Nine Energy Service, Inc 8-K, filed Mar 10, 2026
Nine Energy Service, Inc. (NINE)
About this 8-K
Nine Energy Service, Inc filed this 8-K on March 10, 2026, reporting on events of March 4, 2026.
Items reported
- Item 1.01: Entered into a material agreement
- Item 1.02: Ended a material agreement
- Item 1.03: Bankruptcy or receivership
- Item 2.03: New debt or off-balance-sheet obligation
- Item 3.02: Unregistered sale of equity
- Item 3.03: Change to shareholders' rights
- Item 5.01: Change in control
- Item 5.02: Director or officer change, or executive pay
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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(IRS Employer Identification No.) |
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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:
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| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered* | ||
* On February 5, 2026, the New York Stock Exchange (the “NYSE”) filed a Form 25 with the Securities and Exchange Commission (the “SEC”) to delist Nine Energy Service, Inc.’s common stock from the NYSE. The deregistration of the common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be effective 90 days, or such shorter period as the SEC may determine, after filing of the Form 25.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Introductory Note
As previously disclosed in the Current Report on Form 8-K filed by Nine Energy Service, Inc. (the “Company”) on February 2, 2026, on February 1, 2026, the Company and certain of its subsidiaries (collectively with the Company, the “Company Parties”) filed voluntary petitions (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) to implement a prepackaged chapter 11 plan of reorganization (the “Plan”). The Chapter 11 Cases were jointly administered for administrative purposes only under the caption In re Nine Energy Service, Inc. et al.
On March 4, 2026, the Bankruptcy Court entered an order confirming the Plan, and on March 5, 2026 (the “Plan Effective Date”), the Plan became effective in accordance with its terms and the Company Parties emerged from bankruptcy.
Item 1.01 Entry into a Material Definitive Agreement.
Exit ABL Facility
As previously disclosed, on February 3, 2026, the Company Parties entered into a senior secured super-priority asset-based debtor-in-possession loan and security agreement (the “DIP Loan and Security Agreement”) with White Oak Commercial Finance, LLC, as agent, and the lenders from time to time party thereto (the “DIP Lenders”), which provided the Company Parties with a senior secured super-priority asset-based debtor-in-possession credit facility consisting of $125.0 million in aggregate principal amount of revolving credit commitments (the “DIP ABL Facility”), including a roll-up or refinancing of all obligations under the Prepetition Loan and Security Agreement (as defined below).
On the Plan Effective Date, pursuant to the Plan, the Company entered into a loan and security agreement (the “Exit Loan and Security Agreement”) with White Oak Commercial Finance, LLC, as agent, and the lenders from time to time party thereto, and on the terms and subject to the conditions set forth therein, each DIP Lender exchanged and converted on a cashless basis all of its loans under the DIP Loan and Security Agreement for loans under the Exit Loan and Security Agreement.
The Exit Loan and Security Agreement provides for a first priority senior secured asset-based revolving credit facility consisting of $135.0 million in aggregate principal amount of revolving credit commitments (the “Exit ABL Facility”). A portion of the Exit ABL Facility not in excess of $5.0 million is available for the issuance of standby letters of credit. The Company Parties’ obligations under the Exit ABL Facility are secured by a first-priority security interest in substantially all of their tangible and intangible assets, including all machinery and equipment, and are guaranteed by certain of the Company’s existing and future domestic and Canadian subsidiaries.
Borrowings under the Exit ABL Facility are subject to a borrowing base. The outstanding balance of the borrowings under the Exit ABL Facility may not exceed in the aggregate at any time the lesser of (i) $135.0 million (the “Maximum Revolving Facility Amount”) reduced by certain customary reserves and (ii) the borrowing base, which is calculated on the basis of eligible accounts, inventory, machinery and equipment, and, at the Company Parties’ election, certain real property assets of the Company Parties. In particular, the borrowing base is equal to (a) 92.5% of the aggregate amount of eligible U.S. and Canadian billed accounts receivable, plus (b) the lesser of (x) 85% of the aggregate amount of eligible U.S. and Canadian unbilled accounts receivable and (y) $6.0 million, plus (c) the lesser of (“Foreign Accounts Availability”) (x) 50% of the aggregate amount of eligible billed non-U.S. and non-Canadian accounts receivable and (y) $3.0 million, plus (d) the lower of cost or market value of eligible inventory, multiplied by the lesser of (x) 70% and (y) 85% of the appraised net orderly liquidation value divided by the book value in respect of such inventory, and, in the case of inventory constituting raw materials, not to exceed a maximum sublimit of $1 million, plus (e) the lesser of (“SOFA Availability”) (x) $10.0 million and (y) an amount equal to 10% of the borrowing base, plus (f) the lesser of (x) the sum of (1) up to 75% of the net orderly liquidation value of eligible machinery and equipment (“M&E Availability”) plus (2) up to 75% of the fair market value of eligible real property owned by certain of the Company Parties (“Real Property Availability”) and (y) $30.0 million (which amount shall be permanently reduced on a monthly basis based on a 5-year straight line amortization), minus (g) the aggregate amount of reserves, if any, established by the agent under the Exit Loan and Security Agreement. The Real Property Availability is subject to the Company Parties’ election, at their option, to enter into mortgages from time to time in favor of the agent and lenders under the Exit Loan and Security Agreement with respect to their eligible real property assets as well as the satisfaction of other customary eligibility criteria with respect thereto.
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Borrowings under the Exit ABL Facility bear interest at a per annum rate equal to the term-specific Secured Overnight Financing Rate (SOFR) for an interest period of one month, subject to a 1.50% floor, plus an applicable margin ranging from 3.50% to 4.00%, depending on the Company’s fixed charge coverage ratio, subject to an additional margin of 0.50% with respect to any revolving loans or letters of credit utilizing any of M&E Availability, Real Property Availability, SOFA Availability and/or Foreign Accounts Availability.
The maturity date of the Exit ABL Facility is three years after the Plan Effective Date, subject to earlier termination upon the occurrence of certain events specified in the Exit Loan and Security Agreement. The proceeds of the Exit ABL Facility have been or will be used for (i) working capital and general corporate purposes of the Company Parties, (ii) costs and expenses related to the Exit ABL Facility and (iii) refinancing of all obligations under the DIP ABL Facility.
The Exit Loan and Security Agreement contains certain representations and warranties, events of default, and various affirmative and negative covenants that are customary for asset-based credit facilities of this type, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, and investments (including acquisitions). In addition, the Exit Loan and Security Agreement contains certain financial covenants, including a minimum excess availability of not less than $5.0 million and a minimum fixed charge coverage ratio of 1.10 to 1.00 that will be tested when the excess availability under the Exit ABL Facility is less than the lesser of (a) 7.5% of the lesser of (x) the Maximum Revolving Facility Amount minus reserves and (y) the borrowing base and (b) $9.0 million, which minimum fixed charge coverage ratio would apply until the excess availability is greater than or equal to such threshold for a period of 30 consecutive days.
The foregoing description of the Exit ABL Facility is not complete and is qualified in its entirety by reference to the copy of the Exit Loan and Security Agreement attached to this Current Report on Form 8-K (this “Report”) as Exhibit 10.1, which is incorporated herein by reference.
Registration Rights Agreement
On the Plan Effective Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain of its stockholders who had received shares of New Common Stock (as defined below) pursuant to the Plan (the “Investors”). Under the Registration Rights Agreement, the Investors are entitled to request that the Company file registration statements covering the resale of such shares. Also, under the Registration Rights Agreement, the Investors have certain underwritten offering demand rights and piggyback rights with respect to certain underwritten offerings conducted by the Company for its own account or for the account of other stockholders of the Company. These registration and other rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in an offering and the Company’s right to delay, suspend or withdraw a registration statement under certain circumstances.
The Registration Rights Agreement contains customary provisions relating to the registration and other procedures to be followed by the Company, indemnification and contribution obligations, the selection of underwriters, lock-ups (to the extent requested by an applicable underwriter) and payment by the Company of registration and other expenses incident to its obligations thereunder (including reasonable fees and expenses of counsel for the Investors but excluding any underwriting discounts or commissions attributable to sales of shares by the Investors).
The foregoing description of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the copy of the Registration Rights Agreement attached to this Report as Exhibit 10.2, which is incorporated herein by reference.
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Voting Agreements
On the Plan Effective Date, the Company entered into (i) a voting agreement (the “MacKay Voting Agreement”) with MacKay Shields LLC (“MacKay”) and (ii) a voting agreement (the “Philosophy Voting Agreement”) with Philosophy Distressed and Special Solutions Fund LP, Philosophy Capital Partners, LP, Star V Partners LLC, Blackwell Partners LLC – Series A and Cassini Partners, L.P. (collectively, “Philosophy”). Certain accounts, funds and clients that MacKay has been appointed as investment manager, investment advisor or subadvisor (for which MacKay is deemed to be the beneficial owner of under Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and Philosophy received shares of New Common Stock pursuant to the Plan and are also party to the Registration Rights Agreement.
Pursuant to the MacKay Voting Agreement, MacKay agreed, on each matter brought to a vote at any annual or special meeting of the Company’s stockholders and in connection with any action proposed to be taken by consent of the Company’s stockholders in lieu of a meeting, to vote all shares of the Company’s voting securities that are beneficially owned by MacKay that exceed the Voting Cap Threshold (as defined below) (the “MacKay Excess Voting Securities”) in the same proportion as all other votes cast by the Company’s stockholders with respect to the applicable matter, without taking into account votes cast by MacKay. MacKay may vote any of the Company’s voting securities that are not MacKay Excess Voting Securities at MacKay’s discretion. The MacKay Voting Agreement will terminate by its terms when MacKay ceases to beneficially own more than 10% or more of the Company’s voting securities then outstanding.
Similarly, pursuant to the Philosophy Voting Agreement, Philosophy and any affiliate or affiliated fund thereof agreed, on each matter brought to a vote at any annual or special meeting of the Company’s stockholders and in connection with any action proposed to be taken by consent of the Company’s stockholders in lieu of a meeting, to vote all shares of the Company’s voting securities that are beneficially owned by Philosophy that, together with all voting securities that are beneficially owned by any affiliate or affiliated fund of Philosophy, exceed the Voting Cap Threshold (the “Philosophy Excess Voting Securities”) in the same proportion as all other votes cast by the Company’s stockholders with respect to the applicable matter, without taking into account votes cast by Philosophy or any affiliate or affiliated fund thereof. Philosophy and any affiliate or affiliated fund thereof may vote any of the Company’s voting securities that are not Philosophy Excess Voting Securities at their discretion. The Philosophy Voting Agreement will terminate by its terms when Philosophy and any affiliate or affiliated fund cease to beneficially own more than 10% or more of the Company’s voting securities then outstanding.
The “Voting Cap Threshold” for both the MacKay Voting Agreement and the Philosophy Voting Agreement, is 10% of the total voting power of all outstanding voting securities of the Company with respect to the applicable matter as of the applicable record date, after giving effect to any other voting agreement between the Company and any of its stockholders. Also, for purposes of both the MacKay Voting Agreement and the Philosophy Voting Agreement, beneficial ownership is determined without giving effect to any voting agreement between the Company and any of its stockholders.
The foregoing description of the MacKay Voting Agreement is not complete and is qualified in its entirety by reference to the copy of the MacKay Voting Agreement attached to this Report as Exhibit 10.3, which is incorporated herein by reference, and the foregoing description of the Philosophy Voting Agreement is not complete and is qualified in its entirety by reference to the copy of the Philosophy Voting Agreement attached to this Report as Exhibit 10.4, which is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
Pursuant to the Plan, on the Plan Effective Date, the obligations of Company Parties under the following agreements were terminated: (i) the Indenture, dated as of January 30, 2023, by and among the Company, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and as notes collateral agent, relating to the Company’s 13.000% Senior Secured Notes due 2028 (the “Senior Secured Notes”), and (ii) the Loan and Security Agreement, dated as of May 1, 2025 (the “Prepetition Loan and Security Agreement”), by and among the Company and certain subsidiaries thereof, each as a borrower or guarantor, as applicable, White Oak Commercial Finance, LLC, as agent for the lenders (the “Prepetition Agent”), and the lenders from time to time party thereto (the “Prepetition Lenders”).
Prior to commencing the Chapter 11 Cases, the Company Parties had entered into a restructuring support agreement with an ad hoc group of certain holders of the Senior Secured Notes and the Prepetition Lenders, pursuant to which they agreed, subject to certain terms and conditions, to support the Plan. Also, the Prepetition Agent and the Prepetition Lenders are the agent and lenders, respectively, under the DIP Loan and Security Agreement, and the agent and lenders, respectively, under the Exit Loan and Security Agreement.
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Item 1.03 Bankruptcy or Receivership.
On March 4, 2026, the Bankruptcy Court entered an order confirming the Plan. The material features of the Plan include, among other things:
| ● | the Prepetition Lenders providing the Company Parties with the DIP ABL Facility, including a roll-up or refinancing of all obligations under the Prepetition Loan and Security Agreement, which converted into the Exit ABL Facility on the Plan Effective Date; |
| ● | the Company issuing 100% of a single class of common equity interests (the “New Common Stock”) to the holders of the Senior Secured Notes and the Senior Secured Notes being canceled on the Plan Effective Date; and |
| ● | all of the Company’s equity interests outstanding prior to the Plan Effective Date, including common stock (the “Old Common Stock”), being canceled for no consideration on the Plan Effective Date. |
Also, pursuant to the Plan, all indemnification provisions in place as of the Plan Effective Date for the benefit of current and former directors, officers, managers, employees, attorneys, accountants, investment bankers and other professionals of the Company Parties, as applicable, shall be (a) reinstated and remain intact, irrevocable, and shall survive the Plan Effective Date on terms no less favorable to such current and former directors, officers, managers, employees, attorneys, accountants, investment bankers and other professionals of the Company Parties than the indemnification provisions in place prior to the Plan Effective Date and (b) assumed by the reorganized Company Parties.
The foregoing is a summary of the material features of the Plan and is not complete and is qualified in its entirety by reference to the copy of the Plan, as confirmed, attached to this Report as Exhibit 2.1, which is incorporated herein by reference.
Certain Information Regarding the Company’s Capital Structure, Assets and Liabilities
Prior to the Plan Effective Date, there were 43,310,777 shares of Old Common Stock issued and outstanding. As of March 5, 2026, upon completion of the transactions pursuant to the Plan (including the cancellation of the Old Common Stock and the issuance of 100% of the New Common Stock to the holders of the Senior Secured Notes), there were approximately 13,950,000 shares of New Common Stock issued and outstanding.
Information regarding the assets and liabilities of the Company as of the most recent practicable date is hereby incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”), which was filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2026. As set forth in the Annual Report, as of December 31, 2025, the Company had total assets of $339.5 million and total liabilities of $454.4 million.
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 Report under the heading “Exit ABL Facility” is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
Pursuant to the Plan, on the Plan Effective Date, the Company issued approximately 13,950,000 shares of New Common Stock to holders (the “Former Senior Secured Noteholders”) of the Senior Secured Notes, which were cancelled pursuant to the Plan. The issuance of such shares of New Common Stock was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to section 1145 of the Bankruptcy Code and, to the extent such exemption was unavailable, in reliance on the exemption provided by section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder.
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Item 3.03 Material Modification to Rights of Security Holders.
The information set forth under Items 1.02, 1.03, 5.01 and 5.03 of this Report is incorporated herein by reference.
Item 5.01 Changes in Control of Registrant.
The information set forth under Items 1.03 and 3.02 of this Report is incorporated herein by reference.
Pursuant to the Plan, on the Plan Effective Date, all of the Company’s equity interests, including the Old Common Stock, outstanding prior to the Plan Effective Date, were canceled and are now of no force and effect, and the Company issued shares of New Common Stock to the Former Senior Secured Noteholders. As of the Plan Effective Date, the Former Senior Secured Noteholders hold 100% of the outstanding shares of New Common Stock.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Pursuant to the Plan, as of the Plan Effective Date, the terms of the members of the Company’s board of directors (the “Board”) expired and all such members (i.e., Ann G. Fox, Jerome (Joey) D. Hall, Julie A. Peffer, Scott E. Schwinger and Darryl K. Willis) were deemed to have resigned from the Board.
Also pursuant to the Plan, as of the Effective Date, the following persons were appointed or re-appointed, as applicable, to the Board: Patrick J. Bartels, Sandy Esslemont, Ann G. Fox, Jerome (Joey) D. Hall, J. Carney Hawks and Darryl K. Willis. An additional person will be appointed to the Board by the Ad Hoc Group (as defined in the Plan). As of the date hereof, the Board has not determined the composition of any of its standing committees.
In connection with his appointment to the Board, each of Messrs. Bartels, Esslemont and Hawks (collectively, the “new directors”) have entered into, or are expected to enter into, an indemnification agreement with the Company in substantially the same form that the Company has entered into with its other directors, which provide directors of the Company with contractual rights to indemnification, expense advancement and reimbursement to the fullest extent permitted under the Delaware General Corporation Law (the “DGCL”). Additionally, non-employee directors are expected to receive an annual cash retainer fee of $100,000 in addition to other compensation elements to be determined by the Board following emergence.
There are no arrangements or understandings between any of the new directors and any other person pursuant to which he was appointed as a member of the Board. Also, to the Company’s knowledge as of the date hereof, there are no current or proposed transactions in which any of the new directors has or will have a direct or indirect material interest and in which the Company is or will be a participant that require disclosure pursuant to Item 404(a) of Regulation S-K.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On the Plan Effective Date, pursuant to the Plan, the Company adopted the Fourth Amended and Restated Certificate of Incorporation (the “New Certificate of Incorporation”) and the Fifth Amended and Restated Bylaws (the “New Bylaws”), which amended and restated the Company’s Third Amended and Restated Certificate of Incorporation (the “Old Certificate of Incorporation”) and the Company’s Fourth Amended and Restated Bylaws (the “Old Bylaws”), respectively. The New Certificate of Incorporation and the New Bylaws became effective upon adoption on the Plan Effective Date.
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The amendments effected by the New Certificate of Incorporation include, among other things: (i) an authorized share count of 85 million, consisting of 70 million shares of New Common Stock and 15 million shares of preferred stock (as compared to an authorized share count of 140 million, consisting of 120 million shares of Old Common Stock and 20 million shares of preferred stock under the Old Certificate of Incorporation), (ii) a declassification of the Board, such that all directors shall be elected annually for one-year terms (as compared to the Board being divided into three classes, with each class as nearly equal in number as possible, serving staggered three-year terms, under the Old Certificate of Incorporation), (iii) the ability to remove any director with or without cause with the affirmative vote of a majority vote of the voting power of the stock outstanding and entitled to vote thereon (as compared to the ability to remove any director only for cause with the affirmative vote of at least 662/3% of the voting power of the stock outstanding and entitled to vote thereon under the Old Certificate of Incorporation), (iv) the indemnification of directors and officers to the fullest extent permitted by the DGCL (as compared to such indemnification of only directors under the Old Certificate of Incorporation) and (v) the removal of provisions that are no longer applicable to the Company (e.g., provisions relating to the waiver of business opportunities relating to certain of its prior stockholders).
The amendments effected by the New Bylaws include, among other things: (i) permitting special meetings of stockholders to be called by the chair of the Board, the Company’s chief executive officer or the Company’s secretary upon the request of one or more stockholders who own at least 20% of the outstanding shares of capital stock of the Company entitled to vote generally in the election of directors as of the date such request is delivered to the Company’s secretary (as compared to such meetings only being able to be called by the Board under the Old Bylaws) and (ii) permitting amendments to the bylaws to be adopted at any meeting of stockholders by the affirmative vote of the holders of a majority (instead of 662/3% under the Old Bylaws) of the voting power of the stock issued and outstanding and entitled to vote thereon.
The foregoing summary of the New Certificate of Incorporation and the New Bylaws is not complete and is qualified in its entirety by reference to the copies of the New Certificate of Incorporation and the New Bylaws, which are filed as Exhibit 3.1 and 3.2, respectively, to this Report and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| * | Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to provide a copy of any omitted schedule or similar attachment to the SEC or its staff upon request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedules and similar attachments so furnished. |
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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.
| Dated: March 10, 2026 | NINE ENERGY SERVICE, INC. | |
| By: | /s/ Theodore R. Moore | |
| Theodore R. Moore | ||
| Executive Vice President, | ||
| General Counsel and Secretary | ||
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Exhibit 2.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
houston DIVISION
| ) | ||
| In re: | ) | Chapter 11 |
| ) | ||
| NINE ENERGY SERVICE, INC., et al.,1 | ) | Case No. 26-90295 (CML) |
| ) | ||
| Debtors. | ) | (Jointly Administered) |
| ) |
AMENDED JOINT PREPACKAGED PLAN OF
REORGANIZATION OF NINE ENERGY SERVICE, INC. AND ITS
DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE
THIS CHAPTER 11 PLAN IS BEING SUBMITTED TO THE BANKRUPTCY COURT FOR APPROVAL FOLLOWING SOLICITATION.
| KANE RUSSELL COLEMAN LOGAN PC | KIRKLAND & ELLIS LLP | |
| John J. Kane (TX Bar No. 24066794) | KIRKLAND & ELLIS INTERNATIONAL LLP | |
| Kyle Woodard (TX Bar No. 24102661) | Chad J. Husnick, P.C. (admitted pro hac vice) | |
| JaKayla J. DaBera (TX Bar No. 24129114) | 333 West Wolf Point Plaza | |
| 901 Main Street, Suite 5200 | Chicago, Illinois 60654 |
| Dallas, Texas 75202 | Telephone: | (312) 862-2000 | ||
| Telephone: | (713) 425-7400 | Facsimile: | (312) 862-2200 | |
| Facsimile: | (713) 425-7700 | Email: | chad.husnick@kirkland.com | |
| Email: | jkane@krcl.com | |||
| kwoodard@krcl.com | ||||
| jdabera@krcl.com | ||||
| -and- | -and- | |
| Michael P. Ridulfo (TX Bar No. 16902020) | Ross J. Fiedler (admitted pro hac vice) | |
| Sage Plaza, 5151 San Felipe, Suite 800 | 601 Lexington Avenue | |
| Houston, Texas 77056 | New York, New York 10022 |
| Telephone: | (713) 425-7400 | Telephone: | (212) 446-4800 | |
| Facsimile: | (713) 425-7700 | Facsimile: | (212) 446-4900 | |
| Email: | mridulfo@krcl.com | Email: | ross.fiedler@kirkland.com |
| Proposed Co-Counsel for the Debtors | Proposed Co-Counsel for the Debtors | |
| and Debtors in Possession | and Debtors in Possession |
| 1 | A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ claims and noticing agent at https://dm.epiq11.com/NineEnergy. The location of Nine Energy Service, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 2001 Kirby Drive, Suite 200, Houston, TX 77019. |
TABLE OF CONTENTS
| Article I. DEFINED TERMS, RULES OF INTERPRETATION, COMPUTATION OF TIME, and governing Law | 1 | |
| A. | Defined Terms. | 1 |
| B. | Rules of Interpretation. | 12 |
| C. | Computation of Time. | 13 |
| D. | Governing Law. | 13 |
| E. | Reference to Monetary Figures. | 13 |
| F. | Reference to the Debtors or the Reorganized Debtors. | 13 |
| G. | Nonconsolidated Plan. | 13 |
| H. | Controlling Document. | 13 |
| I. | Consultation, Notice, Information, and Consent Rights. | 13 |
| Article II. ADMINISTRATIVE CLAIMS, priority tax claims, DIP Claims, professional fee claims, AND restructuring expenses | 14 | |
| A. | Administrative Claims. | 14 |
| B. | Priority Tax Claims. | 14 |
| C. | DIP Claims. | 14 |
| D. | Professional Fee Claims. | 15 |
| E. | Payment of Restructuring Expenses and Senior Secured Notes Trustee Fees and Expenses. | 16 |
| Article III. CLASSIFICATION AND TREATMENt oF CLAIMS AND INTERESTS | 16 | |
| A. | Classification of Claims and Interests. | 16 |
| B. | Treatment of Claims and Interests. | 17 |
| C. | Special Provision Governing Unimpaired Claims. | 21 |
| D. | Elimination of Vacant Classes. | 21 |
| E. | Voting Classes, Presumed Acceptance by Non-Voting Classes. | 21 |
| F. | Intercompany Interests. | 21 |
| G. | Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code. | 21 |
| H. | Controversy Concerning Impairment. | 22 |
| I. | Subordinated Claims and Interests. | 22 |
| Article IV. MEANS FOR IMPLEMENTATION OF THe PLAN | 22 | |
| A. | General Settlement of Claims and Interests. | 22 |
| B. | Restructuring Transactions. | 22 |
| C. | Reorganized Debtors. | 23 |
| D. | Sources of Consideration for Plan Distributions. | 23 |
| E. | Corporate Existence. | 24 |
| F. | Vesting of Assets in the Reorganized Debtors. | 25 |
| G. | Cancellation of Existing Securities, Agreements, and Interests. | 25 |
| H. | Corporate Action. | 26 |
| I. | New Organizational Documents. | 26 |
| J. | Directors and Officers of the Reorganized Debtors. | 27 |
| K. | Effectuating Documents; Further Transactions. | 27 |
| L. | Certain Securities Law Matters. | 27 |
| M. | Section 1146 Exemption. | 28 |
| N. | Employee Compensation and Benefits. | 29 |
| O. | Director and Officer Liability Insurance. | 29 |
| P. | Management Incentive Plan. | 30 |
| Q. | Preservation of Causes of Action. | 30 |
| R. | Cashless Transactions. | 30 |
| Article V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES | 30 | |
| A. | Assumption and Rejection of Executory Contracts and Unexpired Leases. | 30 |
| B. | Cure of Defaults for Assumed Executory Contracts and Unexpired Leases. | 31 |
| C. | Indemnification Obligations. | 32 |
| D. | Insurance Policies. | 32 |
| E. | Reservation of Rights. | 32 |
| F. | Nonoccurrence of Effective Date. | 33 |
| G. | Contracts and Leases Entered Into After the Petition Date. | 33 |
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| Article VI. PROVISIONS GOVERNING DISTRIBUTIONS | 33 | |
| A. | Timing and Calculation of Amounts to Be Distributed. | 33 |
| B. | Disbursing Agent. | 33 |
| C. | Rights and Powers of Disbursing Agent. | 34 |
| D. | Delivery of Distributions and Undeliverable or Unclaimed Distributions. | 34 |
| E. | Surrender of Cancelled Instruments or Securities. | 35 |
| F. | Manner of Payment. | 35 |
| G. | Compliance with Tax Requirements. | 35 |
| H. | Allocations. | 36 |
| I. | No Postpetition Interest on Claims. | 36 |
| J. | Setoffs and Recoupment. | 36 |
| K. | Claims Paid or Payable by Third Parties. | 36 |
| Article VII. PROCEDURES FOR RESOLVING CONTINGENT, UNLIQUIDATED, AND DISPUTED CLAIMS | 37 | |
| A. | Disputed Claims Process. | 37 |
| B. | Allowance of Claims. | 37 |
| C. | Claims Administration Responsibilities. | 38 |
| D. | Adjustment to Claims without Objection. | 38 |
| E. | Disallowance of Claims or Interests. | 38 |
| F. | No Distributions Pending Allowance. | 38 |
| G. | Distributions After Allowance. | 38 |
| Article VIII. SETTLEMENT, RELEASE, INJUNCTION, AND RELATED PROVISIONS | 39 | |
| A. | Discharge of Claims and Termination of Interests. | 39 |
| B. | Release of Liens. | 39 |
| C. | Releases by the Debtors. | 40 |
| D. | Releases by the Releasing Parties. | 41 |
| E. | Exculpation. | 42 |
| F. | Injunction. | 43 |
| G. | Protections Against Discriminatory Treatment. | 43 |
| H. | Document Retention. | 43 |
| I. | Reimbursement or Contribution. | 44 |
| J. | Claims by the United States Government or Any State and Local Authority. | 44 |
| Article IX. CONDITIONS PRECEDENT TO CONSUMMATION OF THe PLAN | 44 | |
| A. | Conditions Precedent to the Effective Date. | 44 |
| B. | Waiver of Conditions. | 45 |
| C. | Substantial Consummation. | 45 |
| D. | Effect of Failure of Conditions. | 45 |
| Article X. MODIFICATION, REVOCATION, OR WITHDRAWAL OF This PLAN | 46 | |
| A. | Modification and Amendments. | 46 |
| B. | Effect of Confirmation on Modifications. | 46 |
| C. | Revocation or Withdrawal of Plan. | 46 |
| Article XI. RETENTION OF JURISDICTION | 46 | |
| Article XII. MISCELLANEOUS PROVISIONS | 48 | |
| A. | Immediate Binding Effect. | 48 |
| B. | Additional Documents. | 48 |
| C. | Payment of Statutory Fees. | 48 |
| D. | Reservation of Rights. | 49 |
| E. | Successors and Assigns. | 49 |
| F. | Notices. | 49 |
| G. | Term of Injunctions or Stays. | 50 |
| H. | Entire Agreement. | 50 |
| I. | Exhibits. | 50 |
| J. | Nonseverability of Plan Provisions. | 50 |
| K. | Votes Solicited in Good Faith. | 51 |
| L. | Closing of Chapter 11 Cases. | 51 |
| M. | Waiver or Estoppel. | 51 |
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INTRODUCTION
Nine Energy Service, Inc. (“Nine Energy”) and its affiliated debtors and debtors in possession (collectively, the “Debtors”) propose this joint prepackaged chapter 11 plan of reorganization (as amended, supplemented, or otherwise modified from time to time, this “Plan”) for the resolution of the outstanding Claims against and Interests in the Debtors pursuant to chapter 11 of the Bankruptcy Code. Capitalized terms used herein and not otherwise defined have the meanings ascribed to such terms in Article I.A of this Plan. Holders of Claims against or Interests in the Debtors may refer to the Disclosure Statement for a discussion of the Debtors’ history, businesses, assets, results of operations, historical financial information, risk factors, and projections of future operations, as well as a summary and description of this Plan, the Restructuring Transactions, and certain related matters. The Debtors are the proponents of this Plan within the meaning of section 1129 of the Bankruptcy Code.
ALL HOLDERS OF CLAIMS AGAINST OR INTERESTS IN THE DEBTORS, TO THE EXTENT APPLICABLE, ARE ENCOURAGED TO READ THIS PLAN AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THIS PLAN. ALL HOLDERS OF CLAIMS AND INTERESTS SHOULD REVIEW THE SECURITIES LAW RESTRICTIONS AND NOTICES SET FORTH IN THIS PLAN (INCLUDING UNDER Article IV.L HEREOF) IN FULL.
Article I.
DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME, and governing Law
| A. | Defined Terms. |
As used in this Plan, capitalized terms have the meanings set forth below.
1. “Ad Hoc Group” means that certain ad hoc group of Senior Secured Noteholders represented by the Ad Hoc Group Advisors.
2. “Ad Hoc Group Advisors” means (a) Milbank LLP, as legal counsel to the Ad Hoc Group, (b) Houlihan Lokey Capital, Inc., as investment banker to the Ad Hoc Group, (c) Porter Hedges, LLP, as local counsel to the Ad Hoc Group, and (d) any other counsel or advisor engaged by the Ad Hoc Group in its reasonable discretion, including any local counsel, board search consultant, and operational or industry advisors.
3. “Administrative Claim” means any Claim against any Debtor arising before the Effective Date for the costs and expenses of administration of the Chapter 11 Cases pursuant to sections 503(b), 507(a)(2), 507(b), or 1114(e)(2) of the Bankruptcy Code, including: (a) the actual and necessary costs and expenses incurred by the Debtors on or after the Petition Date until and including the Effective Date of preserving the Estates and operating the Debtors’ businesses incurred on or after the Petition Date and through the Effective Date; (b) Allowed Professional Fee Claims; (c) any adequate protection Claims provided for in the DIP Orders; (d) the Restructuring Expenses; and (e) all fees and charges assessed against the Estates pursuant to section 1930 of chapter 123 of the Judicial Code.
4. “Affiliate” has the meaning set forth in section 101(2) of the Bankruptcy Code as if such Entity was a debtor in a case under the Bankruptcy Code.
5. “Agents/Trustees” means, collectively, the DIP Agent, the Senior Secured Notes Trustee, the Prepetition ABL Agent, and the Exit ABL Facility Agent.
6. “Allowed” means a Claim or an Interest that is allowed under this Plan, under the Bankruptcy Code, or by a Final Order, as applicable. For the avoidance of doubt, (a) there is no requirement to File a Proof of Claim (or move the Bankruptcy Court for allowance) to be an Allowed Claim under this Plan, and (b) the Debtors may affirmatively determine to deem Unimpaired Claims Allowed to the same extent such Claims would be allowed under applicable non-bankruptcy Law; provided that the Reorganized Debtors shall retain all claims and defenses with respect to Allowed Claims that are Reinstated or otherwise Unimpaired pursuant to this Plan.
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7. “Assumed Executory Contracts and Unexpired Leases” means those Executory Contracts and Unexpired Leases to be assumed by the applicable Reorganized Debtors.
8. “Assumed Executory Contracts and Unexpired Leases List” means the list of Executory Contracts and Unexpired Leases (with proposed Cure amounts) that will be assumed by the Reorganized Debtors, which list shall be included in the Plan Supplement, as the same may be amended, modified, or supplemented from time to time.
9. “Avoidance Actions” means any and all actual or potential avoidance, recovery, subordination, or other Claims, Causes of Action, or remedies that may be brought by or on behalf of the Debtors or their Estates or other authorized parties in interest under the Bankruptcy Code or applicable non-bankruptcy Law, including Claims, Causes of Action, or remedies arising under sections 502, 510, 542, 544, 545, and 547 (through and including sections 553 and 724(a)) of the Bankruptcy Code, or other similar or related local, state, federal, or foreign statutes, and common Law, including fraudulent transfer Laws or other applicable Law.
10. “Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§ 101–1532, as amended.
11. “Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas.
12. “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure promulgated under section 2075 of title 28 of the United States Code, 28 U.S.C. §§ 1–4001.
13. “Business Day” means any day other than a Saturday, Sunday, “legal holiday” (as defined in Bankruptcy Rule 9006(a)), or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state of New York.
14. “Cash” or “$” means cash and cash equivalents, including bank deposits, checks, and other similar items in the legal tender of the United States of America.
15. “Cash Collateral” has the meaning ascribed to it under section 363(a) of the Bankruptcy Code.
16. “Causes of Action” means any and all actions, Claims, interests, damages, remedies, causes of action, controversies, demands, proceedings, agreements, rights, Liens, indemnities, contributions, guaranties, suits, obligations, liabilities, judgments, accounts, defenses, offsets, powers, privileges, licenses, and franchises of any kind or character whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, contingent or noncontingent, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, assertable directly or derivatively, whether arising before, on, or after the Petition Date, in contract or in tort, in law or in equity, or pursuant to any other theory of law. Causes of Action also include: (a) any and all rights of setoff, counterclaim, or recoupment, and Claims for breach of contract or for breach of duties imposed by law or in equity; (b) any and all rights to dispute, object to, compromise, or seek to recharacterize, reclassify, subordinate, or disallow Claims against or Interests in the Debtors; (c) any and all Claims pursuant to section 362 or chapter 5 of the Bankruptcy Code; (d) any and all Claims or defenses, including fraud, mistake, duress, and usury, and any other defenses set forth in section 558 of the Bankruptcy Code; and (e) any and all Avoidance Actions arising under chapter 5 of the Bankruptcy Code or under similar local, state, federal, or foreign statutes and common law, including fraudulent transfer laws.
17. “Chapter 11 Cases” means (a) when used with reference to a particular Debtor, the case pending for that Debtor under chapter 11 of the Bankruptcy Code in the Bankruptcy Court and (b) when used with reference to all Debtors, any procedurally consolidated and jointly administered cases Filed for the Debtors under chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
18. “Claim” has the meaning ascribed to it in section 101(5) of the Bankruptcy Code.
19. “Claims and Noticing Agent” means Epiq Corporate Restructuring, LLC, in its capacity as claims, noticing, and solicitation agent for the Debtors.
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20. “Claims Register” means the official register of Claims against and Interests in the Debtors maintained by the clerk of the Bankruptcy Court or the Claims and Noticing Agent.
21. “Class” means a class of Claims or Interests as set forth in Article III hereof pursuant to sections 1122(a) and 1123 of the Bankruptcy Code.
22. “CM/ECF” means the Bankruptcy Court’s Case Management and Electronic Case Filing system.
23. “Combined Hearing” means the hearing before the Bankruptcy Court under section 1128 of the Bankruptcy Code to consider Confirmation of the Plan and approval of the Disclosure Statement pursuant to section 1125 of the Bankruptcy Code, as such hearing may be adjourned or continued from time to time.
24. “Compensation and Benefits Programs” means all employment and severance agreements and policies, and all employment, wages, compensation, and benefit plans and policies, workers’ compensation programs, savings plans, retirement plans, deferred compensation plans, supplemental executive retirement plans, healthcare plans, disability plans, severance benefit plans, incentive and retention plans, programs, and payments, life and accidental death and dismemberment insurance plans and programs, for all employees who are current employees of the Debtors as of the Petition Date, and all amendments and modifications thereto, applicable to the Debtors’ employees, former employees, retirees, and non-employee directors and managers, in each case existing with the Debtors as of immediately prior to the Effective Date.
25. “Confirmation” means the Bankruptcy Court’s entry of the Confirmation Order on the docket of the Chapter 11 Cases.
26. “Confirmation Date” means the date on which the Bankruptcy Court enters the Confirmation Order on the docket of the Chapter 11 Cases within the meaning of Bankruptcy Rules 5003 and 9021.
27. “Confirmation Order” means the order of the Bankruptcy Court confirming this Plan pursuant to section 1129 of the Bankruptcy Code, which may constitute the Disclosure Statement Order.
28. “Consenting Noteholders” means, collectively, the beneficial holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, Senior Secured Notes Claims that have executed and delivered counterpart signature pages to the RSA, a Joinder, or a Transfer Agreement to counsel to Nine Energy.
29. “Consenting Prepetition ABL Lenders” means the Holders of Prepetition ABL Claims that have executed and delivered counterparty signature pages to the RSA, a Joinder, or a Transfer Agreement to counsel of Nine Energy.
30. “Consenting Stakeholders” means, collectively, the Consenting Prepetition ABL Lenders and the Consenting Noteholders.
31. “Consummation” means the occurrence of the Effective Date.
32. “Cure” means a Claim (unless waived or modified by the applicable counterparty) based upon a Debtor’s defaults under an Executory Contract or an Unexpired Lease assumed by such Debtor under section 365 of the Bankruptcy Code, other than a default that is not required to be cured pursuant to section 365(b)(2) of the Bankruptcy Code.
33. “D&O Liability Insurance Policies” means all insurance policies of any of the Debtors for directors’, managers’, and officers’ liability existing as of the Petition Date (including any “tail policy”) and all agreements, documents, or instruments relating thereto.
34. “Debtor Release” means the release set forth in Article VIII.C of this Plan.
35. “Debtors” means, collectively, Nine Energy, a company incorporated and existing under the laws of Delaware, and its debtor Affiliates.
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36. “Definitive Documents” means all material documents in respect of the Restructuring Transactions (including but not limited to the following): (a) this Plan; (b) the Confirmation Order; (c) the Disclosure Statement; (d) the Disclosure Statement Order; (e) the Solicitation Materials; (f) the DIP Documents; (g) the Plan Supplement; (h) the New Organizational Documents; (i) the Exit ABL Facility Documents; (j) the First Day Pleadings (and all orders sought pursuant thereto); and (k) any other materials, amendments, modifications, supplements, documents, opinions, instruments, schedules, or exhibits described in, related to, contemplated in, or reasonably necessary to implement the foregoing (including the Restructuring Steps Plan) to be Filed by the Debtors in connection with the Chapter 11 Cases; provided that notwithstanding anything herein or in any Definitive Document to the contrary, the Definitive Documents shall not include any ministerial notices and similar ministerial documents, retention applications, fee applications, fee statements, any similar pleadings or motions relating to the retention or fees of any professional, monthly operating reports, certifications of service, or any declarations, affidavits, or replies in support of any of the foregoing or in support of the Definitive Documents.
37. “DIP Advisors” means (a) Paul Hastings LLP, as counsel to the DIP Agent, (b) Blake, Cassels & Graydon LLP, as Canadian counsel to the DIP Agent, and (c) such other professional advisors as are retained by the DIP Agent, solely in the case of this clause (c), with the consent of the Debtors (not to be unreasonably withheld).
38. “DIP Agent” means White Oak Commercial Finance, LLC, in its capacity as administrative agent and collateral agent under the DIP Credit Agreement, and any successors and permitted assigns, in such capacity.
39. “DIP Claim” means any Claim derived from, arising under, based upon, or secured pursuant to the DIP Credit Agreement and the DIP Orders.
40. “DIP Credit Agreement” means that certain Senior Secured Superpriority Asset-Based Debtor-In-Possession Loan and Security Agreement, attached as Exhibit 1 to the DIP Orders (as may be amended, restated, amended and restated, supplemented, waived, or otherwise modified from time to time), by and among Nine Energy Service, Inc., Nine Energy Canada Inc., CDK Perforating, LLC, Crest Pumping Technologies, LLC, RedZone Coil Tubing LLC, and Nine Downhole Technologies, LLC, each as borrowers, Nine Energy Service LLC, MOTI Holdco, LLC, Magnum Oil Tools, GP, LLC, and Magnum Tools International, LTD, each as guarantors, White Oak Commercial Finance, LLC, as the DIP Agent, and the DIP Lenders party thereto setting forth the terms and conditions of the DIP Facility.
41. “DIP Documents” means, collectively, the documentation governing the DIP Facility, including the DIP Credit Agreement, any “Loan Documents” under and as defined in the DIP Credit Agreement, and any other agreements, documents, and instruments delivered or entered into in connection therewith, including any guarantee agreements, pledge and collateral agreements, intercreditor agreements, budgets, and other security documents, the DIP Orders, the DIP Motion, the DIP Term Sheet, and any amendments, modifications, and supplements to any of the foregoing.
42. “DIP Facility” means the new senior secured superpriority asset-based financing facility provided by the DIP Lenders to the Debtors on the terms and conditions set forth in the DIP Documents.
43. “DIP Lenders” means the lenders under the DIP Credit Agreement.
44. “DIP Motion” means any motion Filed with the Bankruptcy Court seeking approval of the DIP Facility.
45. “DIP Orders” means, collectively, the Interim DIP Order and the Final DIP Order.
46. “DIP Term Sheet” means the term sheet describing the terms of the DIP Facility that is attached to the RSA as Exhibit C.
47. “Disbursing Agent” means the Debtors or the Reorganized Debtors, as applicable, or the Entity or Entities selected by the Debtors or the Reorganized Debtors, including, the Agents/Trustees with respect to their respective debt facilities, to make or facilitate distributions contemplated under this Plan.
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48. “Disclosure Statement” means the disclosure statement with respect to this Plan, including all exhibits, schedules, supplements, modifications, and amendments thereto.
49. “Disclosure Statement Order” means the order of the Bankruptcy Court, which may be the Confirmation Order, approving the Disclosure Statement as a disclosure statement meeting the applicable requirements of the Bankruptcy Code and, to the extent necessary, approving the Solicitation Materials.
50. “Disputed” means, as to a Claim or an Interest, any Claim or Interest (or portion thereof): (a) that is not Allowed; (b) that is not disallowed by this Plan, the Bankruptcy Code, or a Final Order, as applicable; (c) as to which a dispute is being adjudicated by a court of competent jurisdiction in accordance with non-bankruptcy Law; (d) that is Filed in the Bankruptcy Court and not withdrawn, as to which a timely objection or a request for estimation has been Filed; and (e) with respect to which a party in interest has Filed a Proof of Claim or otherwise made a written request to a Debtor for payment, without any further notice to or action, order, or approval of the Bankruptcy Court.
51. “Distribution Date” means, except as otherwise set forth in this Plan, the date or dates determined by the Debtors or the Reorganized Debtors, as applicable, on or after the Effective Date upon which the Disbursing Agent shall make distributions to Holders of Allowed Claims entitled to receive distributions under this Plan.
52. “Distribution Record Date” means, other than with respect to publicly held Securities, the record date for purposes of making distributions under this Plan on account of Allowed Claims, which date shall be the Effective Date, or such other date as determined by the Debtors and the Required Consenting Noteholders.
53. “DTC” means The Depository Trust Company.
54. “Effective Date” means, as to the applicable Debtor, the date that is the first Business Day after the Confirmation Date on which (a) no stay of the Confirmation Order is in effect; (b) all conditions precedent to the occurrence of the Effective Date set forth in Article IX.A of this Plan have been satisfied or waived in accordance with Article IX.B of this Plan; and (c) this Plan is declared effective by the Debtors. Any action to be taken on the Effective Date may be taken on or as soon as reasonably practicable thereafter.
55. “Entity” has the meaning set forth in section 101(15) of the Bankruptcy Code.
56. “Estate” means, as to each Debtor, the estate created for such Debtor in its Chapter 11 Case pursuant to sections 301 and 541 of the Bankruptcy Code upon the commencement of such Debtor’s Chapter 11 Case.
57. “Exculpated Parties” means, collectively, and in each case in its capacity as such: (a) each of the Debtors and (b) the independent directors of the Debtors, Scott Schwinger, J.D. “Joey” Hall, Julie Peffer, and Darryl K. Willis.
58. “Executory Contract” means a contract to which one or more of the Debtors are a party and that is subject to assumption or rejection under section 365 or 1123 of the Bankruptcy Code.
59. “Exit ABL Facility” means the new senior-secured asset-based loan facility, secured by a first lien security interest on all assets of the Reorganized Debtors, in an aggregate principal amount equal to $135 million, on terms and conditions consistent with the RSA and the Exit ABL Facility Term Sheet.
60. “Exit ABL Facility Advisors” means (a) Paul Hastings LLP, as counsel to the Exit Facility Agent (as defined in the Exit ABL Facility Term Sheet), (b) Blake, Cassels & Graydon LLP, as Canadian counsel to the Exit Facility Agent, (c) and such other professional advisors as are retained by the Exit Facility Agent, solely in the case of this clause (c), with the consent of the Debtors or the Reorganized Debtors (in either case, not to be unreasonably withheld).
61. “Exit ABL Facility Agent” means the agent under the Exit ABL Facility.
62. “Exit ABL Facility Claims” means any Claim on account of indebtedness under the Exit ABL Facility.
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63. “Exit ABL Facility Credit Agreement” means the credit agreement governing the Exit ABL Facility.
64. “Exit ABL Facility Documents” means the Exit ABL Facility Credit Agreement, the Exit ABL Facility Term Sheet, and any other documentation necessary or appropriate to effectuate the incurrence of the Exit ABL Facility.
65. “Exit ABL Facility Lenders” means, collectively, each lender under the Exit ABL Facility.
66. “Exit ABL Facility Loans” means the loans provided under the Exit ABL Facility.
67. “Exit ABL Facility Term Sheet” means the term sheet describing the terms of the Exit ABL Facility that is attached to the RSA as Exhibit D.
68. “Federal Judgment Rate” means the federal judgment rate specified by 28 U.S.C. § 1961 in effect as of the Petition Date.
69. “File,” “Filed,” or “Filing” means file, filed, or filing with the Bankruptcy Court or its authorized designee in the Chapter 11 Cases.
70. “Final DIP Order” means any order entered by the Bankruptcy Court on a final basis approving the DIP Motion.
71. “Final Order” means, as applicable, an order or judgment of the Bankruptcy Court or another court of competent jurisdiction with respect to the relevant subject matter that has not been reversed, stayed, vacated, modified, or amended, as entered on the docket in any Chapter 11 Case or the docket of any court of competent jurisdiction, and as to which the time to appeal, seek certiorari, or move for a new trial, reargument, or rehearing thereof has expired and no appeal, petition for certiorari, or other proceeding for a new trial, reargument, or rehearing thereof has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been or may be timely Filed has been withdrawn or resolved by the highest court to which the order or judgment could be appealed or from which certiorari could be sought or the new trial, re-argument, leave to appeal or rehearing shall have been denied, resulted in no modification of such order or has otherwise been dismissed with prejudice; provided, however, that the possibility that a motion under rule 59 or 60 of the Federal Rules of Civil Procedure, or any comparable rule under the Bankruptcy Rules, the Local Bankruptcy Rules, or applicable non-bankruptcy Law may be Filed with respect to such order or judgment shall not cause such order or judgment to not be a Final Order.
72. “First Day Pleadings” means the first-day pleadings that the Debtors determine are necessary or desirable to File on the Petition Date.
73. “General Unsecured Claim” means any Claim against the Debtors that is not (a) an Other Secured Claim, (b) an Administrative Claim; (c) an Other Priority Claim, (d) a Priority Tax Claim, (e) a DIP Claim, (f) an Intercompany Claim, (g) a Section 510(b) Claim, (h) a Prepetition ABL Claim, (i) a Senior Secured Notes Claim, or (j) otherwise secured by collateral or entitled to priority under the Bankruptcy Code or an order of the Bankruptcy Court.
74. “Governing Body” means, in each case in its capacity as such, a board of directors, board of managers, manager, managing member, general partner, special committee, or any other similar governing body of any Debtor.
75. “Governmental Unit” has the meaning set forth in section 101(27) of the Bankruptcy Code.
76. “Holder” means any Entity that is the record owner of a Claim against, or an Interest in, any Debtor, as applicable.
77. “Impaired” means, with respect to a Claim or Interest, or a Class of Claims against or Interests in the Debtors, a Class of Claims against or Interests in the Debtors that is impaired within the meaning of section 1124 of the Bankruptcy Code.
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78. “Intercompany Claim” means any Claim against a Debtor held by another Debtor.
79. “Intercompany Interest” means any Interest in a Debtor held by another Debtor.
80. “Interests” means the shares (or any class thereof), common stock, preferred stock, limited liability company interests, and any other equity, ownership, or profits interests of any Debtor, and options, warrants, rights, or other securities or agreements to acquire or subscribe for, or which are convertible into the shares (or any class thereof), common stock, preferred stock, limited liability company interests, or other equity, ownership, or profits interests of any Debtor (in each case whether or not arising under or in connection with any employment agreement).
81. “Interim DIP Order” means the order entered by the Bankruptcy Court on an interim basis approving the DIP Motion.
82. “Joinder” means an executed joinder to the RSA, substantially in the form attached thereto as Exhibit F.
83. “Judicial Code” means title 28 of the United States Code, 28 U.S.C. §§ 1–4001, as amended from time to time, and as applicable to the Chapter 11 Cases.
84. “Law” means any federal, state, local, or foreign law (including common law), statute, code, ordinance, rule, regulation, order, ruling, or judgment, in each case, that is validly adopted, promulgated, issued, or entered by a governmental authority of competent jurisdiction (including the Bankruptcy Court).
85. “Lien” has the meaning set forth in section 101(37) of the Bankruptcy Code.
86. “Local Bankruptcy Rules” means the Local Bankruptcy Rules for the Southern District of Texas.
87. “Management Incentive Plan” means the management incentive plan to be designed and adopted by the New Board following the Effective Date.
88. “New Board” means the new board of directors or similar governing body of Reorganized Nine Energy, which shall be selected in accordance with the New Organizational Documents.
89. “New Equity Interests” means equity, common stock, or membership interests, in Reorganized Nine Energy, as applicable, issued on or after the Effective Date pursuant to the Plan.
90. “New Organizational Documents” means the documents providing for corporate governance of the Reorganized Debtors, as applicable, including any charters, bylaws, certificates of incorporation, certificates of formation, limited liability company agreements, operating agreements, or other organizational documents or shareholders’ agreements, as applicable, which shall be consistent with this Plan and section 1123(a)(6) of the Bankruptcy Code (as applicable), and shall be included in the Plan Supplement.
91. “Nine Energy” means Nine Energy Service, Inc.
92. “Nine Energy Equity Interests” means, collectively, all existing equity interests in Nine Energy, including all common stock issued by Nine Energy and historically listed on the New York Stock Exchange under the ticker “NINE”, and any other Interests (including any common unit or preferred stock), rights, options, warrants, preferred securities, or Claims linked to the equity or profit of the Debtors.
93. “Non-Debtor” means all direct and indirect subsidiaries of any Debtor that are not Debtors in these Chapter 11 Cases.
94. “Other Priority Claim” means any Claim against any of the Debtors, other than an Administrative Claim or a Priority Tax Claim, that is entitled to priority in right of payment under section 507(a) of the Bankruptcy Code.
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95. “Other Securities” has the meaning as set forth in Article IV.L of this Plan.
96. “Other Secured Claim” means any other Secured Claim against the Debtors, other than a DIP Claim or a Senior Secured Notes Claim.
97. “Person” has the meaning set forth in section 101(41) of the Bankruptcy Code.
98. “Petition Date” means the first date any of the Debtors commences a Chapter 11 Case.
99. “Plan” means this joint chapter 11 plan, including all exhibits, supplements (including the Plan Supplement), appendices, and schedules (as amended, modified, or supplemented from time to time in accordance with the terms hereof).
100. “Plan Distribution” means a payment or distribution to the Holders of Allowed Claims, Allowed Interests, or other eligible Entities under and in accordance with this Plan.
101. “Plan Supplement” means the compilation of documents and forms of documents, agreements, schedules, and exhibits to the Plan that will be Filed by the Debtors with the Bankruptcy Court.
102. “Prepetition ABL Advisors” means (a) Paul Hastings LLP, as counsel to the Prepetition ABL Agent, (b) Blake, Cassels & Graydon LLP, as Canadian counsel to the Prepetition ABL Agent, and (c) such other professional advisors as are retained by the Prepetition ABL Agent, solely in the case of this clause (c), with the consent of the Debtors (not to be unreasonably withheld).
103. “Prepetition ABL Agent” means White Oak Commercial Finance, LLC, in its capacity as administrative and collateral agent under the Prepetition ABL Credit Agreement.
104. “Prepetition ABL Claim” means any Claim on account of indebtedness under the Prepetition ABL Facility pursuant to the Prepetition ABL Credit Agreement and the other Prepetition ABL Loan Documents, including with respect to any loans and letters of credit issued thereunder.
105. “Prepetition ABL Credit Agreement” means that certain loan and security agreement, dated as of May 1, 2025, by and among: (a) Nine Energy and certain of its subsidiaries, as borrower; (b) Nine Energy Service, LLC, Moti Holdco, LLC, Magnum Oil Tools GP, LLC, and Magnum Oil Tools International, LTD, as guarantors; (c) the Prepetition ABL Lenders; and (d) the Prepetition ABL Agent (as may be further amended, restated, supplemented, or otherwise modified from time to time).
106. “Prepetition ABL Facility” means that certain asset-backed senior secured revolving credit facility in the approximate principal amount of $125 million issued pursuant to the Prepetition ABL Credit Agreement.
107. “Prepetition ABL Lenders” means, collectively, White Oak ABL 3, LLC, White Oak Europe ABL Limited, and any permitted successors and assigns of the foregoing in their capacity as lenders pursuant to the Prepetition ABL Credit Agreement.
108. “Prepetition ABL Loan Documents” means “Loan Documents” as defined in the Prepetition ABL Credit Agreement.
109. “Priority Tax Claim” means any Claim of a Governmental Unit of the kind specified in section 507(a)(8) of the Bankruptcy Code.
110. “Pro Rata” means the proportion that an Allowed Claim in a particular Class bears to the aggregate amount of Allowed Claims in that Class.
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111. “Professional” means an Entity (other than an ordinary course professional): (a) employed, or proposed to be employed prior to the Confirmation Date, in the Chapter 11 Cases pursuant to a Bankruptcy Court order in accordance with sections 327, 328, 363, or 1103 of the Bankruptcy Code and to be compensated for services rendered prior to or on the Confirmation Date, pursuant to sections 327, 328, 329, 330, 331, and 363 of the Bankruptcy Code; or (b) awarded compensation and reimbursement by the Bankruptcy Court pursuant to section 503(b)(4) of the Bankruptcy Code.
112. “Professional Fee Amount” means the aggregate amount of Professional Fee Claims and other unpaid fees and expenses that the Professionals estimate they have incurred or will incur in rendering services to the Debtors prior to and as of the Effective Date, which estimates Professionals shall deliver to the Debtors as set forth in Article II.D of this Plan.
113. “Professional Fee Claim” means any Claim by a Professional seeking an award by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred on or after the Petition Date by such Professionals through and including the Effective Date under sections 330, 331, 503(b)(2), 503(b)(3), 503(b)(4), or 503(b)(5) of the Bankruptcy Code to the extent that such fees and expenses have not been paid pursuant to an order of the Bankruptcy Court and/or in the ordinary course of business and consistent with past practice. To the extent the Bankruptcy Court denies or reduces by a Final Order any amount of a Professional’s requested fees and expenses, then the amount by which such fees or expenses are reduced or denied shall reduce the applicable Professional Fee Claim. For the avoidance of doubt, the Restructuring Expenses shall not be considered Professional Fee Claims, and any such amounts shall be paid in accordance with the DIP Orders and this Plan, as applicable.
114. “Professional Fee Escrow Account” means an interest-bearing account funded by the Debtors or the Reorganized Debtors, as applicable, on the Effective Date in an amount equal to the Professional Fee Amount.
115. “Proof of Claim” means a proof of Claim Filed against any of the Debtors in the Chapter 11 Cases.
116. “Regulation D” means Regulation D under the Securities Act.
117. “Regulation S” means Regulation S under the Securities Act.
118. “Reinstate,” “Reinstated,” or “Reinstatement” means, with respect to Claims and Interests, that the Claim or Interest shall not be discharged hereunder, and the Holder’s legal, equitable, and contractual rights on account of such Claim or Interest shall remain unaltered by Consummation and be rendered Unimpaired in accordance with section 1124 of the Bankruptcy Code.
119. “Rejected Executory Contracts and Unexpired Leases List” means the schedule of Executory Contracts and Unexpired Leases, if any, to be rejected by the Debtors pursuant to this Plan, as the same may be amended, modified, or supplemented from time to time.
120. “Related Party” means, collectively, with respect to any Person or Entity, each of, and in each case in its capacity as such, such Person’s or Entity’s current and former directors (including outside directors), managers, officers, investment committee members, members of any Governing Body, equity holders (regardless of whether such interests are held directly or indirectly), affiliated investment funds or investment vehicles, managed accounts or funds, predecessors, participants, successors, assigns (whether by operation of Law or otherwise), subsidiaries, current and former Affiliates, partners, limited partners, general partners, principals, members, management companies, fund advisors or managers, fiduciaries, trustees, employees, agents, trustees, advisory board members, financial advisors, attorneys (including any other attorneys or professionals retained by any current or former director or manager in his or her capacity as director or manager of an Entity), accountants, investment bankers, consultants, representatives, restructuring advisors, and other professionals and advisors, and any such Person’s or Entity’s respective heirs, executors, estates, and nominees.
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121. “Released Parties” means, collectively, and in each case in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors; (c) the DIP Lenders; (d) the Agents (including the DIP Agent); (e) the Senior Secured Notes Trustee; (f) the members of the Ad Hoc Group; (g) the Consenting Stakeholders; (h) Holders of Prepetition ABL Claims; (i) the Exit ABL Facility Lenders; (j) Holders of Claims or Interests who vote to accept the Plan or are presumed to accept the Plan and do not affirmatively opt out of the releases set forth herein; (k) Holders of Claims or Interests who abstain from voting on the Plan and who do not affirmatively opt out of the releases set forth herein; (l) Holders of Claims or Interests who vote to reject the Plan but do not affirmatively opt out of the releases set forth herein; (m) each current and former Affiliate of each Entity in clause (a) through the following clause (n); and (n) each Related Party of each Entity in clause (a) through clause (n); provided that, in each case, an Entity shall not be a Released Party if it: (i) affirmatively opts out of the releases in the Plan; or (ii) timely objects to the releases in the Plan and such objection is not resolved before the Combined Hearing. Notwithstanding anything to the contrary in the Plan or the Definitive Documents, the Holders of Nine Energy Equity Interests in Class 8 and the Holders of Section 510(b) Claims in Class 9 shall not constitute Released Parties in their capacity as such, irrespective of whether they opted out of the Third-Party Release.
122. “Releasing Parties” means, collectively, and in each case in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors; (c) the DIP Lenders; (d) the Agents (including the DIP Agent); (e) the Senior Secured Notes Trustee; (f) the members of the Ad Hoc Group; (g) the Consenting Stakeholders; (h) Holders of Prepetition ABL Claims; (i) the Exit ABL Facility Lenders; (j) Holders of Claims or Interests who vote to accept the Plan or are presumed to accept the Plan and do not affirmatively opt out of the releases set forth herein; (k) Holders of Claims or Interests who abstain from voting on the Plan and who do not affirmatively opt out of the releases set forth herein; (l) Holders of Claims or Interests who vote to reject the Plan but do not affirmatively opt out of the releases set forth herein; (m) each current and former Affiliate of each Entity in clause (a) through the following clause (n); and (n) each Related Party of each Entity in clause (a) through clause (n) for which such Entity is legally entitled to bind such Related Party to the releases contained in the Plan; provided that, in each case, an Entity shall not be a Releasing Party if it: (i) affirmatively opts out of the releases in the Plan; or (ii) timely objects to the releases in the Plan and such objection is not resolved before the Combined Hearing. Notwithstanding anything to the contrary in the Plan or the Definitive Documents, the Holders of Nine Energy Equity Interests in Class 8 and the Holders of Section 510(b) Claims in Class 9 shall not constitute Releasing Parties and shall not be bound by the Third-Party Release in their capacity as such, irrespective of whether they opted out of the Third-Party Release.
123. “Reorganized Debtors” means, collectively, on and after the Effective Date, each of the Debtors as reorganized under this Plan, including the Reorganized Nine Energy, or any successor or assign thereto, by transfer, merger, consolidation, or otherwise, including any new Entity established in connection with the implementation of the Restructuring Transactions.
124. “Reorganized Nine Energy” means Nine Energy, as reorganized pursuant to this Plan, on and after the Effective Date, or any successors or assigns thereto including by transfer, merger, consolidation, reorganization, or otherwise in connection with the implementation of the Restructuring Transactions, or a new corporation, limited liability company, or partnership that may be formed to, among other things, directly or indirectly acquire substantially all of the assets and/or stock of the Debtors and issue the New Equity Interests to be distributed pursuant to this Plan.
125. “Required Consenting Noteholders” means, as of the relevant date, the Consenting Noteholders holding at least 50.01% of the aggregate outstanding principal amount of Senior Secured Notes that are held by the Consenting Noteholders.
126. “Required Consenting Stakeholders” means, collectively, the Consenting Prepetition ABL Lenders and the Required Consenting Noteholders.
127. “Restructuring Expenses” means all reasonable, documented, due and owing prepetition and postpetition fees, costs, and out-of-pocket expenses of (i) the Ad Hoc Group Advisors, (ii) the Prepetition ABL Advisors, (iii) the DIP Advisors, (iv) the Exit ABL Facility Advisors, in each of the foregoing clauses (i) through (iv), incurred on or prior to the Effective Date and, in each case, to the extent applicable, in accordance with and to the extent permitted by their respective engagement letters or fee reimbursement letters with the Debtors and/or any applicable order of the Bankruptcy Court (including the reasonable and documented fees, costs and expense accrued since the inception of their respective engagement letters and not previously paid by, or on behalf of, the Debtors).
128. “Restructuring Steps Plan” means the description, as set forth in the Plan Supplement, of the steps to be carried out to effectuate the Restructuring Transactions in accordance with this Plan, the RSA, and any Definitive Document.
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129. “Restructuring Transactions” means the transactions described in Article IV.B of this Plan and the Restructuring Steps Plan.
130. “RSA” means that certain restructuring support agreement, dated as of February 1, 2026, by and among the Debtors and the Consenting Stakeholders, including all exhibits thereto, as may be amended, modified, or supplemented from time to time, in accordance with its terms.
131. “Schedule of Retained Causes of Action” means the schedule of certain Causes of Action of the Debtors that are not released, waived, or transferred pursuant to the Plan and which shall be Filed with the Plan Supplement, as the same may be amended, modified, or supplemented from time to time.
132. “SEC” means the United States Securities and Exchange Commission.
133. “Section 510(b) Claim” means any Claim or Interest against a Debtor subject to subordination under section 510(b) of the Bankruptcy Code.
134. “Secured Claim” means a Claim that is: (a) secured by a valid, perfected, and enforceable Lien on collateral to the extent of the value of such collateral, as determined in accordance with section 506(a) of the Bankruptcy Code or (b) subject to a valid right of setoff pursuant to section 553 of the Bankruptcy Code to the extent of the amount subject to setoff.
135. “Securities Act” means the Securities Act of 1933, as amended.
136. “Security” or “Securities” has the meaning set forth in section 2(a)(1) of the Securities Act.
137. “Senior Secured Noteholder” means any holder (or beneficial holder) of, or nominee, investment advisor, sub-advisor, or manager of discretionary accounts that hold Senior Secured Notes Claims.
138. “Senior Secured Notes” means the 13.00% Senior Secured Notes, due 2028, issued by Nine Energy pursuant to the Senior Secured Notes Indenture.
139. “Senior Secured Notes Claim” means all Claims arising under, derived from, based upon, or related to the Senior Secured Notes Documents (including all “Obligations” as defined in the Senior Secured Notes Indenture).
140. “Senior Secured Notes Documents” means, collectively, the Senior Secured Notes Indenture and all other agreements, documents, and instruments delivered or entered into in connection therewith, including, any guarantee agreements, pledge and collateral agreements, intercreditor agreements, fee letters, and other security documents (each as supplemented or amended from time to time).
141. “Senior Secured Notes Indenture” means that certain indenture, dated as of January 30, 2023 (as amended, restated, supplemented, or otherwise modified from time to time), among Nine Energy, as issuer, certain of its subsidiaries, as guarantors, and the Senior Secured Notes Trustee.
142. “Senior Secured Notes Trustee” means U.S. Bank Trust Company, National Association, in its capacity as trustee, notes collateral agent, paying agent, and registrar under the Senior Secured Notes Indenture.
143. “Senior Secured Notes Trustee Charging Lien” means any Lien or other priority in payment for Senior Secured Notes Trustee Fees and Expenses to which the Senior Secured Notes Trustee is entitled pursuant to the Senior Secured Notes Documents.
144. “Senior Secured Notes Trustee Fees and Expenses” means all reasonable and documented compensation, fees, expenses, disbursements and indemnity claims, including, attorneys’ and agents’ fees, expenses and disbursements, incurred by the Senior Secured Notes Trustee under the Senior Secured Notes Indenture, whether before or after the Petition Date or before or after the Effective Date.
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145. “Solicitation Materials” means all materials used in connection with the solicitation of votes on this Plan pursuant to sections 1125 and 1126 of the Bankruptcy Code (as such materials may be modified, supplemented, or amended), including the Disclosure Statement and any procedures established by the Bankruptcy Court with respect to the solicitation of votes on the Plan.
146. “Third-Party Release” means the release set forth in Article VIII.D of this Plan.
147. “Transfer” means to sell, resell, reallocate, use, pledge, assign, transfer, hypothecate, participate, donate or otherwise encumber or dispose of, directly or indirectly (including through derivatives, options, swaps, pledges, forward sales or other transactions); provided that any pledge in favor of a bank or broker dealer at which a Consenting Noteholder maintains an account, where such bank or broker dealer holds a security interest or other encumbrance over property in the account, generally shall not be deemed a “Transfer” under this Plan.
148. “Transfer Agreement” means an executed form of the transfer agreement providing, among other things, that a transferee is bound by the terms of the RSA and substantially in the form attached to the RSA as Exhibit E.
149. “Unexpired Lease” means a lease of non-residential, real property to which one or more of the Debtors are a party that is subject to assumption or rejection under section 365 of the Bankruptcy Code.
150. “Unimpaired” means, with respect to a Claim against or an Interest in a Debtor, not impaired within the meaning of section 1124 of the Bankruptcy Code.
| B. | Rules of Interpretation. |
For purposes of this Plan: (1) in the appropriate context, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine, or neuter gender shall include the masculine, feminine, and the neuter gender; (2) unless otherwise specified, any reference herein to a contract, lease, instrument, release, indenture, or other agreement or document being in a particular form or on particular terms and conditions means that the referenced document shall be substantially in that form or substantially on those terms and conditions; (3) unless otherwise specified, any reference herein to an existing document, schedule, or exhibit, whether or not Filed, having been Filed or to be Filed shall mean that document, schedule, or exhibit, as it may thereafter be amended, modified, or supplemented in accordance with this Plan or the Confirmation Order, as applicable; (4) any reference to an Entity as a Holder of a Claim or Interest includes that Entity’s successors and assigns; (5) unless otherwise specified, all references herein to “Articles” are references to Articles hereof; (6) unless otherwise specified, all references herein to exhibits are references to exhibits in the Plan Supplement; (7) unless otherwise specified, the words “herein,” “hereof,” and “hereto” refer to this Plan (including the exhibits and Plan Supplement) in its entirety rather than to a particular portion of this Plan; (8) subject to the provisions of any contract, charter, bylaws, limited liability company agreements, operating agreements, certificates of incorporation, or other organizational documents or shareholders’ agreements, as applicable, instrument, release, or other agreement or document created or entered into in connection with this Plan, the rights and obligations arising pursuant to this Plan shall be governed by, and construed and enforced in accordance with the applicable Law, including the Bankruptcy Code and the Bankruptcy Rules; (9) any immaterial effectuating provisions may be interpreted by the Debtors or Reorganized Debtors in such a manner that is consistent with the overall purpose and intent of this Plan all without further notice to or action, order, or approval, of the Bankruptcy Court or any other Entity; (10) unless otherwise specified, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, and shall be deemed to be followed by the words “without limitation”; (11) captions and headings to Articles are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of this Plan; (12) unless otherwise specified herein, the rules of construction set forth in section 102 of the Bankruptcy Code shall apply; (13) any term used in capitalized form herein that is not otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be; (14) all references to docket numbers of documents Filed in the Chapter 11 Cases are references to the docket numbers under the Bankruptcy Court’s CM/ECF system; (15) all references to statutes, regulations, orders, rules of courts, and the like shall mean as amended from time to time, and as applicable to the Chapter 11 Cases, unless otherwise stated; (16) references to “Proofs of Claim,” “Holders of Claims,” “Disputed Claims,” and the like shall include “Proofs of Interest,” “Holders of Interests,” “Disputed Interests,” and the like, as applicable; (17) references to “shareholders,” “directors,” and/or “officers” shall also include “members” and/or “managers,” as applicable, as such terms are defined under the applicable state limited liability company Laws; and (18) all references herein to consent, acceptance, or approval may be conveyed by counsel for the respective Person or Entity that have such consent, acceptance, or approval rights, including by electronic mail.
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| C. | Computation of Time. |
Unless otherwise specifically stated herein, the provisions of Bankruptcy Rule 9006(a) shall apply in computing any period of time prescribed or allowed herein. If the date on which a transaction may occur pursuant to this Plan shall occur on a day that is not a Business Day, then such transaction shall instead occur on the next succeeding Business Day. Any action to be taken on the Effective Date may be taken on or as soon as reasonably practicable after the Effective Date.
| D. | Governing Law. |
Except to the extent a rule of Law or procedure is supplied by federal Law (including the Bankruptcy Code and the Bankruptcy Rules), or unless otherwise specifically stated, and subject to the provisions of any contract, lease, instrument, release, indenture, or other agreement or document entered into expressly in connection herewith, the rights and obligations arising hereunder shall be governed by, and construed, implemented, and enforced in accordance with, the Laws of the State of New York, without giving effect to the principles of conflict of Laws (other than section 5-1401 and section 5-1402 of the New York General Obligations Law); provided that corporate governance matters relating to the Debtors or the Reorganized Debtors, as applicable, not incorporated in New York shall be governed by the Laws of the state of incorporation or formation of the relevant Debtor or the Reorganized Debtor, as applicable.
| E. | Reference to Monetary Figures. |
All references in this Plan to monetary figures shall refer to currency of the United States of America, unless otherwise expressly provided herein.
| F. | Reference to the Debtors or the Reorganized Debtors. |
Except as otherwise specifically provided in this Plan to the contrary, references in this Plan to the Debtors or the Reorganized Debtors shall mean the Debtors and the Reorganized Debtors, as applicable, to the extent the context requires.
| G. | Nonconsolidated Plan. |
Although for purposes of administrative convenience and efficiency this Plan has been proposed as a joint plan for each of the Debtors and presents Classes of Claims against and Interests in the Debtors, this Plan does not provide for the substantive consolidation of any of the Debtors.
| H. | Controlling Document. |
In the event of an inconsistency between this Plan and the Disclosure Statement, the terms of this Plan shall control in all respects. In the event of an inconsistency between this Plan and the Plan Supplement, the terms of the relevant provision in the Plan Supplement shall control (unless stated otherwise in such Plan Supplement document or in the Confirmation Order). In the event of an inconsistency between the Confirmation Order and this Plan or the Disclosure Statement, the Confirmation Order shall control.
| I. | Consultation, Notice, Information, and Consent Rights. |
Notwithstanding anything herein to the contrary, any and all respective consultation, information, notice, and consent rights set forth in the RSA (including the exhibits thereto), with respect to the form and substance of this Plan, all exhibits to this Plan, the Plan Supplement, and all other Definitive Documents, including any amendments, restatements, supplements, or other modifications to such agreements and documents, and any consents, waivers, or other deviations under or from any such documents, shall be incorporated herein by this reference (including the applicable definitions in Article I hereof) and fully enforceable as if stated in full herein until such time as the RSA is terminated in accordance with its terms.
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Article II.
ADMINISTRATIVE CLAIMS, priority tax claims, DIP Claims, professional fee claims, AND restructuring expenses
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, Priority Tax Claims, DIP Claims, and Professional Fee Claims have not been classified and, thus, are excluded from the Classes of Claims and Interests set forth in Article III hereof.
| A. | Administrative Claims. |
Except with respect to the Professional Fee Claims, Restructuring Expenses, and except to the extent that a Holder of an Allowed Administrative Claim and the Debtors against which such Allowed Administrative Claim is asserted agree to less favorable treatment for such Holder, or such Holder has been paid by any Debtors on account of such Allowed Administrative Claim prior to the Effective Date, each Holder of an Allowed Administrative Claim will receive in full and final satisfaction of its Allowed Administrative Claim an amount of Cash equal to the amount of such Allowed Administrative Claim in accordance with the following: (1) if an Administrative Claim is Allowed on or prior to the Effective Date, on the Effective Date or as soon as reasonably practicable thereafter (or, if not then due, when such Allowed Administrative Claim is due or as soon as reasonably practicable thereafter); (2) if such Administrative Claim is not Allowed as of the Effective Date, no later than thirty (30) days after the date on which an order allowing such Administrative Claim becomes a Final Order, or as soon as reasonably practicable thereafter; (3) if such Allowed Administrative Claim is based on liabilities incurred by the Debtors in the ordinary course of their business after the Petition Date in accordance with the terms and conditions of the particular transaction giving rise to such Allowed Administrative Claim without any further action by the Holder of such Allowed Administrative Claim; (4) at such time and upon such terms as may be agreed upon by such Holder and the Debtors or the Reorganized Debtors, as applicable, and subject to the consent of the Required Consenting Stakeholders, not to be unreasonably withheld, conditioned or delayed; or (5) at such time and upon such terms as set forth in an order of the Bankruptcy Court.
| B. | Priority Tax Claims. |
Except to the extent that a Holder of an Allowed Priority Tax Claim agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, such Allowed Priority Tax Claim, each Holder of an Allowed Priority Tax Claim shall receive, as determined by the applicable Debtor or Reorganized Debtor, Cash equal to the full amount of its Claim or such other treatment in accordance with the terms set forth in section 1129(a)(9)(C) of the Bankruptcy Code, and reasonably acceptable to the Required Consenting Stakeholders.
| C. | DIP Claims. |
All DIP Claims shall be deemed Allowed as of the Effective Date in an amount equal to (a) the principal amount outstanding under the DIP Facility on such date, (b) all interest accrued and unpaid thereon to the date of payment, and (c) all accrued and unpaid fees, premiums, expenses, and non-contingent indemnification obligations payable under the DIP Documents and the DIP Orders.
On the Effective Date, except to the extent that a Holder of an Allowed DIP Claim agrees to less favorable treatment, each Holder of an Allowed DIP Claim shall receive, in full and final satisfaction of such Allowed DIP Claim, its pro rata share of the Exit ABL Facility Loans.
Upon the satisfaction of the Allowed DIP Claims in accordance with the terms of this Plan, or other such treatment as contemplated by this Article II.C of this Plan, all guarantees provided and all Liens and security interests granted, in each case, to secure such obligations shall be automatically released, terminated, and of no further force and effect without any further notice to or action, order, or approval of the Bankruptcy Court or any other Entity. The DIP Agent and the DIP Lenders shall take all actions to effectuate and confirm such termination, release, and discharge as reasonably requested by the Debtors or the Reorganized Debtors, as applicable.
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| D. | Professional Fee Claims. |
1. Final Fee Applications and Payment of Professional Fee Claims.
All requests for payment of Professional Fee Claims for services rendered and reimbursement of expenses incurred prior to the Confirmation Date must be Filed no later than forty-five (45) days after the Effective Date. The Bankruptcy Court shall determine the Allowed amounts of such Professional Fee Claims after notice and a hearing in accordance with the procedures established by the Bankruptcy Court. The Reorganized Debtors shall pay Professional Fee Claims in Cash in the amount the Bankruptcy Court Allows, including from the Professional Fee Escrow Account, as soon as reasonably practicable after such Professional Fee Claims are Allowed, and which Allowed amount shall not be subject to disallowance, setoff, recoupment, subordination, recharacterization, or reduction of any kind, including pursuant to section 502(d) of the Bankruptcy Code. To the extent that funds held in the Professional Fee Escrow Account are insufficient to satisfy the amount of Professional Fee Claims owing to the Professionals, such Professionals shall have an Allowed Administrative Claim for any such deficiency, which shall be satisfied in accordance with Article II.A of this Plan.
2. Professional Fee Escrow Account.
On the Effective Date, the Reorganized Debtors shall establish and fund the Professional Fee Escrow Account with Cash equal to the Professional Fee Amount. The Professional Fee Escrow Account shall be maintained in trust solely for the Professionals until all Professional Fee Claims Allowed by the Bankruptcy Court have been irrevocably paid in full pursuant to one or more Final Orders. Such funds shall not be considered property of the Estates of the Debtors or the Reorganized Debtors. The amount of Allowed Professional Fee Claims owing to the Professionals shall be paid in Cash to such Professionals by the Reorganized Debtors from the Professional Fee Escrow Account as soon as reasonably practicable after such Professional Fee Claims are Allowed; provided that the Debtors’ and the Reorganized Debtors’ obligations to pay Allowed Professional Fee Claims shall not be limited nor be deemed limited to funds held in the Professional Fee Escrow Account. When all such Allowed Professional Fee Claims have been paid in full, any remaining amount in the Professional Fee Escrow Account shall promptly be paid to the Reorganized Debtors without any further notice to or action, order, or approval of the Bankruptcy Court.
3. Professional Fee Amount.
Professionals shall reasonably estimate in good faith their unpaid Professional Fee Claims and other unpaid fees and expenses incurred in rendering services to the Debtors before and as of the Confirmation Date, and shall deliver such estimate to the Debtors no later than three (3) Business Days before the anticipated Effective Date; provided that such estimates shall not be deemed to limit the amount of the fees and expenses that are the subject of each Professional’s final request for payment of Filed Professional Fee Claims in the Chapter 11 Cases. If a Professional does not provide an estimate, the Debtors or the Reorganized Debtors may estimate the unpaid and unbilled fees and expenses of such Professional.
4. Post-Confirmation Fees and Expenses.
Except as otherwise specifically provided in this Plan, from and after the Confirmation Date, the Debtors or the Reorganized Debtors as applicable, shall, in the ordinary course of business and without any further notice to or action, order, or approval of the Bankruptcy Court, pay in Cash the reasonable and documented legal, professional, or other fees and expenses related to implementation of this Plan and Consummation incurred by the Debtors. Upon the Confirmation Date, any requirement that Professionals comply with sections 327 through 331, 363, and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall terminate, and the Debtors or the Reorganized Debtors, as applicable, may employ and pay any Professional without any further notice to or action, order, or approval of the Bankruptcy Court.
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| E. | Payment of Restructuring Expenses and Senior Secured Notes Trustee Fees and Expenses. |
To the extent not otherwise paid, the Debtors or the Reorganized Debtors, as applicable, shall promptly pay in Cash in full outstanding and invoiced Restructuring Expenses as follows: (i) on the Effective Date, Restructuring Expenses incurred, or estimated to be incurred, during the period prior to the Effective Date to the extent invoiced to the Debtors at least five (5) Business Days in advance of the Effective Date, and (ii) after the Effective Date, any unpaid Restructuring Expenses within five (5) Business Days of receiving an invoice; provided that such Restructuring Expenses shall be paid in accordance with the terms of any applicable engagement letters or other contractual arrangements without the requirement for the filing of retention applications, fee applications, or any other applications in the Chapter 11 Cases, and without any requirement for further notice or Bankruptcy Court review or approval; provided further that, to the extent timely invoiced, Restructuring Expenses that are not paid by the Debtors or the Reorganized Debtors, as applicable, within the timeframes set forth in Article II.D hereof, such Restructuring Expenses shall not be deemed waived and shall be included in a subsequent invoice.
In addition, the Debtors or the Reorganized Debtors, as applicable, shall promptly pay in Cash and in full all outstanding and invoiced Senior Secured Notes Trustee Fees and Expenses pursuant to the procedures set forth in the preceding paragraph.
Article III.
CLASSIFICATION AND TREATMENt oF CLAIMS AND INTERESTS
| A. | Classification of Claims and Interests. |
Except for the Claims addressed in Article II hereof, all Claims and Interests are classified in the Classes set forth below in accordance with sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or an Interest, or any portion thereof, is classified in a particular Class only to the extent that any portion of such Claim or Interest qualifies within the description of that Class and is classified in other Classes to the extent that any portion of such Claim or Interest qualifies within the description of such other Classes. A Claim or an Interest also is classified in a particular Class for the purpose of receiving distributions under this Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and has not been paid, released, or otherwise satisfied prior to the Effective Date.
The classification of Claims against and Interests in the Debtors pursuant to this Plan is as follows:
| Class | Claims and Interests | Status | Voting Rights |
| Class 1 | Other Secured Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) |
| Class 2 | Other Priority Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) |
| Class 3 | Prepetition ABL Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) |
| Class 4 | Senior Secured Notes Claims | Impaired | Entitled to Vote |
| Class 5 | General Unsecured Claims | Unimpaired | Not Entitled to Vote (Presumed to Accept) |
| Class 6 | Intercompany Claims | Unimpaired / Impaired | Not Entitled to Vote (Presumed to Accept / Deemed to Reject) |
| Class 7 | Intercompany Interests | Unimpaired / Impaired | Not Entitled to Vote (Presumed to Accept / Deemed to Reject) |
| Class 8 | Nine Energy Equity Interests | Impaired | Not Entitled to Vote (Deemed to Reject) |
| Class 9 | Section 510(b) Claims | Impaired | Not Entitled to Vote (Deemed to Reject) |
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| B. | Treatment of Claims and Interests. |
Pursuant to this Plan, each Holder of an Allowed Claim or Allowed Interest, as applicable, shall receive the treatment described below in full and final satisfaction, settlement, release, and discharge of and in exchange for such Holder’s Allowed Claim or Allowed Interest, except to the extent different treatment is agreed to by the Debtors or the Reorganized Debtors, as applicable, and the Holder of such Allowed Claim or Allowed Interest, as applicable. Unless otherwise indicated, the Holder of an Allowed Claim or Allowed Interest, as applicable, shall receive such treatment on the Effective Date (or, if payment is not then due, in accordance with such Claim’s terms in the ordinary course of business) or as soon as reasonably practicable thereafter.
1. Class 1 – Other Secured Claims.
| (a) | Classification: Class 1 consists of all Allowed Other Secured Claims against any Debtor. |
| (b) | Treatment: Except to the extent that a Holder of an Allowed Other Secured Claim agrees to less favorable treatment of its Allowed Claim, each Holder of an Allowed Other Secured Claim shall receive, as determined by the applicable Debtor or Reorganized Debtor with the consent (not to be unreasonably withheld, conditioned, or delayed) of the Required Consenting Stakeholders, either: |
| (i) | payment in full in Cash in an amount equal to its Allowed Other Secured Claim; |
| (ii) | the collateral securing its Allowed Other Secured Claim; |
| (iii) | Reinstatement of its Allowed Other Secured Claim; or |
| (iv) | such other treatment rendering its Allowed Other Secured Claim Unimpaired. |
| (c) | Voting: Class 1 is Unimpaired under this Plan. Holders of Allowed Other Secured Claims are conclusively presumed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, such Holders are not entitled to vote to accept or reject this Plan. |
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2. Class 2 – Other Priority Claims.
| (a) | Classification: Class 2 consists of all Allowed Other Priority Claims against any Debtor. |
| (b) | Treatment: Except to the extent that a Holder of an Allowed Other Priority Claim agrees to less favorable treatment of its Allowed Claim, each Holder of an Allowed Other Priority Claim shall receive, as determined by the applicable Debtor or Reorganized Debtor, treatment in a manner consistent with section 1129(a)(9) of the Bankruptcy Code and reasonably acceptable to the Required Consenting Stakeholders. |
| (c) | Voting: Class 2 is Unimpaired under this Plan. Holders of Allowed Other Priority Claims are conclusively presumed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, such Holders are not entitled to vote to accept or reject this Plan. |
3. Class 3 – Prepetition ABL Claims.
| (a) | Classification: Class 3 consists of all Allowed Prepetition ABL Claims against any Debtor. |
| (b) | Treatment: Except to the extent that a Holder of an Allowed Prepetition ABL Claim agrees to less favorable treatment of its Allowed Claim, each Holder of an Allowed Prepetition ABL Claim shall receive payment in full in Cash to the extent not converted into DIP Claims in accordance with the DIP Orders. |
| (c) | Voting: Class 3 is Unimpaired under this Plan. Holders of Prepetition ABL Claims are conclusively presumed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, such Holders are not entitled to vote to accept or reject this Plan. |
4. Class 4 – Senior Secured Notes Claims.
| (a) | Classification: Class 4 consists of all Allowed Senior Secured Notes Claims against any Debtor. |
| (b) | Treatment: Except to the extent that a Holder of an Allowed Senior Secured Notes Claim agrees to less favorable treatment of its Allowed Claim, on the Effective Date, each Holder of an Allowed Senior Secured Notes Claim shall receive its pro rata share of 100% of the New Equity Interests, which shall be distributed ratably on account of the Allowed Senior Secured Notes Claims and subject to dilution on account of the Management Incentive Plan. |
| (c) | Voting: Class 4 is Impaired under this Plan. Holders of Allowed Senior Secured Notes Claims are entitled to vote to accept or reject this Plan. |
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5. Class 5 – General Unsecured Claims.
| (a) | Classification: Class 5 consists of all Allowed General Unsecured Claims against any Debtor. |
| (b) | Treatment: Each Holder of an Allowed General Unsecured Claim shall, as determined by the applicable Debtor or Reorganized Debtor with the consent (not to be unreasonably withheld, conditioned, or delayed) of the Required Consenting Stakeholders, either: |
| (i) | be Reinstated; or |
| (ii) | receive such other treatment rendering such General Unsecured Claims Unimpaired in accordance with section 1124 of the Bankruptcy Code. |
| (c) | Voting: Class 5 is Unimpaired under this Plan. Holders of Allowed General Unsecured Claims in Class 5 are conclusively presumed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, such Holders are not entitled to vote to accept or reject this Plan. |
6. Class 6 – Intercompany Claims.
| (a) | Classification: Class 6 consists of all Intercompany Claims. |
| (b) | Treatment: Each Allowed Intercompany Claim shall be, as determined by the applicable Debtor or Reorganized Debtor with the consent (not to be unreasonably withheld, conditioned, or delayed) of the Required Consenting Stakeholders, either: |
| (i) | Reinstated; |
| (ii) | set off, settled, discharged, contributed, cancelled, or converted to equity; |
| (iii) | released without any distribution on account of such Allowed Intercompany Claims; or |
| (iv) | otherwise addressed at the Debtor’s election. |
| (c) | Voting: Class 6 is Unimpaired if the Allowed Intercompany Claims are Reinstated or Impaired if the Allowed Intercompany Claims in Class 6 are cancelled. Holders of Allowed Intercompany Claims in Class 6 are conclusively presumed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code or rejected this Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, such Holders are not entitled to vote to accept or reject this Plan. |
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7. Class 7 – Intercompany Interests.
| (a) | Classification: Class 7 consists of all Intercompany Interests. |
| (b) | Treatment: On the Effective Date, each Allowed Intercompany Interest shall be, as determined by the applicable Debtor or Reorganized Debtor, with the consent (not to be unreasonably withheld, conditioned, or delayed) of the Required Consenting Stakeholders, either: |
| (i) | Reinstated; |
| (ii) | set off, settled, discharged, contributed, cancelled; |
| (iii) | released without any distribution on account of such Allowed Intercompany Interest; or |
| (iv) | otherwise addressed at the Debtors’ election. |
| (c) | Voting: Class 7 is Unimpaired if the Allowed Intercompany Interests are Reinstated or Impaired if the Allowed Intercompany Interests are cancelled. Holders of Allowed Intercompany Interests in Class 7 are conclusively presumed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code or rejected this Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, such Holders are not entitled to vote to accept or reject this Plan. |
8. Class 8 – Nine Energy Equity Interests.
| (a) | Classification: Class 8 consists of all Nine Energy Equity Interests. |
| (b) | Treatment: All Nine Energy Equity Interests shall be cancelled, released, discharged, extinguished, and of no further force or effect, and such Holders of Nine Energy Equity Interests shall not receive any distribution, property, or other value under this Plan on account of such Nine Energy Equity Interests. |
| (c) | Voting: Class 8 is Impaired under this Plan. Holders of Allowed Nine Energy Equity Interests are conclusively deemed to have rejected this Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, such Holders are not entitled to vote to accept or reject this Plan. |
9. Class 9 – Section 510(b) Claims.
| (a) | Classification: Class 9 consists of all Section 510(b) Claims. |
| (b) | Allowance: Notwithstanding anything to the contrary herein, a Section 510(b) Claim, if any Claim exists, may only become Allowed by Final Order of the Bankruptcy Court. |
| (c) | Treatment: All Section 510(b) Claims will be cancelled, released, discharged, and extinguished, and will be of no further force or effect, and such Holders will not receive any distribution on account of such Section 510(b) Claims. |
| (d) | Voting: Class 9 is Impaired under this Plan. Holders of Allowed Section 510(b) Claims are conclusively deemed to have rejected this Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, such Holders are not entitled to vote to accept or reject this Plan. |
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| C. | Special Provision Governing Unimpaired Claims. |
Except as otherwise provided in this Plan, nothing under this Plan or the Plan Supplement shall affect the rights of the Debtors or the Reorganized Debtors, as applicable, regarding any Unimpaired Claims, including, all rights regarding legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claims.
| D. | Elimination of Vacant Classes. |
Any Class of Claims or Interests that does not have a Holder of an Allowed Claim or Allowed Interest or a Claim or Interest temporarily Allowed by the Bankruptcy Court as of the date of the Combined Hearing shall be deemed eliminated from this Plan for purposes of voting to accept or reject this Plan and for purposes of determining acceptance or rejection of this Plan by such Class pursuant to section 1129(a)(8) of the Bankruptcy Code.
| E. | Voting Classes, Presumed Acceptance by Non-Voting Classes. |
If a Class contains Claims or Interests eligible to vote and no Holders of Claims or Interests eligible to vote in such Class vote to accept or reject this Plan, the Holders of such Claims or Interests in such Class shall be presumed to have accepted this Plan.
| F. | Intercompany Interests. |
To the extent Reinstated under this Plan, distributions on account of Intercompany Interests are not being received by Holders of such Intercompany Interests on account of their Intercompany Interests but for the purposes of administrative convenience and due to the importance of maintaining the prepetition corporate structure, for the ultimate benefit of the Holders of the New Equity Interests in exchange for the Debtors’ and Reorganized Debtors’ agreement under this Plan to make certain distributions to the Holders of Allowed Claims. For the avoidance of doubt, unless otherwise set forth in the Restructuring Steps Plan, to the extent Reinstated pursuant to this Plan, on and after the Effective Date, all Intercompany Interests shall be owned by the same Reorganized Debtor that corresponds with the Debtor that owned such Intercompany Interests immediately prior to the Effective Date.
| G. | Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code. |
Section 1129(a)(10) of the Bankruptcy Code shall be satisfied for purposes of Confirmation by acceptance of this Plan by one or more of the Classes entitled to vote pursuant to Article III.B of this Plan. The Debtors shall seek Confirmation of this Plan pursuant to section 1129(b) of the Bankruptcy Code with respect to any rejecting Class of Claims or Interests. The Debtors reserve the right to modify this Plan in accordance with Article X hereof to the extent, if any, that Confirmation pursuant to section 1129(b) of the Bankruptcy Code requires modification, including by modifying the treatment applicable to a Class of Claims or Interests to render such Class of Claims or Interests Unimpaired to the extent permitted by the Bankruptcy Code and the Bankruptcy Rules.
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| H. | Controversy Concerning Impairment. |
If a controversy arises as to whether any Claims or Interests, or any Class of Claims or Interests, are Impaired, the Bankruptcy Court shall, after notice and a hearing, determine such controversy on or before the Confirmation Date or such other date as fixed by the Bankruptcy Court.
| I. | Subordinated Claims and Interests. |
The allowance, classification, and treatment of all Allowed Claims and Interests and the respective distributions and treatments under this Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy Code, and subject to any applicable consent or approval rights under the RSA, the Debtors, or the Reorganized Debtors, as applicable, reserve the right to re-classify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable subordination rights relating thereto.
Article IV.
MEANS FOR IMPLEMENTATION OF THe PLAN
| A. | General Settlement of Claims and Interests. |
As discussed in detail in the Disclosure Statement and as otherwise provided herein, pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, distributions, releases, and other benefits provided under this Plan, upon the Effective Date, the provisions of this Plan shall constitute a good faith compromise and settlement of all Claims, Interests, and controversies released, settled, compromised, discharged, satisfied, or otherwise resolved pursuant to this Plan. This Plan shall be deemed a motion to approve the good faith compromise and settlement of all such Claims, Interests, and controversies by and among the Debtors, the Consenting Noteholders, the DIP Lenders, and each of the Agents/Trustees pursuant to Bankruptcy Rule 9019, and the entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of such compromise and settlement under section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, as well as a finding by the Bankruptcy Court that such settlement and compromise is fair, equitable, reasonable and in the best interests of the Debtors, their Estates, and Holders of Claims against and Interests in the Debtors. Subject to Article VI hereof, all distributions made to Holders of Allowed Claims in any Class are intended to be, and shall be, final.
| B. | Restructuring Transactions. |
On or before the Effective Date, or as soon as reasonably practicable thereafter, the Debtors or the Reorganized Debtors, as applicable, shall consummate the Restructuring Transactions, including by issuing all securities, notes, instruments, and other documents required to effectuate the Restructuring Transactions. The Debtors or the Reorganized Debtors, as applicable, are authorized in all respects to take all actions as may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate this Plan that are consistent with and pursuant to the terms and conditions of this Plan and the Restructuring Steps Plan, including: (1) the execution and delivery of any appropriate agreements or other documents of merger, amalgamation, consolidation, restructuring, conversion, disposition, transfer, arrangement, continuance, formation, organization, dissolution, sale, purchase, or liquidation containing terms that are consistent with the terms of this Plan, the Plan Supplement, and the RSA; (2) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any asset, property, right, liability, debt, or obligation on terms consistent with the terms of this Plan, the Plan Supplement, and the RSA and having other terms to which the applicable Entities may agree; (3) the execution, delivery, and filing, if applicable, of appropriate certificates or articles of incorporation, formation, reincorporation, merger, consolidation, conversion, amalgamation, arrangement, continuance, or dissolution pursuant to applicable state Law, including any applicable New Organizational Documents; (4) the issuance and distribution of the New Equity Interests; (5) the consummation of the Exit ABL Facility, including the execution, delivery, and filing of all Exit ABL Facility Documents; (6) such other transactions that are required to effectuate the Restructuring Transactions, including any transactions set forth in the Restructuring Steps Plan; (7) the reservation of New Equity Interests on account of the Management Incentive Plan; (8) if applicable, all transactions necessary to provide for the purchase of substantially all of the assets or Interests of any of the Debtors by one or more Entities to be wholly owned by the Reorganized Debtors, which purchase, if applicable, may be structured as a taxable transaction for United States federal income tax purposes; and (9) all other actions that the applicable Entities determine to be necessary or appropriate, including making filings or recordings that may be required by applicable Law in connection with this Plan.
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The Confirmation Order shall, and shall be deemed to, pursuant to both sections 363 and 1123 of the Bankruptcy Code, authorize, among other things, all of the foregoing actions and all actions as may be necessary or appropriate to effectuate any transaction described in, approved by, contemplated by, or necessary to effectuate this Plan and the Restructuring Transactions herein, including any and all actions required to be taken under applicable non-bankruptcy Law. On the Effective Date, or as soon as reasonably practicable thereafter, the Reorganized Debtors, as applicable, shall issue all Securities, notes, instruments, certificates, and other documents required to be issued pursuant to the Restructuring Transactions.
| C. | Reorganized Debtors. |
On the Effective Date, the New Board shall be established and each Reorganized Debtor shall adopt its New Organizational Documents. The Reorganized Debtors shall be authorized to adopt any other agreements, documents, and instruments and to take any other actions contemplated under this Plan as necessary to consummate this Plan. Cash payments to be made pursuant to this Plan will be made by the Debtors or the Reorganized Debtors, as applicable. The Debtors and Reorganized Debtors will be entitled to transfer funds between and among themselves as they determine to be necessary or appropriate to enable the Debtors or the Reorganized Debtors, as applicable, to satisfy their obligations under this Plan. Except as set forth herein or as otherwise provided for in the Restructuring Steps Plan, any changes in intercompany account balances resulting from such transfers will be accounted for and settled in accordance with the Debtors’ historical intercompany account settlement practices and will not violate the terms of this Plan.
| D. | Sources of Consideration for Plan Distributions. |
The Debtors and the Reorganized Debtors, as applicable, shall fund distributions under this Plan and the Restructuring Transactions contemplated thereby with: (1) the Debtors’ Cash on hand as of the Effective Date; (2) the New Equity Interests; and (3) the loans under the Exit ABL Facility. Each distribution and issuance referred to in Article VI shall be governed by the terms and conditions set forth in this Plan applicable to such distribution or issuance and by the terms and conditions of the instruments or other documents evidencing or relating to such distribution or issuance, which terms and conditions shall bind each Entity receiving such distribution or issuance. The issuance, distribution, or authorization, as applicable, of certain Securities in connection with this Plan, including the New Equity Interests, will be exempt from registration under the Securities Act, as described more fully in Article IV.M hereof.
1. Use of Cash.
The Debtors or Reorganized Debtors, as applicable, shall use Cash on hand to fund distributions to Holders of Allowed Claims, consistent with the terms of this Plan.
2. New Equity Interests.
Reorganized Nine Energy, as applicable, shall be authorized to issue the New Equity Interests pursuant to the New Organizational Documents. The issuance of the New Equity Interests, including equity awards reserved for the Management Incentive Plan, shall be authorized without the need for any further corporate action or without any further action by the Debtors or Reorganized Debtors. On the Effective Date, the New Equity Interests shall be issued and distributed as provided for in the Restructuring Steps Plan (as applicable) pursuant to, and in accordance with, this Plan.
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All of the shares (or comparable units) of New Equity Interests issued pursuant to this Plan shall be duly authorized, validly issued, fully paid, and non-assessable. Each distribution and issuance of New Equity Interests shall be governed by the terms and conditions set forth in this Plan applicable to such distribution or issuance and by the terms and conditions of the instruments evidencing or relating to such distribution or issuance, including the New Organizational Documents, which terms and conditions shall bind each Entity receiving such distribution or issuance. Any Entity’s acceptance of New Equity Interests shall be deemed as its agreement to the New Organizational Documents, as the same may be amended or modified from time to time following the Effective Date in accordance with their terms.
The issuance of New Equity Interests will be exempt from registration under the Securities Act and under similar federal, state, local, or foreign laws, including in reliance on the exemption set forth in section 1145 of the Bankruptcy Code. Following the Chapter 11 Cases, Reorganized Nine Energy shall remain a public company (i.e., subject to SEC reporting requirements of section 12(b) or 12(g) of the Securities Exchange Act of 1934), and on the Effective Date (or as soon as reasonably practicable thereafter), Reorganized Nine Energy’s New Equity Interests shall be publicly traded on the NYSE Main Board or NYSE American Exchange of the New York Stock Exchange LLC or on the Nasdaq Global Select Market, Nasdaq Global Market, or Nasdaq Capital Market of the Nasdaq Stock Market LLC (or any successors to any of the foregoing) with the consent of the Required Consenting Noteholders. Additional information relating to the applicability of the securities law is available in Article IV.L of this Plan.
3. Exit ABL Facility.
On the Effective Date, the Reorganized Debtors shall enter into the Exit ABL Facility, pursuant to the Exit ABL Facility Documents. Confirmation of this Plan shall constitute (a) approval of the Exit ABL Facility and the Exit ABL Facility Documents; and (b) authorization for the Debtors and the Reorganized Debtors, as applicable, to take any and all actions necessary or appropriate to consummate the Exit ABL Facility, including executing and delivering the Exit ABL Facility Documents, in each case, without any further notice to or order of the Bankruptcy Court. On the Effective Date, the Exit ABL Facility shall be issued and distributed as provided for in the Restructuring Steps Plan (as applicable) pursuant to, and in accordance with, this Plan.
As of the Effective Date, all of the Liens and security interests to be granted by the Debtors or Reorganized Debtors, as applicable in accordance with the Exit ABL Facility Documents: (a) shall be deemed to be granted; (b) shall be legal, valid, binding, automatically perfected, non-avoidable, first-priority and enforceable Liens on, and security interests in, the applicable collateral specified in the Exit ABL Facility Documents; and (c) shall not be subject to avoidance, recharacterization, or equitable subordination for any purposes whatsoever and shall not constitute preferential transfers, fraudulent transfers, or fraudulent conveyances under the Bankruptcy Code or any applicable non-bankruptcy Law. To the extent provided in the Exit ABL Facility Documents, the Exit ABL Facility Agent is authorized to file with the appropriate authorities mortgages, financing statements and other documents, and to take any other action in order to evidence, validate, and perfect such Liens or security interests. The priorities of such Liens and security interests shall be as set forth in the Exit ABL Facility Documents. The Exit ABL Facility Agent shall be authorized to make all filings and recordings necessary to establish and perfect such Liens and security interests under the provisions of the applicable state, federal, or other law that would be applicable in the absence of this Plan and the Confirmation Order (it being understood that perfection shall occur automatically by virtue of the entry of the Confirmation Order and any such filings, recordings, approvals, and consents shall not be required), and will thereafter cooperate to make all other filings and recordings that otherwise would be necessary under applicable law to give notice of such Liens and security interests to third parties. The guarantees granted under the Exit ABL Facility Documents have been granted in good faith, for legitimate business purposes, and for reasonably equivalent value as an inducement to the lenders thereunder to extend credit thereunder and shall be deemed to not constitute a fraudulent conveyance or fraudulent transfer and shall not otherwise be subject to avoidance, recharacterization, or subordination for any purposes whatsoever and shall not constitute preferential transfers or fraudulent conveyances under the Bankruptcy Code or any applicable non-bankruptcy Law.
| E. | Corporate Existence. |
Except as otherwise provided in this Plan, the Confirmation Order, the Restructuring Steps Plan, the New Organizational Documents, or any agreement, instrument, or other document incorporated therein, each Debtor shall continue to exist after the Effective Date as a separate corporate Entity, limited liability company, partnership, or other form, as the case may be, with all the powers of a corporation, limited liability company, partnership, or other form, as the case may be, pursuant to the applicable Law in the jurisdiction in which such Debtor is incorporated or formed and pursuant to the respective certificate of incorporation and by-laws (or other formation documents) in effect prior to the Effective Date, except to the extent such certificate of incorporation and by-laws (or other formation documents) are amended under this Plan or otherwise, and to the extent such documents are amended in accordance therewith, such documents are deemed to be amended pursuant to this Plan and require no further action or approval (other than any requisite filings, approvals, or consents required under applicable state, provincial, or federal Law). After the Effective Date, the respective certificate of incorporation and bylaws (or other formation documents) of one or more of the Reorganized Debtors may be amended or modified on the terms therein without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules.
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On or after the Effective Date, one or more of the Reorganized Debtors may be disposed of, dissolved, wound down, or liquidated without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules.
| F. | Vesting of Assets in the Reorganized Debtors. |
Except as otherwise provided in this Plan, the Confirmation Order, or any agreement, instrument, or other document incorporated herein, on the Effective Date, all property in each Estate, all Causes of Action, and any property acquired by any of the Debtors pursuant to this Plan, including Interests held by the Debtors in any Non-Debtor, shall vest in each respective Reorganized Debtor, free and clear of all Liens, Claims, charges, Causes of Action, or other encumbrances. On and after the Effective Date, except as otherwise provided in this Plan, the Confirmation Order, or any agreement, instrument, or other document incorporated herein, each Reorganized Debtor may operate its business and may use, acquire, or dispose of property and compromise or settle any Claims, Interests, or Causes of Action without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules. For the avoidance of doubt, no Reorganized Debtor shall be treated as being liable on any Claim that is discharged pursuant to this Plan.
| G. | Cancellation of Existing Securities, Agreements, and Interests. |
On the Effective Date, except as otherwise provided in this Plan, the Confirmation Order, or other Definitive Documents (including the Plan Supplement and the Exit ABL Facility Documents), as applicable, all notes, instruments, certificates, credit agreements, note purchase agreements, indentures, and other documents evidencing Claims (including, for the avoidance of doubt, the Senior Secured Notes Documents, the Prepetition ABL Credit Agreement, and all related collateral and credit documentation), or the Nine Energy Equity Interests, shall, be cancelled, and any rights of any Holder in respect thereof shall be deemed cancelled and of no force or effect, and all prior, present and future obligations and liabilities, actions, suits, accounts or demands, covenants, and indemnities (both actual and contingent), under or in connection with the DIP Credit Agreement, Senior Secured Notes Documents and the Prepetition ABL Credit Agreement of the Debtors or the Reorganized Debtors, as applicable, and any Non-Debtor Affiliates, or any other parties thereunder, or in any way related thereto, shall be deemed satisfied in full, released, cancelled, discharged, and of no force or effect, and the Agents/Trustees and each of the lenders and holders and their respective agents, successors and assigns, shall each be automatically and fully released and discharged of and from all duties and obligations thereunder without any need for further action or approval by the Bankruptcy Court or for a Holder to take further action.
Notwithstanding anything to the contrary herein, but subject to any applicable provisions of Article VI hereof and the Confirmation Order, the DIP Credit Agreement, the Senior Secured Notes Documents and the Prepetition ABL Credit Agreement (including, in each case, all documents ancillary thereto), shall continue in effect to: (1) permit Holders of Claims under the DIP Credit Agreement, Senior Secured Notes Indenture and the Prepetition ABL Credit Agreement to receive their respective Plan Distributions, if any; (2) permit the Reorganized Debtors and any Disbursing Agent, as applicable, to make Plan Distributions on account of the Allowed Claims under the DIP Credit Agreement, Senior Secured Notes Indenture and the Prepetition ABL Credit Agreement, as applicable; (3) permit each of the Agents under the DIP Credit Agreement and the Prepetition ABL Credit Agreement and the Senior Secured Notes Trustee to seek indemnification, compensation, and/or reimbursement of fees and expenses (including the Senior Secured Notes Trustee Fees and Expenses) through the exercise of their respective charging Lien (including the Senior Secured Notes Trustee Charging Lien), to the extent provided for in the DIP Credit Agreement, Senior Secured Notes Documents and the Prepetition ABL Credit Agreement; and (4) permit the Agents/Trustees and the DIP Agent to perform any functions that are necessary to effectuate the foregoing, including appearing and being heard in the Chapter 11 Cases or in any other court proceeding relating to the Senior Secured Notes Documents, the DIP Credit Agreement and the Prepetition ABL Credit Agreement, as applicable. Except as provided in this Plan (including Article VI hereof) or the Confirmation Order, on the Effective Date, the Agents/Trustees and their respective agents, successors, and assigns shall be automatically and fully discharged of all of their duties and obligations associated with the DIP Credit Agreement, Senior Secured Notes Documents and the Prepetition ABL Credit Agreement, as applicable. The commitments and obligations (if any) of the Holders of the DIP Claims and Prepetition ABL Claims to extend any further or future credit or financial accommodations to any of the Debtors, any of the Reorganized Debtors, or any of their respective successors or assigns under the DIP Credit Agreement and the Prepetition ABL Credit Agreement, as applicable, shall fully terminate and be of no further force or effect on the Effective Date.
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For the avoidance of doubt, on and after the Plan Distribution on account of the Senior Secured Notes Claims in accordance with this Plan, which shall be the final distribution made on account of the Senior Secured Notes Claims, (i) the Senior Secured Notes shall be deemed to be null, void, and worthless, and (ii) at the request of the Debtors or Reorganized Debtors, as applicable, DTC shall take down the relevant position relating to the Senior Secured Notes without any requirement of indemnification or security on the part of the Debtors, the Reorganized Debtors, Senior Secured Notes Trustee, as applicable, or any other party. Upon request of the Senior Secured Notes Trustee, the Debtors or the Reorganized Debtors, as applicable, shall deliver to the Senior Secured Notes Trustee a cancellation order in a form reasonably acceptable to the Senior Secured Notes Trustee with respect to the drawdown of the Senior Secured Notes from DTC.
| H. | Corporate Action. |
Upon the Confirmation Date, all actions contemplated under this Plan (including the Restructuring Steps Plan and the other documents contained in the Plan Supplement) shall be deemed authorized and approved by the Bankruptcy Court in all respects without any further corporate or equity holder action, including, as applicable: (1) adoption or assumption, as applicable, of the employment agreements; (2) selection of the directors, officers, or managers for the Reorganized Debtors in accordance with the New Organizational Documents; (3) the issuance and distribution of the New Equity Interests; (4) implementation of the Restructuring Transactions; (5) the entry into the Exit ABL Facility Documents, as applicable, and the execution, delivery, and filing of any documents pertaining thereto; (6) all other actions contemplated under this Plan (whether to occur before, on, or after the Effective Date); (7) adoption of the New Organizational Documents; (8) the assumption or assumption and assignment, as applicable, of Executory Contracts and Unexpired Leases; and (9) all other acts or actions contemplated or reasonably necessary or appropriate to promptly consummate the Restructuring Transactions contemplated by this Plan (whether to occur before, on, or after the Effective Date). Upon the Effective Date, all matters provided for in this Plan involving the corporate structure of the Debtors or the Reorganized Debtors, and any corporate, partnership, limited liability company, or other governance action required by the Debtors or the Reorganized Debtors, as applicable, in connection with this Plan, including, any direction required to be provided to any of the Agents/Trustees to implement the terms of this Plan, shall be deemed to have occurred or to have been delivered, and shall be in effect, without any requirement of further action by the Security Holders, members directors, officers, or managers of the Debtors or the Reorganized Debtors, as applicable. On or prior to the Effective Date, as applicable the appropriate officers of the Debtors and the Reorganized Debtors shall be authorized and directed to issue, execute, and deliver the agreements, documents, Securities, and instruments contemplated under this Plan (or necessary or desirable to effect the transactions contemplated under this Plan) in the name of and on behalf of the Reorganized Debtors, including the New Equity Interests, the Exit Financing Documents, the New Organizational Documents, any other Definitive Documents, and any and all other agreements, documents, Securities, and instruments relating to the foregoing. The authorizations and approvals contemplated by this Article IV.H shall be effective notwithstanding any requirements under non-bankruptcy Law.
| I. | New Organizational Documents. |
On or immediately prior to the Effective Date, except as otherwise provided in this Plan and subject to local Law requirements, the New Organizational Documents shall be automatically adopted or amended by the Reorganized Debtors as may be necessary to effectuate the transactions contemplated by this Plan. To the extent required under this Plan or applicable non-bankruptcy Law, each of the Reorganized Debtors will file its New Organizational Documents with the Secretaries of State and/or other applicable authorities in its respective state, province, or country of incorporation in accordance with the corporate Laws of the respective state, province, or country of incorporation to the extent such filing is required for each such document. The New Organizational Documents will, among other things (a) authorize the issuance of the New Equity Interests and (b) prohibit the issuance of non-voting Equity Securities to the extent required under section 1123(a)(6) of the Bankruptcy Code. After the Effective Date, the Reorganized Debtors may amend and restate their respective New Organizational Documents as permitted by the laws of its jurisdiction of incorporation or formation and in accordance with the terms thereof, and the Reorganized Debtors may file such amended certificates or articles of incorporation, bylaws, or such other applicable formation documents, and other constituent documents as permitted by the Laws of the respective states, provinces, or countries of incorporation or formation and the New Organizational Documents.
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| J. | Directors and Officers of the Reorganized Debtors. |
As of the Effective Date, the term of the current members of the board of directors or other Governing Body of each of the Debtors shall expire, such current directors shall be deemed to have resigned, and all of the directors for the initial term of the New Board and the other Governing Bodies shall be appointed in accordance with the New Organizational Documents. The initial members of the New Board will be identified in the Plan Supplement, to the extent known and determined at the time of filing and shall be consistent with the New Organizational Documents; provided that the composition and identity of the New Board will be determined by the Required Consenting Noteholders in their sole discretion. Each such member and officer of the Reorganized Debtors shall serve from and after the Effective Date pursuant to the terms of the New Organizational Documents and other constituent documents of the Reorganized Debtors.
| K. | Effectuating Documents; Further Transactions. |
On and after the Effective Date, the Reorganized Debtors, and their respective officers, directors, members, or managers, as applicable, are authorized to and may issue, execute, deliver, file, or record such contracts, Securities, instruments, releases, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement, and further evidence the terms and conditions of this Plan, the Restructuring Steps Plan, and the Securities issued pursuant to this Plan in the name of and on behalf of the Reorganized Debtors, without the need for any approvals, authorization, or consents except for those expressly required pursuant to this Plan.
| L. | Certain Securities Law Matters. |
Before the Petition Date the offering, the issuance and distribution of any New Equity Interests and/or the offering, issuance, and distribution of any other debt or equity securities as contemplated herein and/or pursuant to this Plan (any such debt or equity securities, the “Other Securities”) shall be exempt from the registration requirements of the Securities Act in reliance upon section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, and/or in reliance on Regulation S under the Securities Act.
After the Petition Date, pursuant to section 1145 of the Bankruptcy Code and/or other available exemptions from registration, the offering, issuance, and distribution of the New Equity Interests as contemplated herein and/or the offering, issuance, and distribution of Other Securities, if any, shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act and any other applicable U.S. federal, state, or local laws requiring registration prior to the offering, issuance, distribution, or sale of Securities.
The New Equity Interests and the Other Securities, if any, to be issued under this Plan on account of Allowed Claims in accordance with, and pursuant to, section 1145 of the Bankruptcy Code will be freely transferable under the Securities Act by the recipients thereof, subject to: (a) the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 1145(b) of the Bankruptcy Code, and compliance with applicable securities laws and any rules and regulations of the SEC or state or local securities laws, if any, applicable at the time of any future transfer of such Securities or instruments; and (b) any restrictions on the transferability of such New Equity Interests and the Other Securities in the New Organizational Documents.
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To the extent any portion of the New Equity Interests and Other Securities, if any, are not eligible for the exemption of registration provided by section 1145 of the Bankruptcy Code, the offering, sale, issuance, and distribution of the New Equity Interests and Other Securities, if any, shall be made in reliance on section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and on equivalent state Law registration exemptions, or, solely to the extent such exemptions are not available, other available exemptions from registration under the Securities Act. The New Equity Interests and the Other Securities, if any, that may be issued pursuant to the exemption from registration set forth in section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, Registration S under the Securities Act, and/or other available exemptions from registration will be considered “restricted securities,” will bear customary legends and transfer restrictions, and may not be transferred except pursuant to an effective registration statement or under an available exemption from the registration requirements of the Securities Act and subject to any restrictions on the transferability of such New Equity Interests in the New Organizational Documents.
Recipients of the New Equity Interests and the Other Securities, if any, are advised to consult with their own legal advisors as to the availability of any exemption from registration under the Securities Act and any applicable Blue-Sky Laws for resales of such securities.
The Reorganized Debtors need not provide any further evidence other than this Plan or the Confirmation Order to any Entity (including DTC, any nominee thereof or any transfer agent for the New Equity Interests) with respect to the treatment of the New Equity Interests to be issued under this Plan under applicable securities laws. DTC, any nominee thereof, and any transfer agent for the New Equity Interests shall be required to accept and conclusively rely upon this Plan and Confirmation Order in lieu of a legal opinion regarding whether the New Equity Interests to be issued under this Plan are exempt from registration and/or eligible for DTC, book-entry delivery, settlement, and depository (to the extent applicable). Notwithstanding anything to the contrary in this Plan, no Entity (including DTC, any nominee thereof and any transfer agent for the New Equity Interests) may require a legal opinion regarding the validity of any transaction contemplated by this Plan, including, for the avoidance of doubt, whether the New Equity Interests and the Other Securities to be issued under this Plan are exempt from registration.
Following the Effective Date, Reorganized Nine Energy shall remain a public company, and on the Effective Date (or as soon as reasonably practicable thereafter), Reorganized Nine Energy’s New Equity Interests shall be publicly traded on the NYSE Main Board or NYSE American Exchange of the New York Stock Exchange LLC or on the Nasdaq Global Select Market, Nasdaq Global Market, or Nasdaq Capital Market of the Nasdaq Stock Market LLC (or any successors to any of the foregoing).
| M. | Section 1146 Exemption. |
To the fullest extent permitted by section 1146(a) of the Bankruptcy Code, any transfers (whether from a Debtor to a Reorganized Debtor or to any other Person) of property under this Plan or pursuant to (1) the issuance, Reinstatement, distribution, transfer, or exchange of any debt, Equity Security, or other interest in the Debtors or the Reorganized Debtors, including the New Equity Interests, (2) the Restructuring Transactions, (3) the creation, modification, consolidation, termination, refinancing, and/or recording of any mortgage, deed of trust, or other security interest, or the securing of additional indebtedness by such or other means, (4) the making, assignment, or recording of any lease or sublease, (5) the grant of collateral as security for the Reorganized Debtors’ obligations under and in connection with the Exit ABL Facility, or (6) the making, delivery, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, this Plan, including any deeds, bills of sale, assignments, or other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any way related to this Plan, shall not be subject to any document recording tax, deed tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, real estate transfer tax, personal property transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, sales tax, use tax, or other similar tax or governmental assessment, and upon entry of the Confirmation Order, the appropriate U.S federal, state or local governmental officials or agents shall forego the collection of any such tax, recordation fee or governmental assessment and accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax, recordation fee, or governmental assessment. All filing or recording officers (or any other Person with authority over any of the foregoing), wherever located and by whomever appointed, shall comply with the requirements of section 1146(a) of the Bankruptcy Code, shall forego the collection of any such tax, recordation fee or governmental assessment, and shall accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax, recordation fee or governmental assessment.
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| N. | Employee Compensation and Benefits. |
1. Compensation and Benefits Programs.
Except as otherwise set forth herein, on the Effective Date, the Debtors or Reorganized Debtors, as applicable, shall (a) assume all employment agreements, indemnification agreements, or other employment-related agreements entered into with current or former employees who are employees as of the Petition Date or (b) enter into new agreements with such employees on terms and conditions acceptable to the Reorganized Debtors and such employees.
A counterparty to or participant in a Compensation and Benefits Program assumed pursuant to this Plan shall have the same rights under such Compensation and Benefits Program as such counterparty had thereunder immediately prior to such assumption (unless otherwise agreed by such counterparty and the applicable Reorganized Debtor(s)); provided that any assumption of Compensation and Benefits Programs pursuant to this Plan or any of the Restructuring Transactions shall not (a) trigger or be deemed to trigger any change of control, change in control immediate vesting, termination, or similar provisions therein or (b) trigger or be deemed to trigger an event of “Good Reason” (or a term of like import) as a result of the consummation of the Restructuring Transactions or any other transactions contemplated by this Plan. Notwithstanding the foregoing, pursuant to the Plan, any equity-based awards or other Interest (or the right to obtain or receive any equity-based award or other Interest) provided for in any employment agreements or other plans, programs, or arrangements and granted or contractually promised to a current or former employee, officer, director or contractor under an employment agreement or otherwise, shall not be honored and will be deemed cancelled in consideration of approval of the Plan as of the Effective Date, unless otherwise agreed by the Debtors and the Required Consenting Noteholders; provided, however, that the foregoing shall in no way impact the assumption of all employment agreements, indemnification agreements, or employment-related agreements.
2. Workers’ Compensation Programs.
As of the Effective Date, except as set forth in the Plan Supplement, the Debtors and the Reorganized Debtors shall continue to honor their obligations under: (a) all applicable workers’ compensation Laws in states in which the Reorganized Debtors operate; and (b) the Debtors’ written contracts, agreements, agreements of indemnity, self-insured workers’ compensation bonds, policies, programs, and plans for workers’ compensation and workers’ compensation insurance. All Proofs of Claims on account of workers’ compensation shall be deemed withdrawn automatically and without any further notice to or action, order, or approval of the Bankruptcy Court; provided that nothing in this Plan shall limit, diminish, or otherwise alter the Debtors’ or Reorganized Debtors’ defenses, Causes of Action, or other rights under applicable Law, including non-bankruptcy Law with respect to any such contracts, agreements, policies, programs, and plans; provided further that nothing herein shall be deemed to impose any obligations on the Debtors in addition to what is provided for under applicable non-bankruptcy Law.
| O. | Director and Officer Liability Insurance. |
Notwithstanding anything in this Plan to the contrary, the Reorganized Debtors shall be deemed to have assumed all of the Debtors’ D&O Liability Insurance Policies pursuant to section 365(a) of the Bankruptcy Code effective as of the Effective Date. Entry of the Confirmation Order will constitute the Bankruptcy Court’s approval of the Reorganized Debtors’ foregoing assumption of each of the D&O Liability Insurance Policies. Notwithstanding anything to the contrary contained in this Plan, Confirmation of this Plan shall not discharge, impair, or otherwise modify any indemnity obligations assumed by the foregoing assumption of the D&O Liability Insurance Policies, and each such indemnity obligation will be deemed and treated as an Executory Contract that has been assumed by the Debtors under this Plan as to which no Proof of Claim need be Filed.
In addition, after the Effective Date, the Reorganized Debtors will not terminate or otherwise reduce the coverage under any of the D&O Liability Insurance Policies (including any “tail policy”) in effect or purchased as of the Petition Date, and all members, managers, directors, and officers of the Debtors who served in such capacity at any time prior to the Effective Date or any other individuals covered by such insurance policies, will be entitled to the full benefits of any such policy for the full term of such policy regardless of whether such members, managers, directors, officers, or other individuals remain in such positions on or after the Effective Date.
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| P. | Management Incentive Plan. |
Following the Effective Date, the New Board shall adopt the Management Incentive Plan, which will provide for the grants of equity and equity-based awards to employees, directors, consultants, and/or other service providers of the Reorganized Debtors, as determined at the discretion of the New Board. The Reorganized Debtors shall reserve a pool of up to 10.00% of fully-diluted New Equity Interests for the Management Incentive Plan. The awardees, terms, and conditions of the Management Incentive Plan shall be determined at the discretion of the New Board.
| Q. | Preservation of Causes of Action. |
In accordance with section 1123(b) of the Bankruptcy Code, but subject to Article VIII hereof, the Reorganized Debtors shall retain and may enforce all rights to commence and pursue, as appropriate, any and all Causes of Action of the Debtors, whether arising before or after the Petition Date, including any actions specifically enumerated in the Schedule of Retained Causes of Action, and the Reorganized Debtors’ rights to commence, prosecute, or settle such retained Causes of Action shall be preserved notwithstanding the occurrence of the Effective Date or any other provision of this Plan to the contrary, other than the Causes of Action released by the Debtors pursuant to the releases and exculpations contained in this Plan, including in Article VIII hereof.
The Reorganized Debtors may pursue such retained Causes of Action, as appropriate, in accordance with the best interests of the Reorganized Debtors. No Entity may rely on the absence of a specific reference in the RSA, this Plan, the Plan Supplement, or the Disclosure Statement to any Cause of Action against it as any indication that the Debtors or the Reorganized Debtors, as applicable, will not pursue any and all available retained Causes of Action against it. The Debtors and the Reorganized Debtors expressly reserve all rights to prosecute any and all retained Causes of Action against any Entity, except as otherwise expressly provided in this Plan. The Reorganized Debtors may settle any such retained Cause of Action without further notice to or action, order, or approval of the Bankruptcy Court. Unless any retained Causes of Action against an Entity are expressly waived, relinquished, exculpated, released, compromised, or settled in this Plan or a Bankruptcy Court order, the Reorganized Debtors expressly reserve all retained Causes of Action, for later adjudication, and, therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable, or otherwise), or laches, shall apply to such retained Causes of Action upon, after, or as a consequence of the Confirmation or Consummation.
The Reorganized Debtors reserve and shall retain such Causes of Action notwithstanding the rejection or repudiation of any Executory Contract or Unexpired Lease during the Chapter 11 Cases or pursuant to this Plan. In accordance with section 1123(b)(3) of the Bankruptcy Code, any retained Causes of Action that a Debtor may hold against any Entity shall vest in the corresponding Reorganized Debtor, except as otherwise expressly provided in this Plan, including Article VIII hereof, or pursuant to Bankruptcy Court order. The Reorganized Debtors, through their authorized agents or representatives, shall retain and may exclusively enforce any and all such retained Causes of Action. The Reorganized Debtors shall have the exclusive right, authority, and discretion to determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such retained Causes of Action and to decline to do any of the foregoing without the consent or approval of any third party or further notice to or action, order, or approval of the Bankruptcy Court.
| R. | Cashless Transactions. |
Notwithstanding anything to the contrary set forth herein, the treatment of Claims, distributions, and other transactions contemplated hereby, including the funding of the Exit ABL Facility, may, at the election of the applicable participating parties, be effectuated by netting or other form of cashless implementation.
Article V.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
| A. | Assumption and Rejection of Executory Contracts and Unexpired Leases. |
On the Effective Date, all Executory Contracts and Unexpired Leases that are not otherwise rejected shall be deemed assumed by the applicable Reorganized Debtor, without the need for any further notice to or action, order, or approval of the Bankruptcy Court, as of the Effective Date under sections 365 and 1123 of the Bankruptcy Code, other than as expressly set forth in the RSA, unless such Executory Contract or Unexpired Lease was (a) previously assumed, amended and assumed, assumed and assigned, or rejected by the applicable Debtors; (b) previously expired or terminated pursuant to its own terms; or (c) is the subject of a motion to reject such executory contract or unexpired lease that is pending on the Effective Date; or (d) is identified on the Rejected Executory Contracts and Unexpired Leases List; provided that neither the Restructuring Transactions or any actions contemplated by this Plan shall be deemed a “change of control” or other acceleration event for purposes of any Executory Contract or Unexpired Lease of the Debtors.
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Entry of the Confirmation Order shall constitute an order of the Bankruptcy Court approving the assumptions, assumptions and assignments, or rejections of the Executory Contracts or Unexpired Leases as set forth in this Plan, the Assumed Executory Contracts and Unexpired Leases List, or the Rejected Executory Contracts and Unexpired Leases List, as applicable, pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Except as otherwise specifically set forth herein, assumptions or rejections of Executory Contracts and Unexpired Leases pursuant to this Plan are effective as of the Effective Date. Each Executory Contract or Unexpired Lease assumed pursuant to this Plan or by Bankruptcy Court order but not assigned to a third party before the Effective Date shall revest in and be fully enforceable by the applicable contracting Reorganized Debtor in accordance with its terms, except as such terms may have been modified by the provisions of this Plan or any order of the Bankruptcy Court authorizing and providing for its assumption. Any motions to assume Executory Contracts or Unexpired Leases pending on the Effective Date shall be subject to approval by a Final Order on or after the Effective Date but may be withdrawn, settled, or otherwise prosecuted by the Reorganized Debtors.
Except as otherwise provided herein or agreed to by the Debtors, the Required Consenting Noteholders, and the applicable counterparty, each assumed Executory Contract or Unexpired Lease shall include all modifications, amendments, supplements, restatements, or other agreements related thereto, and all rights related thereto, if any, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other interests. Modifications, amendments, supplements, and restatements to prepetition Executory Contracts and Unexpired Leases that have been executed by the Debtors during the Chapter 11 Cases shall not be deemed to alter the prepetition nature of the Executory Contract or Unexpired Lease or the validity, priority, or amount of any Claims that may arise in connection therewith.
To the maximum extent permitted by Law, to the extent any provision in any Executory Contract or Unexpired Lease assumed or assumed and assigned pursuant to this Plan restricts or prevents, or purports to restrict or prevent, or is breached or deemed breached by, the assumption or assumption and assignment of such Executory Contract or Unexpired Lease (including any “change of control” provision), then such provision shall be deemed modified such that the transactions contemplated by this Plan shall not entitle the non-Debtor party thereto to terminate such Executory Contract or Unexpired Lease or to exercise any other default-related rights with respect thereto. Notwithstanding anything to the contrary in this Plan, the Debtors or the Reorganized Debtors, as applicable, reserve the right to alter, amend, modify, or supplement the Assumed Executory Contracts and Unexpired Leases List and Rejected Executory Contracts and Unexpired Leases List at any time through and including forty-five (45) days after the Effective Date.
To the extent any provision of the Bankruptcy Code or the Bankruptcy Rules requires the Debtors to assume or reject an Executory Contract or Unexpired Lease, such requirement shall be satisfied if the Debtors make an election to assume or reject such Executory Contract or Unexpired Lease prior to the deadline set forth by the Bankruptcy Code or the Bankruptcy Rules, as applicable, regardless of whether or not the Bankruptcy Court has actually ruled on such proposed assumption or rejection prior to such deadline.
| B. | Cure of Defaults for Assumed Executory Contracts and Unexpired Leases. |
The Debtors or the Reorganized Debtors, as applicable, shall pay the Cure amounts, if any, on the Effective Date or as soon as reasonably practicable thereafter, with the amount and timing of payment of any such Cure dictated by the underlying agreements and/or the ordinary course of business among the parties thereto, as applicable. Unless otherwise agreed upon in writing by the parties to the applicable Executory Contract or Unexpired Lease, all requests for payment of Cure that differ from the ordinary course amounts paid or proposed to be paid by the Debtors or the Reorganized Debtors to a counterparty must be Filed with the Claims and Noticing Agent on or before thirty (30) days after the Effective Date. Any such request that is not timely Filed shall be disallowed and forever barred, estopped, and enjoined from assertion, and shall not be enforceable against any Reorganized Debtor, without the need for any objection by the Reorganized Debtors or any other party in interest or any further notice to or action, order, or approval of the Bankruptcy Court. Any Cure shall be deemed fully satisfied, released, and discharged upon payment by the Debtors or the Reorganized Debtors of the Cure in the Debtors’ ordinary course of business; provided that nothing herein shall prevent the Reorganized Debtors from paying any Cure despite the failure of the relevant counterparty to File such request for payment of such Cure. The Reorganized Debtors also may settle any Cure without any further notice to or action, order, or approval of the Bankruptcy Court. In addition, any objection to the assumption of an Executory Contract or Unexpired Lease under this Plan must be Filed with the Bankruptcy Court on or before thirty (30) days after the Effective Date. Any counterparty to an Executory Contract or Unexpired Lease that fails to timely object to the proposed assumption of any Executory Contract or Unexpired Lease will be deemed to have consented to such assumption.
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If there is any dispute regarding any Cure amount, the ability of the Reorganized Debtors or any assignee to provide “adequate assurance of future performance” within the meaning of section 365 of the Bankruptcy Code, or any other matter pertaining to assumption, then payment of the Cure amount shall occur as soon as reasonably practicable after entry of a Final Order resolving such dispute, approving such assumption (and, if applicable, assignment), or as may be agreed upon by the Debtors or the Reorganized Debtors, as applicable, and the counterparty to the Executory Contract or Unexpired Lease.
The assumption of any Executory Contract or Unexpired Lease pursuant to this Plan or otherwise and full payment of any applicable Cure pursuant to this Article V, in the amount and at the time dictated by the Debtors’ ordinary course of business, shall result in the full release and satisfaction of any Cures, Claims, or defaults, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed Executory Contract or Unexpired Lease at any time prior to the effective date of assumption. Any and all Proofs of Claim based upon Executory Contracts or Unexpired Leases that have been assumed in the Chapter 11 Cases, including pursuant to the Confirmation Order, and for which any Cure has been fully paid pursuant to this Article V, in the amount and at the time dictated by the Debtors’ ordinary course of business, shall be deemed disallowed and expunged as of the Effective Date without the need for any objection thereto or any further notice to or action, order, or approval of the Bankruptcy Court.
| C. | Indemnification Obligations. |
All indemnification obligations in place as of the Effective Date (whether in the by-laws, certificates of incorporation or formation, limited liability company agreements, limited partnership agreements, other organizational documents, board resolutions, indemnification agreements, employment contracts, or otherwise) for the benefit of current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, creditors, and other professionals of, or acting on behalf of, the Debtors, as applicable, shall be (a) reinstated and remain intact, irrevocable, and shall survive the Effective Date on terms no less favorable to such current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of, or acting on behalf of, the Debtors than the indemnification provisions in place prior to the Effective Date, and (b) shall be assumed by the Reorganized Debtors.
| D. | Insurance Policies. |
Each of the Debtors’ insurance policies and any agreements, documents, or instruments relating thereto, are treated as Executory Contracts under this Plan. Unless otherwise provided in this Plan, on the Effective Date, (1) the Debtors shall be deemed to have assumed all insurance policies and any agreements, documents, and instruments relating to coverage of all insured Claims, including all D&O Liability Insurance Policies, and (2) such insurance policies and any agreements, documents, or instruments relating thereto shall revest in the Reorganized Debtors.
| E. | Reservation of Rights. |
Nothing contained in this Plan or the Plan Supplement shall constitute an admission by the Debtors or any other party that any contract or lease is in fact an Executory Contract or Unexpired Lease or that any of the Reorganized Debtors have any liability thereunder. If there is a dispute regarding whether a contract or lease is or was executory or unexpired at the time of assumption or rejection, the Debtors or the Reorganized Debtors, as applicable, shall have forty-five (45) days following entry of a Final Order resolving such dispute to alter its treatment of such contract or lease under this Plan.
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| F. | Nonoccurrence of Effective Date. |
In the event that the Effective Date does not occur, the Bankruptcy Court shall retain jurisdiction with respect to any request to extend the deadline for assuming or rejecting Unexpired Leases pursuant to section 365(d)(4) of the Bankruptcy Code.
| G. | Contracts and Leases Entered Into After the Petition Date. |
Contracts and leases entered into after the Petition Date by any Debtor, including any Executory Contracts and Unexpired Leases assumed by such Debtor, will be performed by the applicable Debtor or the Reorganized Debtor liable thereunder in the ordinary course of their business. Accordingly, such contracts and leases (including any assumed Executory Contracts and Unexpired Leases) will survive and remain unaffected by entry of the Confirmation Order.
Article VI.
PROVISIONS GOVERNING DISTRIBUTIONS
| A. | Timing and Calculation of Amounts to Be Distributed. |
Unless otherwise provided in this Plan, or as otherwise agreed to by the Debtors or the Reorganized Debtors, as applicable, on or as soon as reasonably practicable after the Effective Date (or, if a Claim or Interest is not an Allowed Claim on the Effective Date, on the date that such Claim becomes an Allowed Claim, or as soon as reasonably practicable thereafter), each Holder of an Allowed Claim, as applicable, shall receive the full amount of the distributions that this Plan provides for Allowed Claims in the applicable Class. In the event that any payment or act under this Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding Business Day but shall be deemed to have been completed as of the required date. If and to the extent that there are Disputed Claims, distributions on account of any such Disputed Claims shall be made pursuant to the provisions set forth in Article VII hereof. Except as otherwise provided in this Plan, Holders of Allowed Claims shall not be entitled to interest, dividends, or accruals on the distributions provided for in this Plan, regardless of whether such distributions are delivered on or at any time after the Effective Date.
Notwithstanding the foregoing, (a) Allowed Administrative Claims with respect to liabilities incurred by the Debtors in the ordinary course of business during the Chapter 11 Cases or assumed by the Debtors prior to the Effective Date shall be paid or performed in the ordinary course of business in accordance with the terms and conditions of any controlling agreements, course of dealing, course of business, or industry practice and (b) Allowed Priority Tax Claims shall be paid in accordance with Article II.B of this Plan and the terms and conditions of any controlling agreements, course of dealing, course of business, or industry practice. To the extent any Allowed Priority Tax Claim is not due and owing on the Effective Date, such Claim shall be paid in full in Cash in accordance with the terms of any agreement between the Debtors and the Holder of such Claim or as may be due and payable under applicable non-bankruptcy Law or in the ordinary course of business.
| B. | Disbursing Agent. |
All distributions under this Plan shall be made by a Disbursing Agent on the Effective Date. A Disbursing Agent shall not be required to give any bond or surety or other Security for the performance of its duties unless otherwise ordered by the Bankruptcy Court. Additionally, in the event that a Disbursing Agent is so otherwise ordered, all costs and expenses of procuring any such bond or surety shall be borne by the Reorganized Debtors.
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All Plan Distributions to any Disbursing Agent on behalf of the Holders of Claims listed on the Claims Register (or the designees of such Holders, as applicable) shall be deemed completed by the Debtors when received by such Disbursing Agent. Distributions under this Plan shall be made to any such Holders (or the designees of such Holders, as applicable) by the applicable Disbursing Agent.
| C. | Rights and Powers of Disbursing Agent. |
1. Powers of the Disbursing Agent.
Each Disbursing Agent shall be empowered to: (a) effect all actions and execute all agreements, instruments, and other documents necessary to perform its duties under this Plan; (b) make all distributions contemplated hereby; (c) employ professionals to represent it with respect to its responsibilities; and (d) exercise such other powers as may be vested in such Disbursing Agent by order of the Bankruptcy Court, pursuant to this Plan, or as deemed by such Disbursing Agent to be necessary and proper to implement the provisions hereof.
2. Expenses Incurred On or After the Effective Date.
Except as otherwise ordered by the Bankruptcy Court, the amount of any reasonable fees and expenses incurred by a Disbursing Agent (including the Agents/Trustees) on or after the Effective Date (including taxes), and any reasonable compensation and expense reimbursement claims (including reasonable attorney fees and expenses), made by such Disbursing Agent shall be paid in Cash by the Reorganized Debtors.
| D. | Delivery of Distributions and Undeliverable or Unclaimed Distributions. |
1. Record Date for Distribution.
On the Distribution Record Date, the Claims Register shall be closed and any party responsible for making distributions shall instead be authorized and entitled to recognize only those record Holders listed on the Claims Register as of the close of business on the Distribution Record Date (or the designees of such Holders, as applicable). Unless otherwise provided in a Final Order from the Bankruptcy Court, if a Claim is transferred twenty (20) or fewer days before the Distribution Record Date, the Disbursing Agent shall make distributions to the transferee only to the extent practical and, in any event, only if the relevant transfer form contains an unconditional and explicit certification and waiver of any objection to the transfer by the transferor.
2. Delivery of Distributions in General.
Except as otherwise provided herein or in the Plan Supplement, a Disbursing Agent shall make distributions to Holders of Allowed Claims, as of the Distribution Record Date, or, if applicable, to such Holder’s designee, as appropriate: (a) at the address for each such Holder as indicated on the Debtors’ records as of the Distribution Record Date; (b) to the signatory set forth on any Proof of Claim Filed by such Holder or other representative identified therein (or at the last known addresses of such Holder if no Proof of Claim is Filed or if the Debtors have not been notified in writing of a change of address); (c) at the addresses set forth in any written notices of address changes delivered to the Reorganized Debtors or the applicable Disbursing Agent, as appropriate, after the date of any related Proof of Claim; or (d) on any counsel that has appeared in the Chapter 11 Cases on the Holder’s behalf; provided that the manner of such distributions shall be determined at the discretion of the Reorganized Debtors.
Notwithstanding any provision of the Plan to the contrary, distributions to Holders of Senior Secured Notes Claims shall be, or shall be deemed to be, made by or at the direction of the Senior Secured Notes Trustee which shall act as Disbursing Agent for distributions to the Holders of Senior Secured Notes Claims. The Senior Secured Notes Trustee may, to the greatest extent practicable, transfer or direct the transfer of distributions directly through the facilities of DTC (whether by means of book-entry exchange, or otherwise) and will be entitled to recognize and deal for all purposes under the Plan with Holders of Senior Secured Notes Claims to the extent consistent with the customary practices of DTC. Regardless of whether such distributions are made by the Senior Secured Notes Trustee, or by any other Disbursing Agent at the reasonable direction of the Senior Secured Notes Trustee, such distributions shall be subject in all respects to the right of the Senior Secured Notes Trustee to maintain, enforce, and exercise its Senior Secured Notes Trustee Charging Lien against such distributions with respect to any unpaid Senior Secured Notes Trustee Fees and Expenses. All Plan Distributions to be made to Holders of Senior Secured Notes Claims shall, to the greatest extent practicable, be eligible to be distributed through the facilities of DTC.
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3. No Fractional Distributions.
No fractional shares of New Equity Interests shall be distributed, and no Cash shall be distributed in lieu of such fractional amounts. When any distribution pursuant to this Plan on account of an Allowed Claim, as applicable, would otherwise result in the issuance of a number of shares of New Equity Interests that is not a whole number, the actual distribution of shares of New Equity Interests shall be rounded as follows: (a) fractions of one-half (½) or greater shall be rounded to the next higher whole number and (b) fractions of less than one-half (½) shall be rounded to the next lower whole number with no further payment therefore. The total number of authorized shares of New Equity Interests to be distributed under this Plan shall be adjusted as necessary to account for the foregoing rounding.
4. Undeliverable Distributions and Unclaimed Property.
In the event that any distribution to any Holder of Allowed Claims or Allowed Interests (as applicable) is returned as undeliverable, no distribution to such Holder shall be made unless and until the applicable Disbursing Agent has determined the then-current address of such Holder, at which time such distribution shall be made to such Holder without interest; provided that such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of one (1) year from the Effective Date. After such date, all unclaimed property or interests in property shall revert to the Reorganized Debtors automatically and without need for a further order by the Bankruptcy Court (notwithstanding any applicable federal, provincial or state escheat, abandoned, or unclaimed property laws to the contrary), and the Claim of any Holder of Claims to such property or interest in property shall be cancelled, released, discharged, and forever barred notwithstanding any applicable federal or state escheat, abandoned, or unclaimed property Laws, or any provisions in any document governing the distribution of such unclaimed property.
| E. | Surrender of Cancelled Instruments or Securities. |
On the Effective Date, or as soon as reasonably practicable thereafter, each Holder (and the applicable Agents for such Holder, including the Agents/Trustees) of a certificate or instrument evidencing a Claim or an Interest that has been cancelled in accordance with Article IV.G hereof, shall be deemed to have surrendered such certificate or instrument to the Disbursing Agent. Such surrendered certificate or instrument shall be cancelled solely with respect to the Debtors and any Non-Debtor Affiliates, and such cancellation shall not alter the obligations or rights of any non-Debtor third parties (other than the Non-Debtor Affiliates) in respect of one another with respect to such certificate or instrument, including with respect to any indenture or agreement that governs the rights of the Holder of a Claim or Interest, which shall continue in effect for the purposes of allowing Holders to receive distributions under this Plan, allowing Agents/Trustees to exercise and enforce their respective charging Liens (including for the avoidance of doubt, the Senior Secured Notes Trustee’s right to exercise its Senior Secured Notes Trustee Charging Lien), priority of payment, and indemnification rights. Notwithstanding anything to the contrary in this Plan, the foregoing shall not apply to certificates or instruments evidencing Claims or Interests that are Unimpaired under this Plan.
| F. | Manner of Payment. |
At the option of the Disbursing Agent, any Cash payment to be made hereunder may be made by check or wire transfer or as otherwise required or provided in applicable agreements.
| G. | Compliance with Tax Requirements. |
In connection with this Plan, to the extent applicable, the Debtors, the Reorganized Debtors, the Disbursing Agent, and any applicable withholding or reporting agent shall comply with all tax withholding and reporting requirements imposed on them by any taxing authority, and all distributions made pursuant to this Plan shall be subject to such withholding and reporting requirements. Notwithstanding any provision in this Plan to the contrary, any applicable withholding or reporting agent shall be authorized to take all actions necessary or appropriate to comply with such tax withholding and reporting requirements, including liquidating a portion of the distribution to be made under this Plan to generate sufficient funds to pay applicable withholding taxes, withholding distributions pending receipt of information necessary to facilitate such distributions, or establishing any other mechanisms they believe are reasonable and appropriate to comply with such tax withholding and reporting requirements. The Debtors and the Reorganized Debtors reserve the right to allocate all distributions made under this Plan in compliance with all applicable wage garnishments, alimony, child support, and other spousal awards, Liens, and encumbrances.
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| H. | Allocations. |
Distributions in respect of Allowed Claims shall be allocated first to the principal amount of such Claims (as determined for U.S. federal income tax purposes) and then, to the extent the consideration exceeds the principal amount of the Claims, to any portion of such Claims for accrued but unpaid interest.
| I. | No Postpetition Interest on Claims. |
Unless otherwise specifically provided for in this Plan or the Confirmation Order, or required by applicable bankruptcy and non-bankruptcy Law, postpetition interest shall not accrue or be paid on any prepetition Claims against the Debtors, and no Holder of a prepetition Claim against the Debtors shall be entitled to interest accruing on or after the Petition Date on any such prepetition Claim. Additionally, and without limiting the foregoing, interest shall not accrue or be paid on any Disputed Claim with respect to the period from the Effective Date to the date a final distribution is made on account of such Disputed Claim, if and when such Disputed Claim becomes an Allowed Claim.
| J. | Setoffs and Recoupment. |
Except as expressly provided in this Plan, each Reorganized Debtor may, pursuant to section 553 of the Bankruptcy Code, set off and/or recoup against any Plan Distributions to be made on account of any Allowed Claim, any and all Claims, rights, and Causes of Action that such Reorganized Debtor may hold against the Holder of such Allowed Claim to the extent such setoff or recoupment is either (1) agreed in amount among the relevant Reorganized Debtor(s) and the Holder of the Allowed Claim or (2) otherwise adjudicated by the Bankruptcy Court or another court of competent jurisdiction; provided that neither the failure to effectuate a setoff or recoupment nor the allowance of any Claim hereunder shall constitute a waiver or release by a Reorganized Debtor or its successor of any and all Claims, rights, and Causes of Action that such Reorganized Debtor or its successor may possess against the applicable Holder. In no event shall any Holder of Claims against, or Interests in, the Debtors be entitled to recoup any such Claim or Interest against any Claim, right, or Cause of Action of the Debtors or the Reorganized Debtors, as applicable, unless such Holder actually has performed such recoupment and provided notice thereof in writing to the Debtors in accordance with Article XII.F hereof on or before the Effective Date, notwithstanding any indication in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any right of recoupment.
| K. | Claims Paid or Payable by Third Parties. |
1. Claims Paid by Third Parties.
The Debtors or the Reorganized Debtors, as applicable, shall reduce in full a Claim, and such Claim shall be disallowed without a Claim objection having to be Filed and without any further notice to or action, order, or approval of the Bankruptcy Court, to the extent that the Holder of such Claim receives payment in full on account of such Claim from a party that is not a Debtor or a Reorganized Debtor. Subject to the last sentence of this paragraph, to the extent a Holder of a Claim receives a distribution on account of such Claim and receives payment from a party that is not a Debtor or a Reorganized Debtor on account of such Claim, such Holder shall, within five (5) Business Days of receipt thereof, repay or return the distribution to the applicable Reorganized Debtor, to the extent the Holder’s total recovery on account of such Claim from the third party and under this Plan exceeds the amount of such Claim as of the date of any such distribution under this Plan. The failure of such Holder to timely repay or return such distribution shall result in the Holder owing the applicable Reorganized Debtor annualized interest at the Federal Judgment Rate on such amount owed for each Business Day after the five (5) Business Day grace period specified above until the amount is fully repaid.
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2. Claims Payable by Third Parties.
No distributions under this Plan shall be made on account of an Allowed Claim that is payable pursuant to one of the Debtors’ insurance policies until the Holder of such Allowed Claim has exhausted all remedies with respect to such insurance policy. To the extent that one or more of the Debtors’ insurers agrees to satisfy or is found liable for satisfying in full or in part a Claim (if and to the extent adjudicated by a court of competent jurisdiction), then immediately upon such insurers’ agreement, the applicable portion of such Claim may be expunged without a Claim objection having to be Filed and without any further notice to or action, order, or approval of the Bankruptcy Court.
3. Applicability of Insurance Policies.
Except as otherwise provided in this Plan, distributions to Holders of Allowed Claims shall be in accordance with the provisions of any applicable insurance policy. Notwithstanding anything to the contrary contained herein (including Article III of this Plan), nothing contained in this Plan shall constitute or be deemed a release, settlement, satisfaction, compromise, or waiver of any Cause of Action that the Debtors or any Entity may hold against any other Entity, including insurers, under any policies of insurance, nor shall anything contained herein constitute or be deemed a waiver by such insurers of any defenses, including coverage defenses, held by such insurers.
Article VII.
PROCEDURES FOR RESOLVING CONTINGENT,
UNLIQUIDATED, AND DISPUTED CLAIMS
| A. | Disputed Claims Process. |
Notwithstanding section 502(a) of the Bankruptcy Code, and in light of the Unimpaired status of all Allowed General Unsecured Claims under this Plan, Holders of Claims need not File Proofs of Claim, and the Reorganized Debtors and the Holders of Claims shall determine, adjudicate, and resolve any disputes over the validity and amounts of such Claims in the ordinary course of business as if the Chapter 11 Cases had not been commenced except that (unless expressly waived pursuant to this Plan) the Allowed amount of such Claims shall be subject to, the limitations or maximum amounts permitted by the Bankruptcy Code, including sections 502 and 503 of the Bankruptcy Code, to the extent applicable. All Proofs of Claim Filed in these Chapter 11 Cases shall be considered objected to and Disputed without further action by the Debtors or Reorganized Debtors. Upon the Effective Date, all Proofs of Claim Filed against the Debtors, regardless of the time of filing, and including Proofs of Claim Filed after the Effective Date, shall be deemed withdrawn and expunged, other than as provided below. Notwithstanding anything in this Plan to the contrary, disputes regarding the amount of any Cure pursuant to section 365 of the Bankruptcy Code and Claims that the Debtors seek to have determined by the Bankruptcy Court, shall in all cases be determined by the Bankruptcy Court.
For the avoidance of doubt, there is no requirement to File a Proof of Claim (or move the Bankruptcy Court for allowance) to be an Allowed Claim, as applicable, under this Plan. Notwithstanding the foregoing, Entities must File Cure objections as set forth in Article V.B of this Plan to the extent such Entity disputes the amount of the Cure paid or proposed to be paid by the Debtors or the Reorganized Debtors to a counterparty. Except as otherwise provided herein, all Proofs of Claim Filed after the Effective Date shall be disallowed and forever barred, estopped, and enjoined from assertion, and shall not be enforceable against any Reorganized Debtor, without the need for any objection by the Reorganized Debtors or any further notice to or action, order, or approval of the Bankruptcy Court.
| B. | Allowance of Claims. |
After the Effective Date and subject to the terms of this Plan, each of the Reorganized Debtors shall have and retain any and all rights and defenses such Debtor had with respect to any Claim or Interest immediately prior to the Effective Date. The Reorganized Debtors, with the consent of the Required Consenting Stakeholders (not to be unreasonably withheld), may affirmatively determine to deem Unimpaired Claims Allowed to the same extent such Claims would be Allowed under applicable non-bankruptcy Law.
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| C. | Claims Administration Responsibilities. |
Except as otherwise specifically provided in this Plan, after the Effective Date, the Reorganized Debtors shall have the sole authority: (1) to File, withdraw, or litigate to judgment, objections to Claims or Interests; (2) to settle or compromise any Disputed Claim or Interest without any further notice to or action, order, or approval by the Bankruptcy Court; and (3) to administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy Court. For the avoidance of doubt, except as otherwise provided herein, from and after the Effective Date, each Reorganized Debtor shall have and retain any and all rights and defenses such Debtor had immediately prior to the Effective Date with respect to any Disputed Claim or Interest, including the Causes of Action retained pursuant to this Plan.
Notwithstanding the foregoing, the Debtors and Reorganized Debtors shall be entitled to dispute and/or otherwise object to any General Unsecured Claim in accordance with applicable non-bankruptcy Law. If the Debtors or Reorganized Debtors, as applicable, dispute any General Unsecured Claim, such dispute shall be determined, resolved, or adjudicated, as the case may be, in the manner as if the Chapter 11 Cases had not been commenced and shall survive the Effective Date. In any action or proceeding to determine the existence, validity, or amount of any General Unsecured Claim, any and all Claims or defenses that could have been asserted by the applicable Debtor(s) or the Entity holding such General Unsecured Claim are preserved as if the Chapter 11 Cases had not been commenced.
| D. | Adjustment to Claims without Objection. |
Any duplicate Claim or any Claim that has been paid, satisfied, amended, or superseded may be adjusted or expunged (including pursuant to this Plan) on the Claims Register by the Debtors or Reorganized Debtors or the Claims and Noticing Agent without the Debtors or Reorganized Debtors having to File an application, motion, complaint, objection, or any other legal proceeding seeking to object to such Claim and without any further notice to or action, order, or approval of the Bankruptcy Court.
| E. | Disallowance of Claims or Interests. |
Except as otherwise expressly set forth herein, and subject to the terms hereof, including Article VIII and the DIP Order, all Claims and Interests of any Entity from which property is sought by the Debtors under sections 542, 543, 550, or 553 of the Bankruptcy Code, or that the Debtors or the Reorganized Debtors allege is a transferee of a transfer that is avoidable under sections 522(f), 522(h), 544, 545, 547, 548, 549, 553(b), or 724(a) of the Bankruptcy Code, shall be deemed disallowed if: (a) the Entity, on the one hand, and the Debtors or the Reorganized Debtors, as applicable, on the other hand, agree or the Bankruptcy Court has determined by Final Order that such Entity or transferee is liable to turn over any property or monies under any of the aforementioned sections of the Bankruptcy Code; and (b) such Entity or transferee has failed to turn over such property by the date set forth in such agreement or Final Order.
| F. | No Distributions Pending Allowance. |
Notwithstanding any other provision of this Plan, if any portion of a Claim or Interest is a Disputed Claim or Interest, as applicable, no payment or distribution provided hereunder shall be made on account of such Claim or Interest unless and until such Disputed Claim becomes an Allowed Claim; provided that if only the Allowed amount of an otherwise valid Claim or Interest is Disputed, such Claim or Interest shall be deemed Allowed in the amount not Disputed and payment or distribution shall be made on account of such undisputed amount pending resolution of the dispute.
| G. | Distributions After Allowance. |
To the extent that a Disputed Claim or Interest ultimately becomes an Allowed Claim or Allowed Interest, distributions (if any) shall be made to the Holder of such Allowed Claim or Interest in accordance with the provisions of this Plan. As soon as reasonably practicable after the next Distribution Date after the date that the order or judgment of the Bankruptcy Court Allowing any Disputed Claim or Disputed Interest becomes a Final Order, the applicable Disbursing Agent shall provide to the Holder of such Claim or Interest the distribution (if any) to which such Holder is entitled under this Plan as of the Effective Date, without any interest to be paid on account of such Claim or Interest.
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Article VIII.
SETTLEMENT, RELEASE, INJUNCTION, AND RELATED PROVISIONS
| A. | Discharge of Claims and Termination of Interests. |
Pursuant to section 1141(d) of the Bankruptcy Code and except as otherwise specifically provided herein, the Confirmation Order, or in any contract, instrument, or other agreement or document created pursuant to this Plan or the Plan Supplement, the distributions, rights, and treatment that are provided herein shall be in complete satisfaction, discharge, and release, effective as of the Effective Date, of Claims (including any Intercompany Claims that the Reorganized Debtors resolve or compromise after the Effective Date), Interests, and Causes of Action of any nature whether known or unknown, including any interest accrued on Claims or Interests from and after the Petition Date, whether known or unknown, against, liabilities of, Liens on, obligations of, rights against, and Interests in the Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained pursuant to this Plan on account of such Claims and Interests, including demands, liabilities, and Causes of Action that arose before the Effective Date, any liability (including withdrawal liability) to the extent such Claims or Interests relate to services that employees of the Debtors have performed prior to the Effective Date, and that arise from a termination of employment, any contingent or noncontingent liability on account of representations or warranties issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not (a) a Proof of Claim based upon such debt or right is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code; (b) a Claim or Interest based upon such debt, right, or Interest is Allowed pursuant to section 502 of the Bankruptcy Code; or (c) the Holder of such a Claim or Interest has accepted this Plan. Any default or “event of default” by the Debtors with respect to any Claim or Interest that existed immediately prior to or on account of the filing of the Chapter 11 Cases shall be deemed cured (and no longer continuing) as of the Effective Date. Without prejudice to the distributions, rights, and treatment that are provided by this Plan, the Confirmation Order shall be a judicial determination of the discharge of all Claims (other than any Reinstated Claims) and Interests subject to the occurrence of the Effective Date, and, upon the Effective Date, all Holders of such Claims and Interests shall be forever precluded and enjoined, pursuant to section 524 of the Bankruptcy Code, from prosecuting or asserting any such Claim or Interest against the Debtors, Reorganized Debtors, or any of their assets or property.
| B. | Release of Liens. |
Except as otherwise provided in the Exit ABL Facility Documents, this Plan, the Confirmation Order, or any contract, instrument, release, or other agreement or document created pursuant to this Plan, on the Effective Date and concurrently with the applicable distributions made pursuant to this Plan and, in the case of a Secured Claim satisfaction in full of the portion of the Secured Claim that is Allowed as of the Effective Date, except for Other Secured Claims that the Debtors elect to Reinstate in accordance with this Plan, all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estates shall be fully released and discharged, and all of the right, benefit, title, and interest of any Holder of such mortgages, deeds of trust, Liens, pledges, or other security interests shall revert and, as applicable, be reassigned, surrendered, reconveyed, or retransferred to the Reorganized Debtors and their successors and assigns. Any Holder of such Secured Claim (and the applicable agents for such Holder, including the Agents/Trustees and the DIP Agent) shall be authorized and directed, at the sole cost and expense of the Reorganized Debtors, to release any collateral or other property of any Debtor (including any Cash Collateral and possessory collateral) held by such Holder (and the applicable agents for such Holder, including the Agents/Trustees) and to take such actions as may be reasonably requested by the Reorganized Debtors to evidence the release of such Lien, including the execution, delivery, and filing or recording of such releases. The presentation or filing of the Confirmation Order to or with any federal, state, provincial, or local agency or department shall constitute good and sufficient evidence of, but shall not be required to effect, the termination of such Liens.
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To the extent that any Holder of a Secured Claim that has been satisfied or discharged in full pursuant to this Plan, or any agent for such Holder, has filed or recorded publicly any Liens and/or security interests to secure such Holder’s Secured Claim, then as soon as practicable on or after the Effective Date, such Holder (or the agent for such Holder) shall take any and all steps reasonably requested by the Debtors or the Reorganized Debtors, that are necessary or desirable to record or effectuate the cancellation and/or extinguishment of such Liens and/or security interests, including the making of any applicable filings or recordings, and the Reorganized Debtors shall be entitled to make any such filings or recordings on such Holder’s behalf.
| C. | Releases by the Debtors. |
Except as otherwise provided in this Plan or the Confirmation Order to the contrary, pursuant to section 1123(b) of the Bankruptcy Code, in exchange for good and valuable consideration, including the obligations of the Debtors under this Plan and the contributions and services of the Released Parties in facilitating the implementation of the restructuring contemplated by this Plan, the adequacy of which is hereby confirmed, on and after the Effective Date, each Released Party is, and is deemed to be, hereby conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged by the Debtors, their Estates, the Reorganized Debtors, and any Person seeking to exercise the rights of the Debtors or their Estates, including any successors to the Debtors or any Estates or any Estate representatives appointed or selected pursuant to section 1123(b)(3) of the Bankruptcy Code, in each case on behalf of themselves and their respective successors, assigns, and representatives, and any and all other Entities who may purport to assert any Claim or Cause of Action, directly or derivatively, by, through, for, or because of the foregoing Entities, from any and all Claims and Causes of Action whatsoever, including any Avoidance Actions and any derivative Claims, asserted or assertable on behalf of any of the Debtors, Reorganized Debtors, and their Estates, whether liquidated or unliquidated, known or unknown, foreseen or unforeseen, matured or unmatured, asserted or unasserted, accrued or unaccrued, existing or hereafter arising, contingent or noncontingent, in Law, equity, contract, tort or otherwise, that the Debtors, their Estates, or the Reorganized Debtors, including any successors to the Debtors or any Estate representatives appointed or selected, would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim against, or Interest in, a Debtor, the Reorganized Debtors, their Estates, or other Entity, or that any Holder of any Claim against, or Interest in, a Debtor or other Entity could have asserted on behalf of the Debtors or other Entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors (including the Debtors’ capital structure, management, ownership, or operation thereof), the purchase, sale, or recission of any Security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in this Plan, the business or contractual arrangements or interaction between or among any Debtor and any Released Party, the ownership and/or operation of the Debtors by any Released Party or the distribution of any Cash or other property of the Debtors to any Released Party, the assertion or enforcement of rights and remedies against the Debtors, the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions, any related adversary proceedings, intercompany transactions between or among a Debtor and another Debtor or an Affiliate of a Debtor, the decision to File the Chapter 11 Cases, the formulation, documentation, preparation, dissemination, solicitation, negotiation, entry into or filing of the RSA, the DIP Documents, the DIP Facility, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, this Plan (including, for the avoidance of doubt, the Plan Supplement), before or during the Chapter 11 Cases, any other Definitive Document or any Restructuring Transaction, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by this Plan or the reliance by any Released Party on this Plan or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the RSA, the DIP Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, this Plan, any other Definitive Document, or any Restructuring Transactions before or during the Chapter 11 Cases, the filing of the Chapter 11 Cases, the Disclosure Statement or this Plan, the solicitation of votes with respect to this Plan, the pursuit of Confirmation, the pursuit of Consummation of the Restructuring Transactions, the administration and implementation of this Plan, or the distribution of property under this Plan or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date relating to any of the foregoing.
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Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any Causes of Action identified in the Schedule of Retained Causes of Action, (b) any post-Effective Date obligations of any party or Entity under this Plan, the Confirmation Order, any Restructuring Transaction, or any document, instrument, or Agreement (including any Definitive Document, the Exit ABL Facility, the Exit ABL Facility Documents, the New Organizational Documents, and other documents set forth in the Plan Supplement) executed to implement this Plan or any Claim or obligation arising under this Plan, or (c) any Released Party from any claim or Cause of Action arising from an act or omission that is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Debtor Release, which includes by reference each of the related provisions and definitions contained in this Plan, and further, shall constitute the Bankruptcy Court’s finding that the Debtor Release is: (a) in exchange for the good and valuable consideration provided by each of the Released Parties, including, without limitation, the Released Parties’ substantial contributions to facilitating the Restructuring Transactions and implementing this Plan; (b) a good faith settlement and compromise of the Claims released by the Debtor Release; (c) in the best interests of the Debtors and all Holders of Claims and Interests; (d) fair, equitable, and reasonable; (e) given and made after due notice and opportunity for hearing; and (f) a bar to any of the Debtors, the Reorganized Debtors, or the Debtors’ Estates asserting any Claim or Cause of Action released pursuant to the Debtor Release.
| D. | Releases by the Releasing Parties. |
Except as otherwise provided in this Plan or the Confirmation Order to the contrary, on and after the Effective Date, in exchange for good and valuable consideration, including the obligations of the Debtors under this Plan and the contributions and services of the Released Parties in facilitating the implementation of the restructuring contemplated by this Plan, the adequacy of which is hereby confirmed, pursuant to section 1123(b) of the Bankruptcy Code, in each case except for Claims arising under, or preserved by, this Plan, to the fullest extent permitted under applicable law, each Released Party is, and is deemed to be, hereby conclusively, absolutely, unconditionally, irrevocably and forever, released and discharged by each and every Releasing Party, in each case on behalf of themselves and their respective successors, assigns, and representatives, and any and all other Entities who may purport to assert any Claims or Cause of Action, directly or derivatively, by, through, for, or because of the foregoing Entities, from any and all Claims and Causes of Action arising at any time prior to the Effective Date, including any Avoidance Actions and any derivative claims assertable, whether liquidated or unliquidated, known or unknown, foreseen or unforeseen, matured or unmatured, existing on or before the Effective Date, contingent or noncontingent, in law, equity, contract, tort, or otherwise, including any derivative Claims asserted or assertable on behalf of any of the Debtors, that such Entities would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim against, or Interest in, a Debtor, the Reorganized Debtors, or their Estates or other Entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Reorganized Debtors, and their Estates (including the capital structure, management, ownership, or operation thereof), the Chapter 11 Cases, the purchase, sale, or recission of any Security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in this Plan, the business or contractual arrangements or interaction between or among any Debtor and any Released Party, the assertion or enforcement of rights and remedies against the Debtors, the Debtors’ in- or out-of-court restructuring efforts, intercompany transactions between or among a Debtor and another Debtor or Affiliate of a Debtor, the decision to File the Chapter 11 Cases, the formulation, documentation, preparation, dissemination, solicitation, negotiation, entry into, or filing of the RSA, the DIP Facility, the DIP Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, this Plan (including, for the avoidance of doubt, the Plan Supplement), before or during the Chapter 11 Cases, any other Definitive Document or any Restructuring Transaction, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by this Plan or the reliance by any Released Party on this Plan or the Confirmation Order in lieu of such legal opinion) relating to any of the foregoing, created or entered into in connection with the RSA, the DIP Facility, the DIP Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, this Plan, or the Plan Supplement, before or during the Chapter 11 Cases, or any Restructuring Transactions, any preference, fraudulent transfer, or other avoidance claim arising pursuant to chapter 5 of the Bankruptcy Code or other applicable Law, the filing of the Chapter 11 Cases, the Disclosure Statement, or this Plan, the solicitation of votes with respect to this Plan, the pursuit of Confirmation, the pursuit of Consummation of the Restructuring Transactions, the administration and implementation of this Plan and the Restructuring Transactions, including the issuance or distribution of Securities pursuant to the Restructuring Transactions and/or Plan, or the distribution of property under this Plan or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date relating to any of the foregoing.
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Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any post-Effective Date obligations of any party or Entity under this Plan, the Confirmation Order, any Restructuring Transaction, or any document, instrument, or agreement (including any Definitive Document, the Exit ABL Facility Documents, the New Organizational Documents, and other documents set forth in the Plan Supplement) executed to implement this Plan or any Claim or obligation arising under this Plan, or (b) any Released Party from any claim or Cause of Action arising from an act or omission that is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Third-Party Release, which includes by reference each of the related provisions and definitions contained herein, and, further, shall constitute the Bankruptcy Court’s finding that the Third-Party Release is: (a) consensual; (b) essential to the Confirmation of this Plan; (c) given in exchange for the good and valuable consideration provided by each of the Released Parties, including, without limitation, the Released Parties’ substantial contributions to facilitating the Restructuring Transactions and implementing this Plan; (d) a good faith settlement and compromise of the Claims released by the Third-Party Release; (e) in the best interests of the Debtors and their Estates; (f) fair, equitable, and reasonable; (g) given and made after due notice and opportunity for hearing; and (h) a bar to any of the Releasing Parties asserting any Claim or Cause of Action released pursuant to the Third-Party Release.
| E. | Exculpation. |
Notwithstanding anything contained in this Plan to the contrary, to the fullest extent permissible under applicable law and without affecting or limiting either the Debtor Release or Third-Party Release, effective as of the Effective Date, no Exculpated Party shall have or incur liability or obligation for, and each Exculpated Party is hereby released and exculpated from, any Cause of Action for any Claim arising from the Petition Date through the Effective Date related to any act or omission in connection with, relating to, or arising out of, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, filing, or termination of the RSA and related prepetition transactions, the DIP Facility, the DIP Documents, the Definitive Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, this Plan, the Plan Supplement, the Restructuring Transactions, or any wind down transaction, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by this Plan or the reliance by any Released Party on this Plan or the Confirmation Order in lieu of such legal opinion) in connection with the RSA and related prepetition transactions, the DIP Facility, the DIP Documents, the Definitive Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, this Plan, the Plan Supplement, the Restructuring Transactions, any preference, fraudulent transfer, or other avoidance Claim arising pursuant to chapter 5 of the Bankruptcy Code or other applicable law, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of consummation of the Restructuring Transactions, the administration and implementation of this Plan, including the issuance or distribution of Securities pursuant to this Plan, or the distribution of property under this Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date, except for Claims related to any act or omission that is determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence, but in all respects such Entities shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to this Plan.
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| F. | Injunction. |
Except as otherwise expressly provided in this Plan or in the Confirmation Order, or for obligations or distributions issued or required to be paid pursuant to this Plan or the Confirmation Order, all Entities who have held, hold, or may hold Claims, Interests, or Causes of Action that have been extinguished, released, discharged, or are subject to exculpation, are permanently enjoined, from and after the Effective Date, from taking any of the following actions against, as applicable, the Debtors, the Reorganized Debtors, the Exculpated Parties, or the Released Parties: (a) commencing or continuing in any manner any action, suit, or other proceeding of any kind on account of or in connection with or with respect to any such released Claims, Interests, or Causes of Action; (b) enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order against such Entities on account of or in connection with or with respect to any such Claims, Interests, liabilities, or Causes of Action; (c) creating, perfecting, or enforcing any Lien or encumbrance of any kind against such Entities or the property or the Estates of such Entities on account of or in connection with or with respect to any such Claims, Interests, liabilities, or Causes of Action; (d) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from such Entities or against the property or the Estates of such Entities on account of or in connection with or with respect to any such Claims or Interests, unless such Holder has timely Filed a motion with the Bankruptcy Court expressly requesting the right to perform such setoff, subrogation or recoupment on or before the Effective Date, and notwithstanding an indication of a Claim, Interest, or Cause of Action or otherwise that such Holder asserts, has, or intends to preserve any right of setoff pursuant to applicable Law or otherwise; and (e) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Claims, Interests, liabilities, or Causes of Action released or settled pursuant to this Plan.
Upon entry of the Confirmation Order, all Holders of Claims and Interests and their respective current and former employees, agents, officers, directors, managers, principals, and direct and indirect Affiliates, in their capacities as such, shall be enjoined from taking any actions to interfere with the implementation or Consummation of this Plan. Each Holder of an Allowed Claim or Allowed Interest, as applicable, by accepting or being eligible to accept distributions under or Reinstatement of such Claim or Interest, as applicable, pursuant to this Plan (as may be amended, restated, supplemented, or otherwise modified from time to time), shall be deemed to have consented to the injunction provisions set forth in this Plan.
No Person or Entity may commence or pursue a Claim or Cause of Action of any kind against the Exculpated Parties that relates to or is reasonably likely to relate to any act or omission in connection with, relating to, or arising out of a Claim or Cause of Action, as applicable, subject to Article VIII.E hereof, without the Bankruptcy Court (i) first determining, after notice and a hearing, that such Claim or Cause of Action represents a colorable Claim not subject to exculpation under this Plan, and (ii) specifically authorizing such Person or Entity to bring such Claim or Cause of Action, as applicable, against any such Exculpated Party.
| G. | Protections Against Discriminatory Treatment. |
Consistent with section 525 of the Bankruptcy Code and the Supremacy Clause of the United States Constitution, all Entities, including Governmental Units, shall not discriminate against the Reorganized Debtors or deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, the Reorganized Debtors, or another Entity with whom the Reorganized Debtors have been associated, solely because each Debtor has been a debtor under chapter 11 of the Bankruptcy Code, has been insolvent before the commencement of the Chapter 11 Cases (or during the Chapter 11 Cases but before the Debtors are granted or denied a discharge), or has not paid a debt that is dischargeable in the Chapter 11 Cases.
| H. | Document Retention. |
On and after the Effective Date, the Reorganized Debtors may maintain documents in accordance with their standard document retention policy, as may be altered, amended, modified, or supplemented by the Reorganized Debtors.
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| I. | Reimbursement or Contribution. |
If the Bankruptcy Court disallows a Claim for reimbursement or contribution of an Entity pursuant to section 502(e)(1)(B) of the Bankruptcy Code, then to the extent that such Claim is contingent as of the time of allowance or disallowance, such Claim shall be forever disallowed and expunged notwithstanding section 502(j) of the Bankruptcy Code, unless prior to the Confirmation Date: (1) such Claim has been adjudicated as non-contingent or (2) the relevant Holder of a Claim has Filed a non-contingent Proof of Claim on account of such Claim and a Final Order has been entered prior to the Confirmation Date determining such Claim as no longer contingent.
| J. | Claims by the United States Government or Any State and Local Authority. |
Nothing in the Confirmation Order or the Plan shall effect a release of any claim by the United States Government or any of its agencies or any state and local authority whatsoever, including any claim arising under the Internal Revenue Code, the environmental laws, or any criminal laws of the United States or any state and local authority against any party or person, nor shall anything in the Confirmation Order or the Plan enjoin the United States or any state or local authority from bringing any claim, suit, action, or other proceedings against any party or person for any liability of such persons whatever, including any claim, suit, or action arising under the Internal Revenue Code, the environmental laws, or any criminal laws of the United States or any state and local authority against such persons, nor shall anything in the Confirmation Order or the Plan exculpate any party or person from any liability to the United States Government or any of its agencies or any state and local authority whatsoever, including any liabilities arising under the Internal Revenue Code, the environmental laws, or any criminal laws of the United States or any state and local authority against any party or person.
Article IX.
CONDITIONS PRECEDENT TO CONSUMMATION OF THe PLAN
| A. | Conditions Precedent to the Effective Date. |
It shall be a condition to the Effective Date of this Plan that the following conditions shall have been satisfied or waived pursuant to the provisions of Article IX.B hereof:
1. each Definitive Document shall have been executed and/or effectuated, in the form and substance and contain terms and conditions consistent with the RSA or otherwise be approved by the applicable Parties in accordance with the consent rights under the RSA;
2. the RSA shall be in full force and effect, no termination event or event that would give rise to a termination event under the RSA upon the expiration of the applicable grace period shall have occurred and remain occurring, and the RSA shall not have been validly terminated before the Effective Date;
3. all allowed professional fees and expenses of retained professionals required to be approved by the Bankruptcy Court shall have been paid in full or amounts sufficient to pay such fees and expenses after the Effective Date shall have been placed in a professional fee escrow account, in each case in accordance with and subject to the terms of this Plan and the Confirmation Order;
4. all Restructuring Expenses and Senior Secured Notes Trustee Fees and Expenses shall have been paid in full and in cash in accordance with the RSA and this Plan;
5. the Bankruptcy Court shall have entered the DIP Orders, consistent with the RSA, which orders shall not have been reversed, stayed, modified, dismissed, vacated, or reconsidered;
6. the DIP Facility and all the DIP Documents shall be in full force and effect, no event of default under the DIP Documents upon the expiration of the applicable grace period shall have occurred and remain occurring, and the DIP Facility shall not have been validly terminated before the Effective Date;
7. the final version of the Plan Supplement shall have been filed and all of the schedules, documents, and exhibits contained therein shall be consistent in all respects with the RSA and the other Definitive Documents and subject to the consent of the Required Consenting Stakeholders in accordance with their respective consent rights under the RSA;
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8. the Bankruptcy Court shall have entered the Confirmation Order, in form and substance consistent with the RSA, and the Confirmation Order shall not have been reversed, stayed, modified, dismissed, vacated, or reconsidered, and shall have become a final and non-appealable order;
9. the New Equity Interests shall have been issued by Reorganized Nine Energy in accordance with this Plan and the RSA;
10. the New Organizational Documents shall have been executed and/or effectuated, and shall be in form and substance consistent with this Plan and the RSA;
11. the Debtors shall have otherwise substantially consummated the Restructuring Transactions, and all transactions contemplated herein, in a manner consistent in all respects with the RSA and the other Definitive Documents;
12. (i) all the Exit ABL Facility Documents and all other documentation related to the Exit ABL Facility shall have been duly executed and delivered by each party thereto; (ii) all conditions precedent to the effectiveness of the Exit ABL Facility shall have been satisfied or duly waived in writing in accordance with the terms of the Exit ABL Facility by the party whose consent is required thereunder, as applicable; and (iii) the Exit ABL Facility shall have been funded and closed, and shall be in full force and effect;
13. no court of competent jurisdiction or other competent governmental or regulatory authority shall have issued any order making illegal or otherwise restricting, limiting, preventing, or prohibiting the consummation of any of the Restructuring Transactions;
14. there shall not have been instituted or be pending any action, proceeding, application, claim, counterclaim, or investigation by any governmental entity (i) making illegal, enjoining, or otherwise prohibiting the consummation of the Plan contemplated herein and in the Definitive Documents or (ii) imposing a material award, claim, injunction, fine or penalty that both (1) is not dischargeable, as determined by the Bankruptcy Court in the Confirmation Order, and (2) has a material adverse effect on the financial condition or operations of the Reorganized Debtors, taken as whole; and
15. all governmental and third-party approvals and consents, including Bankruptcy Court approval, necessary in connection with the Restructuring Transactions contemplated by the RSA shall have been obtained, not be subject to unfulfilled conditions, and be in full force and effect, and all applicable waiting periods shall have expired or been waived.
| B. | Waiver of Conditions. |
The Conditions Precedent may be waived, in whole or in part, with the written consent (email being sufficient) of the Debtors and the Required Consenting Stakeholders.
| C. | Substantial Consummation. |
“Substantial consummation” of this Plan, as defined by section 1101(2) of the Bankruptcy Code, shall be deemed to occur on the Effective Date.
| D. | Effect of Failure of Conditions. |
If Consummation does not occur, this Plan shall be null and void in all respects and nothing contained in the RSA, this Plan, or the Disclosure Statement shall: (1) constitute a waiver or release of any Claims by the Debtors or any Holder of Claims or Interests of any Claim or Interest; (2) prejudice in any manner the rights of the Debtors, any Holders of Claims or Interests, or any other Entity; or (3) constitute an admission, acknowledgment, offer, or undertaking by the Debtors, any Holders of Claims or Interests, or any other Entity, respectively; provided that all provisions of the RSA that survive termination thereof shall remain in effect in accordance with the terms thereof.
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Article X.
MODIFICATION, REVOCATION, OR WITHDRAWAL OF This PLAN
| A. | Modification and Amendments. |
Except as otherwise specifically provided in this Plan and to the extent permitted by the RSA, the Debtors reserve the right to modify this Plan, with the consent of the Required Consenting Stakeholders, whether such modification is material or immaterial, and seek Confirmation consistent with the Bankruptcy Code and, as appropriate, not resolicit votes on such modified Plan. Subject to those restrictions on modifications set forth in this Plan and the RSA, and the requirements of section 1127 of the Bankruptcy Code, Bankruptcy Rule 3019, and, to the extent applicable, sections 1122, 1123, and 1125 of the Bankruptcy Code, each of the Debtors expressly reserves its respective rights to revoke or withdraw, to alter, amend, or modify this Plan, with the consent of the Required Consenting Stakeholders, with respect to such Debtor, one or more times, after Confirmation, and, to the extent necessary may initiate proceedings in the Bankruptcy Court to so alter, amend, or modify this Plan, or remedy any defect or omission, or reconcile any inconsistencies in this Plan, the Disclosure Statement, or the Confirmation Order, in such matters as may be necessary to carry out the purposes and intent of this Plan.
| B. | Effect of Confirmation on Modifications. |
Entry of the Confirmation Order shall mean that all modifications or amendments to this Plan since the solicitation thereof are approved pursuant to section 1127(a) of the Bankruptcy Code and do not require additional disclosure or resolicitation under Bankruptcy Rule 3019.
| C. | Revocation or Withdrawal of Plan. |
To the extent permitted by the RSA, the Debtors reserve the right to revoke or withdraw this Plan prior to the Confirmation Date and to File subsequent plans of reorganization. If the Debtors revoke or withdraw this Plan, or if Confirmation or Consummation does not occur, then: (1) this Plan shall be null and void in all respects; (2) any settlement or compromise embodied in this Plan (including the fixing or limiting to an amount certain, and including the Allowance or disallowance, of all or any portion of any Claim or Interest or Class of Claims or Interests), assumption or rejection of Executory Contracts or Unexpired Leases effected under this Plan, and any document or agreement executed pursuant to this Plan, shall be deemed null and void; and (3) nothing contained in this Plan shall: (a) constitute a waiver or release of any Claims or Interests; (b) prejudice in any manner the rights of such Debtor or any other Entity; or (c) constitute an admission, acknowledgement, offer, or undertaking of any sort by such Debtor or any other Entity.
Article XI.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, on and after the Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, or relating to, the Chapter 11 Cases and this Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including jurisdiction to:
1. allow, disallow, determine, liquidate, classify, estimate, or establish the priority, secured or unsecured status, or amount of any Claim, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the secured or unsecured status, priority, amount, or allowance of Claims;
2. decide and resolve all matters related to the granting and denying, in whole or in part, any applications for allowance of compensation or reimbursement of expenses to Professionals authorized pursuant to the Bankruptcy Code or this Plan;
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3. resolve any matters related to: (a) the assumption, assumption and assignment, or rejection of any Executory Contract or Unexpired Lease to which a Debtor is party or with respect to which a Debtor may be liable and to hear, determine, and, if necessary, liquidate, any Claims arising therefrom, including Cure pursuant to section 365 of the Bankruptcy Code; (b) any potential contractual obligation under any Executory Contract or Unexpired Lease that is assumed; (c) the Reorganized Debtors amending, modifying, or supplementing, after the Effective Date, pursuant to Article V hereof, any Executory Contracts or Unexpired Leases to the list of Executory Contracts and Unexpired Leases to be assumed or rejected or otherwise; and (d) any dispute regarding whether a contract or lease is or was executory or expired;
4. ensure that distributions to Holders of Allowed Claims are accomplished (as applicable) pursuant to the provisions of this Plan;
5. adjudicate, decide, or resolve any motions, adversary proceedings, contested or litigated matters, and any other matters, and grant or deny any applications involving a Debtor that may be pending on the Effective Date;
6. adjudicate, decide, or resolve any and all matters related to section 1141 of the Bankruptcy Code;
7. enter and implement such orders as may be necessary to execute, implement, or consummate the provisions of this Plan and all contracts, instruments, releases, indentures, and other agreements or documents created or entered into in connection with this Plan, the Confirmation Order, or the Disclosure Statement;
8. enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;
9. resolve any cases, controversies, suits, disputes, or Causes of Action that may arise in connection with the Consummation, interpretation, or enforcement of this Plan or any Entity’s obligations incurred in connection with this Plan or otherwise in connection with the Chapter 11 Cases;
10. issue injunctions, enter and implement other orders, or take such other actions as may be necessary to restrain interference by any Entity with Consummation or enforcement of this Plan;
11. resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the settlements, releases, injunctions, discharges, exculpations, and other provisions contained in this Plan, including under Article VIII hereof, whether arising prior to or after the Effective Date, and enter such orders as may be necessary or appropriate to implement and enforce such releases, injunctions, exculpations, and other provisions;
12. resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the Holder of a Claim or Interest for amounts not timely repaid pursuant to Article VI.K hereof;
13. enter and implement such orders as are necessary if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated;
14. determine any other matters that may arise in connection with or relate to this Plan, the Plan Supplement, the Disclosure Statement, the Confirmation Order, or any contract, instrument, release, indenture, or other agreement or document created in connection with this Plan, the Plan Supplement, or the Disclosure Statement;
15. enter an order concluding or closing the Chapter 11 Cases;
16. adjudicate any and all disputes arising from or relating to distributions under this Plan or any transactions contemplated herein;
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17. consider any modifications of this Plan, to Cure any defect or omission, or to reconcile any inconsistency in any Bankruptcy Court order, including the Confirmation Order;
18. determine requests for the payment of Claims entitled to priority pursuant to section 507 of the Bankruptcy Code;
19. hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of this Plan or the Confirmation Order, including disputes arising under agreements, documents, or instruments executed in connection with this Plan;
20. hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;
21. hear and determine all disputes involving the existence, nature, scope, or enforcement of any exculpations, discharges, injunctions, and releases granted in this Plan, including under Article VIII hereof, regardless of whether such termination occurred prior to or after the Effective Date;
22. enforce all orders previously entered by the Bankruptcy Court; and
23. hear any other matter not inconsistent with the Bankruptcy Code.
As of the Effective Date, notwithstanding anything in this Article IX to the contrary, the New Organizational Documents shall be governed by the jurisdictional provisions therein and the Bankruptcy Court shall not retain jurisdiction with respect thereto.
Article XII.
MISCELLANEOUS PROVISIONS
| A. | Immediate Binding Effect. |
Subject to Article IX.A hereof, and notwithstanding Bankruptcy Rules 3020(e), 6004(h), or 7062 or otherwise, upon the occurrence of the Effective Date, the terms of this Plan (including the documents and instruments contained in the Plan Supplement) shall be immediately effective and enforceable and deemed binding upon the Debtors, Reorganized Debtors, and any and all Holders of Claims or Interests (irrespective of whether such Holders of Claims or Interests are deemed to have accepted this Plan), all Entities that are parties to or are subject to the settlements, compromises, releases, discharges, and injunctions described in this Plan, each Entity acquiring property under this Plan, and any and all non-Debtor parties to Executory Contracts and Unexpired Leases with the Debtors. All Claims or Interests shall be as fixed, adjusted, or compromised, as applicable, pursuant to this Plan regardless of whether any Holder of a Claim or Interest has voted on this Plan.
| B. | Additional Documents. |
Subject to and in accordance with the RSA, on or before the Effective Date, the Debtors may File with the Bankruptcy Court such agreements and other documents as may be necessary to effectuate and further evidence the terms and conditions of this Plan, subject to the RSA and the consent rights set forth therein. The Debtors or the Reorganized Debtors, as applicable, and all Holders of Claims receiving distributions pursuant to this Plan and all other parties in interest shall, from time to time, prepare, execute, and deliver any agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of this Plan.
| C. | Payment of Statutory Fees. |
All fees payable pursuant to section 1930(a) of the Judicial Code, as determined by the Bankruptcy Court at a hearing pursuant to section 1128 of the Bankruptcy Code, shall be paid by each of the Reorganized Debtors (or the Disbursing Agent on behalf of each of the Reorganized Debtors) for each quarter (including any fraction thereof) until the Chapter 11 Cases are converted, dismissed, or closed, whichever occurs first.
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| D. | Reservation of Rights. |
Except as expressly set forth in this Plan, this Plan shall have no force or effect unless the Bankruptcy Court shall enter the Confirmation Order, and the Confirmation Order shall have no force or effect if the Effective Date does not occur. None of the Filing of this Plan, any statement or provision contained in this Plan, or the taking of any action by any Debtor with respect to this Plan, the Disclosure Statement, or the Plan Supplement shall be or shall be deemed to be an admission or waiver of any rights of any Debtor with respect to the Holders of Claims or Interests prior to the Effective Date.
| E. | Successors and Assigns. |
The rights, benefits, and obligations of any Entity named or referred to in this Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor or assign, Affiliate, Related Party, officer, manager, director, agent, representative, attorney, beneficiaries, or guardian, if any, of each Entity.
| F. | Notices. |
All notices, requests, and demands to or upon the Debtors to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:
1. if to the Debtors, to:
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
| Attention: | Guy Sirkes, Theodore Moore | |
| E-mail: | guy.sirkes@nineenergyservice.com; | |
| ted.moore@nineenergyservice.com |
with copies to:
Kirkland & Ellis LLP
333 West Wolf Point Plaza
Chicago, Illinois 60654
| Attention: | Chad J. Husnick, P.C.; Seth T. Sanders | |
| E-mail: | chad.husnick@kirkland.com; | |
| seth.sanders@kirkland.com |
and
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
| Attention: | Ross J. Fiedler | |
| E-mail: | ross.fiedler@kirkland.com |
2. if to a Consenting Noteholder, to:
Milbank LLP
55 Hudson Yards
New York, New York 10001
| Attention: | Evan R. Fleck; Matthew Brod; Abigail Debold | |
| E-mail: | efleck@milbank.com; mbrod@milbank.com; | |
| adebold@milbank.com |
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3. if to the Consenting Prepetition ABL Lenders, to:
Paul Hastings LLP
200 Park Avenue
New York, New York 10166
| Attention: | Jennifer Yount; Roger G. Schwartz; Rafael Alvarado | |
| E-mail: | jenniferyount@paulhastings.com; | |
| rogerschwartz@paulhastings.com; | ||
| rafaelalvarado@paulhastings.com |
After the Effective Date, the Reorganized Debtors have the authority to send a notice to Entities that to continue to receive documents pursuant to Bankruptcy Rule 2002, such Entity must File a renewed request to receive documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the Reorganized Debtors are authorized to limit the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have Filed such renewed requests.
| G. | Term of Injunctions or Stays. |
Unless otherwise provided in this Plan or in the Confirmation Order, all injunctions or stays in effect in the Chapter 11 Cases pursuant to sections 105 or 362 of the Bankruptcy Code or any order of the Bankruptcy Court, and extant on the Confirmation Date (excluding any injunctions or stays contained in this Plan or the Confirmation Order) shall remain in full force and effect until the Effective Date. All injunctions or stays contained in this Plan or the Confirmation Order shall remain in full force and effect from and after the Effective Date in accordance with their terms.
| H. | Entire Agreement. |
Except as otherwise indicated, this Plan (including the documents and instruments in the Plan Supplement) supersedes all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into this Plan.
| I. | Exhibits. |
All exhibits and documents included in the Plan Supplement are an integral part of this Plan and are incorporated into and are a part of this Plan as if set forth in full in this Plan. After the exhibits and documents are Filed, copies of such exhibits and documents shall be available upon written request to the Debtors’ counsel at the address above or by downloading such exhibits and documents from the Debtors’ restructuring website at https://dm.epiq11.com/NineEnergy or the Bankruptcy Court’s website at https://www.deb.uscourts.gov/. To the extent any exhibit or document is inconsistent with the terms of this Plan, unless otherwise ordered by the Bankruptcy Court, the Plan Supplement exhibit or document shall control.
| J. | Nonseverability of Plan Provisions. |
If, prior to Confirmation, any term or provision of this Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of this Plan will remain in full force and effect and will in no way be affected, Impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of this Plan, as it may have been altered or interpreted in accordance with the foregoing, is: (1) valid and enforceable pursuant to its terms; (2) integral to this Plan and may not be deleted or modified without the Debtors’ consent; and (3) nonseverable and mutually dependent.
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| K. | Votes Solicited in Good Faith. |
Upon entry of the Confirmation Order, the Debtors will be deemed to have solicited votes on this Plan in good faith and in compliance with section 1125(g) of the Bankruptcy Code, and pursuant to section 1125(e) of the Bankruptcy Code, the Exculpated Parties, the directors and officers of any of the Debtors, each of the Debtors and Reorganized Debtors, and with respect to the foregoing, the Related Parties thereto, will be deemed to have participated in good faith and in compliance with the Bankruptcy Code in the offer, issuance, sale, and purchase of Securities offered and sold under this Plan or any previous plan, and, therefore, no such parties nor individuals or the Reorganized Debtors will have any liability for the violation of any applicable Law, rule, or regulation governing the solicitation of votes on this Plan or the offer, issuance, sale, or purchase of the Securities offered and sold under this Plan and any previous plan.
| L. | Closing of Chapter 11 Cases. |
Upon the occurrence of the Effective Date, the Reorganized Debtors shall be permitted to close all of the Chapter 11 Cases except for one of the Chapter 11 Cases, as determined by the Reorganized Debtors, and all contested matters (if any) relating to each of the Debtors, including objections to Claims, shall be administered and heard in such Chapter 11 Case. The Reorganized Debtors shall, promptly after the full administration of the Chapter 11 Cases, File with the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court to close the Chapter 11 Cases.
| M. | Waiver or Estoppel. |
On the Effective Date, each Holder of a Claim or an Interest shall be deemed to have waived any right to assert any argument, including the right to argue that its Claim or Interest should be Allowed in a certain amount, in a certain priority, secured or not subordinated by virtue of an agreement made with the Debtors or their counsel, or with any other Entity, if such agreement was not disclosed in this Plan, the Disclosure Statement, or papers to be Filed with the Bankruptcy Court prior to the Confirmation Date.
| Dated: March 3, 2026 | NINE ENERGY SERVICE, INC. on behalf of itself and all other Debtors | ||
| By: | /s/ Guy Sirkes | ||
| Name: | Guy Sirkes | ||
| Title: | Executive Vice President and Chief Financial Officer | ||
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Exhibit 3.1
FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NINE ENERGY SERVICE, INC.
The original Certificate of Incorporation of NINE ENERGY SERVICE, INC. was filed with the Secretary of State of the State of Delaware on September 26, 2011 under the name NSC-TRIPOINT, INC. Pursuant to a Certificate of Merger filed with the Secretary of State of the State of Delaware on October 3, 2011, IDTS, Inc., a Delaware corporation, merged with and into NSC-Tripoint, Inc. and the Certificate of Incorporation was amended and restated in its entirety by an Amended and Restated Certificate of Incorporation. Pursuant to a Second Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on February 28, 2013, the corporation’s name was changed to “Nine Energy Service, Inc.” and the Certificate of Incorporation was amended and restated in its entirety by a Second Amended and Restated Certificate of Incorporation. The Corporation thereafter amended and restated its Certificate of Incorporation pursuant to that certain Third Amended and Restated Certificate of Incorporation filed with the Secretary of the State of Delaware on January 23, 2018 (as amended, the “Existing Certificate”).
On February 1, 2026, the Corporation (as defined below) and certain of its subsidiaries commenced voluntary cases under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).
The Corporation hereby amends and restates the Existing Certificate in its entirety as set forth in this Fourth Amended and Restated Certificate of Incorporation (this “Certificate of Incorporation”). This Certificate of Incorporation has been duly adopted in accordance with Section 242, 245 and 303 of the General Corporation Law of the State of Delaware (the “DGCL”), pursuant to the Corporation’s confirmed chapter 11 plan of reorganization (the “Plan”), as confirmed by order of the Bankruptcy Court (the “Confirmation Order”) on March 4, 2026, and pursuant to Sections 1123(a)(5) and 1145 of the Bankruptcy Code.
ARTICLE I
Section 1.1. Name. The name of the Corporation is Nine Energy Service, Inc.
Section 1.2. Address. The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle 19801. The name of its registered agent at such address is The Corporation Trust Company.
Section 1.3. Purpose. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
Section 1.4. Authorized Capital Stock. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 85,000,000, consisting of two classes as follows: (i) 70,000,000 shares of common stock of the par value of one cent ($0.01) per share (the “Common Stock”) and (ii) 15,000,000 shares of preferred stock of the par value of one cent ($0.01) per share (the “Preferred Stock”). The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.
ARTICLE
II
COMMON STOCK
Section 2.1. General. Each share of Common Stock of the Corporation shall have identical rights and privileges in every respect. The Common Stock shall be subject to the express terms of the Preferred Stock and any series thereof. The Corporation shall not issue any non-voting equity securities; provided, however, that (a) the foregoing restriction shall have no further force or effect beyond that required pursuant to Section 1123(a)(6) of the Bankruptcy Code, (b) such restriction shall apply only for so long as Section 1123(a)(6) of the Bankruptcy Code is in effect and applicable to the Corporation, and (c) in all events, such restriction may be amended or eliminated in accordance with applicable law. This provision is included in this Certificate of Incorporation in compliance with Section 1123(a)(6) of the Bankruptcy Code.
Section 2.2. Voting.
(a) Except as otherwise provided by law or as stated or expressed in the resolution or resolutions of the Board of Directors (the “Board”) with respect to any series of Preferred Stock (each, a “Preferred Stock Designation”), each registered holder of Common Stock shall be entitled to one vote for each share of such Common Stock held by such holder on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Preferred Stock Designation) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to this Certificate of Incorporation (including any Preferred Stock Designation). There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) without a class vote of the Common Stock, irrespective of the provisions of Section 242(b)(2) of the DGCL, unless otherwise required by this Certificate of Incorporation (including any Preferred Stock Designation). Except as otherwise provided for or fixed pursuant to the provisions of this Certificate of Incorporation, including any Preferred Stock Designation, no action that is permitted or required to be taken by the stockholders of the Corporation may be effected by consent of stockholders in lieu of a meeting of stockholders.
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(b) Except as required by law and subject to the rights of the holders of any series of Preferred Stock,
(i) Holders of Common Stock shall be entitled to elect directors of the Corporation; and
(ii) Subject to Section 2.2(a), holders of Common Stock shall be entitled to vote on all other matters properly submitted to a vote of stockholders of the Corporation.
Section 2.3. Dividends. Subject to the prior rights and preferences, if any, applicable to shares of the Preferred Stock or any series thereof, the holders of shares of the Common Stock shall be entitled to receive ratably such dividends (payable in cash, stock or otherwise), if any, as may be declared thereon by the Board, at any time and from time to time, out of any funds of the Corporation legally available therefor.
Section 2.4. Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock or any class or series thereof, the holders of shares of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of the Common Stock held by them. A liquidation, dissolution or winding-up of the Corporation, as such terms are used in this Section 2.4, shall not be deemed to be occasioned by or to include any consolidation or merger of the Corporation with or into any other corporation or corporations or other entity or a sale, lease, exchange or conveyance of all or a part of the assets of the Corporation.
ARTICLE
III
PREFERRED STOCK
Section 3.1. Blank Check Preferred. Subject to any vote expressly required by this Certificate of Incorporation, authority is hereby expressly granted to the Board to, from time to time, issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issuance of the shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including, but not limited to, the following:
(a) whether or not the series is to have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;
(b) the number of shares to constitute the series and the designations thereof;
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(c) the preferences, and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any series;
(d) whether or not the shares of any series shall be redeemable at the option of the Corporation or the holders thereof or upon the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property), and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption;
(e) whether or not the shares of a series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount thereof, and the terms and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or series of stock, whether or not such dividends shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends shall accumulate;
(g) the preferences, if any, and the amounts thereof which the holders of any series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation;
(h) whether or not the shares of any series, at the option of the Corporation or the holder thereof or upon the happening of any specified event, shall be convertible into or exchangeable for, the shares of any other class or of any other series of stock, securities or other property of the Corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and
(i) such other special rights and protective provisions with respect to any series as the Board may determine are advisable.
Section 3.2. Number of Shares. The shares of each series of the Preferred Stock may vary from the shares of any other series thereof in any or all of the foregoing respects. The Board may increase the number of shares of the Preferred Stock designated for any existing series by a resolution adding to such series authorized and unissued shares of the Preferred Stock not designated for any other series. The Board may decrease the number of shares of the Preferred Stock designated for any existing series by a resolution subtracting from such series authorized and unissued shares of the Preferred Stock designated for such existing series, and the shares so subtracted shall become authorized, unissued, and undesignated shares of the Preferred Stock.
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ARTICLE
IV
THE BOARD
Section 4.1. Authority and Number of Directors. The business and affairs of the Corporation shall be managed by or under the direction of the Board. The number of directors which shall constitute the entire Board shall be fixed from time to time by the Board. Unless and except to the extent that the bylaws of the Corporation (as the same may be amended and/or restated from time to time the “Bylaws”) of the Corporation so provide, the election of directors need not be by written ballot. Each director shall hold office until his or her successor shall have been duly elected and qualified or until his or her earlier death, resignation, retirement, disqualification or removal.
Section 4.2. Vacancies. Subject to the rights of the holders of any outstanding series of Preferred Stock, and unless otherwise required by law, newly created directorships resulting from any increase in the authorized number of directors and any vacancies in the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause may be filled by a majority of the directors then in office, even though less than a quorum, or a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall hold office for the remaining term of his or her predecessor.
Section 4.3. Removal. Subject to the rights of the holders of any outstanding series of Preferred Stock, if any, to elect additional directors pursuant to this Certificate of Incorporation (including any Preferred Stock Designation), any director, or the entire Board, may be removed from office at any time, with or without cause, by the affirmative vote of a majority of the voting power of the stock outstanding and entitled to vote thereon.
Section 4.4. Preferred Stock Directors. During any period when the holders of any series of Preferred Stock have the right to elect additional directors as provided for or fixed pursuant to the provisions of this Certificate of Incorporation (including any Preferred Stock Designation), then upon commencement and for the duration of the period during which such right continues: (a) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to such provisions, and (b) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to his earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, retirement, disqualification or removal of such additional directors, shall forthwith terminate (in which case each such director thereupon shall cease to be qualified as, and shall cease to be, a director) and the total authorized number of directors of the Corporation shall be reduced accordingly.
ARTICLE
V
BYLAW AMENDMENTS
Section 5.1. In furtherance of, and not in limitation of, the powers conferred upon it by law, the Board shall have the power to adopt, amend or repeal the Bylaws. In addition to any separate vote of the Preferred Stock or any series thereof required pursuant to this Certificate of Incorporation (including any Preferred Stock Designation), the stockholders of the Corporation may alter, amend or repeal the Bylaws by an affirmative vote of the holders of a majority of the voting power of the stock outstanding and entitled to vote thereon.
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ARTICLE
VI
BUSINESS COMBINATIONS
Section 6.1. The Corporation shall be governed by Section 203 of the DGCL.
ARTICLE
VII
EXCULPATION, INDEMNIFICATION AND ADVANCEMENT
Section 7.1. To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended, no director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of this Section 7.1 shall not adversely affect any right or protection of a director or officer existing at the time of such repeal or modification.
Section 7.2. Indemnification and Insurance.
(a) Right to Indemnification. (i) Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative, is or was or has agreed to become a director or officer of the Corporation or while a director or officer is or was serving or has agreed to serve, at the request of the Corporation, in any capacity, with any corporation, partnership, joint venture, trust or other enterprise in which the Corporation has a partnership or other interest, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving or having agreed to serve as a director or officer of the Corporation, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to serve in the capacity which initially entitled such person to indemnity hereunder and shall inure to the benefit of his or her heirs, executors and administrators, and (ii) the Corporation shall indemnify and hold harmless in such manner any person designated by the Board, or any committee thereof, as a person subject to this indemnification provision, and who was or is made a party or is threatened to be made a party to a proceeding by reason of the fact that he, she or a person of whom he or she is the legal representative, is or was serving at the request of the Board as a director, officer, employee or agent of another corporation or a partnership, joint venture, trust or other enterprise whether such request is made before or after the acts taken or allegedly taken or events occurring or allegedly occurring which give rise to such proceeding; provided, however, that except as provided in Section 7.2(b), the Corporation shall indemnify any such person seeking indemnification pursuant to this Section 7.2(a) in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding no later than 30 days after receipt by the Corporation of a written request for advancement from such person (together with such invoices or other supporting information as may be reasonably requested by the Corporation and reasonably available to such person) and without regard to whether such person will ultimately be entitled to be indemnified under this Article VII or otherwise; provided further, however, that if the DGCL requires, the payment of such expenses incurred by a current, former or proposed director or officer in his or her capacity as a director or officer or proposed director or officer (and not in any other capacity in which service was or is or has been agreed to be rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) within 15 days of the receipt by the Corporation of such a written request, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnified person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under this Article VII or otherwise. The Corporation may, by action of the Board, provide indemnification or advancement to employees or agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.
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(b) Right of Claimant to Bring Suit. If a claim under Section 7.2(a) is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim to the fullest extent permitted by law. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
(c) Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred in this Article VII shall not be exclusive of any other right which any person may have acquired or hereafter acquires under any law (common or statutory), provision of this Certificate of Incorporation, bylaw, agreement (including any indemnification agreement or employment agreement with the Corporation), vote of stockholders or disinterested directors or otherwise.
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(d) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any person who is or was serving as a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.
(e) Nature of Rights. The rights conferred upon indemnitees in this Article VII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article VII that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit, eliminate, or impair any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.
(f) Savings Clause. If this Article VII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and hold harmless each current or former director and officer of the Corporation, as to costs, charges and expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article VII that shall not have been invalidated and to the fullest extent permitted by applicable law.
ARTICLE
VIII
FORUM SELECTION
Section 8.1. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have subject matter jurisdiction over the matter, the state or federal court in Delaware with jurisdiction over the matter) shall be the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of the Corporation; (b) any action asserting a claim for breach of a fiduciary duty owed by any current or former director, officer, employee or agent of the Corporation to the Corporation or the stockholders; (c) any action asserting a claim arising pursuant to any provision of the DGCL, this Certificate of Incorporation or the Bylaws; or (d) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any stockholder of the Corporation or person or entity that otherwise acquires an interest in shares of stock in the Corporation shall be deemed to have notice of, and to have consented to, this Article VIII.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned has caused this Fourth Amended and Restated Certificate of Incorporation to be executed this 5th day of March, 2026.
| NINE ENERGY SERVICE, INC. | ||
| By: | /s/ Theodore R. Moore | |
| Name: | Theodore R. Moore | |
| Title: | Executive Vice President, General Counsel and Secretary | |
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Exhibit 3.2
Final
FIFTH AMENDED AND RESTATED BYLAWS
OF
NINE ENERGY SERVICE, INC.
A Delaware Corporation
Date of Adoption:
March 5, 2026
Table of Contents
| Page | ||
| ARTICLE I | ||
| OFFICES | ||
| Section 1.01 | Registered Office | 1 |
| Section 1.02 | Other Offices | 1 |
| ARTICLE II | ||
| STOCKHOLDERS | ||
| Section 2.01 | Place of Meetings | 1 |
| Section 2.02 | Quorum; Voting; Adjournment of Meetings | 1 |
| Section 2.03 | Annual Meetings | 2 |
| Section 2.04 | Special Meetings | 2 |
| Section 2.05 | Fixing Date for Determination of Stockholders of Record | 3 |
| Section 2.06 | Notice of Meetings | 3 |
| Section 2.07 | Notice of Stockholder Business and Nominations | 4 |
| Section 2.08 | Stock List | 13 |
| Section 2.09 | Proxies | 13 |
| Section 2.10 | Elections; Inspectors | 13 |
| Section 2.11 | Order of Business | 14 |
| Section 2.12 | No Action Without Meeting | 14 |
| Section 2.13 | Meeting by Remote Communications | 14 |
| ARTICLE III | ||
| BOARD OF DIRECTORS | ||
| Section 3.01 | Power; Number; Term of Office | 15 |
| Section 3.02 | Qualification and Election of Directors. | 15 |
| Section 3.03 | Quorum | 16 |
| Section 3.04 | Place of Meetings; Order of Business | 16 |
| Section 3.05 | First Meeting | 16 |
| Section 3.06 | Regular Meetings | 16 |
| Section 3.07 | Special Meetings | 16 |
| Section 3.08 | Emergency Bylaws | 16 |
| Section 3.09 | Removal | 16 |
| Section 3.10 | Vacancies; Increases in the Number of Directors | 16 |
| Section 3.11 | Compensation | 17 |
| Section 3.12 | Action Without a Meeting; Telephone Conference Meeting | 17 |
| ARTICLE IV | ||
| COMMITTEES | ||
| Section 4.01 | Designation; Powers | 17 |
| Section 4.02 | Procedure; Meetings; Quorum | 17 |
| Section 4.03 | Substitution of Members | 18 |
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| ARTICLE V | ||
| OFFICERS | ||
| Section 5.01 | Number, Titles and Term of Office | 18 |
| Section 5.02 | Salaries | 18 |
| Section 5.03 | Removal | 18 |
| Section 5.04 | Vacancies | 18 |
| Section 5.05 | Powers and Duties of the Chief Executive Officer | 18 |
| Section 5.06 | Powers and Duties of the Chairman of the Board | 18 |
| Section 5.07 | Powers and Duties of the President | 19 |
| Section 5.08 | Powers and Duties of the Vice Presidents | 19 |
| Section 5.09 | Powers and Duties of the Chief Financial Officer | 19 |
| Section 5.10 | Powers and Duties of the Treasurer | 19 |
| Section 5.11 | Powers and Duties of the Assistant Treasurers | 19 |
| Section 5.12 | Powers and Duties of the Secretary | 19 |
| Section 5.13 | Powers and Duties of the Assistant Secretaries | 20 |
| Section 5.14 | Action with Respect to Securities of Other Entities | 20 |
| ARTICLE VI | ||
| CAPITAL STOCK | ||
| Section 6.01 | Uncertificated Shares; Certificates | 20 |
| Section 6.02 | Transfer of Shares | 20 |
| Section 6.03 | Ownership of Shares | 20 |
| Section 6.04 | Regulations Regarding Certificates | 20 |
| Section 6.05 | Lost or Destroyed Certificates | 20 |
| ARTICLE VII | ||
| MISCELLANEOUS PROVISIONS | ||
| Section 7.01 | Fiscal Year | 21 |
| Section 7.02 | Notice and Waiver of Notice | 21 |
| Section 7.03 | Resignations | 22 |
| Section 7.04 | Facsimile or Electronic Signatures | 22 |
| Section 7.05 | Reliance upon Books, Reports and Records | 22 |
| ARTICLE VIII | ||
AMENDMENTS |
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FIFTH AMENDED AND RESTATED BYLAWS
OF
NINE ENERGY SERVICE, INC.
ARTICLE
I
OFFICES
Section 1.01 Registered Office. The registered office of Nine Energy Service, Inc. (formerly NSC-Tripoint, Inc.) (the “Corporation”) required by the General Corporation Law of the State of Delaware (the “DGCL”) to be maintained in the State of Delaware, shall be the registered office named in the Certificate of Incorporation of the Corporation from time to time. The Certificate of Incorporation of the Corporation, as the same may be amended and/or restated from time to time, as herein referenced shall include any certificate of designations (each, a “Preferred Stock Designation”) relating to any series or class of Preferred Stock (collectively, the “Certificate of Incorporation”). Should the Corporation maintain a principal office within the State of Delaware such registered office need not be identical to such principal office of the Corporation.
Section 1.02 Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors of the Corporation (the “Board”) may from time to time determine or the business of the Corporation may require.
ARTICLE
II
STOCKHOLDERS
Section 2.01 Place of Meetings. All meetings of the stockholders shall be held at such place, if any, within or without the State of Delaware as shall be specified or fixed in the notices or waivers of notice thereof.
Section 2.02 Quorum; Voting; Adjournment of Meetings. Unless otherwise required by law or provided in the Certificate of Incorporation or these bylaws, the holders of a majority of the voting power of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders for the transaction of business; provided, however, that where a separate vote by a class or series or classes or series is required, a majority of the voting power of the stock of such class or series or classes or series outstanding and entitled to vote on that matter, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such matter. At any meeting of stockholders at which directors are to be elected, directors shall be elected by a plurality of the votes cast. Except as otherwise required by law, the Certificate of Incorporation (including any Preferred Stock Designation), these bylaws or any law, rule or regulation applicable to the Corporation or its securities, in which case such other vote shall apply, at each meeting of stockholders at which a quorum is present, all corporate actions (other than the election of directors) to be taken by vote of the stockholders shall be authorized by the affirmative vote of at least a majority of the voting power of the stock present in person or represented by proxy and entitled to vote on the subject matter, and where a separate vote by a class or series or classes or series is required, if a quorum of such class or series or classes or series is present, such act shall be authorized by the affirmative vote of at least a majority of the voting power of the stock of such class or series or classes or series present in person or represented by proxy and entitled to vote on the subject matter. Voting at meetings of stockholders need not be by written ballot. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
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Notwithstanding the other provisions of the Certificate of Incorporation or these bylaws, the chairman of the meeting or the holders of a majority of the issued and outstanding stock, present in person or represented by proxy, at any meeting of stockholders, whether or not a quorum is present, shall have the power to adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding of the adjourned meeting in accordance with the DGCL. Except as otherwise permitted or required by law, if the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at such meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally called.
Section 2.03 Annual Meetings. An annual meeting of the stockholders for the election of directors and for the transaction of such other business as may properly come before the meeting, shall be held at such place, if any, within or without the State of Delaware, on such date, and at such time as the Board shall fix and set forth in the notice of the meeting. The Board may postpone, reschedule or cancel any annual meeting of the stockholders previously scheduled by the Board.
Section 2.04 Special Meetings. Subject to the rights of the holders of any outstanding series of Preferred Stock and to the requirements of the DGCL, special meetings of stockholders of the Corporation may be called only (a) by the Chair of the Board, (b) by the Chief Executive Officer, (c) by the Board pursuant to a resolution adopted by the Board, or (d) by the Secretary of the Corporation upon the written request of one or more stockholders of record who collectively own at least twenty percent (20%) of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors as of the date such request is delivered to the Secretary. Any business transacted at any special meeting of stockholders shall be limited to the matters properly brought before the meeting pursuant to the Corporation’s notice of meeting. Notwithstanding the foregoing, whenever the holders of one or more series of Preferred Stock shall have the right, voting separately as a series, to elect directors pursuant to the terms of such series, such holders may call, pursuant to the terms of the applicable certificate of designation, special meetings of the holders of such series.
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Section 2.05 Fixing Date for Determination of Stockholders of Record.
(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than sixty (60) days prior to such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
(c) Unless otherwise restricted by the Certificate of Incorporation, in order that the Corporation may determine the stockholders entitled to express consent to corporate action without a meeting, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board. If no record date for determining stockholders entitled to express consent to corporate action without a meeting is fixed by the Board, (i) when no prior action of the Board is required by law, the record date for such purpose shall be the first date on which a signed consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, and (ii) if prior action by the Board is required by law, the record date for such purpose shall be at the close of business on the day on which the Board adopts the resolution taking such prior action.
Section 2.06 Notice of Meetings. Notice of the place, if any, date and hour of all meetings, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for determining the stockholders entitled to notice of the meeting), the means of remote communications (if applicable), and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by or at the direction of the Chairman of the Board (if any), the President or the Secretary to each stockholder entitled to vote thereat not less than 10 nor more than 60 days before the date of the meeting, unless otherwise provided by law, the Certificate of Incorporation or these bylaws. Such notice may be delivered personally by mail or by electronic transmission in the manner provided in Section 232 of the DGCL. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation.
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Section 2.07 Notice of Stockholder Business and Nominations.
(a) A stockholder may properly bring nominations or other business before an annual or special meeting, as applicable, only if the stockholder, at the time of giving of notice provided for in this Section 2.07, is a stockholder of record and is entitled to vote at such meeting and complies with the notice procedures set forth in this Section 2.07 (such stockholder, a “Proposing Stockholder”). Such Proposing Stockholder shall give timely notice of such nominations or other business (a “Proposing Stockholder Notice”) in proper written form to the secretary of the Corporation setting forth the information required by Section 2.07(b) hereof, and any such other business must be a proper subject for stockholder action under the DGCL. To be timely, a Proposing Stockholder Notice must be received by the secretary at the principal executive offices of the Corporation:
(i) in the case of an annual meeting of stockholders, no later than the close of business on the 90th day nor earlier than the 120th day prior to the anniversary date of the prior year’s annual meeting of stockholders; provided however, that if the date of the annual meeting is advanced by more than thirty (30) days or delayed (other than as a result of adjournment) by more than sixty (60) days from such anniversary date, such notice must be received not later than the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made; and
(ii) in the case of a special meeting of stockholders, not later than the close of business on the tenth (10th) day following the day on which public announcement of the date of the special meeting is first made.
In no event shall the adjournment or postponement of an annual or special meeting, or the public announcement thereof, commence a new time period (or extend any time period) for the giving of a Proposing Stockholder Notice. Notwithstanding the foregoing, in the case of a special meeting of the stockholders, nominations of persons for election to the Board may be made only if the election of directors is specified as a purpose of the meeting in the Corporation’s notice of meeting (or, if such special meeting is called by stockholders pursuant to the Certificate of Incorporation, in the stockholder request for such meeting). No stockholder shall be permitted to bring any other nomination or business before a special meeting of stockholders.
(b) To be in proper written form, a Proposing Stockholder’s notice shall set forth and include:
(i) as to each person, if any, whom the Proposing Stockholder proposes to nominate for election or reelection as a director:
(A) such nominee’s residence and business addresses and all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder,
(B) such nominee’s written consent to (i) being named as a nominee in the Corporation’s proxy statement and proxy card and to serving as a director if elected and (ii) the public disclosure of information provided pursuant to this Section 2.07(b)(i),
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(C) the class or series and number of shares of stock of the Corporation owned beneficially and of record by such nominee and any Associated Person of such nominee as of the date of the notice, including the date of each purchase, the number of shares purchased and per share purchase price paid on each such date,
(D) the name of each record holder of shares of all stock of the Corporation owned beneficially but not of record by such nominee or any Associated Person of such nominee, and the class or series and number of such shares of stock of the Corporation so held by such record holder, including the date of each purchase, the number of shares purchased and per share purchase price paid on each such date, and a calculation of the weighted average of the purchase prices in paragraph (C) and this paragraph (D),
(E) the Derivative Ownership Information with respect to such nominee and any Associated Person of such nominee,
(F) the Nominee Independence Information with respect to such nominee,
(G) the representations, agreements and other information of such nominee required by Section 3.02 of these bylaws, and
(H) the Proposing Stockholder’s agreement that it will provide Applicable Updates of the information provided pursuant to each item of this Section 2.07(b)(i).
(ii) as to any other business that the Proposing Stockholder proposes to bring before the meeting, (A) a brief description of such business including, if applicable, the text of any resolutions proposed for consideration, (B) the reasons for conducting such business at the meeting, and (C) a description of any substantial interest such Proposing Stockholder, any other Proposing Person or their respective Representatives may have in such business.
(iii) as to each Proposing Person:
(A) the name and address of the Proposing Stockholder, as they appear on the Corporation’s books, and the name and address of each other Proposing Person,
(B) the class or series and number of shares of stock of the Corporation owned of record by each Proposing Person, including the date of each such purchase, the number of shares purchased and the per share purchase price paid on each such date,
(C) the name of each record holder of shares of all stock of the Corporation owned beneficially but not of record by each Proposing Person, and the class or series and number of such shares of stock of the Corporation so held by each such record holder, including the date of each such purchase, the number of shares purchased, per share purchase price paid on each such date and a calculation of the weighted average of the purchase prices in paragraph (B) and this paragraph (C),
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(D) a representation that the Proposing Stockholder intends to be present in person or by proxy at the meeting to propose such nomination or other business,
(E) a description of each Solicitation Related Contract to which one or more Proposing Persons is party, which description shall include the number and type of securities that are the subject of such Solicitation Related Contract and the name and address of each party to each such Solicitation Related Contract,
(F) (i) a description of any contacts that resulted in, or were reasonably likely to result in, (x) an agreement regarding voting, financial support or coordination, (y) a commitment of financial support or (z) the sharing of material non-public information regarding the Proposing Stockholder’s Platform or the Corporation between or among a Proposing Person (or any employee, officer or director of a Proposing Person) and any other stockholders of the Corporation in connection with or relating to any proposal or nomination set out in the Proposing Stockholder Notice or in connection with or relating to any Proposing Person’s Platform (as defined below), in each case, from the date three (3) months prior to the date of the Proposing Stockholder Notice until the earlier of the Proposing Stockholder making filings under Rule 14a-12 promulgated under the Exchange Act or filing a preliminary or definitive proxy statement (or Form S-4) in accordance with Rule 14a-3 promulgated under the Exchange Act, (ii) to the extent not previously disclosed pursuant to Rule 14a-12 promulgated under the Exchange Act, a copy of any presentations, analyses or other material information presented to any such stockholder or investor in connection with or pursuant to any such contacts, (iii) a detailed description of any material expression of financial support made by any stockholder or potential investor to any Proposing Person (including any indication by any stockholder or investor as to whether it intends or is likely to purchase or borrow additional shares of the Corporation and/or to vote shares held, borrowed or purchased by it in favor of the Proposing Stockholder’s proposal or nomination), and (iv) the identity of any such other stockholder or potential investor, and, to the extent available to any Proposing Person, the number and type of securities of the Corporation held by each such other stockholder or investor, or which may be voted by each such other stockholder or investor,
(G) the Derivative Ownership Information with respect to each Proposing Person,
(H) in the event the Proposing Stockholder seeks to nominate candidates for election to the Board, a description of any plans, proposals or policies that the Proposing Persons will seek to have the Corporation adopt, including, without limitation, any plans, proposals or policies of the type described in Item 4 of Schedule 13D promulgated under the Exchange Act (the “Proposing Stockholder’s Platform”), any costs associated with, or impediments to, implementing the Proposing Stockholder’s Platform, and a copy (or a detailed summary) of any material analysis or projection performed by or on behalf of any Proposing Person with respect to the Proposing Stockholder’s Platform and with respect to any material alternative potential plans, proposals or policies reviewed by the Proposing Persons, including any material analysis or projection performed with respect to the anticipated effect of the Proposing Stockholder’s Platform (or the effect of any material alternative potential plans, proposals or policies reviewed) on the price of the stock of the Corporation, on the Proposing Stockholder’s investment returns or on any other financial metrics of the Corporation,
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(I) a description of any other substantial financial interest, direct or indirect, of any Proposing Person in the nomination or business proposed by the Proposing Stockholder that is not shared pro rata by all stockholders,
(J) a representation as to whether any Proposing Person intends to engage in a solicitation with respect to such nomination or proposal and, if so, the name of each participant in such solicitation (as defined in Instruction 3 to Rule 14a-101, Item 4, promulgated under the Exchange Act) and whether such person or group intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the business to be proposed (in person or by proxy) by the stockholder,
(K) in the event any Proposing Person or group of Proposing Persons intends to solicit proxies in support of director nominees other than the Corporation’s nominees, a statement whether such person or group intends to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of director nominees other than the Corporation’s nominees,
(L) the Proposing Stockholder’s agreement that it will provide Applicable Updates of the information provided pursuant to each item of this Section 2.07(b)(iii).
(iv) as to each Proposing Person, the written consent of such Proposing Person to the public disclosure by the Corporation of information provided pursuant to this Section 2.07(b).
(c) To be eligible to be a nominee for election or reelection as a director of the Corporation pursuant to this Section 2.07, a person must deliver (in accordance with the time periods prescribed for delivery of notice under paragraph (a) of this Section 2.07) to the secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the secretary upon written request by a stockholder of record identified by name within five business days of such request) and a written representation and agreement (in the form provided by the secretary upon written request by a stockholder of record identified by name within five business days of such request) that such person (A) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law; (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation; (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable rules of the exchanges upon which the securities of the Corporation are listed and all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation; and (D) in such person’s individual capacity and on behalf of any Proposing Stockholder on whose behalf the nomination is being made, intends to serve a full term if elected as a director of the Corporation.
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(d) Only those persons who are nominated in accordance with the procedures set forth in these bylaws shall be eligible for election as directors at any meeting of stockholders, subject to the rights of holders of any series of Preferred Stock. At a meeting of stockholders, only such other business shall be conducted as shall have been properly brought before the meeting in accordance with the procedures set forth herein. If it is determined in accordance with these bylaws that a notice does not satisfy the applicable requirements, the Chairman of the Board or Secretary shall so declare and any such nomination or other business shall not be introduced at such meeting of stockholders, notwithstanding that proxies in respect of such matters may have been received. If as a result of any such determination there is no nomination or other business that may be properly introduced at such meeting of stockholders, the Board, in its discretion, may cancel the meeting. If it is determined in accordance with these bylaws that any nomination or other business has not been brought before a meeting in compliance with the requirements of these bylaws (including if the Proposing Stockholder does not provide any required Applicable Updates to the Corporation), the chairman of the meeting shall have the power and duty to declare that such nomination or proposal shall be disregarded, notwithstanding that proxies in respect of such matters may have been received. Notwithstanding the foregoing provisions of this Section 2.07, a stockholder giving notice of nominations or other business pursuant to this Section 2.07 shall also comply with all applicable requirements of the DGCL and the Exchange Act and the rules and regulations promulgated thereunder, including, without limitation, Rule 14a-9, Rule 14a-12, and Rule 14a-19 promulgated under the Exchange Act. Without limiting the generality of the foregoing, unless otherwise required by law, if such stockholder (x) (i) provides notice pursuant to Rule 14a-19(b), and (ii) subsequently fails to comply with the requirements of Rule 14a-19(a)(2) and Rule 14a-19(a)(3) or (y) violates Rule 14a-9 or Rule 14a-12, then, in each case, the Corporation shall disregard any proxies or votes solicited for any persons nominated by such stockholder. Upon request by the Corporation, if any stockholder provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act, such stockholder shall deliver to the Corporation, no later than five (5) business days prior to the applicable meeting, reasonable evidence that it has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act. Notwithstanding the foregoing provisions of this Section 2.07, if a Proposing Stockholder (or a qualified representative of the Proposing Stockholder) is not present at the meeting of stockholders to make a nomination or propose other business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote have been received by the Corporation. For purposes of this Section 2.07, to be considered a qualified representative of the Proposing Stockholder, a person must be a duly authorized officer, manager or partner of such Proposing Stockholder or authorized by a writing executed by such Proposing Stockholder (or a reliable reproduction of the writing) delivered to the Corporation prior to the making of such nomination or proposal at such meeting by such Proposing Stockholder stating that such person is authorized to act for such Proposing Stockholder as proxy at the meeting of stockholders. In the event that a qualified representative of the Proposing Stockholder will appear at the annual meeting of stockholders to make a nomination or propose business, the Proposing Stockholder must provide notice of the designation, including the identity of the representative, to the Corporation at least forty-eight (48) hours prior to such meeting. Where a Proposing Stockholder fails to provide such notice of designation to the Corporation within the required timeframe, such Proposing Stockholder must appear in person to present his, her or its nomination or proposed business at the annual meeting or such nomination shall be disregarded and such proposed business shall not be transacted as provided for above.
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(e) The Corporation may also require, as a condition to any such nomination or other business being deemed properly brought before a meeting of stockholders, any Proposing Stockholder or a Proposing Stockholder’s director nominee to furnish to the secretary, within five business days of such request, such other information as may be reasonably requested by the Board or Corporation, to determine whether a Proposing Stockholder’s director nominee is qualified under the Certificate of Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or any law or regulation applicable to the Corporation to serve as a director or independent director of the Corporation.
(f) For purposes of this Section 2.07,
(i) “Affiliate” of a person means any other person that directly or indirectly (including through one or more intermediaries) controls, is controlled by, or is under common control with such person.
(ii) “Applicable Update” with respect to any category of information required to be provided pursuant to Section 2.07 in connection with a meeting means a notice to the Corporation in writing (A) within five (5) business days after the record date for notice of such meeting of any change in such information as of such record date and (B) within two (2) business days of any change in such information that occurs after such record date; provided that neither this paragraph nor any other section of these bylaws shall (i) limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, (ii) extend any applicable deadlines hereunder or (iii) enable or be deemed to permit a stockholder who has previously submitted notice hereunder or under any other provision of these bylaws to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business and/or resolutions proposed to be brought before a meeting of the stockholders.
(iii) “Associated Person” of a person means any person that is an associate of such person within the meaning of Rule 14a-1(a) under the Exchange Act.
(iv) “business day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close.
(v) “close of business” shall mean 5:00 p.m. local time at the principal executive offices of the corporation, and if an applicable deadline falls on the close of business on a day that is not a business day, then the applicable deadline shall be deemed to be the close of business on the immediately preceding business day.
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(vi) “Compensation Arrangement” means any direct or indirect compensatory, reimbursement, indemnification, payment or other financial agreement, arrangement or understanding between an nominee and any person other than the Corporation in connection with such nominee’s candidacy, nomination, or service as a director of the Corporation other than indemnification and reimbursement agreements that provide only for indemnification and reimbursement relating to the candidacy and nomination of such nominee, which agreement has been disclosed to the Corporation.
(vii) “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of securities, by contract, or otherwise.
(viii) “Derivative Ownership Information” with respect to any nominee or Proposing Person means:
(A) A complete listing of each derivative instrument, put, call, forward sale agreement, forward purchase agreement, swap, total return swap, option, warrant, short sale, stock borrowing or lending arrangement or agreement, hedge, profit interest, convertible or exchangeable instrument, non-recourse or limited recourse financing arrangement, or any similar agreement, instrument, transaction arrangement or understanding of any kind (i) which has been entered into by or on behalf of such nominee (or any Associated Person of such nominee) or such Proposing Person or of which such nominee (or any Associated Person of such nominee) or Proposing Person is a direct or indirect beneficiary or obligor and (ii) (a) the value of which is in whole or in part based upon or determined by reference to, the value of the stock or other securities of the Corporation, or (b) with respect to any financing arrangement (regardless of how such arrangement is documented) which is directly or indirectly secured, on a non-recourse or limited recourse basis by stock or other securities of the Corporation (any such agreement, transaction, arrangement, instrument or understanding a “Derivative”).
(B) With respect to each Derivative, a description of:
(1) any voting rights associated with, arising from or transferred by such Derivative, including, if applicable, any agreement, arrangement, understanding or relationship granting a right or opportunity to vote or direct the vote of any stock that is the subject of, used as a reference security in, or held as a hedge or security by the counterparty for such Derivative (including any agreement, arrangement, or understanding that the counterparty will physically hedge, in whole or in part, its exposure under the Derivative),
(2) the name and address of the counterparty to such Derivative, the date such Derivative was entered into, the date on which the Derivative will expire, terminate or be subject to renewal or repricing, the economic terms of the Derivative, and if applicable, the notional number of shares of stock of the Corporation with respect to such Derivative, and
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(3) a plain English description of the purpose of entering into the Derivative (e.g., whether the Derivative was entered into in order to mitigate potential losses in the event of a decrease in the Corporation’s stock price, to amplify profits from a stock price increase, to profit from a stock price decrease, to obtain voting rights, to decrease any costs that would arise from owning stock outright or otherwise transfer the economic consequences of ownership, to limit reporting requirements, etc.), the potential dollar amount of protection or gain associated with such Derivative (to the extent relevant, using such assumptions with respect to stock price movements and time horizons as were analyzed or modelled by such nominee (or its Associated Persons) or Proposing Person in deciding to enter into such Derivative), and a plain English description of the overall effect of the Derivative in differentiating the economic or other interests of the Proposing Persons from those of a long-only stockholder.
(ix) “Interested Affiliate” of a person means an Affiliate of such person that directly or indirectly participates in, shares information regarding, cooperates with, benefits from or provides services in connection with the nomination or business proposed in the Proposing Stockholder Notice.
(x) “Manager” of a person means each officer, director, partner, member, manager (or person holding a similar position) of such person (other than passive limited partners or members with no managerial authority).
(xi) “Nominee Independence Information” means with respect to any person proposed to be nominated as a director of the Corporation:
(A) a description of any employment, consulting or similar agreement, arrangement, understanding or relationship between such nominee (or his or her Associated Persons) and any Proposing Person that has been entered into at any time in the five (5) year period prior to the date of the Proposing Stockholder Notice, including a description of any compensation of any kind received or payable thereunder,
(B) a listing of directorships or similar positions to which such nominee has been nominated or appointed by a Proposing Person in the five (5) year period prior to the date of the Proposing Stockholder Notice, and a description of any fees, expenses or other compensation or reimbursement paid or payable to such nominee (or his or her Associated Persons) in respect thereof,
(C) any investment of any type made by or on behalf of such nominee (or his or her Associated Persons) in any entity controlled by any Proposing Person, or made by a Proposing Person in any Associated Person of such nominee, or any joint or co-investments made by such nominee (or any of his or her Associated Persons) and any Proposing Person, regardless of whether such investment was made in cash, for services rendered or otherwise,
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(D) a description of any family or any other material relationship between (x) the nominee (and his or her Associated Persons) and (y) any Proposing Person,
(E) a description of any agreement, arrangement or understanding between the nominee and any person or entity (including the Proposing Persons) as to how such nominee, if elected, will act or vote on any issue or question and any Compensation Arrangement in connection with such nominee’s candidacy, nomination for director and/or service as director,
(xii) “participant” shall have the meaning set forth in Rule 14a-101, Item 4, Instruction 3(a) with respect to a participant in any solicitation made in connection with a Proposing Stockholder Notice.
(xiii) “person” means any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
(xiv) “Proposing Person” means: (i) each member of the Proposing Stockholder Group, and (ii) each stockholder of the Corporation or Derivative holder that has entered into a Solicitation Related Contract with any member of the Proposing Stockholder Group, together with each Interested Affiliate of such stockholder or Derivative holder, and each Manager of such stockholder, Derivative holder or Interested Affiliate.
(xv) “Proposing Stockholder Group” means the Proposing Stockholder, its Interested Affiliates and their respective Managers.
(xvi) “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the United States Securities and Exchange Commission (the “SEC”) pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(xvii) “Solicitation Related Contract” means any contract, arrangement or understanding with respect to the nomination or other business set forth in the Proposing Stockholder Notice including, without limitation, any contract, arrangement or understanding relating to acquiring, holding, voting or disposing of any shares of stock or other securities of the Corporation (including Derivatives).
(xviii) Shares of the Corporation shall be treated as “beneficially owned” by a person if the person beneficially owns such shares, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Regulations 13D and 13G thereunder.
(g) Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for the exclusive use by the Board.
Nothing in this Section 2.07 shall be deemed to affect any rights of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.
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Section 2.08 Stock List. The Corporation shall prepare, no later than the tenth day before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of ten (10) days ending on the day before the meeting date (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting or (ii) during ordinary business hours at the principal place of business of the corporation. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.08 or to vote in person or by proxy at any meeting of stockholders.
Section 2.09 Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him, her or it by proxy. Proxies for use at any meeting of stockholders shall be filed with the Secretary, or such other officer as the Board may from time to time determine by resolution, before or at the time of the meeting. All proxies shall be received and taken charge of and all ballots, if any, shall be received and canvassed by the secretary of the meeting who shall decide all questions touching upon the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions.
No proxy shall be valid after three years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and coupled with an interest sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise such powers in respect of the same portion of the shares as he is of the proxies representing such shares.
Section 2.10 Elections; Inspectors. Unless otherwise required by law or provided in the Certificate of Incorporation, each stockholder shall have one vote for each share of stock entitled to vote which is registered in his, her or its name on the record date for stockholders entitled to vote at the meeting. Shares registered in the name of another entity, domestic or foreign, may be voted by such officer, agent or proxy as the bylaw (or comparable instrument) of such entity may prescribe, or in the absence of such provision, as the board of directors (or comparable body) of such entity may determine. Shares registered in the name of a deceased person may be voted by his executor or administrator, either in person or by proxy.
At any meeting of the stockholders, the Board or the chairman of the meeting may, and shall if required by law, appoint one or more inspectors, each of whom shall subscribe an oath or affirmation to execute faithfully the duties of inspector at such meeting with strict impartiality and according to the best of his or her ability. Such inspector shall receive the ballots, if any, count the votes and make and sign a certificate of the result thereof. The chairman of the meeting may appoint any person to serve as inspector, except no candidate for the office of director shall be appointed as an inspector.
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Section 2.11 Order of Business. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 2.12 No Action Without Meeting. Unless otherwise provided in the Certificate of Incorporation, no action that is permitted or required to be taken at a meeting of stockholders may be effected by consent of stockholders in lieu of a meeting of stockholders.
Section 2.13 Meeting by Remote Communications. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a)(2) of the DGCL. If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the Board may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication: (a) participate in a meeting of stockholders; and (b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that: (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder; (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.
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ARTICLE
III
BOARD OF DIRECTORS
Section 3.01 Power; Number; Term of Office. The business and affairs of the Corporation shall be managed by or under the direction of the Board, and subject to the restrictions imposed by law or the Certificate of Incorporation, they may exercise all the powers of the Corporation.
The number of directors which shall constitute the whole Board shall be not less than 3 and not more than 15 and shall be determined from time to time by resolution of the Board (provided that no decrease in the number of directors which would have the effect of shortening the term of an incumbent director may be made by the Board). Each director shall hold office until his or her successor shall have been elected and qualified or until his or her earlier death, resignation or removal.
Section 3.02 Qualification and Election of Directors.
(a) All directors of the Corporation shall be natural persons, but need not be residents of Delaware or stockholders of the Corporation. Except in the case of vacancies, directors shall be elected by the stockholders. The Board shall establish the retirement policy for directors.
(b) Within the time period specified in these bylaws for providing the applicable nomination, each nominee for election as a director of the Corporation must deliver to the secretary of the Corporation a written representation and agreement that such person (i) understands his or her duties as a director under the DGCL and agrees to act in accordance with those duties while serving as a director, (ii) if elected as a director of the Corporation, will comply with all applicable laws and stock exchange listing standards and the Corporation’s publicly disclosed policies and guidelines applicable to directors, and (iii) will provide facts, statements and other information in all communications with the Corporation and its stockholders that are or will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
(c) At the request of the Corporation, each nominee for election as a director of the Corporation must submit to the secretary of the Corporation all completed and signed questionnaires required of directors and officers.
(d) In the event that any information or communications provided by a nominee, or any Proposing Person, to the Corporation or its stockholders ceases to be true and correct in all material respects or omits a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, such nominee or Proposing Person shall promptly notify the secretary of the Corporation of any defect in such previously provided information and of the information that is required to correct any such defect.
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Section 3.03 Quorum. Unless otherwise provided in the Certificate of Incorporation, a majority of the total number of directors shall constitute a quorum for the transaction of business of the Board and the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board.
Section 3.04 Place of Meetings; Order of Business. The directors may hold their meetings and may have an office and keep the books of the Corporation, except as otherwise provided by law, in such place or places, within or without the State of Delaware, as the Board may from time to time determine by resolution. At all meetings of the Board business shall be transacted in such order as shall from time to time be determined by the Chairman of the Board (if any), or in his or her absence by the President, or by resolution of the Board.
Section 3.05 First Meeting. The Board may hold a meeting for the purpose of organization and the transaction of business, if a quorum is present, immediately after and at the same place, if any, as the annual meeting of the stockholders. Notice of such meeting shall not be required. At the first meeting of the Board in each year at which a quorum shall be present, held next after the annual meeting of stockholders, the Board shall proceed to the election of the officers of the Corporation.
Section 3.06 Regular Meetings. Regular meetings of the Board shall be held at such times and places, if any, as shall be designated from time to time by resolution of the Board. A notice of each regular meeting shall not be required.
Section 3.07 Special Meetings. Special meetings of the Board may be called by the Chairman of the Board (if any), the President or, on the written request of any two directors, by the Secretary, in each case on at least 24 hours’ notice to each director. Such notice, or any waiver thereof pursuant to Section 7.02 of these bylaws, need not state the purpose or purposes of such meeting, except as may otherwise be required by law or provided for in the Certificate of Incorporation or these bylaws.
Section 3.08 Emergency Bylaws. In the event of any emergency, disaster or catastrophe, as referred to in Section 110 of the DGCL, or other similar emergency condition (an “Emergency”), as a result of which a quorum of the Board or a standing committee of the Board cannot readily be convened for action, then the director or directors in attendance at the meeting shall constitute a quorum. Such director or directors in attendance may further take action to appoint one or more of themselves or other directors to membership on any standing or temporary committees of the Board as they shall deem necessary and appropriate. Without limiting the foregoing, during any Emergency, the Corporation, the Board and the officers may exercise any authority and take any action or measure permitted by Section 110 of the DGCL.
Section 3.09 Removal. Any director or the entire Board may be removed from office at any time, with or without cause, by the holders of a majority of the shares outstanding and entitled to vote thereon.
Section 3.10 Vacancies; Increases in the Number of Directors. Unless otherwise provided in the Certificate of Incorporation, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office and entitled to vote thereon, although less than a quorum, or a sole remaining director; and any director so chosen to fill a vacancy not resulting from an increase in the number of directors shall hold office for the remaining term of his or her predecessor or until his or her earlier death, resignation, retirement, disqualification or removal.
Any directors elected to fill vacancies or newly created directorships shall hold office until their successors shall be duly elected and shall qualify.
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Section 3.11 Compensation. The Board, or any committee designated by the Board, shall have the authority to fix the compensation of directors.
Section 3.12 Action Without a Meeting; Telephone Conference Meeting. Any action required or permitted to be taken at any meeting of the Board, or any committee designated by the Board, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the board or committee in the same paper or electronic form as the minutes are maintained. Such consent shall have the same force and effect as a unanimous vote at a meeting of the Board or a committee, as the case may be, and may be stated as such in any document or instrument filed with the Secretary of State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation, subject to the requirement for notice of meetings, members of the Board, or members of any committee designated by the Board, may participate in a meeting of such Board or committee, as the case may be, by means of a conference telephone or other communications equipment by means of which all persons participating in the meetings can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
ARTICLE
IV
COMMITTEES
Section 4.01 Designation; Powers. The Board may, by resolution passed by the Board, designate one or more committees, including, if the Board shall so determine, an executive committee, each such committee to consist of one or more of the directors of the Corporation. Any such designated committee shall have and may exercise such of the powers and authority of the Board in the management of the business and affairs of the Corporation as may be provided in such resolution, except that no such committee shall have the power or authority of the Board in reference to (i) approving, adopting, or recommending to the stockholders, any action expressly required by the DGCL to be submitted to the stockholders for approval (other than the election or removal of directors); or (ii) adopting, amending or repealing any bylaw of the Corporation. Any such designated committee may authorize the seal of the Corporation to be affixed to all papers which may require it.
Section 4.02 Procedure; Meetings; Quorum. Any committee designated pursuant to Section 4.01 shall choose its own chairman unless previously appointed by the Board, shall keep regular minutes of its proceedings and report the same to the Board when requested, shall fix its own rules or procedures and shall meet at such times and at such place or places, if any, as may be provided by such rules, or by resolution of such committee or resolution of the Board. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum, and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolution.
17
Section 4.03 Substitution of Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of the absent or disqualified member.
ARTICLE
V
OFFICERS
Section 5.01 Number, Titles and Term of Office. The officers of the Corporation shall be a Chief Executive Officer, a President, one or more Vice Presidents, a Treasurer, a Secretary and, if the Board so elects, a Chairman of the Board and such other officers as the Board may from time to time elect or appoint. Each officer shall hold office until his or her successor shall be duly elected and shall qualify or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided. Any number of offices may be held by the same person, unless the Certificate of Incorporation provides otherwise. Except for the Chairman of the Board, if any, no officer need be a director.
Section 5.02 Salaries. The salaries or other compensation of the officers and agents of the Corporation shall be fixed from time to time by the Board, or any committee designated by the Board, or, if such power is expressly delegated to any officers of the Corporation, by such officers.
Section 5.03 Removal. Any officer or agent elected or appointed by the Board may be removed, either with or without cause, by the vote of a majority of the Board at a special meeting called for the purpose, or at any regular meeting of the Board, provided the notice for such meeting shall specify that the matter of any such proposed removal will be considered at the meeting but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.
Section 5.04 Vacancies. Any vacancy occurring in any office of the Corporation may be filled by the Board.
Section 5.05 Powers and Duties of the Chief Executive Officer. The Chief Executive Officer shall be an officer of the Corporation. Subject to the control of the Board and the executive committee (if any), the Chief Executive Officer shall have general executive charge, management and control of the properties, business and operations of the Corporation with all such powers as may be reasonably incidental to such responsibilities; he or she may agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation and may sign all certificates for shares of capital stock of the Corporation; and shall have such other powers and duties as designated in accordance with these bylaws and as from time to time may be assigned to him or her by the Board.
Section 5.06 Powers and Duties of the Chairman of the Board. If elected, the Chairman of the Board shall preside at all meetings of the stockholders and of the Board; and he or she shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him or her by the Board.
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Section 5.07 Powers and Duties of the President. Unless the Board otherwise determines, the President shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation and may sign all certificates for shares of capital stock of the Corporation; and, unless the Board otherwise determines, he or she shall, in the absence of the Chairman of the Board or if there be no Chairman of the Board, preside at all meetings of the stockholders and (should he or she be a director) of the Board; and he or she shall have such other powers and duties as designated in accordance with these bylaws and as from time to time may be assigned to him or her by the Chief Executive Officer or the Board.
Section 5.08 Powers and Duties of the Vice Presidents. In the absence of the President, or in the event of his or her inability or refusal to act, a Vice President appointed and designated by the Board shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. In the absence of a designation by the Board of a Vice President to perform the duties of the President, or in the event of his or her absence or inability or refusal to act, the Vice President who is present and who is senior in terms of time as a Vice President of the Corporation shall so act. The Vice Presidents shall perform such other duties and have such other powers as the Board may from time to time prescribe.
Section 5.09 Powers and Duties of the Chief Financial Officer. Unless the Board otherwise determines, the Chief Financial Officer, if any, shall have responsibility for the general executive charge, management and control of the financial affairs and business of the Corporation and, jointly with the Treasurer, shall have custody and control of all the funds and securities of the Corporation; and he or she shall have such other powers and duties as designated in accordance with these bylaws and as from time to time may be assigned to him or her by the Chief Executive Officer or the Board.
Section 5.10 Powers and Duties of the Treasurer. The Treasurer, jointly with the Chief Financial Officer (if any shall be appointed), shall have responsibility for the custody and control of all the funds and securities of the Corporation, and he or she shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him or her by the Board. He or she shall perform all acts incident to the position of Treasurer, subject to the control of the Chief Executive Officer and the Board; and he or she shall, if required by the Board, give such bond for the faithful discharge of his or her duties in such form as the Board may require.
Section 5.11 Powers and Duties of the Assistant Treasurers. Each Assistant Treasurer, if any, shall have the usual powers and duties pertaining to his or her office, together with such other powers and duties as designated in these bylaws and as from time to time may be assigned to him or her by the Chief Executive Officer or the Board. The Assistant Treasurers shall exercise the powers of the Treasurer during that officer’s absence or inability or refusal to act.
Section 5.12 Powers and Duties of the Secretary. The Secretary shall keep the minutes of all meetings of the Board, committees of directors and the stockholders, in books provided for that purpose; he or she shall attend to the giving and serving of all notices; he or she may in the name of the Corporation affix the seal of the Corporation to all contracts of the Corporation and attest the affixation of the seal of the Corporation thereto; he or she may sign with the other appointed officers all certificates for shares of capital stock of the Corporation; he or she shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the Board may direct, all of which shall at all reasonable times be open to inspection of any director upon application at the office of the Corporation during business hours; he or she shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him or her by the Board; and he or she shall in general perform all acts incident to the office of Secretary, subject to the control of the Chief Executive Officer and the Board.
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Section 5.13 Powers and Duties of the Assistant Secretaries. Each Assistant Secretary, if any, shall have the usual powers and duties pertaining to his or her office, together with such other powers and duties as designated in these bylaws and as from time to time may be assigned to him or her by the Chief Executive Officer or the Board. The Assistant Secretaries shall exercise the powers of the Secretary during that officer’s absence or inability or refusal to act.
Section 5.14 Action with Respect to Securities of Other Entities. Unless otherwise directed by the Board, the Chief Executive Officer or an officer or agent delegated by the Chief Executive Officer shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of security holders of or with respect to any action of security holders of any other entity in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other entity.
ARTICLE
VI
CAPITAL STOCK
Section 6.01 Uncertificated Shares; Certificates. The shares of the Corporation shall be uncertificated, provided, however, that the Board may provide by resolution that some or all of any class or series of stock shall be represented by certificates. Each holder of shares represented by certificates shall be entitled to a certificate representing the number of shares registered in certificated form, signed by, or in the name of, the Corporation by any two authorized officers of the Corporation; provided, however, that any of or all the signatures on the certificate may be facsimile or by other means of electronic reproduction. The stock record books and the blank stock certificate books shall be kept by the Secretary, or at the office of such transfer agent or transfer agents as the Board may from time to time by resolution determine. In case any officer, transfer agent or registrar who shall have signed or whose facsimile or electronically reproduced signature or signatures shall have been placed upon any such certificate or certificates shall have ceased to be such officer, transfer agent or registrar before such certificate is issued by the Corporation, such certificate may nevertheless be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The stock certificates shall be entered in the books of the Corporation as they are issued and shall exhibit the holder’s name and number of shares represented by such certificate.
Section 6.02 Transfer of Shares. Subject to the provisions of the Certificate of Incorporation, these bylaws and any applicable agreements regarding the transfer of stock, shares of stock of the Corporation shall be transferable only on the books of the Corporation in accordance with applicable law. Transfers of shares represented by certificates shall be effected upon surrender of the certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer. Transfers of uncertificated shares shall be effected upon receipt of proper transfer instructions from the registered holder thereof in accordance with applicable law and the procedures established by the Corporation or its transfer agent.
Section 6.03 Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares of capital stock of the Corporation as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.
Section 6.04 Regulations Regarding Certificates. The Board shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of capital stock of the Corporation.
Section 6.05 Lost or Destroyed Certificates. The Corporation may determine the conditions upon which a new certificate of stock may be issued in place of a certificate which is alleged to have been lost, stolen or destroyed; and may, in its discretion, require the owner of such certificate or his, her or its legal representative to give bond, with sufficient surety, to indemnify the Corporation and each transfer agent and registrar against any and all losses or claims which may arise by reason of the issuance of a new certificate in the place of the one so lost, stolen or destroyed.
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ARTICLE
VII
MISCELLANEOUS PROVISIONS
Section 7.01 Fiscal Year. The fiscal year of the Corporation shall be such as established from time to time by the Board. Absent any determination to the contrary by the Board, the fiscal year of the Corporation shall end on December 31.
Section 7.02 Notice and Waiver of Notice.
(a) Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws may be given in writing directed to the stockholder’s mailing address (or by electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the corporation. Notice shall be given (i) if mailed, when deposited in the United States mail, postage prepaid, (ii) if delivered by courier service, the earlier of when the notice is received or left at the stockholder’s address, or (iii) if given by electronic mail, when directed to such stockholder’s electronic mail address (unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail or such notice is prohibited by the DGCL to be given by electronic transmission). A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the corporation. A notice by electronic mail will include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the corporation who is available to assist with accessing such files or information. Any notice to stockholders given by the corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws provided by means of electronic transmission (other than any such notice given by electronic mail) may only be given in a form consented to by such stockholder, and any such notice by such means of electronic transmission shall be deemed to be given as provided by the DGCL. The terms “electronic mail,” “electronic mail address,” “electronic signature” and “electronic transmission” as used herein shall have the meanings ascribed thereto in the DGCL.
(b) Except as otherwise provided herein or permitted by applicable law, notices to any director may be in writing and delivered personally or mailed to such director at such director’s address appearing on the books of the Corporation, or may be given by telephone or by any means of electronic transmission (including, without limitation, electronic mail) directed to an address for receipt by such director of electronic transmissions appearing on the books of the Corporation.
(c) Without limiting the manner by which notice otherwise may be given effectively to stockholders, and except as prohibited by applicable law, any notice to stockholders given by the Corporation under any provision of applicable law, the Certificate of Incorporation, or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any stockholder who fails to object in writing to the corporation, within 60 days of having been given written notice by the corporation of its intention to send the single notice permitted under this Section 7.02(c), shall be deemed to have consented to receiving such single written notice.
(d) Whenever notice is required to be given by law, the Certificate of Incorporation or under any of the provisions of these bylaws, a written waiver thereof, signed by the person entitled to notice or waiver by electronic transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these bylaws.
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Section 7.03 Resignations. Any director, member of a committee or officer may resign at any time. Such resignation shall be made in writing and shall take effect at the time, or upon the happening of an event, specified therein, or if no such time or event be specified, at the time of its receipt by the Chief Executive Officer or Secretary. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.
Section 7.04 Facsimile or Electronic Signatures. In addition to the provisions for the use of facsimile or electronic signatures elsewhere specifically authorized in these bylaws, facsimile or electronic signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board.
Section 7.05 Reliance upon Books, Reports and Records. Each director and each member of any committee designated by the Board shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or reports made to the Corporation by any of its officers, or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board or by any such committee, or in relying in good faith upon other records of the Corporation.
ARTICLE
VIII
AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be adopted (a) at any annual or special meeting of stockholders by the affirmative vote of the holders of a majority of the voting power of the stock issued and outstanding and entitled to vote thereon; or (b) by the Board.
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Exhibit 10.1
Execution Version
LOAN AND SECURITY AGREEMENT
Dated as of March 5, 2026
among
WHITE OAK COMMERCIAL FINANCE, LLC,
as Agent,
NINE ENERGY SERVICE, INC.,
NINE ENERGY CANADA ULC,
CDK Perforating, LLC,
Crest Pumping Technologies, LLC,
RedZone Coil Tubing, LLC,
and
Nine Downhole Technologies, LLC,
as Borrowers,
Nine Energy Service, LLC,
MOTI Holdco, LLC,
Magnum Oil Tools GP, LLC,
and
Magnum Oil Tools International, LTD,
as Guarantors,
the financial institutions party hereto from time to time,
as Lenders
and
WHITE OAK COMMERCIAL FINANCE, LLC,
as a Lead Arranger
Loan and Security Agreement
TABLE OF CONTENTS
| Page | |||
| 1. | LOANS AND LETTERS OF CREDIT. | 2 | |
| 1.1 | Amount of Loans / Letters of Credit. | 2 | |
| 1.2 | Reserves re Revolving Loans / Letters of Credit | 3 | |
| 1.3 | Protective Advances | 4 | |
| 1.4 | Notice of Borrowing; Manner of Revolving Loan Borrowing | 4 | |
| 1.5 | Letters of Credit | 4 | |
| 1.6 | Conditions of Making the Loans and Issuing Letters of Credit | 7 | |
| 1.7 | Repayments. | 11 | |
| 1.8 | Prepayments / Voluntary Termination / Application of Prepayments. | 11 | |
| 1.9 | Obligations Unconditional | 12 | |
| 1.10 | Reversal of Payments | 13 | |
| 1.11 | Independent Obligations | 14 | |
| 1.12 | Revolving Loans by Agent and Settlement Among Lenders. | 14 | |
| 2. | INTEREST AND FEES; LOAN ACCOUNT. | 15 | |
| 2.1 | Interest | 15 | |
| 2.2 | Fees | 18 | |
| 2.3 | Computation of Interest and Fees | 18 | |
| 2.4 | Loan Account; Monthly Accountings | 18 | |
| 2.5 | Further Obligations; Maximum Lawful Rate | 19 | |
| 3. | SECURITY INTEREST GRANT / POSSESSORY COLLATERAL / FURTHER ASSURANCES. | 20 | |
| 3.1 | Grant of Security Interest | 20 | |
| 3.2 | Possessory Collateral | 20 | |
| 3.3 | Further Assurances. | 20 | |
| 3.4 | UCC and PPSA Financing Statements | 21 | |
| 3.5 | Valid Security Interest | 22 | |
| 3.6 | Real Property Assets | 22 | |
| 3.7 | Rolling Stock. | 22 | |
| 4. | CERTAIN PROVISIONS REGARDING ACCOUNTS, INVENTORY, EQUIPMENT, COLLECTIONS, APPLICATIONS OF PAYMENTS, INSPECTION RIGHTS, AND APPRAISALS. | 23 | |
| 4.1 | Lock Boxes and Blocked Accounts | 23 | |
| 4.2 | Application of Payments | 24 | |
| 4.3 | Notification; Verification | 25 | |
| 4.4 | Power of Attorney. | 26 | |
| 4.5 | Disputes | 27 | |
| 4.6 | Inventory. | 27 | |
| 4.7 | Access to Collateral, Books and Records | 27 | |
| 4.8 | Appraisals | 28 | |
| 4.9 | Equipment. | 28 | |
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Loan and Security Agreement
| Page | |||
| 5. | REPRESENTATIONS, WARRANTIES AND COVENANTS. | 28 | |
| 5.1 | Existence and Authority | 28 | |
| 5.2 | Names; Trade Names and Styles | 29 | |
| 5.3 | Title to Collateral; Third Party Locations; Permitted Liens | 29 | |
| 5.4 | Accounts, Chattel Paper, Inventory and Equipment. | 29 | |
| 5.5 | Electronic Chattel Paper | 30 | |
| 5.6 | Capitalization; Investment Property. | 30 | |
| 5.7 | Commercial Tort Claims | 32 | |
| 5.8 | Jurisdiction of Organization; Location of Collateral | 32 | |
| 5.9 | Financial Statements and Reports; Solvency. | 32 | |
| 5.10 | Tax Returns and Payments; Pension Contributions. | 33 | |
| 5.11 | Compliance with Laws; Intellectual Property; Licenses; Real Property. | 33 | |
| 5.12 | Litigation | 35 | |
| 5.13 | Use of Proceeds | 35 | |
| 5.14 | Insurance. | 36 | |
| 5.15 | Financial, Collateral and Other Reporting / Notices | 36 | |
| 5.16 | Litigation Cooperation | 39 | |
| 5.17 | Maintenance of Collateral, Etc. | 39 | |
| 5.18 | Material Contracts | 39 | |
| 5.19 | No Default | 40 | |
| 5.20 | No Material Adverse Change | 40 | |
| 5.21 | Full Disclosure | 40 | |
| 5.22 | Sensitive Payments | 40 | |
| 5.23 | [Reserved]. | 41 | |
| 5.24 | Negative Covenants | 41 | |
| 5.25 | Fixed Charge Coverage Ratio | 50 | |
| 5.26 | Minimum Excess Availability | 50 | |
| 5.27 | Employee and Labor Matters | 50 | |
| 5.28 | Post Closing Matters | 51 | |
| 6. | LIMITATION OF LIABILITY AND INDEMNITY. | 51 | |
| 6.1 | Limitation of Liability | 51 | |
| 6.2 | Indemnity/Currency Indemnity. | 51 | |
| 7. | EVENTS OF DEFAULT AND REMEDIES. | 52 | |
| 7.1 | Events of Default | 52 | |
| 7.2 | Remedies with Respect to Lending Commitments/Acceleration/Etc. | 55 | |
| 7.3 | Remedies with Respect to Collateral | 55 | |
| 8. | LOAN GUARANTY. | 60 | |
| 8.1 | Guaranty | 60 | |
| 8.2 | Guaranty of Payment | 60 | |
| 8.3 | No Discharge or Diminishment of Loan Guaranty. | 60 | |
| 8.4 | Defenses Waived | 61 | |
| 8.5 | Rights of Subrogation | 61 | |
| 8.6 | Reinstatement; Stay of Acceleration | 61 | |
| 8.7 | Information | 61 | |
| 8.8 | Termination | 61 | |
| 8.9 | Maximum Liability | 62 | |
| 8.10 | Contribution | 62 | |
| 8.11 | Liability Cumulative | 63 | |
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Loan and Security Agreement
| Page | |||
| 9. | PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES. | 63 | |
| 9.1 | Taxes. | 63 | |
| 10. | GENERAL PROVISIONS. | 66 | |
| 10.1 | Notices. | 66 | |
| 10.2 | Severability | 68 | |
| 10.3 | Integration | 68 | |
| 10.4 | Waivers | 68 | |
| 10.5 | Amendment. | 68 | |
| 10.6 | Time of Essence | 70 | |
| 10.7 | Expenses, Fee and Costs Reimbursement | 70 | |
| 10.8 | Benefit of Agreement; Assignability. | 71 | |
| 10.9 | Recordation of Assignment | 72 | |
| 10.10 | Participations | 73 | |
| 10.11 | Headings; Construction | 73 | |
| 10.12 | USA PATRIOT Act Notification; CAML | 74 | |
| 10.13 | Counterparts; Email Signatures | 74 | |
| 10.14 | GOVERNING LAW | 75 | |
| 10.15 | WAIVERS AND JURISDICTION; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS | 75 | |
| 10.16 | Publication | 75 | |
| 10.17 | Confidentiality | 76 | |
| 10.18 | Borrowing Agency Provisions. | 76 | |
| 10.19 | Agent Provisions. | 77 | |
| 10.20 | [Reserved] | 82 | |
| 10.21 | Defaulting Lender | 82 | |
| 10.22 | Erroneous Payments. | 85 | |
| 10.23 | [Reserved] | 85 | |
| 10.24 | Waivers Regarding Insolvency Proceedings. | 86 | |
| Information Certificate(s) | |
| Schedule A | Description of Certain Terms |
| Schedule B | Definitions |
| Schedule C | Existing JPM Letters of Credit |
| Schedule D | Reporting |
| Schedule E | [Reserved] |
| Schedule F | Lender Notice Information |
| Exhibit A | Form of Notice of Borrowing |
| Exhibit B | [Reserved] |
| Exhibit C | [Reserved] |
| Exhibit D | [Reserved] |
| Exhibit E | Form of Account Debtor Notification |
| Exhibit F | Form of Compliance Certificate |
| Exhibit G | Form of Monthly Financial Model |
| Exhibit H | Form of Assignment and Acceptance |
| Exhibit I-1 | Form of U.S. Tax Compliance Certificate |
| Exhibit I-2 | Form of U.S. Tax Compliance Certificate |
| Exhibit I-3 | Form of U.S. Tax Compliance Certificate |
| Exhibit I-4 | Form of U.S. Tax Compliance Certificate |
| Exhibit J | Post-Closing Obligations |
| Annex I | Specified Real Property |
-iii-
Loan and Security Agreement
This Loan and Security Agreement (as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”) is entered into as of March 5, 2026, among (1) White Oak Commercial Finance, LLC (“WOCF”), as agent for the Lenders (in such capacity, together with its successors and assigns “Agent”), (2) the lenders from time to time party hereto (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender” and, collectively, as the “Lenders”), (3) Nine Energy Service, Inc., a Delaware corporation (the “Company”), (4) Nine Energy Canada ULC (formerly known as Nine Energy Canada Inc.), an unlimited liability corporation organized under the laws of the province of Alberta, Canada (“Nine Canada”), (5) CDK Perforating, LLC, a Texas limited liability company (“CDK”), (6) Crest Pumping Technologies, LLC, a Delaware limited liability company (“Crest Pumping”), (7) RedZone Coil Tubing, LLC, a Texas limited liability company (“RedZone”), (8) Nine Downhole Technologies, LLC, a Delaware limited liability company (“Nine Downhole” and together with the Company, Nine Canada, CDK, Crest Pumping, RedZone, and any other Person who from time to time becomes a Borrower hereunder, collectively, the “Borrowers” and each individually, a “Borrower”), (9) Nine Energy Service, LLC, a Delaware limited liability company (“Nine Service”), (10) MOTI Holdco, LLC, a Delaware limited liability company (“MOTI”), (11) Magnum Oil Tools GP, LLC, a Texas limited liability company (“Magnum Oil GP”), and (12) Magnum Oil Tools International, LTD, a Texas limited partnership (“Magnum Oil LP” and together with Nine Service, MOTI, and Magnum Oil GP, and each of the Affiliates of the Borrowers signatory to this Agreement from time to time as guarantors, each a “Guarantor” and collectively, the “Guarantors”). The Schedules and Exhibits to this Agreement are an integral part of this Agreement and are incorporated herein by reference. Terms used, but not defined elsewhere, in this Agreement are defined in Schedule B.
RECITALS:
WHEREAS, on February 1, 2026 (the “Petition Date”), each of the Loan Parties filed voluntary petitions and commenced cases, jointly administered under Case No. 26-90295 (collectively, the “Chapter 11 Cases”), under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (such court, together with any other court having exclusive jurisdiction over the Chapter 11 Cases from time to time and any Federal appellate court thereof, the “Bankruptcy Court”);
WHEREAS, prior to the Petition Date, the Lenders provided financing to the Borrowers and the Guarantors pursuant to that certain Loan and Security Agreement, dated as of May 1, 2025 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Prepetition Credit Agreement”), by and among the Borrowers, the Guarantors, White Oak Commercial Finance, LLC, as agent, and the lenders party thereto;
WHEREAS, prior to the Closing Date, the Lenders provided financing to the Borrowers and the Guarantors pursuant to that certain Senior Secured Superpriority Asset-Based Debtor-in-Possession Loan and Security Agreement, dated as of February 3, 2026 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “DIP Credit Agreement”), by and among the Borrowers, the Guarantors, White Oak Commercial Finance, LLC, as agent, and the lenders party thereto (the “DIP Lenders”);
WHEREAS, immediately prior to the Closing Date, White Oak Europe ABL Limited, in its capacity as a DIP Lender, assigned 100% of its revolving commitment and DIP Loans to White Oak ABL 3, LLC, in its capacity as a DIP Lender, in accordance with Section 10.8(b) of the DIP Credit Agreement, and White Oak ABL 3, LLC became the sole DIP Lender under the DIP Credit Agreement;
WHEREAS, the Borrowers have requested and the Lenders and LC Issuer are willing to make available: (i) to the Borrowers, a revolving credit facility and (ii) to the Borrowers and the other Loan Parties, a letter of credit facility, in each case, upon the terms and subject to the conditions set forth herein, the Prepackaged Plan and the RSA; and
WHEREAS, pursuant to the Prepackaged Plan, each DIP Lender will exchange and convert on a cashless basis all of its DIP Loans for Loans under this Agreement and other consideration set forth in the RSA, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
| 1. | LOANS AND LETTERS OF CREDIT. |
1.1 Amount of Loans / Letters of Credit.
(a) Revolving Loans and Letters of Credit. Subject to the terms and conditions contained in this Agreement, including Sections 1.3 and 1.6, each Lender with a Revolving Commitment shall (severally, not jointly and severally), from time to time prior to the Maturity Date, at Borrowing Agent’s request, (i) make revolving loans to Borrowers (“Revolving Loans”), and (ii) make, or cause or permit a Participant (as defined in Section 10.10) to make, letters of credit (“Letters of Credit”) available to Borrowers in an amount not to exceed such Lender’s Pro Rata Share of such Revolving Loans and/or Letters of Credit; provided, that after giving effect to each such Revolving Loan and each such Letter of Credit, (A) the outstanding balance of all Revolving Loans and Letter of Credit Liabilities will not exceed the lesser of (x) the Maximum Revolving Facility Amount, minus Reserves and (y) the Borrowing Base, and (B) none of the other Loan Limits for Revolving Loans will be exceeded.
Notwithstanding anything to the contrary contained in this Agreement, (i) all outstanding Revolving Loans shall first be deemed to be Revolving Loans that were made based on the Domestic Accounts Availability as of such date, and the aggregate amount of any Revolving Loans in excess of such Domestic Accounts Availability shall be deemed to be Revolving Loans based on the Inventory Availability, and the aggregate amount of any Revolving Loans in excess of such Inventory Availability shall be deemed to be Revolving Loans based on the M&E Availability, and the aggregate amount of any Revolving Loans in excess of such M&E Availability shall be deemed to be Revolving Loans based on the Real Property Availability, and the aggregate amount of any Revolving Loans in excess of such Real Property Availability shall be deemed to be Revolving Loans based on the SOFA Availability, and the aggregate amount of any Revolving Loans in excess of such SOFA Availability shall be deemed to be Revolving Loans based on the Foreign Accounts Availability and (ii) all payments at any time received by Agent with respect to outstanding Revolving Loans shall be first deemed to be Revolving Loans that were made based on then existing Foreign Accounts Availability, and any portion of such payment received by Agent that exceeds the then existing Foreign Accounts Availability with respect to Revolving Loans shall be next deemed to be applied to Revolving Loans that were made based on SOFA Availability, and any portion of such payment received by Agent that exceeds the then existing SOFA Availability with respect to Revolving Loans shall be next deemed to be applied to Revolving Loans that were made based on Real Property Availability, and any portion of such payment received by Agent that exceeds the then existing Real Property Availability with respect to Revolving Loans shall be next deemed to be applied to Revolving Loans that were made based on M&E Availability, and any portion of such payment received by Agent that exceeds the then existing M&E Availability with respect to Revolving Loans shall be next deemed to be applied to Revolving Loans that were made based on Inventory Availability, and any portion of such payment received by Agent that exceeds the then existing Inventory Availability with respect to Revolving Loans shall be next deemed to be applied to Revolving Loans that were made based on Domestic Accounts Inventory. For the purposes of determining the Domestic Accounts Availability, Inventory Availability, M&E Availability, Real Property Availability, SOFA Availability and Foreign Accounts Availability hereunder, all Reserves shall be deemed to first apply to Domestic Accounts Availability.
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All Revolving Loans shall be made in and repayable in Dollars. Any Revolving Loans repaid may be reborrowed in accordance with the terms herein (including any DIP Loans which the reborrowing thereof shall, for the avoidance of doubt, constitute Loans hereunder).
(b) DIP Loans and Existing Letter of Credit. Notwithstanding anything to the contrary contained herein or in any other Loan Document:
(i) On the Closing Date, upon the satisfaction (or waiver in accordance with the terms of this Agreement) of the conditions set forth in Section 1.6, the Existing Letter of Credit shall constitute a Letter of Credit for all purposes under this Agreement and shall be deemed issued under this Agreement and all Obligations on all Fronting Exposure in respect of the Existing Letter of Credit and interest, expenses, fees and other sums payable in respect thereof under the “Loan Documents” (as defined in the DIP Credit Agreement) shall constitute “Obligations” for all purposes under this Agreement and the other Loan Documents.
(ii) On the Closing Date, upon the satisfaction (or waiver in accordance with the terms of this Agreement) of the conditions set forth in Section 1.6, all DIP Loans and any remaining “Obligations” (as defined in the DIP Credit Agreement) shall automatically be deemed exchanged and converted on a cashless basis into and constitute Obligations hereunder, with the outstanding amount of all DIP Loans, if any, being refinanced as Loans hereunder and all unpaid interest and fees thereon accrued through the Closing Date to be paid on the next scheduled date for payment of interest and fees under this Agreement.
1.2 Reserves re Revolving Loans / Letters of Credit. Agent may from time to time establish and revise reserves against the Borrowing Base and/or the Maximum Revolving Facility Amount in such amounts and of such types as Agent deems appropriate in its Permitted Discretion (“Reserves”); provided, that (i) the amount of any Reserves established by Agent shall have a reasonable relationship to the event, condition, other circumstance or fact that is the basis for such Reserve as determined by Agent in its Permitted Discretion and (ii) to the extent that an event, condition or circumstance as to any eligible asset has been fully addressed pursuant to the treatment thereof within the applicable definition of such terms or by the imposition or establishment of a separate Reserve, Agent shall not also establish a duplicative Reserve to address the same event, condition or circumstance. Notwithstanding anything to the contrary herein, unless an Event of Default has occurred and is continuing, Agent shall provide email notice advising Borrowing Agent of such Reserves two (2) Business Days prior to the imposition of such Reserves (during which period (x) Agent shall be available to discuss any such proposed Reserves with the Borrowing Agent to afford the Borrowing Agent an opportunity to take such action as may be required so that the event, condition or circumstance that is the basis for such Reserve no longer exists in the manner and to the extent satisfactory to Agent in its Permitted Discretion and (y) Borrowers may not obtain any new Revolving Loan or Letter of Credit to the extent that, after giving pro forma effect to such proposed Reserves, such Revolving Loan or Letter of Credit would cause the outstanding balance of all Revolving Loans and the Letter of Credit Liabilities to exceed the lesser of (a) the Maximum Revolving Facility Amount minus Reserves and (b) the Borrowing Base). Without limiting the foregoing, references to Reserves shall include the Dilution Reserve, the Royalty Reserve and reserves with respect to the amount in excess of the undrawn amount all Letters of Credit as would be necessary to collateralize all Letters of Credit and satisfy the Borrowers’ outstanding Reimbursement Obligations. In no event shall the establishment of a Reserve in respect of a particular actual or contingent liability obligate any Lender to make advances to pay such liability or otherwise obligate any Lender with respect thereto.
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1.3 Protective Advances. Any contrary provision of this Agreement or any other Loan Document notwithstanding, Agent is hereby authorized by Borrowers and Lenders at any time during the existence of a Default or an Event of Default (regardless of (a) whether any of the other applicable conditions precedent set forth in Section 1.6 hereof have not been satisfied or the commitment of Lenders to make Loans hereunder has been terminated for any reason, or (b) any other contrary provision of this Agreement) to make Revolving Loans to, or for the benefit of, Borrowers that Agent, in its Permitted Discretion, deems necessary or desirable (i) to preserve or protect the Collateral, or any portion thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (iii) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement (the “Protective Advances”). Any contrary provision of this Agreement or any other Loan Document notwithstanding, Agent may direct the proceeds of any Protective Advance to Borrowers or to such other Person as Agent determines in its Permitted Discretion. All Protective Advances shall be payable promptly (but in no event later than two (2) Business Days) following Borrowing Agent’s receipt of written demand therefor from Agent.
1.4 Notice of Borrowing; Manner of Revolving Loan Borrowing. Borrowing Agent shall request (other than with respect to the deemed refinancing of the DIP Loans with Loans hereunder pursuant to Section 1.1(b)) each Revolving Loan by an Authorized Officer delivering, in writing or via an Approved Electronic System or by other Approved Electronic Communication, a Notice of Borrowing substantially in the form of Exhibit A hereto (each such request a “Notice of Borrowing”). Each Notice of Borrowing shall be irrevocable and shall specify (1) the borrowing amount and (2) the requested funding date (which must be a Business Day). Subject to the terms and conditions of this Agreement, including Sections 1.1 and 1.6, Agent shall, except as provided in Section 1.3, deliver the amount of the Revolving Loan requested in the Notice of Borrowing to the Disbursement Account or, if requested in the applicable Notice of Borrowing, any account of Borrowers at a bank in the United States of America as Borrowing Agent may specify (provided that such account must be one identified on Section 41 of the Information Certificate(s) and approved by Agent as an account to be used for funding of loan proceeds) by wire transfer of immediately available funds (a) on the same day if the Notice of Borrowing is received by Agent on or before 11:00 a.m. Eastern Time on a Business Day and the requested Revolving Loan is in an aggregate principal amount of less than $10,000,000, or (b) on the immediately following Business Day if (x) the Notice of Borrowing is received by Agent on or before 11:00 a.m. Eastern Time on a Business Day and the requested Revolving Loan is in an aggregate principal amount of $10,000,000 or more, (y) the Notice of Borrowing is received by Agent after 11:00 a.m. Eastern Time on a Business Day, or (z) the Notice of Borrowing is received by Agent on any day that is not a Business Day. Agent shall charge Agent’s usual and customary fees for the wire transfer of each Loan. At the request of a Lender, Borrowers shall deliver a promissory note to such Lender, evidencing its Loans.
1.5 Letters of Credit and Letter of Credit Fees.
(a) Letters of Credit. On the terms and subject to the conditions set forth herein, the Revolving Commitments may be used by Borrowers, in addition to the making of Revolving Loans hereunder, for the issuance, prior to that date which is one year prior to the Maturity Date, by (i) Agent, of letters of credit, Guarantees or other agreements or arrangements (each, a “Support Agreement”) to induce an LC Issuer to issue or increase the amount of, or extend the expiry date of, one or more Letters of Credit and (ii) a Lender, identified by Agent, as an LC Issuer, of one or more Lender Letters of Credit, so long as, in each case:
(i) Agent shall have received a Notice of LC Credit Event at least five (5) Business Days before the relevant date of issuance, increase or extension; and
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(ii) after giving effect to such issuance, increase or extension, (A) the aggregate Letter of Credit Liabilities do not exceed the Letter of Credit Limit, and (B) the Revolver Usage does not exceed the Line Cap.
Nothing in this Agreement shall be construed to obligate any Lender to issue, increase the amount of or extend the expiry date of any Letter of Credit, which act or acts, if any, shall be subject to agreements to be entered into from time to time between Borrowers and such Lender. Each Lender that is an LC Issuer hereby agrees to give Agent prompt written notice of each issuance of a Lender Letter of Credit by such Lender and each payment made by such Lender in respect of Lender Letters of Credit issued by such Lender.
(b) Letter of Credit Fees. Borrowers shall pay to Agent, for the benefit of the Lenders in accordance with their respective Pro Rata Shares, a letter of credit fee (“Letter of Credit Fees”) with respect to the Letter of Credit Liabilities for each Letter of Credit, computed for each day from the date of issuance of such Letter of Credit to the date that is the last day a drawing is available under such Letter of Credit, at a rate per annum equal to the Applicable Margin then applicable to Revolving Loans whose interest rate is based on the SOFR Index Rate. Such fee shall be payable in arrears on the last day of each calendar month prior to the Maturity Date and on such date. In addition, Borrowers agree to pay promptly to the LC Issuer any fronting or other fees or other charges, costs and/or expenses, that it may charge in connection with any Letter of Credit.
(c) Reimbursement Obligations of Borrowers. If either (i) Agent shall make a payment to an LC Issuer pursuant to a Support Agreement, or (ii) any Lender shall notify Agent that it has made payment in respect of, a Lender Letter of Credit, (A) the applicable Borrower shall reimburse Agent or such Lender, as applicable, for the amount of such payment by the end of the day on which Agent or such Lender shall make such payment or (B) Borrowers shall be deemed to have immediately requested that Lenders make a Revolving Loan, in a principal amount equal to the amount of such payment (but solely to the extent such Borrower shall have failed to directly reimburse Agent or, with respect to Lender Letters of Credit, the applicable LC Issuer, for the amount of such payment). Agent shall promptly notify Lenders of any such deemed request and each Lender hereby agrees to make available to Agent not later than noon on the Business Day following such notification from Agent such Lender’s Pro Rata Share of such Revolving Loan. Each Lender hereby absolutely and unconditionally agrees to fund such Lender’s Pro Rata Share of the Loan described in the immediately preceding sentence, unaffected by any circumstance whatsoever, including, without limitation, (1) the occurrence and continuance of a Default or Event of Default, (2) the fact that, whether before or after giving effect to the making of any such Loan, the aggregate Revolver Usage exceed or will exceed the Line Cap, and/or (3) the non-satisfaction of any conditions set forth in Section 1.6. Agent hereby agrees to apply the gross proceeds of each Revolving Loan deemed made pursuant to this Section 1.5 in satisfaction of Borrowers’ reimbursement obligations arising pursuant to this Section 1.5. Borrowers shall pay interest, on demand, on all amounts so paid by Agent pursuant to any Support Agreement or to any applicable Lender in honoring a draw request under any Lender Letter of Credit for each day from the date of such payment until Borrowers reimburse Agent or the applicable Lender therefor (whether pursuant to clause (A) or (B) of the first sentence of this subsection (c)) at a rate per annum equal to the interest rate applicable to Revolving Loans for such day.
(d) Reimbursement and Other Payments by Borrowers. The obligations of each Borrower to reimburse Agent and/or the applicable LC Issuer pursuant to Section 1.5(c) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including the following:
(i) any lack of validity or enforceability of, or any amendment or waiver of or any consent to departure from, any Letter of Credit or any related document;
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(ii) the existence of any claim, set-off, defense or other right which any Borrower may have at any time against the beneficiary of any Letter of Credit, the LC Issuer (including any claim for improper payment), Agent, any Lender or any other Person, whether in connection with any Loan Document or any unrelated transaction, provided, however, that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;
(iii) any statement or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever;
(iv) any affiliation between the LC Issuer and Agent; or
(v) to the extent permitted under applicable law, any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
(e) Deposit Obligations of Borrowers. In the event any Letters of Credit are outstanding at the time that Borrowers prepay in full or are required to repay the Obligations or the Revolving Commitments are terminated, Borrowers shall (i) deposit with Agent for the benefit of all Lenders cash in an amount equal to one hundred three percent (103%) of the aggregate outstanding Letter of Credit Liabilities to be available to Agent, for its benefit and the benefit of Agent and issuers of Letters of Credit, to reimburse payments of drafts drawn under such Letters of Credit and pay any fees and expenses related thereto, and (ii) prepay Letter of Credit Fees payable under Section 1.5(b) with respect to such Letters of Credit for the full remaining terms of such Letters of Credit assuming that the full amount of such Letters of Credit as of the date of such repayment or termination remain outstanding until the end of such remaining terms. Upon termination of any such Letter of Credit and so long as no Event of Default has occurred and is continuing, the unearned portion of such prepaid fee attributable to such Letter of Credit shall be refunded to Borrowers, together with the deposit described in the preceding clause (i) attributable to such Letter of Credit, but only to the extent not previously applied by Agent in the manner described herein.
(f) Participations in Support Agreements and Lender Letters of Credit.
(i) Concurrently with the issuance of each Supported Letter of Credit, Agent shall be deemed to have sold and transferred to each Lender, and each such Lender shall be deemed irrevocably and immediately to have purchased and received from Agent, without recourse or warranty, an undivided interest and participation in, to the extent of such Lender’s Pro Rata Share, Agent’s Support Agreement liabilities and obligations in respect of such Supported Letter of Credit and Borrowers’ Reimbursement Obligations with respect thereto. Concurrently with the issuance of each Lender Letter of Credit, the LC Issuer in respect thereof shall be deemed to have sold and transferred to each Lender, and each such Lender shall be deemed irrevocably and immediately to have purchased and received from such LC Issuer, without recourse or warranty, an undivided interest and participation in, to the extent of such Lender’s Pro Rata Share, such Lender Letter of Credit and Borrowers’ Reimbursement Obligations with respect thereto. Any purchase obligation arising pursuant to the immediately two preceding sentences shall be absolute and unconditional and shall not be affected by any circumstances whatsoever.
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(ii) If either (A) Agent makes any payment or disbursement under any Support Agreement and/or (B) an LC Issuer makes any payment or disbursement under any Lender Letter of Credit, and (I) Borrowers have not reimbursed Agent or the LC Issuer, as applicable, in full for such payment or disbursement in accordance with this Section 1.5, or (II) any reimbursement under any Support Agreement or Lender Letter of Credit received by Agent or any LC Issuer, as applicable, from any Loan Party is or must be returned or rescinded upon or during any bankruptcy or reorganization of any Loan Party or otherwise, each Lender shall be irrevocably and unconditionally obligated to pay to Agent or the LC Issuer, as applicable, its Pro Rata Share of such payment or disbursement (but no such payment shall diminish the Obligations of Borrowers under this Section 1.5). To the extent any such Lender shall not have made such amount available to Agent or the LC Issuer, as applicable, before 12:00 noon on the Business Day on which such Lender receives notice from Agent or the LC Issuer, as applicable, of such payment or disbursement, or return or rescission, as applicable, such Lender agrees to pay interest on such amount to Agent or the applicable LC Issuer, as applicable, forthwith on demand accruing daily at the Federal Funds Rate, for the first three (3) days following such Lender’s receipt of such notice, and thereafter at the Base Rate in respect of Revolving Loans. Any such Lender’s failure to make available to Agent or the applicable LC Issuer, as applicable, its Pro Rata Share of any such payment or disbursement, or return or rescission, as applicable, shall not relieve any other Lender of its obligation hereunder to make available such other Lender’s Pro Rata Share of such payment, but no Lender shall be responsible for the failure of any other Lender to make available such other Lender’s Pro Rata Share of any such payment or disbursement, or return or rescission.
1.6 Conditions of Making the Loans and Issuing Letters of Credit. Each Lender’s obligation to make any Loan or issue or cause any Letter of Credit to be issued under this Agreement (including the deemed funding and issuance of the Revolving Loans and Letters of Credit pursuant to Section 1.1(b)) is subject to the satisfaction (or waiver in accordance with the terms of this Agreement) of the following conditions precedent:
(a) Loans and Letters of Credit Made and/or Issued on the Closing Date:
(i) Fees. Borrowers shall have paid to Agent and Lenders, as applicable, all fees due on the date hereof, and shall have paid or reimbursed Agent and Lenders for all of Agent’s and any Lender’s costs, charges and expenses incurred through the Closing Date which are required to be paid or reimbursed pursuant to the Fee Letter and the terms hereof (as long as presented in a reasonably detailed invoice to the Borrowers at least two (2) Business Days prior to the Closing Date) and in connection herewith, Borrowers hereby irrevocably authorize Agent to charge such fees, costs, charges and expenses as Revolving Loans (if agreed in writing (which may be via email)) between Borrowers and Agent;
(ii) Closing Documents. Agent shall have received:
(A) executed counterparts of this Agreement duly signed on behalf of each party hereto;
(B) (i) each document (including, without limitation, drafts of any UCC financing statement) required by any Loan Document to be filed, registered or recorded to create, in favor of Agent, for the benefit of itself and the Lenders, a first priority and perfected security interest upon the Collateral that constitutes personal property, (ii) copies of any stock, share or member certificates representing any equity interests pledged pursuant to any Loan Document executed by the Loan Parties, together with corresponding blank powers or equivalent transfer forms, as applicable, in each case all in form and substance reasonable satisfactory to Agent and (iii) executed counterparts of Control Agreements for each Deposit Account, security account or commodity account that was subject to a Control Agreement under the Prepetition Credit Agreement immediately prior to the Petition Date duly signed on behalf of the applicable Loan Party, Agent and the applicable depositary institution;
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(C) a certificate of the Secretary, Assistant Secretary or any Authorized Officer of each Loan Party setting forth (1) a copy of the resolutions, in form and substance reasonably satisfactory to Agent, of the governing body of such Loan Party authorizing (x) the execution, delivery and performance of the Loan Documents (and any agreements relating thereto) to which it is a party and (y) in the case of the Borrowers, the extensions of credit contemplated hereunder, (2) true and complete copies of each of the Organic Documents of each Loan Party, (3) the officers of each Loan Party (x) who are authorized to sign the Loan Documents to which such Loan Party is a party and (y) who will, until replaced by another officer or officers duly authorized for that purpose, act as its representative for purposes of signing documents and giving notices and other communications in connection with this Agreement and the transactions contemplated hereby, and (4) specimen signatures of such authorized officers;
(D) certificates of the appropriate state agencies with respect to the existence, qualification and good standing (or its equivalent) of each of the Loan Parties dated no earlier than thirty (30) days prior to the Closing Date;
(E) a complete copy of the Information Certificate attached hereto;
(F) [reserved];
(G) executed counterparts of a global intercompany note, in form and substance reasonably acceptable to Agent, duly signed on behalf of each Loan Party and its respective Subsidiaries;
(H) the financial statements required to be delivered (x) pursuant to Section 5.15(b)(i) of the DIP Credit Agreement for the fiscal month ending January 31, 2026 and (y) pursuant to Section 5.15(b)(ii) of the DIP Credit Agreement for the fiscal quarter ending December 31, 2025;
(I) executed counterparts of the Canadian Security Documents; and
(J) copies of insurance certificates evidencing the insurance required to be maintained by the Borrowers and the other Loan Parties pursuant to Section 5.14;
(iii) Registration. The Canadian Security Documents shall have been registered (or arrangement for registration reasonably satisfactory to Agent shall be made) in all offices in which, in the opinion of Agent or its counsel, registration is necessary or of advantage to perfect, or render opposable to third parties, the Liens intended to be created thereby;
(iv) Solvency Certificate. Agent shall have received a solvency certificate dated as of the Closing Date (after giving effect to the deemed funding and issuance of Loans and Letters of Credit and the consummation of all transactions contemplated hereby on the Closing Date) from the chief financial officer (or substantially equivalent officer) of the Borrowing Agent with respect to the solvency of the Loan Parties in form and substance reasonably satisfactory to Agent;
(v) Opinions. Agent shall have received a legal opinion from (a) Kirkland & Ellis LLP, as special New York counsel for the Loan Parties and (b) Osler, Hoskin & Harcourt LLP, as Canadian legal counsel for each of the Canadian Loan Parties, in each case in form and substance reasonably satisfactory to the Lenders;
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(vi) Minimum Excess Availability. After giving effect to such Loans and Letters of Credit and the consummation of all transactions contemplated hereby to occur on the Closing Date, closing costs and any book overdraft, Excess Availability shall be no less than $10,000,000;
(vii) Borrowing Base Certificate. Agent shall have received a Borrowing Base Certificate which calculates the Borrowing Base as of a period specified by Agent;
(viii) Lien Searches. Agent shall have received the results of a recent lien search in each jurisdiction where the Loan Parties are organized and where the assets of such Loan Parties are located, and such search shall reveal no Liens on any of the assets of such Loan Parties (except for Permitted Liens or Liens discharged on or prior to the Closing Date pursuant to a pay-off letter or other documentation reasonably satisfactory to Agent);
(ix) Cash Flow Forecasts; Business Plan. Agent shall have received a reasonably satisfactory cash flow forecast and business plan for the Loan Parties through December 31, 2026, to be prepared on a monthly basis, and such forecast and business plan shall include profit and loss projections, balance sheet projections, income statement projections, cash flow projections and Fixed Charge Coverage Ratio projections (regardless of whether a Covenant Testing Period is in effect), together with supporting details and a statement of underlying assumptions used in preparing such projections.
(x) No Material Adverse Change. Since the Petition Date and excluding the pendency of the Chapter 11 Cases, there has been no Material Adverse Effect with respect to the Loan Parties, taken as a whole;
(xi) Bankruptcy Items.
(A) The Bankruptcy Court shall have entered the Confirmation Order confirming the Prepackaged Plan and approving the corresponding Disclosure Statement (as defined in the Prepackaged Plan), in each case, in form and acceptable to Agent, and which Confirmation Order shall be in full force and effect and shall not (i) have been stayed, reversed, vacated, supplemented or otherwise modified in a manner that could reasonably be expected to adversely affect the interests of Agent or the Lenders or (ii) be subject of any appeal, unless, in each case, waived in writing by Agent and the Required Lenders.
(B) Any amendment, modification or supplement to the Definitive Documents (as defined in the Prepackaged Plan), all related documentation, including without limitation any amendments, any subsequent plan of reorganization, the Plan Supplement (as defined in the Prepackaged Plan) and/or the Confirmation Order (collectively, the “Prepackaged Plan Documentation”) shall be on terms and conditions satisfactory to the Agent and all Prepackaged Plan Documentation shall have been executed, delivered or filed pursuant to the Prepackaged Plan in form and substance acceptable to Agent.
(C) The effective date under the Prepackaged Plan (which Prepackaged Plan shall be satisfactory to Agent) shall have occurred or shall have occurred concurrently with the effectiveness of this Agreement (and all conditions precedent thereto as set forth therein shall have been satisfied or waived in accordance with the terms thereof).
(D) Prior to or substantially concurrently with the deemed funding of the Loans hereunder, the Restructuring Transactions (as defined in the Prepackaged Plan) shall have been consummated in accordance with the terms and conditions set forth in the RSA and the Prepackaged Plan.
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(xii) DIP Credit Agreement and Prepetition Credit Agreement Terminations. Agent shall have received termination letters in form and substance reasonably satisfactory to Agent evidencing that (a) the DIP Credit Agreement and the Prepetition Credit Agreement shall have been repaid in full (including pursuant to the deemed refinancing under this Agreement or the DIP Credit Agreement, as applicable), (b) the commitments thereunder have been terminated and (c) the Liens securing the Indebtedness under such agreements shall have been released and terminated, in each case, contemporaneously with the effectiveness of this Agreement;
(xiii) Lien Releases. Agent shall have received evidence satisfactory to it (including mortgage releases, deposit account control agreement terminations, intellectual property agreement terminations and UCC-3 and PPSA financing statement terminations) that all Liens (other than Permitted Liens and, with respect to Permitted Liens securing Indebtedness, solely to the extent such Indebtedness is permitted to exist on the Closing Date as described on Section 5.24(k)) on the Collateral have been released or terminated, or will be released and terminated subject only to the funding of the initial Loans hereunder and the deemed refinancing of the DIP Loans and Existing Letter of Credit and the filing of applicable terminations and releases;
(xiv) No Actions, Suits, Proceedings, Etc. Other than the Chapter 11 Cases, there shall be no actions, suits, proceedings, investigations, claims or disputes pending or, to the knowledge of the Loan Parties, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any of their Subsidiaries or against any of their properties or revenues that (i) purport to affect or pertain to this Agreement or any other Loan Document or (ii) could reasonably be expected to result in a Material Adverse Effect;
(xv) No Default or Event of Default; Representations and Warranties. On the Closing Date and immediately after giving effect to this Agreement and the transactions contemplated hereby, (A) no Default or Event of Default shall have occurred and be continuing or shall arise hereunder and (B) all representations and warranties made by any Loan Party contained herein or in the other Loan Documents shall be true and correct in all material respects (unless such representations and warranties are already qualified by materiality, Material Adverse Effect or a similar qualification in which case such representations and warranties shall be true and correct in all respects).
(xvi) PATRIOT Act; Beneficial Ownership Information; Background Checks. Agent and Lenders (A) shall have received, to the extent requested, (i) all documentation and other information required by U.S. regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act; and (ii) from Borrower, within three (3) Business Days prior to the Closing Date, to the extent any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a Beneficial Ownership Certification in relation to such Borrower and (B) shall have completed customary individual background checks for each Loan Party’s senior management and key principals, the results of which shall be reasonably satisfactory to Agent and such Lenders.
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(b) All Loans and/or Letters of Credit: With respect to Loans made, Letters of Credit issued and/or Support Agreements issued or provided, on the Closing Date (including the deemed funding and issuance of the Revolving Loans and Letters of Credit pursuant to Section 1.1(b)) and/or at any time thereafter, in addition to the conditions specified in clause (a) above as applicable,
(i) after giving effect to such Loan, Letter of Credit and/or Support Agreement, Excess Availability shall be no less than $5,000,000;
(ii) each of the representations and warranties set forth in this Agreement, the Information Certificate(s) and in the other Loan Documents shall be true and correct in all material respects (without duplication of materiality qualifiers therein) as of the date such Loan is made and/or such Letter of Credit is issued (or to the extent any representations or warranties are expressly made solely as of an earlier date, such representations and warranties shall be true and correct in all material respects (without duplication of materiality qualifiers therein) as of such earlier date), both before and after giving effect thereto; and
(iii) no Default or Event of Default shall be in existence, both before and after giving effect thereto.
1.7 Repayments.
(a) Revolving Loans/Letters of Credit. If at any time for any reason whatsoever (including without limitation as a result of currency fluctuations) (i) the sum of the outstanding balance of all Revolving Loans and Letter of Credit Liabilities exceeds the Line Cap, or (ii) any of the Loan Limits for Revolving Loans or Letters of Credit are exceeded, then in each case, Borrowers will, within two (2) Business Days, jointly and severally pay to Agent (for the benefit of the Lenders) such amounts (or, with respect to Letter of Credit Liabilities, provide cash collateral to Agent in the manner set forth in clause (c) below) as shall cause Borrowers to eliminate such excess (such excess, an “Overadvance”).
(b) [Reserved].
(c) Maturity Date Payments / Cash Collateral. All remaining outstanding monetary Obligations (including, all accrued and unpaid fees described in the Fee Letter) shall be payable in full on the Maturity Date. Without limiting the generality of the foregoing, if, on the Maturity Date, there are any outstanding Letters of Credit, then on such date Borrowers shall provide to Agent cash collateral in an amount equal to 103% of the outstanding Letter of Credit Liabilities to secure all of the Obligations (including estimated reasonable and documented out-of-pocket attorneys’ fees and other expenses) relating to said Letters of Credit, pursuant to a cash pledge agreement in form and substance reasonably satisfactory to Agent.
(d) Currency Due. If, notwithstanding the terms of this Agreement or any other Loan Document, Agent receives any payment from or on behalf of Borrowers or any other Person in a currency other than the Currency Due, Agent may convert the payment (including the monetary proceeds of realization upon any Collateral and any funds then held in a cash collateral account) into the Currency Due at exchange rate selected by Agent in the manner contemplated by Section 6.3(b) and Borrowers shall jointly and severally reimburse Agent, within two (2) Business Days following Agent’s demand therefor, for all reasonable costs they incur with respect thereto. To the extent permitted by law, the obligation shall be satisfied only to the extent of the amount actually received by Agent upon such conversion. The value of any and all assets of a Loan Party valued in Canadian Dollars shall be converted to Dollars in accordance with Agent’s customary practices and procedures and conversion rate.
1.8 Prepayments / Voluntary Termination / Application of Prepayments.
(a) Certain Mandatory Prepayment Events. Borrowers shall be required to prepay the unpaid principal balance of the Revolving Loans within three (3) Business Days following the date of each and every Prepayment Event (and within three (3) Business Days following any date thereafter on which proceeds pertaining thereto are received by any Loan Party), in each case without any demand or notice from Agent or any other Person, all of which is hereby expressly waived by Borrowers, in the amount of 100% of the proceeds (net of documented reasonable out-of-pocket costs and expenses incurred in connection with the collection of such proceeds, in each case payable to Persons that are not Affiliates of any Loan Party) received by any Loan Party with respect to such Prepayment Event. Each such prepayment shall be subject to the Early Payment/Termination Premium, if applicable, in the amount specified in the Fee Letter.
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(b) Voluntary Termination of Loan Facilities. Borrowers may, on at least ten (10) days’ prior and irrevocable written notice received by Agent (or such shorter period as Agent may agree), permanently terminate the Loan facilities by repaying all of the outstanding Obligations, including all principal, interest and fees with respect to the Revolving Loans, and an Early Payment/Termination Premium in the amount specified in the paragraph under the heading “Early Payment/Termination Premium” in the Fee Letter; provided, that the Borrowers shall only need to provide at least five (5) Business Days’ (or such shorter period as Agent may agree) prior and irrevocable written notice to permanently terminate the Loan facilities pursuant to this Section 1.8(b) if such termination is in connection with (i) a refinancing of the Loans which results in a repayment of all of the outstanding Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been asserted) or (ii) an acquisition or disposition transaction by the Loan Parties; provided, further, that any such notice of termination required by this Section 1.8(b) may state that such notice is conditioned upon the effectiveness of a specified condition, in which case such notice may be revoked by Borrowers (by notice to Agent on or prior to the specified effective date) if such condition is not satisfied. If, on the date of a voluntary termination pursuant to this Section 1.8(b), there are any outstanding Letters of Credit, then on such date, and as a condition precedent to such termination, Borrowers shall provide to Agent cash collateral in an amount equal to 103% of the outstanding Letter of Credit Liabilities to secure all of the Obligations (including estimated reasonable and documented out-of-pocket attorneys’ fees and other expenses) relating to said Letters of Credit, pursuant to a cash pledge agreement in form and substance reasonably satisfactory to Agent. From and after such date of termination, Lenders shall have no obligation whatsoever to extend any additional Loans or Letters of Credit and all of their lending commitments hereunder shall be terminated.
(c) Voluntary Reduction of Maximum Revolving Facility Amount. Borrowers may, at their option from time to time, permanently reduce the aggregate Maximum Revolving Facility Amount upon at least ten (10) days’ prior written notice to Agent (or such shorter period as Agent may agree), which notice shall specify the amount and effective date of the reduction and shall be irrevocable once given; provided, that any such notice delivered pursuant to this Section 1.8(c) may state that such reduction in the Maximum Revolving Facility Amount is conditioned upon the effectiveness of a specified condition, in which case such notice may be revoked by Borrowers (by notice to Agent on or prior to the specified effective date) if such condition is not satisfied. Each reduction (i) shall be in a minimum amount of $1,000,000, (ii) shall not reduce the Maximum Revolving Facility Amount to an amount less than the sum of (A) the aggregate principal amount of Revolving Loans outstanding at such time plus (B) the amount of all Letter of Credit Liabilities (unless accompanied by a corresponding prepayment of such outstanding Revolving Loans and/or cash collateralization of Letter of Credit Liabilities reasonably satisfactory to Agent), and (iii) shall not reduce the Maximum Revolving Facility Amount to an amount less than $75,000,000. On the effective date of each permanent reduction of the Maximum Revolving Facility Amount, Borrowers will be required to pay the Early Payment/Termination Premium in the amount specified in the Fee Letter with respect to the amount by which the Maximum Revolving Facility Amount is reduced.
1.9 Obligations Unconditional.
(a) The payment and performance of all Obligations shall constitute the absolute and unconditional obligations of each Loan Party and shall be independent of any defense or rights of set-off, recoupment or counterclaim which any Loan Party or any other Person might otherwise have against Agent, any Lender or any other Person. All payments required by this Agreement and/or the other Loan Documents shall be made in Dollars (unless payment in a different currency is expressly provided otherwise in the applicable Loan Document).
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(b) If, at any time and from time to time after the Closing Date (or at any time before or after the Closing Date with respect to (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith, or (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case for purposes of this clause (y) pursuant to Basel III, regardless of the date enacted, adopted or issued), (i) any change in any existing law, regulation, treaty or directive or in the interpretation or application thereof, (ii) any new law, regulation, treaty or directive enacted or application thereof, or (iii) compliance by Agent or any Lender with any request or directive (whether or not having the force of law) from any Governmental Authority, central bank or comparable agency (A) subjects Agent or any Lender to any tax, levy, impost, deduction, assessment, charge or withholding of any kind whatsoever with respect to any Loan Document, or changes the basis of taxation of payments to Agent or any Lender of any amount payable thereunder (other than (1) Indemnified Taxes, (2) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (3) Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes), or (B) imposes on Agent or any Lender any other condition or increased cost in connection with the transactions contemplated thereby or participations therein, and the result of any of the foregoing is to increase the cost to Agent or any Lender of making or continuing any Loan or Letter of Credit or to reduce any amount receivable hereunder or under any other Loan Documents, then, in any such case, Borrowers shall promptly and jointly and severally pay to Agent or such Lender, when notified to do so by Agent or such Lender, any additional amounts necessary to compensate Agent or such Lender, on an after-tax basis, for such additional cost or reduced amount as determined by Agent or such Lender; provided, that Borrowers shall not be required to compensate Agent or any Lender for any increased costs or reductions incurred more than 180 days before the date that Agent or such Lender notifies Borrowers of such change giving rise to such increased costs or reductions and of Agent’s or such Lender’s intention to claim compensation therefor; provided, further, that, if such change giving rise to such increased costs is retroactive, then the 180 day period referred to above shall be extended to indicate the period of retroactive effect thereof. Each such notice of additional amounts payable pursuant to this Section 1.9(b) submitted by Agent or any Lender to Borrowing Agent shall, absent manifest error, be final, conclusive and binding for all purposes.
(c) This Section 1.9 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Obligations.
1.10 Reversal of Payments. To the extent that any payment or payments made to or received by Agent or any Lender pursuant to this Agreement or any other Loan Document are subsequently invalidated, declared to be fraudulent or preferential, set aside, or required to be repaid to any trustee, receiver or other Person under any state, federal or other bankruptcy or other such applicable law, then, to the extent thereof, such amounts (and all Liens, rights and remedies therefore) shall be revived as Obligations (secured by all such Liens) and continue in full force and effect under this Agreement and under the other Loan Documents as if such payment or payments had not been received by Agent or such Lender. This Section 1.10 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Obligations.
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1.11 Independent Obligations. The Revolving Loans shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (a) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make the Revolving Loans (or other extension of credit) hereunder, nor shall any commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (b) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.
1.12 Revolving Loans by Agent and Settlement Among Lenders.
(a) Agent, on behalf of the Lenders, shall disburse all Loans and other advances to the Borrowing Agent and shall handle all collections of Collateral and repayment of all Obligations. If Agent elects to require that any Lender make funds available to Agent prior to a disbursement by Agent to Borrowing Agent, Agent shall advise each Lender by telephone, facsimile or e-mail of the amount of such Lender’s Pro Rata Share of the Revolving Loan requested by Borrowers no later than noon (Eastern time) on the date of funding of such Revolving Loan, and each such Lender shall pay Agent on such date such Lender’s Pro Rata Share of such requested Revolving Loan, in same day funds, by wire transfer to an account of Agent identified in writing by Agent to Lenders from time to time; provided, that no Lender shall have an obligation to make any Revolving Loan, if (i) one or more of the applicable conditions precedent set forth in Section 1.6 will not be satisfied on the requested date for the applicable Revolving Loan unless such condition has been waived by Required Lenders, or (ii) the requested Revolving Loan would exceed the Excess Availability on such requested date for the applicable Revolving Loan. It is understood that for purposes of advances to the Borrowing Agent and for purposes of this Section 1.12, unless Agent has made the election referred to in the immediately preceding sentence, Agent will be using the funds of Agent, and pending settlement, all interest accruing on such advances shall be payable to Agent.
(b) Unless Agent shall have been notified in writing by any Lender prior to any advance to the Borrowing Agent that such Lender will not make the amount which would constitute its Pro Rata Share of the borrowing on such date available to Agent, Agent may assume that such Lender shall make such amount available to Agent on a Settlement Date, and in reliance upon such assumption, Agent may make available to the Borrowing Agent a corresponding amount. A certificate of Agent submitted to any Lender with respect to any amount owing under this subsection shall be conclusive, absent manifest error. Nothing contained herein shall be deemed to obligate Agent to make available to the Borrowers the full amount of a requested advance when Agent has any notice (written or otherwise) that any of the Lenders will not advance its Pro Rata Share thereof.
(c) It is agreed that each Lender’s funded portion of the Revolving Loans is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving Loans. Such agreement notwithstanding, Agent, and the other Lenders agree (which agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Revolving Loans (including Protective Advances) shall take place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent in its sole discretion (1) for itself, with respect to the outstanding Protective Advances, and (2) with respect to any Loan Party’s or any of their Subsidiaries’ payments or other amounts received, as to each by notifying the Lenders by facsimile, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement Date”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Revolving Loans (including Protective Advances) for the period since the prior Settlement Date. Subject to the terms and conditions contained herein: (y) if the amount of the Revolving Loans (including Protective Advances) made by a Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Revolving Loans (including Protective Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Protective Advances), and (z) if the amount of the Revolving Loans (including Protective Advances) made by a Lender is less than such Lender’s Pro Rata Share of the Revolving Loans (including Protective Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. on the Settlement Date transfer in immediately available funds to Agent’s Office, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Protective Advances). Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Protective Advances and, shall constitute Revolving Loans of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.
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(ii) In determining whether a Lender’s balance of the Revolving Loans (including Protective Advances) is less than, equal to, or greater than such Lender’s Pro Rata Share of the Revolving Loans (including Protective Advances) as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.
(iii) Between Settlement Dates, Agent, to the extent Protective Advances are outstanding, may pay over to Agent any payments or other amounts received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to Protective Advances. During the period between Settlement Dates, Agent with respect to Protective Advances, and each Lender with respect to the Revolving Loans other than Protective Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Agent or the Lenders, as applicable.
(iv) Anything in this Section 1.12 to the contrary notwithstanding, in the event that a Lender is a Defaulting Lender, Agent shall be entitled to refrain from remitting settlement amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set forth in Section 10.21.
| 2. | INTEREST AND FEES; LOAN ACCOUNT. |
2.1 Interest.
(a) Subject to the provisions hereof (including this Section 2.1(a) and Section 2.1(d)), all Loans and other monetary Obligations shall bear interest at the interest rate(s) set forth in Section 3 of Schedule A, and accrued interest shall be payable (a) on the first day of each month in arrears, (b) upon a prepayment of such Loan in accordance with Section 1.8, and (c) on the Maturity Date; provided, that after the occurrence and during the continuation of an Event of Default, all Loans and other monetary Obligations shall bear interest at a rate per annum equal to two (2) percentage points in excess of the rate otherwise applicable thereto (the “Default Rate”), and all such interest shall be payable on demand in cash. Changes in the interest rate shall be effective as of the date of any change in the ABR Index Rate or SOFR Index Rate, as applicable. Subject to the terms and conditions set forth herein, all Loans shall be SOFR Index Rate Loans or under the circumstances set forth in Section 2.1(d), ABR Index Rate Loans; provided, that if an Event of Default has occurred and is continuing, the interest rate applicable to all Loans and other Obligations may be converted to the ABR Index Rate at the election of Agent.
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(b) Any SOFR Index Rate Loan shall bear interest at the SOFR Index Rate for a period commencing on the first day of a calendar month and ending on the last day of such calendar month (the “Interest Period”) unless and until converted to Loans bearing interest at the ABR Index Rate in accordance with Section 2.1(a) or Section 2.1(d) below.
(c) The SOFR Index Rate may be adjusted by Agent on a prospective basis (provided that Agent is making such adjustment for similarly situated borrowers) to take into account any increased costs due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including changes in tax laws (except changes of general applicability in corporate income tax laws) and changes in the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any successor), which additional or increased costs would increase the cost of maintaining loans under this Agreement bearing interest based upon the SOFR Index Rate. In any such event, Agent shall give Borrowers notice of such a determination and adjustment (it being understood that such notice requirement will be deemed satisfied by such information being made available to Borrowers on an Approved Electronic System designated by Agent for such purpose) and, upon its receipt of the notice from Agent, Borrowers may, by notice to Agent (A) require Agent to furnish to Borrowers a statement setting forth the basis for adjusting the SOFR Index Rate and the method for determining the amount of such adjustment or (B) repay the portion of the Loans bearing interest based upon the SOFR Index Rate with respect to which such adjustment is made. Upon any such repayment, Borrowers shall also pay accrued interest on the amount so repaid.
(d) Inability to Determine Rate; Illegality.
(i) If, in connection with any request for a Loan based on the SOFR Index Rate, (A) Agent determines that (1) adequate and reasonable means do not exist for determining the SOFR Index Rate with respect to any such proposed or existing Loan, and (2) the circumstances described in clause (iii)(A) below do not apply (in each case with respect to this clause (i)(A), “Impacted Loans”), or (B) Agent determines, in good faith, that a Market Disruption Event has occurred, Agent will promptly so notify Borrowing Agent and each Lender, in each case, in writing. Thereafter, (1) the obligation of Lenders to make or maintain Loans based on the SOFR Index Rate shall be suspended (to the extent of the affected Loans), and (2) in the event of a determination described in the preceding sentence with respect to the SOFR Index Rate component of the Base Rate, the utilization of the SOFR Index Rate component in determining the Base Rate shall be suspended, in each case until Agent revokes such notice in writing. Upon receipt of such notice, Borrowing Agent may revoke any pending request for a borrowing of Loans based on the SOFR Index Rate (to the extent of the affected Loans).
(ii) Notwithstanding the foregoing, if Agent has made the determination described in clause (i)(A) above, Agent, in consultation with Borrowing Agent, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (A) Agent revokes the notice delivered in writing with respect to the Impacted Loans under clause (i)(A) above, (B) Agent notifies Borrowing Agent in writing that such alternative interest rate does not adequately and fairly reflect the cost to the Lenders of the Impacted Loans, or (C) any Lender determines that any law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest, or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing, and provides Agent, the other Lenders, and Borrowing Agent written notice thereof.
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(iii) Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Required Lenders or Agent determines (which determination shall be conclusive and binding upon all parties hereto absent manifest error), that:
A. adequate and reasonable means do not exist for ascertaining the SOFR Index Rate, including, without limitation, because the SOFR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary;
B. the administrator of the SOFR Screen Rate or a Governmental Authority having jurisdiction over Agent or any Lender has made a public statement identifying a specific date after which SOFR or the SOFR Screen Rate shall no longer be made available, or used for determining the interest rate of loans (such specific date, the “Scheduled Unavailability Date”); or
C. syndicated loans currently being executed, or that include language similar to that contained in this Section 2.1(d), are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace SOFR;
then, reasonably promptly after such determination by Agent or the Required Lenders, as applicable, Agent may amend this Agreement to replace SOFR with (A) the ABR Index Rate, or (B) if administratively feasible and acceptable to Agent in its sole discretion, another alternate benchmark rate giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such benchmarks (such as the margin applicable thereto) (any such proposed rate, a “SOFR Successor Rate”). Any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after Agent shall have posted such proposed amendment to Lenders and Borrowers. Such SOFR Successor Rate shall be applied in a manner consistent with market practice; provided, that to the extent such market practice is not administratively feasible for Agent, such SOFR Successor Rate shall be applied in a manner as otherwise reasonably determined by Agent.
(iv) If no SOFR Successor Rate has been determined and either the circumstances under clause (iii)(A) above exist or the Scheduled Unavailability Date has occurred (as applicable), Agent will promptly so notify Borrowing Agent and each Lender in writing. Thereafter, (1) the obligation of the Lenders to make or maintain Loans based in the SOFR Index Rate shall be suspended (to the extent of the affected Loans), and (2) the SOFR Index Rate component shall no longer be utilized in determining the Base Rate. Upon receipt of such notice, Borrowers may revoke any pending request for a borrowing of Loans based on the SOFR Index Rate (to the extent of the affected Loans) or, failing that, will be deemed to have converted such request into a request for Loans bearing interest at the ABR Index Rate in the amount specified therein. In connection with the implementation of a SOFR Successor Rate, Agent will have the right to make SOFR Successor Rate Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such SOFR Successor Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
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(v) Notwithstanding anything else herein, any definition of SOFR Successor Rate shall provide that in no event shall such SOFR Successor Rate be less than the Floor for purposes of this Agreement.
Anything to the contrary contained herein notwithstanding, no Lender is required to actually match fund any Obligation as to which interest accrues based on SOFR Index Rate.
(e) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis of a 360-day or 365-day year, the yearly rate of interest to which the rate used in such calculation is equivalent is the rate so used multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 360 or 365, as applicable. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.
(f) Any provision of this Agreement that would oblige a Canadian Loan Party to pay any fine, penalty or rate of interest on any arrears of principal or interest secured by a mortgage on Real Property or hypothec on immovables that has the effect of increasing the charge on arrears beyond the rate of interest payable on principal money not in arrears shall not apply to such Canadian Loan Party, which shall be required to pay interest on money in arrears at the same rate of interest payable on principal money not in arrears.
2.2 Fees. Borrowers shall jointly and severally pay to Agent, for its own benefit or the benefit of Lenders as indicated in the Fee Letter, the fees set forth in the Fee Letter, on the dates set forth therein, which fees are in addition to all fees and other sums payable by Borrowers or any other Person to Agent or any Lender under this Agreement or under any other Loan Document, and, in each case are not refundable once paid (unless otherwise expressly provided herein, in the Fee Letter or such other Loan Document).
2.3 Computation of Interest and Fees. All interest and fees shall be calculated daily on the outstanding monetary Obligations based on the actual number of days elapsed in a year of 360 days.
2.4 Loan Account; Monthly Accountings. Agent shall maintain an account on its books in the name of Borrowers (the “Loan Account”) in which Borrowers will be charged with all Revolving Loans made by Lenders to Borrowers or for Borrowers’ account, including Revolving Loans, interest, fees, expenses and any other Obligations in respect of Revolving Loans. The Loan Account will be credited with all amounts received by Agent from Borrowers or for Borrowers’ account, including, as set forth below, all amounts received in the Administrative Agent Account. Agent shall send Borrowing Agent a monthly statement reflecting the activity in the Loan Account. Absent manifest error, each such statement shall be final, conclusive and binding on Borrowers, except for a notice of objection which Borrowing Agent may send to Agent within fifteen (15) days from the date upon which the monthly statement of activity in the Loan Account is sent. Borrowers hereby authorize Agent to charge the Loan Account with the amount of all principal, interest, fees, expenses and other payments to be made hereunder and under the other Loan Documents with respect to Obligations owing in respect of Revolving Loans. Agent may, but shall not be obligated to, discharge Borrowers’ payment obligations hereunder by so charging the Loan Account (but solely to the extent any Borrower shall have not otherwise paid the amount of such payment obligation).
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2.5 Further Obligations; Maximum Lawful Rate.
(a) With respect to all monetary Obligations for which the interest rate is not otherwise specified herein (whether such Obligations arise hereunder or under any other Loan Document, or otherwise), such Obligations shall bear interest at the rate(s) in effect from time to time with respect to the applicable Loan to which such Obligations relate and shall be payable upon demand by Agent. In no event shall the interest charged with respect to any Loan or any other Obligation exceed the maximum amount permitted under applicable law. Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable or other amounts hereunder or under any other Loan Document (the “Stated Rate”) would exceed the highest rate of interest or other amount permitted under any applicable law to be charged (the “Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest and other amounts payable shall be equal to the Maximum Lawful Rate; provided, that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, Borrowers shall, to the extent permitted by applicable law, continue to pay interest and such other amounts at the Maximum Lawful Rate until such time as the total interest and other such amounts received is equal to the total interest and other such amounts which would have been received had the Stated Rate been (but for the operation of this provision) the interest rate payable or such other amounts payable. Thereafter, the interest rate and such other amounts payable shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest or other such amounts received by Agent, for the benefit of Lenders, exceed the amount which it could lawfully have received had the interest and other such amounts been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence, Agent, for the benefit of Lenders, has received interest or other such amounts hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or to other Obligations (other than interest) payable hereunder, and if no such principal or other Obligations are then outstanding, such excess or part thereof remaining shall be paid to Borrowers. In computing interest payable with reference to the Maximum Lawful Rate applicable to any Lender, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.
(b) Notwithstanding the generality of Section 2.5(a), if any provision of this Agreement or of any of the other Loan Documents would obligate any Loan Party to make any payment of interest or other amount payable to Agent or Lenders in an amount or calculated at a rate which would result in receipt by Agent or Lenders of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)) then, notwithstanding such provisions, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by Agent or Lenders of interest at a criminal rate, such adjustment to be effected, to the extent necessary, as follows: (1) firstly, by reducing the amount or rate of interest required to be paid to Lenders under Section 2.1, and (2) thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to Agent or any Lender which would constitute “interest” for purposes of Section 347 of the Criminal Code (Canada). Notwithstanding the foregoing, all adjustments contemplated thereby, if Agent or any Lender shall have received an amount in excess of the maximum permitted by that section of the Criminal Code (Canada), the Loan Parties shall be entitled, by notice in writing to Agent, to obtain reimbursement from Agent and Lenders in an amount equal to such excess and, pending such reimbursement, such amount shall be deemed to be an amount payable by Agent and Lenders to the Borrowers. Any amount or rate of interest referred to in this Section 2.5(b) shall be determined in accordance with generally accepted actuarial practices and principles as an effective annual rate of interest over the term that the applicable Loans remain outstanding on the assumption that any charges, fees or expenses that fall within the meaning of “interest” (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be pro-rated over that period of time and otherwise be pro-rated over the period from the Closing Date to the Maturity Date and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by Agent shall be conclusive for the purposes of such determination.
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| 3. | SECURITY INTEREST GRANT / POSSESSORY COLLATERAL / FURTHER ASSURANCES. |
3.1 Grant of Security Interest. To secure the full payment and performance of all of the Obligations, each Loan Party hereby assigns to Agent, for the benefit of Lenders, and grants to Agent, for the benefit of Lenders, a continuing security interest in all property of such Loan Party, whether tangible or intangible, real or personal, now or hereafter owned, existing, acquired or arising and wherever now or hereafter located, and whether or not eligible for lending purposes, including: (a) all Accounts (whether or not Eligible Billed Accounts, Eligible Foreign Billed Accounts or Eligible Unbilled Accounts) and all Goods whose sale, lease or other disposition by such Loan Party has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, such Loan Party; (b) all Chattel Paper (including Electronic Chattel Paper), Instruments, Documents, and General Intangibles (including all Copyright Collateral, Patent Collateral, Trademark Collateral, trade secrets, software, franchises, customer lists, tax refund claims, claims against carriers and shippers, guarantee claims, contracts rights, payment intangibles, security interests, security deposits and rights to indemnification); (c) all Inventory (whether or not Eligible Inventory); (d) all Goods (other than Inventory), including Equipment (whether or not Eligible Equipment or Eligible Rolling Stock), Farm Products, Health-Care-Insurance Receivables, vehicles, and Fixtures; (e) all Investment Property, including, without limitation, all rights, privileges, authority, and powers of such Loan Party as an owner or as a holder of Pledged Equity, including, without limitation, all economic rights, all control rights, authority and powers, and all status rights of such Loan Party as a member, equity holder or shareholder, as applicable, of each Issuer; (f) all Deposit Accounts, bank accounts, deposits and cash; (g) all Letter-of-Credit Rights; (h) all Commercial Tort Claims listed in Section 42 of the Information Certificate(s); (i) all Supporting Obligations; (j) any other property of such Loan Party now or hereafter in the possession, custody or control of Agent or any agent or any parent, Affiliate or Subsidiary of Agent or any Participant with Agent in the Loans, for any purpose (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise), and (k) all additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, including proceeds of all insurance policies insuring the foregoing property, and all of such Loan Party’s books and records relating to any of the foregoing and to such Loan Party’s business. Notwithstanding the foregoing, no Loan Party shall pledge, and the Collateral shall not include Excluded Collateral; provided that, none of the assets included in the Borrowing Base shall constitute Excluded Collateral.
3.2 Possessory Collateral. Promptly, but in any event no later than ten (10) Business Days (or such later date as Agent may agree in its discretion) after any Loan Party’s receipt of any portion of the Collateral evidenced by an agreement, Instrument or Document, including any Tangible Chattel Paper, in each case with a value in excess of $1,500,000, and any Investment Property consisting of certificated securities, such Loan Party shall deliver the original thereof to Agent together with an appropriate endorsement or other specific evidence of assignment thereof to Agent (in form and substance acceptable to Agent). If an endorsement or assignment of any such items shall not be made for any reason, Agent is hereby irrevocably authorized, as attorney and agent-in-fact (coupled with an interest) for each Loan Party, to endorse or assign the same on such Loan Party’s behalf.
3.3 Further Assurances.
(a) Each Loan Party will, at the time that any Loan Party forms any direct or indirect Subsidiary (other than an Excluded Subsidiary), acquires any direct or indirect Subsidiary after the Closing Date (other than an Excluded Subsidiary), within ten (10) Business Days after such event (or such later date as permitted by Agent in its sole discretion) (i) cause such new Subsidiary to become a Loan Party and to grant Agent, for the benefit of Lenders, a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary (other than assets constituting Excluded Collateral)), (ii) provide, or cause the applicable Loan Party to provide, to Agent, for the benefit of Lenders, a pledge agreement and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary in form and substance reasonably satisfactory to Agent (which pledge, if reasonably requested by Agent, shall be governed by the laws of the jurisdiction of such Subsidiary), and (iii) provide to Agent all other documentation as it may reasonably require, including one or more opinions of counsel reasonably satisfactory to Agent if Agent reasonably determines such opinion of counsel is required, which, in its opinion, is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance, flood certification documentation or other documentation with respect to all Real Property Collateral owned in fee and subject to a Mortgage).
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(b) Each Loan Party will, and will cause each of the other Loan Parties to, at any time upon the reasonable request of Agent, execute or deliver to Agent any and all financing statements, fixture filings, security agreements, pledges, assignments, mortgages, deeds of trust, opinions of counsel, and all other documents (the “Additional Documents”) that Agent may reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and continue to be perfected or to better perfect Agent’s Liens in all of the assets of each of the Loan Parties (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of Agent, for the benefit of Lenders, in any Real Property Collateral. To the maximum extent permitted by applicable law, if any Borrower or any other Loan Party refuses or fails to execute or deliver any reasonably requested Additional Documents within a reasonable period of time following the request to do so, each Borrower and each other Loan Party hereby authorizes Agent to execute any such Additional Documents in the applicable Loan Party’s name and authorizes Agent to file such executed Additional Documents in any appropriate filing office.
(c) Each Loan Party shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (and/or use commercially reasonable efforts to cause such other applicable Person to take, execute, acknowledge and deliver) all such further acts, documents, agreements and instruments as Agent shall deem reasonably necessary in order to (i) carry out the intent and purposes of the Loan Documents and the transactions contemplated thereby, (ii) establish, create, preserve, protect and perfect a first priority lien (subject only to Permitted Liens) in favor of Agent, for the benefit of Lenders, in all Collateral (wherever located) from time to time owned by the Loan Parties, (iii) cause each Loan Party to guarantee all of the Obligations, all pursuant to documentation that is in form and substance satisfactory to Agent in its Permitted Discretion and (iv) facilitate the collection of the Collateral. Without limiting the foregoing, each Loan Party shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (and/or use commercially reasonable efforts to cause such other applicable Person to take, execute, acknowledge and deliver) to Agent all promissory notes, security agreements, agreements with landlords, mortgagees and processors and other bailees, subordination and intercreditor agreements and other agreements, instruments and documents, in each case in form and substance reasonably acceptable to Agent, as Agent may request from time to time to perfect, protect, and maintain Lender’s security interests in the Collateral, including the required priority thereof, and to fully carry out the transactions contemplated by the Loan Documents.
3.4 UCC and PPSA Financing Statements. Each Loan Party authorizes Agent to file, transmit, or communicate, as applicable, from time to time, Uniform Commercial Code and/or PPSA financing statements and finance change statements, along with amendments and modifications thereto, in all filing offices selected by Agent, listing such Loan Party as the debtor and Agent as the secured party, and describing the collateral covered thereby in such manner as Agent may elect, including using descriptions such as “all personal property of debtor” or “all assets of debtor” or words of similar effect. Each Loan Party also hereby ratifies its authorization for Agent to have filed in any filing office any financing statements filed prior to the date hereof.
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3.5 Valid Security Interest. Each Loan Party and Agent hereby acknowledge that (a) value has been given, (b) such Loan Party has rights in the Collateral in which it has granted a security interest, (c) this Agreement constitutes a security agreement as that term is defined in the PPSA, and (d) the security interest attaches upon the execution of this Agreement (or in the case of any after-acquired property, at the time of acquisition thereof).
3.6 Real Property Assets.
(a) With respect to (x) any Specified Real Property and (y) any other Real Property owned by a Loan Party which is acceptable to Agent, in each case, the Loan Parties may, at their election, provide written notice to Agent that the Loan Parties desire for such Real Property to constitute Eligible Real Property and, within a time period to be agreed between the Loan Parties and Agent, deliver to Agent for the ratable benefit of the Lenders the following:
(i) (A) fully executed counterpart of a Mortgage in favor of the Agent covering such Real Property, duly executed by such Loan Party, together with satisfactory evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of such Mortgage (and payment of any taxes or fees in connection therewith), together with any necessary fixture filings, as may be necessary to create a valid, perfected Lien, subject to Permitted Liens, against the properties purported to be covered thereby and (B) any other Real Estate Deliverables requested by Agent with respect to such Real Property; and
(ii) such customary affidavits, certificates, instruments of indemnification and other items as shall be reasonably required and evidence of payment by any Loan Party of all search and examination charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages and the issuance of the title insurance policies, in each case to the extent required pursuant to the foregoing.
(b) If the Agent or the Required Lenders reasonably determine that there is a Legal Requirement for them to have appraisals prepared in respect of the real property of the Loan Parties subject to a Mortgage pursuant to this Section 3.6, the Company shall provide to the Agent appraisals which satisfy the applicable requirements set forth in 12 C.F.R., Part 32 - Subpart C or any successor or similar statute, rule, regulation, guideline or order, and which shall be in scope, form and substance, and from appraisers, reasonably satisfactory to the Required Lenders and shall be accompanied by a certification of the appraisal firm providing such appraisals that the appraisals comply with such requirements.
(c) Notwithstanding the other provisions of this Section 3.6, the Agent may, in its sole discretion, determine that the burdens, costs or consequences of obtaining a Mortgage on any Real Property, all or any part of which contains a Building (as defined in the applicable Flood Insurance Regulations) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulations), are excessive in view of the benefits to be obtained by the Lenders. In the event that the Agent makes such a determination, the Mortgage relating to such Real Property may contain customary exclusionary provisions with respect to such Building or Manufactured (Mobile) Home satisfactory to the Agent in its sole discretion.
3.7 Rolling Stock.
(a) Within (i) in the case of Rolling Stock owned by the Loan Parties as of the Closing Date, ninety (90) days after the Closing Date (or such later date as agreed to by Agent in its sole discretion) and (ii) in the case of Rolling Stock acquired by the Loan Parties after the Closing Date, within sixty (60) days following the date of acquisition thereof (or such later date as agreed to by Agent in its sole discretion), the Loan Parties shall duly submit (A) to Agent (or upon Agent’s direction, the Title Servicing Agent) the certificates of title applicable to such Rolling Stock, (B) in the case of (x) any Rolling Stock with an appraised Net Orderly Liquidation Value of greater than $50,000 or (y) any other Rolling Stock requested by Agent in writing in its Permitted Discretion, an application to the appropriate Governmental Authority for a Title Notation to be made on such certificates of title, and (C) if applicable, an application to the appropriate Governmental Authority for the removal of any Lien in favor of a Person other than Agent noted on the certificate of title for each such unit of Rolling Stock.
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(b) The Loan Parties shall direct the applicable Governmental Authority notating any Liens in accordance with the foregoing clause (a)(B) to deliver the duly endorsed certificates of title directly to Agent (or upon Agent’s direction, the Title Servicing Agent) and to the extent, any duly endorsed certificates of title are delivered to the Loan Parties in contravention of the requirements of this Section 3.7, the Loan Parties shall promptly deliver such certificates of title to Agent (or upon Agent’s direction, the Title Servicing Agent).
(c) Notwithstanding anything to the contrary in this Section 3.7 or otherwise in this Agreement or any other Loan Document, it is understood and agreed that there shall be no Default or Event of Default hereunder due to the failure to deliver any certificates of title or Title Notations therefore on or prior to the timeframes indicated in this Section 3.7.
| 4. | CERTAIN PROVISIONS REGARDING ACCOUNTS, INVENTORY, EQUIPMENT, COLLECTIONS, APPLICATIONS OF PAYMENTS, INSPECTION RIGHTS, AND APPRAISALS. |
4.1 Lock Boxes and Blocked Accounts.
(a) Each Loan Party hereby represents and warrants that all Deposit Accounts and all other depositary and other accounts maintained by each Loan Party are described in Section 41 of the Information Certificate(s), which description includes for each such account, the name of the Loan Party maintaining such account, the name of the financial institution at which such account is maintained, the account number, and the purpose of such account.
(b) After the Closing Date, no Loan Party shall open any new Deposit Accounts or any other depositary or other accounts without the prior written consent of Agent and without updating Section 41 of the Information Certificate(s) to reflect such Deposit Accounts or other accounts, as applicable. No Deposit Accounts or other accounts of any Loan Party shall at any time constitute an Excluded Deposit Account other than accounts expressly indicated in Section 41 of the Information Certificate(s) (as the same may be updated from time to time in accordance with this Agreement) as being an Excluded Deposit Account (and each Loan Party hereby represents and warrants that each such account shall at all times meet the requirements set forth in the definition of Excluded Deposit Account to qualify as an Excluded Deposit Account).
(c) Each Loan Party will, at its expense, establish (and revise from time to time as Agent may require in its Permitted Discretion) procedures acceptable to Agent, in Agent’s Permitted Discretion, for the collection of checks, wire transfers and all other proceeds of all of such Loan Party’s Accounts and other Collateral (“Collections”), which shall include directing all Account Debtors to (i) send all payments on Accounts directly to a post office box designated by Agent either in the name of such Loan Party (as to which, during a Cash Dominion Period, Agent shall have exclusive access) or, at Agent’s option during a Cash Dominion Period, in the name of Agent (a “Lock Box”), and/or (ii) if payments are made electronically, make all payments in respect of Accounts directly into one or more Controlled Accounts maintained in the name of such Loan Party (but as to which Agent has exclusive access during a Cash Dominion Period) (each, a “Blocked Account”), in each case with a depository bank acceptable to Agent and as to which Agent shall have exclusive access during any Cash Dominion Period or, at Agent’s option during a Cash Dominion Period, into the Administrative Agent Account.
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(d) Each Loan Party shall be subject to cash dominion at all times during a Cash Dominion Period. At any time that a Cash Dominion Period is in effect, cash on hand and Collections which are received into any Blocked Account or Lock Box shall be liquidated and the cash proceeds thereof, shall be swept on a daily basis into the Administrative Agent Account, or as otherwise directed by Agent, and used to prepay Loans outstanding under this Agreement in accordance with Section 4.1. Borrowers authorize Agent to maintain the Administrative Agent Account for the deposit of remittances received in the Lock Box and receipt of Collections received electronically in any Blocked Account. All collections and other amounts received by the Loan Parties from any Account Debtor, in addition to all other cash received by the Loan Parties from any other source, shall upon receipt be forwarded to the Lock Box in the form received or deposited into a Blocked Account. Agent will, upon receipt in the Administrative Agent Account, apply all such payments to the Loan Account, conditional upon final collection; credit will be given only for cleared funds received prior to 2:00 p.m. (New York time) by Agent in the Administrative Agent Account; provided, however, that for purposes of calculating interest due to the Lenders, credit will be given to collections on the Business Day following the date of receipt by Agent of cleared funds. Provided no Event of Default shall have occurred and be continuing and no Cash Dominion Period shall be continuing, any resulting credit balance in the Administrative Agent Account following application to amounts outstanding under the Loans shall be made available to Borrowers no later than two (2) Business Days after receipt of such cleared funds. Borrowers hereby agree to, and will cause the other Loan Parties to, endorse any Collections upon the request of Agent. In all cases, the Loan Account will be credited only with the net amounts actually received. Notwithstanding the foregoing in this Section 4.1(d) or anything else in this Agreement to the contrary, at any time that a Cash Dominion Period is in effect, the Loan Parties shall be permitted to first deduct amounts necessary (in the good faith determination of the Loan Parties, which such amounts are detailed to Agent in writing and are factually supportable) to pay ordinary course operation and maintenance expenses and other amounts prior to any sweep to repay the Loans outstanding hereunder.
(e) Each Loan Party agrees to execute, and to cause its depository banks and other account holders to execute, (i) Control Agreements with respect to each Collateral Account and (ii) such Lock Box agreements and other documentation as Agent shall require from time to time in its Permitted Discretion to effectuate the provisions of this Section 4.1, all in form and substance acceptable to Agent in its Permitted Discretion, and in any event, such arrangements and documents must be in place on the date hereof with respect to accounts in existence on the date hereof, or prior to any such account being opened with respect to any such account opened after the date hereof, in each case excluding Excluded Deposit Accounts.
(f) On the Closing Date, each Loan Party shall provide Agent with online read-only access to such Loan Party’s Deposit Accounts and investment accounts constituting securities accounts and maintain such access in effect for Agent throughout the term of this Agreement and until all Obligations have been paid in full, all in a manner acceptable to Agent in its Permitted Discretion.
4.2 Application of Payments. Subject to Section 4.1, all amounts paid to or received by Agent or any Lender in respect of the monetary Obligations, from whatever source (whether from any Borrower or any other Loan Party pursuant to such other Loan Party’s guaranty of the Obligations, any realization upon any Collateral, or otherwise) shall, unless otherwise directed by Borrowing Agent with respect to any particular payment (unless an Event of Default shall then be continuing, in which event Agent may disregard Borrowing Agent’s direction), be applied by Agent to the Obligations in such order as Agent (with the consent of the Required Lenders) may elect, and absent such election shall be applied as follows:
(a) FIRST, to reimburse Agent for all fees and out-of-pocket costs and expenses, and all indemnified losses, incurred by Agent which are reimbursable to Agent in accordance with this Agreement and/or any of the other Loan Documents,
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(b) SECOND, to any accrued but unpaid interest on any Protective Advances,
(c) THIRD, to the outstanding principal of any Protective Advances,
(d) FOURTH, ratably to reimburse each Lender for all fees (including any Early Payment/Termination Premium) and out-of-pocket costs and expenses, and all indemnified losses, incurred by each Lender which are reimbursable to such Lender in accordance with this Agreement and/or any of the other Loan Documents,
(e) FIFTH, ratably to any unpaid accrued interest on the Obligations,
(f) SIXTH, ratably to the outstanding principal of the Obligations, and, to the extent required by this Agreement, to cash collateralize Letter of Credit Liabilities, and
(g) SEVENTH, to the payment of any other outstanding Obligations; and after payment in full in cash of all of the outstanding monetary Obligations, any further amounts paid to or received by Agent or any Lender in respect of the Obligations (so long as no monetary Obligations are outstanding) shall be paid over to Borrowers or such other Person(s) as may be legally entitled thereto. For purposes of determining the Borrowing Base, such amounts will be credited to the Loan Account and the Collateral balances to which they relate upon Agent’s receipt of an advice from Agent’s Bank (set forth in Section 5 of Schedule A) that such items have been credited to Agent’s account at Agent’s Bank (or upon Agent’s deposit thereof at Agent’s Bank in the case of payments received by Agent in kind), in each case subject to final payment and collection. However, for purposes of computing interest on the Obligations, such items shall be deemed applied by Agent two Business Days after Agent’s receipt of advice of deposit thereof at Agent’s Bank.
4.3 Notification; Verification. Agent or its designee may, from time to time, (a) whether or not a Default or Event of Default has occurred: (i) verify directly with the Account Debtors of the Loan Parties (or by any reasonable manner and through any reasonable medium Agent considers advisable in the exercise of its Permitted Discretion) the validity, amount and other matters relating to the Accounts and Chattel Paper of the Loan Parties, by means of mail, telephone or otherwise, either in the name of the applicable Loan Party or Agent or such other name as Agent may choose and (ii) notify Account Debtors of the Loan Parties that Agent has a security interest in the Accounts of the Loan Parties and (b) following the occurrence and during the continuance of an Event of Default (i) require any Loan Party to cause all invoices and statements which it sends to Account Debtors or other third parties to be marked, in a manner reasonably satisfactory to Agent, to reflect Agent’s security interest therein and payment instructions acceptable to Agent; (ii) direct such Account Debtors to make payment thereof directly to Agent; such notification to be sent on the letterhead of such Loan Party and substantially in the form of Exhibit E annexed hereto; and (iii) demand, collect or enforce payment of any Accounts and Chattel Paper (but without any duty to do so). Each Loan Party hereby authorizes Account Debtors, upon the occurrence and during the continuance of an Event of Default, to make payments directly to Agent in accordance with the terms hereof and to rely on notice from Agent without further inquiry. Agent may on behalf of each Loan Party endorse all items of payment received by Agent that are payable to such Loan Party for the purposes described above.
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4.4 Power of Attorney.
Each Loan Party hereby grants to Agent an irrevocable power of attorney, coupled with an interest, authorizing and permitting Agent (acting through any of its officers, employees, attorneys or agents), at Agent’s option (and solely with respect to any actions taken by Agent under Section 4.4(a) below, in the exercise of its Permitted Discretion), but without obligation, with or without notice to such Loan Party, and at such Loan Party’s expense, to do any or all of the following, in such Loan Party’s name or otherwise:
(a) (i) execute on behalf of such Loan Party any documents that Agent may deem reasonably necessary in order to perfect, protect and maintain Agent’s security interests, and priority thereof, in the Collateral (including such financing statements, financing change statements, and continuation financing statements, and amendments or other modifications thereto, as Agent shall deem necessary or appropriate); (ii) endorse such Loan Party’s name on all checks and other forms of remittances received by Agent; (iii) receive and otherwise take control in any manner of any cash or non-cash items of payment or Proceeds of Collateral; (iv) endorse or assign to Agent on such Loan Party’s behalf any portion of Collateral evidenced by an agreement, Instrument or Document if an endorsement or assignment of any such items is not made by Borrowers pursuant to Section 3.2; and (v) receive, open and process all mail addressed to such Loan Party at any post office box/lockbox maintained by Agent for such Loan Party or at any other business premises of Agent with Collections to be promptly transferred to the Blocked Account and any mail unrelated to Collections to be promptly remitted to such Loan Party along with copies of all other mail addressed to such Loan Party and received by Agent; and
(b) after the occurrence and during the continuance of an Event of Default and subject to the terms and conditions of Section 7 of this Agreement: (i) execute on behalf of such Loan Party any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose of or lease (as lessor or lessee) any real or personal property which is part of the Collateral or in which Agent has an interest; (ii) execute on behalf of such Loan Party any invoices relating to any Accounts, any draft against any Account Debtor, any proof of claim in bankruptcy, any notice of Lien or claim, and any assignment or satisfaction of mechanic’s, materialman’s or other Lien; (iii) except as otherwise provided in Section 4.3 hereof, execute on behalf of such Loan Party any notice to any Account Debtor; (iv) pay, contest or settle any Lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (v) grant extensions of time to pay, compromise claims relating to, and settle Accounts, Chattel Paper and General Intangibles for less than face value and execute all releases and other documents in connection therewith; (vi) settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor; (vii) instruct any third party having custody or control of any Collateral or books or records belonging to, or relating to, such Loan Party to give Agent the same rights of access and other rights with respect thereto as Agent has under this Agreement or any other Loan Document; (viii) change the address for delivery of such Loan Party’s mail; (ix) vote any right or interest with respect to any Investment Property; (x) instruct any Account Debtor to make all payments due to such Loan Party directly to Agent; (xi) pay any sums required on account of such Loan Party’s taxes or to secure the release of any Liens therefor; and (xii) pay any amounts necessary to obtain, or maintain in effect, any of the insurance described in Section 5.14.
Any and all sums paid, and any and all costs, expenses, liabilities, obligations and reasonable attorneys’ fees incurred, by Agent with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations at such time. Each Loan Party agrees that Agent’s rights under the foregoing power of attorney and/or any of Agent’s other rights under this Agreement or the other Loan Documents shall not be construed to indicate that Agent is in control of the business, management or properties of such Loan Party.
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4.5 Disputes. Each Loan Party shall promptly notify Agent of all disputes or claims relating to its Accounts and Chattel Paper, the amount of which exceeds, individually or in the aggregate, $1,500,000. Each Loan Party agrees that it will not, without Agent’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), compromise or settle any of its Accounts or Chattel Paper for less than the full amount thereof, grant any extension of time for payment of any of its Accounts or Chattel Paper, release (in whole or in part) any Account Debtor or other person liable for the payment of any of its Accounts or Chattel Paper or grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of its Accounts or Chattel Paper; except (unless otherwise directed by Agent during the existence of a Default or an Event of Default) such Loan Party may take any of such actions in the ordinary course of its business consistent with past practices, provided, that Borrowers promptly report the same to Agent.
4.6 Inventory.
(a) Returns. No Loan Party will accept returns of any Inventory from any Account Debtor except in the ordinary course of its business. In the event the value of returned Inventory in any one calendar month exceeds $1,000,000 (collectively for all Loan Parties), Borrowers will promptly (and in any event within five (5) Business Days) notify Agent (which notice shall specify the value of all such returned Inventory, the reasons for such returns, and the locations and the condition of such returned Inventory).
(b) Sale on Return, etc. No Loan Party will, without Agent’s prior written consent, at any time, sell any Inventory that Borrowers have then reported to Agent as then being Eligible Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent basis.
(c) Fair Labor Standards Act. Each Loan Party represents and warrants, and covenants that all of the Inventory of each Loan Party, to the knowledge of such Loan Party, is produced only in accordance in all material respects with the Fair Labor Standards Act of 1938 and all rules, regulations and orders promulgated thereunder.
4.7 Access to Collateral, Books and Records. At reasonable times during normal business hours (and prior to the occurrence and continuance of an Event of Default, following reasonable advance notice), Agent and/or its representatives or agents shall have the right to inspect the Collateral, and the right to conduct field examinations of each Loan Party’s assets, liabilities, books and records, including examining and copying each Loan Party’s books and records. Each Loan Party agrees to give Agent and/or its representatives or agents access to any or all of such Loan Party’s, and each of its Subsidiaries’, premises to enable Agent to conduct such inspections and examinations. Such inspections and examinations shall be at Borrowers’ expense and the charge therefor shall be $1,500 per person per day (or such higher amount as shall represent Agent’s then current standard charge, provided Agent is making such adjustment for similarly situated borrowers), plus out-of-pocket expenses; provided, that Borrowers shall only be required to reimburse Agent for up to one (1) such inspection and examination in any Fiscal Year plus (a) one additional inspection and field examination in a Fiscal Year in the event that (i) any outstanding Revolving Loan or Letter of Credit (or any portion thereof) that has been made or issued has been deemed to be made or issued pursuant to this Agreement based on M&E Availability, Real Property Availability, SOFA Availability and/or Foreign Accounts Availability and (ii) such Revolving Loan or Letter of Credit (or portion thereof) has remained outstanding for a period of at least forty-five (45) consecutive days and (c) any additional inspections and examinations that are conducted during the existence of an Event of Default. Upon the occurrence and during the continuance of an Event of Default, Agent may, at Borrowers’ expense, use each Loan Party’s personnel, computer and other equipment, programs, printed output and computer readable media, supplies and premises for the collection, sale or other disposition of Collateral to the extent Agent, in its sole discretion, deems appropriate. Each Loan Party hereby irrevocably authorizes all accountants and other financial professional third parties to disclose and deliver to Agent, at Borrowers’ expense, all financial information, books and records, work papers, management reports and other information in their possession regarding the Loan Parties. Notwithstanding any of the foregoing, in no event shall the Loan Parties be required pursuant to the terms of this Section 4.7 to allow any such Person to inspect or examine, or be required to discuss, any records, documents or other information (i) that is prohibited or limited by applicable law, rule, regulation, contract or order of or with any Governmental Authority, or (ii) that is subject to attorney-client privilege.
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4.8 Appraisals. Each Loan Party will permit Agent and each of its representatives or agents to conduct appraisals and valuations of the Collateral at such times and intervals as Agent may designate. Such appraisals and valuations shall be at Borrowers’ expense; provided, that Borrowers shall only be required to reimburse Agent (a) for up to (i) two (2) appraisals and valuation of Inventory, (ii) two (2) appraisals and valuations of Equipment, and (iii) one (1) appraisal and valuation of Real Property (solely with respect to Real Property constituting Eligible Real Property which is then included in the Borrowing Base), in each case, in any Fiscal Year and (b) for any additional appraisals and valuations that are conducted during the existence of an Event of Default.
4.9 Equipment. No Loan Party will, without Agent’s prior written consent, alter or remove any vehicle identification number, serial or similar number or symbol on any of such Loan Party’s Equipment constituting Collateral.
| 5. | REPRESENTATIONS, WARRANTIES AND COVENANTS. |
To induce Agent and Lenders to enter into this Agreement, each Loan Party represents, warrants and covenants as follows (it being understood and agreed that (a) each such representation and warranty (i) will be made as of the date hereof and be deemed remade as of each date on which any Loan is made or Letter of Credit is issued (except to the extent any such representation or warranty expressly relates only to any earlier and/or specified date, in which case such representation or warranty will be made as of such earlier and/or specified date), and (ii) shall not be affected by any knowledge of, or any investigation by, Agent or any Lender and (b) each such covenant shall continuously apply with respect to all times commencing on the date hereof and continuing until the Termination Date):
5.1 Existence and Authority. Each Loan Party is duly organized or incorporated, validly existing and in good standing under the laws of its jurisdiction of organization (which jurisdiction is identified in Section 3 of the Information Certificate(s)) and is qualified to do business in each jurisdiction in which the operation of its business requires that it be qualified (which each such jurisdiction is identified in Section 15 of the Information Certificate(s)), except where the failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect. Each Loan Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect such Person’s valid existence and good standing in its jurisdiction of organization and, except as could not reasonably be expected to result in a Material Adverse Effect, good standing with respect to all other jurisdictions in which it is qualified to do business and any rights, franchises, permits, licenses, accreditations, authorizations, or other approvals material to their businesses. Each Loan Party has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby. The execution, delivery and performance by each Loan Party of this Agreement and all of the other Loan Documents to which such Loan Party is a party have been duly and validly authorized, do not violate such Loan Party’s Organic Documents, or any law or any agreement or instrument or any court order which is binding upon any Loan Party or its property, do not constitute grounds for acceleration of any Indebtedness or obligation under any agreement or instrument which is binding upon any Loan Party or its property, and do not require the consent of any Person. No Loan Party is required to obtain any government approval, consent, or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of any of the Loan Documents. This Agreement and each of the other Loan Documents have been duly executed and delivered by, and are enforceable against each of the Loan Parties who have signed them, in accordance with their respective terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Section 18 of the Information Certificate(s) sets forth the ownership of each Borrower. Section 20 of the Information Certificate(s) sets forth the ownership of each of Borrowers’ Subsidiaries.
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5.2 Names; Trade Names and Styles. The name of each Loan Party set forth in Section 1 of the Information Certificate(s) is its correct and complete legal name as of the Closing Date. Listed in Section 8 of the Information Certificate(s) are all prior names used by each Loan Party at any time in the five years preceding the Closing Date, and no Loan Party will use any other name at any time in any tax filing made in any jurisdiction except as set forth in Section 1 or Section 8 of the Information Certificate. Listed in Section 7 of the Information Certificate(s) are all of the present and prior trade names used by any Loan Party at any time in the past five years. Borrowers shall give Agent at least fifteen (15) days’ prior written notice (or such shorter time as Agent may agree in its sole discretion), and will deliver an updated Section 7 or Section 8 of the Information Certificate(s), as applicable, to reflect the same, before it or any other Loan Party changes its legal name or does business under any other name.
5.3 Title to Collateral; Third Party Locations; Permitted Liens. Each Loan Party has, and at all times will continue to have, good and marketable title to all of the Collateral (including the Real Property Collateral), subject to dispositions permitted hereunder and Permitted Liens. The Collateral now is, and at all times will remain, free and clear of any and all Liens, except for Permitted Liens. Agent now has, and will at all times continue to have, a first-priority perfected and enforceable security interest in all of the Collateral, and each Loan Party will at all times defend Agent and each Lender and the Collateral against all claims of others. Prior to causing or permitting any Collateral to at any time be located upon premises other than the locations listed in Sections 27-32 of the Information Certificate(s), in which any third party (including any landlord, warehouseman, or otherwise) has an interest, Borrowers shall give Agent no less than thirty (30) days written notice thereof (or such shorter time as Agent may agree in its sole discretion) and the applicable Loan Party shall use commercially reasonable efforts to cause each such third party to execute and deliver to Agent, in form and substance acceptable to Agent, such waivers, collateral access agreements, and subordinations as Agent shall specify, so as to, among other things, ensure that Agent’s rights in the Collateral are, and will at all times continue to be, superior to the rights of any such third party and that Agent has access to such Collateral. Each applicable Loan Party will keep at all times in full force and effect, and will comply in all payment and other material respects at all times with all the terms of, any lease of Real Property where any of the Collateral now or in the future may be located, subject to the expiration of such leases of real property by their terms.
5.4 Accounts, Chattel Paper, Inventory and Equipment.
(a) As of each date reported by Borrowers, all Accounts which Borrowers have then reported to Agent as then being Eligible Billed Accounts, Eligible Foreign Billed Accounts or Eligible Unbilled Accounts, as the case may be, comply in all respects with the criteria for eligibility set forth in the definitions of Eligible Billed Accounts, Eligible Foreign Billed Accounts or Eligible Unbilled Accounts, respectively. All such Accounts and Chattel Paper are genuine and in all respects what they purport to be, arise out of a completed, bona fide and unconditional and non-contingent sale and delivery of goods or rendition of services by Borrowers in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto, each Account Debtor thereunder had the capacity to contract at the time any contract or other document giving rise to such Accounts and Chattel Paper were executed, and the transactions giving rise to such Accounts and Chattel Paper comply with all applicable laws and governmental rules and regulations.
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(b) As of each date reported by Borrowers, all Inventory, Equipment and Rolling Stock which Borrowers have then reported to Agent as then being Eligible Inventory, Eligible Equipment or Eligible Rolling Stock, as applicable, complies in all respects with the criteria for eligibility set forth in the definitions of Eligible Inventory, Eligible Equipment or Eligible Rolling Stock, as applicable. As of the Closing Date, all of the Loan Parties’ Equipment or Rolling Stock is set forth in the Closing Date Appraisal.
5.5 Electronic Chattel Paper. To the extent that any Loan Party obtains or maintains any Electronic Chattel Paper with an individual or aggregate value in excess of $250,000, if requested by Agent, such Loan Party shall at all times thereafter create, store and assign the record or records comprising such Electronic Chattel Paper in such a manner that (a) a single authoritative copy of the record or records exists which is unique, identifiable and except as otherwise provided below, unalterable, (b) the authoritative copy identifies Agent as the assignee of the record or records, (c) the authoritative copy is communicated to and maintained by Agent or its designated custodian, (d) copies or revisions that add or change an identified assignee of the authoritative copy can only be made with the participation of Agent, (e) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy and (f) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.
5.6 Capitalization; Investment Property.
(a) No Loan Party, directly or indirectly, owns, or shall at any time own, any Equity Interests of any other Person except as set forth in Sections 20 and 43 of the Information Certificate(s), which such Sections of the Information Certificate(s) list all Investment Property owned by each Loan Party, except in each case for Permitted Investments and except as permitted by Section 5.24(a).
(b) None of the Pledged Equity has been issued or otherwise transferred in violation of the Securities Act, or other applicable laws of any jurisdiction to which such issuance or transfer may be subject.
(c) The Pledged Equity pledged by each Loan Party hereunder constitutes all of the issued and outstanding Equity Interests of each Issuer owned by such Loan Party.
(d) All of the Pledged Equity has been duly and validly issued and is fully paid and non-assessable, and the holders thereof are not entitled to any preemptive, first refusal, or other similar rights. There are no outstanding options, warrants or similar agreements, documents, or instruments with respect to any of the Pledged Equity.
(e) [Reserved].
(f) Each Loan Party will take any and all actions required or reasonably requested by Agent, from time to time, to (i) cause Agent to obtain exclusive control of any Investment Property in a manner reasonably acceptable to Agent and (ii) obtain from any Issuers and such other Persons as Agent shall specify, for the benefit of Agent, written confirmation of Agent’s exclusive control over such Investment Property and take such other actions as Agent may request to perfect Agent’s security interest in any Investment Property. For purposes of this Section 5.6, Agent shall have exclusive control of Investment Property if (A) pursuant to Section 3.2, such Investment Property consists of certificated securities and the applicable Loan Party delivers such certificated securities to Agent (with all appropriate endorsements); (B) such Investment Property consists of uncertificated securities and either (x) the applicable Loan Party delivers such uncertificated securities to Agent or (y) the Issuer thereof agrees, pursuant to documentation in form and substance satisfactory to Agent, that it will comply with instructions originated by Agent without further consent by the applicable Loan Party, and (C) such Investment Property consists of security entitlements and either (x) Agent becomes the entitlement holder thereof or (y) the appropriate securities intermediary agrees, pursuant to documentation in form and substance satisfactory to Agent, that it will comply with entitlement orders originated by Agent without further consent by the applicable Loan Party. Each Loan Party that is a limited liability company or a partnership hereby represents and warrants that it has not, and at no time will, elect pursuant to the provisions of Section 8-103 of the UCC to provide that its Equity Interests are securities governed by Article 8 of the UCC and its Organic Documents do not, and will not, provide that the Equity Interests issued by it shall be “securities” for purposes of and as governed by and defined in Article 8 of the UCC (in each case, unless otherwise agreed by Agent in writing).
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(g) No Loan Party owns, or has any present intention of acquiring, any “margin security” or any “margin stock” within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System (herein called “margin security” and “margin stock”). None of the proceeds of the Loans will be used, directly or indirectly, for the purpose of purchasing or carrying, or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry, any margin security or margin stock or for any other purpose which might constitute the transactions contemplated hereby a “purpose credit” within the meaning of said Regulations T, U or X, or cause this Agreement to violate any other regulation of the Board of Governors of the Federal Reserve System or the Exchange Act or any similar federal, provincial or territorial statute of Canada, or any rules or regulations promulgated under such statutes.
(h) No Loan Party shall vote to enable, or take any other action to cause or to permit, any Issuer to issue any Equity Interests of any nature, or to issue any other securities or interests convertible into or granting the right to purchase or exchange for any Equity Interests of any nature of any Issuer, in each case, unless pledged hereunder.
(i) No Loan Party shall take, or fail to take, any action that would in any manner impair the value or the enforceability of Agent’s Lien on any of the Investment Property, or any of Agent’s rights or remedies under this Agreement or any other Loan Document with respect to any of the Investment Property.
(j) In the case of any Loan Party which is an Issuer, such Issuer agrees that the terms of Section 7.3(g)(iii) of this Agreement shall apply to such Loan Party with respect to all actions that may be required of it pursuant to such Section 7.3(g)(iii) regarding the Investment Property issued by it.
(k) In the event that any stock dividend, reclassification, readjustment or other change is made or declared in the capital structure of any Issuer, or any Loan Party acquires or in any other manner receives additional shares of stock, membership/limited liability company interests, partnership interests or other equity interests in any such Issuer, or any option included within the Pledged Equity with respect to the stock, membership/limited liability company interests, partnership interests or other equity interests of such Issuer is exercised, any and all such new, substituted or additional equity interests (together with all related rights associated therewith) issued by reason of any such change or exercise to any Loan Party shall immediately and automatically become subject to this Agreement and the pledge and grant of a security interest created by each Loan Party hereunder and each Loan Party hereby grants a security interest in any such future equity interests (together with all related rights associated therewith) to Agent to secure the Obligations. Any and all certificates issued to any Loan Party with respect to any such new, substituted or additional Equity Interests shall be delivered to and held by Agent in the same manner as the Pledged Equity originally pledged hereunder. Promptly following the issuance of any such equity interests, any such Loan Party shall deliver written notice of such issuance to Agent, which such written notice shall include an update to Sections 20 and 43 of the Information Certificate(s), which shall upon delivery be deemed to have amended and restated the previously effective version of such Information Certificate.
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5.7 Commercial Tort Claims. No Loan Party has any Commercial Tort Claims with a claimed value in excess of $1,000,000 individually pending other than those listed in Section 42 of the Information Certificate(s), and each Loan Party shall promptly (but in any case no later than ten (10) Business Days thereafter (or such later date as Agent may agree in its discretion)) notify Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof against any third party. Such notice shall constitute such Loan Party’s authorization to amend such Section 42 to add such Commercial Tort Claim and shall automatically be deemed to amend such Section 42 to include such Commercial Tort Claim.
5.8 Jurisdiction of Organization; Location of Collateral. Sections 14 and 27-32 of the Information Certificate(s) set forth (a) the chief executive office and registered office of each Loan Party (as determined under the PPSA)), (b) all locations where all Inventory, Equipment, and other Collateral owned by each Loan Party is kept, and (c) whether each such Collateral location and/or chief executive office or registered office (as determined under the PPSA)) is owned by a Loan Party or leased (and if leased, specifies the complete name and notice address of each lessor). No Inventory or Equipment that Borrowers have reported to Agent as being Eligible Inventory, Eligible Equipment or Eligible Rolling Stock in the most recently delivered Borrowing Base Certificate is located outside the United States, Canada, or in the possession of any lessor, bailee, warehouseman or consignee, except as expressly indicated in Sections 28-32 of the Information Certificate(s) (or in the case of Rolling Stock between customer locations or locations of the Loan Parties). Each Loan Party will give Agent at least fifteen (15) days’ prior written notice (or such shorter time as Agent may agree) prior to any changes to its jurisdiction of organization, or changing its chief executive office, registered office (as determined under the PPSA) or the location of its books and records.
5.9 Financial Statements and Reports; Solvency.
(a) All financial statements delivered to Agent or any Lender by or on behalf of any Loan Party have been, and at all times will be, prepared in conformity with GAAP in all material respects (unless approved by Agent in its discretion) and completely and fairly reflect the financial condition of each Loan Party and its Subsidiaries covered thereby, at the times and for the periods therein stated, subject only, in the case of unaudited financial statements, to year-end adjustments and the absence of footnotes.
(b) As of the date hereof (after giving effect to the Loans and Letters of Credit to be made or issued on the date hereof, and the consummation of the transactions contemplated hereby), and as of each other day that any Loan or Letter of Credit is made or issued (after giving effect thereof), (i) the fair saleable value of all of the assets and properties of the Loan Parties, taken as a whole, exceeds the aggregate liabilities and Indebtedness of the Loan Parties, taken as a whole (including contingent liabilities), (ii) the Loan Parties, taken as a whole, are solvent and able to pay their debts as they come due, (iii) the Loan Parties, taken as a whole, have sufficient capital to carry on their business as now conducted and as proposed to be conducted, (iv) no Loan Party is contemplating either the liquidation of all or any substantial portion of its assets or property, or the filing of any petition under any state, provincial, territorial, federal, or other bankruptcy or insolvency law or the equivalent in any relevant jurisdiction, and (v) no Loan Party has knowledge of any Person contemplating the filing of any such petition against any Loan Party.
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5.10 Tax Returns and Payments; Pension Contributions.
(a) Each Loan Party has timely filed all tax returns and reports required by applicable law, has timely paid all applicable Taxes and assessments owing by such Loan Party and will timely pay all such items in the future as they became due and payable, except (a) Taxes that are being contested in good faith by appropriate proceedings and such Loan Party maintains adequate reserves therefor in conformity with GAAP, or (b) to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect. No Loan Party is aware of any assessments or adjustments proposed for any prior tax years that could result in additional Taxes becoming due and payable by any Loan Party, except to the extent that such assessment or adjustment would not reasonably be expected to have a Material Adverse Effect. Except to the extent the same could not reasonably be expected to result, individually or together with all of the following events or conditions, in a Material Adverse Effect: each Plan is in compliance with the applicable provisions of ERISA, the Code and other applicable laws; each Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter or opinion letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code; there are no pending or, to the knowledge of any Loan Party, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan; there has been no non-exempt “prohibited transaction” described in Section 406 of ERISA or Section 4975 of the Code or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in liabilities individually or in the aggregate on any Loan Party; no ERISA Event has occurred or is reasonably expected to occur; each Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained;; no Loan Party or any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; no Loan Party nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or Section 4212(c) of ERISA; and no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.
(b) As of the Closing Date, no Loan Party, nor any Subsidiary thereof, maintains, sponsors, administers, contributes to, participates in or has any liability in respect of any Canadian Defined Benefit Plan. Except as would not reasonably be expected to result in a Material Adverse Effect: (i) the Canadian Pension Plans are duly registered under the Income Tax Act (Canada) and all other laws which require registration and no event has occurred which is reasonably likely to cause the loss of such registered status, (ii) the Canadian Pension Plans have been administered and invested in compliance with their terms and requirements of law and there have been no improper withdrawals or application of the assets of the Canadian Pension Plans, (iii) there are no outstanding disputes concerning the assets of the Canadian Pension Plans, (iv) there are no taxes, penalties or interest owing in respect of any Canadian Pension Plan, (v) there has been no partial termination of any Canadian Pension Plan and no facts or circumstances have occurred or existed that could result, or be reasonably expected to result, in the declaration of a partial termination of any Canadian Pension Plan, (vi) all payments and contributions required to be made by any Loan Party, to or in respect of any Canadian Pension Plan have been made on a timely basis in accordance with the current terms of such plans and all requirements of law, and (vii) as of the date hereof, no Canadian Pension Event has occurred.
5.11 Compliance with Laws; Intellectual Property; Licenses; Real Property.
(a) Each Loan Party has complied, and will continue at all times to comply, in all material respects with all provisions of all applicable material laws and regulations, including those relating to the ownership, use or operations of real or personal property, the conduct and licensing of each Loan Party’s business, and safety and environmental matters applicable to any Loan Party.
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(b) No Loan Party has received written notice of a material default or violation, nor is any Loan Party in material default or violation, with respect to any judgment, order, writ, injunction, decree, demand or assessment issued by any court or any federal, provincial, territorial, state, local, municipal or other Governmental Authority relating to any aspect of any Loan Party’s business, affairs, properties or assets. No Loan Party has received written notice of or been charged with, or is, to the knowledge of any Loan Party, under investigation with respect to, any material violation in any material respect of any provision of any applicable law. Except in each case as otherwise disclosed to Agent in writing, no Loan Party nor any real property owned, leased or used in a material portion of the business of any Loan Party is subject to any federal, provincial, territorial, state or local investigation to determine whether any remedial action is needed to address any hazardous materials or an environmental release (as that term is defined under environmental and health and safety laws) at, on, or under any real property currently leased, owned or used by a Loan Party nor is a Loan Party liable for any environmental release identified or under investigation at, on or under any real property previously owned, leased or used by a Loan Party. No Loan Party has any material contingent liability with respect to any environmental release, environmental pollution or hazardous material on any real property now or previously owned, leased or operated by it.
(c) No Loan Party owns any registered Intellectual Property, except as set forth in Sections 35-37 of the Information Certificate(s). Except as set forth in Section 39 of the Information Certificate(s), none of the registered Intellectual Property owned by any Loan Party is the subject of any licensing or franchise agreement pursuant to which such Loan Party is the licensor or franchisor. Each Loan Party shall promptly (but in any event within the timeframe required by Section 5.15(c)(ii)) notify Agent in writing of any additional registered Intellectual Property acquired or arising after the Closing Date and submit to Agent a supplement to Sections 35-37 of the Information Certificate(s) to reflect such additional Intellectual Property rights in connection with each update or supplement to the Information Certificate contemplated by Section 5.15(c) (provided, that such Loan Party’s failure to do so shall not impair Agent’s security interest therein). Each Loan Party shall execute a separate security agreement granting Agent a security interest in such Intellectual Property (whether owned on the Closing Date or thereafter), in form and substance reasonably acceptable to Agent and suitable for registering such security interest in such Intellectual Property with the United States Patent and Trademark Office, United States Copyright Office and/or the Canadian Intellectual Property Office, as applicable (provided, that such Loan Party’s failure to do so shall not impair Agent’s security interest therein). Each Loan Party owns or has, and will at all times continue to own or have, the valid right to use all material patents, trademarks, copyrights, software, computer programs, equipment designs, network designs, equipment configurations, technology and other Intellectual Property used, marketed and sold in such Loan Party’s business, and each Loan Party is in compliance, and will continue at all times to comply, in all material respects with all licenses, user agreements and other such agreements regarding the use of Intellectual Property. No Loan Party has any knowledge that, or has received any written notice claiming that, any of such Intellectual Property infringes upon or violates the rights of any other Person.
(d) Each Loan Party has and will continue at all times to have all material federal, provincial, territorial, state, governmental, local and other licenses and permits required to be maintained in connection with such Loan Party’s business operations, and its ownership, use and operation of any real property, and all such licenses and permits, necessary for the operation of the business are valid and will remain and in full force and effect. Each Loan Party has, and will continue at all times to have, complied with the requirements of such licenses and permits in all material respects, and has received no written notice of any pending or threatened proceedings for the suspension, termination, revocation or limitation thereof. No Loan Party is aware of any facts or conditions that could reasonably be expected to cause or permit any of such material licenses or permits to be voided, revoked or withdrawn.
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(e) In addition to and without limiting the generality of clause (a) above, except as would not reasonably be expected to result, individually or together with all of the following events or conditions, in a Material Adverse Effect, each Loan Party will: (i) comply with the applicable provisions of ERISA and the Code with respect to all Plans, (ii) without the prior written consent of Lender, not take any action or fail to take action the result of which would result in a Loan Party incurring a material liability in connection with a Plan to the Internal Revenue Service, the PBGC or to a Pension Plan or Multiemployer Plan (other than to pay contributions or premiums payable in the ordinary course), (iii) not participate in any non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code with respect to any Plan, and (iv) operate each Plan in such a manner that will not incur any material tax liability under the IRC (including Section 4980B of the IRC). With respect to each Pension Plan (other than a Multiemployer Plan) except as would not reasonably be expected to result, individually or together with all of the following events or conditions, in a Material Adverse Effect, the Loan Parties and the ERISA Affiliates shall (y) satisfy in full and in a timely manner, without incurring any late payment or underpayment charge or penalty and without giving rise to any Lien, all of the contribution and funding requirements of the IRC and of ERISA, and (z) pay, or cause to be paid, to the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all premiums required pursuant to ERISA.
(f) Except the extent the failure to do so would not reasonably be expected to result in a Material Adverse Effect, each Loan Party will (i) comply with and perform its obligations under and in respect of each Canadian Pension Plan, including under any funding agreements and all applicable laws and (ii) pay or remit in a timely fashion in accordance with the terms of any funding agreements and all applicable laws all employee or employee contributions or premiums required to be remitted, paid to or in respect of each Canadian Pension Plan.
(g) Section 27 of the Information Certificate sets forth the address (including street address, state, province or territory) of all Real Property that is owned in fee by the Loan Parties and their Subsidiaries (other than Excluded Subsidiaries) as of the Closing Date and identifies the owner thereof.
(h) Section 28 of the Information Certificate sets forth the address (including street address and state) of all Real Property that is leased, subleased, or licensed to or by the Loan Parties and their Subsidiaries (other than Excluded Subsidiaries) as of the Closing Date.
5.12 Litigation. Section 54 of the Information Certificate(s) discloses all claims, proceedings, litigation or investigations pending or (to the best of each Loan Party’s knowledge) threatened against any Loan Party as of the Closing Date (other than the Chapter 11 Cases). Except for the Chapter 11 Cases, there is no claim, suit, litigation, proceeding or investigation pending or (to the best of each Loan Party’s knowledge) threatened by or against or affecting any Loan Party in any court or before any Governmental Authority (or any basis therefor known to any Loan Party) (a) which would reasonably be expected to result, either separately or in the aggregate, in monetary liability in excess of $3,000,000 for the Loan Parties (other than the Royalty Litigation), except, in the case of this clause (a), for those matters disclosed to Agent in writing within three (3) Business Days (or such later date as Agent may agree in its sole discretion) following the date on which any Senior Officer or Authorized Officer of a Loan Party has actual knowledge thereof, or (b) which could reasonably be expected to result in a Material Adverse Effect.
5.13 Use of Proceeds. All proceeds of all Loans and Letters of Credit shall be used by Borrowers solely (a) with respect to Loans deemed funded on the Closing Date, to exchange and convert the DIP Loans as Loans under this Agreement as contemplated in Section 1.1(b), (b) to pay the fees, costs, and expenses incurred in connection with the Borrowers’ and Guarantors’ exit from the Chapter 11 Cases, (c) for Borrowers’ working capital and general corporate purposes and (d) for such other purposes not prohibited by the terms of this Agreement. All proceeds of all Loans and Letters of Credit will be used solely for lawful business purposes.
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5.14 Insurance.
(a) Each Loan Party will at all times carry property, liability and other insurance, with insurers reasonably acceptable to Agent, in such form and amounts, and with such deductibles and other provisions, as are customary for similarly situated companies and reasonably acceptable to Agent, and upon Agent’s request Borrowers will provide Agent with evidence satisfactory to Agent that such insurance is, at all times, in full force and effect (including, without limitation, flood insurance with respect to any Real Property Collateral located in any area identified by FEMA (or any successor agency) as a “Special Flood Zone” with such providers, on such terms and in such amounts as required pursuant to the Flood Disaster Protection Act and the National Flood Insurance Act of 1968, and all applicable rules and regulations promulgated thereunder, or as otherwise required by Agent in its Permitted Discretion (but no less than the full insurable value of such Real Property Collateral or, if available, the “Probable Maximum Loss” as calculated by a reputable engineer)). A true and complete listing of such insurance as of the Closing Date, including issuers, coverages and deductibles, is set forth in Section 53 of the Information Certificate(s). Each property insurance policy shall name Agent as lender loss payee and shall, within forty-five (45) days following the date on which any such insurance policy is entered into or effective, (or such later date as Agent may agree in its sole discretion), contain a lender’s loss payable endorsement in form acceptable to Agent, each liability insurance policy shall name Agent as an additional insured, and each business interruption insurance policy (if any) shall be collaterally assigned to Agent, all in form and substance reasonably satisfactory to Agent. All policies of insurance shall provide that they may not be cancelled or changed without at least thirty (30) days’ prior written notice to Agent (or ten (10) days in the case of cancellation for non-payment of premium), and shall otherwise be in form and substance reasonably satisfactory to Agent. Borrowers have not received notice from any insurance carrier regarding any intended or threatened cancellation, non-renewal, reduction or material amendment of any insurance policies maintained by any Loan Party. Borrowers shall advise Agent promptly of any policy cancellation, non-renewal, reduction, or material amendment with respect to any insurance policies maintained by any Loan Party or any receipt by any Loan Party of any written notice received after the Closing Date from any insurance carrier regarding any intended or threatened cancellation, non-renewal, reduction or material amendment of any of such policies, and Borrowers shall promptly deliver to Agent copies of all notices and related documentation received by any Loan Party in connection with the same.
(b) Borrowers shall deliver to Agent, as soon as practicable prior to or promptly following the expiration of any then current insurance policies (and in any event, concurrently with each delivery of a Compliance Certificate pursuant to Section 5.15(b)(i)), insurance certificates evidencing renewal of all such insurance policies required by this Section 5.14. Borrowers shall deliver to Agent, upon Agent’s request, certificates evidencing such insurance coverage in such form as Agent shall reasonably request. If any Loan Party fails to provide Agent with a certificate of insurance or other evidence of the continuing insurance coverage required by this Agreement within the time period set forth in the first sentence of this Section 5.14(b), Agent may purchase insurance required by this Agreement at Borrowers’ expense. This insurance may, but need not, protect any Loan Party’s interests.
5.15 Financial, Collateral and Other Reporting / Notices. Each Loan Party has kept and will at all times keep adequate records and books of account with respect to its business activities and the Collateral in which proper entries are made in accordance with GAAP (unless otherwise approved by Agent in its discretion) reflecting all its financial transactions. Each Loan Party will cause to be prepared and furnished to Agent, in each case in a form and in such detail as is acceptable to Agent the following items (the items to be provided under this Section 5.15 shall be delivered to Agent by a form of Approved Electronic Communication approved by Agent or in writing)).
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(a) Annual Financial Statements. Not later than ninety (90) days after the close of each Fiscal Year (or such later date as Agent may agree in its sole discretion), commencing with the Fiscal Year ended December 31, 2025, audited financial statements of each Loan Party as of the end of such Fiscal Year, including balance sheet, income statement, and statement of cash flow for such Fiscal Year, in each case on a consolidated and consolidating basis, audited and certified (without qualification, other than a going concern or like qualification arising with respect to (x) the audited financial statements for the Fiscal Year ended December 31, 2025, and (y) as a result of the scheduled maturity of any Indebtedness permitted hereunder within one year of the date of such financial statements) by PriceWaterhouseCoopers LLP or other firm of independent certified public accountants of recognized standing selected by Borrowers and reasonably acceptable to Agent, together with a copy of any management letter issued in connection therewith. Concurrently with the delivery of such financial statements, Borrowing Agent shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with the financial covenant specified in Section 5.25, and setting forth a detailed calculation of such covenants, and (ii) any Default or Event of Default is then in existence.
(b) Interim Financial Statements.
(i) Not later than thirty (30) days after the end of each fiscal month (or no later than April 4, 2026 in the case of the fiscal month ended February 28, 2026) (in each case, or such later date as Agent may agree in its sole discretion), commencing with the fiscal month ended February 28, 2026, including the last fiscal month of each Fiscal Year, (A) the Monthly Financial Model and (B) unaudited interim financial statements of each Loan Party as of the end of such fiscal month and of the portion of such Fiscal Year then elapsed, including balance sheet, income statement, statement of cash flow, and results of their respective operations during such fiscal month and the then-elapsed portion of the Fiscal Year, together with comparative figures for the same periods in the immediately preceding Fiscal Year and the corresponding figures from the budget for the Fiscal Year covered by such financial statements, in each case on a consolidated and consolidating basis, certified by an Authorized Officer of Borrowing Agent as prepared in accordance with GAAP (unless otherwise approved by Agent in its discretion) and fairly presenting the consolidated financial position and results of operations (including, upon Agent’s request, management discussions and analysis of such results) of each Loan Party for such fiscal month and period subject only to year-end adjustments and the absence of footnotes. Concurrently with the delivery of such financial statements for any fiscal month, Borrowing Agent shall deliver to Agent a Compliance Certificate, indicating (x) whether Borrowers are in compliance with each of the covenant specified in Section 5.25, and setting forth a detailed calculation of such covenants and (y) whether any Default or Event of Default is then in existence.
(ii) Not later than forty-five (45) days after the end of each fiscal quarter (or such later date as Agent may agree in its sole discretion), commencing with the fiscal quarter ending on March 31, 2026, including the last fiscal month of each Fiscal Year, unaudited interim financial statements of each Loan Party as of the end of such fiscal quarter and of the portion of such Fiscal Year then elapsed, including balance sheet, income statement, statement of cash flow, and results of their respective operations during such fiscal quarter and the then-elapsed portion of the Fiscal Year, together with comparative figures for the same periods in the immediately preceding Fiscal Year and the corresponding figures from the budget for the Fiscal Year covered by such financial statements, in each case on a consolidated and consolidating basis, certified by an Authorized Officer of Borrowing Agent as prepared in accordance with GAAP (unless otherwise approved by Agent in its discretion) and fairly presenting the consolidated financial position and results of operations (including, upon Agent’s request, management discussions and analysis of such results) of each Loan Party for such fiscal quarter and period subject only to year-end adjustments and the absence of footnotes.
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(c) Borrowing Base / Collateral Reports / Insurance Certificates / Information Certificate(s) / Other Items.
(i) The items described on Schedule D hereto by the respective dates set forth therein (or, in each case, such later date as Agent may agree in its sole discretion).
(ii) Concurrently with the delivery of the unaudited financial statements described in Section 5.15(b)(ii) with respect to each fiscal quarter ending June 30 and December 31 of each Fiscal Year (or such later date as Agent may agree in its sole discretion), or more frequently at the Loan Parties’ election or as otherwise required by this Agreement, an updated Information Certificate (or a supplement to the most recently delivered Information Certificate) in substantially the same form as that delivered to Agent on or prior to the Closing Date (or such other form as may be acceptable to Agent). It is understood and agreed that any representation or warranty made at any time under this Agreement which references an Information Certificate (or any Section or component thereof and any information contained therein), shall be deemed made as of the date of the most recently delivered Information Certificate.
(d) Projections, Etc.
(i) Not later than thirty (30) days prior to the end of each Fiscal Year (or such later date as Agent may agree in its sole discretion), monthly business projections for the following Fiscal Year for the Loan Parties on a consolidated and consolidating basis, which projections shall include for each such period Borrowing Base projections, profit and loss projections, balance sheet projections, income statement projections, cash flow projections and Fixed Charge Coverage Ratio projections (regardless of whether a Covenant Testing Period is in effect), together with appropriate supporting details and a statement of underlying assumptions used in preparing such projections.
(ii) [Reserved].
(e) Shareholder Reports, Etc. To the extent the following are not publicly available on the website of a Loan Party or on the website of the SEC, promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which each Loan Party has made available to its shareholders and copies of any regular, periodic and special reports or registration statements which any Loan Party files with the SEC or any Governmental Authority which may be substituted therefor, or any national securities exchange.
(f) ERISA Reports; Canadian Pension Events. Copies of any annual report required to be filed pursuant to the requirements of ERISA by a Loan Party in connection with each Pension Plan maintained by a Loan Party subject thereto promptly upon request by Agent and in addition, each Loan Party shall promptly notify Agent upon having knowledge of any ERISA Event or any Canadian Pension Event that could reasonably be expected to result in a Material Adverse Effect.
(g) Tax Returns. Upon request from Agent, each federal, provincial, territorial and state income tax return filed by any Loan Party promptly, together with such supporting documentation as is supplied to the applicable tax authority with such return and proof of payment of any amounts owing with respect to such return.
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(h) Notification of Certain Changes. Borrowers will promptly (and in no case later than the earlier of (x) five (5) Business Days after the date any Loan Party becomes aware of any of the following (or such later date as Agent may agree in its sole discretion) and (y) such other date that such information is required to be delivered pursuant to this Agreement or any other Loan Document) notify Agent in writing of: (i) the occurrence of any Default or Event of Default, (ii) the occurrence of any event that has had, or could reasonably be expected to result in, a Material Adverse Effect, (iii) any change in any Loan Party’s Senior Officers or directors, (iv) any suit, proceeding or claim (or any development with respect to any existing suit, proceeding or claim) relating to any Loan Party, any officer or director of a Loan Party relating to his or her capacity as an officer or director of a Loan Party, the Collateral or which could reasonably be expected to have a Material Adverse Effect, (v) any violation or asserted violation of any applicable law (including OSHA or any Environmental Laws), if an adverse resolution could reasonably be expected to have a Material Adverse Effect or otherwise result in material liability to any Loan Party, (vi) any other event or the existence of any circumstance that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect, (vii) any actual breaches of any Material Contract or termination of any Material Contract or any material amendment to or modification of a Material Contract, or the execution of any new Material Contract by any Loan Party and (viii) Borrowers’ receipt or knowledge of any material finding, ruling, decision or determination with respect to the Royalty Litigation (and Borrowers shall deliver to Agent copies of all material documents received in connection with the same), and (ix) Borrowers’ receipt or knowledge of any material pleading, filing or other document in connection with the Royalty Litigation (and Borrowers shall deliver to Agent copies of all material documents received in connection with the same); provided, that (A) the Loan Parties and their Subsidiaries shall not be required to disclose, provide or discuss any document, information or other matter (i) the disclosure of which is prohibited by applicable laws, rules or regulations, or (ii) that is subject to the attorney-client privilege or that constitutes attorney work product and (B) any disclosure required pursuant to this Section 5.15(h) shall be subject to Section 10.17 of this Agreement. In the event of each such notice under this Section 5.15(h), Borrowers shall give notice to Agent of the action or actions that each Loan Party has taken, is taking, or proposes to take with respect to the event or events giving rise to such notice obligation.
(i) Canadian Pension Plan. Promptly after any Borrower knows of the occurrence of: (i) any violation of any applicable law (including any applicable provincial pension benefits legislation) in any respect with respect to any Canadian Pension Plan that could reasonably be expected to result in a Material Adverse Effect; or (ii) any Canadian Pension Event that could reasonably be expected to result in a Material Adverse Effect, the applicable Borrower will deliver to Agent a certificate of a Senior Officer of the applicable Borrower setting forth details as to such occurrence and the action, if any, that such Borrower is required or proposes to take, together with any notices (required, proposed or otherwise) given to or filed with or by such Borrower.
(j) [Reserved].
(k) Other Information. Promptly upon written request from Agent to Borrowing Agent, such other data and information (financial and otherwise) as Agent, from time to time, may reasonably request, bearing upon or related to the Collateral or each Loan Party’s business or financial condition or results of operations.
5.16 Litigation Cooperation. Should any third-party suit, regulatory action, or any other judicial, administrative, or similar proceeding be instituted by or against Agent or any Lender with respect to any Collateral or in any manner relating to any Loan Party, this Agreement, any other Loan Document or the transactions contemplated hereby, each Loan Party shall, without expense to Agent or any Lender, make available each Loan Party, such Loan Party’s officers, employees and agents, and any Loan Party’s books and records, without charge, to the extent that Agent may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding.
5.17 Maintenance of Collateral, Etc. Each Loan Party will maintain all of the Collateral in good working condition, ordinary wear and tear and casualty events excepted, and no Loan Party will use the Collateral for any unlawful purpose.
5.18 Material Contracts. Except as expressly disclosed in Section 57 of the Information Certificate(s), no Loan Party is (a) a party to any contract which has had or could reasonably be expected to have a Material Adverse Effect or (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any contract to which it is a party or by which any of its assets or properties is bound, which default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in monetary liabilities of a Loan Party or a Subsidiary of a Loan Party in excess of $1,500,000 in any Fiscal Year (a “Material Contract”).
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5.19 No Default. No Default or Event of Default has occurred and is continuing.
5.20 No Material Adverse Change. Since the Petition Date, there has been no material adverse change in the financial condition, business, operations, or properties of any Loan Party (it being understood that the Chapter 11 Cases, in and of themselves, shall not constitute a “material adverse change”).
5.21 Full Disclosure. All written reports, notices, certificates, information or other statements delivered or made (including, in electronic form) by or on behalf of any Loan Party or any Subsidiary of a Loan Party to Agent or any Lender in connection with this Agreement or any other Loan Document, taken as a whole, do not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein not misleading as of the date such information is dated or certified (or if not dated or certified as of a certain date, as of the date delivered to Agent). Except for matters of a general economic or political nature which do not affect any Loan Party uniquely, there is no fact presently known to any Loan Party regarding its or its Subsidiaries business or operations which has not been disclosed to Agent or any Lender, which has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
5.22 Sensitive Payments.
(a) Each Loan Party (i) is in compliance in all material respects with applicable anti-corruption and anti-bribery laws which, among other things, prohibit contributions, payments or gifts to or for the private use of any governmental official, employee or agent where either the payment or the purpose of such contribution, payment or gift is illegal under the applicable laws of the United States, Canada or the jurisdiction in which made or any other applicable jurisdiction, and (ii) is in compliance in all material respects with the foreign assets control regulations (including those implementing the Trading with the Enemy Act) and other similar applicable Sanctions rules or regulations enforced by the U.S. Treasury, OFAC or any similar applicable laws, rules or regulations applicable to such Loan Party, including any Canadian anti-terrorism or Anti-Corruption Laws.
Notwithstanding anything in this Agreement, including but not limited to the representations made under this Section 5.22, nothing in this Agreement shall require any Loan Party, or any director, officer, employee or agent of the foregoing, to commit an act or omissions that contravenes the Foreign Extraterritorial Measures Act (Canada) or any Order promulgated thereunder, any provision of Council Regulation (EC) No 2271/1996 of 22 November 1996 or any law or regulation implementing such Regulation in any member state of the European Union or the United Kingdom, section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung), or any similar blocking or anti-boycott law in Canada, the European Union, or the United Kingdom.
(b) No Loan Party organized under the laws of Canada or any province, territory or other political subdivision thereof is a charity registered with the Canada Revenue Agency and no such Loan Party solicits charitable financial donations from the public and none of the Loans under this Agreement and none of the other services and products, if any, to be provided by Agent or any Lender under or in connection with this Agreement will be used by, on behalf of or for the benefit, of any Person other than the Loan Parties.
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5.23 [Reserved].
5.24 Negative Covenants. No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, without the Required Lenders’ prior written consent:
(a) merge, amalgamate or consolidate with another Person, except (i) that a Loan Party may merge, amalgamate or consolidate with another Loan Party so long as (A) such Loan Party shall provide Agent with ten (10) days’ prior written notice of such merger, amalgamation or consolidation, (B) in connection with any merger, amalgamation or consolidation to which a Borrower is a party, such Borrower must be the surviving entity of merger, amalgamation or consolidation, (C) in connection with any merger, amalgamation or consolidation between a Loan Party and any of its Subsidiaries which is not a Loan Party, such Loan Party must be the surviving entity of merger or consolidation, and (D) such Loan Party shall deliver to Agent all of the relevant agreements, documents and instruments evidencing such merger, amalgamation or consolidation, and (ii) that any Foreign Subsidiary may merge, amalgamate or be consolidated with or into any other Foreign Subsidiary; provided that, immediately after giving effect to any such proposed transaction no Default or Event of Default would exist;
(b) enter into any transaction outside the ordinary course of business that is not expressly permitted by this Agreement;
(c) dissolve or elect to dissolve;
(d) engage, directly or indirectly, in a business other than the business which is being conducted on the date hereof or any business reasonably related, incidental or ancillary thereto, wind up its business operations or cease substantially all, or any material portion, of its normal business operations, or suffer any material disruption, interruption or discontinuance of a material portion of its normal business operations;
(e) enter into any transaction with an Affiliate other than (i) transactions between or among Loan Parties expressly permitted by this Agreement and (ii) transactions on arms-length terms in the ordinary course of business in a manner consistent with past practices;
(f) change its jurisdiction of organization or incorporation or enter into any transaction which has the effect of changing its jurisdiction of organization or incorporation except as provided for in Section 5.24(a);
(g) agree, consent, permit or otherwise undertake to amend or otherwise modify any of the terms or provisions of any Loan Party’s Organic Documents, except for such amendments or other modifications required by applicable law or that are not adverse to Agent or Lenders, and then, only to the extent such amendments or other modifications are fully disclosed in writing to Agent no less than five (5) Business Days prior to being effectuated;
(h) enter into or assume any agreement prohibiting the creation or assumption of any Lien on the Collateral to secure the Obligations upon its properties or assets, whether now owned or hereafter acquired;
(i) [reserved];
(j) (i) divide or enter into any plan of division pursuant to section 18-217 of the Delaware Limited Liability Company Act or any similar stature or provision under any applicable law or otherwise, (ii) dispose of any property through a plan of division under the Delaware Limited Liability Company Act or any comparable transaction under any similar law or (iii) make any payment or distribution pursuant to a plan of division under the Delaware Limited Liability Company Act or any comparable transaction under any similar law;
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(k) create, assume, incur, suffer to exist, or in any manner become liable, directly, indirectly, or contingently in respect of, any Indebtedness other than the following (collectively, the “Permitted Indebtedness”):
(i) the Obligations;
(ii) Indebtedness existing on the Closing Date and described in Section 49 of the Information Certificate(s) and extensions, refinancings, refundings, replacements and renewals of any such Indebtedness subject to the last sentence of this Section 5.24(k);
(iii) intercompany Indebtedness incurred by any Loan Party owing to any other Loan Party; so long as such Indebtedness is also permitted as an Investment under Section 5.24(m); provided that, (i) to the extent such Indebtedness is evidenced by an unsecured intercompany note, Agent shall have a first priority Lien in such intercompany note and the receivable evidenced thereby and (ii) such Indebtedness shall be subordinated to the Obligations on terms reasonably acceptable to Agent;
(iv) purchase money debt or Capitalized Leases (including extensions, refinancings, refundings, replacements and renewals of thereof subject to the last paragraph of this Section 5.24(k), and including those described in Section 49 of the Information Certificate) (A) incurred in connection with the Jacksboro Project in an aggregate outstanding principal amount, in the case of this clause (A), not to exceed $20,000,000, and (B) other purchase money debt or Capitalized Leases in an aggregate outstanding principal amount, in the case of this clause (B), not to exceed $12,000,000 at any time;
(v) Indebtedness arising from the endorsement of instruments for collection in the ordinary course of business;
(vi) intercompany Indebtedness incurred by any Foreign Subsidiary that is not a Loan Party and owing to any Loan Party or Subsidiary; provided that, the aggregate outstanding amount of all Indebtedness pursuant to this Section 5.24(k)(vi) (taken together with the aggregate amount of all investments in Foreign Subsidiaries made in reliance on Section 5.24(m)(iv)) does not exceed $10,000,000;
(vii) [reserved];
(viii) any guaranty of Indebtedness so long as such underlying Indebtedness is otherwise permitted hereunder;
(ix) Indebtedness arising from the financing of insurance premium of any Loan Party or any Subsidiary consistent with past practices, so long as (i) such Indebtedness shall not be in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the underlying term of such insurance policy, (ii) any unpaid amount of such Indebtedness is fully cancelled upon termination of the underlying insurance policy, and (iii) the aggregate principal amount of Indebtedness outstanding pursuant to this clause (k)(ix) shall not exceed $15,000,000 at any time;
(x) secured Indebtedness not otherwise permitted under the preceding provisions of this Section 5.24(k) (including extensions, refinancings, refundings, replacements and renewals of thereof subject to the last sentence of this Section 5.24(k)); provided that, (i) the aggregate principal amount of such Indebtedness shall not exceed $10,000,000 at any time and (ii) the properties encumbered by any Lien securing such Indebtedness shall not be Collateral or any property that is required to be Collateral under Section 3.1 or Section 3.3;
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(xi) unsecured Indebtedness not otherwise permitted under the preceding provisions of this Section 6.1 (including extensions, refinancings, refundings, replacements and renewals of thereof subject to the last sentence of this Section 5.24(k)); provided that, the aggregate outstanding principal amount of Indebtedness permitted under this clause (k)(xi) shall not exceed, at the time such Indebtedness is incurred (after giving effect to the incurrence thereof), $20,000,000;
(xii) unsecured Indebtedness constituting earn-out obligations, contingent obligations or similar obligations of any Loan Party or Subsidiary arising from or relating to the FracTech Acquisition or any Permitted Acquisition; provided that such Indebtedness (other than any such Indebtedness arising from or relating to the FracTech Acquisition) shall be subordinated to the Obligations on terms reasonably acceptable to Agent;
(xiii) Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations, in each case provided in the ordinary course of business and in an aggregate amount not to exceed $3,000,000 at any time outstanding;
(xiv) [reserved]; and
(xv) Indebtedness (A) in respect of the Existing JPM Letters of Credit (but not, for the avoidance of doubt, any increase, extension or renewal thereof) and (B) in an aggregate amount not to exceed $1,000,000 in respect of cash management arrangements, employee credit card programs and purchasing card programs incurred in the ordinary course of business.
Any amendments to or extensions, refinancings, refundings, replacements and renewals of Indebtedness as permitted above in this Section 5.24(k) shall be subject to the following conditions: (A) any such refinancing Indebtedness is in an aggregate principal amount not greater than the aggregate principal amount of the Indebtedness being renewed or refinanced, plus the amount of any premiums required to be paid thereon and reasonable fees and expenses associated therewith and an amount equal to any unutilized active commitment under the Indebtedness being renewed or refinanced and (B) the covenants, events of default, subordination and other provisions thereof (including any guarantees thereof but excluding, for the avoidance of doubt pricing, interest rates and fees) shall be, in the aggregate, no less favorable to the Loan Parties and their Subsidiaries than those contained in the Indebtedness being amended, renewed or refinanced; provided that, the foregoing conditions are not, and shall not be construed as, an increase in any dollar limit already provided in Section 5.24(k) above nor an amendment of any specific requirement set forth in Section 5.24(k) above, including the specific requirements under clause (vii) above;
(l) create, assume, incur, or suffer to exist any Lien on the property of any Loan Party or any Subsidiary, whether now owned or hereafter acquired, or assign any right to receive any income, other than the following (collectively, the “Permitted Liens”):
(i) Liens securing the Obligations pursuant to this Agreement and the other Loan Documents;
(ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens, landlord’s liens and other similar liens, and such Liens granted under contract with such materialmen, mechanic, carrier, workmen, repairmen and landlord, in any case, arising in the ordinary course of business securing obligations which are not overdue for a period of more than thirty (30) days or are being contested in good faith by appropriate procedures or proceedings and for which adequate reserves have been established;
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(iii) Liens arising in the ordinary course of business out of pledges or deposits under workers compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation to secure public or statutory obligations;
(iv) Liens for taxes, assessments, or other governmental charges which are not yet due and payable or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in compliance with GAAP;
(v) undetermined or inchoate Liens, rights of distress and charges incidental to current operations that have not at such time been filed or exercised, or of which written notice has not been duly given in accordance with applicable law or which although filed or registered, relate to obligations not due or delinquent or, if due, the validity of such Lien is being contested in good faith by appropriate actions diligently conducted;
(vi) Liens securing purchase money debt or Capitalized Lease obligations permitted under Section 5.24(k)(iv); provided that, each such Lien encumbers only the property purchased in connection with the creation of any such purchase money debt or the subject of any such Capitalized Lease, and all proceeds thereof (including insurance proceeds);
(vii) Liens arising from PPSA or precautionary UCC financing statements regarding operating leases;
(viii) encumbrances consisting of easements, zoning restrictions, servitudes or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of any Loan Party to use such assets in its business;
(ix) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only Deposit Accounts or other funds maintained with a depository institution;
(x) Liens on cash or securities with an aggregate value not to exceed $3,000,000 pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business;
(xi) judgment and attachment Liens not giving rise to an Event of Default, provided that, (x) any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and (y) no action to enforce such Lien has been commenced;
(xii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into in the ordinary course of business or Liens arising by operation of law under Article 2 of the UCC or by contract in favor of a reclaiming seller of goods or buyer of goods (including purchase money security interests in favor of vendors in the ordinary course of business);
(xiii) Liens solely on cash earnest money deposits made in connection with any letter of intent or purchase agreement permitted hereunder;
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(xiv) Lien arising by reason of deposits with or giving of any form of security to any Governmental Authority for any purpose at any time as required by applicable law as a condition to the transaction of any business or the exercise of any privilege or license;
(xv) Liens created pursuant to joint venture agreements and related documents (to the extent requiring a Lien on the Equity Interest owned by the Company, a Loan Party or a Subsidiary in the applicable joint venture is required thereunder) having ordinary and customary terms (including with respect to Liens) and entered into in the ordinary course of business and securing obligations other than Indebtedness;
(xvi) Liens encumbering property of the Loan Parties and their Subsidiaries which is not Collateral (as defined in the Security Agreements) or property required to be Collateral under Section 3.1 and/or Section 3.3 and securing Indebtedness permitted under Section 5.24(k)(x);
(xvii) Liens encumbering properties not constituting Collateral (as defined in the Security Agreements) of Foreign Subsidiaries securing Indebtedness permitted under Section 5.24(k)(vi);
(xviii) Liens on property of a Person which becomes a Subsidiary after the date hereof, to the extent that (i) such Liens are in existence at the time such Person becomes a Subsidiary and were not created in anticipation thereof and (ii) the Indebtedness secured by such Liens does not thereafter increase in amount;
(xix) Liens existing as of the date hereof and described in Section 50 of the Information Certificate;
(xx) Liens on cash (A) to cash collateralize up to 105% of the stated amount of the Existing JPM Letters of Credit as of the Closing Date (without giving effect to any increase, extension or renewal thereof) and (B) to secure Indebtedness permitted under Section 5.24(k)(xv).
(xxi) [reserved]; and
(xxii) Liens arising under federal or provincial pension standards legislation in Canada in respect of a Canadian Pension Plan for amounts required to be remitted but not yet due.
The permitted existence of any Permitted Liens or any other Liens shall not be interpreted to expressly or impliedly subordinate any Liens granted in favor of Agent, for the benefit of the Lenders, as there is no intention to subordinate the Liens granted in favor of Agent for the benefit of the Lenders;
(m) make or hold any Investment other than the following (collectively, the “Permitted Investments”):
(i) Investments in the form of trade credit to customers of a Loan Party or a Subsidiary arising in the ordinary course of business and represented by accounts from such customers;
(ii) Liquid Investments;
(iii) Investments made prior to the Closing Date as specified Section 51 of the Information Certificate;
(iv) (A) Investments by any Loan Party in any other Loan Party, (B) Investments by any Domestic Subsidiary that is not Loan Party in any other Domestic Subsidiary that is not Loan Party, (C) Investments by any Foreign Subsidiary in any other Foreign Subsidiary and (D) Investments by any Loan Party in a Foreign Subsidiary in an aggregate amount for all such investments made in reliance on this subclause (D) (taken together with the aggregate outstanding amount of all Indebtedness of Foreign Subsidiaries incurred in reliance on Section 5.24(k)(vi)) not in excess of $10,000,000 at any one time;
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(v) Investments in the form of Permitted Acquisitions; provided that, if such Permitted Acquisition involves a Subsidiary, such acquisition otherwise complies with this Agreement;
(vi) Investments consisting of the creation and de minimis (on both an individual basis and on an aggregate basis with any other entities capitalized pursuant to this clause (m)(vi)) initial capitalization of any additional Subsidiaries in compliance with Section 3.3;
(vii) loans or advances to (x) directors, officers and employees of any Loan Party or Subsidiary for expenses or other payments incident to such Person’s employment or association with any Loan Party or Subsidiary and (y) former owners of Equity Interests in any Loan Party or Subsidiary in connection with or relating to their acquisition of Equity Interests in such Loan Party or Subsidiary; provided that, the aggregate amount of such loans and advances pursuant to this Section 5.24(m)(vii) together with the aggregate amount of Restricted Payments permitted under Section 5.24(q)(ii) of this Agreement shall not exceed $5,000,000 in the aggregate per fiscal year;
(viii) Investments (including debt obligations and Equity Interests) and other assets received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement or delinquent obligations of, or other disputes with, customers and suppliers arising in the ordinary course of business or received upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(ix) Investments in the form of mergers, amalgamations and consolidations of Loan Parties and their Subsidiaries in compliance with Section 5.24(a); provided that, if such Investment involves a Subsidiary, such Investment otherwise complies with this Agreement, including Section 3.3;
(x) Capital Expenditures and Investments to the extent funded exclusively with the cash proceeds of a substantially contemporaneous issuance of Equity Interests (of Equity Interests not constituting Disqualified Equity Interests); and
(xi) Investments (other than in any Excluded Subsidiary) with respect to which the Payment Conditions are satisfied on a pro forma basis for such Investment;
(n) make an acquisition in a single transaction or related series of transactions of (1) all or substantially all of the assets of a Person or line of business of such Person or (2) all of the outstanding capital stock or other Equity Interests of a Person (such selling Person (in the case of clause (1)) or acquired Person (in the case of clause (2)) is herein referred to as the “Target”) other than (each a “Permitted Acquisition”):
(i) any acquisition approved by the Required Lenders; or
(ii) any acquisition with respect to which, (w) the Payment Conditions are satisfied on a pro forma basis, (x) the assets, business line or Target acquired shall comprise a business of the type engaged in by the Loan Parties as of the Closing Date (or is reasonably related, ancillary or complementary thereto), (y) such acquisition shall have received the approval (to the extent required) of the board of directors or similar governing body of the Target; and (z) no assets acquired in any such acquisition shall be included in the Borrowing Base until Agent has received a field examination and/or appraisal of such assets, in form and substance acceptable to Agent;
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(o) create, incur, assume or permit to exist any contract, agreement or understanding which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its property, whether now owned or hereafter acquired, to secure the Obligations or restricts any Subsidiary from paying Restricted Payments to any Borrower or Loan Party, or which requires the consent of or notice to other Persons in connection therewith other than:
(i) the Loan Documents;
(ii) [reserved];
(iii) agreements governing Indebtedness permitted by Section 5.24(k)(iv) to the extent such restrictions govern only the assets financed pursuant to such Indebtedness and the proceeds thereof;
(iv) any prohibition or limitation that (x) exists pursuant to applicable requirements of a Governmental Authority, (y) restricts subletting or assignment of leasehold interests contained in any lease governing a leasehold interest of the Company or a Subsidiary and customary provisions in other contracts restricting assignment thereof, or (z) exists in any agreement in effect at the time a Subsidiary becomes a Subsidiary of the Company, so long as such agreement was not entered into in contemplation of such Person becoming a Subsidiary;
(v) any prohibition or limitation that exists in any contract to which a Loan Party is a party on the date hereof so long as (y) such prohibition or limitation is generally applicable and does not specifically address any of the Obligations or the Liens granted under the Loan Documents, and (z) the noncompliance of such prohibition or limitation would not reasonably be expected to be adverse to Agent; and
(vi) agreements governing Indebtedness permitted by Section 5.24(k)(x) to the extent such restrictions do not apply to Collateral or properties which are required to be Collateral under Section 3.1 or Section 3.3 and such agreements do not require the direct or indirect granting of any Lien securing such Indebtedness or other obligation by virtue of the granting of Liens on or pledge of Collateral to secure the Obligations;
(p) make a disposition other than:
(i) disposition by any Subsidiary (other than a Loan Party) of any of its properties to any Loan Party; provided that, at the reasonable request of Agent, the receiving Loan Party shall ratify, grant and confirm the Liens on such assets (and any other related Collateral) pursuant to documentation reasonably satisfactory to Agent;
(ii) disposition by any Loan Party of any of its properties to any other Loan Party; provided that (y) any disposition by a U.S. Loan Party to a Canadian Loan Party must be made in the ordinary course of business and (z) at the reasonable request of Agent, the receiving Loan Party shall ratify, grant and confirm the Liens on such assets (and any other related Collateral) pursuant to documentation reasonably satisfactory to Agent;
(iii) sale of Inventory in the ordinary course of business and disposition of cash or Liquid Investments in the ordinary course of business;
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(iv) disposition of worn out, obsolete or surplus property in the ordinary course of business and the abandonment or other disposition of Intellectual Property that, in the reasonable judgment of the Loan Parties, should be replaced or is no longer economically practicable to maintain or useful in the conduct of the business of the Loan Parties and their Subsidiaries taken as a whole;
(v) mergers, amalgamations and consolidations in compliance with Section 5.24(a);
(vi) assignments and licenses of Intellectual Property of any Loan Party or Subsidiary in the ordinary course of business;
(vii) disposition of any assets required under Legal Requirements;
(viii) dispositions of Equipment by any Loan Party in the ordinary course of business the proceeds of which are (a) reinvested in the acquisition of Equipment of comparable value and type within ninety (90) days and on which Agent has a Lien or (b) otherwise used by the Loan Parties, at their election, for a bona fide business purpose acceptable to Agent;
(ix) dispositions of Equipment by any Foreign Subsidiary in the ordinary course of business;
(x) dispositions of Equity Interests in a joint venture;
(xi) leases of real or personal property in the ordinary course of business;
(xii) dispositions of property permitted by Section 5.24(s); and
(xiii) disposition of properties not otherwise permitted under the preceding clauses of this Section 5.24(p); provided that, (A) such disposition, taken together with all such other dispositions completed since the Closing Date, does not exceed ten percent (10%) of the Tangible Net Assets in the aggregate and calculated at the time of such subject disposition, (B) at least seventy-five percent (75%) of the consideration for each disposition effected pursuant to this Section 5.24(p) shall be cash or Liquid Investments and (C) Borrowers shall deliver to Agent an updated Borrowing Base Certificate giving pro forma effect to such disposition to the extent any Accounts, Inventory, Equipment or Real Property being disposed of in connection with such disposition were included in the Borrowing Base and reflected in the most recently delivered Borrowing Base Certificate;
(q) make any Restricted Payments except that:
(i) (y) the Subsidiaries of a Borrower may make Restricted Payments to another Borrower or any other Loan Party, and (z) the Foreign Subsidiaries may make Restricted Payments to any Loan Party;
(ii) so long as no Default exists or would result from the making of such Restricted Payment, any Loan Party or any Subsidiary may (y) make cash Restricted Payments to existing and former officers, directors, and employees of such Loan Party or such Subsidiary; provided, that such Restricted Payments are in consideration for the retirement, purchase, or redemption of any of the Equity Interests of such Loan Party or such Subsidiary, or any option, warrant or other right to purchase or acquire such Equity Interest, in any event, held by such Person and (z) make repurchases, redemptions or exchanges of Equity Interests of the Company deemed to occur upon exercise of stock options or exchange of exchangeable shares if such Equity Interests represent a portion of the exercise price of such options and may make repurchases, redemptions or other acquisitions or retirements for value of Equity Interests of the Company made in lieu of withholding taxes in connection with any exercise or exchange of stock options, warrants or other similar rights, provided that the aggregate amount of Restricted Payments made pursuant to this Section 5.24(q)(ii) together with the aggregate amount of loans and advances made pursuant to Section 5.24(m)(vii) of this Agreement shall not exceed $5,000,000 in the aggregate per fiscal year;
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(iii) a Borrower may declare and pay dividends with respect to its common stock payable solely in additional shares of its common stock, and, with respect to its preferred stock, payable solely in additional shares of such preferred stock (not constituting Disqualified Equity Interests) or in shares of its common stock;
(iv) the Company may make Restricted Payments to purchase, redeem, retire, or otherwise acquire its Equity Interests, to the extent such Restricted Payments are made from the substantially concurrent receipt by the Company of net proceeds from capital contributions or the substantially concurrent issuance of new Equity Interests of the Company (not constituting Disqualified Equity Interests); and
(v) the Company may make Restricted Payments so long as the Payment Conditions are satisfied;
(r) make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of scheduled payments, required payments and redemptions as and when due in respect of any Indebtedness permitted under Section 5.24(k);
(iii) refinancings of Indebtedness to the extent permitted by Section 5.24(k);
(iv) the Loan Parties may make payments in respect of Indebtedness not otherwise permitted by this Section 5.24(k) so long as the Payment Conditions are satisfied;
(v) the Company may make payments on Indebtedness with the proceeds of the issuance of new Equity Interests (not constituting Disqualified Equity Interests) by the Company or by exchanging such Indebtedness for new Equity Interests (not constituting Disqualified Equity Interests) of the Company; and
(vi) payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness to the extent such sale or transfer is permitted by the terms of Section 5.24(p);
(s) sell or transfer to a Person any property, whether now owned or hereafter acquired, if at the time or thereafter the Company or a Subsidiary shall lease as lessee such property or any part thereof or other property which the Company or a Subsidiary intends to use for substantially the same purpose as the property sold or transferred; provided that, the Loan Parties and their Subsidiaries may effect such transactions with property that is not Collateral so long as (i) such transactions do not exceed $10,000,000 in the aggregate during the term hereof, (ii) if such Loan Party or Subsidiary is a Foreign Subsidiary, the cash proceeds of such transaction are distributed or otherwise transferred to a Loan Party for repayment of Loans pursuant to Section 4.1 and (iii) such property does not include any Accounts, Inventory, Equipment or Real Property included in the Borrowing Base; and
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(t) (x) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Swap Agreement for speculative purposes; or (y) be party to or otherwise enter into any Swap Agreement which is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to the Borrowers’ or their Subsidiaries’ operations; provided that, for the avoidance of doubt, any Loan Party or Subsidiary may enter into Swap Agreement (A) to mitigate risk to which such Loan Party or Subsidiary has actual exposure, (B) to effectively cap, collar or exchange interest rates (from floating to fixed rates, from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or Investment of any Loan Party or any Subsidiary and (C) consisting of spot and forward delivery foreign exchange contracts entered into in the ordinary course of business and not for speculative purposes.
5.25 Fixed Charge Coverage Ratio. Upon the occurrence and during the continuation of a Covenant Testing Period, Borrowers shall not permit the Fixed Charge Coverage Ratio for such period to be less than 1.10 to 1.00, measured (a) initially for the twelve (12) consecutive month period most recently ended for which financial statements have been (or were required to be) delivered pursuant to Section 5.15(a) or 5.15(b) (or, prior to the first delivery of any such financial statements, with respect to the most recently available financial statements) at the time of occurrence of such Covenant Testing Period and (b) thereafter for (and as of the last day of) each twelve (12) consecutive month period ending on the last day of each fiscal month for which financial statements have been (or were required to be) delivered pursuant to Section 5.15(a) or 5.15(b).
5.26 Minimum Excess Availability. Each Borrower shall not permit Excess Availability to be less than $5,000,000, with such covenant to be tested (and Excess Availability to be measured) as of each date the Borrowing Agent delivers a Borrowing Base Certificate required pursuant to Section 5.15(c)(i) (or on the last permissible date for which the Borrowing Agent is required to deliver such Borrowing Base Certificate if no such Borrowing Base Certificated has been delivered on or prior to such date).
5.27 Employee and Labor Matters. There is (a) no unfair labor practice complaint pending or, to the knowledge of any Borrower, threatened against any Loan Party or its Subsidiaries before any Governmental Authority and no labor grievance or labor arbitration proceeding pending or threatened in writing against any Loan Party or its Subsidiaries which arises out of or under any collective bargaining agreement and that could reasonably be expected to result in a Material Adverse Effect, (b) no strike, labor dispute, concerted slowdown or stoppage or similar action or grievance pending or threatened in writing against any Loan Party or its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect, or (c) to the knowledge of any Borrower, after due inquiry, no union representation question existing with respect to the employees of any Loan Party or its Subsidiaries and no union organizing activity taking place with respect to any of the employees of any Loan Party or its Subsidiaries. None of any Loan Party or its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied. The hours worked and payments made to employees of each Loan Party and its Subsidiaries are not in violation of the Fair Labor Standards Act or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. All material payments due from any Loan Party or its Subsidiaries on account of wages and employee health and welfare insurance have been paid or accrued as a liability on the books of Borrowers, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
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5.28 Post Closing Matters. Loan Parties shall execute and deliver the documents and take such actions (or cause such actions to be taken by other Persons) as are set forth in the section labeled “Post Closing Deliverables and Covenants” on Exhibit J, in each case, on or prior to the deadlines specified on Exhibit J (or such later dates as Agent may agree in its sole discretion).
| 6. | LIMITATION OF LIABILITY AND INDEMNITY. |
6.1 Limitation of Liability. In no circumstance will Agent, any Lender, any Participant, any of their respective successors and assigns, any of their respective Affiliates, or any of their respective directors, officers, employees, attorneys or agents (the “Released Parties”) be liable for lost profits or other special, punitive, or consequential damages. Notwithstanding any provision in this Agreement to the contrary, this Section 6.1 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.
6.2 Indemnity/Currency Indemnity.
(a) Each Loan Party hereby agrees to indemnify the Released Parties and hold them harmless from and against any and all claims, debts, liabilities, losses, demands, obligations, actions, causes of action, fines, penalties, costs and expenses (including reasonable attorneys’ fees and consultants’ fees), of every nature, character and description (including, without limitation, natural resources damages, property damage and claims for personal injury), which the Released Parties may sustain or incur based upon or arising out of any of the transactions contemplated by this Agreement or any other Loan Documents or any of the Obligations, including any transactions or occurrences relating to the issuance of any Letter of Credit, any Collateral relating thereto, any drafts thereunder and any errors or omissions relating thereto (including, without limitation, any loss or claim due to any action or inaction taken by the issuer of any Letter of Credit, Agent or any Lender) (and for this purpose any charges to Agent and/or any Lender by any issuer of Letters of Credit shall be conclusive as to their appropriateness and may be charged to the Loan Account), or any other matter, including any breach of any covenant or representation or warranty relating to any environmental and health and safety laws or an environmental release, cause or thing whatsoever occurred, done, omitted or suffered to be done by Agent or any Lender relating to any Loan Party or the Obligations (except any such amounts sustained or incurred solely as the result of the gross negligence or willful misconduct of such Released Parties, as finally determined by a court of competent jurisdiction). Notwithstanding any provision in this Agreement to the contrary, this Section 6.2 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Obligations.
(b) If, for the purposes of obtaining or enforcing judgment in any court in any jurisdiction with respect to this Agreement or any Loan Document, it becomes necessary to convert into the currency of such jurisdiction (the “Judgment Currency”) any amount due under this Agreement or under any Loan Document in any currency other than the Judgment Currency (the “Currency Due”) (or for the purposes of Section 1.7(d)), then, to the extent permitted by law, conversion shall be made at the exchange rate reasonably selected by Agent on the Business Day before the day on which judgment is given (or for the purposes of Section 1.7(d), on the Business Day on which the payment was received by Agent). In the event that there is a change in such exchange rate between the Business Day before the day on which the judgment is given and the date of receipt by Agent of the amount due, each Loan Party shall to the extent permitted by law, on the date of receipt by Agent, pay such additional amounts, if any, or be entitled to receive reimbursement of such amount, if any as may be necessary to ensure that the amount received by Agent on such date is the amount in the Judgment Currency which (when converted at such exchange rate on the date of receipt by Agent in accordance with normal banking procedures in the relevant jurisdiction) is the amount then due under this Agreement or such Loan Document in the Currency Due. If the amount of the Currency Due (including any Currency Due for purposes of Section 1.7(c)) which Agent is so able to purchase is less than the amount of the Currency Due (including any Currency Due for purposes of Section 1.7(c)) originally due to it, each Loan Party shall to the extent permitted by law jointly and severally indemnify and save Agent and Lenders harmless from and against loss or damage arising as a result of such deficiency.
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| 7. | EVENTS OF DEFAULT AND REMEDIES. |
7.1 Events of Default. The occurrence of any of the following events shall constitute an “Event of Default”:
(a) if any warranty, representation, statement of fact, report or certificate made or delivered to Agent or any Lender by or on behalf of any Loan Party pursuant to this Agreement or any Loan Document is untrue or misleading in any material respect when made or deemed made;
(b) if any Loan Party fails to pay to Agent or any Lender (i) when due, any principal or interest payment required under this Agreement or any other Loan Document, or (ii) within three (3) Business Days of when due, any other monetary Obligation under this Agreement or any other Loan Document (including payments of interest, fees, reimbursements and indemnifications);
(c) (1) if any Loan Party defaults in the due observance or performance of any covenant, condition or agreement contained in Section 4.1, 4.6(c), 4.7, 4.8, 5.2, 5.3, 5.13, 5.14, 5.15, 5.17, 5.22, 5.24, 5.25, 5.26 or 5.28 of this Agreement; or
(2) if any Loan Party defaults in the due observance or performance of any covenant, condition or agreement contained in this Agreement or any other Loan Document and not addressed in clauses Sections 7.1(a), (b) or (c)(1), and the continuance of such default remains unremedied for a period of fifteen (15) Business Days after the earlier of (A) the date on which any Senior Officer or Authorized Officer of such Loan Party has actual knowledge of such breach and (B) the date on which written notice thereof shall have been given to the Borrowers by Agent;
(d) any Loan Party suffers final non-appealable judgments (other than with respect to the Royalty Litigation) against any of them since the date of this Agreement that results in an aggregate amount, less any insurance proceeds covering such judgments which are received or as to which the insurance carriers have not denied, greater than $5,000,000 and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgments or (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgments, by reason of a pending appeal or otherwise, shall not be in effect;
(e) any default (after giving effect to all applicable notice and cure periods) with respect to any Indebtedness (other than the Obligations) of any Loan Party which has an outstanding principal amount in excess of $5,000,000 if (i) such default shall consist of the failure to pay such Indebtedness when due, whether by acceleration or otherwise, or (ii) the effect of such default is to permit the holder, with or without notice or lapse of time or both, to accelerate the maturity of any such Indebtedness or to cause such Indebtedness to become due prior to the stated maturity thereof (without regard to the existence of any subordination or intercreditor agreements);
(f) [Reserved];
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(g) if any Loan Party shall apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, administrator, interim receiver, receiver and manager, administrator, sequestrator, trustee, custodian, monitor, agent, liquidator or similar official of it or any of its properties, admits in writing its inability to pay its debts as they mature, make a general assignment for the benefit of creditors, be the subject of any stay of proceedings, be adjudicated a bankrupt or insolvent or be the subject of an order for relief under the Bankruptcy Code, any Canadian Insolvency Law or under any equivalent bankruptcy or insolvency law of a foreign jurisdiction, or file a voluntary petition, proceeding or application seeking relief in bankruptcy or a stay of proceedings, or a petition or a proceeding seeking reorganization or an arrangement with creditors, including, without limitation, any corporate law permitting a debtor to obtain an arrangement of any debts of the corporation or a stay or a compromise of the claims of creditors, or to take advantage of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, winding-up, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;
(h) the commencement of an involuntary case or other proceeding against any Loan Party seeking liquidation, reorganization, arrangement or a stay of proceedings or other relief with respect to it or its debts under any bankruptcy, insolvency, administration or other similar applicable law including Canadian Insolvency Law or seeking the appointment of a receiver, interim receiver, receiver and manager, administrator, sequestrator, trustee, custodian, monitor, liquidator or similar official of it or any substantial part of its property and such case or other proceeding continues undischarged or unstayed for sixty (60) days, or if an order for relief is entered against any Loan Party under any bankruptcy insolvency or other similar applicable law as now or hereafter in effect;
(i) the actual or attempted revocation or termination of, or limitation or denial of liability under, any guaranty of any of the Obligations, or any security document securing any of the Obligations, by any Loan Party;
(j) if any Loan Party makes any payment on account of any Indebtedness or obligation which has been contractually subordinated to the Obligations other than payments which are not prohibited by the applicable subordination provisions pertaining thereto, or if any Loan Party or Subsidiary thereof who has subordinated any such Indebtedness or obligations attempts to limit or terminate any applicable subordination provisions pertaining thereto;
(k) if there is any actual indictment or conviction of any Borrower, or any Guarantor under any criminal statute in each case related to a felony committed in the direct conduct of any Borrower’s, or such Guarantor’s business, as applicable, and the indictment remains unquashed or such legal process remains undismissed for a period of sixty (60) days or more, unless Agent, in its reasonable discretion, determines that the indictment is not material;
(l) if (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 33% or more of the equity securities of the Company entitled to vote for members of the board of directors of the Company on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right) (the “Equity Control Threshold”), or (ii) occupation at any time of a majority of the seats (other than vacant seats) on the board of directors of the Company by Persons who were not (x) directors of the Company on the date of this Agreement, (y) nominated or appointed by the board of directors of the Company, or (z) approved by the board of directors of the Company as director candidates prior to their election; provided that, the foregoing clause (ii) shall not include any change to the board of directors of the Company solely to the extent required for the board of directors of the Company to comply with Section 303A.01 of the New York Stock Exchange listed company manual within one year after the Closing Date; provided, further, that no Event of Default shall be deemed to have occurred pursuant to Section 7.1(l)(i) solely because a third party has become, directly or indirectly, the “beneficial owner” of equity securities of the Company equal to or in excess of the Equity Control Threshold until the date that is 60 days following the date on which such third party initially becomes a “beneficial owner” of equity securities in excess of such threshold;
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(m) [Reserved];
(n) if any Lien purported to be created by any Loan Document shall cease to be a valid perfected first priority Lien (subject only to any priority accorded by law to Permitted Liens) on any material portion of the Collateral as required by the terms hereof or any Loan Document, or any Loan Party shall assert in writing that any Lien purported to be created by any Loan Document is not a valid perfected first priority lien (subject only to any priority accorded by law to Permitted Liens) on the assets or properties purported to be covered thereby as required by the terms hereof or any Loan Document;
(o) if any of the Loan Documents shall cease to be in full force and effect (other than as a result of the discharge thereof in accordance with the terms thereof or by written agreement of all (or the relevant) parties thereto);
(p) [Reserved];
(q) (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result, individually or together with all of the ERISA Events, in a Material Adverse Effect, (ii) the existence of any Lien that primes the Liens that secure the Obligations under Section 430(k) of the Code or Section 303(k) or Section 4068 of ERISA on any assets of a Loan Party, (iii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan and a Material Adverse Effect could reasonably be expected to result therefrom, or (iv) a Canadian Pension Event occurs with respect to a Canadian Pension Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect;
(r) a requirement from the Minister of National Revenue for payment pursuant to Section 224 or any successor section of the ITA or Section 317, or any successor section in respect of any Loan Party of the Excise Tax Act (Canada) or any comparable provision of similar legislation shall have been received by Agent, any Lender or any other Person in respect of any Loan Party or otherwise issued in respect of any Loan Party and a Material Adverse Effect could reasonably be expected to result therefrom; or
(s) if (i) any Loan Party is enjoined, restrained or in any way prevented by any Governmental Authority from conducting any material part of its business for a period of greater than ninety (90) days, (ii) any Loan Party suffers the loss, revocation or termination of any material license, permit, lease or agreement necessary to its business, or (iii) there is a cessation of any material part of any Loan Party’s business for a material period of time, provided, that no Event of Default shall be deemed to have occurred pursuant to this Section 7.1(s), if such enjoinder, restraint, loss, revocation, termination or cessation involves Loan Parties (A) with aggregate EBITDA that accounts for less than 10% of EBITDA for the Company and its Subsidiaries on a consolidated basis for the four consecutive fiscal quarters of the Company ended on such date (or, if such date is not the last day of the fiscal quarter, the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 5.15(a) or 5.15(b)(ii)) (or, prior to the first delivery of any such financial statements, with respect to the most recently available financial statements), or (B) that contribute, in the aggregate less than 10% of the Collateral identified in the Borrowing Base as of such date.
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7.2 Remedies with Respect to Lending Commitments/Acceleration/Etc. Upon the occurrence and during the continuance of an Event of Default, Agent may, in Agent’s sole discretion, or, at the request of the Required Lenders, shall (a) terminate all or any portion of its commitment to lend to or extend credit to Borrowers under this Agreement and/or any other Loan Document, without prior notice to any Loan Party, and/or (b) demand payment in full of all or any portion of the Obligations (whether or not payable on demand prior to such Event of Default), together with (if applicable) the Early Payment/Termination Premium in the amount specified in the Fee Letter, and demand that the Letters of Credit be cash collateralized in the manner described in Section 1.7(c) and/or (c) take any and all other and further actions and avail itself of any and all rights and remedies available to Agent under this Agreement, any other Loan Document, under law and/or in equity. Notwithstanding the foregoing sentence, upon the occurrence of any Event of Default described in Section 7.1(g) or Section 7.1(h), without notice, demand or other action by Agent or any Lender all of the Obligations (including without limitation the Early Payment/Termination Premium in the amount specified in the Fee Letter) shall immediately become due and payable whether or not payable on demand prior to such Event of Default.
7.3 Remedies with Respect to Collateral. Without limiting any rights or remedies Agent may have pursuant to this Agreement, the other Loan Documents, under applicable law or otherwise, upon the occurrence and during the continuance of an Event of Default:
(a) Any and All Remedies. Agent may take any and all actions and avail itself of any and all rights and remedies available to Agent under this Agreement, any other Loan Document, under law or in equity, and the rights and remedies herein and therein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law or otherwise.
(b) Collections; Modifications of Terms. Agent may, but at the direction of Required Lenders shall, (i) notify all appropriate parties that the Collateral, or any part thereof, has been assigned to Agent; (ii) demand, sue for, collect and give receipts for and take all necessary or desirable steps to collect any Collateral or “proceeds” (as defined under the applicable UCC) in its or any Loan Party’s name, and apply any such collections against the Obligations as Agent may elect; (iii) take control of any Collateral and any cash and non-cash Proceeds of any Collateral; (iv) enforce, compromise, extend, renew settle or discharge any rights or benefits of each Loan Party with respect to or in and to any Collateral, or deal with the Collateral as Agent may deem advisable; and (v) make any compromises, exchanges, substitutions or surrenders of Agent deems necessary or proper in its reasonable discretion, including extending the time of payment, permitting payment in installments, or otherwise modifying the terms or rights relating to any of the Collateral, all of which may be effected without notice to, consent of, or any other action of any Loan Party and without otherwise discharging or affecting the Obligations, the Collateral or the security interests granted to Agent under this Agreement or any other Loan Document.
(c) Insurance. Agent may file proofs of loss and claim with respect to any of the Collateral with the appropriate insurer, and may endorse in its own and each Loan Party’s name any checks or drafts constituting Proceeds of insurance. Any Proceeds of insurance received by Agent may be applied by Agent against payment of all or any portion of the Obligations as Agent may elect in its reasonable discretion.
(d) Possession and Assembly of Collateral. Agent may take possession of the Collateral and/or without removal render each Loan Party’s Equipment unusable. Upon Agent’s request, each Loan Party shall assemble the Collateral and make it available to Agent at a place or places to be designated by Agent.
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(e) Set-off. Agent and each Lender may and without any notice to, consent of or any other action by any Loan Party (such notice, consent or other action being expressly waived), set-off or apply (i) any and all deposits (general or special, time or demand, provisional or final) at any time held by or for the account of Agent, any Lender or any Affiliate of Agent or any Lender, and/or (ii) any Indebtedness at any time owing by Agent, any Lender or any Affiliate of Agent or any Lender or any Participant in the Loans to or for the credit or the account of any Loan Party, to the repayment of the Obligations irrespective of whether any demand for payment of the Obligations has been made; provided, that if any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to Agent for further application in accordance with the provisions of Section 10.21 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.
(i) If any Lender, directly or through an Affiliate or branch office thereof, obtains any payment of any Obligation of any Loan Party (whether voluntary, involuntary or through the exercise of any right of setoff or the receipt of any Collateral, Proceeds or “proceeds” (as defined under the applicable UCC) of Collateral) other than pursuant to Section 4.2 and such payment exceeds the amount such Lender would have been entitled to receive if all payments had gone to, and been distributed by, Agent in accordance with the provisions of the Loan Documents, such Lender shall purchase for cash from other Lenders such participations in their Obligations as necessary for such Lender to share such excess payment with such Lenders to ensure such payment is applied as though it had been received by Agent and applied in accordance with this Agreement (or, if such application would then be at the discretion of the Borrower, applied to repay the Obligations in accordance herewith); provided, however, that (A) if such payment is rescinded or otherwise recovered from such Lender, such purchase shall be rescinded and the purchase price therefor shall be returned to such Lender without interest and (B) such Lender shall, to the fullest extent permitted by applicable requirements of law, be able to exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the applicable Loan Party in the amount of such participation.
(f) Disposition of Collateral.
(i) Sale, Lease, etc. of Collateral. Agent may, without demand, advertising or notice, all of which each Loan Party hereby waives (except as the same may be required under the UCC, the PPSA or other applicable law and is not waivable under the UCC, the PPSA or such other applicable law), at any time or times in one or more public or private sales or other dispositions, for cash, on credit or otherwise, at such prices and upon such terms as determined by Agent (provided such price and terms are commercially reasonable within the meaning of the UCC or the PPSA to the extent such sale or other disposition is subject to the UCC or the PPSA requirements that such sale or other disposition must be commercially reasonable) (A) sell, lease, license or otherwise dispose of any and all Collateral, and/or (B) deliver and grant options to a third party to purchase, lease, license or otherwise dispose of any and all Collateral. Agent may sell, lease, license or otherwise dispose of any Collateral in its then-present condition or following any preparation or processing deemed necessary by Agent in its Permitted Discretion. Agent may be the purchaser at any such public or private sale or other disposition of Collateral, and in such case Agent may make payment of all or any portion of the purchase price therefor by the application of all or any portion of the Obligations due to Agent and Lenders to the purchase price payable in connection with such sale or disposition. Agent may, in its Permitted Discretion, postpone or adjourn any sale or other disposition of any Collateral from time to time by an announcement at the time and place of the sale or disposition to be so postponed or adjourned without being required to give a new notice of sale or disposition; provided, however, that Agent shall provide the applicable Loan Party with written notice of the time and place of such postponed or adjourned sale or disposition. Each Loan Party hereby acknowledges and agrees that Agent’s compliance with any requirements of applicable law in connection with a sale, lease, license or other disposition of Collateral will not be considered to adversely affect the commercial reasonableness of any sale, lease, license or other disposition of such Collateral.
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(ii) Deficiency. Each Loan Party shall remain liable for all amounts of the Obligations remaining unpaid as a result of any deficiency of the Proceeds of the sale, lease, license or other disposition of Collateral after such Proceeds are applied to the Obligations as provided in this Agreement.
(iii) Warranties; Sales on Credit. Agent may sell, lease, license or otherwise dispose of the Collateral without giving any warranties and may specifically disclaim any and all warranties, including but not limited to warranties of title, possession, merchantability and fitness. Each Loan Party hereby acknowledges and agrees that Agent’s disclaimer of any and all warranties in connection with a sale, lease, license or other disposition of Collateral will not be considered to adversely affect the commercial reasonableness of any such disposition of the Collateral. If Agent sells, leases, licenses or otherwise disposes of any of the Collateral on credit, Borrowers will be credited only with payments actually made in cash by the recipient of such Collateral and received by Agent and applied to the Obligations. If any Person fails to pay for Collateral acquired pursuant to this Section 7.3(f) on credit, Agent may re-offer the Collateral for sale, lease, license or other disposition.
(g) Investment Property; Voting and Other Rights; Irrevocable Proxy.
(i) All rights of each Loan Party to exercise any of the voting and other consensual rights which it would otherwise be entitled to exercise in accordance with the terms hereof with respect to any Investment Property, and to receive any dividends, payments, and other distributions which it would otherwise be authorized to receive and retain in accordance with the terms hereof with respect to any Investment Property, shall upon written notice to the relevant Loan Party, at the election of Agent following the occurrence and during the continuance of an Event of Default, cease, and all such rights shall thereupon become vested solely in Agent, and Agent (personally or through an agent) shall thereupon be solely authorized and empowered, without notice, to (A) transfer and register in its name, or in the name of its nominee, the whole or any part of the Investment Property, it being acknowledged by each Loan Party that any such transfer and registration may be effected by Agent through its irrevocable appointment as attorney-in-fact pursuant to Section 7.3(g)(ii) and Section 4.4 of this Agreement, (B) exchange certificates and/or instruments representing or evidencing Investment Property for certificates and/or instruments of smaller or larger denominations, (C) exercise the voting and all other rights as a holder with respect to all or any portion of the Investment Property (including, without limitation, all economic rights, all control rights, authority and powers, and all status rights of each Loan Party as a member or as a shareholder (as applicable) of the Issuer), (D) collect and receive all dividends and other payments and distributions made thereon, (E) notify the parties obligated on any Investment Property to make payment to Agent of any amounts due or to become due thereunder, (F) endorse instruments in the name of each Loan Party to allow collection of any Investment Property, (G) enforce collection of any of the Investment Property by suit or otherwise, and surrender, release, or exchange all or any part thereof, or compromise or renew for any period (whether or not longer than the original period) any liabilities of any nature of any Person with respect thereto, (H) consummate any sales of Investment Property or exercise any other rights as set forth in Section 7.3(f) hereof, (I) otherwise act with respect to the Investment Property as though Agent was the outright owner thereof, and (J) exercise any other rights or remedies Agent may have under the UCC, other applicable law, or otherwise.
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(ii) EACH LOAN PARTY HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS AGENT AS ITS PROXY AND ATTORNEY-IN-FACT FOR SUCH LOAN PARTY WITH RESPECT TO ALL OF EACH SUCH LOAN PARTY’S INVESTMENT PROPERTY WITH THE RIGHT (EXERCISABLE SOLELY DURING THE CONTINUANCE OF AN EVENT OF DEFAULT), UPON WRITTEN NOTICE TO THE RELEVANT LOAN PARTY, TO TAKE ANY OF THE FOLLOWING ACTIONS: (A) TRANSFER AND REGISTER IN AGENT’S NAME, OR IN THE NAME OF ITS NOMINEE, THE WHOLE OR ANY PART OF THE INVESTMENT PROPERTY, (B) VOTE THE PLEDGED EQUITY, WITH FULL POWER OF SUBSTITUTION TO DO SO, (C) RECEIVE AND COLLECT ANY DIVIDEND OR ANY OTHER PAYMENT OR DISTRIBUTION IN RESPECT OF, OR IN EXCHANGE FOR, THE INVESTMENT PROPERTY OR ANY PORTION THEREOF, TO GIVE FULL DISCHARGE FOR THE SAME AND TO INDORSE ANY INSTRUMENT MADE PAYABLE TO ANY LOAN PARTY FOR THE SAME, (D) EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES, AND REMEDIES (INCLUDING ALL ECONOMIC RIGHTS, ALL CONTROL RIGHTS, AUTHORITY AND POWERS, AND ALL STATUS RIGHTS OF EACH LOAN PARTY AS A MEMBER OR AS A SHAREHOLDER (AS APPLICABLE) OF THE ISSUER) TO WHICH A HOLDER OF THE PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING, WITH RESPECT TO THE PLEDGED EQUITY, GIVING OR WITHHOLDING WRITTEN CONSENTS OF MEMBERS OR SHAREHOLDERS, CALLING SPECIAL MEETINGS OF MEMBERS OR SHAREHOLDERS, AND VOTING AT SUCH MEETINGS), AND (E) TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT WHICH AGENT MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT. THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE VALID AND IRREVOCABLE UNTIL (X) ALL OF THE OBLIGATIONS (OTHER THAN CONTINGENT INDEMNIFICATION AND EXPENSE REIMBURSEMENT OBLIGATIONS FOR WHICH NO CLAIM HAS BEEN ASSERTED) HAVE BEEN PAID IN FULL IN CASH IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, (Y) AGENT AND LENDERS HAVE NO FURTHER OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (Z) THE COMMITMENTS UNDER THIS AGREEMENT HAVE EXPIRED OR HAVE BEEN TERMINATED (IT BEING UNDERSTOOD AND AGREED THAT SUCH OBLIGATIONS WILL BE AUTOMATICALLY REINSTATED IF AT ANY TIME PAYMENT, IN WHOLE OR IN PART, OF ANY OF THE OBLIGATIONS IS RESCINDED OR MUST OTHERWISE BE RESTORED OR RETURNED BY AGENT OR ANY LENDER FOR ANY REASON WHATSOEVER, INCLUDING, WITHOUT LIMITATION, AS A PREFERENCE, FRAUDULENT CONVEYANCE, OR OTHERWISE UNDER ANY BANKRUPTCY, INSOLVENCY, OR SIMILAR LAW, ALL AS THOUGH SUCH PAYMENT HAD NOT BEEN MADE; IT BEING FURTHER UNDERSTOOD THAT IN THE EVENT PAYMENT OF ALL OR ANY PART OF THE OBLIGATIONS IS RESCINDED OR MUST BE RESTORED OR RETURNED, ALL REASONABLE AND DOCUMENTED OUT-OF-POCKET COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL REASONABLE AND DOCUMENTED ATTORNEYS’ FEES AND DISBURSEMENTS) INCURRED BY AGENT IN DEFENDING AND ENFORCING SUCH REINSTATEMENT SHALL HEREBY BE DEEMED TO BE INCLUDED AS A PART OF THE OBLIGATIONS). SUCH APPOINTMENT OF AGENT AS PROXY AND AS ATTORNEY-IN-FACT SHALL BE VALID AND IRREVOCABLE AS PROVIDED HEREIN NOTWITHSTANDING ANY LIMITATIONS TO THE CONTRARY SET FORTH IN ANY ORGANIC DOCUMENTS OF ANY LOAN PARTY, ANY ISSUER, OR OTHERWISE.
(iii) In order to further effect the foregoing transfer of rights in favor of Agent, during the continuance of an Event of Default, each Loan Party hereby authorizes and instructs each Issuer of Investment Property pledged by such Loan Party to comply with any instruction received by such Issuer from Agent without any other or further instruction from such Loan Party, and each Loan Party acknowledges and agrees that each Issuer shall be fully protected in so complying, and to pay any dividends, distributions, or other payments with respect to any of the Investment Property directly to Agent.
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(iv) Upon exercise of the proxy set forth herein, all prior proxies given by any Loan Party with respect to any of the Pledged Equity or other Investment Property, as applicable (other than to Agent), are hereby revoked, and no subsequent proxies (other than to Agent) will be given with respect to any of the Pledged Equity or any of the other Investment Property, as applicable, unless Agent otherwise subsequently agrees in writing. Agent, as proxy, will be empowered and may exercise the irrevocable proxy to vote the Pledged Equity and/or the other Investment Property at any and all times during the existence of an Event of Default, including, without limitation, at any meeting of shareholders or members, as the case may be, however called, and at any adjournment thereof, or in any action by written consent, and may waive any notice otherwise required in connection therewith. To the fullest extent permitted by applicable law, Agent shall have no agency, fiduciary, or other implied duties to any Loan Party, any Issuer, any Loan Party, or any other Person when acting in its capacity as such proxy or attorney-in-fact. Each Loan Party hereby waives and releases any claims that it may otherwise have against Agent with respect to any breach, or alleged breach, of any such agency, fiduciary, or other duty.
(v) Any transfer to Agent or its nominee, or registration in the name of Agent or its nominee, of the whole or any part of the Investment Property shall be made solely for purposes of effectuating voting or other consensual rights with respect to the Investment Property in accordance with the terms of this Agreement and is not intended to effectuate any transfer of ownership of any of the Investment Property. Notwithstanding the delivery by Agent of any instruction to any Issuer or any exercise by Agent of an irrevocable proxy or otherwise, Agent shall not be deemed the owner of, or assume any obligations or any liabilities whatsoever of the owner or holder of, any Investment Property unless and until Agent expressly accepts such obligations in a duly authorized and executed writing and agrees in writing to become bound by the applicable Organic Documents or otherwise becomes the owner thereof under applicable law (including through a sale as described in Section 7.3(f) hereof). The execution and delivery of this Agreement shall not subject Agent to, or transfer or pass to Agent, or in any way affect or modify, the liability of any Loan Party under the Organic Documents of any Issuer or any related agreements, documents, or instruments or otherwise. In no event shall the execution and delivery of this Agreement by Agent, or the exercise by Agent of any rights hereunder or assigned hereby, constitute an assumption of any liability or obligation whatsoever of any Loan Party to, under, or in connection with any of the Organic Documents of any Issuer or any related agreements, documents, or instruments or otherwise.
(h) Election of Remedies. Subject to the Required Lenders’ right to direct Agent to take action pursuant to the terms of this Agreement, Agent shall have the right in Agent’s sole discretion to determine which rights, security, Liens and/or remedies Agent may at any time pursue, foreclose upon, relinquish, subordinate, modify or take any other action with respect to, without in any way impairing, modifying or affecting any of Agent’s other rights, security, Liens or remedies with respect to such property, or any of Agent’s rights or remedies under this Agreement or any other Loan Document.
(i) Agent’s Obligations. Each Loan Party agrees that Agent shall not have any obligation to preserve rights to any Collateral against prior parties or to marshal any Collateral of any kind for the benefit of any other creditor of any Loan Party or any other Person. Agent shall not be responsible to any Loan Party or any other Person for loss or damage resulting from Agent’s failure to enforce its Liens or collect any Collateral or “proceeds” (as defined under the applicable UCC or PPSA) or any monies due or to become due under the Obligations or any other liability or obligation of any Loan Party to Agent.
(j) Waiver of Rights by Loan Parties. Except as otherwise expressly provided for in this Agreement or by non-waivable applicable law, each Loan Party waives: (i) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent or any Lender on which any Loan Party may in any way be liable, and hereby ratifies and confirms whatever Agent and such Lender may do in this regard, (ii) all rights to notice and a hearing prior to Agent’s taking possession or control of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Agent to exercise any of its remedies and (iii) the benefit of all valuation, appraisal, marshalling and exemption laws.
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| 8. | LOAN GUARANTY. |
8.1 Guaranty. Each Guarantor hereby agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders, the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, all of the Obligations and all costs and expenses, including all court costs and documented attorneys’ and paralegals’ fees and expenses paid or incurred by Agent or Lenders in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, any Borrower, any Guarantor of all or any part of the Obligations (and such costs and expenses paid or incurred shall be deemed to be included in the Obligations). Each Guarantor further agrees that the Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remains bound upon its guarantee notwithstanding any such extension or renewal. All terms of this Loan Guaranty apply to and may be enforced by or on behalf of any branch or Affiliate of Agent or any Lender that extended any portion of the Obligations.
8.2 Guaranty of Payment. This Loan Guaranty is a guaranty of payment and not of collection. Each Guarantor waives any right to require Agent or any Lender to sue or otherwise take action against any Borrower, any other Guarantor, or any other Person obligated for all or any part of the Obligations, or otherwise to enforce its payment against any Collateral securing all or any part of the Obligations.
8.3 No Discharge or Diminishment of Loan Guaranty.
(a) Except as otherwise expressly provided for herein, the obligations of each Guarantor hereunder are unconditional and absolute and not subject to any reduction, limitation, impairment or termination for any reason (other than the payment in full in cash of all of the Obligations), including: (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or compromise of any of the Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure or ownership of any Borrower or any other Guarantor; (iii) any insolvency, bankruptcy, reorganization, arrangement, wind up, receivership, liquidation or other similar proceeding affecting any Borrower or any other Guarantor, or their assets or any resulting release or discharge of any obligation of any Borrower or any other Guarantor; or (iv) the existence of any claim, setoff or other rights which any Guarantor may have at any time against any Borrower, any other Guarantor, Agent, any Lender, or any other Person, whether in connection herewith or in any unrelated transactions.
(b) The obligations of each Guarantor hereunder are not subject to any defense or setoff, counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or unenforceability of any of the Obligations or otherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Borrower or any other Guarantor, of the Obligations or any part thereof.
(c) Further, the obligations of any Guarantor hereunder are not discharged or impaired or otherwise affected by: (i) the failure of Agent or any Lender to assert any claim or demand or to enforce any remedy with respect to all or any part of the Obligations; (ii) any waiver or modification of or supplement to any provision of any agreement relating to the Obligations; (iii) any release, non-perfection, or invalidity of any indirect or direct security for all or any part of the Obligations or all or any part of any obligations of any Guarantor; (iv) any action or failure to act by Agent or any Lender with respect to any Collateral; or (v) any default, failure or delay, willful or otherwise, in the payment or performance of any of the Obligations, or any other circumstance, act, omission or delay that might in any manner or to any extent vary the risk of such Guarantor or that would otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the payment in full in cash of all of the Obligations).
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8.4 Defenses Waived. To the fullest extent permitted by applicable law, each Guarantor hereby waives any defense based on or arising out of any defense of any Guarantor or the unenforceability of all or any part of the Obligations from any cause, or the cessation from any cause of the liability of any Guarantor, other than the payment in full in cash of all of the Obligations. Without limiting the generality of the foregoing, each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Borrower, or any other Person. Each Guarantor confirms that it is not a surety under any state law and shall not raise any such law as a defense to its obligations hereunder. Agent may, at its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with respect to any Collateral, compromise or adjust any part of the Obligations, make any other accommodation with any Borrower or any other Guarantor or exercise any other right or remedy available to it against any Borrower or any other Guarantor, without affecting or impairing in any way the liability of any Guarantor under this Loan Guaranty except to the extent the Obligations have been fully and paid in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though that election may operate, pursuant to applicable law, to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against any Borrower or any other Guarantor or any security.
8.5 Rights of Subrogation. No Guarantor will assert any right, claim or cause of action, including, without limitation, a claim of subrogation, contribution or indemnification that it has against any Borrower or any other Guarantor, or any Collateral, until the Termination Date.
8.6 Reinstatement; Stay of Acceleration. If at any time any payment of any portion of the Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, arrangement, receivership, wind-up, liquidation, or reorganization of any Borrower or any other Person, or otherwise, each Guarantor’s obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time as though the payment had not been made and whether or not Agent or any Lender is in possession of this Loan Guaranty. If acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy, arrangement, receivership, wind-up, liquidation or reorganization of any Borrower, all such amounts otherwise subject to acceleration under the terms of any agreement relating to the Obligations shall nonetheless be payable by the Loan Parties forthwith on demand by Agent. This Section 8.6 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Obligations.
8.7 Information. Each Guarantor assumes all responsibility for being and keeping itself informed of Borrowers’ financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that each Guarantor assumes and incurs under this Loan Guaranty, and agrees that neither Agent nor any Lender shall not have any duty to advise any Guarantor of information known to it regarding those circumstances or risks.
8.8 Termination. To the maximum extent permitted by law, each Guarantor hereby waives any right to revoke this Loan Guaranty as to future Obligations. If such a revocation is effective notwithstanding the foregoing waiver, each Guarantor acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Agent, (b) no such revocation shall apply to any Obligations in existence on the date of receipt by Agent of such written notice (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof), (c) no such revocation shall apply to any Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of any Lender, (d) no payment by any Borrower, any other Guarantor, or from any other source, prior to the date of Agent’s receipt of written notice of such revocation shall reduce the maximum obligation of any Guarantor hereunder, and (e) any payment, by any Borrower or from any source other than a Guarantor which has made such a revocation, made subsequent to the date of such revocation, shall first be applied to that portion of the Obligations as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligation of any Guarantor hereunder.
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8.9 Maximum Liability. The provisions of this Loan Guaranty are severable, and in any action or proceeding involving any federal, provincial, territorial or state corporate law or other law governing business entities, or any state, provincial, territorial, federal or foreign bankruptcy, insolvency, arrangement, liquidation, wind-up, receivership, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under this Loan Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Guarantor’s liability under this Loan Guaranty, then, notwithstanding any other provision of this Loan Guaranty to the contrary, the amount of such liability shall, without any further action by the Loan Parties, Agent or any Lender, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being the relevant Guarantor’s “Maximum Liability”). This Section with respect to the Maximum Liability of each Guarantor is intended solely to preserve the rights of Agent and Lenders to the maximum extent not subject to avoidance under applicable law, and no Guarantor nor any other Person shall have any right or claim under this Section with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Guarantor hereunder shall not be rendered voidable under applicable law. Each Guarantor agrees that the Obligations may at any time and from time to time exceed the Maximum Liability of each Guarantor without impairing this Loan Guaranty or affecting the rights and remedies of Agent and Lenders hereunder, provided, that, nothing in this sentence shall be construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.
8.10 Contribution. In the event any Guarantor shall make any payment or payments under this Loan Guaranty or shall suffer any loss as a result of any realization upon any collateral granted by it to secure its obligations under this Loan Guaranty (such Guarantor a “Paying Guarantor”), each other Guarantor (each a “Non-Paying Guarantor”) shall contribute to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable Percentage” of such payment or payments made, or losses suffered, by such Paying Guarantor. For purposes of this Section 8.10, each Non-Paying Guarantor’s “Applicable Percentage” with respect to any such payment or loss by a Paying Guarantor shall be determined as of the date on which such payment or loss was made by reference to the ratio of (a) such Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount of all monies received by such Non-Paying Guarantor from Borrowers after the date hereof (whether by loan, capital infusion or by other means) to (b) the aggregate Maximum Liability of all Loan Parties hereunder (including such Paying Guarantor) as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder), or to the extent that a Maximum Liability has not been determined for any Guarantor, the aggregate amount of all monies received by such Loan Parties from Borrowers after the date hereof (whether by loan, capital infusion or by other means). Nothing in this provision shall affect any Guarantor’s several liability for the entire amount of the Obligations (up to such Guarantor’s Maximum Liability). Each of the Loan Parties covenants and agrees that its right to receive any contribution under this Loan Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in full in cash of all of the Obligations. This provision is for the benefit of Agent, each Lender and the Loan Parties and may be enforced by any one, or more, or all of them in accordance with the terms hereof.
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8.11 Liability Cumulative. The liability of each Guarantor under this Section 8 is in addition to and shall be cumulative with all liabilities of each Guarantor to Agent and each Lender under this Agreement and the other Loan Documents to which such Guarantor is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.
| 9. | PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES. |
9.1 Taxes.
(a) Any and all payments by or on account of any obligation of the Loan Parties hereunder or under any other Loan Document shall to the extent permitted by applicable laws be made free and clear of and without reduction or withholding for any Taxes, except as required by applicable law. If, however, applicable laws require the Loan Parties to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such laws as the case may be, upon the basis of the information and documentation to be delivered pursuant to clause (e) below.
(b) If any Loan Party shall be required by applicable law to withhold or deduct any Taxes from any payment, then (i) such Loan Party shall withhold or make such deductions as are required by applicable laws, (ii) such Loan Party shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with applicable laws, and (iii) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the Loan Parties shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made. Upon request by Agent or any Lender or other Recipient, Borrowers shall deliver to Agent or such Lender or such other Recipient, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment of Indemnified Taxes, a copy of any return required by applicable law to report such payment or other evidence of such payment reasonably satisfactory to Agent or such Lender or such other Recipient, as the case may be.
(c) Without limiting the provisions of subsections (a) and (b) above, the Loan Parties shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.
(d) Without duplication of payments made pursuant to subsections (a) through (c) above, each Loan Party shall, and does hereby, on a joint and several basis indemnify Agent, each Lender and each other Recipient and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) paid or incurred by Agent, such Lender or any other Recipient on account of, or in connection with any Loan Document or a breach by a Loan Party thereof, and any penalties, interest and reasonable and documented expenses arising therefrom or with respect thereto (whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority). A certificate as to the amount of any such payment or liability delivered to Borrowers shall be conclusive absent manifest error.
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(e) If Agent, any Lender or any Participant is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document, Agent and each Lender, as applicable, shall deliver to Borrowers and each such Participant shall deliver to such Lender granting the participation, at the time or times prescribed by applicable laws or reasonably requested by the Borrowers or such Lender granting the participation, such properly completed and executed documentation as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, Agent and each Lender shall deliver to Borrowers and each Participant shall deliver to Agent and such Lender granting the participation, at the time or times prescribed by applicable laws or reasonably requested by the Borrowers or such Lender granting the participation, such properly completed and executed documentation prescribed by applicable laws or by the taxing authorities of any jurisdiction or such other reasonably requested information as will enable Borrowers or such Lender granting the participation, as the case may be, to determine (i) whether or not payments made hereunder or under any other Loan Document are subject to Taxes or information reporting requirements, (ii) if applicable, the required rate of withholding or deduction, and (iii) such Lender’s or Participant’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Recipient by the Loan Parties pursuant to this Agreement or otherwise to establish such Recipient’s status for withholding tax purposes in the applicable jurisdiction. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 9.1(e)(i), (ii) or (iii)) shall not be required if in the Lender’s or Participant’s reasonable judgment such completion, execution or submission would subject such Lender or Participant to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender or Participant (this provision shall be referred to as the “Lender Documentation Exception”).
Without limiting the generality of the foregoing, if a Borrower is resident for tax purposes in the United States:
(i) Each Recipient that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall deliver to Borrowers (or such Lender granting a participation as applicable) on or about the date on which such Recipient becomes an agent or a lender (or such Participant is granted a participation) under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or such Lender granting such participation), executed copies of Internal Revenue Service Form W-9 (or any successor form), certifying that such Recipient is exempt from U.S. federal backup withholding tax;
(ii) Each Recipient that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code (a “Non-U.S. Recipient”) shall deliver to Borrowers (and such Lender granting a participation in case the Non-U.S. Recipient is a Participant) on or prior to the date on which such Non-U.S. Person becomes an agent or a lender (or such Participant is granted a participation) under this Agreement (and from time to time thereafter upon the reasonable request of Borrowers or such Lender granting such participation but only if such Non-U.S. Recipient is legally entitled to do so), whichever of the following is applicable: (A) executed copies of Internal Revenue Service Form W-8BEN (or any successor form) or Form W-8BEN-E (or any successor form) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (B) executed copies of Internal Revenue Service Form W-8ECI (or any successor form); (C) to the extent a Non-U.S. Recipient is not the beneficial owner, executed copies of Internal Revenue Service Form W-8IMY (or any successor form) accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-1 or Exhibit I-2, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Recipient is a partnership and one or more direct or indirect partners of such Recipient are claiming the portfolio interest exemption, such Recipient may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-3 on behalf of each such direct and indirect partner and all other required supporting documentation; (D) each Non-U.S. Recipient claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, shall provide (x) a certificate to the effect that such Non-U.S. Recipient is not (I) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (II) a “10 percent shareholder” of the Borrowers within the meaning of section 871(h)(3)(B) of the Code, or (III) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of Internal Revenue Service Form W-8BEN (or any successor form) or Form W-8BEN-E (or any successor form); and/or (E) executed copies of any other form prescribed by applicable law (including FATCA) as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable law to permit Borrowers or any Lender granting a participation, to determine the withholding or deduction required to be made;
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(iii) If a payment made to Agent or any Lender (or Participant) under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if Agent or such Lender (or such Participant) were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), Agent or such Lender (or such Participant) shall deliver to the Borrowers and such Lender granting such participation at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers or such Lender granting such participation such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrowers or such Lender granting such participation as may be necessary for the Borrowers and such Lender granting such participation to comply with their obligations under FATCA and to determine that such Lender or such Participant has complied with such Lender’s or such Participant’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement;
(iv) If any form or certification previously delivered by any Recipient expires or becomes obsolete or inaccurate in any respect, such Recipient shall update such form or certification or promptly notify Borrowers (or such Lender granting a participation) of its legal inability to do so; and
(v) Notwithstanding anything herein to the contrary, Agent shall deliver to Borrowers a duly executed IRS Form W-9.
(f) If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 9.1 (including by the payment of additional amounts pursuant to this Section 9.1), it shall pay to the applicable Loan Party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 9.1(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 9.1(f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 9.1(f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. For purposes of this Section 9.1(f), all references to “refund” shall include the monetary benefit of a credit received in lieu of a refund of Taxes.
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(g) Each party’s obligations under this Section 9.1 shall survive any assignment of rights by any Lender or any Participant and the repayment, satisfaction or discharge of all obligations under any Loan Document.
(h) For purposes of this Section 9.1, the term “applicable law” includes FATCA.
| 10. | GENERAL PROVISIONS. |
10.1 Notices.
(a) Notice by Approved Electronic Communications.
Agent, each Lender and each of its Affiliates is authorized to transmit, post or otherwise make or communicate, in its sole discretion (but shall not be required to do so), by Approved Electronic Communications in connection with this Agreement or any other Loan Document and the transactions contemplated therein, including the posting of Specified Materials by Agent to the Lending Parties on an Approved Electronic System. Agent is hereby authorized to establish procedures to provide access to and to make available or deliver, or to accept, notices, documents and similar items by posting to any Approved Electronic System. Each of the Loan Parties, Agent and each Lender hereby acknowledges and agrees that the use of Electronic Systems and Approved Electronic Communications is not necessarily secure and that there are risks associated with such use, including risks of interception, disclosure and abuse and each indicates it assumes and accepts such risks by hereby authorizing Agent, each Lender and each of its Affiliates to transmit Approved Electronic Communications. All Approved Electronic Systems and Approved Electronic Communications shall be provided “as is” and “as available”. None of Agent, any Lender or any of its Affiliates or Related Persons warrants the accuracy, adequacy or completeness of any Specified Materials, Electronic System or electronic transmission and disclaims all liability for errors or omissions therein. No warranty of any kind is made by Agent, any Lender or any of its Affiliates or Related Persons in connection with any Electronic System or electronic transmission, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects. Each Borrower and each other Loan Party executing this Agreement agrees that neither Agent, nor any Lender has responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Approved Electronic System or any Approved Electronic Communication or otherwise required for any Approved Electronic System or any Approved Electronic Communication.
No Approved Electronic Communications shall be denied legal effect merely because it is made electronically. Approved Electronic Communications that are not readily capable of bearing either a signature or a reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or logically associating with such Approved Electronic Communication, an E-Signature, upon which Agent, each Lender and the Loan Parties may rely and assume the authenticity thereof. Each Approved Electronic Communication containing a signature, a reproduction of a signature or an E-Signature shall, for all intents and purposes, have the same effect and weight as a signed paper original. Each E-Signature shall be deemed sufficient to satisfy any requirement for a “signature” and each Approved Electronic Communication shall be deemed sufficient to satisfy any requirement for a “writing”, in each case including pursuant to this Agreement, any other Loan Document, the Uniform Commercial Code, the Federal Uniform Electronic Transactions Act, the Electronic Signatures in Global and National Commerce Act and any substantive or procedural law governing such subject matter. Each party or beneficiary hereto agrees not to contest the validity or enforceability of an Approved Electronic Communication or E-Signature under the provisions of any applicable law requiring certain documents to be in writing or signed; provided, that nothing herein shall limit such party’s or beneficiary’s right to contest whether an Approved Electronic Communication or E-Signature has been altered after transmission.
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(b) All Other Notices.
All notices, requests, demands and other communications under or in respect of this Agreement or any transactions hereunder, other than those approved for or required to be delivered by Approved Electronic Communications (including via an Approved Electronic System or otherwise pursuant to Section 10.1(a)), shall be in writing and shall be personally delivered or mailed (by prepaid registered or certified mail, return receipt requested), sent by prepaid recognized overnight courier service, or by email to the applicable party at its address or email address indicated below,
If to Agent:
White Oak Commercial Finance, LLC
1155 Avenue of the Americas
New York, New York 10036
Attention: Glenn Schwartz
Email: gschwartz@whiteoakcf.com
with a copy to:
Paul Hastings LLP
200 Park Avenue
New York, New York 10166
Attention: Jennifer Yount and Rafael Alvarado
Email: jenniferyount@paulhastings.com; rafaelalvarado@paulhastings.com
If to any Lender, to the address set forth on Schedule F for such Lender.
If to Borrowers or any other Loan Party:
c/o Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
Attention: Guy Sirkes
Email: Guy.Sirkes@nineenergyservice.com
with a copy to:
Kirkland & Ellis LLP
609 Main Street
Houston, TX 77002
Attention: Mary Kogut, P.C. and James B. Kelly
Email: mary.kogut@kirkland.com; james.kelly@kirkland.com
or, as to each party, at such other address as shall be designated by such party in a written notice to the other party delivered as aforesaid. All such notices, requests, demands and other communications shall be deemed given (i) when personally delivered, (ii) three (3) Business Days after being deposited in the mails with postage prepaid (by registered or certified mail, return receipt requested), (iii) one (1) Business Day after being delivered to the overnight courier service, if prepaid and sent overnight delivery, addressed as aforesaid and with all charges prepaid or billed to the account of the sender, or (iv) when sent by email transmission to an email address designated by such addressee and the sender receives a confirmation of transmission.
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10.2 Severability. If any provision of this Agreement or any other Loan Document is held invalid or unenforceable, either in its entirety or by virtue of its scope or application to given circumstances, such provision shall thereupon be deemed modified only to the extent necessary to render same valid, or not applicable to given circumstances, or excised from this Agreement or such other Loan Document, as the situation may require, and this Agreement and the other Loan Documents shall be construed and enforced as if such provision had been included herein as so modified in scope or application, or had not been included herein or therein, as the case may be.
10.3 Integration. This Agreement and the other Loan Documents represent the final, entire and complete agreement between each Loan Party hereto and thereto, Agent and Lenders and supersede all prior and contemporaneous negotiations, oral representations and agreements, all of which are merged and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES THAT ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
10.4 Waivers. The failure of Agent or any Lender at any time or times to require any Loan Party to strictly comply with any of the provisions of this Agreement or any other Loan Documents shall not waive or diminish any right of Agent or any Lender later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other Loan Document shall be deemed to have been waived by any act or knowledge of Agent or any Lender or any of their agents or employees, but only by a specific written waiver signed by an authorized officer of Agent and delivered to Borrowers. Once an Event of Default shall have occurred, it shall be deemed to continue to exist and not be cured or waived unless specifically cured pursuant to the terms of this Agreement or waived in writing by an authorized officer of Agent and Required Lenders and delivered to Borrowers. Each Loan Party waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, Instrument, Account, General Intangible, Document, Chattel Paper, Investment Property or guaranty at any time held by Agent or any Lender on which such Loan Party is or may in any way be liable, and notice of any action taken by Agent or any Lender, unless expressly required by this Agreement, and notice of acceptance hereof.
10.5 Amendment.
(a) Subject to Section 2.1(d), no amendment, modification or waiver of any provision of this Agreement or any other Loan Document, and no consent or approval with respect to any departure by any Loan Party therefrom, shall be effective unless the same shall be in writing (which such writing may be provided via email to the extent acceptable to Agent) and signed (or sent) by Agent, the Required Lenders (or by Agent with the consent of the Required Lenders or by counsel to Agent with consent of Agent or the Required Lenders), and the Loan Parties (or by counsel to the Loan Parties), and then such waiver shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, modification, consent or approval shall, unless in writing (or email to the extent acceptable to Agent) and signed (or sent) by all the Lenders directly affected thereby (or by Agent with the consent of all the Lenders directly affected thereby or by counsel to Agent with the consent of all of the Lenders directly affected thereby), in addition to Agent, the Required Lenders (or by Agent with the consent of the Required Lenders), and the Borrowers, do any of the following:
(i) increase or extend the Revolving Commitment of such Lender (or reinstate any Revolving Commitments previously terminated);
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(ii) postpone or delay any date fixed for, or reduce or waive, any scheduled installment of principal or any payment of interest, Early Payment/Termination Premium, fees or other amounts (other than principal) due to such Lender hereunder or under any other Loan Document (for the avoidance of doubt, mandatory prepayments pursuant to Section 1.8(a) may be postponed, delayed, reduced, waived or modified with the consent of the Required Lenders);
(iii) reduce the principal of, or the rate of interest specified herein (it being agreed that waiver of the default interest margin shall only require the consent of Agent) or the amount of interest payable in cash specified herein on the Loans of such Lender, or of any Early Payment/Termination Premium, fees or other amounts payable hereunder or under any other Loan Document for such Lender;
(iv) change the percentage of the Revolving Commitments or of the aggregate unpaid principal amount of the Loans which shall be required for the Lenders or any of them to take any action hereunder;
(v) amend this Section 10.5 or, subject to the terms of this Agreement, the definition of Required Lenders, the definition of Pro Rata Share or any provision providing for consent or other action by all Lenders;
(vi) discharge any Loan Party from its respective payment Obligations under the Loan Documents, or release all or substantially all of the Collateral or the guarantees of the Obligations, except as otherwise may be provided in this Agreement or the other Loan Documents;
(vii) modify the Accounts Advance Rate (or any component definition thereof) or the Inventory Advance Rates or the advance rates set forth in the definition of “Fixed Asset Formula Amount”;
(viii) modify the definition of “Borrowing Base,” or any component or defined term within “Borrowing Base”;
(ix) change the general criteria for acceptability of Eligible Billed Accounts, Eligible Foreign Billed Accounts, Eligible Unbilled Accounts, Eligible Inventory, Eligible Equipment, Eligible Rolling Stock or Eligible Real Property;
(x) increase the Letter of Credit Limit;
(xi) amend or modify the second sentence of Section 1.2;
(xii) amend or modify Section 1.6(b); or
(xiii) amend or modify Section 4.2.
(b) No amendment, waiver or consent shall, unless in writing and signed by Agent, and the Required Lenders or all Lenders directly affected thereby or all the Lenders, as the case may be (or by Agent with the consent of the Required Lenders or all the Lenders directly affected thereby or all the Lenders), affect the rights or duties of Agent under this Agreement or any other Loan Document.
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(c) Notwithstanding anything to the contrary contained in this Section 10.5 or any other provision of this Agreement or any other Loan Document, Agent and the Borrower may amend or modify this Agreement and any other Loan Document (without the consent of any Lender) to (i) cure any ambiguity, omission, mistake, error, defect or inconsistency herein or therein, and (ii) grant a new Lien for the benefit of Agent and Lenders, extend an existing Lien over additional assets for the benefit of the Lenders or join additional Persons as Loan Parties.
(d) Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that any of the matters governed by Section 10.5(a)(i) through (iii) that affect such Defaulting Lender may not be amended without the consent of such Defaulting Lender.
(e) In the event that (i) Agent or Borrowers request the consent of a Lender pursuant to this Section 10.5 with respect to any action to be taken by Lenders or Agent hereunder that requires the consent, authorization, or agreement of a Lender, and such consent, authorization or agreement is denied by such Lender but otherwise granted by the Required Lenders, (ii) any Lender (other than Agent) makes a request makes any request for increased costs pursuant to Section 1.9(b) or (iii) any Lender (other than Agent) invokes the Lender Documentation Exception), then Agent or Borrowing Agent may, at its option, require such Lender to assign its interest in the Loans and its Commitment of the Revolving Loans to Agent or to another Lender or to any other Person designated by Agent or Borrower and reasonably acceptable to Agent (the “Designated Lender”), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrowers. In the event Agent or Borrowing Agent elects to require any Lender to assign its interest to Agent or to the Designated Lender, Agent or Borrower will so notify such Lender in writing within thirty (30) days following such Lender’s denial, and such Lender will assign its interest to Agent or the Designated Lender no later than five (5) Business Days following receipt of such notice pursuant to the applicable documentation executed by such Lender, Agent or the Designated Lender, as appropriate, and Agent.
10.6 Time of Essence. Time is of the essence in the performance by each Loan Party of each and every obligation under this Agreement and the other Loan Documents.
10.7 Expenses, Fee and Costs Reimbursement. Borrowers hereby agree to promptly and jointly and severally pay (a) all fees, costs and expenses of Agent and each Lender (including Agent’s underwriting fees) and (b) all out of pocket fees, costs and expenses of legal counsel to, and appraisers, accountants, consultants and other professionals and advisors retained by or on behalf of, Agent or such Lender, all of which shall be reasonable, prior to the occurrence and continuance of an Event of Default, in connection with: (i) all loan proposals and commitments pertaining to the transactions contemplated hereby (whether or not such transactions are consummated), (ii) the examination, review, due diligence investigation, documentation, negotiation, and closing of the transactions contemplated by the Loan Documents (whether or not such transactions are consummated), (iii) the creation, perfection and maintenance of Liens pursuant to the Loan Documents, (iv) the performance by Agent or any Lender of its rights and remedies under the Loan Documents, (v) the administration of the Loans (including usual and customary fees for wire transfers and other transfers or payments received by Agent or any Lender on account of any of the Obligations) and Loan Documents, (vi) any amendments, modifications, consents and waivers to and/or under any and all Loan Documents (whether or not such amendments, modifications, consents or waivers are consummated), (vii) any periodic public record searches conducted by or at the request of Agent or any Lender (including, title investigations and public records searches), pending litigation and tax lien searches and searches of applicable corporate, limited liability company, partnership and related records concerning the continued existence, organization and good standing of certain Persons), (viii) protecting, storing, insuring, handling, maintaining, auditing, examining, valuing or selling any Collateral, (ix) any litigation, dispute, suit or proceeding relating to any Loan Document, and (x) any workout, collection, bankruptcy, insolvency, receivership, liquidation, wind-up and other enforcement proceedings under any and all of the Loan Documents (it being agreed that such costs and expenses may include the costs and expenses of workout consultants, investment bankers, financial consultants, appraisers, valuation firms and other professionals and advisors retained by or on behalf of Agent as otherwise provided for in this Agreement), and (c) without limitation of the preceding clauses (a) and (b), all out of pocket costs and expenses of Agent in connection with Agent’s reservation of funds in anticipation of the funding of the initial Loans to be made hereunder by Agent or any Lender). Any fees, costs and expenses owing by Borrowers or any other Loan Party hereunder shall be due and payable within thirty (30) days after Borrowers’ receipt of written demand therefor from Agent or a Lender entitled to reimbursement pursuant to this Section 10.7. This Section 10.7 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
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10.8 Benefit of Agreement; Assignability.
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of Borrowers, each other Loan Party hereto, Agent and each Lender; provided, (a) that neither any Borrower nor any other Loan Party may assign or transfer any of its rights under this Agreement without the prior written consent of Agent, and any prohibited assignment shall be void and (b) assignments by any Lender shall be subject to this Section 10.8. No consent by Agent to any assignment shall release any Loan Party from its liability for any of the Obligations. Agent and each Lender shall have the right to assign all or any of its rights and obligations under the Loan Documents to one or more other Persons subject to Section 10.8(b), and each Loan Party agrees, to the extent applicable, to execute any agreements, instruments and documents requested by Agent in connection with any such assignments. Notwithstanding any provision of this Agreement or any other Loan Document to the contrary, each Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement and the other Loan Documents to secure obligations of such Lender, including any pledge or grant to secure obligations to a Federal Reserve Bank, financial institution or other funding source (other than any Loan Party, any Affiliate thereof or any natural person) or any trustee or agent therefor in support of obligations owing by such Lender to such Person(s).
(b) Lender Assignments. Each Lender may sell, transfer, negotiate or assign all or a portion of its rights and obligations hereunder (including all or a portion of its Revolving Commitments and its rights and obligations with respect to its portion of the Loans) (each a “Sale”) to:
(i) any existing Lender;
(ii) any Affiliate or Approved Fund of any existing Lender;
(iii) any other Person acceptable to (x) Agent (such acceptance by Agent not to be unreasonably withheld or delayed) and (y) Borrowers (such acceptance by Borrowers not to be unreasonably withheld or delayed); provided, however, that:
(A) in the event an Event of Default has occurred and is continuing the consent of Borrowers shall not be required for any Sale;
(B) the consent of Borrower shall be deemed to have been given unless an objection is delivered to Agent within ten (10) Business Days after written notice of a proposed Sale is delivered to Borrowers;
(C) for each Revolving Loan, the aggregate outstanding principal amount (determined as of the effective date of the applicable Assignment and Acceptance) of the Revolving Loan and the Revolving Commitments subject to any such Sale shall be in a minimum amount of $1,000,000, unless such Sale is made to an existing Lender or an Affiliate or Approved Fund of any existing Lender, is of the assignor’s (together with its Affiliates and Approved Funds) entire interest in such facility or is made with the prior consent of Agent.
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Notwithstanding the foregoing, Agent’s refusal to accept a Sale to a Loan Party, a Subsidiary or Affiliate of a Loan Party, or the imposition of conditions or limitations (including limitations on voting) upon Sales to such Persons, shall not be deemed to be unreasonable. No assignment hereunder shall be permitted if to any Ineligible Assignee.
(c) Procedure. The assignee and assignor parties to each Sale made in reliance on clause (b) above (other than those described in clause (e) below) shall execute and deliver to Agent an Assignment and Acceptance evidencing such Sale, together with any existing note subject to such Sale (or any affidavit of loss therefor acceptable to Agent), any Tax forms required to be delivered pursuant to Section 9 and payment of an assignment fee in the amount of $3,500 to Agent, unless waived or reduced by Agent, provided that (1) if a Sale by a Lender is made to an Affiliate or an Approved Fund of such assigning Lender, then no assignment fee shall be due in connection with such Sale, and (2) if a Sale by a Lender is made to an assignee that is not an Affiliate or Approved Fund of such assignor Lender, and concurrently to one or more Affiliates or Approved Funds of such assignee, then only one assignment fee of $3,500 (unless waived or reduced by Agent) shall be due in connection with such Sale. Upon receipt of all the foregoing, and conditioned upon such receipt and, if such Sale is made in accordance with Section 10.9, upon Agent consenting to such Sale, from and after the effective date specified in the Assignment and Acceptance, Agent shall record or cause to be recorded in the Register the information contained in such Assignment and Acceptance.
(d) Effectiveness. Subject to the Register recording requirements by Agent relating to an Assignment and Acceptance pursuant to Section 10.9, (i) the assignee thereunder shall become a party hereto and, to the extent that rights and obligations under the Loan Documents have been assigned to such assignee pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender, (ii) any applicable note shall be transferred to such assignee through such entry and (iii) the assignor thereunder shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except for those surviving the termination of the Revolving Commitments and the payment in full of the Obligations) and be released from its obligations under the Loan Documents, other than those relating to events or circumstances occurring prior to such assignment (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto).
10.9 Recordation of Assignment. In respect of any Sale of all or any portion of any Lender’s interest in this Agreement and/or any other Loan Documents at any time and from time to time, the following provisions shall be applicable:
(a) Borrowers, or any agent appointed by Borrowers, shall maintain a register (the “Register”) in which there shall be recorded the name and address of each Person holding any Loans or any commitment to lend hereunder, and the principal amount and stated interest payable to such Person hereunder or committed by such Person under such Person’s lending commitment. Borrowers hereby irrevocably appoint Agent (and/or any subsequent Agent appointed by Agent then maintaining the Register) as Borrowers’ non-fiduciary agent for the purpose of maintaining the Register.
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(b) In connection with any Sale as aforesaid, the transferor/assignor shall deliver to Agent then maintaining the Register an assignment and assumption agreement executed by the transferor/assignor and the transferee/assignee, setting forth the specifics of the subject transaction, including but not limited to the amount and nature of Obligations and/or lending commitments being transferred or assigned (and being assumed, as applicable), and the proposed effective date of such transfer or assignment and the related assumption (if applicable).
(c) Subject to receipt of any required tax forms reasonably required by Agent, Agent shall record the subject transfer, assignment and assumption in the Register. Anything contained in this Agreement or other Loan Document to the contrary notwithstanding, no Sale shall be effective until it is recorded in the Register pursuant to this Section 10.9(c). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error; and each Borrower, Agent and each Lender shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement and the other Loan Documents. The Register shall be available for inspection by each Borrower and each Lender at any reasonable time and from time to time upon reasonable prior notice.
10.10 Participations. Anything in this Agreement or any other Loan Document to the contrary notwithstanding, each Lender may, at any time and from time to time, without the consent of, or notice to, any Borrower or Agent, and without in any manner affecting or impairing the validity of any Obligations, sell participations (each, a “Participation”) to any Person (other than a natural Person, any Loan Party or any Loan Party’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Revolving Commitments and/or the Loans owing to it). In the event of a sale by any Lender of a participating interest to a Participant, (a) such Lender’s obligations hereunder and under the other Loan Documents shall remain unchanged for all purposes, (b) Borrowers and Agent shall continue to deal solely and directly with each other in connection with such Lender’s rights and obligations hereunder and under the other Loan Documents and (c) all amounts payable by Borrowers shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender; provided, however, a Participant shall be entitled to the benefits of Section 9.1 as if it were a Lender if Borrowers are notified of the Participation and the Participant complies with Section 9.1(e). Borrowers agree that if amounts outstanding under this Agreement or any other Loan Document are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement and the other Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement; provided, that such right of set-off shall not be exercised without the prior written consent of such Lender and shall be subject to the obligation of each Participant to share with such Lender its share thereof. Borrowers also agree that each Participant shall be entitled to the benefits of Section 10.9 as if it were a Lender. Notwithstanding the granting of any such participating interests: (x) Borrowers shall look solely to Lenders for all purposes of this Agreement, the Loan Documents and the transactions contemplated hereby, (y) Borrowers shall at all times have the right to rely upon any amendments, waivers or consents signed by Agent and Required Lenders as being binding upon all of the Participants, and (z) all communications in respect of this Agreement and such transactions shall remain solely between Borrowers, Agent and Lenders (exclusive of Participants) hereunder. Each Lender granting a participation hereunder shall maintain, as a non-fiduciary agent of Borrowers, a register as to the participations granted and transferred under this Section containing the same information specified in Section 10.9 on the Register as if each Participant were a Lender to the extent required to cause the Loans to be in registered form for the purposes of Sections 163(f), 165(j), 871, 881, and 4701 of the Code.
10.11 Headings; Construction. Section and subsection headings are used in this Agreement only for convenience and do not affect the meanings of the provisions that they precede.
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10.12 USA PATRIOT Act Notification; CAML.
(a) Agent hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act, it may be required to obtain, verify and record certain information and documentation that identifies such Person, which information may include the name and address of each such Person and such other information that will allow Agent to identify such Persons in accordance with the USA PATRIOT Act.
(b) Each Loan Party acknowledges that, pursuant to CAML, Agent may be required to obtain, verify and record information regarding directors, authorized signing officers, direct or indirect shareholders or other Persons in control of such Loan Parties, and the transactions contemplated hereby. Each Loan Party shall promptly provide all such information, including supporting documentation and other evidence, as may be reasonably requested by Agent, or any prospective assignee or participant of a Lender, in order to comply with any applicable CAML, whether now or hereafter in existence.
(c) If Agent has ascertained the identity of a Loan Party or any authorized signatories of a Loan Party for the purposes of applicable CAML, then Agent:
(i) shall be deemed to have done so as an agent for each Lender, and this Agreement shall constitute a “written agreement” in such regard between each Lender and Agent within the meaning of applicable CAML; and
(ii) shall provide to each Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness.
Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each Lender agrees that Agent has no obligation to ascertain the identity of a Loan Party or any authorized signatories of a Loan Party on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from a Loan Party or any such authorized signatory in doing so
10.13 Counterparts; Email Signatures. This Agreement may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or by email as a “.pdf” or “.tiff” attachment shall be effective as delivery of a manually executed counterpart of this Agreement. It is understood and agreed that, subject to applicable law, the words “execution”, “signed”, “signature”, “delivery” and words of like import in or relating to any Loan Document shall be deemed to include any E-Signature, delivery or the keeping of any record in electronic form (including deliveries by facsimile, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall have the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system to the extent and as provided for in applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, Parts 2 and 3 of the Personal Information Protection and Electronic Documents Act (Canada), the Electronic Commerce Act 2000 (Ontario), the Electronic Transactions Act (British Columbia), the Electronic Transactions Act (Alberta), or any similar state, federal or provincial laws based on the Uniform Electronic Transactions Act or the Uniform Electronic Commerce Act of the Uniform Law Conference of Canada.
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10.14 GOVERNING LAW. THIS AGREEMENT, ALONG WITH ALL OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED OTHERWISE IN SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES (EXCEPT SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATION LAW). FURTHER, THE LAW OF THE STATE OF NEW YORK SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR CONNECTED TO OR WITH THIS AGREEMENT AND ALL SUCH OTHER LOAN DOCUMENTS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES (EXCEPT SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATION LAW).
10.15 WAIVERS AND JURISDICTION; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS. ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR IN ANY OTHER COURT (IN ANY JURISDICTION) SELECTED BY AGENT IN ITS SOLE DISCRETION, AND EACH BORROWER AND EACH OTHER LOAN PARTY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFOREMENTIONED COURTS. EACH BORROWER AND EACH OTHER LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, OR BASED ON UPON 28 U.S.C. § 1404, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING AND ADJUDICATION OF ANY SUCH ACTION, SUIT OR PROCEEDING IN ANY OF THE AFOREMENTIONED COURTS AND AMENDMENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. EACH BORROWER AND EACH OTHER LOAN PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER, AMENDMENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND EACH OTHER LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON ANY BORROWER OR ANY OTHER LOAN PARTY AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWERS’ NOTICE ADDRESS (ON BEHALF OF THE BORROWERS OR SUCH LOAN PARTY) SET FORTH IN SECTION 10.1 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE MAIL, OR, AT AGENT’S OPTION, BY SERVICE UPON BORROWERS OR ANY OTHER LOAN PARTY IN ANY OTHER MANNER PROVIDED UNDER THE RULES OF ANY SUCH COURTS.
10.16 Publication. Each Borrower and each other Loan Party consents to the publication by Agent and each Lender of a tombstone, press releases or similar advertising material relating to the financing transactions contemplated by this Agreement, and Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.
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10.17 Confidentiality. Agent and each Lender agrees to use commercially reasonable efforts not to disclose Confidential Information to any Person without the prior consent of Borrowers; provided, however, that nothing herein contained shall limit any disclosure of the tax structure of the transactions contemplated hereby, or the disclosure of any information (a) to the extent required by applicable law, statute, rule, regulation or judicial process or in connection with the exercise of any right or remedy under any Loan Document, or as may be required in connection with the examination, audit or similar investigation of Agent, any Lender or any of their Affiliates, (b) to examiners, auditors, accountants or any regulatory authority, (c) to the officers, partners, managers, directors, employees, agents and advisors (including independent auditors, lawyers and counsel) of Agent, any Lender or any of their Affiliates, (d) in connection with any litigation or dispute which relates to this Agreement or any other Loan Document to which Agent or any Lender is a party or is otherwise subject, (e) to a subsidiary or Affiliate of Agent or any Lender, (f) to any assignee or participant (or prospective assignee or participant) which agrees to be bound by this Section 10.17 and (g) to any lender or other funding source of any Lender (each reference to Lender in the foregoing clauses shall be deemed to include the actual and prospective assignees and participants referred to in clause (f) and the lenders and other funding sources referred to in clause (g), as applicable for purposes of this Section 10.17), and provided further, that in no event shall Agent or any Lender be obligated or required to return any materials furnished by or on behalf of Borrowers or any other Loan Party. The obligations of Agent and each Lender under this Section 10.17 shall supersede and replace the obligations of Agent and each Lender under any confidentiality letter or provision in respect of this financing or any other financing previously signed and delivered by Agent or any Lender to Borrowers or any of their respective Affiliates.
10.18 Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent and in such capacity to (i) borrow, (ii) request advances, (iii) request the issuance of Letters of Credit, (iv) sign and endorse notes, (v) execute and deliver all instruments, documents, applications, security agreements, reimbursement agreements and letter of credit agreements for Letters of Credit and all other certificates, notice, writings and further assurances now or hereafter required hereunder, (vi) make elections regarding interest rates, (vii) give instructions regarding Letters of Credit and agree with the issuer thereof upon any amendment, extension or renewal of any Letter of Credit and (viii) otherwise take action under and in connection with this Agreement and the other Loan Documents, all on behalf of and in the name such Borrower, and hereby authorizes Agent to pay over or credit all Loan proceeds hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an accommodation to the Borrowers and at their request. Neither Agent nor any Lender shall incur liability to any Borrower as a result thereof. To induce Agent and each Lender to do so and in consideration thereof, each Borrower hereby indemnifies Agent and each Lender and holds Agent and each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any Lender by any Person arising from or incurred by reason of the handling of the financing arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or instruction from Borrowing Agent or any other action taken by Agent or any Lender with respect to this Section 10.18 except due to willful misconduct or gross (not mere) negligence by the indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable judgment).
(c) All Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals and forbearance granted by Agent and Lenders to any Borrower, failure of Agent or any Lender to give any Borrower notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve its rights against any Borrower, the release by Agent and Lenders of any Collateral now or thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is unconditional and unaffected by prior recourse by Agent and Lenders to the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof. Each Borrower waives all suretyship defenses.
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10.19 Agent Provisions.
(a) Appointment and Duties.
(i) Each Lender hereby appoints WOCF (together with any successor Agent pursuant to Section 10.19(j)) as Agent hereunder and authorizes Agent to (i) execute and deliver the Loan Documents and accept delivery thereof on its behalf from any Loan Party, (ii) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to Agent under such Loan Documents and (iii) exercise such powers as are reasonably incidental thereto.
(ii) Without limiting the generality of clause (a)(i) above, Agent shall have the sole and exclusive right and authority (to the exclusion of the Lenders), and are each hereby authorized, to (A) act as the disbursing and collecting agent for the Lenders with respect to all payments and collections arising in connection with the Loan Documents (including in any proceeding described in Sections 7.1(g) or 7.1(h) or any other bankruptcy, insolvency or similar proceeding), and each Person making any payment in connection with any Loan Document to any Lender is hereby authorized to make such payment to Agent, (B) file and prove claims and file other documents necessary or desirable to allow the claims of the Lenders with respect to any Obligation in any proceeding described in Section 7.1(g) or (h) or any other bankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise act on behalf of such Person), (C) act as collateral agent for Agent and each Lender for purposes of the perfection of all Liens created by such agreements and all other purposes stated therein, (D) manage, supervise and otherwise deal with the Collateral, (E) take such other action as is necessary or desirable to maintain the perfection and priority of the Liens created or purported to be created by the Loan Documents, (F) except as may be otherwise specified in any Loan Document, exercise all remedies given to Agent and the Lenders with respect to the Loan Parties and/or the Collateral, whether under the Loan Documents, applicable requirements of law or otherwise and (G) execute any amendment, consent or waiver under the Loan Documents on behalf of any Lender that has consented in writing to such amendment, consent or waiver.
(iii) Under the Loan Documents, Agent (A) is acting solely on behalf of the Lenders (except to the limited extent provided in Section 10.9 with respect to the Register), with duties that are entirely administrative in nature, notwithstanding the use of the defined terms “Agent” or the terms “agent” and “collateral agent” and similar terms in any Loan Document to refer to Agent, which terms are used for title purposes only, (B) is not assuming any obligation under any Loan Document other than as expressly set forth therein or any role as agent, fiduciary or trustee of or for any Lender or any other Person and (C) shall have no implied functions, responsibilities, duties, obligations or other liabilities under any Loan Document, and each Lender by accepting the benefits of the Loan Documents hereby waives and agrees not to assert any claim against Agent based on the roles, duties and legal relationships expressly disclaimed in clauses (A) through (C) above.
(b) Binding Effect. Each Lender, by accepting the benefits of the Loan Documents, agrees that (i) any action taken by Agent or the Required Lenders (or, if expressly required hereby, a greater proportion of the Lenders) in accordance with the provisions of the Loan Documents, (ii) any action taken by Agent in reliance upon the instructions of Required Lenders (or, where so required, such greater proportion) and (iii) the exercise by Agent or the Required Lenders (or, where so required, such greater proportion) of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders.
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(c) Use of Discretion.
(i) Agent shall not be required to exercise any discretion or take, or to omit to take, any action, including with respect to enforcement or collection, except any action it is required to take or omit to take (A) under any Loan Document or (B) pursuant to instructions from the Required Lenders (or, where expressly required by the terms of this Agreement, a greater proportion of the Lenders).
(ii) Notwithstanding clause (c)(i) above, Agent shall not be required to take, or to omit to take, any action (A) unless, upon demand, Agent receives an indemnification satisfactory to it from the Lenders (or, to the extent applicable and acceptable to Agent, any other Person) against all liabilities that, by reason of such action or omission, may be imposed on, incurred by or asserted against Agent or any Related Person thereof or (B) that is, in the opinion of Agent or its counsel, contrary to any Loan Document or applicable requirement of law.
(d) Exclusive Right to Enforce Rights and Remedies. Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, Agent in accordance with the Loan Documents for the benefit of all the Lenders. In the event of a foreclosure or similar enforcement action by Agent on any of the Collateral pursuant to a public or private sale or other disposition (including pursuant to section 363(k), section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code), Agent (or any Lender, except with respect to a “credit bid” pursuant to section 363(k), section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code) may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and Agent, as agent for and representative of the Lenders (but not any Lender or Lenders in its or their respective individual capacities) shall be entitled, upon instructions from Required Lenders, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale or disposition, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Agent at such sale or other disposition. The foregoing shall not prohibit (i) Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under the other Loan Documents, (ii) Agent or any Lender from exercising setoff rights in accordance with Section 7.3(e) or (iii) subject to the following paragraph, Agent or any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any bankruptcy or other debtor relief law; and provided, further, that if at any time there is no Person acting as Agent hereunder and under the other Loan Documents, then the Required Lenders shall have the rights otherwise ascribed to Agent pursuant to Sections 7.2 and 7.3 and in addition to the matters set forth in clauses (ii) and (iii) of the preceding proviso and subject to Section 7.3(e)(ii), any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders. In case of the pendency of any bankruptcy or other debtor relief proceeding or any other judicial proceeding relative to any Loan Party, Agent (irrespective of whether the principal of any Loans shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Agent shall have made any demand on any Loan Party) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Revolving Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and Agent allowed in such judicial proceeding and to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to Agent and, in the event that Agent shall consent to the making of such payments directly to the Lenders, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent hereunder.
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(e) Delegation of Rights and Duties. Agent may, (a) upon any term or condition it specifies, delegate or exercise any of their respective rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any Loan Document by or through any trustee, co-agent, employee, attorney-in-fact and any other Person (including any Lender) and (b) award the title of joint lead arranger to any Affiliate of Agent. Any such Person shall benefit from this Section 10.19 to the extent provided by Agent.
(f) Reliance and Liability.
(i) Agent may, without incurring any liability hereunder, (A) rely on the Register to the extent set forth in Section 10.9, (B) consult with any of its Related Persons and, whether or not selected by it, any other advisors, accountants and other experts (including advisors to, and accountants and experts engaged by, any Loan Party) and (C) rely and act upon any document and information (including those transmitted by Approved Electronic Communication) and any telephone message or conversation, in each case believed by it to be genuine and transmitted, signed or otherwise authenticated by the appropriate parties.
(ii) Agent and its Related Persons shall not be liable for any action taken or omitted to be taken by any of them under or in connection with any Loan Document, and each Lender and Loan Party hereby waive and shall not assert (and Borrower shall cause each other Loan Party not a signatory hereto to waive and agree not to assert) any right, claim or cause of action based thereon, except to the extent of liabilities resulting from the gross negligence or willful misconduct of Agent or, as the case may be, such Related Person (each as determined in a final, non-appealable judgment by a court of competent jurisdiction) in connection with the duties expressly set forth herein. Without limiting the foregoing, Agent: (A) shall not be responsible or otherwise incur liability to any Lender or other Person for any action or omission taken in reliance upon the instructions of the Required Lenders or for the actions or omissions of any of its Related Persons selected with reasonable care (other than employees, officers and directors of Agent, when acting on behalf of Agent); (B) shall not be responsible to any Lender or other Person for the due execution, legality, validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or in connection with, any Loan Document; (C) make no warranty or representation, and shall not be responsible, to any Lender or other Person for any statement, document, information, representation or warranty made or furnished by or on behalf of any Loan Party or any Related Person of any Loan Party in connection with any Loan Document or any transaction contemplated therein or any other document or information with respect to any Loan Party, whether or not transmitted or (except for documents expressly required under any Loan Document to be transmitted to the Lenders) omitted to be transmitted by Agent, including as to completeness, accuracy, scope or adequacy thereof, or for the scope, nature or results of any due diligence performed by Agent in connection with the Loan Documents; and (D) shall not have any duty to ascertain or to inquire as to the performance or observance of any provision of any Loan Document, whether any condition set forth in any Loan Document is satisfied or waived, as to the financial condition of any Loan Party or as to the existence or continuation or possible occurrence or continuation of any Default or Event of Default and shall not be deemed to have notice or knowledge of such occurrence or continuation unless it has received a notice from Borrower or any Lender describing such Default or Event of Default clearly labeled “notice of default” (in which case Agent shall promptly give notice of such receipt to all Lenders). For each of the items set forth in clauses (A) through (D) above, each Lender and the Loan Parties hereby waive and agree not to assert (and Borrower shall cause each other Loan Party not a signatory hereto to waive and agree not to assert) any right, claim or cause of action it might have against Agent based thereon.
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(g) Agent Individually. Agent and its Affiliates may make loans and other extensions of credit to, acquire Equity Interests of, engage in any kind of business with, any Loan Party or Affiliate thereof as though it were not acting as Agent, and may receive separate fees and other payments therefor. To the extent Agent or any of its Affiliates makes any portion of the Revolving Loans or otherwise becomes a Lender hereunder, it shall have and may exercise the same rights and powers hereunder and shall be subject to the same obligations and liabilities as any other Lender and the terms “Lender” and “Required Lender” and any similar terms shall, except where otherwise expressly provided in any Loan Document, include Agent or such Affiliate, as the case may be, in its individual capacity as Lender or as one of the Required Lenders.
(h) Lender Credit Decision.
(i) Each Lender acknowledges that it shall, independently and without reliance upon Agent or any Lender or any of their Related Persons or upon any document (including any offering and disclosure materials in connection with the syndication of the Loans) solely or in part because such document was transmitted by Agent or any of its Related Persons, conduct its own independent investigation of the financial condition and affairs of each Loan Party and make and continue to make its own credit decisions in connection with entering into, and taking or not taking any action under, any Loan Document or with respect to any transaction contemplated in any Loan Document, in each case based on such documents and information as it shall deem appropriate. Except for documents expressly required by any Loan Document to be transmitted by Agent to the Lenders, Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Loan Party or any Affiliate of any Loan Party that may come in to the possession of Agent or any of its Related Persons.
(ii) If any Lender has elected to abstain from receiving material non-public information (“MNPI”) concerning the Loan Parties or their Affiliates such Lender acknowledges that, notwithstanding such election, Agent and/or the Loan Parties will, from time to time, make available syndicate-information (which may contain MNPI) as required by the terms of, or in the course of administering the Revolving Loans to the credit contact(s) identified for receipt of such information on the Lender’s administrative questionnaire who are able to receive and use all syndicate-level information (which may contain MNPI) in accordance with such Lender’s compliance policies and contractual obligations and applicable law, including federal and state securities laws; provided, that if such contact is not so identified in such questionnaire, the relevant Lender hereby agrees to promptly (and in any event within one (1) Business Day) provide such a contact to Agent and the Loan Parties upon request therefor by Agent or the Loan Parties. Notwithstanding such Lender’s election to abstain from receiving MNPI, such Lender acknowledges that if such Lender chooses to communicate with Agent, it assumes the risk of receiving MNPI concerning the Loan Parties or their Affiliates.
(i) Expenses; Indemnities; Withholding.
(i) Each Lender agrees to reimburse Agent and its Related Persons (to the extent not reimbursed by any Loan Party), promptly upon demand, severally and ratably, for any reasonable costs and expenses (including fees, charges and disbursements of financial, legal and other advisors and Other Taxes paid in the name of, or on behalf of, any Loan Party) that may be incurred by Agent or its Related Persons in connection with the preparation, syndication, execution, delivery, administration, modification, consent, waiver or enforcement of, or the taking of any other action (whether through negotiations, through any work-out, bankruptcy, restructuring or other legal or other proceeding (including preparation for and/or response to any subpoena or request for document production relating thereto or otherwise)) in respect of, or legal advice with respect to its rights or responsibilities under, any Loan Document.
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(ii) Each Lender further agrees to indemnify, defend and hold Agent and its Related Persons (to the extent not reimbursed by any Loan Party), in each case, severally and ratably, harmless from and against liabilities (including, to the extent not indemnified pursuant to Section 9, Taxes, interests and penalties imposed for not properly withholding or backup withholding on payments made to or for the account of any Lender) that may be imposed on, incurred by or asserted against Agent or its Related Persons in any matter relating to or arising out of, in connection with or as a result of any Loan Document, any related document or any other act, event or transaction related, contemplated in or attendant to any such document, or, in each case, any action taken or omitted to be taken by Agent or its Related Persons under or with respect to any of the foregoing; provided, that no Lender shall be liable to Agent or its Related Persons to the extent such liability has resulted primarily from the gross negligence or willful misconduct of Agent or, as the case may be, such Related Person, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.
(iii) To the extent required by any requirement of law, Agent may withhold from any payment to any Lender under a Loan Document an amount equal to any applicable withholding Tax (including withholding Taxes imposed under Chapters 3 and 4 of Subtitle A of the Code). If the IRS or any other Governmental Authority asserts a claim that Agent did not properly withhold Tax from amounts paid to or for the account of any Lender (because the appropriate certification form was not delivered, was not properly executed, or fails to establish an exemption from, or reduction of, withholding Tax with respect to a particular type of payment, or because such Lender failed to notify Agent or any other Person of a change in circumstances which rendered the exemption from, or reduction of, withholding Tax ineffective, failed to maintain a Register and/or Participant Register or for any other reason), or Agent reasonably determines that it was required to withhold Taxes from a prior payment but failed to do so, such Lender shall promptly indemnify Agent fully for all amounts paid, directly or indirectly, by Agent as Tax or otherwise, including penalties and interest, and together with all expenses incurred by Agent, including legal expenses, allocated internal costs and out-of-pocket expenses. Agent may offset against any payment to any Lender under a Loan Document, any applicable withholding Tax that was required to be withheld from any prior payment to such Lender but which was not so withheld, as well as any other amounts for which Agent is entitled to indemnification from such Lender under this Section 10.19(i)(iii).
(j) Resignation of Agent.
(i) Agent may resign at any time by delivering notice of such resignation to the Lenders and Borrowers, effective on the date set forth in such notice or, if no such date is set forth therein, upon the date such notice shall be effective in accordance with the terms of this Section 10.19(j)(i). If Agent delivers any such notice, the Required Lenders shall have the right to appoint a successor Agent. If, after thirty (30) days after the date of the retiring Agent’s notice of resignation, no successor Agent has been appointed by the Required Lenders that has accepted such appointment, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent from among the Lenders. Each resignation and appointment under this clause (i) shall be subject to the prior consent of Borrowers which may not be unreasonably withheld but shall not be required during the continuance of an Event of Default.
(ii) Effective immediately upon its resignation, (A) the retiring Agent shall be discharged from its duties and obligations under the Loan Documents, (B) the Lenders shall assume and perform all of the duties of the retiring Agent until a successor Agent shall have accepted a valid appointment hereunder, (C) the retiring Agent and its Related Persons shall no longer have the benefit of any provision of any Loan Document other than with respect to any actions taken or omitted to be taken while such retiring Agent was, or because such retiring Agent had been, validly acting as Agent under the Loan Documents and (D) subject to its rights under Section 10.19(c), the retiring Agent shall take such action as may be reasonably necessary to assign to the successor Agent its rights as Agent under the Loan Documents. Effective immediately upon its acceptance of a valid appointment as Agent a successor Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Agent under the Loan Documents.
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(k) Release of Collateral or Guarantors. Each Lender hereby consents to the release and hereby directs Agent to release (or, in the case of clause (ii)(B) below, release or subordinate) the following:
(i) any Subsidiary of Borrower from its guaranty of any Obligation if all of the Equity Interests of such Subsidiary owned by any Loan Party are sold or transferred in a transaction expressly permitted under the Loan Documents (including pursuant to a waiver or consent), to the extent that, after giving effect to such transaction, such Subsidiary would not be required to guaranty any Obligations pursuant to the Loan Documents; and
(ii) any Lien held by Agent for the benefit of the Lenders against (A) any Collateral that is sold, transferred, conveyed or otherwise disposed of by a Loan Party in a transaction expressly permitted by the Loan Documents (including pursuant to a valid waiver or consent), to the extent all Liens required to be granted in such Collateral pursuant to the Loan Documents after giving effect to such transaction have been granted, (B) any property subject to a Lien permitted hereunder in reliance upon Section 5.24(k)(iv) and Section 5.24(l)(vi) and (C) all of the Collateral and all Loan Parties, upon (x) the occurrence of the Termination Date and (y) to the extent requested by Agent, receipt by Agent and the Lenders of liability releases from the Loan Parties each in form and substance satisfactory to Agent.
Each Lender hereby directs Agent, and Agent hereby agrees, upon receipt of reasonable advance written notice from Borrower, to execute and deliver or file such documents and to perform other actions reasonably necessary to release the guaranties and Liens when and as directed in this Section 10.19(k).
(l) No Other Duties. Notwithstanding anything to the contrary contained herein, no Person identified herein or on the facing page or signature pages hereof or otherwise holding the title of “Arranger”, “Lead Arranger” or “Joint Lead Arranger”, if any, shall have or be deemed to have any right, power, obligation, liability, responsibility or duty under this Agreement or the other Loan Documents, other than: (a) in such Person’s capacity as: (i) Agent or a Lender hereunder and (ii) a Released Party; or (b) under Section 10.19.
10.20 [Reserved].
10.21 Defaulting Lender. If any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a) such Defaulting Lender’s Revolving Commitment and outstanding Revolving Loans shall be excluded for purposes of calculating the fee payable to Lenders in respect of the Unused Line Fee, and such Defaulting Lender shall not be entitled to receive any Unused Line Fee with respect to such Defaulting Lender’s Revolving Commitment or Revolving Loans (in each case not including any fee in connection with any portion of such Defaulting Lenders Revolving Commitment that has been reallocated to non-Defaulting Lenders pursuant to Section 10.21(d) hereof).
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(b) the Revolving Commitments and Loans of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 10.5).
(c) in the event a Defaulting Lender has defaulted on its obligation to fund any Revolving Loan, or purchase any participation pursuant to Section 1.5 hereof, until such time as the Default Excess with respect to such Defaulting Lender has been reduced to zero, any prepayments or repayments on account of the Revolving Loans or participations pursuant to Section 1.5, in each case to the extent they would be otherwise be payable to such Defaulting Lender, shall be applied first, to the payment of any amounts owing by such Defaulting Lender to Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the LC Issuer of Lender Letters of Credit and to each Letter of Credit guarantor/indemnitor in respect of Supported Letters of Credit; third, to provide cash collateral in the amount of 103% of any LC Issuer’s Fronting Exposure with respect to such Defaulting Lender; fourth, as the Borrowers may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Agent; fifth, if so determined by Agent and the Borrowers, to be held in a Deposit Account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) provide cash collateral in the amount of 103% of the LC Issuers’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Lender Letters of Credit issued under this Agreement; sixth, to the payment of any amounts owing to Agent, the Lenders, any LC Issuers or any Letter of Credit guarantor/indemnitor as a result of any judgment of a court of competent jurisdiction obtained by Agent, any Lender, any LC Issuer or Letter of Credit guarantor/indemnitor against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided, that, if (x) such payment is a payment of the principal amount of any Loans or Letter of Credit Liabilities in respect of which such Defaulting Lender has not fully funded its appropriate share and (y) such Loans or Letter of Credit Liabilities were made at a time when the conditions set forth in Section 1.6 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and Letter of Credit Liabilities owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or Letter of Credit Liabilities owed to, such Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this Section 10.21(c) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(d) If any Letter of Credit Liabilities exist at the time a Lender becomes a Defaulting Lender then:
(i) so long as no Default or Event of Default then exists, all or any part of such Letter of Credit Liabilities shall be reallocated among the non-Defaulting Lenders in accordance with their respective Pro Rata Shares of the total Revolving Commitments (calculated without regard to such Defaulting Lender’s Revolving Commitments), provided that no Lender’s Revolving Exposure shall exceed its Revolving Commitment;
(ii) if the reallocation described in paragraph (i) above cannot, or can only partially, be effected, the Borrowers shall within one (1) Business Day following notice by Agent, cash collateralize such Defaulting Lender’s Pro Rata Share of all Letter of Credit Liabilities (after giving effect to any partial reallocation pursuant to paragraph (i) above) for so long as any such Letter of Credit Liabilities remain are outstanding;
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(iii) if the Borrowers cash collateralize any portion of such Defaulting Lender’s Pro Rata Share of the Letter of Credit Liabilities pursuant to this Section 10.21(d), the Borrowers shall not be required to pay any Letter of Credit Fees to such Defaulting Lender with respect to the portion of such Defaulting Lender’s Pro Rata Share of the Letter of Credit Liabilities which have been cash collateralized (and the Defaulting Lender shall not be entitled to receive any such fees);
(iv) if the Defaulting Lender’s Pro Rata Share of the Letter of Credit Liabilities is reallocated pursuant to this Section 10.21(d), then the Letter of Credit Fees payable to the non-Defaulting Lenders shall be adjusted accordingly; and
(v) if any Defaulting Lender’s Pro Rata Share of the Letter of Credit Liabilities is not cash collateralized or reallocated pursuant to this Section 10.21(d), then without prejudice to any rights or remedies of the applicable Letter of Credit guarantor/indemnitor or LC Issuer hereunder, all Letter of Credit Fees payable hereunder with respect to such Defaulting Lender’s Pro Rata Share of the Letter of Credit Liabilities shall be payable to the applicable LC Issuer or if applicable, the Letter of Credit guarantor/indemnitor.
(e) So long as any Lender is a Defaulting Lender, no LC Issuer shall be required to issue, extend or increase any Letter of Credit and neither Agent nor any Lender shall be required to provide or enter into any Support Agreement in respect of a Letter of Credit, in each case unless it is reasonably satisfied that the related exposure will be 100% covered by the Revolving Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrowers, and participating interests in any such newly issued, extended or increased Letter of Credit or Support Agreement shall be allocated among non-Defaulting Lenders in a manner consistent with Section 10.21(d) (and Defaulting Lenders shall not participate therein).
(f) No reallocation permitted pursuant to Section 10.21(d) shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.
(g) In the event that Agent, the LC Issuers and each Letter of Credit guarantor/indemnitor each agrees in writing that a Defaulting Lender has adequately remedied all matters which caused such Lender to become a Defaulting Lender, then the Pro Rata Shares of the Letter of Credit Liabilities of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Revolving Commitment and on such date such Lender shall purchase at par such of the Revolving Loans of the other Lenders or participations in the Revolving Loans as Agent shall determine may be necessary in order for such Lender to hold such Revolving Loans or participations in accordance with its Pro Rata Share; provided, that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while that Lender was a Defaulting Lender; provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to any other Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.
(h) The rights and remedies with respect to a Defaulting Lender under this Section 10.21 are in addition to any other rights and remedies which the Borrowers, Agent, the LC Issuers or any Letter of Credit guarantor/indemnitor, as applicable, may have against such Defaulting Lender.
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10.22 Erroneous Payments.
(a) Each Lender hereby agrees that (i) if Agent notifies such Lender that Agent has determined in its sole discretion that any funds received by such Lender from Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Lender (whether or not known to such Lender (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise), individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Lender shall promptly, but in no event later than one (1) Business Day thereafter, return to Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Lender to the date such amount is repaid to Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (ii) such Lender shall not assert any right or claim to the Erroneous Payment, and hereby waives any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by Agent for the return of any Erroneous Payments received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine. A notice of Agent to any Lender under this subsection (a) shall be conclusive, absent manifest error.
(b) Without limiting subsection (a) above, each Lender hereby further agrees that if it receives an Erroneous Payment from Agent (or any of its Affiliates) (i) that is in an amount different than (other than a de minimis difference), or on a different date from, that specified in a notice of payment sent by Agent (or any of its Affiliates) with respect to such Erroneous Payment (an “Erroneous Payment Notice”), or (ii) that was not preceded or accompanied by an Erroneous Payment Notice, it shall be on notice that, in each such case, an error has been made with respect to such Erroneous Payment. Each Lender further agrees that, in each such case, or if it otherwise becomes aware an Erroneous Payment (or portion thereof) may have been sent in error, such Lender shall promptly notify Agent of such occurrence and, upon demand from Agent, it shall promptly, but in no event later than one (1) Business Day thereafter, return to Agent the amount of any such Erroneous Payment (or portion thereof) that was received by such Lender to the date such amount is repaid to Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation from time to time in effect.
(c) Each Loan Party hereby agrees that (i) in the event an Erroneous Payment (or portion thereof) is not recovered from any Lender that has received such Erroneous Payment (or portion thereof) for any reason, Agent shall be subrogated to all the rights of such Lender with respect to such amount and (ii) an Erroneous Payment that does not consist of the Loan Parties’ funds, or to the extent an Erroneous Payment consists of the Loan Parties’ funds and such Erroneous Payment has been returned to the applicable Loan Parties, such Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by any Loan Party hereunder or under any of the other Loan Documents.
(d) Each party’s obligations under this Section 10.22 shall survive the resignation or replacement of Agent or any transfer of rights or obligations by, or the replacement of, a Lender, the termination of this Agreement, the termination of the Revolving Commitments and the payment in full of the Obligations.
10.23 [Reserved].
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10.24 Waivers Regarding Insolvency Proceedings.
(a) Each Loan Party hereby covenants and agrees that it will not institute against, or join with, encourage or cooperate with any other Person in instituting against, any Lender, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings, under any federal or state bankruptcy or similar law; provided, however, that nothing in this Section 10.24 shall constitute a waiver of any right, if any, to indemnification, reimbursement or other payment from any Lender pursuant to this Agreement. In the event that any Loan Party takes action in violation of this Section 10.24, Agent shall file or cause to be filed an answer with the bankruptcy court or otherwise properly contesting the filing of such a petition by such Loan Party against the applicable Lender or the commencement of such action and raising the defense that such Loan Party has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert. The provisions of this Section 10.24(a) shall survive the termination of this Agreement.
(b) Notwithstanding any other provision of this Agreement to the contrary, each Loan Party agrees that any claims of such Loan Party against any Lender in respect of any obligation of a Lender hereunder, if any, are limited to such Lender and the assets thereof (subject to the provisions of Section 10.24(a) hereof). No recourse shall be had against any principal, director, officer, employee, beneficiary, shareholder, partner, member, trustee, agent or affiliate of any Lender or any person owning, directly or indirectly, any legal or beneficial interest in a Lender, or any successors or assigns of any of the foregoing for the payment of any amounts payable hereunder. For the avoidance of doubt, this Section 10.24(b) shall survive the termination of this Agreement.
(c) For the avoidance of doubt, nothing in this Section 10.24 shall be construed to limit or prejudice the right of the Loan Parties and their Affiliates to file a petition for relief as to themselves under the Bankruptcy Code, any Canadian Insolvency Law or under any equivalent bankruptcy or insolvency law.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, Borrowers, each other Loan Party signatory hereto, Agent and each Lender have signed this Agreement as of the date first set forth above.
| BORROWERS: | ||
| NINE ENERGY SERVICE, INC. | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
| NINE ENERGY CANADA ULC | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
| CDK PERFORATING, LLC | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
| CREST PUMPING TECHNOLOGIES, LLC | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
| REDZONE COIL TUBING, LLC | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
| NINE DOWNHOLE TECHNOLOGIES, LLC | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
[Signature Page to Loan and Security Agreement – Nine Energy Service, Inc.]
| GUARANTORS: | ||
| NINE ENERGY SERVICE, LLC | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
| MOTI HOLDCO, LLC | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
| MAGNUM OIL TOOLS GP, LLC | ||
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
| MAGNUM OIL TOOLS INTERNATIONAL, LTD | ||
| By: | Magnum Oil Tools GP, LLC, its general partner | |
| By: | /s/ Guy Sirkes | |
| Name: | Guy Sirkes | |
| Title: | Executive Vice President and Chief Financial Officer | |
[Signature Page to Loan and Security Agreement – Nine Energy Service, Inc.]
| AGENT: | ||
| WHITE OAK COMMERCIAL FINANCE, LLC, | ||
| as Agent | ||
| By: | /s/ Thomas K. Otte | |
| Name: | Thomas K. Otte | |
| Title: | Manager | |
| LENDERS: | ||
| WHITE OAK ABL 3, LLC, | ||
| as a Lender | ||
| By: | /s/ Thomas K. Otte | |
| Name: | Thomas K. Otte | |
| Title: | Manager | |
[Signature Page to Loan and Security Agreement – Nine Energy Service, Inc.]
SCHEDULE A
DESCRIPTION OF CERTAIN TERMS
| 1. Loan Limits for Revolving Loans and Letters of Credit: | |
| (a) Maximum Revolving Facility Amount: | $135,000,000 |
| (b) Advance Rates: | |
| (i) Billed Accounts Advance Rate: | 92.5%; provided, that if Dilution with respect to any Borrower exceeds 1.00%, Agent may, at its option (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Reserve on account of such excess (the “Dilution Reserve”). |
| (ii) Unbilled Accounts Advance Rate: | 85%; provided, that if Dilution exceeds 1.00%, Agent may, at its option (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Dilution Reserve |
| (iii) Foreign Billed Accounts Advance Rate: | 50%; provided, that if Dilution exceeds 1.00%, Agent may, at its option (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Dilution Reserve |
| (iv) Inventory Advance Rate: | The lesser of (i) 70% and (ii) 85% of the NOLV Factor of the applicable Eligible Inventory |
| (c) Sublimit on advances against Eligible Foreign Billed Accounts | $3,000,000 |
| (d) Sublimit on advances against Eligible Unbilled Accounts: | $6,000,000 |
| (e) Sublimit on advances against Inventory consisting of raw materials | $1,000,000 |
| (f) Letter of Credit Limit: | $5,000,000 |
| 3. Interest Rates: | |
| (a) Revolving Loans: | An interest rate per annum equal to the SOFR Index Rate plus the Applicable Margin |
| (b) Letters of Credit: | A rate per annum equal to the Applicable Margin |
A-1
| 4. Maximum Days re Eligible Accounts: | |
| (a) Maximum days after original invoice date for Eligible Billed Accounts and Eligible Foreign Billed Accounts: | Ninety (90) days (with respect to Eligible Billed Accounts)
One hundred (100) days (with respect to Eligible Foreign Billed Accounts) |
| (b) Maximum days after original invoice due date for Eligible Billed Accounts and Eligible Foreign Billed Accounts: | Sixty (60) days |
| (c) Maximum days after services rendered for Eligible Unbilled Accounts: | Thirty (30) days |
| 5. Agent’s Bank: | Wells Fargo Bank, N.A. Account # 2090000511099 ABA Routing # 121000248 Reference: Nine Energy (which bank may be changed from time to time by notice from Agent to Borrowers) |
| 6. Scheduled Maturity Date: | March 5, 2029 |
| 7. Revolving Commitment of Lenders: |
| Lender | Revolving Commitment | Pro Rata Share |
| White Oak ABL 3, LLC | $135,000,000.00 | 100.00% |
| Total: | $135,000,000.00 | 100.00% |
A-2
SCHEDULE B
DEFINITIONS
Unless otherwise defined herein, the following terms are used in this Agreement as defined in the UCC: Accounts, Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Electronic Chattel Paper, Farm Products, Fixtures, General Intangibles, Goods, Health-Care-Insurance Receivables, Instruments, Inventory, Letter-of-Credit Rights, Proceeds, Supporting Obligations and Tangible Chattel Paper, provided that when used to define a category or categories of the Collateral which is subject to the PPSA, such terms shall include the equivalent category or categories of property set forth in the applicable PPSA.
As used in this Agreement, the following terms have the following meanings:
“ABR Index Rate” means, as of any SOFR Index Adjustment Date, a rate per annum equal to the highest of: (a) the Federal Funds Rate plus one half of one percent (0.50%); (b) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as reasonably determined by Agent) or any similar release by the Federal Reserve Board (as reasonably determined by Agent), and (c) the Floor.
“ABR Index Rate Loans” means Loans that bear interest at a rate based upon the ABR Index Rate.
“Acceptable Appraisal” means, with respect to an appraisal of Equipment, Rolling Stock, Inventory, Real Property or any other property, the most recent appraisal of such property received by Agent (a) from an appraisal company satisfactory to Agent in its Permitted Discretion, (b) the scope and methodology (including, to the extent relevant, any sampling procedure employed by such appraisal company) of which are satisfactory to Agent in its Permitted Discretion, and (c) the results of which are satisfactory to Agent in its Permitted Discretion.
“Accounts Advance Rate” means, collectively, the Billed Accounts Advance Rate, the Foreign Billed Accounts Advance Rate and the Unbilled Accounts Advance Rate.
“Administrative Agent Account” means a special account established by Agent (f/b/o White Oak ABL 3, LLC) at Wells Fargo Bank, N.A. (account number ending x1099) or, from time to time, another bank or banks reasonably acceptable to Agent.
“Administrative Detail Form” means an administrative detail form supplied by, or otherwise acceptable to, Agent.
“Affiliate” means, with respect to any Person, any other Person in control of, controlled by, or under common control with the first Person, and any other Person who has a substantial interest, direct or indirect, in the first Person or any of its Affiliates, including, any officer or director of the first Person or any of its Affiliates; provided, however, that neither Agent, any Lender or any of its Affiliates shall be deemed an “Affiliate” of any Borrower for any purposes of this Agreement. For the purpose of this definition, a “substantial interest” shall mean the direct or indirect legal or beneficial ownership of more than ten (10%) percent of any class of equity or similar interest.
“Agent’s Office” means Agent’s address set forth in Section 10.1(b) or such other address as Agent may from time to time notify the Borrowing Agent and each other Lending Party.
B-1
“Agreement” and “this Agreement” have the meanings set forth in the heading to this Agreement.
“Anti-Corruption Laws” means all laws, rules, ordinances and regulations of any jurisdiction applicable to the Company or any of its Subsidiaries from time to time concerning or relating to bribery, money laundering or corruption, including the United States Foreign Corrupt Practice Act of 1997 and the U.K. Bribery Act 2010.
“Applicable Margin” means, with respect to any Revolving Loan or Letter of Credit, or any portion of a Revolving Loan or Letter of Credit, that was made based on (a) the Domestic Accounts Availability or the Inventory Availability (the “Category 1 Loans”), the Applicable Margin as set forth under the heading “Applicable Margin for Category 1 Loans” and (b) the M&E Availability, the Real Property Availability, the SOFA Availability or the Foreign Accounts Availability (the “Category 2 Loans”), the Applicable Margin as set forth under the heading “Applicable Margin for Category 2 Loans”.
| Tier | Fixed Charge Coverage Ratio | Applicable
Margin for Category 1 Loans |
Applicable Margin for Category 2 Loans |
| I | Less than 1.1 to 1.00 | 4.00% | 4.50% |
| II | Greater than or equal to 1.1 to 1.00 but less than or equal to 1.40 to 1.00 | 3.75% | 4.25% |
| III | Greater than 1.40 to 1.00 | 3.50% | 4.00% |
As of the Closing Date and through and including the date immediately prior to the first Adjustment Date (as defined below), the applicable percentage specified in Tier III above. Following the completion of the first fiscal month ended after the Closing Date, the Applicable Margin shall be adjusted, if necessary, on a monthly basis effective as of (x) in the case of the first such Adjustment Date, April 4, 2026, and (y) thereafter, the first calendar day of each month immediately after the applicable monthly financial statements and Compliance Certificate were delivered (or required to be delivered) in accordance with Section 5.15(b)(i) (each such day described in the foregoing clauses (x) and (y), an “Adjustment Date”) to the applicable percent per annum set forth in the pricing table above corresponding to the Fixed Charge Coverage Ratio for the trailing twelve month period ending on the last day of the most recently completed fiscal month for which such financial statements were delivered (or were required to be delivered) prior to the applicable Adjustment Date (provided that it is understood and agreed any Adjustment Date based upon January financial statements shall be March 1st of the then current fiscal year).
If the Borrowers shall fail to deliver the financial statements, certificates and/or other information required under Schedule D by the dates required pursuant to such Schedule, each Applicable Margin shall be conclusively presumed to equal the highest Applicable Margin specified in the pricing table set forth above until the date of delivery of such financial statements, certificates and/or other information, at which time the rate will be adjusted based upon the Fixed Charge Coverage Ratio reflected in such statements. Notwithstanding anything to the contrary contained herein, no downward adjustment in any Applicable Margin shall be made on any Adjustment Date on which any Event of Default shall have occurred and be continuing. Notwithstanding anything to the contrary contained herein, immediately and automatically upon the occurrence of any Event of Default, each Applicable Margin shall increase to and equal the highest Applicable Margin specified in the pricing table set forth above and shall continue at such highest Applicable Margin until the date (if any) on which such Event of Default shall be waived in accordance with the provisions of this Agreement, at which time the rate will be adjusted based upon the Fixed Charge Coverage Ratio reflected on the most recently delivered financial statements and Compliance Certificate delivered by Borrowers to Agent pursuant to Schedule D. Any increase in interest rates and/or other fees payable by Borrowers under this Agreement and the other Loan Documents pursuant to the provisions of the foregoing sentence shall be in addition to and independent of any increase in such interest rates and/or other fees resulting from the occurrence of any Event of Default (including, if applicable, any Event of Default arising from a breach of Schedule D hereof) and/or the effectiveness of the Default Rate provisions of Section 2.1 hereof.
B-2
If, as a result of any restatement of, or other adjustment to, the financial statements of Borrowers or for any other reason, Agent determines that (a) the Fixed Charge Coverage Ratio as previously calculated as of any applicable date for any applicable period was inaccurate, and (b) a proper calculation of the Fixed Charge Coverage Ratio for any such period would have resulted in different pricing for such period, then (i) if the proper calculation of the Fixed Charge Coverage Ratio would have resulted in a higher interest rate and/or fees (as applicable) for such period, automatically and immediately without the necessity of any demand or notice by Agent or any other affirmative act of any party, the interest accrued on the applicable outstanding Obligations and/or the amount of the fees accruing for such period under the provisions of this Agreement and the other Loan Documents shall be deemed to be retroactively increased by, and Borrowers shall be obligated to immediately pay to Agent for the ratable benefit of Lenders an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period; and (ii) if the proper calculation of the Fixed Charge Coverage Ratio would have resulted in a lower interest rate and/or fees (as applicable) for such period, then the interest accrued on the applicable outstanding Loans and Letter of Credit Liabilities and the amount of the fees accruing for such period under the provisions of this Agreement and the other Loan Documents shall be deemed to remain unchanged, and Agent and Lenders shall have no obligation to repay interest or fees to the Borrowers; provided, that, if as a result of any restatement or other event or other determination by Agent a proper calculation of the Fixed Charge Coverage Ratio would have resulted in a higher interest rate and/or fees (as applicable) for one or more periods and a lower interest rate and/or fees (as applicable) for one or more other periods (due to the shifting of income or expenses from one period to another period or any other reason), then the amount payable by Borrowers pursuant to clause (i) above shall be based upon the excess, if any, of the amount of interest and fees that should have been paid for all applicable periods over the amounts of interest and fees actually paid for such periods.
“Approved Electronic Communication” means each notice, demand, communication, information, document and other material transmitted, posted or otherwise made or communicated by e-mail, facsimile, or any Approved Electronic System, whether owned, operated or hosted by Agent, any of its Affiliates or any other Person, that any party is obligated to, or otherwise chooses to, provide to Agent pursuant to this Agreement or any other Loan Document, including any financial statement, financial and other report, notice, request, certificate and other information or material; provided that Approved Electronic Communications shall not include any notice, demand, communication, information, document or other material that Agent specifically instructs a Person to deliver in physical form.
“Approved Electronic System” means an Electronic System designated as approved by Agent in writing to Borrowing Agent and the Lenders.
“Approved Fund” means, with respect to any Lender, any Person (other than a natural Person) that (i)(a) is or will be engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business or (b) temporarily warehouses loans for any Lender or any Person described in clause (a) above and (ii) is advised or managed by (a) such Lender, (b) any Affiliate of such Lender or (c) any Person (other than an individual) or any Affiliate of any Person (other than an individual) that administers or manages such Lender.
“Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in the form of Exhibit H to this Agreement.
B-3
“Authorized Officer” means the chief executive officer, chief operating officer, chief financial officer, chief accounting officer or treasurer, the vice president of finance, the vice president of tax (or, in each case, an officer which is the functional equivalent of the foregoing) of any Borrower and each other Person designated from time to time by any of the foregoing officers of any Borrower in a notice to Agent, which designation shall continue in force and effect until terminated in a notice to Agent from any of the foregoing officers of any Borrower.
“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).
“Bankruptcy Court” has the meaning set forth in the recitals.
“Base Rate” means an interest rate equal to: (a) the sum of (i) the SOFR Index Rate, as adjusted as of each SOFR Index Adjustment Date, plus (ii) the Applicable Margin in effect from time to time per annum; or (b) with respect to the affected Loans, during the existence of a Market Disruption Event (commencing on the first day of the first month following such Market Disruption Event and for each subsequent month occurring during such Market Disruption Event with respect to any outstanding affected Loans), the sum (i) of the ABR Index Rate, as adjusted as of each SOFR Index Adjustment Date, plus (ii) the Applicable Margin in effect from time to time per annum.
“Billed Accounts Advance Rate” means the percentage set forth in Section 1(b)(i) of Schedule A.
“Blocked Account” has the meaning set forth in Section 4.1.
“Borrowers” has the meaning set forth in the Preamble to this Agreement.
“Borrowing Agent” means the Company, acting for itself in its capacity as a Borrower or in its capacity as agent for all of the Borrowers (including itself).
“Borrowing Base” means, as of any date of determination, the Dollar Equivalent amount as of such date of determination of:
(a) the aggregate amount of Eligible Billed Accounts multiplied by the Billed Accounts Advance Rate; plus
(b) the aggregate amount of Eligible Unbilled Accounts multiplied by the Unbilled Accounts Advance Rate (but in no event to exceed the Unbilled Accounts Sublimit); plus
(c) the aggregate amount of Eligible Foreign Billed Accounts multiplied by the Foreign Billed Accounts Advance Rate (but in no event to exceed the Foreign Billed Accounts Sublimit); plus
(d) the lower of cost or market value of Eligible Inventory multiplied by the applicable Inventory Advance Rate (but in no event to exceed, with respect to Inventory constituting raw materials, the Raw Material Inventory Sublimit); plus
(e) the Fixed Asset Formula Amount; plus
(f) the lesser of (i) $10,000,000 and (ii) an amount equal to 10% of the Borrowing Base (calculated without giving effect to this clause (f)); minus
(g) all Reserves which Agent has established pursuant to Section 1.2 (including those to be established in connection with any requested Revolving Loan or Letter of Credit).
B-4
“Borrowing Base Certificate” means a certificate of an Authorized Officer of Borrowing Agent setting forth a calculation of the Borrowing Base and Excess Availability as of the last day of the most recently ended calendar month or calendar week as required pursuant to Section 5.15(c)(i), as applicable, in form and detail acceptable to Agent.
“Business Day” means (a) any day other than a Saturday, Sunday or any other day on which Agent or commercial banks in New York are authorized to close, or are in fact closed, (b) any day that any of the Federal Reserve Bank of New York or the New York Stock Exchange is closed, and (c) any other day included in the recommended holiday schedule of the Loan Syndications and Trading Association for calculating delayed compensation; provided, that, if such day relates to any interest rate settings as to a Loan that is based on SOFR, any fundings, disbursements, settlements, and payments in respect of any Loan accruing interest based upon the SOFR Index Rate, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Loan, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“Business Optimization Costs and Savings” means those certain costs and expenses paid or payable by the Loan Parties in connection with the transition, restructuring, integration and business optimization of the assets of the Loan Parties and other costs related to replacing services to be performed for the Loan Parties’ business, including in the case of each of the foregoing all one-time costs and charges in connection with the following: (i) restructuring, business optimization, set-up, recertification and integration, (ii) retention and severance, (iii) systems and information technology procurement, establishment and optimization, (iv) rebranding, (v) contract termination, (vi) the start-up, closure, relocation or reconfiguration, consolidation, or opening of facilities and future lease commitments, (vii) recruiting, retention, relocation, signing bonuses, severance and salary for interim employees, (viii) consulting fees and expenses not payable to any Affiliate of the Loan Parties, and (ix) interim salary and bonus.
“Capital Expenditures” means all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of Borrowers, but excluding expenditures made in connection with the acquisition, replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with cash awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.
“Capitalized Lease” means any lease which is or should be capitalized on the balance sheet of the lessee thereunder in accordance with GAAP.
“CAML” means the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), Part II.1 of the Criminal Code (Canada), the Special Economic Measures Act (Canada), the United Nations Act (Canada), and other applicable anti-money laundering and/or anti-terrorism laws or government sanctions and “know your client” policies, regulations, laws or rules applicable in Canada, including any guidelines or orders thereunder.
“Canada” means the country of Canada, together with any province or territory thereof and any political subdivision of any of them.
“Canadian Defined Benefit Plan” means any Canadian Pension Plan which contains a “defined benefit provision” as defined in subsection 147.1(1) of the Income Tax Act (Canada).
B-5
“Canadian Dollars” or “Cdn$” means the lawful currency of Canada, as in effect from time to time.
“Canadian Insolvency Law” means legislation in Canada (or any province thereof) relating to bankruptcy, insolvency, reorganization, arrangement, compromise or re-adjustment of debt, liquidation, dissolution or winding-up, or any similar legislation, and specifically, includes, for greater certainty, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), and the Winding-up and Restructuring Act (Canada), each as now and hereafter in effect, and any successors to such statutes and any proceeding under applicable corporate law seeking an arrangement or compromise of some or all of the debts of a Person or a stay of proceedings to enforce some or all claims of creditors against a Person.
“Canadian Loan Parties” means Nine Canada or any other Loan Party incorporated or otherwise organized under the laws of Canada or any province or territory thereof.
“Canadian Pension Event” means (a) the voluntary whole or partial wind-up of a Canadian Pension Plan by any Loan Party or any Subsidiary; (b) the filing of a notice of intent to terminate in whole or in part a Canadian Pension Plan or the treatment of a Canadian Pension Plan amendment as a termination or partial termination; (c) the institution of proceedings by a Governmental Authority to terminate in whole or in part or have a trustee appointed to administer a Canadian Pension Plan, or (d) any other event or condition which might constitute grounds for the termination of, winding up or partial termination or winding up or the appointment of trustee to administer, any Canadian Pension Plan.
“Canadian Pension Plans” means any plan or arrangement that is required to be registered under Canadian federal or provincial pensions standards legislation and is established, maintained or contributed to or required to be contributed to by a Loan Party for its employees or former employees, but does not include the Canada Pension Plan or the Quebec Pension Plan as maintained by the Government of Canada or the Province of Quebec, respectively.
“Canadian Security Agreement” means a collateral pledge agreement in form and substance reasonably acceptable to Agent governed by the laws of the Province of Alberta and the federal laws of Canada applicable therein dated as of the Closing Date made by Borrowers and the other grantors from time to time party thereto in favor of Agent.
“Canadian Security Documents” means (a) the Canadian Security Agreement, (b) the Canadian patent security agreement made by Nine Energy Canada ULC and the other grantors from time to time party thereto in favor of Agent, (c) the Canadian trademark security agreement made by Nine Energy Canada ULC and the other grantors from time to time party thereto in favor of Agent, and (d) each document (including, without limitation, drafts of any PPSA financing statement) required by the Canadian Security Agreement to be filed, registered or recorded to create, in favor of Agent, for the benefit of itself and the Lenders, a first priority and perfected security interest upon the Collateral that constitutes personal property that is located in Canada.
“Cash Dominion Event” means the occurrence of any of the following: (a) Excess Availability is less than $9,000,000, or (b) an Event of Default has occurred and is continuing.
“Cash Dominion Period” means the period following the occurrence and during the continuance of a Cash Dominion Event during which Agent has exercised its option under Section 4.1 of this Agreement to have exclusive access to the Blocked Accounts.
B-6
“Category 1 Loans” has the meaning assigned to such term in the definition of “Applicable Margin.”
“Category 2 Loans” has the meaning assigned to such term in the definition of “Applicable Margin.”
“Chapter 11 Cases” has the meaning set forth in the recitals.
“Closing Date” means March 5, 2026.
“Closing Date Appraisal” means that certain appraisal report prepared by Hilco dated effective as of February 17, 2026 and delivered by the Loan Parties to Agent on February 27, 2026.
“CME Term SOFR Page” means, as of any time on any SOFR Index Adjustment Date, the display designated as “CME Term SOFR Rates” on the website of CME Group Benchmark Administration Limited at such time on such date (or, if such display is unavailable, then on any successor or substitute page of such service, or any successor to, or substitute for, such service, providing rate quotations comparable to those currently provided on such page of such service, as reasonably determined by Agent from time to time for purposes of providing forward-looking term rates for SOFR).
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” means all property and interests in property in or upon which a security interest, mortgage, pledge or other Lien is granted pursuant to this Agreement or the other Loan Documents, including all Real Property Collateral and of the property of each Loan Party described in Section 3.1.
“Collateral Account” means all Deposit Accounts, commodity accounts and securities accounts of any Loan Party, other than Excluded Deposit Accounts.
“Custodial Agreement” means any collateral agency agreement or similar agreement in form and substance reasonably acceptable to Agent, among Agent, the Loan Parties party thereto and Title Servicing Agent, as the same may hereafter be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Collections” has the meaning set forth in Section 4.1.
“Compliance Certificate” means a compliance certificate substantially in the form of Exhibit F hereto to be signed by an Authorized Officer of Borrowing Agent.
“Confidential Information” means confidential information that any Loan Party furnishes to Agent or any Lender pursuant to any Loan Document concerning any Loan Party’s business, but does not include any such information once such information has become, or if such information is, generally available to the public or available to Agent or any Lender (or other applicable Person) from a source other than the Loan Parties which is not, to Agent’s or any Lender’s knowledge, bound by any confidentiality agreement in respect thereof.
“Confirmation Order” means the Order (I) Approving the Debtors’ Disclosure Statement for the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and its Debtor Affiliates Pursuant to Chapter 11 of The Bankruptcy Code, (II) Confirming the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and its Debtor Affiliates Pursuant to Chapter 11 of The Bankruptcy Code, and (III) Granting Related Relief [Docket No. 189].
B-7
“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 ownership, by contract, or otherwise, and the terms “Controlled by” or “under common Control with” shall have the correlative meanings.
“Control Agreement” means any agreement entered into among a depository institution, commodities intermediary or securities intermediary at which a Loan Party maintains a Deposit Account, securities account or commodity account, such Loan Party and Agent, pursuant to which Agent obtains control (within the meaning of the UCC) over such Deposit Account, securities account or commodity account, in form and substance reasonably satisfactory to Agent.
“Controlled Account” means a Deposit Account, securities account or commodity account that is subject to a Control Agreement.
“Copyright Collateral” means all copyrights of any Loan Party, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of such Loan Party’s rights, titles and interests in and to all copyrights registered in the United States Copyright Office or anywhere else in the world, including those copyright registrations or applications therefor set forth in Section 37 of the Information Certificate(s), and registrations and recordings thereof and all applications for registration thereof, whether pending or in preparation, all copyright licenses, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and Proceeds of suit, which are owned or licensed by such Loan Party.
“Covenant Testing Period” means the period (a) commencing on any day that Excess Availability is less than the lesser of (x) 7.5% of the Line Cap then in effect and (y) $9,000,000 and (b) continuing until Excess Availability is greater than or equal to the lesser of (x) 7.5% of the Line Cap then in effect and (y) $9,000,000 at all times for a period of thirty (30) consecutive days.
“Default” means any event which with notice or passage of time, or both, would constitute an Event of Default.
“Default Excess” means with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of all Revolving Loans (calculated as if all Defaulting Lenders (other than such Defaulting Lender) had funded their respective Pro Rata Shares of all Revolving Loans) over the aggregate outstanding principal amount of all Revolving Loans of such Defaulting Lender.
“Default Rate” has the meaning set forth in Section 2.1.
B-8
“Defaulting Lender” means, subject to Section 10.21(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies Agent and Borrowing Agent in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Agent, or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified Borrowing Agent and Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by Agent or Borrowing Agent, to confirm in writing to Agent and Borrowing Agent that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Agent and Borrowing Agent), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 10.21(b)) upon delivery of written notice of such determination to Borrowing Agent, and each other Lender.
“Defaulting Lender Rate” means (a) for the first three days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Revolving Loans that bear interest based upon the ABR Index Rate (inclusive of the Applicable Margin).
“Dilution” means, as of any date of determination, with respect to any Borrower, a percentage, based upon the experience of the immediately prior twelve (12) months, that is the result of dividing the Dollar Equivalent amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to such Borrower’s Accounts during such period, by (b) such Borrower’s billings with respect to Accounts during such period.
“Dilution Reserve” has the meaning set forth in Section 1(b)(i) of Schedule A.
“DIP Credit Agreement” has the meaning set forth in the recitals.
“DIP Lenders” has the meaning set forth in the recitals.
“DIP Loans” shall mean the “Loans” under and as defined in the DIP Credit Agreement made by the DIP Lenders to the Borrowers pursuant to the DIP Credit Agreement that are outstanding immediately prior to the Closing Date.
“Disbursement Account” means that certain Deposit Account of the Company maintained at JPMorgan Chase Bank, N.A., with an account number ending x8231 (or such other Deposit Account that is a Controlled Account identified by the Company to Agent from time to time in writing following the Closing Date in Section 41 of the Information Certificate).
B-9
“Disqualified Equity Interest” 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) or upon the happening of any event, matures or is mandatorily redeemable for any consideration other than another Equity Interest (which would not constitute a Disqualified Equity Interest), pursuant to a sinking fund obligation or otherwise (except as a result of a change in control or asset sale so long as any rights of the holders thereof upon the occurrence of such change in control or asset sale event shall be subject to prior to the Termination Date), or is convertible or exchangeable for Indebtedness or redeemable for any consideration other than any Equity Interest (which would not constitute a Disqualified Equity Interest) at the option of the holder thereof, in whole or in part, on or prior to the date that is one hundred eighty (180) days after the earlier of (a) the Maturity Date and (b) the Termination Date; provided that, if such Equity Interest is issued pursuant to a Plan for the benefit of the Company or its Subsidiaries or their officers or employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.
“Dollar Equivalent” means, at any time, (a) as to any amount denominated in Dollars, the amount hereof at such time, and (b) as to any amount denominated in a currency other than Dollars, the equivalent amount in Dollars as determined by Agent at such time that such amount could be converted into Dollars by Agent according to prevailing exchange rates selected by Agent.
“Dollars” or “$” means United States Dollars, lawful currency for the payment of public and private debts.
“Domestic Accounts Availability” means, at any time of determination, an amount equal to the sum of the clauses (a) and (b) of the definition of Borrowing Base, less the corresponding Reserves applied thereto pursuant to Section 1.2.
“Domestic Subsidiary” means any Subsidiary that is either (a) incorporated or organized under the laws of the United States, any State thereof or the District of Columbia or (b) disregarded for U.S. federal income tax purposes and the parent of such Subsidiary is either the Company or any other Domestic Subsidiary.
“E-Signature” means an electronic symbol, digital signature or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Early Payment/Termination Premium” has the meaning set forth in the Fee Letter.
“EBITDA” means, for any period, Net Income of the Company and its consolidated Subsidiaries for such period, plus (a) without duplication and to the extent deducted in determining Net Income for such period, the sum of (i) Interest Expense for such period, (ii) provisions for taxes based on income, profits or capital (including federal, state, provincial, franchise, excise and similar taxes) net of tax refunds associated with such taxes, (iii) all amounts attributable to depreciation and amortization expense for such period, (iv) any extraordinary or non-recurring non-cash charges for such period, and any other non-cash charges or expenses for such period (but excluding any non-cash charge or expense in respect of an item that was included in Net Income in a prior period and any non-cash charge or expense that relates to the write-down or write-off of inventory), (v) cash and non-cash charges associated with the transactions contemplated by this Agreement and the other Loan Documents, (vi) expenses reimbursed by a third party that is not a Loan Party, but only to the extent the Loan Parties actually receive payment in respect of such reimbursed expenses, (vii) (A) fees, costs and expenses relating to the transactions contemplated by this Agreement and the other Loan Documents (including any fees, expenses and costs which are incurred prior to the Closing Date in connection with the Chapter 11 Cases and the Prepackaged Plan), or any Permitted Acquisition (including cash-stay bonuses paid to employees, severance and reorganization costs and expenses in connection with any Permitted Acquisition), (B) fees, costs and expenses relating to any permitted issuance of Equity Interests, investment, debt incurrence (including a refinancing thereof, whether or not successful) or repayment, amortization or write-off (including discounts) of Indebtedness, recapitalization, or any sale, transfer or other disposition of assets, (C) fees, costs and expenses relating to other acquisitions which would have (if consummated) satisfied the requirements of the defined term “Permitted Acquisitions” and fees, costs and expenses relating to investments which would have (if consummated) satisfied the requirements of such definition, (D) fees, costs and expenses related to other Investments and any offerings of equity or debt by the Loan Parties, in an aggregate amount not to exceed $5,000,000 for any period and (E) purchase accounting adjustments in connection with Permitted Acquisitions and investments permitted by Section 5.24(m), (viii) non-cash costs or expenses relating to any equity-based compensation or equity-based incentive plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, in each case of the Company or any Subsidiary for such period and funded with equity, (ix) the amount of any fees, costs, expenses or charges incurred in connection with (A) Business Optimization Costs and Savings and (B) the closure, transfer or consolidation of facilities or other operations, (x) any proceeds from business interruption insurance received by the Loan Parties during such period, to the extent the associated losses arising out of the event that resulted in the payment of such business interruption insurance proceeds were included in computing Net Income and (xi) one-time litigation costs and expenses; provided, that the aggregate amount of additions to EBITDA pursuant to the foregoing clauses (iv) through (vii) and (ix) through (xi) shall not, in an aggregate amount, exceed fifteen percent (15%) of unadjusted EBITDA (before giving effect the additions set forth in the foregoing clauses (iv) through (vii) and (ix) through (xi)) for such period; minus (b) without duplication and to the extent included in Net Income, (y) any cash payments made during such period in respect of non-cash charges described in clause (a)(v) taken in a prior period and (z) any extraordinary gains and any non-cash items of income for such period, all calculated for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP.
B-10
“Electronic System” means an electronic system for the delivery of information (including documents), such as IntraLinks On Demand Workspaces™ or DXSyndicate™, that may or may not be provided or administered by Agent or an Affiliate thereof.
“Eligible Billed Account” means, at any time of determination, an Account owned by a Borrower which satisfies the general criteria set forth below and which is otherwise acceptable to Agent in its Permitted Discretion (provided, that Agent may, in its Permitted Discretion, change the general criteria for acceptability of Eligible Billed Accounts and shall notify Borrowers of such change promptly thereafter). An Account shall be deemed to meet the general criteria if:
(a) neither the Account Debtor nor any of its Affiliates is an (i) Affiliate (including any employee or agent of a Loan Party or Affiliate of a Loan Party), (ii) creditor or (iii) supplier of any Loan Party or any Affiliate of a Loan Party (with Accounts described in the foregoing clauses (ii) and (iii) to be ineligible to the extent of any amounts owed by such applicable Borrower or any other Loan Party or Affiliate of a Loan Party to such Person as a creditor or supplier);
(b) it does not remain unpaid more than the earlier to occur of (i) the number of days after the original invoice date set forth in Section 4(a) of Schedule A or (ii) the number of days after the original invoice due date set forth in Section 4(b) of Schedule A;
(c) the Account Debtor or its Affiliates are not past due (or past any of the applicable dates referenced in clause (b) above) on other Accounts owing to the Borrowers comprising more than 50% of all of the Accounts owing to the Borrowers by such Account Debtor or its Affiliates;
(d) all Accounts owing by the Account Debtor and its Affiliates do not represent more than 20% of all otherwise Eligible Billed Accounts, Eligible Foreign Billed Accounts and Eligible Unbilled Accounts (provided, that Accounts which are deemed to be ineligible solely by reason of this clause (d) shall be considered Eligible Billed Accounts, Eligible Foreign Billed Accounts or Eligible Unbilled Accounts, as applicable, to the extent of the amount thereof which does not exceed 20% of all otherwise Eligible Billed Accounts, Eligible Foreign Billed Accounts and Eligible Unbilled Accounts);
B-11
(e) the Account complies with each covenant, representation or warranty contained in this Agreement or any other Loan Document with respect to Eligible Billed Accounts and Eligible Foreign Billed Accounts (including any of the representations set forth in Section 5.4);
(f) the Account is not subject to any contra relationship, counterclaim, dispute, customer deposit or set-off; provided, that such Account shall be deemed to be ineligible only to the extent of such contra, counterclaim, dispute, customer deposit or set-off;
(g) the Account Debtor’s chief executive office or principal place of business is located in the United States or Canada or the Account Debtor is organized under the laws of the United States or Canada (or any state or province thereof);
(h) the Account is payable solely in Dollars or Canadian Dollars;
(i) it is evidenced by an invoice or other documentation satisfactory to Agent which has been sent to the Account Debtor and it is absolutely owing to such Borrower and does not arise from a sale on a bill-and-hold, guarantied sale, sale-or-return, sale-on-approval, consignment, retainage or any other repurchase or return basis or consist of progress billings and the payment terms are not “C.O.D.”, cash on delivery or other similar terms;
(j) Agent shall have verified the Account in a manner satisfactory to Agent in its Permitted Discretion;
(k) the Account Debtor is not the United States of America or the Government of Canada or any state, province, territory or political subdivision of any of them (or any department, agency or instrumentality thereof), unless the applicable Borrower has complied with the Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq.), or the Financial Administration Act (Canada) or other applicable similar state, provincial, territorial or local law in a manner satisfactory to Agent;
(l) it is at all times subject to Agent’s duly perfected, first priority security interest and to no other Lien that is not a Permitted Lien, and the goods giving rise to such Account (i) were not, at the time of sale, subject to any Lien except Permitted Liens and (ii) have been sold by the applicable Borrower to the Account Debtor in the ordinary course of the applicable Borrower’s business and delivered to and accepted by the Account Debtor, or the services giving rise to such Account have been performed by the applicable Borrower and accepted by the Account Debtor in the ordinary course of the applicable Borrower’s business;
(m) the Account is not evidenced by Chattel Paper or an Instrument of any kind (unless delivered to Agent in accordance with Section 3.2 of this Agreement) and has not been reduced to judgment;
(n) the Account Debtor’s total indebtedness to the applicable Borrower does not exceed the amount of any credit limit established by the applicable Borrower or Agent in its Permitted Discretion and the Account Debtor is otherwise deemed to be creditworthy by Agent based on Agent’s Permitted Discretion (provided, that Accounts which are deemed to be ineligible solely by reason of this clause (n) shall be considered Eligible Billed Accounts or Eligible Foreign Billed Accounts to the extent the amount of such Accounts does not exceed the lower of such credit limits);
(o) there are no facts or circumstances existing, or which could reasonably be anticipated to occur, which might result in any adverse change in the Account Debtor’s financial condition or impair or delay the collectability of all or any portion of such Account;
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(p) Agent has been furnished with all documents and other information pertaining to such Account which Agent has reasonably requested, or which the applicable Borrower is obligated to deliver to Agent, pursuant to this Agreement;
(q) the applicable Borrower has not made an agreement with the Account Debtor to extend the time of payment thereof beyond the time periods set forth in clause (b) above;
(r) the applicable Borrower has not posted a surety or other bond in respect of the contract under which such Account arose;
(s) the Account Debtor is not a Sanctioned Person;
(t) it does not have selling terms of more than 60 days; and
(u) the Account Debtor is not subject to any proceeding seeking liquidation, arrangement, receivership, dissolution, wind-up, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law.
“Eligible Equipment” means, at any time of determination, Equipment (other than Rolling Stock) owned by a Borrower which satisfies the general criteria set forth below and which is otherwise acceptable to Agent in its Permitted Discretion (including with respect to any Equipment acquired after the Closing Date) (provided, that Agent may, in its Permitted Discretion, change the general criteria for acceptability of Eligible Equipment and shall notify Borrowers of such change promptly thereafter). Equipment (other than Rolling Stock) shall be deemed to meet the current general criteria if:
(a) a Borrower has good, valid and marketable title to such Equipment and it is at all times subject to Agent’s duly perfected, first priority security interest and no other Lien except a Permitted Lien;
(b) such Equipment (i) is not subject to any agreement which restricts the ability of a Borrower to use, sell, transport or dispose of such Equipment or which restricts Agent’s ability to take possession of, sell or otherwise dispose of such Equipment and (ii) has not been purchased from a Sanctioned Person;
(c) it is (i) located on real property owned by any Loan Party, (ii) located on real property leased by any Loan Party or is being stored by a vendor that, in each case, (x) such lessor or third party, as the case may be, has executed and delivered all documentation which Agent shall require to evidence the subordination or other limitation or extinguishment of such Person’s rights with respect to such Equipment and Agent’s right to gain access thereto or (y) a rent Reserve has been established by Agent in accordance with this Agreement in the case of third party leased locations, or such other Reserve satisfactory to Agent in its Permitted Discretion has been established with respect to Equipment in possession of any vendor or (iii) located at a customer site in the ordinary course of business;
(d) it is situated at a Collateral location listed in Sections 27-32 of the Information Certificate(s) or other location of which Agent has been notified as required by Section 5.8 (and it is not in-transit, other than between customer locations in the United States), in each case which location must be in the continental United States;
(e) it conforms in all respects to any covenants, warranties and representations set forth in this Agreement and each other Loan Document;
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(f) it is used in the ordinary course of such Borrower’s business and is not worn out, obsolete, damaged or in an inoperable condition (other than Equipment under repair or held for repair for such purpose);
(g) such Equipment does not constitute “Fixtures” under the applicable laws of the jurisdiction in which such Equipment is located (unless with respect to Real Property which has been Mortgaged in favor of Agent); and
(h) an Acceptable Appraisal and field examination satisfactory to Agent in its Permitted Discretion of such Equipment has been completed (including any Equipment acquired in connection with a Permitted Acquisition, or such Equipment is owned by a Person that is joined to this Agreement as a Borrower pursuant to the provisions of this Agreement).
“Eligible Foreign Billed Account” means, at any time of determination, an Account owned by a Borrower that is otherwise an “Eligible Billed Account” but for clause (g) of the definition thereof; provided that (a) such Account Debtor is located in an Eligible Jurisdiction, (b) such Account (i) is fully backed by a letter of credit, guaranty or acceptance acceptable to Agent in its Permitted Discretion, and if backed by a letter of credit, such letter of credit has been issued or confirmed by a bank satisfactory to Agent in its Permitted Discretion, is sufficient to cover such Account, and if required by Agent, the original of such letter of credit has been delivered to Agent or Agent’s agent and the issuer thereof notified of the assignment of the proceeds of such letter of credit to Agent or (ii) is subject to credit insurance payable to Agent issued by an insurer and on terms, conditions and in an amount acceptable to Agent in its Permitted Discretion, (c) such Account is payable solely in Dollars and (d) such Account is billed and collectible solely in the U.S; provided, further, that the eligibility criteria set forth in clause (t) of the definition of “Eligible Billed Account” shall not apply to the determination of Eligible Foreign Billed Accounts for Specified Extended Terms Accounts.
“Eligible Inventory” means, at any time of determination, Inventory owned by a Borrower which satisfies the general criteria set forth below and which is otherwise acceptable to Agent in its Permitted Discretion (provided, that Agent may, in its Permitted Discretion, change the general criteria for acceptability of Eligible Inventory and shall notify Borrowers of such change promptly thereafter). Inventory shall be deemed to meet the current general criteria if:
(a) it consists of raw materials or finished goods;
(b) it is in good, new and saleable condition;
(c) it is not slow-moving (defined as inventory that is (i) over one year old from date of receipt or (ii) in quantities exceeding the last 12 months’ sales by unit), obsolete, damaged, contaminated, unmerchantable, returned, rejected, discontinued or repossessed, or supplies and packaging;
(d) it is not in the possession of a processor, consignee or bailee, or located on premises leased or subleased to the applicable Borrower, or on premises subject to a mortgage in favor of a Person other than Agent, unless (x) such processor, consignee, bailee or mortgagee or the lessor or sublessor of such premises, as the case may be, has executed and delivered all documentation which Agent shall require to evidence the subordination or other limitation or extinguishment of such Person’s rights with respect to such Inventory and Agent’s right to gain access thereto or (y) a rent Reserve has been established by Agent in accordance with this Agreement in the case of third party leased locations, or such other Reserve satisfactory to Agent in its Permitted Discretion has been established with respect to Inventory in possession of any processor, consignee or bailee, or located on the premises owned by any Loan Party subject to a mortgage in favor of a Person other than Agent;
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(e) it does not consist of (i) fabricated parts, labels, pallets, consigned items, supplies or packaging, (ii) “big lake equipment” or other Equipment or (iii) RedZone’s “specialty coil tubing inventory”;
(f) it meets all standards imposed by any Governmental Authority;
(g) it conforms in all respects to any covenants, warranties and representations set forth in this Agreement and each other Loan Document;
(h) it is at all times subject to Agent’s duly perfected, first priority security interest and no other Lien except a Permitted Lien;
(i) it is not purchased or manufactured pursuant to a license agreement that is not assignable to each of Agent and its transferees, unless such license agreement is satisfactory to Agent or Agent is in receipt of a Licensor Consent Agreement in form and substance satisfactory to Agent;
(j) it is situated at a Collateral location listed in Sections 27-32 of the Information Certificate(s) or other location of which Agent has been notified as required by Section 5.8 (and it is not in-transit), in each case which location must be in the continental United States or Canada;
(k) it is situated at a location holding not less than $100,000 of the aggregate value of Inventory of the Borrowers;
(l) no Person other than a Borrower has any direct or indirect ownership interest or title; and
(m) it is not acquired from a Sanctioned Person.
“Eligible Jurisdiction” means (a) Australia, Saudia Arabia, the United Kingdom, any European Union member, and the United Arab Emirates and (b) any other jurisdiction that Agent may, at the Borrowing Agent’s written request, from time to time designate as an “Eligible Jurisdiction” in its Permitted Discretion.
“Eligible Real Property” means, at any time of determination, Real Property owned in fee by any Borrower which satisfies the general criteria set forth below and which is otherwise acceptable to Agent in its Permitted Discretion (provided, that Agent may, in its Permitted Discretion, change the general criteria for acceptability of Eligible Real Property and shall notify Borrowers of such change promptly thereafter). Real Property shall be deemed to meet the current general criteria if:
(a) it is Specified Real Property or any other Real Property acceptable to Agent in its Permitted Discretion which a Borrower elects to mortgage pursuant to Section 3.6;
(b) it is Real Property located in the United States;
(c) a Borrower has good, valid and marketable fee title thereto;
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(d) it is Real Property with respect to which Agent has received (i) a Mortgage, (ii) mortgagee title insurance policies issued by a title insurance company reasonably satisfactory to Agent in amounts reasonably satisfactory to Agent (but in no event less than the FMV thereof) assuring Agent that the Mortgages on such Real Property are valid and enforceable first priority mortgage Liens on such Real Property free and clear of all defects and encumbrances except Permitted Liens, and otherwise in form and substance reasonably satisfactory to Agent, (iii) ALTA surveys (or any updates or affidavits that the title insurance company may reasonably require in connection with the insurance of the title insurance policies) in form and substance reasonably satisfactory to Agent, (iv) phase-I environmental reports with respect to each parcel composing the Real Property (the environmental consultants retained for such reports, the scope of the reports, and the results thereof which shall be reasonably satisfactory to Agent), (v) flood certifications (and, if applicable, acceptable flood insurance and FEMA form acknowledgements of insurance, in each case, acceptable to Agent), (vi) such customary affidavits, certificates, instruments of indemnification and other items as shall be reasonably required and evidence of payment by any Borrower of all search and examination charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages and the issuance of the title insurance policies, in each case to the extent required pursuant to the foregoing and (vii) local counsel opinions (A) as to the due authorization, execution and delivery by such Borrower of such Mortgage and such other customary matters that are incidental thereto and (B) in jurisdictions where such Real Property is located covering the enforceability of such Mortgage and such other customary matters as are incidental thereto (the foregoing clauses (i) through (vii), the “Real Estate Deliverables”);
(e) an Acceptable Appraisal of such item of Real Property has been completed;
(f) it conforms in all respects to any covenants, warranties and representations set forth in this Agreement and each other Loan Document; and
(g) it is at all times subject to Agent’s duly perfected, first priority security interest pursuant to a Mortgage reasonably acceptable to Agent (and arrangements for the recordation of the Mortgage reasonably satisfactory to Agent shall have been made) and no other Lien except a Permitted Lien.
“Eligible Rolling Stock” means, at any time of determination, Rolling Stock owned by a Borrower which satisfies the general criteria set forth below and which is otherwise acceptable to Agent in its Permitted Discretion (including with respect to any Rolling Stock acquired after the Closing Date) (provided, that Agent may, in its Permitted Discretion, change the general criteria for acceptability of Eligible Rolling Stock and shall notify Borrowers of such change promptly thereafter). Rolling Stock shall be deemed to meet the current general criteria if:
(a) a Borrower has good, valid and marketable title to such Rolling Stock and it is at all times subject to Agent’s duly perfected, first priority security interest and no other Lien except a Permitted Lien;
(b) it is located in the United States of America;
(c) it is used in the ordinary course of such Borrower’s business and is not worn out, obsolete, damaged or in an inoperable condition (other than Rolling Stock under repair or held for repair for such purpose);
(d) it meets, in all material respects, all applicable safety or regulatory standards applicable to it for the use for which it is intended or for which it is being used;
(e) it conforms in all respects to any covenants, warranties and representations set forth in this Agreement and each other Loan Document;
(f) it is not on lease or rented to any other Person, and is being primarily used by a Borrower or another Loan Party;
(g) the ownership of which is evidenced by a certificate of title that has the name of a Borrower noted thereon as the owner of it and is otherwise properly registered in one of the states of the United States to a Borrower in the state that has issued such certificate of title in accordance with all applicable laws;
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(h) it meets, in all material respects, all applicable standards of all motor vehicle laws or other statutes and regulations established by any Governmental Authority and is not subject to any licensing or similar requirement that would limit the right of Agent to sell or otherwise dispose of such Rolling Stock;
(i) it is insured as required by this Agreement;
(j) a Borrower or Loan Party has actual and exclusive possession thereof (either directly or through a bailee or agent of a Borrower or Loan Party), including as a result of the lease thereof by a Borrower;
(k) it is described (by model, make, manufacturer, serial number and/or such other identifying information as may be appropriate, as determined by Agent in its Permitted Discretion) in a schedule received by Agent;
(l) an Acceptable Appraisal and field examination satisfactory to Agent in its Permitted Discretion of such Rolling Stock has been completed (including any Rolling Stock acquired in connection with a Permitted Acquisition, or such Rolling Stock is owned by a Person that is joined to this Agreement as a Borrower pursuant to the provisions of this Agreement); and
(m) the certificate of title with respect to any such Rolling Stock has been delivered to Agent or its Title Servicing Agent;
provided that, notwithstanding anything to the contrary in the foregoing clauses (a), (e) and (m) above, any Rolling Stock owned by the Loan Parties as of the Closing Date shall not be deemed ineligible for a period commencing as of the Closing Date through and including the ninetieth (90th) day following the Closing Date (or such later date as agreed to by Agent in its sole discretion), solely as a result of a Loan Party’s failure to provide and deliver to Agent or its Title Servicing Agent a certificate of title and/or a Title Notation with respect to such Rolling Stock.
“Eligible Unbilled Account” means any Unbilled Amount of a Borrower which (a) is owing, but which is not yet billed, for sales actually consummated or services actually rendered by such Borrower, as reflected on its books and records, (b) shall become a standard billed Account in the ordinary course of business of such Borrower pursuant to the billing of such amount (and the conversion thereof into an Account), (c) is subject to a perfected first priority security interest in favor of Agent and no other lien except Permitted Liens and would not otherwise be deemed ineligible under the definition of Eligible Billed Accounts (except for the fact that such Unbilled Amount is not yet billed and invoiced), (d) the Unbilled Amount is evidenced by documentation satisfactory to Agent in its Permitted Discretion and has been verified by Agent in a manner satisfactory to Agent, (e) is owing by a Person other than any (i) Affiliate (including any employee or agent of a Loan Party or Affiliate of a Loan Party), (ii) creditor or (iii) supplier of a Loan Party or an Affiliate of a Loan Party (with such Unbilled Amounts described in the foregoing clauses (ii) and (iii) to be ineligible to the extent of any amounts owed by a Loan Party or an Affiliate of a Loan Party to such Person as a creditor or supplier), and (f) is the product of services rendered not more than the number of days specified in Section 4(c) of Schedule A, as applicable. Notwithstanding anything to the contrary contained in the foregoing, no Unbilled Amount shall be an Eligible Unbilled Account included in the Borrowing Base unless such Unbilled Amount is owing in, and will be billed and invoiced in, denominated in and repayable in, Dollars or Canadian Dollars.
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“Equipment” means, as to any Person, all “equipment” (as that term is defined in the UCC) now owned or hereafter acquired by such Person (or in which such Person has rights or the power to transfer rights to a secured party), wherever located, including, without limitation, all Rolling Stock any and all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other similar tangible personal property (other than Inventory) of every kind and description, and all parts, accessories and accessions thereto and substitutions and replacements therefor.
“Equity Control Threshold” has the meaning set forth in Section 7.1(l).
“Equity Interests” means, with respect to a Person, all of the shares of stock, warrants, interests, participations, or other equivalents (regardless of how designated) of or in such Person, whether voting or nonvoting, including capital stock (or other ownership or profit interests or units), preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities Exchange Commission under the Securities Exchange Act of 1934, or any similar federal or provincial statute of Canada, as in effect from time to time).
“ERISA” means the Employee Retirement Income Security Act of 1974 and all rules, regulations and orders promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with a Loan Party within the meaning of section 414(b) or (c) of the Code (and sections 414(m) and (o) of the Code for purposes of provisions relating to section 412 of the Code and section 302 of ERISA).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan or Multiemployer Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan or Multiemployer Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.
“Erroneous Payment” has the meaning assigned to it in Section 10.22(a).
“Erroneous Payment Notice” has the meaning assigned to it in Section 10.22(b).
“Event of Default” has the meaning set forth in Section 7.1.
“Excess Availability” means the amount, as determined by Agent, calculated at any date, equal to the difference of (a) the Line Cap, minus (b) the outstanding balance of all Revolving Loans and the aggregate amount of Letter of Credit Liabilities; provided that if any of the Loan Limits for Revolving Loans is exceeded as of the date of calculation, then Excess Availability shall be zero.
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“Excluded Collateral” means:
(a) Letter-of-Credit Rights (other than to the extent constituting Supporting Obligations);
(b) Excluded Governmental Approvals;
(c) Excluded Contracts;
(d) Excluded JV Equity Interests;
(e) Excluded PMSI Collateral;
(f) Excluded Real Property;
(g) Excluded Foreign Stock; and
(h) Excluded Trademark Collateral;
provided, however, that (v) in no event shall any assets included in the Borrowing Base or Controlled Accounts of a Loan Party constitute Excluded Collateral, (w) the exclusion from the Lien and security interest granted by any Loan Party hereunder of any Excluded Collateral shall not limit, restrict or impair the grant by such Loan Party of the Lien and security interest in any accounts or receivables arising under any such Excluded Collateral or any payments due or to become due thereunder unless the conditions in effect which qualify such property as Excluded Collateral applies with respect to such accounts and receivables, (x) any proceeds received by any Loan Party from the sale, transfer or other disposition of Excluded Collateral shall constitute Collateral unless the conditions in effect which qualify such property as an Excluded Collateral applies with respect to such proceeds, (y) for the avoidance of doubt, no Excluded Foreign Stock shall secure the Obligations, and (z) any property (including any Equity Interests or intercompany note) that ceases to be “Excluded Collateral” shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Agreement as “Collateral”.
“Excluded Contracts” means any contract to which any of the Loan Parties is a party on the date hereof or which is entered into by any Loan Party after the date hereof which complies with this Agreement (and the provisions of which are not agreed to by a Loan Party for the purposes of excluding such contract from the Lien granted hereunder) to the extent (but only to the extent) that the granting of a security interest therein would be prohibited by (a) such contract under a provision (unless a Loan Party or a Subsidiary may unilaterally waive such prohibition) in such contract in existence on the date hereof or, as to contracts entered into after the date hereof, in existence in compliance with Section 5.24(o) of this Agreement (and the provisions of which are not agreed to by a Loan Party for the purposes of excluding such contract from the Lien granted hereunder), or (b) an applicable Legal Requirement to which such Loan Party or such contract is subject; provided, however, to the extent that (i) either of the prohibitions discussed in clause (a) and clause (b) above is ineffective or subsequently rendered ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or under any other Legal Requirement or is otherwise no longer in effect or enforceable, or (ii) the applicable Loan Party has obtained the consent of the other parties to such Excluded Contract to the creation of a lien and security interest in such Excluded Contract, then such contract shall cease to be an “Excluded Contract” and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Agreement as “Collateral”; provided further, that any proceeds received by any Loan Party from the sale, transfer or other disposition of Excluded Contracts shall constitute Collateral unless any property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
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“Excluded Deposit Accounts” means Deposit Accounts that are (a) solely used for the purposes of making payments in respect of payroll, taxes and employees’ wages and benefits for the benefit of any Loan Party or any of its Subsidiaries, (b) trust, escrow and fiduciary accounts, (c) maintained (and at all times will be maintained) solely in connection with an employee benefit plan, (d) which, in the aggregate, do not contain at any time an amount on deposit in excess of $750,000 (or the Dollar Equivalent thereof), (e) cash collateral accounts to the extent the liens thereunder are permitted pursuant to Section 5.24(l) and (f) zero balance accounts used for disbursements (and not the receipt of Collections) for which the balance of such account is transferred at the end of each date to a Deposit Account subject to a Control Agreement.
“Excluded Foreign Stock” means the Equity Interests issued by Foreign Subsidiaries of any Loan Party or issued by any Domestic Subsidiary of any Loan Party that is owned directly or indirectly by a Foreign Subsidiary, other than (a) 65% of the voting Equity Interests issued by a first-tier Foreign Subsidiary and (b) 100% of Equity Interests issued by a first-tier Foreign Subsidiary that are not voting Equity Interests.
“Excluded Governmental Approvals” means any governmental approval to the extent (but only to the extent) that a Loan Party is prohibited from granting a security interest in, pledge of, or charge, mortgage or lien upon any such property by reason of applicable Legal Requirement to which such Loan Party or such property is subject; provided, however, to the extent that (i) such prohibition is ineffective or subsequently rendered ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or under any other Legal Requirement or is otherwise no longer in effect or enforceable, or (ii) the applicable Loan Party has obtained the consent of the applicable Governmental Authority to the creation of a lien and security interest in such Excluded Governmental Approval, then such governmental approval shall cease to be an “Excluded Governmental Approval” and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Agreement as “Collateral”; provided further, that any proceeds received by any Loan Party from the sale, transfer or other disposition of Excluded Governmental Approval shall constitute Collateral unless any property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
“Excluded JV Equity Interests” means the Equity Interests owned by any Loan Party in a joint venture to the extent (but only to the extent) (a) the organizational documents of such joint venture prohibit the granting of a Lien on such Equity Interests or (b) such Equity Interests of such joint venture are expressly required to be pledged as collateral to secure (i) obligations to the other holders of the Equity Interests in such joint venture (other than a holder that is a Subsidiary of the Borrower) or (ii) Indebtedness of such joint venture that is non-recourse to any of the Loan Parties or to any of the Loan Parties’ properties, in each case the provisions of which are not agreed to by a Loan Party for the purpose of excluding such Equity Interests; provided, however, if any of the foregoing conditions ceases to be in effect for any reason, then the Equity Interest in such joint venture shall cease to be an “Excluded JV Equity Interest” and shall automatically be subject to the Lien and security interest granted hereby and to the terms and provisions of this Agreement as “Collateral”; provided further, that any proceeds received by any Loan Party in respect of any (including from the sale, transfer or other disposition of) Excluded JV Equity Interest shall constitute Collateral unless any property constituting such proceeds are themselves subject to the exclusions set forth above.
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“Excluded PMSI Collateral” means any property and proceeds thereof (including insurance proceeds) of a Loan Party that is now or hereafter subject to a Lien securing (and, for the avoidance of doubt, acquired with the proceeds of) purchase money debt or a Capitalized Lease obligation to the extent (and only to the extent) that (a) the Indebtedness associated with such Lien is permitted under Section 5.24(k)(iv) or 5.24(k)(x) of this Agreement, and (b) the documents evidencing such purchase money debt or Capitalized Lease obligation prohibit or restrict the granting of a Lien in such property; provided, however, to the extent that (i) either of the prohibitions discussed in clauses (a) and (b) above is ineffective or subsequently rendered ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or under any other Legal Requirement or is otherwise no longer in effect or (ii) the holder of such Lien consents to the granting of a Lien in favor of Agent, then such property and proceeds thereof shall cease to be “Excluded PMSI Collateral” and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Agreement as “Collateral”; provided further, that any proceeds received by any Loan Party from the sale, transfer or other disposition of Excluded PMSI Collateral shall constitute Collateral unless any property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
“Excluded Real Property” means all Real Property (including all leases related thereto) of any Loan Party, other than the Specified Real Property and any other Real Property which, in each case, the Loan Parties elect to mortgage pursuant to Section 3.6.
“Excluded Subsidiary” means any Foreign Subsidiary other than any Subsidiary of a Loan Party that is organized under the laws of Canada.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), or (ii) that are Other Connection Taxes; (b) United States federal withholding Taxes imposed on amounts payable to or for the account of such Recipient with respect to an applicable interest in a Loan or Revolving Commitment pursuant to a law in effect on the date on which such Recipient acquires such interest in the Loan or Revolving Commitment or acquires such participation, except in each case to the extent that, pursuant to Section 9.1 amounts with respect to such Taxes were payable either to such Recipient’s assignor (or such Lender granting such participation) immediately before such assignment or grant of participation; (c) Taxes attributable to such Recipient’s failure to comply with Section 9.1(e); (d) any withholding Taxes imposed pursuant to FATCA; and (e) any withholding tax imposed under Part XIII of the Income Tax Act (Canada) arising as a result of such recipient either (i) not dealing at arm’s length with a Borrower (for purposes of the Income Tax Act (Canada)), or (ii) being, or not dealing at arm’s length with (for purposes of the Income Tax Act (Canada)), a “specified shareholder” of a Borrower (for purposes of the Income Tax Act (Canada)); provided that Agent shall not be deemed to be a “specified shareholder” or not dealing at arm’s length just by virtue of it being granted, holding, possessing and/or enforcing any security interest in any Collateral, including any Equity Interests.
“Excluded Trademark Collateral” means all United States intent to use trademark applications with respect to which the grant of a security interest therein would impair the validity or enforceability of said intent to use trademark application under federal law; provided, however, to the extent that such law is no longer in effect, then such trademark application shall cease to be “Excluded Trademark Collateral” and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Agreement as “Collateral”; provided further, that any proceeds received by any Loan Party from the sale, transfer or other disposition of Excluded Trademark Collateral shall constitute Collateral unless any property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
“Existing Credit Agreement” means the Credit Agreement, dated as of October 25, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified), by and among, inter alios, the Borrowers party thereto, the Guarantors party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
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“Existing JPM Letters of Credit” means the letters of credit issued by JPMorgan Chase Bank, N.A. outstanding as of the Closing Date and set forth on Schedule C hereto, in each case without giving effect to any increase, extension or renewal thereof.
“Existing Letter of Credit” means that certain irrevocably standby letter of credit dated as of September 15, 2025, by and among the Company, as applicant, NCS Multistage Inc and NCS Multistage LLC, as beneficiaries, and Wells Fargo Bank, N.A., as issuer.
“Extraordinary Receipts” means any cash or cash equivalents received by or paid to or for the account of any Loan Party not in the ordinary course of business, including amounts received in respect of foreign, United States, Canadian, state, provincial, territorial or local tax refunds, purchase price adjustments, indemnification payments, and pension plan reversions.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code and any fiscal or regulatory legislation or rules adopted pursuant to such intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, that (a) if such day is not a Business Day, then the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if no such rate is so published on such next succeeding Business Day, then the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of one-hundredth of one percent (0.01%)) charged to major money center banks on such day on such transactions as determined by Agent and (c) if the Federal Funds Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Fee Letter” means that certain Fee Letter, dated as of February 3, 2026, between Borrowers and WOCF, as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Fiscal Year” means the fiscal year of Loan Parties which ends on December 31st of each year.
“Fixed Asset Formula Amount” means an amount equal to the lesser of (a) sum of (i) seventy-five percent (75%) of the NOLV Factor of Eligible Equipment identified in the most recent Acceptable Appraisal of Eligible Equipment at such time, plus (ii) seventy-five percent (75%) of the NOLV Factor of Eligible Rolling Stock identified in the most recent Acceptable Appraisal of Eligible Rolling Stock at such time plus (iii) seventy-five percent (75%) of the FMV of Eligible Real Property identified in the most recent Acceptable Appraisal of Eligible Real Property at such time and (b) $30,000,000 (which sublimit shall be permanently reduced on a monthly basis based on a 5-year straight line amortization (i.e. the sublimit will reduce to $29,500,000 on the first monthly “anniversary” of the Closing Date)); provided that the amount included in the Fixed Asset Formula Amount shall be reduced on the date any item of Eligible Equipment, Eligible Rolling Stock or Eligible Real Property ceases to be Eligible Equipment, Eligible Rolling Stock or Eligible Real Property for any reason (including as a result of any sale, transfer or other disposition therefor or any casualty or condemnation with respect thereto), by the amount then included in the Fixed Asset Formula Amount with respect to such item of Eligible Equipment, Eligible Rolling Stock or Eligible Real Property.
B-22
“Fixed Charge Coverage Ratio” means, at any date, the ratio of (a) (i) EBITDA for the twelve consecutive calendar month period ended on such date (or, if such date is not the last day of a calendar month, the last day of the most recently ended calendar month for which financial statements have been delivered pursuant to Section 5.15(a) or 5.15(b)) (or, prior to the first delivery of any such financial statements, with respect to the most recently available financial statements) for such period minus (ii) expenses for taxes paid in cash minus (iii) Unfunded Capital Expenditures to (b) the sum of Fixed Charges for such period. Notwithstanding anything to the contrary in the foregoing, the last day of the calendar month ended February 28, 2026 shall be deemed to mean March 4, 2026.
“Fixed Charges” means, for any period, without duplication, (a) cash Interest Expense, plus (b) scheduled principal payments on Indebtedness (other than scheduled principal payments on Indebtedness permitted pursuant to Section 5.24(k)(ix)) due in cash, whether or not paid, plus (c) Restricted Payments paid in cash (other than Restricted Payments permitted pursuant to Section 5.24(q)(i), (iii) or (iv)), plus (d) cash payments of obligations under Capitalized Leases, plus (e) cash payments in respect of earn-out obligations, plus (f) the amount of Investments made in cash or cash equivalents in Persons that are not Loan Parties during such period, plus (g) the amount of collateral management fees in respect of the Collateral paid in cash during such period, all calculated for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP; provided that it is understood and agreed that “Fixed Charges” shall not include cash Interest Expense, principal payments or other amounts with respect to the Senior Secured Notes (which amounts shall be disregarded for purposes of any such calculation of “Fixed Charges” or the “Fixed Charge Coverage Ratio” hereunder).
“Floor” means a rate of interest equal to 1.50%.
“FMV” means, as of any date of determination, in respect of Real Property, as applicable, the fair market value thereof as determined in the most recent Acceptable Appraisal of the Real Property, as applicable.
“Foreign Accounts Availability” means, at any time of determination, an amount equal to the sum of the clause (c) of the definition of Borrowing Base, less the corresponding Reserves applied thereto pursuant to Section 1.2.
“Foreign Billed Accounts Advance Rate” means the percentage set forth in Section 1(b)(iii) of Schedule A.
“Foreign Billed Accounts Sublimit” means the amount set forth in Section 1(c) of Schedule A.
“Foreign Subsidiary” means any Subsidiary of a Loan Party that is not (a) a Domestic Subsidiary or (b) a Loan Party.
“FracTech Acquisition” means the acquisition by Nine Downhole of Frac Technology AS, a Norwegian private limited company, pursuant to that certain Securities Purchase Agreement dated as of October 1, 2018, by and among Nine Downhole and the sellers party thereto.
B-23
“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to any LC Issuer of a Lender Letter of Credit, such Defaulting Lender’s Pro Rata Share of the outstanding Letter of Credit Liabilities with respect to Letters of Credit issued by such LC Issuer and (b) with respect to any Letter of Credit guarantor/indemnitor, such Defaulting Lender’s Pro Rata Share of the outstanding Letter of Credit Liabilities with respect to Supported Letters of Credit supported by a Support Agreement to which such Letter of Credit guarantor/indemnitor is a party, in each case other than Letter of Credit Liabilities as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or cash collateralized.
“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the United States accounting profession), which are applicable to the circumstances as of the date of determination, in any case consistently applied.
“Governmental Authority” means the government of the United States of America, Canada or any other nation, or of any political subdivision thereof, whether state, provincial, territorial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Guaranty”, “Guaranteed” or to “Guarantee”, as applied to any Indebtedness, liability or other obligation, means (a) a guaranty, directly or indirectly, in any manner, including by way of endorsement (other than endorsements of negotiable instruments for collection in the ordinary course of business), of any part or all of such Indebtedness, liability or obligation, and (b) an agreement, contingent or otherwise, and whether or not constituting a guaranty, assuring, or intended to assure, the payment or performance (or payment of damages in the event of non-performance) of any part or all of such Indebtedness, liability or obligation by any means (including, the purchase of securities or obligations, the purchase or sale of property or services, or the supplying of funds).
“Guarantors” has the meaning set forth in the heading to this Agreement.
“Impacted Loans” has the meaning assigned to such term in Section 2.1(d).
“Indebtedness” means (without duplication), with respect to any Person, (a) all obligations or liabilities, contingent or otherwise, for borrowed money, (b) all obligations represented by promissory notes, bonds, debentures or the like, or on which interest charges are customarily paid, (c) all liabilities secured by any Lien on property owned or acquired, whether or not such liability shall have been assumed, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding trade payables which are not ninety (90) days past the invoice date incurred in the ordinary course of business, but including the maximum potential amount payable under any earn-out or similar obligations), (f) all obligations of such Person under Capitalized Leases, (g) all obligations (contingent or otherwise) of such Person as an account party or applicant in respect of letters of credit and/or bankers’ acceptances, or in respect of financial or other hedging obligations (valued at the termination value of such hedging obligations), (h) all Equity Interests issued by such Person subject to repurchase or redemption at any time on or prior to the Scheduled Maturity Date, other than voluntary repurchases or redemptions that are at the sole option of such Person, (i) all principal outstanding under any synthetic lease, off-balance sheet loan or similar financing product, and (j) all Guarantees and other contingent obligations of such Person in respect of the obligations of others of the kinds referred to in clauses (a) through (i) above.
B-24
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Ineligible Assignee” means (a) any natural person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person), (b) any Loan Party or any of its Affiliates or (c) any Defaulting Lender or any Affiliate of any Defaulting Lender or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or an Affiliate thereof.
“Information Certificate(s)” means (a) as of the Closing Date, the information certificate(s) annexed hereto and (b) as of any date after the Closing Date, the information certificate(s) described in the immediately foregoing clause (a) as most recently updated and delivered to Agent (including pursuant to Section 5.15(c)(ii)).
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, Canadian, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, industrial designs, industrial design licenses, trade secrets, trademarks and trademark licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
“Interest Expense” means, for the applicable period, for the Loan Parties on a consolidated basis, total interest expense (including interest attributable to Capitalized Leases in accordance with GAAP) and fees with respect to outstanding Indebtedness.
“Inventory Advance Rate” means the percentage(s) set forth in Section 1(b)(iv) of Schedule A.
“Inventory Availability” means, at any time of determination, an amount equal to the sum of clause (d) of the definition of Borrowing Base, less the corresponding Reserves applied thereto pursuant to Section 1.2.
“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 capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, or a purchase or other acquisition or assumption of any Indebtedness 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 assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
“Investment Property” means the collective reference to (a) all “investment property” as such term is defined in Section 9-102 of the UCC, (b) all “financial assets” as such term is defined in Section 8-102(a)(9) of the UCC, and (c) whether or not constituting “investment property” as so defined, all Pledged Equity.
“Issuers” means the collective reference to each issuer of Investment Property.
“Jacksboro Project” means that certain testing facility located in Jack County, Texas, which is in development as of the Closing Date but which upon completion will be operated by the Loan Parties.
B-25
“Judgment Currency” has the meaning set forth in Section 6.3(b).
“LC Issuer” means one or more banks, trust companies or other Persons in each case expressly identified by Agent from time to time, in its sole discretion, as an LC Issuer for purposes of issuing one or more Letters of Credit hereunder. Without limitation of Agent’s discretion to identify any Person as an LC Issuer, no Person shall be designated as an LC Issuer unless such Person maintains reporting systems acceptable to Agent with respect to letter of credit exposure and agrees to provide regular reporting to Agent satisfactory to it with respect to such exposure.
“Legal Requirement” means any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including, but not limited to, Regulations T, U, and X.
“Lender” has the meaning set forth in the heading to this Agreement.
“Lender Documentation Exception” has the meaning set forth in Section 9.1(e).
“Lender Letter of Credit” means a Letter of Credit issued by an LC Issuer that is also, at the time of issuance of such Letter of Credit, a Lender.
“Lending Office” means, as to any Lender, the account or office of such Lender described as such in such Lender’s Administrative Detail Form, or such other account, office or offices as a Lender may from time to time notify Borrowing Agent and Lending Parties.
“Lending Parties” means, collectively, Agent, each LC Issuer and Lenders.
“Letter of Credit” means a standby letter of credit issued for the account of any Borrower by an LC Issuer which expires by its terms within one year after the date of issuance and in any event at least thirty (30) days prior to the Maturity Date. Notwithstanding the foregoing, a Letter of Credit may provide for automatic extensions of its expiry date for one or more successive one (1) year periods, provided, however, that the LC Issuer that issued such Letter of Credit has the right to terminate such Letter of Credit on each such annual expiration date and no renewal term may extend the term of the Letter of Credit to a date that is later than the thirtieth (30th) day prior to the Maturity Date. Each Letter of Credit shall be either a Lender Letter of Credit or a Supported Letter of Credit.
“Letter of Credit Fees” has the meaning set forth in Section 1.5(b).
“Letter of Credit guarantor/indemnitor” means any Lending Party that is obligated under or in respect of a Support Agreement.
“Letter of Credit Liabilities” means, at any time of calculation, the sum of (a) without duplication, the amount then available to be drawn under all outstanding Lender Letters of Credit and all Supported Letters of Credit, in each case without regard to whether any conditions to drawing thereunder can then be met, plus (b) without duplication, the aggregate unpaid amount of all reimbursement obligations in respect of previous drawings made under all such Lender Letters of Credit and Supported Letters of Credit, plus (c) all interest, fees and costs due or, in Agent’s estimation, likely to become due in connection with outstanding Letters of Credit.
“Letter of Credit Limit” means the amount set forth in Section 1(f) of Schedule A.
B-26
“License” means any license or agreement under which a Loan Party is granted rights with respect to Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of assets or property or any other conduct of its business.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security arrangement and any other preference, priority, or preferential arrangement in the nature of a security interest of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor under a Capitalized Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.
“Line Cap” means, at any time of determination, the lesser of (x) the Maximum Revolving Facility Amount minus Reserves and (y) the Borrowing Base.
“Liquid Investments” means (a) readily marketable direct full faith and credit obligations of the United States of America or Canada or obligations unconditionally guaranteed by the full faith and credit of the United States of America or Canada; (b) commercial paper issued by (i) any Lender or any Affiliate of any Lender or (ii) any commercial banking institutions or corporations rated at least P-1 by Moody’s or A-1 by S&P; (c) certificates of deposit, time deposits, and bankers’ acceptances issued by (i) any of the Lenders or (ii) any other commercial banking institution which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $250,000,000 and rated Aa by Moody’s or AA by S&P; (d) repurchase agreements which are entered into with any of the Lenders or any major money center banks included in the commercial banking institutions described in clause (c) and which are secured by readily marketable direct full faith and credit obligations of the government of the United States of America or Canada or any agency thereof; (e) investments in any money market fund which holds investments substantially of the type described in the foregoing clauses (a) through (d); and (f) other investments made through Agent or its Affiliates. All the Liquid Investments described in clauses (a) through (d) above shall have maturities of not more than 365 days from the date of issue.
“Loan Account” has the meaning set forth in Section 2.4.
“Loan Documents” means, collectively, this Agreement and all notes, guaranties, security agreements, deeds of hypothec, mortgages, landlord’s agreements, Lock Box and Blocked Account agreements, Control Agreements, the Fee Letter, the Assignment and Acceptance, the Mortgages, the Canadian Security Agreement and any other agreements, documents and instruments now or hereafter executed or delivered by any Borrower, any Loan Party in connection with this Agreement.
“Loan Guaranty” means Section 8 of this Agreement.
“Loan Limits” means, collectively, the Loan Limits for Revolving Loans and Letters of Credit set forth in Section 1 of Schedule A and all other limits on the amount of Loans and Letters of Credit set forth in this Agreement.
“Loan Party” means, individually, any Borrower, any Guarantor or any Subsidiary party to this Agreement; and “Loan Parties” means, collectively, Borrowers, Guarantors and all Subsidiaries party to this Agreement, provided that, no Excluded Subsidiary shall be a Loan Party for any purpose of this Agreement.
“Loans” means the Revolving Loans.
B-27
“Lock Box” has the meaning set forth in Section 4.1.
“M&E Availability” means, at any time of determination, an amount equal to the sum of clause (d) of the definition of Borrowing Base (without giving effect to clause (a)(iii) of the definition of Fixed Asset Formula Amount), less the corresponding Reserves applied thereto pursuant to Section 1.2.
“Market Disruption Event” means any of the following: (a) any Lender notifies Agent that the SOFR Index Rate does not adequately and fairly reflect the cost to such Lender of funding its respective Loans, or any Lender determines that any law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the SOFR Index Rate or to determine or charge interest rates based upon such SOFR Index Rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing; or (b) the circumstances set forth in Section 2.1(d)(i) exist or the Scheduled Unavailability Date has occurred, and no SOFR Successor Rate has been determined in accordance with Section 2.1(d).
“Material Adverse Effect” means any event, act, omission, condition or circumstance which, which individually or in the aggregate, has or could reasonably be expected to have a material adverse effect on (a) the business, operations, prospects, properties, assets or condition, financial or otherwise, of the Loan Parties, taken as a whole, (b) the ability of the Loan Parties, taken as a whole, to perform any of the obligations under any of the Loan Documents, or (c) the validity or enforceability of, or Agent and Lenders’ rights and remedies under, any of the Loan Documents.
“Material Contract” means has the meaning set forth in Section 5.18.
“Maturity Date” means the Scheduled Maturity Date (or if earlier the Termination Date), or such earlier date as the Obligations may be accelerated in accordance with the terms of this Agreement (including without limitation pursuant to Section 7.2).
“Maximum Lawful Rate” has the meaning set forth in Section 2.5.
“Maximum Liability” has the meaning set forth in Section 8.9.
“Maximum Revolving Facility Amount” means the amount set forth in Section 1(a) of Schedule A.
“Monthly Financial Model” means a report substantially in the form of Exhibit G hereto to be signed by an Authorized Officer of Borrowing Agent.
“Mortgage” means, in the case of fee owned real property only, a mortgage, deed of trust, deed of hypothec or similar instrument, in a form to be reasonably agreed between the Company and Agent, in each case, with such changes thereto as may be recommended by the local counsel based on local laws or customary local practices, as the same may be amended, modified or supplemented from time to time.
“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or with respect to which any Loan Party has any current or contingent liability.
“Negotiable Document” shall mean a Document that is “negotiable” within the meaning of Article 7 of the UCC.
B-28
“Net Income” means, for the applicable period, for Borrowers or Loan Parties on a consolidated basis, as applicable, the net income (or loss) of Borrowers or Loan Parties on a consolidated basis, as applicable, for such period, in each case of Borrowers or Loan Parties on a consolidated basis, as applicable, for such period, but excluding (without duplication): (a) any income of any Person if such Person is not a Subsidiary, except that a Loan Party’s direct or indirect equity in the net income of any such Person for such period shall be included in such computation of net income (or loss) up to the aggregate amount of cash actually distributed by such Person during such period to a Loan Party or a Subsidiary thereof as a dividend or other distribution; (b) net income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of that income is prohibited by operation of the terms of its Organic Documents or any contractual obligation or laws applicable to such Subsidiary or by which Subsidiary is bound and (c) any unrealized net gains in the fair market value of any arrangements under Swap Agreements and gains attributable to the early extinguishment or conversion of arrangements under Swap Agreements or other derivative instruments.
“Net Orderly Liquidation Value” with respect to Eligible Inventory, Eligible Equipment or Eligible Rolling Stock, means the net orderly liquidation value of such Eligible Inventory, Eligible Equipment or Eligible Rolling Stock, as applicable, as determined by Agent from time to time in its Permitted Discretion based upon the most recent Acceptable Appraisal with respect to Inventory or Equipment (including Rolling Stock) received by Agent.
“NOLV Factor” means the quotient, expressed as a percentage, of (a) the Net Orderly Liquidation Value of Eligible Inventory, Eligible Equipment or Eligible Rolling Stock, as applicable, divided by (b) the book value of Eligible Inventory, Eligible Equipment or Eligible Rolling Stock, as applicable, which will be adjusted monthly or at such other times as Agent shall determine in its discretion.
“Non-Paying Guarantor” has the meaning set forth in Section 8.10.
“Non-U.S. Recipient” has the meaning set forth in Section 9.1(e)(ii).
“Notice of Borrowing” has the meaning set forth in Section 1.4.
“Notice of LC Credit Event” means a notice from an Authorized Officer of Borrowing Agent to Agent with respect to any issuance, increase or extension of a Letter of Credit specifying: (a) the date of issuance or increase of a Letter of Credit; (b) the identity of the LC Issuer with respect to such Letter of Credit, (c) the expiry date of such Letter of Credit; (d) the proposed terms of such Letter of Credit, including the face amount; and (e) the transactions that are to be supported or financed with such Letter of Credit or increase thereof.
“Obligations” means all present and future Loans, advances, debts, liabilities, fees, expenses, obligations, guaranties, covenants, duties and indebtedness at any time owing by any Borrower or any Loan Party to Agent and Lenders (including any Early Payment/Termination Premium), whether evidenced by this Agreement, any other Loan Document or otherwise whether arising from an extension of credit, opening of a Letter of Credit, guaranty, indemnification or otherwise, whether direct or indirect (including those acquired by assignment and any participation by any Lender in Borrowers’ indebtedness owing to others), whether absolute or contingent, whether due or to become due, and whether arising before or after the commencement of a proceeding under the Bankruptcy Code, any Canadian Insolvency Law or any similar statute.
“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.
B-29
“Organic Documents” means, with respect to any Person, the certificate of incorporation, articles of incorporation, certificate of formation, certificate of limited partnership, by-laws, operating agreement, limited liability company agreement, limited partnership agreement or other similar governance document of such Person.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
“Outstanding Amount” means with respect to the revolving credit facility provided in this Agreement on any date, the sum of (a) the aggregate outstanding principal amount of all Revolving Loans as of such date, and (b) the amount of any outstanding Letters of Credit as of such date, after giving effect, without duplication, to any borrowings and prepayments or repayments of Revolving Loans and the issuance of any Letters of Credit.
“Overadvance” has the meaning set forth in Section 1.7(a).
“Participant” has the meaning set forth in Section 10.10.
“Patent Collateral” means (a) all inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including those patents and patent applications set forth in Section 36 of the Information Certificate(s), (b) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a), (c) all patent licenses, and other agreements providing any Loan Party with the right to use any items of the type referred to in clauses (a) and (b) above, and (d) all proceeds of, and rights associated with, the foregoing (including licenses, royalties income, payments, claims, damages and proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license.
“Paying Guarantor” has the meaning set forth in Section 8.10.
“Payment Conditions” shall be deemed to be satisfied with respect to an action or proposed action if:
(a) no Default or Event of Default has occurred and is continuing or would result immediately after giving effect to such action or proposed action;
(b) immediately after giving effect to and at all times during the thirty (30) day period immediately prior to such action or proposed action, Borrowers shall have (1) (x) Excess Availability calculated on a pro forma basis after giving effect to such action or proposed action of not less than the greater of (A) 15% of the Line Cap then in effect, and (B) $22,500,000, and (y) a Fixed Charge Coverage Ratio calculated on a pro forma basis after giving effect to such action or proposed action of not less than 1.00 to 1.00, or (2) Excess Availability calculated on a pro forma basis after giving effect to such action or proposed action of not less than the greater of (A) 20% of the Line Cap then in effect or (B) $30,000,000; and
B-30
(c) the Borrowing Agent shall have delivered to Agent a certificate in form and substance reasonably satisfactory to Agent certifying as to the items described in (A) and (B) above and attaching calculations for item (B).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (other than a Multiemployer Plan) that is maintained or is contributed to by a Loan Party and or ERISA Affiliate, or with respect to which any Loan Party or ERISA Affiliate has any liability, and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.
“Permitted Acquisition” has the meaning set forth in Section 5.24(n).
“Permitted Discretion” means a determination made by Agent in the exercise of reasonable (from the perspective of an asset-based secured lender) business judgment exercised in good faith.
“Permitted Indebtedness” has the meaning set forth in Section 5.24(k).
“Permitted Investments” has the meaning set forth in Section 5.24(m).
“Permitted Liens” has the meaning set forth in Section 5.24(l).
“Person” means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, government or any agency or political division thereof, or any other entity.
“Petition Date” has the meaning set forth in the recitals.
“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan, but other than a Multiemployer Plan), maintained by any Loan Party or any such plan to which any Loan Party (or with respect to any such plan subject to Section 412 or 430 of the Code or Section 302 or Title IV of ERISA, any ERISA Affiliate) is required to contribute.
“Pledged Equity” means all Equity Interests of any Issuer, including those listed on Sections 20 and 43 of the Information Certificate(s); all registrations, certificates, articles, by-laws, regulations, limited liability company agreements or constitutive agreements governing or representing any such interests; all options and other rights, contractual or otherwise, at any time existing with respect to such interests, as such interests are amended, modified, or supplemented from time to time, and together with any interests in any Pledged Equity of an Issuer taken in extension or renewal thereof or substitution therefor, and including, without limitation, to the extent attributable to, or otherwise related to, such pledged Equity Interests, all of such Loan Party’s (a) interests in the profits and losses of each Issuer of Pledged Equity, (b) rights and interests to receive distributions of each such Issuer’s assets and properties, and (c) rights and interests, if any, to participate in the management or each Issuer related to such pledged Equity Interests.
B-31
“PPSA” means the Personal Property Security Act (Alberta), including the regulations thereto, provided that, if validity, perfection or the effect of perfection or non-perfection or the priority of any Lien created hereunder on the Collateral is governed by the personal property security legislation or other applicable legislation with respect to personal property security in effect in a jurisdiction other than Alberta, “PPSA” means the Personal Property Security Act or such other applicable legislation in effect from time to time in such other jurisdiction (including the Civil Code of Quebec and the regulations respecting the register of personal and movable real rights thereunder) for purposes of the provisions hereof relating to such validity, perfection, effect of perfection or non-perfection or priority.
“Prepackaged Plan” means that certain Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and its Debtor Affiliates Pursuant to Chapter 11 of The Bankruptcy Code, dated as of March 3, 2026 [Docket No. 173], together with all annexes, exhibits, schedules and supplements thereto, in each case, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Prepackaged Plan Documentation” has the meaning set forth in Section 1.6(a)(xi)(B).
“Prepayment Event” means: (a) any sale (other than sales of inventory in the ordinary course of business), transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of any Loan Party other than assets with an aggregate fair value which do not exceed $2,500,000 in any Fiscal Year; (b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of any of any Loan Party with an aggregate fair value immediately prior to such event equal to or greater than $2,500,000 in any Fiscal Year; and (c) the receipt by any Loan Party of any Extraordinary Receipts in excess of $2,500,000 in the aggregate in any Fiscal Year, in each case of each of the preceding clauses (a), (b) and (c), solely to the extent such property or assets constitute Collateral.
“Prepetition Credit Agreement” has the meaning set forth in the recitals.
“Protective Advances” has the meaning set forth in Section 1.3.
“Pro Rata Share” means: (a) a Lender’s obligation to make all or a portion of the Revolving Loans, (b) a Lender’s right to receive payments of interest, fees, and principal with respect to the Revolving Loans, and (c) all other computations and other matters related to the Revolving Commitments or the Revolving Loans, the percentage obtained by dividing (x) the Revolving Exposure of such Lender by (y) the aggregate Revolving Exposure of all Lenders.
“Raw Material Inventory Sublimit” means the amount(s) set forth in Section 1(e) of Schedule A.
“Real Property” means all land, together with the buildings, structures, parking areas, and other improvements thereon, now or hereafter owned, leased, subleased, licensed or otherwise operated or occupied by any Loan Party, including all easements, rights-of-way, and similar rights appurtenant thereto.
“Real Property Availability” means, at any time of determination, an amount equal to the sum of clause (d) of the definition of Borrowing Base (without giving effect to clauses (a)(i) and (a)(ii) of the definition of Fixed Asset Formula Amount), less the corresponding Reserves applied thereto pursuant to Section 1.2.
“Real Property Collateral” means any Real Property now owned or hereafter acquired by any Loan Party that is subject to a Mortgage.
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“Recipient” means Agent, any Lender, any Participant, or any other recipient of any payment to be made by or on account of any Obligation of any Loan Party under this Agreement or any other Loan Document, as applicable.
“Register” has the meaning set forth in Section 10.9(a).
“Reimbursement Obligations” means, at any date, the obligations of each Borrower then outstanding to reimburse (a) Agent or any other Letter of Credit guarantor/indemnitor for payments made by Agent or such other Letter of Credit guarantor/indemnitor under a Support Agreement, and/or (b) any LC Issuer, for payments made by such LC Issuer under a Lender Letter of Credit.
“Related Person” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.
“Released Parties” has the meaning set forth in Section 6.1.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived.
“Required Lenders” means, at any time, Lenders having or holding at least 50.1% of the aggregate Revolving Exposure of all Lenders; provided that (x) if there are less than three (3) unaffiliated Lenders, Required Lenders shall mean all Lenders, and (y) the Revolving Commitment of, and the portion of the liabilities held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“Reserves” has the meaning set forth in Section 1.2.
“Restricted Payment” means, with respect to any Person, any direct or indirect dividend or distribution (whether in cash, securities or other property) or any direct or indirect payment of any kind or character (whether in cash, securities or other property) in consideration for or otherwise in connection with any retirement, purchase, redemption or other acquisition of any Equity Interest of such Person, or any options, warrants or rights to purchase or acquire any such Equity Interest of such Person; provided that, the term “Restricted Payment” shall not include any dividend or distribution payable solely in Equity Interests of such Person or warrants, options or other rights to purchase such Equity Interests.
“Revolver Usage” means the aggregate amount of outstanding Loans (inclusive of Protective Advances), plus Letter of Credit Liabilities.
“Revolving Commitment” means, with respect to each Lender, its Revolving Commitment, and with respect to all Lenders, their Revolving Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule A to this Agreement or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 10.8 of this Agreement; provided that the aggregate amount of the Revolving Commitments shall in no event exceed the Total Revolving Commitments.
“Revolving Exposure” means, with respect to any Lender, as of any date of determination (a) prior to the termination of the Revolving Commitments, the amount of such Lender’s Revolving Commitment, and (b) after the termination of the Revolving Commitments, the aggregate outstanding principal amount of the Revolving Loans and Letter of Credit Liabilities of such Lender.
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“Revolving Loans” has the meaning set forth in Section 1.1(a).
“Rolling Stock” means any vehicle or other Equipment owned by a Loan Party that is subject to a certificate of title.
“Royalties” means all royalties, fees, expense reimbursement and other amounts payable by a Loan Party under a License.
“Royalty Litigation” means the lawsuit filed on April 8, 2020, in the U.S. District Court for the Western District of Texas (Waco Division) by NCS Multistage Inc. and NCS Multistage, LLC, against the Company regarding the alleged infringement of U.S. Patent No. 10,465,445 (a patent relating to a certain airlock system).
“Royalty Reserve” means reserves for all accrued Royalties, whether or not then due and payable by a Loan Party.
“RSA” means that certain Restructuring Support Agreement (including all exhibits, schedules and attachments thereto), dated as of February 1, 2026, by and among the Loan Parties party thereto, the “Consenting Noteholders” referred to therein, the “Consenting Prepetition ABL Lenders” referred to therein and the other parties thereto from time to time, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“Sanctioned Entity” means (a) a country or a government of a country, region or territory, (b) an agency of the government of a country, region or territory, (c) an organization directly or indirectly controlled by a country, region or territory or its government, (d) a Person resident in a country, region or territory, in each case, that is subject to a country, region or territory sanctions program administered and enforced by OFAC or other applicable Sanctions authority, including, without limitation, as of the Closing Date, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, the Crimea, Zaporizhzhia and Kherson Regions of Ukraine, Cuba, Iran, North Korea and Syria.
“Sanctioned Person” means, at any time, (a) a Person named on any Sanctions-related list of designated Persons maintained by OFAC or other applicable Sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Entity or (c) any Person owned or controlled (as such terms are defined by applicable Sanctions) by any such Person or Persons described in the foregoing clauses (a) or (b).
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, (b) the United Nations Security Council, the European Union, any European Union member state, His Majesty’s Treasury of the United Kingdom, or (c) the Government of Canada.
“Scheduled Maturity Date” means the date set forth in Section 6 of Schedule A.
“Scheduled Unavailability Date” has the meaning ascribed thereto in Section 2.1(d)(iii)(B).
“SEC” means, the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Securities Act” means the Securities of Act of 1933, as amended.
B-34
“Senior Officer” means the current president, chief executive officer, executive vice president, chief financial officer, general counsel, treasurer or assistant treasurer of any Loan Party.
“Senior Secured Notes” means the 13.000% senior secured notes due 2028 which were issued by the Company prior to the Petition Date and which were deemed paid in full on or prior to the Closing Date pursuant to the Confirmation Order.
“Settlement” has the meaning set forth in Section 1.12(c).
“Settlement Date” has the meaning set forth in Section 1.12(c).
“SOFA Availability” means, at any time of determination, an amount equal to the sum of clause (f) of the definition of Borrowing Base, less the corresponding Reserves applied thereto pursuant to Section 1.2.
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Index Adjustment Date” means (a) the Closing Date and (b) thereafter, the last Business Day of each calendar month as any Obligations remain outstanding.
“SOFR Index Rate” means, as of any SOFR Index Adjustment Date, the greater of (a) the Floor, and (b) the rate per annum for the forward-looking term rate for SOFR for a period one (1) month, which appears on the CME Term SOFR Page on or about 5:00 a.m. (New York time) on the date of such SOFR Index Adjustment Date; provided, that, to the extent that the rate described in this clause (b)(i) is not ascertainable pursuant to the foregoing provisions of this definition, then the rate described in this clause (b)(i) shall be the interest rate per annum determined by Agent in Agent’s reasonable discretion in accordance with Section 2.1(d).
“SOFR Index Rate Loans” means Loans that bear interest at a rate based upon the SOFR Index Rate.
“SOFR Screen Rate” means the SOFR quote on an applicable screen page that Agent designates to determine SOFR pursuant to Section 2.1 (or such other commercially available source providing such quotations as may be designated by Agent from time to time).
“SOFR Successor Rate” has the meaning set forth in Section 2.1(d).
“SOFR Successor Rate Conforming Changes” means, with respect to any proposed SOFR Successor Rate, any conforming changes to the definition of Base Rate, SOFR Index Rate, ABR Index Rate, SOFR Screen Rate, CME Term SOFR Page, Business Day, U.S. Government Securities Business Day, or any related, similar or analogous definitions, timing and frequency of determining rates, making payments of interest, the applicability and length of lookback periods, and other technical, administrative and operational matters as may be appropriate, in the reasonable discretion of Agent, to reflect the adoption of such SOFR Successor Rate and to permit the administration thereof by Agent in a manner substantially consistent with market practice (or, if Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such SOFR Successor Rate exists, in such other manner of administration as Agent determines is reasonably necessary in connection with the administration of this Agreement).
B-35
“Specified Extended Terms Accounts” means Accounts owed by (a) Leaders Oil Field Equipment LLC with selling terms of not more than 95 days or (b) Haliburton Saudi Industries Services Ltd., Baker Hughes Trading Co. Ltd. or Energy Oilfield Supplies, in each case with selling terms of not more than 90 days.
“Specified Materials” means, collectively, all written materials provided by or on behalf of any Loan Party relating to the Loan Parties (or any of them) or their respective Affiliates or any other materials or matters relating to the Loan Documents (including any amendments or waivers of the terms thereof or supplements thereto).
“Specified Real Property” means the Real Property located at the addresses detailed on Annex I hereto as of the Closing Date.
“Stated Rate” has the meaning set forth in Section 2.5.
“Subsidiary” means any corporation or other entity of which a Person owns, directly or indirectly, through one or more intermediaries, more than 50% of the Equity Interests at the time of determination. Unless the context indicates otherwise, references to a Subsidiary shall be deemed to refer to a Subsidiary of Borrowers.
“Support Agreement” has the meaning set forth in Section 1.5(a).
“Supported Letter of Credit” means a Letter of Credit issued by an LC Issuer in reliance on one or more Support Agreements.
“Swap Agreement” means any agreement with respect to any swap, forward, spot, future, credit default or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that, no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrowers or their respective Subsidiaries shall be a Swap Agreement.
“Tangible Net Assets” means (a) the consolidated net book value of all assets of the Company and its consolidated Subsidiaries (excluding Foreign Subsidiaries) minus (b) the consolidated net book value of all intangible assets of the Company and its consolidated Subsidiaries (excluding Foreign Subsidiaries), calculated in each case based on the Company’s consolidated balance sheet for the most recently ended fiscal quarter as to which its financial statements are available. Tangible Net Assets shall be subject to pro forma adjustments for acquisitions and dispositions made which are not prohibited by this Agreement.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination Date” means the date on which all of the Obligations have been paid in full in cash and all of Lender’s lending commitments under this Agreement and under each of the other Loan Documents have been terminated.
“Title Notation” means certificates of title with respect to Rolling Stock with notations for the Liens granted to Agent to secure the Obligations.
B-36
“Title Servicing Agent” means a servicing company engaged by Agent or the Loan Parties to provide titling and custodial services pursuant to any Custodial Agreement, if any, with respect to certificates of title for the Rolling Stock, including the services described and required by Section 3.7 hereof, such servicing company to be satisfactory to Agent in its Permitted Discretion.
“Total Revolving Commitments” means, the Revolving Commitments of all Lenders; provided that the aggregate amount of the Total Revolving Commitments shall in no event exceed $135,000,000.
“Trademark Collateral” means (a) (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired, including those trademarks set forth in Section 35 of the Information Certificate(s), whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the “Trademark”), (b) all trademark licenses for the grant by or to any Loan Party of any right to use any trademark, (c) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable, clause (b), (d) the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b), and (e) all Proceeds of, and rights associated with, the foregoing, including any claim by any Loan Party against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.
“UCC” means, at any given time, the Uniform Commercial Code as adopted and in effect at such time in the State of New York or such other applicable jurisdiction.
“Unbilled Accounts Advance Rate” means the percentage set forth in Section 1(b)(ii) of Schedule A.
“Unbilled Accounts Sublimit” means the amount set forth in Section 1(d) of Schedule A.
“Unbilled Amounts” means, as to a Borrower, all obligations owing to such Borrower and all rights to payment owing to such Borrower, including but not limited to all such obligations and rights to payment constituting Accounts, arising out of or in connection with the rendition of services which have been performed for or provided to any customer but have not yet been billed or invoiced to such customer.
“Unfunded Capital Expenditures” means, as to any Loan Party, without duplication, a Capital Expenditure (a) funded from such Loan Party’s internally generated cash flow or (b) which is not financed from the proceeds of any Indebtedness (other than the Revolving Loans; it being understood and agreed that, to the extent any Capital Expenditures are financed with Revolving Loans, such Capital Expenditures shall be deemed Unfunded Capital Expenditures), calculated in accordance with GAAP.
“Unused Line Fee” means the unused line fee described in clause (d) of the Fee Letter.
B-37
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Loan Parties” means all Loan Parties other than the Canadian Loan Parties.
“U.S. Tax Compliance Certificate” has the meaning set forth in Section 9.1(e)(ii).
“Weekly Reporting Period” has the meaning set forth in Schedule D.
“Weekly Reporting Trigger” has the meaning set forth in Schedule D.
“White Oak” means WOABL and WOCF.
“WOABL” means White Oak ABL 3, LLC, a Delaware limited liability company (including, for the avoidance of doubt, any secured party acting in place of WOABL pursuant to a valid exercise of rights and remedies by such secured party as and to the extent permitted under any credit documentation to which WOABL and such secured party are a party).
“WOCF” has the meaning set forth in the Preamble to this Agreement.
Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder (including determinations made pursuant to the exhibits hereto) shall be made, and all financial statements required to be delivered hereunder shall be prepared on a consolidated basis in accordance with GAAP consistently applied. If at any time any change in GAAP would affect the computation of any financial ratio or financial requirement set forth in any Loan Document, and either Borrowers or Agent shall so request, Agent, Lenders and Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided, that until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) Borrowers shall provide to Agent financial statements and other documents required under this Agreement and the other Loan Documents which include a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (Codification of Accounting Standards 825-10) to value any Indebtedness or other liabilities of any Loan Party at “fair value”, as defined therein.
Notwithstanding anything to the contrary in this Agreement, the last day of the calendar month (or fiscal month, as the case may be) or calendar week ended February 28, 2026 shall be deemed to mean March 4, 2026.
B-38
Notwithstanding anything to the contrary contained in the paragraph above or the definitions of Capital Expenditures or Capitalized Leases, in the event of a change in GAAP after the Closing Date requiring all leases to be capitalized, only those leases (assuming for purposes of this paragraph that they were in existence on the Closing Date) that would constitute Capitalized Leases on the Closing Date shall be considered Capitalized Leases (and all other such leases shall constitute operating leases) and all calculations and deliverables under this Agreement or the other Loan Documents shall be made in accordance therewith (other than the financial statements delivered pursuant to this Agreement; provided, that all such financial statements delivered to Agent in accordance with the terms of this Agreement after the date of such change in GAAP shall contain a schedule showing the adjustments necessary to reconcile such financial statements with GAAP as in effect immediately prior to such change).
References in this Agreement to “Articles”, “Sections”, “Annexes”, “Exhibits” or “Schedules” shall be to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement unless otherwise specifically provided. Any term defined herein may be used in the singular or plural. “Include”, “includes” and “including” shall be deemed to be followed by “without limitation”. “Or” shall be construed to mean “and/or”. Except as otherwise specified or limited herein, references to any Person include the successors and assigns of such Person. References “from” or “through” any date mean, unless otherwise specified, “from and including” or “through and including”, respectively. Unless otherwise specified herein, the settlement of all payments and fundings hereunder between or among the parties hereto shall be made in lawful money of the United States and in immediately available funds. Time is of the essence for each performance obligation of the Loan Parties under this Agreement and each Loan Document. All amounts used for purposes of financial calculations required to be made herein shall be without duplication. References to any statute or act shall include all related current regulations and all amendments and any successor statutes, acts and regulations. References to any agreement, instrument or document (a) shall include all schedules, exhibits, annexes and other attachments thereto and (b) shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or in any other Loan Document). The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Unless otherwise specified herein Dollar ($) baskets set forth in the representations and warranty, covenants and event of default provisions of this Agreement (and other similar baskets) are calculated as of each date of measurement by the Dollar Equivalents thereof as of such date of measurement.
In this Agreement, where the context so requires, (i) any term defined in this Agreement by reference to the “UCC” shall also have any extended, alternative or analogous meaning given to such term in the PPSA, in all cases for the extension, preservation or betterment of the security and rights of the Collateral (including, without limitation, “general intangibles” shall include “intangibles”, “documents” shall include “documents of title”), (ii) all references in this Agreement to “Article 8” also to applicable Canadian securities transfer laws (including, without limitation, the Securities Transfer Act, SA 2006 (Alberta)), (iii) all references in this Agreement to a financing statement, continuation statement, amendment or termination statement shall be deemed to refer also to the analogous documents used under applicable Canadian personal property security laws, including, without limitation, where applicable, financing change statements, and (iv) all references to federal or state securities law shall be deemed to refer also to analogous federal, provincial and territorial securities laws in Canada.
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SCHEDULE C
EXISTING JPM LETTERS OF CREDIT
| LC # | Beneficiary | Amount | Expiration Date | ||||
| NUSCGS033652 | WEX Bank | $ | 300,000.00 | June 15, 2026 | |||
| NUSCGS043637 | Trisura Insurance Company | $ | 775,000.00 | June 27, 2026 | |||
C-1
Exhibit 10.2
Registration Rights Agreement
by and among
Nine Energy Service, Inc.
and the Stockholders of Nine Energy Service, Inc. Signatories Hereto
TABLE OF CONTENTS
| Page | ||
| Article I | ||
| DEFINITIONS | ||
| Section 1.01. | Defined Terms | 1 |
| Section 1.02. | Other Interpretive Provisions | 6 |
| Article II | ||
| REGISTRATION RIGHTS | ||
| Section 2.01. | Demand Registration | 6 |
| Section 2.02. | Shelf Registration | 9 |
| Section 2.03. | Limitations on Registration | 11 |
| Section 2.04. | Piggyback Registration | 11 |
| Section 2.05. | Lock-Up Periods | 13 |
| Section 2.06. | Registration Procedures | 14 |
| Section 2.07. | Underwritten Offerings | 18 |
| Section 2.08. | No Inconsistent Agreements | 19 |
| Section 2.09. | Registration Expenses | 19 |
| Section 2.10. | Indemnification | 20 |
| Section 2.11. | Rules 144 and 144A and Regulation S | 21 |
| Section 2.12. | Opt-Out | 22 |
| Article III | ||
| TRANSFER | ||
| Section 3.01. | Transfer of Registration Rights | 22 |
| Article IV | ||
| MISCELLANEOUS | ||
| Section 4.01. | Effectiveness | 22 |
| Section 4.02. | Registrable Securities | 22 |
| Section 4.03. | Existing Registration Statements | 23 |
| Section 4.04. | Other Activities | 23 |
| Section 4.05. | Entire Agreement | 23 |
| Section 4.06. | Governing Law; Submission to Jurisdiction; Waiver of Jury Trial | 23 |
| Section 4.07. | Obligations; Remedies | 23 |
| Section 4.08. | Amendment and Waiver | 24 |
| Section 4.09. | Binding Effect | 24 |
| Section 4.10. | Termination | 24 |
| Section 4.11. | Notices | 24 |
| Section 4.12. | Severability | 25 |
| Section 4.13. | Third-Party Beneficiaries | 25 |
| Section 4.14. | Counterparts | 25 |
| Section 4.15. | Headings | 25 |
i
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of March 5, 2026, by and among Nine Energy Service, Inc., a Delaware corporation (the “Issuer”), MacKay Shields LLC (the “Fund I Signatory”) and Philosophy Distressed and Special Situations Fund LP, Philosophy Capital Partners, LP, Star V Partners LLC, Blackwell Partners LLC – Series A and Cassini Partners, L.P. (collectively, the “Fund II Signatories”).
WITNESSETH:
WHEREAS, the Issuer and the Fund I Signatory and the Fund II Signatories are entering into this Agreement in accordance with and pursuant to the plan of reorganization (the “Plan”) of the Issuer and its debtor subsidiaries under chapter 11 of title 11 of the United States Code approved by the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”);
WHEREAS, pursuant to the Plan, the Issuer shall issue to the Fund I Investors and the Fund II Signatories shares of common stock, par value $0.01 per share (the “Common Stock”), in accordance with its terms; and
WHEREAS, in connection with the effectiveness of the Plan (the date of such effectiveness, the “Plan Effective Date”), the Issuer has agreed to provide the Investors (as defined below) with certain registration rights as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article
I
DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
“Adverse Disclosure” means public disclosure of MNPI that, in the Board’s good faith judgment, after consultation with outside counsel to the Issuer, (i) would be required to be made in any Registration Statement or report filed with the SEC by the Issuer so that such Registration Statement or report would not be materially misleading; (ii) would not be required to be made at such time but for the filing of such Registration Statement; and (iii) the Issuer has a bona fide business purpose for not disclosing publicly.
“Affiliate” has the meaning specified in Rule 12b-2 under the Exchange Act; provided, that no Investor shall be deemed an Affiliate of the Issuer or any of its subsidiaries for purposes of this Agreement.
1
“Affiliated Fund” means with respect to any Investor, (a) any Affiliates (including at the institutional level) of such Investor or any fund, account (including any separately managed accounts) or investment vehicle that is controlled, managed, advised or sub-advised by such Investor, an Affiliate of such Investor or by the same investment manager, advisor or subadvisor as such Investor or an Affiliate of such Investor or any fund, account (including any separately managed accounts) or investment vehicle which is controlled, managed, advised or sub-advised by an Affiliate of an Investor’s investment manager, advisor or sub-advisor or (b) one or more special purpose vehicles that are wholly owned by such Investor and/or its Affiliates.
“Agreement” has the meaning set forth in the Preamble.
“Bankruptcy Court” has the meaning set forth in the Recitals.
“Beneficial Owner” and “Beneficially Own” and similar terms have the meaning set forth in Rule 13d-3 under the Exchange Act as of the date hereof without giving effect to any voting agreement between the Issuer and any of its shareholders; provided, however, that no Investor shall be deemed to beneficially own any securities of the Issuer held by any other Investor solely by virtue of the provisions of this Agreement (other than this definition).
“Block Trade” means an offering and/or sale of Registrable Securities off of an effective Shelf Registration Statement by one or more of the Investors on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts prior to pricing, including a same day trade, overnight trade or similar transaction.
“Board” means the board of directors of the Issuer.
“Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks located in New York, New York are required or authorized by law to be closed.
“Chosen Court” has the meaning set forth in Section 4.06(b).
“Common Shares” means shares of Common Stock.
“Common Stock” has the meaning set forth in the Recitals.
“Demand Notice” has the meaning set forth in Section 2.01(e).
“Demand Period” has the meaning set forth in Section 2.01(d).
“Demand Registration” has the meaning set forth in Section 2.01(a)(i).
“Demand Registration Statement” has the meaning set forth in Section 2.01(a)(ii).
“Demand Request” has the meaning set forth in Section 2.01(a)(i).
“Demand Suspension” has the meaning set forth in Section 2.01(f).
“Demanding Investor” has the meaning set forth in Section 2.01(a)(i).
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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
“FINRA” means the Financial Industry Regulatory Authority.
“Fund I Investors” means the Fund I Signatory, as investment manager, investment advisor or subadvisor on behalf of certain of its clients, funds and accounts that have retained the services of its High Yield investment team.
“Fund II Investors” means any Affiliate or Affiliated Fund of Fund II Signatories.
“Holder” means an Investor for so long as such Investor Beneficially Owns Registrable Securities; provided, however, that an Investor shall cease to be a Holder when such Investor Beneficially Owns less than five percent (5%) of the then-outstanding Common Shares and such Investor may dispose of all Registrable Securities then Beneficially Owned by such Investor pursuant to Rule 144 without volume or manner-of-sale restrictions and without the requirement for the Issuer to be in compliance with the current public information requirement clause (c) of Rule 144; provided, further, that an Investor shall again become a Holder if the Issuer is not in compliance with its reporting obligations under the Exchange Act and such Investor can no longer sell pursuant to Rule 144 without volume or manner-of-sale restrictions.
“Investor” or “Investors” means (i) the Fund I Investors, (ii) the Fund II Investors and (iii) any Person who succeeds to rights hereunder pursuant to Section 3.01.
“Issuer” has the meaning given to the term in the Preamble.
“Issuer Free Writing Prospectus” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act, relating to an offer of the Registrable Securities.
“Issuer Public Sale” has the meaning set forth in Section 2.04(a).
“Law” with respect to any Person, means (a) all provisions of all laws, statutes, ordinances, rules, regulations, permits, certificates or orders of any governmental authority applicable to such Person or any of its assets or property or to which such Person or any of its assets or property is subject, and (b) all judgments, injunctions, orders and decrees of any governmental authority in proceedings or actions in which such Person is a party or by which it or any of its assets or properties is or may be bound or subject.
“Lock-Up Securities” has the meaning set forth in Section 2.05(a).
“Long-Form Registration Statement” has the meaning set forth in Section 2.01(a)(i).
“Loss” or “Losses” has the meaning set forth in Section 2.10(a).
“Majority Participating Investors” means the Participating Investors Beneficially Owning Registrable Securities representing at least a majority of the voting power of the Registrable Securities Beneficially Owned by the Participating Investors.
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“MNPI” means material non-public information within the meaning of Regulation FD promulgated under the Exchange Act, which shall in any case include the receipt of the notice of a Registration or any offering of Registrable Securities pursuant to this Agreement and the information contained in such notice.
“Opt-Out Request” has the meaning set forth in Section 2.12(b).
“Participating Investor” means, with respect to any Registration, any Investor of Registrable Securities covered by the applicable Registration Statement.
“Person” means an individual, corporation, association, limited liability company, partnership, estate, trust, joint venture, unincorporated organization or a government or any agency or political subdivision thereof.
“Piggyback Eligible Investor” means the Fund I Investors and the Fund II Investors.
“Piggyback Registration” has the meaning set forth in Section 2.04(a).
“Plan” has the meaning set forth in the Recitals.
“Plan Effective Date” has the meaning set forth in the Recitals.
“Prospectus” means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including pre- and post-effective amendments to such Registration Statement, and all other material incorporated by reference in such prospectus.
“Registrable Securities” means any Common Shares (i) owned by the Investors from time to time, including Common Shares issued to the Fund I Investors or the Fund II Signatories on the Plan Effective Date pursuant to the Plan, (ii) assigned to a Person pursuant to Section 3.01 or (iii) issued in respect of the securities described in clause (i) by way of conversion, dividend, stock split or other distribution, merger, consolidation, exchange, recapitalization or reclassification or similar transaction; provided, that any such Common Shares, as applicable, shall irrevocably cease to be Registrable Securities to the extent: (v) such Registrable Securities have been disposed of pursuant to an effective Registration Statement; (w) such Registrable Securities have been disposed of pursuant to Rule 144; (x) such Registrable Securities shall have been otherwise transferred and are represented by certificates or book entries not bearing a legend restricting transfer under the Securities Act; (y) the date on which the Registrable Securities cease to be outstanding; or (z) it is held by a Person that has not taken valid assignment of the rights provided in this Agreement pursuant to Section 3.01 or who is otherwise not a Holder in accordance with the provisos to the definition of Holder provided for herein.
“Registration” means a registration with the SEC of the Issuer’s securities for offer and sale to the public under a Registration Statement. The terms “Register” and “Registered” shall have a correlative meaning.
“Registration Expenses” has the meaning set forth in Section 2.09(a).
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“Registration Statement” means any registration statement of the Issuer filed with, or to be filed with, the SEC under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.
“Representatives” means, with respect to any Person, any of such Person’s officers, directors, employees, agents, attorneys, accountants, actuaries, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such Person.
“Required Investors” means an Investor or Investors Beneficially Owning, in the aggregate, Registrable Securities representing not less than twelve and one-half percent (12.5%) of, at the relevant time, the issued and outstanding Common Shares.
“Rule 144” means Rule 144 promulgated under the Securities Act (or any successor rule then in effect).
“Rule 158” means Rule 158 promulgated under the Securities Act (or any successor rule then in effect).
“Rule 415” means Rule 415 promulgated under the Securities Act (or any successor rule then in effect).
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
“Shelf Period” has the meaning set forth in Section 2.02(b).
“Shelf Registration” means a Registration effected pursuant to Section 2.02.
“Shelf Registration Statement” means a Registration Statement of the Issuer filed with the SEC for an offering to be made on a continuous basis pursuant to Rule 415 covering the Registrable Securities, as applicable.
“Shelf Suspension” has the meaning set forth in Section 2.02(c).
“Short-Form Registration Statement” has the meaning set forth in Section 2.01(a)(i).
“Suspension” means either a Demand Suspension or a Shelf Suspension.
“Takedown Notice” has the meaning set forth in Section 2.02(d).
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“Underwritten Offering” means a discrete registered offering of securities of the Issuer conducted by one or more underwriters pursuant to the terms of an underwriting agreement, including, for the avoidance of doubt, any Block Trade undertaken on an underwritten basis.
Section 1.02. Other Interpretive Provisions. The meanings of defined terms are equally applicable to the singular and plural forms thereof.
(a) The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection, Section, Exhibit, Schedule and Annex references are to this Agreement unless otherwise specified.
(b) The term “including” is not limiting and means “including without limitation.”
(c) Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.
Article II
REGISTRATION RIGHTS
Section 2.01. Demand Registration.
(a) Demand by the Investors.
(i) The Required Investors may make a written request (a “Demand Request”) to the Issuer for Registration of all or part of the Registrable Securities held by such Required Investors (A) on Form S-1 or any similar long-form Registration Statement (a “Long-Form Registration Statement”) or (B) on Form S-3 or any similar short-form Registration Statement (a “Short-Form Registration Statement”) if the Issuer is then qualified to use such short-form Registration Statement. Any such requested Registration shall hereinafter be referred to as a “Demand Registration,” and any Investor requesting such Demand Registration shall hereinafter be referred to as a “Demanding Investor.” Each Demand Request shall specify the aggregate amount of Registrable Securities to be Registered and the intended methods of disposition thereof.
(ii) Unless there is a currently effective Shelf Registration Statement covering such Registrable Securities on file with the SEC then that permits the Demanding Investors to sell their Registrable Securities in the manner specified in their Demand Requests, within (A) forty-five (45) days in the case of a request for a Long-Form Registration Statement or (B) thirty (30) days in the case of a request for a Short-Form Registration Statement, the Issuer shall file a Registration Statement relating to such Demand Registration (a “Demand Registration Statement”), and shall use its reasonable best efforts to cause such Demand Registration Statement to become effective under the Securities Act.
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(b) Limitation on Demand Registrations. The aggregate number of Demand Registrations using a Long-Form Registration Statement that may be requested by the Investors shall not exceed five (5). The Investors may request an unlimited number of Demand Registrations using a Short-Form Registration Statement.
(c) Demand Withdrawal. A Demanding Investor and any other Investor that has requested its Registrable Securities be included in a Demand Registration pursuant to Section 2.01(e) may withdraw all or any portion of its Registrable Securities included in a Demand Registration from a Demand Registration at any time prior to the effectiveness of the applicable Demand Registration Statement. Upon receipt of a notice to such effect from all Demanding Investors with respect to all of the Registrable Securities included by the Demanding Investors in their Demand Requests, the Issuer shall cease all efforts to secure effectiveness of the applicable Demand Registration Statement and such Registration nonetheless shall be deemed a Demand Registration for purposes of Section 2.01(b) unless (i) the Demanding Investors shall have paid or reimbursed the Issuer for all reasonable and documented out-of-pocket fees and expenses incurred by the Issuer in connection with the Registration of the Demanding Investors’ withdrawn Registrable Securities or (ii) during the registration process material adverse information regarding the Issuer is disclosed that was not known by the Demanding Investors at the time the Demand Request was made. If, as a result of a Demanding Investor withdrawing all of its Registrable Securities included in its Demand Request, the number of Registrable Securities Beneficially Owned by all other Demanding Investors is less than twelve and one-half percent (12.5%) of the then-outstanding Common Shares, the Issuer shall no longer be required to file the requested Demand Registration Statement.
(d) Effective Registration. The Issuer shall be deemed to have effected a Demand Registration if the Demand Registration Statement has become effective and remains effective for not less than one hundred eighty (180) days (or such shorter period as shall terminate when all Registrable Securities covered by such Demand Registration Statement have been sold or withdrawn), or if such Registration Statement relates to an Underwritten Offering, such longer period as, in the opinion of counsel for the underwriter or underwriters, a Prospectus is required by law, to be delivered in connection with sales of Registrable Securities by an underwriter or dealer (the applicable period, the “Demand Period”). No Demand Registration shall be deemed to have been effected if (i) during the Demand Period such Registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court or (ii) the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such Registration are not satisfied other than by reason of a wrongful act, misrepresentation or breach of such applicable underwriting agreement by the Demanding Investor.
(e) Demand Notice. Promptly upon receipt of any request for a Demand Registration pursuant to Section 2.01(a)(i) (but in no event more than three (3) Business Days thereafter), the Issuer shall deliver a written notice (a “Demand Notice”) of any such Registration request to all other Investors (which notice shall state that the material terms of such proposed Registration, to the extent known, as well as the identity of the Demanding Investor, are available upon request), and subject to Sections 2.01(f) and 2.01(h), the Issuer shall include in such Demand Registration all such Registrable Securities with respect to which the Issuer has received written requests for inclusion therein within five (5) Business Days after the date that the Demand Notice has been delivered to the relevant Investor. All requests made pursuant to this Section 2.01(e) shall specify the aggregate amount of Registrable Securities of the requesting Investor to be Registered and the intended method of distribution of such securities. Notwithstanding the above provisions in this Section 2.01(e), if the requesting Investor’s intended method of distribution of such securities, as specified in its request, may be accomplished under a currently effective Shelf Registration Statement, the Issuer shall not be required to include such securities in the Demand Registration.
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(f) Delay in Filing; Suspension of Registration. If the Issuer determines in good faith that the filing, initial effectiveness or continued use of a Demand Registration Statement at any time would require the Issuer to make an Adverse Disclosure, the Issuer may, upon giving prompt written notice of such action to the Participating Investors, delay the filing or initial effectiveness of, or suspend use of, the Demand Registration Statement (a “Demand Suspension”); provided, that the Issuer shall not be permitted to exercise a Suspension (other than a Shelf Suspension relating to a post-effective amendment to a Shelf Registration Statement required to update such Shelf Registration Statement pursuant to Section 10(a)(3) of the Securities Act) (i) more than twice during any twelve (12)-month period, or (ii) for a period exceeding forty-five (45) days on any one occasion. In the case of a Demand Suspension, the Investors agree to suspend use of the applicable Prospectus and any Issuer Free Writing Prospectuses in connection with any sale or purchase, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Issuer shall immediately notify the Participating Investors upon the termination of any relevant Demand Suspension, amend or supplement the Prospectus or any Issuer Free Writing Prospectus, if necessary, so it does not contain any untrue statement or omission and furnish to the Participating Investors such numbers of copies of the Prospectus as so amended or supplemented or any Issuer Free Writing Prospectus as the Participating Investors may reasonably request. The Issuer shall, if necessary, supplement or make amendments to the Demand Registration Statement, if required by the registration form used by the Issuer for the Demand Registration or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder or as may reasonably be requested by a Demanding Investor.
(g) Underwritten Offering. If the expected aggregate gross proceeds of an offering of Registrable Securities are at least fifty million U.S. dollars ($50,000,000), a Demanding Investor may request that such offering be in the form of an Underwritten Offering, and such Demanding Investor shall have the right to select the managing underwriter or underwriters to administer the offering; provided, that (i) such managing underwriter or underwriters shall be reasonably acceptable to the Issuer and the Majority Participating Investors and (ii) the Issuer shall have the right to select at least one (1) of the joint bookrunning managers. Notwithstanding the foregoing, in no event shall the Issuer be required to effect more than one (1) Underwritten Offering (regardless of whether such Underwritten Offering is requested pursuant to this Section 2.01(g), pursuant to Section 2.02(d) or pursuant to Section 2.02(e)) in any ninety (90)-day period.
(h) Priority of Securities Registered Pursuant to Demand Registrations. If the managing underwriter or underwriters of a proposed Underwritten Offering of the Registrable Securities included in a Demand Registration advise the Board in writing that, in its or their opinion, the number of securities requested to be included in such Demand Registration exceeds the number which can be sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Demand Registration shall be allocated, (i) first, if applicable, pro rata between the Participating Investors based on the relative number of Registrable Securities then held by each Participating Investor and (ii) second, and only if all of the Registrable Securities referred to in clause (i) have been included, the number of Registrable Securities that the Issuer proposes to include in such Registration that, in the opinion of the managing underwriter or underwriters can be sold without having such adverse effect.
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Section 2.02. Shelf Registration.
(a) Initial Shelf Registration. If requested by the Required Investors on or after the Plan Effective Date, as promptly as practicable (and in no event later than forty-five (45) days following written notice to the Issuer of such request by the Required Investors), the Issuer shall use its reasonable best efforts to prepare and file with the SEC a Shelf Registration Statement relating to the offer and sale by the Investors requesting inclusion therein of their Registrable Securities from time to time in accordance with the methods of distribution elected by such Investors and set forth in the Shelf Registration Statement and, as promptly as practicable thereafter, shall use its reasonable best effort to cause such Shelf Registration Statement to become effective under the Securities Act on the earliest date practicable.
(b) Continued Effectiveness. The Issuer shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by the applicable Investors until the earlier of (i) the date as of which all Registrable Securities have been sold pursuant to such Shelf Registration Statement or another Registration Statement filed under the Securities Act (but in no event prior to the applicable period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder) and (ii) the date as of which each of the Participating Investors with respect to such Shelf Registration Statement no longer holds its Registrable Securities (such period of effectiveness, the “Shelf Period”).
(c) Suspension of Registration. If the Issuer determines in good faith that the continued use of such Shelf Registration Statement at any time would require the Issuer to make an Adverse Disclosure, the Issuer may, upon giving, to the extent practicable, at least five (5) days’ prior written notice of such action to the Participating Investors (or, in the case of a Block Trade, upon receipt of notice of such Block Trade pursuant to Section 2.02(e)), suspend use of the Shelf Registration Statement (a “Shelf Suspension”); provided, that the Issuer shall not be permitted to exercise a Suspension (other than a Shelf Suspension relating to a post-effective amendment to a Shelf Registration Statement required to update such Shelf Registration Statement pursuant to Section 10(a)(3) of the Securities Act) (i) more than once during any twelve (12)-month period, or (ii) for a period exceeding forty-five (45) days on any one occasion. In the case of a Shelf Suspension, the Investors agree to suspend use of the applicable Prospectus and any Issuer Free Writing Prospectuses in connection with any sale or purchase of, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Issuer shall immediately notify the Participating Investors upon the termination of any Shelf Suspension, amend or supplement the Prospectus or any Issuer Free Writing Prospectus, if necessary, so it does not contain any material misstatement or omission and furnish to the Participating Investors such numbers of copies of the Prospectus as so amended or supplemented or any Issuer Free Writing Prospectus as the Participating Investors may reasonably request. The Issuer shall, if necessary, supplement or make amendment to such Shelf Registration Statement, if required by the registration form used by the Issuer for such Shelf Registration or by the instruction applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder or as may reasonably be requested by the Participating Investors.
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(d) Underwritten Offering. If the expected aggregate gross proceeds of an offering of Registrable Securities are at least fifty million U.S. dollars ($50,000,000), and the Required Investors (to the extent such Required Investors are named as selling security holders in the Shelf Registration Statement) so elect, such offering may be in the form of an Underwritten Offering, the Issuer shall amend or supplement the Shelf Registration Statement for such purpose and such Required Investors shall have the right to select the managing underwriter or underwriters to administer such offering; provided, that (i) such managing underwriter or underwriters shall be reasonably acceptable to the Issuer and the Majority Participating Investors and (ii) the Issuer shall have the right to select at least one (1) of the joint bookrunning managers. Promptly upon receipt of any request for an Underwritten Offering (that is not a Block Trade) pursuant to this Section 2.02(d) (but in no event more than three (3) Business Days thereafter), the Issuer shall deliver a written notice (a “Takedown Notice”) of any such request to all other Investors named as selling security holders in the Shelf Registration Statement (which notice shall state that the material terms of such proposed Underwritten Offering, to the extent known, as well as the identity of the Required Investors making such request, are available upon request), and subject to Section 2.02(c) and the last sentence of this Section 2.02(d), any Investor from whom the Issuer has received written requests for inclusion therein within five (5) Business Days after the date that the Takedown Notice has been delivered shall be eligible to participate in such Underwritten Offering. All requests made pursuant to this Section 2.02(d) shall specify the aggregate amount of Registrable Securities that the requesting Investor seeks to offer and sell in such Underwritten Offering. Notwithstanding the foregoing, in no event shall the Issuer be required to effect more than one (1) Underwritten Offering (regardless of whether such Underwritten Offering is requested pursuant to this Section 2.02(d), pursuant to Section 2.02(e) or pursuant to Section 2.01(g)) in any ninety (90)-day period. The provisions of Section 2.01(h) shall apply to any Underwritten Offering pursuant to this Section 2.02(d).
(e) Block Trades. If the Required Investors wish to engage in a Block Trade, such Required Investors (to the extent such Required Investors are named as selling security holders in the Shelf Registration Statement) shall notify the Issuer of the Block Trade, including the day on which such Block Trade is to commence, no later than 10:00 a.m. New York City time on the day such Block Trade is to commence. The Issuer shall as expeditiously as possible use its reasonable best efforts (including co-operating with such Required Investors with respect to the provision of necessary information) to facilitate such Block Trade (which may close as early as two (2) Business Days after the date it commences), provided, that the Required Investors requesting such Block Trade shall use reasonable best efforts to work with the Issuer and the underwriters prior to making such request in order to facilitate preparation of the Prospectus and other offering documentation related to the Block Trade. Notwithstanding anything to the contrary set forth herein, the Issuer shall not be obligated to notify the other Investors of any Block Trade.
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Section 2.03. Limitations on Registration. Notwithstanding anything else in this Agreement, the Issuer shall not be required to file more than one (1) Registration Statement pursuant to Section 2.01 and Section 2.02 in any ninety- (90) day period.
Section 2.04. Piggyback Registration.
(a) Participation in a Shelf Registration. If the Issuer at any time proposes to file a Shelf Registration Statement under the Securities Act with respect to any offering of its equity securities for its own account or for the account of any other Persons (other than (i) a Registration under Section 2.01 or Section 2.02, (ii) a Registration on Form S-4 or S-8 or any successor form to such Forms or (iii) a Registration of securities solely relating to an offering and sale to employees or directors of the Issuer pursuant to any employee stock plan or other employee benefit plan arrangement) (an “Issuer Public Sale”), then, as soon as practicable (but in no event less than three (3) Business Days prior to the proposed date of public filing of such Shelf Registration Statement), the Issuer shall give written notice of such proposed filing to the Investors, and such notice shall offer the Investors the opportunity to Register under such Shelf Registration Statement such number of Registrable Securities as each such Investor may request in writing (a “Piggyback Registration”). All requests made pursuant to this Section 2.04(a) shall specify the aggregate amount of Registrable Securities of the requesting Investor to be Registered and the intended method of distribution of such securities. Subject to Section 2.04(c), the Issuer shall include in such Shelf Registration Statement all such Registrable Securities that are requested to be included therein within five (5) Business Days after the receipt by such Investors of any such notice; provided, that if at any time after giving written notice of its intention to Register any securities and prior to the effective date of the Shelf Registration Statement filed in connection with such Registration, the Issuer shall determine for any reason not to Register or to delay Registration of such securities, the Issuer shall give written notice of such determination to each requesting Investor and, thereupon, (i) in the case of a determination not to Register, shall be relieved of its obligation to Register any Registrable Securities in connection with such Registration (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of the Investors to request that such Registration be effected as a Demand Registration under Section 2.01, and (ii) in the case of a determination to delay Registering, in the absence of a request for a Demand Registration, shall be permitted to delay Registering any Registrable Securities, for the same period as the delay in Registering such other securities. If any offering pursuant to such Shelf Registration Statement is to be an Underwritten Offering, then only a Piggyback Eligible Investor shall be entitled to participate in such Underwritten Offering on the terms and subject to the conditions set forth in this Agreement upon making a request for a Piggyback Registration pursuant to this Section 2.04(a), and the Issuer shall make such arrangements with the managing underwriter or underwriters so that each such Piggyback Eligible Investor may participate in such Underwritten Offering, subject to Section 2.04(c). If the offering pursuant to such Registration Statement is to be on any other basis, then each Investor making a request for a Piggyback Registration pursuant to this Section 2.04(a) and the Issuer shall make such arrangements so that each such Investor may participate in such offering on such basis. Notwithstanding the above provisions of this Section 2.04(a), if a requesting Investor’s intended method of distribution of its securities, as specified in its request, may be accomplished under a currently effective Registration Statement, the Issuer shall not be required to include such securities in the Issuer’s Shelf Registration Statement.
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(b) Participation in a Non-Shelf Registration. If the Issuer at any time proposes to file a Registration Statement under the Securities Act that is not a Shelf Registration Statement with respect to any Issuer Public Sale, then, as soon as practicable (but in no event less than three (3) Business Days prior to the proposed date of public filing of such Registration Statement), the Issuer shall give written notice of such proposed filing to the Piggyback Eligible Investors (which notice shall state that the material terms of such proposed Issuer Public Sale, to the extent known, are available upon request), and such notice shall offer the Piggyback Eligible Investors the opportunity to make a Piggyback Registration. Subject to Section 2.04(c), the Issuer shall include in such Registration Statement all such Registrable Securities that are requested to be included therein within five (5) Business Days after the receipt by such Piggyback Eligible Investors of any such notice; provided, that if at any time after giving written notice of its intention to Register any securities and prior to the effective date of the Registration Statement filed in connection with such Registration, the Issuer shall determine for any reason not to Register or to delay Registration of such securities, the Issuer shall give written notice of such determination to each Piggyback Eligible Investor and, thereupon, (i) in the case of a determination not to Register, shall be relieved of its obligation to Register any Registrable Securities in connection with such Registration (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of the Investors to request that such Registration be effected as a Demand Registration under Section 2.01, and (ii) in the case of a determination to delay Registering, in the absence of a request for a Demand Registration, shall be permitted to delay Registering any Registrable Securities, for the same period as the delay in Registering such other securities. If the offering pursuant to such Registration Statement is to be an Underwritten Offering, then each Piggyback Eligible Investor making a request for a Piggyback Registration pursuant to this Section 2.04(b) and the Issuer shall make such arrangements with the managing underwriter or underwriters so that each such Piggyback Eligible Investor may participate in such Underwritten Offering, subject to Section 2.04(c). If the offering pursuant to such Registration Statement is to be on any other basis, then each Piggyback Eligible Investor making a request for a Piggyback Registration pursuant to this Section 2.04(b) and the Issuer shall make such arrangements so that each such Piggyback Eligible Investor may participate in such offering on such basis. All requests for inclusion in the Piggyback Registration shall specify the aggregate amount of Registrable Securities of the requesting Investor to be Registered and the intended method of distribution of such securities, and notwithstanding the above provisions of this Section 2.04(b), if a requesting Investor’s intended method of distribution of its securities, as specified in its request, may be accomplished under a currently effective Registration Statement, the Issuer shall not be required to include such securities in the Issuer’s Registration Statement.
(c) Priority of Piggyback Registration. If the managing underwriter or underwriters of any proposed Underwritten Offering of Registrable Securities included in a Piggyback Registration informs the Issuer and the Piggyback Eligible Investors of Registrable Securities in writing that, in its or their opinion, the number of securities which such Piggyback Eligible Investors and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Registration shall be (i) first, 100% of the securities proposed to be sold in such Registration by the Issuer or (subject to Section 2.08) any Person (other than an Investor) exercising a contractual right to demand Registration, as the case may be, and (ii) second, and only if all the securities referred to in clause (i) have been included, the number of Registrable Securities that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect, with such number to be allocated pro rata among the Piggyback Eligible Investors that have requested to participate in such Registration based on the relative number of Registrable Securities then held by each such Piggyback Eligible Investor; provided, that any securities thereby allocated to a Piggyback Eligible Investor that exceed such Piggyback Eligible Investor’s request shall be reallocated among the remaining requesting Piggyback Eligible Investors in like manner and (iii) third, and only if all of the Registrable Securities referred to in clause (ii) have been included in such Registration, any other securities eligible for inclusion in such Registration.
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(d) Withdrawal. Any Investor shall have the right to withdraw all or part of its request for inclusion of its Registrable Securities in a Piggyback Registration by giving written notice to the Issuer of its request to withdraw; provided, that (i) such request must be made in writing prior to the effectiveness of such Registration Statement and (ii) such withdrawal shall be irrevocable and, after making such withdrawal, an Investor shall no longer have any right to include Registrable Securities in the Piggyback Registration as to which such withdrawal was made.
(e) No Effect on Demand Registrations. No Registration of Registrable Securities effected pursuant to a request under this Section 2.04 shall be deemed to have been effected pursuant to Section 2.01 or Section 2.02 or shall relieve the Issuer of its obligations under Section 2.01 or Section 2.02.
(f) Underwritten Offering. In any Issuer Public Sale that constitutes an Underwritten Offering, the Issuer shall have the sole and exclusive right to select the managing underwriter or underwriters to administer such offering.
Section 2.05. Lock-Up Periods.
(a) Lock-Up Periods for Investors. In the event of an Issuer Public Sale of the Issuer’s equity securities in an Underwritten Offering, the Participating Investors in such Issuer Public Sale pursuant to Section 2.04 acknowledge that such participation may only be permitted if such Investor agrees, if requested by the managing underwriter or underwriters in such Underwritten Offering, not to effect any public sale or distribution of any Registrable Securities (except, in each case, as part of the Issuer Public Sale pursuant to Section 2.04) that are the same as or similar to those being Registered in connection with such Issuer Public Sale, or any securities convertible into or exchangeable or exercisable for Registrable Securities (the “Lock-Up Securities”), during the period beginning two (2) days before and ending ninety (90) days (or such lesser period as may be permitted for all Investors by the Issuer or such managing underwriter or underwriters) after the effective date of the Registration Statement filed in connection with such Registration (or, in the case of an offering under a Shelf Registration Statement, the date of the applicable prospectus supplement in connection therewith) to the extent timely notified in writing by the Issuer or the managing underwriter or underwriters.
(b) Lock-Up Period for the Issuer and Others. In the case of a Registration of Registrable Securities pursuant to Section 2.01 or Section 2.02 in an Underwritten Offering, excluding any Block Trade, the Issuer agrees, if requested by the Investors or the managing underwriter or underwriters with respect to such Registration, not to effect any public sale or distribution of any Lock-Up Securities, during the period beginning two (2) days before and ending ninety (90) days (or such lesser period as may be permitted for the Issuer by the Investors or such managing underwriter or underwriters) after the effective date of the Registration Statement filed in connection with such Registration (or, in the case of an offering under a Shelf Registration Statement, the date of the applicable prospectus supplement in connection therewith), to the extent timely notified in writing by the Investors or the managing underwriter or underwriters. Notwithstanding the foregoing, the Issuer may effect a public sale or distribution of securities of the type described above and during the periods described above if such sale or distribution is made pursuant to Registrations on Form S-4 or S-8 or any successor form to such Forms or as part of any Registration of securities for offering and sale to employees or directors of the Issuer pursuant to any employee stock plan, employee stock purchase plan or other employee benefit plan arrangement. Without limiting the foregoing (but subject to Section 2.08), if after the date hereof the Issuer grants any Person (other than an Investor) any rights to demand or participate in a Registration, the Issuer agrees that such Person’s participation in an Underwritten Offering of Registrable Securities pursuant to Section 2.01 or Section 2.02 shall be made conditional on such Person’s agreement to comply with any lock-up period required by this Section 2.05(b) as if it were an Investor hereunder.
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Section 2.06. Registration Procedures.
(a) In connection with the Issuer’s Registration obligations under Section 2.01, Section 2.02 and Section 2.04, the Issuer shall use its reasonable best efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as reasonably practicable, and in connection therewith the Issuer shall:
(i) prepare the required Registration Statement including all exhibits and financial statements required under the Securities Act to be filed therewith, and before filing a Registration Statement, Prospectus or any Issuer Free Writing Prospectus, or any amendments or supplements thereto, (x) furnish to the underwriters, if any, and to Participating Investors, copies of all documents prepared to be filed, which documents shall be subject to the review of such underwriters and such Investors and their respective counsel and (y) except in the case of a Registration under Section 2.04, not file any Registration Statement, Prospectus or any Issuer Free Writing Prospectus or amendments or supplements thereto to which the Investors or the underwriters, if any, shall reasonably object;
(ii) as soon as reasonably practicable (but in no event later than the time period required under Section 2.01(a)(ii) or Section 2.02(a), as applicable) file with the SEC a Registration Statement relating to the Registrable Securities, including all exhibits and financial statements required by the SEC to be filed therewith, and use its reasonable best efforts to cause such Registration Statement to become effective under the Securities Act as soon as practicable;
(iii) prepare and file with the SEC such pre- and post-effective amendments to such Registration Statement, supplements or amendments to the Prospectus or any Issuer Free Writing Prospectus as may be (A) reasonably requested by a Participating Investor (including, until and unless (x) the Common Shares are listed on a national securities exchange or (y) the Common Shares may be sold by any and all Holders without restriction pursuant to a Registration Statement in an at-the-market offering, a Prospectus or Issuer Free Writing Prospectus disclosing the price at which the Common Shares will be offered and sold within twenty-four (24) hours of a request by a Participating Investor; provided if such Participating Investor provides such price by 9 a.m. New York City time on a Business Day, the Issuer shall provide such Prospectus or Issuer Free Writing Prospectus on the same Business Day by 1:00 pm New York City time) or (B) necessary to keep such Registration effective for the period of time required by this Agreement, and comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;
(iv) notify the Participating Investors and the managing underwriter or underwriters, if any, and (if requested) confirm such advice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by the Issuer (a) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus, any amendment or supplement to such Prospectus (except for any amendment as a result of the filing of a periodic report, current report or any other document required to be filed by the Issuer under the Exchange Act and which is incorporated by reference into such Registration Statement), any Issuer Free Writing Prospectus or any amendment or supplement to such Issuer Free Writing Prospectus has been filed, (b) of any written comments by the SEC or any request by the SEC or any other federal or state governmental authority for amendments or supplements to such Registration Statement, such Prospectus, such Issuer Free Writing Prospectus or for additional information, (c) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or any order by the SEC or any other regulatory authority preventing or suspending the use of any preliminary or final Prospectus or the initiation or threatening of any proceedings for such purposes, (d) if, at any time, the representations and warranties of the Issuer in any applicable underwriting agreement cease to be true and correct in all material respects, and (e) of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
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(v) promptly notify the Participating Investors and the managing underwriter or underwriters, if any, when the Issuer becomes aware of the happening of any event as a result of which the applicable Registration Statement, Prospectus (as then in effect) or any Issuer Free Writing Prospectus contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of such Prospectus, any preliminary Prospectus or Issuer Free Writing Prospectus, in light of the circumstances under which they were made) not misleading, when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the Registration Statement or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement, Prospectus or Issuer Free Writing Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the SEC, and furnish without charge to the Participating Investors and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement, Prospectus or Issuer Free Writing Prospectus which shall correct such misstatement or omission or effect such compliance;
(vi) use its reasonable best efforts to prevent, or obtain the withdrawal of, any stop order or other order or notice preventing or suspending the use of any preliminary or final Prospectus or any Issuer Free Writing Prospectus;
(vii) promptly incorporate in a Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment such information as the managing underwriter or underwriters and the Investors agree should be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment;
(viii) furnish to each Participating Investor and each underwriter, if any, without charge, as many conformed copies as such Investor or underwriter may reasonably request of the applicable Registration Statement and any amendment or post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference), except that the Issuer shall not be required to provide documents that are available through the SEC’s Electronic Data Gathering Analysis and Retrieval System;
(ix) deliver to each Participating Investor and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto, each Issuer Free Writing Prospectus and such other documents as such Investor or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by such Investor or underwriter, it being understood that the Issuer consents, subject to the other provisions of this Agreement, to the use of such Prospectus or any Issuer Free Writing Prospectus or any amendment or supplement thereto by such Investor and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto or Issuer Free Writing Prospectus;
(x) on or prior to the date on which the applicable Registration Statement becomes effective, use its reasonable best efforts to Register or qualify, and cooperate with the Participating Investors, the managing underwriter or underwriters, if any, and their respective counsel, in connection with the Registration or qualification of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of each state and other jurisdiction of the United States as any Participating Investor or managing underwriter or underwriters, if any, or their respective counsel reasonably request in writing and do any and all other acts or things reasonably necessary or advisable to keep such Registration or qualification in effect for such period as required by Section 2.01(d) or Section 2.02(b), whichever is applicable; provided, that the Issuer shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject;
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(xi) cooperate with the Participating Investors and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two (2) Business Days prior to any sale of Registrable Securities to the underwriters; provided, that the Issuer may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System;
(xii) use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities;
(xiii) make such representations and warranties to the underwriters or agents, if any, in form, substance and scope as are, in the opinion of the Issuer, customarily made by similarly-situated issuers in secondary underwritten public offerings;
(xiv) enter into such customary agreements (including underwriting and indemnification agreements) and take all such other actions as the Investors or the managing underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the Registration and disposition of such Registrable Securities;
(xv) in the case of an Underwritten Offering, obtain for delivery to the underwriter or underwriters, with copies to the Participating Investors, an opinion or opinions from counsel for the Issuer dated the effective date of the Registration Statement or, in the event of an Underwritten Offering, the date of the closing under the underwriting agreement, in customary form, scope and substance, which opinions shall be reasonably satisfactory to such underwriters, as the case may be, and their respective counsel;
(xvi) in the case of an Underwritten Offering, obtain for delivery to the underwriter or underwriters, with copies to the Participating Investors, a comfort letter from the Issuer’s independent certified public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the managing underwriter or underwriters reasonably request, dated the date of execution of the underwriting agreement and the date of closing under the underwriting agreement;
(xvii) cooperate with each Participating Investor and each underwriter, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;
(xviii) make available to its security holders, as soon as reasonably practicable, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder (including, at the option of the Issuer, Rule 158);
(xix) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable Registration Statement from and after a date not later than the effective date of such Registration Statement;
(xx) cause all Registrable Securities covered by the applicable Registration Statement to be listed on the national securities exchange on which the relevant class or classes of Registrable Securities are then listed (if any);
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(xxi) make available upon reasonable notice at reasonable times and for reasonable periods for inspection by the Participating Investors, by any underwriter participating in any disposition to be effected pursuant to such Registration Statement and by any attorney, accountant or other agent retained by the Investors or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Issuer, and cause all of its officers, directors and employees and the independent public accountants who have certified its financial statements to make themselves available to discuss the business of the Issuer and to supply all information reasonably requested by any such Person in connection with such Registration Statement as shall be necessary to enable them to exercise their due diligence responsibility; provided, that any such Person gaining access to information regarding the Issuer pursuant to this Section 2.06(a)(xxi) shall agree to hold in strict confidence and shall not make any disclosure or use any information regarding the Issuer that it determines in good faith to be confidential, and of which determination such Person is notified, unless (w) the release of such information is requested or required by deposition, interrogatory, requests for information or documents by a governmental entity, subpoena or similar process, (x) such information is or becomes publicly known other than through a breach of this or any other agreement of which such Person has knowledge, (y) such information is or becomes available to such Person on a non-confidential basis from a source other than the Issuer or (z) such information is independently developed by such Person; and
(xxii) in the case of an Underwritten Offering, cause the senior executive officers of the Issuer to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter or underwriters in any such Underwritten Offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto; provided, that the Issuer shall not be obligated to cause its senior executive officers to participate in more than two (2) “road shows” (other than “net road shows”) in any twelve (12) month period or if such participation is reasonably expected to interfere with the business operations of the Issuer;
(xxiii) take no direct or indirect action prohibited by Regulation M under the Exchange Act;
(xxiv) take all reasonable action to ensure that any Issuer Free Writing Prospectus utilized in connection with any Registration covered by Section 2.01, Section 2.02 or Section 2.04 complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related Prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and
(xxv) take all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities.
(b) If the Issuer files any Shelf Registration Statement, the Issuer agrees that it shall include in such Shelf Registration Statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Investors) in order to ensure that the Investors may be added to such Shelf Registration Statement at a later time through the filing of a prospectus supplement rather than a post-effective amendment; provided, however, that this Section 2.06(b) shall apply only to the extent that the Issuer is eligible to rely on Rule 430B under the Securities Act with respect to selling security holder disclosures.
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(c) The Issuer may require each Participating Investor to furnish to the Issuer such information regarding the distribution of such securities and such other information relating to such Investor and its ownership of Registrable Securities as the Issuer may from time to time reasonably request in writing and the Issuer may exclude from such Registration the Registrable Securities of any Participating Investor who fails to furnish such information within ten (10) Business Days after receiving such request. For the avoidance of doubt, it shall, in all cases, be reasonable for the Issuer to request from each Participating Investor such information as the Issuer may reasonably determine is required to be disclosed in any Registration Statement or, in the case of an Underwritten Offering, as any underwriter may require to satisfy any know-your-customer, anti-money-laundering or similar policies, procedures or regulations. Each Participating Investor agrees to furnish such information to the Issuer and to cooperate with the Issuer as reasonably necessary to enable the Issuer to comply with the provisions of this Agreement.
(d) Each Participating Investor agrees that, upon receipt of any notice from the Issuer of the happening of any event of the kind described in Section 2.06(a)(v), such Investor will forthwith discontinue disposition of Registrable Securities pursuant to such Registration Statement until such Investor’s receipt of the copies of the supplemented or amended Prospectus or Issuer Free Writing Prospectus, as the case may be, contemplated by Section 2.06(a)(v), or until such Investor is advised in writing by the Issuer that the use of the Prospectus or Issuer Free Writing Prospectus, as the case may be, may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus or such Issuer Free Writing Prospectus or any amendments or supplements thereto and if so directed by the Issuer, such Investor shall deliver to the Issuer (at the Issuer’s expense) all copies, other than permanent file copies then in such Investor’s possession, of the Prospectus or any Issuer Free Writing Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Issuer shall give any such notice, the period during which the applicable Registration Statement is required to be maintained effective shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by such Registration Statement either receives the copies of the supplemented or amended Prospectus or any Issuer Free Writing Prospectus contemplated by Section 2.06(a) (v) or is advised in writing by the Issuer that the use of the Prospectus may be resumed.
(e) If any Registration Statement or comparable statement under the “Blue Sky” laws refers to any Investor by name or otherwise as the Investor of any securities of the Issuer, then such Investor shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such Investor and the Issuer, to the effect that the holding by such Investor of such securities is not to be construed as a recommendation by such Investor of the investment quality of the Issuer’s securities covered thereby and that such holding does not imply that such Investor will assist in meeting any future financial requirements of the Issuer, or (ii) in the event that such reference to such Investor by name or otherwise is not in the judgment of the Issuer, as advised by counsel, required by the Securities Act or any similar federal statute or any “Blue Sky” or securities law then in force, the deletion of the reference to such Investor.
Section 2.07. Underwritten Offerings.
(a) Demand and Shelf Registrations. If requested by the underwriters for any Underwritten Offering requested by the Investors pursuant to a Registration under Section 2.01 or Section 2.02, the Issuer shall enter into an underwriting agreement with such underwriters for such offering, such agreement to be reasonably satisfactory in substance and form to the Issuer, the Participating Investors and the underwriters, and to contain such representations and warranties by the Issuer and such other terms as are generally prevailing in agreements of that type, including indemnities no less favorable to the recipient thereof than those provided in Section 2.10. The Participating Investors shall cooperate with the Issuer in the negotiation of such underwriting agreement and shall give consideration to the reasonable suggestions of the Issuer regarding the form thereof. Such Investors shall not be required to make any representations or warranties to or agreements with the Issuer or the underwriters other than representations, warranties or agreements regarding such Investors, such Investor’s title to, and power and authority to transfer, the Registrable Securities, such Investor’s intended method of distribution, such matters pertaining to such Investor’s compliance with securities laws as reasonably may be requested and any other representations required to be made by such Investor under applicable law, and the aggregate amount of the liability of such Investor shall not exceed such Investor’s net proceeds from such Underwritten Offering.
(b) Piggyback Registrations. If the Issuer proposes to Register any of its securities under the Securities Act as contemplated by Section 2.04 and such securities are to be distributed in an Underwritten Offering through one or more underwriters, the Issuer shall, if requested by any Piggyback Eligible Investor pursuant to Section 2.04 and subject to the provisions of Section 2.04(c), use its reasonable best efforts to arrange for such underwriters to include on the same terms and conditions that apply to the other sellers in such Registration all the Registrable Securities to be offered and sold by such Piggyback Eligible Investor among the securities of the Issuer to be distributed by such underwriters in such Registration. Any such Piggyback Eligible Investor shall not be required to make any representations or warranties to, or agreements with the Issuer or the underwriters other than representations, warranties or agreements regarding such Piggyback Eligible Investor, such Piggyback Eligible Investor’s title to, and power and authority to transfer, the Registrable Securities, such Piggyback Eligible Investor’s intended method of distribution, such matters pertaining to such Piggyback Eligible Investor’s compliance with securities laws as reasonably may be requested and any other representations required to be made by such Piggyback Eligible Investor under applicable law, and the aggregate amount of the liability of such Piggyback Eligible Investor shall not exceed such Piggyback Eligible Investor’s net proceeds from such Underwritten Offering.
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(c) Participation in Underwritten Registrations. Subject to provisions of Section 2.07(a) and Section 2.07(b) above, no Person may participate in any Underwritten Offering hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Persons entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
(d) Price and Underwriting Discounts. In the case of an Underwritten Offering under Section 2.01 or Section 2.02, the price, underwriting discount and other financial terms for the Registrable Securities shall be determined by the Majority Participating Investors. In addition, in the case of any Underwritten Offering under Section 2.01, Section 2.02 or Section 2.04, each of the Investors may, subject to any limitations on withdrawal contained in Section 2.01, Section 2.02 or Section 2.04, withdraw all or part of their request to participate in such Registration after being advised of such price, discount and other terms and shall not be required to enter into any agreements or documentation that would require otherwise.
Section 2.08. No Inconsistent Agreements; Additional Rights. The Issuer shall not hereafter enter into, and is not currently a party to, any agreement with respect to its securities that is inconsistent with the rights granted to the Investors under this Agreement. Without the prior written consent of the Investors Beneficially Owning a majority of the voting power of the then-outstanding Registrable Securities, none of the Issuer or any of its subsidiaries shall enter into any agreement granting registration or similar rights to any Person that more favorable than the rights granted to the Investors hereunder.
Section 2.09. Registration Expenses.
(a) Except as expressly provided herein, all of the Issuer’s expenses incident to the Issuer’s performance of or compliance with this Agreement shall be paid by the Issuer, including (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the SEC or FINRA, (ii) all fees and expenses in connection with compliance with any securities or “Blue Sky” laws, (iii) all printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses (including expenses of printing certificates for the Registrable Securities, if any, in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses and Issuer Free Writing Prospectuses), (iv) all fees and disbursements of counsel for the Issuer and of all independent certified public accountants of the Issuer, (v) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or quotation of the Registrable Securities on any inter-dealer quotation system, (vi) any reasonable fees and disbursements of underwriters customarily paid by issuers of securities, (vii) all fees and expenses of any special experts or other Persons retained by the Issuer in connection with any Registration, (viii) all of the Issuer’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), (ix) all reasonable and documented fees and disbursements of legal counsel selected by the Fund I Investors, the Fund II Investors or the Demanding Investor, in the case of a Demand Registration or an Underwritten Offering related thereto, or by the Fund I Investors, the Fund II Investors or the Majority Participating Investors in the case of a Shelf Registration Statement or an Underwritten Offering related thereto, and (x) all expenses of the Issuer related to the “road-show” for any Underwritten Offering, including all travel, meals and lodging. All such expenses are referred to herein as “Registration Expenses.”
(b) Except as explicitly set forth in Section 2.09(a), the Investors shall bear their own expenses incurred with respect to any transaction pursuant to this Agreement. For the avoidance of doubt, the Issuer shall not be required to pay underwriting discounts and commissions and transfer taxes, if any, attributable to the sale of Registrable Securities.
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Section 2.10. Indemnification.
(a) Indemnification by the Issuer. The Issuer agrees to indemnify and hold harmless, to the full extent permitted by law, each Investor, each member, limited or general partner thereof, each member, limited or general partner of each such member, limited or general partner, each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each of their respective Representatives from and against any and all losses, penalties, judgments, suits, costs, claims, damages, liabilities and expenses joint or several (including reasonable costs of investigation and legal expenses) (each, a “Loss” and collectively “Losses”) insofar as such Losses arise out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities were Registered under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or any other disclosure document produced by or on behalf of the Issuer or any of its subsidiaries including reports and other documents filed under the Exchange Act or any Issuer Free Writing Prospectus or amendment thereof or supplement thereto, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus, or any Issuer Free Writing Prospectus in light of the circumstances under which they were made) not misleading or (iii) any violation by the Issuer of any rule or regulation promulgated under the Securities Act or any state securities laws applicable to the Issuer and relating to action or inaction required of the Issuer in connection with any Registration pursuant to this Agreement; provided, that the Issuer shall not be liable to any particular indemnified party (A) to the extent that any such Loss arises out of or is based upon a material misstatement or omission or an alleged material misstatement or omission made in any such Registration Statement or other document in reliance upon and in conformity with written information furnished to the Issuer by such indemnified party expressly for use in the preparation thereof or (B) to the extent that any such Loss arises out of or is based upon a material misstatement or omission or an alleged material misstatement or omission in a preliminary Prospectus relating to Registrable Securities, if a Prospectus (as then amended or supplemented) that would have cured the defect was furnished to the indemnified party from whom the Person asserting the claim giving rise to such Loss purchased Registrable Securities prior to the written confirmation of the sale of the Registrable Securities to such Person and a copy of such Prospectus (as amended and supplemented) was not sent or given by or on behalf of such indemnified party to such Person at or prior to the written confirmation of the sale of the Registrable Securities to such Person. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Investor or any indemnified party and shall survive the transfer of such securities by such Investor. The Issuer shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the indemnified parties.
(b) Indemnification by the Participating Investors. Each Participating Investor agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Issuer, its directors and officers, employees, agents and each Person who controls the Issuer (within the meaning of the Securities Act or the Exchange Act) from and against any Losses insofar as such Losses arise out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities were Registered under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein or any other disclosure document produced by or on behalf of the Issuer or any of its subsidiaries including reports and other documents filed under the Exchange Act or any Issuer Free Writing Prospectus or amendment thereof or supplement thereto), or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus, or any Issuer Free Writing Prospectus in light of the circumstances under which they were made) not misleading, in each case, to the extent, but only to the extent, that such untrue statement or omission is contained in any information furnished in writing by such Investor to the Issuer specifically for inclusion in such Registration Statement and has not been corrected in a subsequent writing prior to or concurrently with the confirmation of the sale of the Registrable Securities to the Person asserting the claim. In no event shall the liability of such Investor hereunder be greater in amount than the dollar amount of the net proceeds received by such Investor under the sale of Registrable Securities giving rise to such indemnification obligation less any amounts paid by such Investor pursuant to Section 2.10(d). The Issuer shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above (with appropriate modification).
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(c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided, that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it is actually and materially prejudiced by reason of such delay or failure and (ii) the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, assume the defense thereof, with counsel reasonably satisfactory to the indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party). After notice from the indemnifying party to the indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to the indemnified party under Section 2.09(a) and Section 2.09(b), as applicable, for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by the indemnified party, in connection with the defense thereof other than reasonable costs of investigation. It is understood that the indemnifying party shall not, in connection with any one action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time for all indemnified parties except to the extent that local counsel or counsel with specialized expertise (in addition to any regular counsel) is required to effectively defend against any such action or proceeding. No indemnifying party shall, without the written consent of the indemnified party (such consent not to be unreasonably withheld, conditioned or delayed), effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
(d) Contribution. If for any reason the indemnification provided for in Section 2.09(a) and Section 2.09(b) is unavailable to an indemnified party (other than as a result of exceptions contained in Section 2.09(a) and Section 2.09(b)) or insufficient in respect of any Losses referred to therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party or parties on the other hand in connection with the acts, statements or omissions that resulted in such losses, as well as any other relevant equitable considerations. In connection with any Registration Statement filed with the SEC by the Issuer, the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 2.10(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 2.10(d). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an indemnified party as a result of the Losses referred to in Section 2.10(a) and Section 2.10(b) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 2.10(d), in connection with any Registration Statement filed by the Issuer, a Participating Investor shall not be required to contribute any amount in excess of the dollar amount of the net proceeds received by such Investor under the sale of Registrable Securities giving rise to such contribution obligation less any amounts paid by such Investor pursuant to Section 2.10(b). The remedies provided for in this Section 2.10 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.
Section 2.11. Rules 144 and 144A and Regulation S. The Issuer shall use its reasonable best efforts to file in a timely fashion the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, or, if the Issuer is not required to file such reports, the Issuer shall make publicly available such necessary information for so long as necessary to permit sales pursuant to Rules 144, 144A or Regulation S under the Securities Act, and it will take such further action as the Investors may reasonably request, all to the extent required from time to time to enable the Investors, following the Plan Effective Date, to sell Registrable Securities without Registration under the Securities Act within the limitation of the exemptions provided by (i) Rules 144, 144A or Regulation S under the Securities Act, as such Rules may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon reasonable request of an Investor, the Issuer will deliver to such Investor a written statement as to whether it has complied with such requirements and, if not, the specifics thereof in reasonable detail.
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Section 2.12. Opt-Out.
(a) Each Investor hereby (i) acknowledges that it is aware that the U.S. securities laws prohibit any Person who has MNPI about a company from purchasing or selling, directly or indirectly, securities of such company (including entering into hedge transactions involving such securities), or from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities, and (ii) agrees that it will not use or permit any third party to use, and that it will use its reasonable best efforts to assure that none of its Representatives will use or permit any third party to use, any MNPI the Issuer provides in contravention of the U.S. securities laws.
(b) Each Investor shall have the right, at any time and from time to time (including after receiving information regarding any potential Registration or offering of Registrable Securities), to elect not to receive any notice that the Issuer or any other Investors otherwise are required to deliver pursuant to this Agreement by delivering to the Issuer a written statement signed by such Investor that it does not want to receive any notices hereunder (an “Opt-Out Request”); in which case and notwithstanding anything to the contrary in this Agreement the Issuer and other Investors shall not be required to, and shall not, deliver any notice or other information required to be provided to Investors hereunder. An Opt-Out Request may state a date on which it expires or, if no such date is specified, shall remain in effect indefinitely. An Investor who previously has given the Issuer an Opt-Out Request may revoke such request at any time, and there shall be no limit on the ability of an Investor to issue and revoke subsequent Opt-Out Requests; provided that each Investor shall use its reasonable best efforts to minimize the administrative burden on the Issuer arising in connection with any such Opt-Out Requests.
Article
III
TRANSFER
Section 3.01. Transfer of Registration Rights. The Fund I Investors and the Fund II Investors may assign all or a portion of their rights hereunder to (a) an Affiliate or (b) any transferee of Registrable Securities constituting not less than one percent (1.0%) of, at the relevant time, the issued and outstanding Common Shares, effective upon the receipt by the Issuer of (x) written notice from the transferring Investor stating the name and address of the transferee and identifying the amount of Registrable Securities with respect to which rights under this Agreement are being transferred and (y) agreement by such transferee to be bound by the terms of this Agreement.
Article
IV
MISCELLANEOUS
Section 4.01. Effectiveness. This Agreement shall become effective and binding upon the Issuer, the Fund I Signatory and the Fund II Signatories immediately following the Plan Effective Date by operation of the Plan.
Section 4.02. Registrable Securities. In order to enable the Issuer to determine the number of Registrable Securities issued and outstanding or Beneficially Owned by any Investor or Investors at any given time, (i) each Investor shall provide the Issuer with information as to the number of Registrable Securities Beneficially Owned by such Investor promptly upon reasonable written request by the Issuer and (ii) as a condition to an Investor exercising rights hereunder, such Investor shall certify to the Issuer the number of Registrable Securities Beneficially Owned by such Investor when delivering any notice, request or other action by the Required Investors or the Majority Participating Investors or any other group of Investors meeting a Beneficial Ownership threshold under this Agreement.
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Section 4.03. Existing Registration Statements. Notwithstanding anything herein to the contrary and subject to applicable law and regulation, the Issuer may satisfy any obligation hereunder to file a Registration Statement or to have a Registration Statement become effective by a specified date by designating, by notice to the Investors, a Registration Statement that previously has been filed with the SEC or become effective, as the case may be, as the relevant Registration Statement for purposes of satisfying such obligation, and all references to any such obligation shall be construed accordingly; provided, that such previously filed Registration Statement may be amended or supplemented, as appropriate, to add the number of Registrable Securities, and, to the extent necessary, to identify as selling stockholders those Investors demanding the filing of a Registration Statement pursuant to the terms of this Agreement. To the extent this Agreement refers to the filing or effectiveness of other Registration Statements by or at a specified time and the Issuer has, in lieu of then filing such Registration Statements or having such Registration Statements become effective, designated a previously filed or effective Registration Statement as the relevant Registration Statement for such purposes in accordance with the preceding sentence, such references shall be construed to refer to such designated Registration Statement.
Section 4.04. Other Activities. Notwithstanding anything in this Agreement, none of the provisions of this Agreement shall in any way limit an Investor or any of its Affiliates from engaging in any brokerage, investment advisory, financial advisory, anti-raid advisory, principaling, merger advisory, financing, asset management, trading, market making, arbitrage, investment activity and other similar activities conducted in the ordinary course of their business.
Section 4.05. Entire Agreement. This Agreement, together with the Schedule hereto, constitutes the entire understanding and agreement between the parties as to the matters covered herein and therein and supersede and replace any prior understanding, agreement (including the Restructuring Support Agreement, dated as of February 1, 2026) or statement of intent, in each case, written or oral, of any and every nature with respect thereto between the parties as to the matters covered herein and therein. In the event of any inconsistency between this Agreement and any document executed or delivered to effect the purposes of this Agreement, this Agreement shall govern as among the parties hereto.
Section 4.06. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be construed and enforced in accordance with, and the rights and duties of the parties shall be governed by, the law of the State of New York, without regard to principles of conflicts of laws.
(b) Each party agrees that it will bring any action or proceeding in respect of any claim arising out of this Agreement or the transactions contemplated hereby exclusively in the United States District Court located in the Borough of Manhattan in the City of New York or, if such court does not accept jurisdiction over the applicable action or proceeding, the state courts of the State of New York located in the Borough of Manhattan in the City of New York (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party and (iv) agrees that service of process upon such party in any such action or proceeding will be effective if notice is given in accordance with Section 4.11.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.06(c).
Section 4.07. Obligations; Remedies. The Issuer and the Investors shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement (including, without limitation, costs of enforcement) and to exercise all other rights existing in their favor. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. Accordingly, the parties shall be entitled to specific performance of the terms of this Agreement without the necessity of proving the inadequacy of monetary damages as a remedy, including an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief. All remedies, either under this Agreement or by Law or otherwise afforded to any party, shall be cumulative and not alternative.
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Section 4.08. Amendment and Waiver.
(a) The terms and provisions of this Agreement may be modified or amended at any time and from time to time only by the written consent of (i) the Issuer, (ii) the Fund I Signatory, provided the Fund I Investors own at least ten percent (10%) of the Common Shares and (iii) the Fund II Signatories, provided the Fund II Investors own at least ten percent (10%) of the Common Shares; provided, that (a) any amendment that would have a disproportionate material adverse effect on an Investor relative to any other Investors shall require the written consent of that Investor and (b) this Section 4.08 may not be amended without the prior written consent of the Issuer and all of the Investors. If reasonably requested by the Investors, the Issuer agrees to execute and deliver any amendments to this Agreement which the Issuer in its reasonable discretion concludes are not adverse to Issuer or its public stockholders to the extent so requested by the Investors in connection with the addition of a transferee in accordance with Section 3.01 or a recipient of any newly-issued Common Shares as a party hereto; provided that such amendments are in compliance with the immediately preceding sentence. Any amendment, modification or waiver effected in accordance with the foregoing shall be effective and binding on the Issuer and all Investors.
(b) Any failure by any party at any time to enforce any of the provisions of this Agreement shall not be construed a waiver of such provision or any other provisions hereof.
Section 4.09. Binding Effect. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the parties’ successors and permitted assigns.
Section 4.10. Termination. This Agreement shall automatically terminate upon the later of (i) the expiration of the Shelf Period and (ii) such time as there are no Registrable Securities, except for the provisions of Section 2.10 and all of this Article IV, which shall survive any such termination. In the event of any termination of this Agreement as provided in this Section 4.10, this Agreement shall forthwith become wholly void and of no further force or effect (except for the provisions of Section 2.10 and this Article IV, which shall survive) and there shall be no liability on the part of any parties hereto or their respective Affiliates, except as provided in this Article IV. Notwithstanding the foregoing, no party hereto shall be relieved from liability for any willful breach of this Agreement.
Section 4.11. Notices. Any and all notices, designations, offers, acceptances or other communications provided for herein shall be deemed duly given (a) when delivered personally by hand, (b) when sent by e-mail or (c) one Business Day following the day sent by overnight courier:
if to the Issuer, to:
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, TX 77019
Telephone: (281) 730-5100
Attention: Theodore R. Moore
E-mail address: Ted.Moore@nineenergyservice.com
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
609 Main Street
Houston, TX 77002
Attention: Matthew R. Pacey and Lanchi Huynh
E-mail addresses: matt.pacey@kirkland.com and lanchi.huynh@kirkland.com
if to the Fund I Signatory, to:
MacKay Shields LLC
299 Park Avenue, 32nd Floor
New York, NY 10171
Attention: Ryan Bailes
E-mail address: [personal information omitted]
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with a copy (which shall not constitute notice) to:
Milbank LLP
55 Hudson Yards
New York, NY 10003
Attention: Evan Fleck; Matthew Brod; Paul Denaro
E-mail address: efleck@milbank.com; mbrod@milbank.com; pdenaro@milbank.com
if to the Fund II Signatories, to:
Philosophy Capital Management, LLC
3201 Danville Boulevard, Suite 100
Almo, CA 94507
Attention: Yedi Wong
Email addresses: [personal information omitted]
with a copy (which shall not constitute notice) to:
Milbank LLP
55 Hudson Yards
New York, NY 10003
Attention: Evan Fleck; Matthew Brod; Paul Denaro
E-mail address: efleck@milbank.com; mbrod@milbank.com; pdenaro@milbank.com
If to any other Investor who becomes party to this Agreement after the date hereof, to the address on the counterpart signature page to this Agreement executed by such Investor (which must include an email address).
Section 4.12. Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction such that the invalid, illegal or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.
Section 4.13. Third-Party Beneficiaries. Except with respect to each Person entitled to indemnity or contribution under Section 2.10, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and successors, and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 4.14. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute a single instrument. Copies of executed counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 4.14.
Section 4.15. Headings. The heading references herein and in the table of contents hereto are for convenience purposes only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
[REMAINDER INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to be executed on its behalf as of the date first written above.
| Nine Energy Service, Inc. | ||
| By: | /s/ Theodore R. Moore | |
| Name: | Theodore R. Moore | |
| Title: | Executive Vice President, General Counsel and Secretary | |
[Signature Page – Registration Rights Agreement]
| MACKAY SHIELDS LLC, as investment manager, investment advisor or subadvisor on behalf of certain of its clients, funds and accounts that have retained the services of its High Yield Investment team. | ||
| By: | /s/ Andrew Susser | |
| Name: | Andrew Susser | |
| Title: | Executive Managing Director | |
[Signature Page – Registration Rights Agreement]
PHILOSOPHY DISTRESSED AND SPECIAL SITUATIONS FUND LP By: Philosophy Capital Management LLC | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page – Registration Rights Agreement]
| PHILOSOPHY CAPITAL PARTNERS, LP By: Philosophy Capital Management LLC its Investment Adviser | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page – Registration Rights Agreement]
STAR V PARTNERS LLC | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page – Registration Rights Agreement]
| BLACKWELL PARTNERS LLC – SERIES A, solely with respect to the assets for which Philosophy Capital Management, LLC acts as its investment manager | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page – Registration Rights Agreement]
| CASSINI PARTNERS, L.P. | ||
| By: Philosophy Capital Management LLC | ||
| its Investment Adviser | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page – Registration Rights Agreement]
Exhibit 10.3
VOTING AGREEMENT
by and between
NINE ENERGY SERVICE, INC.
and
MACKAY SHIELDS LLC
Dated as of March 5, 2026
VOTING AGREEMENT
THIS VOTING AGREEMENT, dated as of March 5, 2026 (this “Agreement”), is by and between NINE ENERGY SERVICE, INC., a Delaware corporation (the “Company”), and MACKAY SHIELDS LLC, a Delaware limited liability company (“MacKay”). Each of the Company and MacKay is referred to herein individually as a “Party” and collectively as the “Parties.” This Agreement shall be effective upon the issuance of the New Equity Interests.
WHEREAS, pursuant to the Plan of Reorganization (the “Plan”) of the Company and its debtor subsidiaries under Chapter 11 of Title 11 of the United States Code approved by the United States Bankruptcy Court for the Southern District of Texas, the Company shall issue New Equity Interests comprised of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), to MacKay; and
WHEREAS, the Parties desire to set forth certain agreements herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE I
VOTING OF VOTING SECURITIES
Section 1.01. Voting Agreement. On each matter brought to a vote at any annual or special meeting of the Company’s stockholders, however called, including any adjournment or postponement thereof, and in connection with any action proposed to be taken by consent of the Company’s stockholders in lieu of a meeting of stockholders, MacKay shall vote or duly execute and deliver a stockholder consent with respect to, as applicable, all Voting Securities that are Beneficially Owned by MacKay as of the applicable record date set forth in Section 1.02(a) below that are in excess of the Voting Cap Threshold (such Voting Securities in excess of the Voting Cap Threshold, the “Excess Voting Securities”) in the same proportion (in the good faith estimate of the Company as near as practicable (and prior) to such annual or special meeting or the effectiveness of such stockholder action by consent, as applicable) as all other votes cast or effective duly executed and delivered consents with respect to the applicable matter (such proportion determined without inclusion of the votes cast or consents delivered in respect of MacKay). To accomplish the foregoing, with respect to an annual or special meeting of the Company’s stockholders, MacKay will grant to the Company or one or more of its officers a proxy to vote all Excess Voting Securities in the same proportion as all other votes cast with respect to the applicable matter (such proportion determined without inclusion of the votes cast or consents delivered in respect of MacKay). For the avoidance of doubt, nothing in this Agreement shall restrict in any way the voting of or exercise of the right to act by consent in lieu of a meeting of stockholders with respect to any Voting Securities that are not Excess Voting Securities (which Voting Securities MacKay may vote or exercise the right to act by consent in lieu of a meeting of stockholders in its discretion).
Section 1.02. Cooperation.
(a) In connection with fixing or causing to be fixed the record date for each meeting of stockholders of the Company or for determining the stockholders of the Company entitled to act by consent in lieu of a meeting of stockholders, as applicable, during the period that this Agreement is in effect, the Company shall use reasonable best efforts to confirm with MacKay as of such record date, the Beneficial Ownership of Voting Securities of MacKay (the “Requested Information”). MacKay shall promptly report the Requested Information in writing to the Company and in any event no later than the tenth day following such record date.
(b) The Company and MacKay agree to keep confidential any Requested Information reported to the Company, except as required by Law.
ARTICLE II
DEFINITIONS
Section 2.01. Defined Terms. For purposes of this Agreement, the following terms shall have the following meanings:
(a) “Agreement” shall have the meaning set forth in the preamble to this Agreement.
(b) “Beneficial Ownership” or “Beneficially Own” shall have the meaning given such term in Rule 13d-3 under the Exchange Act as of the date hereof without giving effect to any voting agreement (including this Agreement) between the Company and any of its shareholders; provided that MacKay shall not be deemed under this Agreement to Beneficially Own any Common Stock Beneficially Owned by the Company solely by virtue of this Agreement.
(c) “business day” shall mean any day other than a Saturday, a Sunday or any other day on which banks in New York, New York may, or are required to, remain closed.
(d) “Chosen Courts” shall have the meaning set forth in Section 3.04.
(e) “Commission” shall mean the Securities and Exchange Commission.
(f) “Common Stock” shall have the meaning set forth in the recitals to this Agreement.
(g) “Company” shall have the meaning set forth in the preamble to this Agreement.
(h) “Excess Voting Securities” shall have the meaning set forth in Section 1.01.
(i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
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(j) “Governmental Authority” shall mean any supranational, national, federal, state, provincial county, local or municipal government, or other political subdivision thereof, or any court, tribunal or arbitral body and any entity exercising executive, legislative, judicial, regulatory, taxing, administrative, prosecutorial or arbitral functions of or pertaining to government, domestic or foreign, including, for the avoidance of doubt, the Commission and any stock exchange.
(k) “Law” shall mean all supranational, national, federal, state, provincial, county, local, municipal or other laws, statutes, ordinances, regulations and rules of any Governmental Authority (including the rules and regulations of the Commission and applicable stock exchange rules), and all judgments, orders, writs, awards, preliminary or permanent injunctions or decrees of any Governmental Authority.
(l) “Litigation” shall have the meaning set forth in Section 3.04.
(m) “MacKay” shall have the meaning set forth in the preamble to this Agreement.
(n) “New Equity Interests” shall have the meaning assigned to it in the Plan.
(o) “Parties” and “Party” shall have the meaning set forth in the preamble to this Agreement.
(p) “Person” shall mean any individual, partnership, joint venture, corporation, limited liability company, trust, trustee, unincorporated organization, other entity, government or department or agency of a government.
(q) “Plan” shall have the meaning set forth in the preamble to this Agreement.
(r) “Requested Information” shall have the meaning set forth in Section 1.02(a).
(s) “Voting Cap Threshold” shall mean the outstanding Voting Securities collectively constituting 10% of the total voting power of all of the outstanding Voting Securities of the Company on such matter as of the applicable record date after giving effect to any other voting agreement between the Company and any of its shareholders.
(t) “Voting Securities” shall mean, with respect to any matter to be voted on or stockholder action proposed to be taken by consent, (i) the Common Stock and (ii) any bonds, debentures, notes or other indebtedness or instruments or any other shares of capital stock or other voting or equity securities of or ownership interests in the Company that have the right to vote on such matter or act by stockholder consent with respect to such action, as applicable.
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ARTICLE III
MISCELLANEOUS
Section 3.01. Notices. Any notices or other communications required or permitted under, or otherwise in connection with this Agreement, shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) upon transmission by electronic mail as evidenced by confirmation of transmission to the sender (but only if followed by transmittal of a copy thereof by (i) national overnight courier or (ii) hand delivery with receipt, in each case, for delivery by the second business day following such electronic mail or facsimile transmission), (c) on receipt after dispatch by registered or certified mail, postage prepaid and addressed, or (d) on the next business day if transmitted by national overnight courier, in each case as set forth to the parties as set forth below:
if to the Company, to:
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, TX 77019
Attention: Theodore R. Moore
E-mail address: Ted.Moore@nineenergyservice.com
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
609 Main Street
Houston, TX 77002
Attention: Matthew R. Pacey and Lanchi Huynh
E-mail addresses: matt.pacey@kirkland.com and lanchi.huynh@kirkland.com
if to MacKay:
MacKay Shields LLC
299 Park Avenue, 32nd Floor
New York, NY 10171
Attention: Ryan Bailes
E-mail address: [personal information omitted]
or such other address, e-mail address or facsimile number as such Party may hereafter specify by like notice to the other Parties hereto.
Section 3.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by MacKay and the Company, or in the case of a waiver, by MacKay, if the waiver is to be effective against MacKay, or by the Company, if the waiver is to be effective against the Company.
(b) No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
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Section 3.03. Successors and Assigns; Parties in Interest. Neither this Agreement nor any of the rights or obligations under this Agreement shall be assigned, in whole or in part, by any Party without the prior written consent of the other Party. Subject to the foregoing, the provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer any rights, remedies or causes of action under or by reason of this Agreement upon any Person other than the Parties and their respective successors and permitted assigns. For the avoidance of doubt, this Agreement shall not be binding on any Person who purchases or receives Common Stock from MacKay.
Section 3.04. Governing Law; Consent to Jurisdiction. This Agreement shall be construed in accordance with and governed by the internal Laws of the State of New York, without giving effect to the principles of conflicts of laws. Each of the Parties hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the U.S. federal and New York State courts in the Borough of Manhattan in The City of New York (the “Chosen Courts”), for any action, proceeding or investigation in any court or before any Governmental Authority (“Litigation”) arising out of or relating to this Agreement and the matters contemplated hereby and further agrees that service of any process, summons, notice or document by U.S. mail to its address set forth in this Agreement shall be effective service of process for any Litigation brought against it in any such court. Each of the Parties hereby irrevocably and unconditionally waives any objection to the laying of venue of any Litigation arising out of this Agreement or the matters contemplated hereby in the Chosen Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Litigation brought in any such court has been brought in an inconvenient forum. Each of the Parties irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any and all rights to trial by jury in connection with any Litigation arising out of or relating to this Agreement or the matters contemplated hereby.
Section 3.05. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
Section 3.06. Specific Performance. Each of the Parties acknowledges and agrees that the Parties’ respective remedies at law for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and, in recognition of that fact, agree that, in the event of a breach or threatened breach by MacKay, on the one hand, or the Company, on the other hand, of the provisions of this Agreement, in addition to any remedies at law, the Company and MacKay, respectively, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available.
Section 3.07. Termination. Subject to the following sentence, after one year from the date of this Agreement, this Agreement shall automatically renew for consecutive one-year periods unless either Party terminates this Agreement by giving written notice to the other Party at least six months prior to the expiration of the then-applicable term. This Agreement shall terminate and thereafter be of no further force and effect for all Parties at such time as MacKay ceases to Beneficially Own more than 10% of the Voting Securities then outstanding.
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Section 3.08. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided that the Parties shall negotiate in good faith to attempt to place the Parties in the same position as they would have been in had such provision not been held to be invalid, void or unenforceable.
Section 3.09. Effective Time. This Agreement shall be effective as of the date first written above.
Section 3.10. Entire Agreement. This Agreement embodies the complete agreement and understanding between the Parties with respect to the subject matter hereof. This Agreement supersedes and preempts any prior understandings, agreements or representations by or between the Parties, written or oral, that may have related to the subject matter hereof in any way.
Section 3.11. No Third-Party Beneficiaries. Nothing in this Agreement shall be construed as giving any Person, other than the Parties and their respective successors, legal representatives and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof.
Section 3.12. Interpretation. References in this Agreement to Articles and Sections shall be deemed to be references to Articles and Sections of this Agreement, unless the context shall otherwise require. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of such agreement or instrument. Words in the singular shall be held to include the plural and vice versa. References to “written” or “in writing” include in electronic form. The word “or” shall not be exclusive. The phrase “to the extent” shall mean the degree to which a subject or other thing extends, and not merely “if.” Each of the Parties has participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or burdening any party by virtue of the authorship of any of the provisions in this Agreement. A reference to any Person includes such Person’s successors and permitted assigns.
Section 3.13. Headings. The titles of Articles and Sections of this Agreement are for convenience only and shall not be interpreted to limit or otherwise affect the provisions of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Voting Agreement to be duly executed as of the day and year first above written.
| NINE ENERGY SERVICE, INC | ||
| By: | /s/Theodore R. Moore | |
| Name: | Theodore R. Moore | |
| Title: | Executive Vice President, General Counsel and Secretary | |
[Signature Page to Voting Agreement]
| MACKAY SHIELDS LLC, as investment manager, investment advisor or subadvisor on behalf of certain of its clients, funds and accounts that have retained the services of its High Yield Investment team. | ||
| By: | /s/Andrew Susser | |
| Name: | Andrew Susser | |
| Title: | Executive Managing Director | |
[Signature Page to Voting Agreement]
Exhibit 10.4
VOTING AGREEMENT
by and between
NINE ENERGY SERVICE, INC.
and
PHILOSOPHY DISTRESSED AND SPECIAL SITUATIONS FUND LP
PHILOSOPHY CAPITAL PARTNERS, LP
STAR V PARTNERS LLC
BLACKWELL PARTNERS LLC – SERIES A
CASSINI PARTNERS, L.P.
Dated as of March 5, 2026
VOTING AGREEMENT
THIS VOTING AGREEMENT, dated as of March 5, 2026 (this “Agreement”), is by and between NINE ENERGY SERVICE, INC., a Delaware corporation (the “Company”), and PHILOSOPHY DISTRESSED AND SPECIAL SITUATIONS FUND LP, PHILOSOPHY CAPITAL PARTNERS, LP, STAR V PARTNERS LLC, BLACKWELL PARTNERS LLC – SERIES A, and CASSINI PARTNERS, L.P. (collectively, “Philosophy”). Each of the Company and Philosophy is referred to herein individually as a “Party” and collectively as the “Parties.” This Agreement shall be effective upon the issuance of the New Equity Interests.
WHEREAS, pursuant to the Plan of Reorganization (the “Plan”) of the Company and its debtor subsidiaries under Chapter 11 of Title 11 of the United States Code approved by the United States Bankruptcy Court for the Southern District of Texas, the Company shall issue New Equity Interests comprised of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), to Philosophy; and
WHEREAS, the Parties desire to set forth certain agreements herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE I
VOTING OF VOTING SECURITIES
Section 1.01. Voting Agreement. On each matter brought to a vote at any annual or special meeting of the Company’s stockholders, however called, including any adjournment or postponement thereof, and in connection with any action proposed to be taken by consent of the Company’s stockholders in lieu of a meeting of stockholders, Philosophy and any Philosophy Covered Person shall vote or duly execute and deliver a stockholder consent with respect to, as applicable, all Voting Securities that are Beneficially Owned by Philosophy, that when taken together with all Voting Securities that are Beneficially Owned by any Philosophy Covered Person, as of the applicable record date set forth in Section 1.02(a) below that are in excess of the Voting Cap Threshold (such Voting Securities in excess of the Voting Cap Threshold, the “Excess Voting Securities”) in the same proportion (in the good faith estimate of the Company as near as practicable (and prior) to such annual or special meeting or the effectiveness of such stockholder action by consent, as applicable) as all other votes cast or effective duly executed and delivered consents with respect to the applicable matter (such proportion determined without inclusion of the votes cast or consents delivered in respect of any of the Philosophy Covered Interests). To accomplish the foregoing, with respect to an annual or special meeting of the Company’s stockholders, Philosophy and any Philosophy Covered Person will grant to the Company or one or more of its officers a proxy to vote all Excess Voting Securities in the same proportion as all other votes cast with respect to the applicable matter (such proportion determined without inclusion of the votes cast or consents delivered in respect of any of the Philosophy Covered Interests). For the avoidance of doubt, nothing in this Agreement shall restrict in any way the voting of or exercise of the right to act by consent in lieu of a meeting of stockholders with respect to any Voting Securities that are not Excess Voting Securities (which Voting Securities Philosophy or any Philosophy Covered Person may vote or exercise the right to act by consent in lieu of a meeting of stockholders in its discretion).
Section 1.02. Cooperation.
(a) In connection with fixing or causing to be fixed the record date for each meeting of stockholders of the Company or for determining the stockholders of the Company entitled to act by consent in lieu of a meeting of stockholders, as applicable, during the period that this Agreement is in effect, Philosophy shall use reasonable best efforts to confirm with each Philosophy Covered Person, in each case as of such record date, the Beneficial Ownership of Voting Securities of such Philosophy Covered Person (the “Requested Information”). Philosophy shall promptly report the Requested Information (including, if applicable, any failures of a Philosophy Covered Person to respond) in writing to the Company, together with the Beneficial Ownership of Voting Securities of Philosophy as of such record date, and in any event no later than the tenth day following such record date.
(b) The Company and Philosophy agree to keep confidential any Requested Information reported to the Company, except as required by Law.
ARTICLE II
DEFINITIONS
Section 2.01. Defined Terms. For purposes of this Agreement, the following terms shall have the following meanings:
(a) “Affiliate” has the meaning specified in Rule 12b-2 under the Exchange Act; provided, that Philosophy shall not be deemed an Affiliate of the Company or any of its subsidiaries for purposes of this Agreement.
(b) “Affiliated Fund” means with respect to Philosophy, (i) any Affiliates (including at the institutional level) of Philosophy or any fund, account (including any separately managed accounts) or investment vehicle that is controlled, managed, advised or sub-advised by Philosophy, an Affiliate of Philosophy or by the same investment manager, advisor or subadvisor as Philosophy or an Affiliate of Philosophy or any fund, account (including any separately managed accounts) or investment vehicle which is controlled, managed, advised or sub-advised by an Affiliate of Philosophy’s investment manager, advisor or sub-advisor or (ii) one or more special purpose vehicles that are wholly owned by Philosophy and/or its Affiliates.
(c) “Agreement” shall have the meaning set forth in the preamble to this Agreement.
(d) “Beneficial Ownership” or “Beneficially Own” shall have the meaning given such term in Rule 13d-3 under the Exchange Act as of the date hereof without giving effect to any voting agreement (including this Agreement) between the Company and any of its shareholders; provided that neither Philosophy nor any Philosophy Covered Person shall be deemed under this Agreement to Beneficially Own any Common Stock Beneficially Owned by the Company solely by virtue of this Agreement.
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(e) “business day” shall mean any day other than a Saturday, a Sunday or any other day on which banks in New York, New York may, or are required to, remain closed.
(f) “Chosen Courts” shall have the meaning set forth in Section 3.04.
(g) “Commission” shall mean the Securities and Exchange Commission.
(h) “Common Stock” shall have the meaning set forth in the recitals to this Agreement.
(i) “Company” shall have the meaning set forth in the preamble to this Agreement.
(j) “Excess Voting Securities” shall have the meaning set forth in Section 1.01.
(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
(l) “Governmental Authority” shall mean any supranational, national, federal, state, provincial county, local or municipal government, or other political subdivision thereof, or any court, tribunal or arbitral body and any entity exercising executive, legislative, judicial, regulatory, taxing, administrative, prosecutorial or arbitral functions of or pertaining to government, domestic or foreign, including, for the avoidance of doubt, the Commission and any stock exchange.
(m) “Law” shall mean all supranational, national, federal, state, provincial, county, local, municipal or other laws, statutes, ordinances, regulations and rules of any Governmental Authority (including the rules and regulations of the Commission and applicable stock exchange rules), and all judgments, orders, writs, awards, preliminary or permanent injunctions or decrees of any Governmental Authority.
(n) “Litigation” shall have the meaning set forth in Section 3.04.
(o) “New Equity Interests” shall have the meaning assigned to it in the Plan.
(p) “Parties” and “Party” shall have the meaning set forth in the preamble to this Agreement.
(q) “Person” shall mean any individual, partnership, joint venture, corporation, limited liability company, trust, trustee, unincorporated organization, other entity, government or department or agency of a government.
(r) “Philosophy” shall have the meaning set forth in the preamble to this Agreement.
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(s) “Philosophy Covered Interests” shall mean Philosophy Capital Management, LLC and the Philosophy Covered Persons.
(t) “Philosophy Covered Person” shall mean any Affiliate or Affiliated Fund of Philosophy.
(u) “Plan” shall have the meaning set forth in the preamble to this Agreement.
(v) “Requested Information” shall have the meaning set forth in Section 1.02(a).
(w) “Voting Cap Threshold” shall mean the outstanding Voting Securities collectively constituting 10% of the total voting power of all of the outstanding Voting Securities of the Company on such matter as of the applicable record date after giving effect to any other voting agreement between the Company and any of its shareholders.
(x) “Voting Securities” shall mean, with respect to any matter to be voted on or stockholder action proposed to be taken by consent, (i) the Common Stock and (ii) any bonds, debentures, notes or other indebtedness or instruments or any other shares of capital stock or other voting or equity securities of or ownership interests in the Company that have the right to vote on such matter or act by stockholder consent with respect to such action, as applicable.
ARTICLE III
MISCELLANEOUS
Section 3.01. Notices. Any notices or other communications required or permitted under, or otherwise in connection with this Agreement, shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) upon transmission by electronic mail as evidenced by confirmation of transmission to the sender (but only if followed by transmittal of a copy thereof by (i) national overnight courier or (ii) hand delivery with receipt, in each case, for delivery by the second business day following such electronic mail or facsimile transmission), (c) on receipt after dispatch by registered or certified mail, postage prepaid and addressed, or (d) on the next business day if transmitted by national overnight courier, in each case as set forth to the parties as set forth below:
if to the Company, to:
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, TX 77019
Attention: Theodore R. Moore
E-mail address: Ted.Moore@nineenergyservice.com
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
609 Main Street
Houston, TX 77002
Attention: Matthew R. Pacey and Lanchi Huynh
E-mail addresses: matt.pacey@kirkland.com and lanchi.huynh@kirkland.com
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if to Philosophy:
Philosophy Capital Management, LLC
3201 Danville Boulevard, Suite 100
Almo, CA 94507
Attention: Yedi Wong
Email addresses: [personal information omitted]
or such other address, e-mail address or facsimile number as such Party may hereafter specify by like notice to the other Parties hereto.
Section 3.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Philosophy and the Company, or in the case of a waiver, by Philosophy, if the waiver is to be effective against Philosophy, or by the Company, if the waiver is to be effective against the Company.
(b) No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
Section 3.03. Successors and Assigns; Parties in Interest. Neither this Agreement nor any of the rights or obligations under this Agreement shall be assigned, in whole or in part, by any Party without the prior written consent of the other Party. Subject to the foregoing, the provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer any rights, remedies or causes of action under or by reason of this Agreement upon any Person other than the Parties and their respective successors and permitted assigns. For the avoidance of doubt, this Agreement shall not be binding on any Person who purchases or receives Common Stock from Philosophy or a Philosophy Covered Person.
Section 3.04. Governing Law; Consent to Jurisdiction. This Agreement shall be construed in accordance with and governed by the internal Laws of the State of New York, without giving effect to the principles of conflicts of laws. Each of the Parties hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the U.S. federal and New York State courts in the Borough of Manhattan in The City of New York (the “Chosen Courts”), for any action, proceeding or investigation in any court or before any Governmental Authority (“Litigation”) arising out of or relating to this Agreement and the matters contemplated hereby and further agrees that service of any process, summons, notice or document by U.S. mail to its address set forth in this Agreement shall be effective service of process for any Litigation brought against it in any such court. Each of the Parties hereby irrevocably and unconditionally waives any objection to the laying of venue of any Litigation arising out of this Agreement or the matters contemplated hereby in the Chosen Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Litigation brought in any such court has been brought in an inconvenient forum. Each of the Parties irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any and all rights to trial by jury in connection with any Litigation arising out of or relating to this Agreement or the matters contemplated hereby.
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Section 3.05. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
Section 3.06. Specific Performance. Each of the Parties acknowledges and agrees that the Parties’ respective remedies at law for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and, in recognition of that fact, agree that, in the event of a breach or threatened breach by Philosophy, on the one hand, or the Company, on the other hand, of the provisions of this Agreement, in addition to any remedies at law, the Company and Philosophy, respectively, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available.
Section 3.07. Termination. Subject to the following sentence, after one year from the date of this Agreement, this Agreement shall automatically renew for consecutive one-year periods unless either Party terminates this Agreement by giving written notice to the other Party at least six months prior to the expiration of the then-applicable term. This Agreement shall terminate and thereafter be of no further force and effect for all Parties at such time as Philosophy and the Philosophy Covered Persons cease to Beneficially Own more than 10% of the Voting Securities then outstanding.
Section 3.08. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided that the Parties shall negotiate in good faith to attempt to place the Parties in the same position as they would have been in had such provision not been held to be invalid, void or unenforceable.
Section 3.09. Effective Time. This Agreement shall be effective as of the date first written above.
Section 3.10. Entire Agreement. This Agreement embodies the complete agreement and understanding between the Parties with respect to the subject matter hereof. This Agreement supersedes and preempts any prior understandings, agreements or representations by or between the Parties, written or oral, that may have related to the subject matter hereof in any way.
Section 3.11. No Third-Party Beneficiaries. Nothing in this Agreement shall be construed as giving any Person, other than the Parties and their respective successors, legal representatives and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof.
Section 3.12. Interpretation. References in this Agreement to Articles and Sections shall be deemed to be references to Articles and Sections of this Agreement, unless the context shall otherwise require. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of such agreement or instrument. Words in the singular shall be held to include the plural and vice versa. References to “written” or “in writing” include in electronic form. The word “or” shall not be exclusive. The phrase “to the extent” shall mean the degree to which a subject or other thing extends, and not merely “if.” Each of the Parties has participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or burdening any party by virtue of the authorship of any of the provisions in this Agreement. A reference to any Person includes such Person’s successors and permitted assigns.
Section 3.13. Headings. The titles of Articles and Sections of this Agreement are for convenience only and shall not be interpreted to limit or otherwise affect the provisions of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Voting Agreement to be duly executed as of the day and year first above written.
| Nine Energy Service, Inc. | ||
| By: | /s/ Theodore R. Moore | |
| Name: | Theodore R. Moore | |
| Title: | Executive Vice President, General Counsel and Secretary | |
[Signature Page to Voting Agreement]
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PHILOSOPHY DISTRESSED AND SPECIAL SITUATIONS FUND LP By: Philosophy Capital Management LLC | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page to Voting Agreement]
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| PHILOSOPHY CAPITAL PARTNERS, LP By: Philosophy Capital Management LLC its Investment Adviser | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page to Voting Agreement]
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STAR V PARTNERS LLC | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page to Voting Agreement]
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| BLACKWELL PARTNERS LLC – SERIES A, solely with respect to the assets for which Philosophy Capital Management, LLC acts as its investment manager | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page to Voting Agreement]
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| CASSINI PARTNERS, L.P. | ||
| By: Philosophy Capital Management LLC | ||
| its Investment Adviser | ||
| By: | /s/ Jacob Rubin | |
| Name: | Jacob Rubin | |
| Title: | Managing Member | |
[Signature Page to Voting Agreement]
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Exhibit 99.1
IN
THE UNITED STATES BANKRUPTCY COURT
FOR THE Southern District of TexaS
HOUSTON DIVISION
| ) | ||
| In re: | ) | Chapter 11 |
| ) | ||
| NINE ENERGY SERVICE, INC., et al.,1 | ) | Case No. 26-90295 (CML) |
| ) | ||
| Debtors. | ) | (Jointly Administered) |
| ) |
ORDER (I)
APPROVING
THE DEBTORS’ DISCLOSURE
STATEMENT FOR THE JOINT PREPACKAGED
PLAN OF REORGANIZATION OF NINE ENERGY
SERVICE, INC. AND ITS DEBTOR AFFILIATES PURSUANT
TO CHAPTER 11 OF THE BANKRUPTCY CODE, (II) CONFIRMING
THE AMENDED JOINT PREPACKAGED PLAN OF REORGANIZATION
OF NINE ENERGY SERVICE, INC. AND ITS DEBTOR AFFILIATES
PURSUANT
TO CHAPTER 11 OF THE BANKRUPTCY CODE, AND (III) GRANTING RELATED
RELIEF
The above-captioned debtors (collectively, the “Debtors”)2 having:
| a. | on February 1, 2026: |
| i. | entered into the restructuring support agreement (as may be amended, modified, or supplemented from time to time in accordance with its terms, the “RSA”) with holders of (1) over 70% of Senior Secured Notes Claims and (2) 100% of the Prepetition ABL Claims; and |
| 1 | A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ claims and noticing agent at https://dm.epiq11.com/NineEnergy. The location of Nine Energy Service, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 2001 Kirby Drive, Suite 200, Houston, TX 77019. |
| 2 | Capitalized terms used but not defined in these findings of fact, conclusions of law, and order (collectively, this “Confirmation Order”) have the meanings ascribed to them in the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 173] (as modified, amended, or supplemented from time to time, the “Plan,” a copy of which is attached hereto as Exhibit A) or the Disclosure Statement for the Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 6] (including all exhibits attached thereto, and as modified, amended, or supplemented from time to time, the “Disclosure Statement”), as applicable. The rules of interpretation set forth in Article I.B of the Plan apply herein. |
| ii. | commenced solicitation of votes to accept or reject the Plan by, among other things, commencing service of the Solicitation Packages3 to Holders of Claims in Class 4 (Senior Secured Notes Claims), in accordance with the applicable provisions of title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”), the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and the Bankruptcy Local Rules for the Southern District of Texas (the “Bankruptcy Local Rules”); |
| b. | after commencing solicitation of votes to accept or reject the Plan, on February 1, 2026 (the “Petition Date”), commenced these Chapter 11 Cases by Filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code; |
| c. | on February 1, 2026, and February 2, 2026 Filed: |
| i. | the Declaration of Guy Sirkes, Executive Vice President and Chief Financial Officer of Nine Energy Service, Inc., in Support of Chapter 11 Petitions and First Day Motions [Docket No. 4] (the “First Day Declaration”), detailing the facts and circumstances of these Chapter 11 Cases; |
| ii. | the Debtors’ First-Day Pleadings; |
| iii. | the Debtors’ Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 5]; |
| iv. | the Disclosure Statement [Docket No. 6]; and |
| v. | the Scheduling Motion, including the Ballots attached as Exhibits 3A and 3B thereto [Docket No. 7]; |
| d. | obtained, on February 3, 2026, entry of the Order (I) Scheduling a Combined Disclosure Statement Approval and Plan Confirmation Hearing, (II) Establishing a Plan Voting Deadline, Opt-Out Deadline, and Plan and Disclosure Statement Objection Deadline and Related Procedures, (III) Approving the Solicitation Procedures, (IV) Approving the Combined Hearing Notice, (V) Waiving the Requirements for the U.S. Trustee to Convene a Meeting of Creditors, (VI) Waiving the Requirements for the Debtors to File (A) Schedules and SOFAs and (B) Rule 2015.3 Financial Reports, and (VII) Granting Related Relief [Docket No. 66] (the “Scheduling Order”), approving: |
| i. | the Notice of (I) Commencement of Prepackaged Chapter 11 Bankruptcy Cases; (II) Hearing Approving the Disclosure Statement, Confirming the Joint Prepackaged Chapter 11 Plan, and Related Matters; and (III) Objection Deadlines and Summary of the Debtors’ Joint Prepackaged Chapter 11 Plan (the “Combined Hearing Notice”), attached to the Scheduling Order as Exhibit 1, which contained notice of the commencement of these Chapter 11 Cases, the date and time set for the Combined Hearing, and the deadline for Filing objections to the Plan and Disclosure Statement; |
| ii. | the notice of publication attached as Exhibit 2 to the Scheduling Order (the “Publication Notice”); |
| iii. | the Ballots attached to the Scheduling Order as Exhibits 3A and 3B; and |
| 3 | The solicitation packages (the “Solicitation Packages”) included (a) the Plan; (b) the Disclosure Statement (including all exhibits attached thereto); and (c) the respective Ballots for voting class as outlined in, and attached as exhibits to, the Debtors’ Emergency Motion for Entry of an Order (I) Scheduling a Combined Disclosure Statement Approval and Plan Confirmation Hearing, (II) Establishing a Plan Voting Deadline, Opt-Out Deadline, and Plan and Disclosure Statement Objection Deadline and Related Procedures, (III) Approving the Solicitation Procedures, (IV) Approving the Combined Hearing Notice, (V) Waiving the Requirements for the U.S. Trustee to Convene a Meeting of Creditors, (VI) Waiving the Requirements for the Debtors to File (A) Schedules and SOFAs and (B) Rule 2015.3 Financial Reports, and (VII) Granting Related Relief [Docket No. 7] (the “Scheduling Motion”). |
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| iv. | the Notice of (I) Non-Voting Status of Certain Claims and Interests (II) Opportunity for Holders of Such Claims and Interests to Opt Out of the Plan Release (the “Opt-Out Form”), attached to the Scheduling Order as Exhibit 4, that was distributed to Holders of Claims in Class 1 (Other Secured Claims), Class 2 (Other Priority Claims), Class 3 (Prepetition ABL Claims), Class 5 (General Unsecured Claims), Class 8 (Nine Energy Equity Interests), and Class 9 (Section 510(b) Claims); |
| e. | on February 3, 2026, Filed the Certificate of Service regarding the Debtors’ prepetition service of solicitation materials on Holders of Claims in Class 4 (Senior Secured Notes Claims) [Docket No. 47] (together with the Proof of Publication (as defined below), the “Affidavits”); |
| f. | on or before February 6, 2026, commenced service of (a) the Opt-Out Form, and (b) the Combined Hearing Notice on Holders of Claims or Interests deemed to accept or reject the Plan; |
| g. | on February 10, 2026, and February 11, 2026, respectively, published a version of the Publication Notice, modified for publication in The New York Times (national and international edition), as evidenced by Proof of Publication of The New York Times [Docket No. 131] and the Proof of Publication of The New York Times International Edition [Docket No.130] (collectively, the “Proof of Publication”). |
| h. | on February 23, 2026, Filed the Plan Supplement for the Debtors’ Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 151] (as modified, amended, or supplemented from time to time, the “Plan Supplement” and which, for purposes of the Plan and this Confirmation Order, is included in the definition of “Plan”); |
| i. | on March 3, 2026, Filed: |
| i. | the Declaration of Guy Sirkes in Support of Confirmation of the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 177] (the “Sirkes Declaration”); |
| i. | the Declaration of Scott Schwinger in Support of Confirmation of the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 181] (the “Schwinger Declaration”); |
| ii. | the Declaration of David M. Cunningham in Support of Confirmation of the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 176] (the “Cunningham Declaration”); |
| iii. | the Declaration of David Rush in Support of (I) Approval of the Debtors’ Disclosure Statement on a Final Basis and (II) Confirmation of the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 175] (the “Rush Declaration” and, together with the Sirkes Declaration, the Schwinger Declaration, and the Cunningham Declaration, the “Confirmation Declarations”); |
| iv. | the Declaration of Stephenie Kjontvedt on behalf of Epiq Corporate Restructuring, LLC Regarding the Solicitation and Tabulation of Votes on the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code, which detailed the results of the Plan voting process [Docket No. 178] (the “Voting Report”); and |
| v. | the Debtors’ Memorandum of Law in Support of an Order (I) Approving the Debtors’ Disclosure Statement for the Joint Prepackaged Plan of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code, (II) Confirming the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code, and (III) Granting Related Relief [Docket No. 178] (the “Confirmation Brief”); |
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| j. | on March 3, 2026, Filed the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 173]; and |
| k. | operated their businesses and managed their properties during these Chapter 11 Cases as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. |
The United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) having:
| a. | reviewed the solicitation procedures in the Scheduling Motion regarding votes to accept or reject the Plan (the “Solicitation Procedures”); |
| b. | heard the statements and arguments made by counsel and parties with respect to the approval of the requested relief in the Scheduling Motion, including the approval of the Solicitation Procedures and the Confirmation Schedule (as defined in the Scheduling Motion), and approved the relief requested therein; |
| c. | taken notice of the Plan, the Disclosure Statement, the Scheduling Motion, the Plan Supplement, the Confirmation Brief, the Confirmation Declarations, the Voting Report, the Combined Hearing Notice, the Affidavits, and all filed pleadings, exhibits, statements, and comments regarding approval of the Disclosure Statement and Confirmation, including any and all objections, statements, and reservations of rights; |
| d. | reviewed the discharge, compromises, settlements, releases, exculpations, and injunctions set forth in Article VIII of the Plan; |
| e. | held a hearing on March 4, 2026, at 12:00 p.m., prevailing Central Time, pursuant to Bankruptcy Rules 3017 and 3018 and sections 1126, 1128, and 1129 of the Bankruptcy Code to consider approval of the Disclosure Statement and Confirmation (the “Combined Hearing”); |
| f. | heard the statements and arguments made by counsel and parties-in-interest in respect of both approval of the Disclosure Statement and Confirmation; |
| g. | considered all oral representations, testimony, documents, filings, and other evidence regarding both approval of the Disclosure Statement and Confirmation; |
| h. | overruled, including for any reasons stated on the record of the Confirmation Hearing, any and all objections to approval of the Disclosure Statement and Confirmation and all statements and reservations of rights not consensually resolved, waived, settled, or withdrawn unless otherwise indicated herein or on the record at the Confirmation Hearing; and |
| i. | taken judicial notice of all pleadings and other documents Filed, all orders entered, and all evidence and arguments presented in these Chapter 11 Cases. |
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NOW, THEREFORE, it appearing to the Bankruptcy Court that notice of the Combined Hearing and the opportunity for any party in interest to object to both approval of the Disclosure Statement and Confirmation were adequate and appropriate as to all parties affected or to be affected by the Plan and the transactions contemplated thereby, and that the legal and factual bases set forth in the documents Filed in support of both approval of the Disclosure Statement and Confirmation and other evidence presented at the Combined Hearing establish just cause for the relief granted herein; and after due deliberation thereon and good cause appearing therefor, the Bankruptcy Court makes and issues the following findings of fact and conclusions of law, and orders:
FINDINGS OF FACT AND CONCLUSIONS OF LAW
IT IS DETERMINED, FOUND, ADJUDGED, DECREED, AND ORDERED THAT:
A. Findings and Conclusions.
1. The determinations, findings, judgments, decrees, orders, and conclusions set forth herein and in the record of the Combined Hearing constitute the Bankruptcy Court’s findings of fact and conclusions of law under Rule 52 of the Federal Rules of Civil Procedure, as made applicable herein by Bankruptcy Rules 7052 and 9014. To the extent any of the following conclusions of law constitute findings of fact, or vice versa, they are adopted as such.
B. Jurisdiction, Venue, and Core Proceeding.
2. The Bankruptcy Court has jurisdiction over these Chapter 11 Cases pursuant to 28 U.S.C. § 1334. The Bankruptcy Court has exclusive jurisdiction to determine whether the Disclosure Statement and the Plan comply with the applicable provisions of the Bankruptcy Code and should be approved and confirmed, respectively. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. Approval of the Disclosure Statement and Confirmation are core proceedings as defined in 28 U.S.C. § 157(b)(2).
C. Eligibility for Relief.
3. The Debtors were and are Entities eligible for relief under section 109 of the Bankruptcy Code, and the Debtors are proper proponents of the Plan under section 1121(a) of the Bankruptcy Code.
D. Commencement and Joint Administration of these Chapter 11 Cases.
4. On the Petition Date, each of the Debtors commenced a voluntary case under chapter 11 of the Bankruptcy Code. On February 2, 2026, the Bankruptcy Court entered an order [Docket No. 28] authorizing the procedural consolidation and joint administration of these chapter 11 cases pursuant to Bankruptcy Rule 1015(b) and Bankruptcy Local Rule 1015-1. Since the Petition Date, the Debtors have operated their businesses and managed their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No request for the appointment of a trustee or examiner has been made in these Chapter 11 Cases.
E. Burden of Proof—Confirmation of the Plan.
5. The Debtors, as proponents of the Plan, have met their burden of proving the applicable elements of sections 1123, 1129(a), and 1129(b) of the Bankruptcy Code by a preponderance of the evidence or the applicable evidentiary standard for Confirmation. In addition, and to the extent applicable, the Plan is confirmable under the clear and convincing evidentiary standard.
F. Notice.
6. As evidenced by the Affidavits and the Voting Report, the Debtors provided due, adequate, and sufficient notice of the commencement of these Chapter 11 Cases, the Disclosure Statement, the Plan (and the opportunity to opt out of the Third-Party Release therein), the Plan Supplement, and the Combined Hearing, in compliance with all applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, including Bankruptcy Rules 2002(b), 3017, 3019, and 3020(b), the Bankruptcy Local Rules, and the Scheduling Order. Further, the Plan, Disclosure Statement, Scheduling Order, Combined Hearing Notice, and all other documents Filed in these Chapter 11 Cases were and continue to be available at no charge to all members of the public on the case website maintained by the Claims and Noticing Agent at: https://dm.epiq11.com/NineEnergy. No other or further notice is or shall be required.
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G. Disclosure Statement.
7. The Disclosure Statement contains (a) sufficient information of a kind necessary to satisfy the disclosure requirements of all applicable non-bankruptcy laws, rules, and regulations, including the Securities Act, and (b) “adequate information” (as such term is defined in section 1125(a) of the Bankruptcy Code and used in section 1126(b)(2) of the Bankruptcy Code) with respect to the Debtors, the Plan, and the transactions contemplated therein. The Filing of the Disclosure Statement with the Bankruptcy Court satisfied Bankruptcy Rule 3016(b). The Debtors’ use of the Disclosure Statement in solicitation of acceptances of the Plan is approved and the Disclosure Statement is approved on a final basis pursuant to this Confirmation Order.
H. Ballots.
8. Class 4 (Senior Secured Notes Claims) is the only class of claims entitled under the Plan to vote to accept or reject the Plan (the “Voting Class”).
9. The ballots the Debtors used to solicit votes to accept or reject the Plan from Holders of Claims in the Voting Class (the “Ballots”) adequately addressed the particular needs of these Chapter 11 Cases and were appropriate for Holders of Claims in the Voting Class to vote to accept or reject the Plan.
I. Solicitation.
10. The solicitation of votes on the Plan was appropriate and satisfactory based upon the circumstances of these Chapter 11 Cases and was in compliance with the provisions of the Bankruptcy Code, the Bankruptcy Rules, the Bankruptcy Local Rules, and any other applicable rules, laws, and regulations, including the Securities Act.
11. As described in the Confirmation Declarations, the Voting Report, the Affidavits, the Scheduling Motion, and the Confirmation Brief, prior to the Petition Date, the Debtors caused the Solicitation Packages to be transmitted and served to all Holders of Class 4 Senior Secured Notes Claims that held such Claims as of January 30, 2026 (the “Voting Record Date”) in compliance with the Bankruptcy Code, including sections 1125 and 1126 thereof, the Bankruptcy Rules, including Bankruptcy Rules 3017 and 3018, the Bankruptcy Local Rules, and any applicable non-bankruptcy law. The posting and service of the Solicitation Packages were timely, adequate, and sufficient under the facts and circumstances of these Chapter 11 Cases. The establishment and notice of the Voting Record Date was reasonable and sufficient, and the period during which the Debtors solicited votes to accept or reject to the Plan was a reasonable and sufficient period for Holders of Claims in the Voting Class to make an informed decision to accept or reject the Plan and complies with Bankruptcy Rule 2002 and 17 CFR§ 240. 14e-1(a), to the extent applicable. None of the post-solicitation technical modifications to the Plan merit re-solicitation. No other or further notice or opportunity to vote on the Plan is or shall be required.
12. Under section 1126(f) of the Bankruptcy Code, Holders of Claims in Class 1 (Other Secured Claims), Class 2 (Other Priority Claims), Class 3 (Prepetition ABL Claims), and Class 5 (General Unsecured Claims) (collectively, the “Unimpaired Classes”) are Unimpaired and conclusively presumed to have accepted the Plan. The Debtors were not required to solicit votes from the Holders of Claims and Interests in Class 8 (Nine Energy Equity Interests) and Class 9 (Section 510(b) Claims) (collectively, the “Deemed Rejecting Classes”), which were Impaired and deemed to reject the Plan under the Bankruptcy Code. Holders of Claims and Interests in Class 6 (Intercompany Claims) and Class 7 (Intercompany Interests) (such Classes together with the Unimpaired Classes and the Deemed Rejecting Classes, the “Non-Voting Classes”) are Unimpaired and conclusively presumed to have accepted the Plan (to the extent Reinstated) or are Impaired and deemed to reject the Plan (to the extent canceled), and, in either event, are not entitled to vote to accept or reject the Plan. No further notice shall be required for Holders of Claims and Interests in Non-Voting Classes.
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J. Voting.
13. As evidenced by the Voting Report, the procedures used to solicit and tabulate the Ballots were fair, reasonable, and conducted in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Bankruptcy Local Rules, the Disclosure Statement, and any applicable non-bankruptcy law, rule, or regulation. As evidenced by the Voting Report, the Voting Class voted to accept the Plan with respect to each Debtor.
K. Opt-Out Procedures.
14. The Opt-Out Procedures set forth in the Ballots and service of the Combined Hearing Notice, the Publication Notice, and the Notices of Non-Voting Status and Opt-Out Form, as applicable, are good, sufficient, and adequate to bind the applicable parties to the Third-Party Release and are approved in all respects. The process described in the Scheduling Motion (as authorized by the Scheduling Order) and the Voting Report that the Debtors and the Claims and Noticing Agent followed to identify the relevant parties on which to serve the applicable Ballot or Notice of Non-Voting Status and Opt-Out Form (a) is consistent with practices used in other complex chapter 11 cases, and (b) was reasonably calculated to ensure that each Holder of Claims and Interests in each Class was informed of its ability to opt out of the Third-Party Release and the consequences for failure to do so timely. Any party that elected in its Ballot or its Opt-Out Form, as applicable, to opt out of the Third-Party Release and timely submitted such election to the Claims and Noticing Agent in accordance with the Solicitation Procedures prior to any deadline to submit such Ballot or Opt-Out Form, as applicable, whether under any original or extended deadline, shall be neither a Released Party nor a Releasing Party under the Plan. The procedures used for tabulation of elections to opt out of the Third-Party Release are approved in all respects.
L. Objections.
15. This Bankruptcy Court takes judicial notice of the docket of these Chapter 11 Cases maintained by the clerk of the Bankruptcy Court including all pleadings and other documents Filed, and orders entered thereon. Any resolution of objections to approval of the Disclosure Statement and Confirmation explained on the record at the Confirmation Hearing is hereby incorporated by reference. All unresolved objections, statements, informal objections, and reservations of rights, if any, related to approval of the Disclosure Statement and Confirmation are overruled on the merits.
M. Plan Supplement.
16. The Plan Supplement complies with the Bankruptcy Code and the terms of the Plan, and the Filing and notice of such documents are good and proper in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Local Rules, and all other applicable rules, laws, and requirements, and no other or further notice is required. All documents included in the Plan Supplement are integral to, part of, and incorporated by reference into the Plan. Subject to the terms of the Plan and the RSA (including, for the avoidance of doubt, any consent rights set forth or incorporated therein), the Debtors reserve the right to alter, amend, update, or modify, in each case in whole or in part, and to add additional documents to, the Plan Supplement before the Effective Date. The Debtors served the Plan Supplement on all members of the Voting Class and made the Plan Supplement publicly available on the Claims and Noticing Agent’s website. No other or further notice is or shall be required.
N. Compliance with Bankruptcy Code Requirements¾Section 1129(a)(1).
17. The Plan complies with all applicable provisions of the Bankruptcy Code as required by section 1129(a)(1) of the Bankruptcy Code. In addition, the Plan is dated and identifies the Entities submitting it, thereby satisfying Bankruptcy Rule 3016(a).
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| (i) | Proper Classification¾Sections 1122 and 1123. |
18. The Plan satisfies the requirements of sections 1122(a) and 1123(a)(1) of the Bankruptcy Code. Article III of the Plan provides for the separate classification of Claims and Interests into nine Classes. Valid business, factual, and legal reasons exist for the separate classification of such Classes of Claims and Interests. The classification scheme contained in the Plan does not reflect any improper purpose and does not unfairly discriminate between, or among, Holders of Claims or Interests. Each Class of Claims and Interests contains only Claims or Interests that are substantially similar to the other Claims or Interests within that Class.
| (ii) | Specified Unimpaired Classes¾Section 1123(a)(2). |
19. The Plan satisfies the requirements of section 1123(a)(2) of the Bankruptcy Code. Article III of the Plan specifies the Unimpaired Classes within the meaning of section 1124 of the Bankruptcy Code:
| Class | Designation | |
| Class 1 | Other Secured Claims | |
| Class 2 | Other Priority Claims | |
| Class 3 | Prepetition ABL Claims | |
| Class 5 | General Unsecured Claims |
20. Additionally, Article II of the Plan specifies that Allowed Administrative Claims, Priority Tax Claims, DIP Claims, Professional Fee Claims, Restructuring Expenses, and Senior Secured Notes Trustee Fees and Expenses will be paid in full in accordance with the terms of the Plan; although these Claims are not classified under the Plan.
| (iii) | Specified Treatment of Impaired Classes¾Section 1123(a)(3). |
21. The Plan satisfies the requirements of section 1123(a)(3) of the Bankruptcy Code. Article III of the Plan specifies the Claims and Interests in the following Classes that are Impaired (the “Impaired Classes”) under the Plan within the meaning of section 1124 of the Bankruptcy Code:
| Class | Designation | |
| Class 4 | Senior Secured Notes Claims | |
| Class 8 | Nine Energy Equity Interests | |
| Class 9 | Section 510(b) Claims |
22. For the avoidance of doubt, Holders of Class 6 (Intercompany Claims) and Class 7 (Intercompany Interests) are Unimpaired and conclusively presumed to accept the Plan (to the extent Reinstated), or are Impaired and deemed to reject the Plan (to the extent canceled), and, in either event, are not entitled to vote to accept or reject the Plan.
| (iv) | No Discrimination¾Section 1123(a)(4). |
23. The Plan satisfies the requirements of section 1123(a)(4) of the Bankruptcy Code. The Plan provides for the same treatment by the Debtors for each Claim or Interest in each respective Class unless the Holder of a particular Claim or Interest has agreed to a less favorable treatment of such Claim or Interest.
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| (v) | Adequate Means for Plan Implementation¾Section 1123(a)(5). |
24. The Plan satisfies the requirements of section 1123(a)(5) of the Bankruptcy Code. Article IV of the Plan, the exhibits and attachments to the Plan, the Plan Supplement, and the Disclosure Statement, provide, in detail, adequate and proper means for the Plan’s implementation, including: (a) the general settlement of Claims and Interests; (b) authorization to effectuate the Restructuring Transactions, including all Exit ABL Facility Documents and related security agreements and mortgages; (c) the vesting of authority in the Reorganized Debtors; (d) the funding and sources of consideration for distributions under the Plan, including the Cash on hand, New Equity Interests, and the Exit ABL Facility; (e) the preservation of each Debtor’s corporate existence after the Effective Date; (f) the vesting of assets in the Reorganized Debtors; (g) the cancellation of all notes, instruments, certificates, and other documents evidencing Claims or Interests, including credit agreements, note purchase agreements, and indentures; (h) the authorization and approval of certain corporate actions under the Plan; (i) the adoption of the New Organizational Documents by the Reorganized Debtors; (j) the appointment of the New Board and the other Governing Bodies; (k) the effectuation and implementation of other documents and agreements contemplated by, or necessary to effectuate, the transactions contemplated by the Plan; (l) the exemption from certain securities laws; (m) the exemptions consistent with section 1146 of the Bankruptcy Code; (n) the assumption of certain employment obligations; (o) the assumption of the D&O Liability Insurance Policies; (p) the authorization of the Management Incentive Plan; and (q) the preservation of Claims and Causes of Action not released pursuant to the Plan.
| (vi) | Voting Power of Equity Securities¾Section 1123(a)(6). |
25. The Plan satisfies the requirements of section 1123(a)(6) of the Bankruptcy Code. Article IV.I of the Plan provides that the New Organizational Documents will comply with section 1123(a)(6) of the Bankruptcy Code. The New Organizational Documents will prohibit the issuance of non-voting securities to the extent required by section 1123(a)(6) of the Bankruptcy Code.
| (vii) | Directors and Officers¾Section 1123(a)(7). |
26. The Plan satisfies the requirements of section 1123(a)(7) of the Bankruptcy Code. Article IV.J of the Plan provides for the appointment of the New Board, the initial members of which (a) will be designated and appointed in accordance with the terms set forth in the New Organizational Documents; and (b) were disclosed in the Plan Supplement to the extent known.
| (viii) | Impairment / Unimpairment of Classes¾Section 1123(b)(1). |
27. The Plan is consistent with section 1123(b)(1) of the Bankruptcy Code. Article III of the Plan impairs or leaves Unimpaired each Class of Claims and Interests.
| (ix) | Assumption¾Section 1123(b)(2). |
28. The Plan is consistent with section 1123(b)(2) of the Bankruptcy Code. Article V of the Plan provides for the assumption of the Debtors’ Executory Contracts and Unexpired Leases, and the payment of Cures, if any, related thereto, not previously assumed, assumed and assigned, or rejected during these Chapter 11 Cases under section 365 of the Bankruptcy Code. The assumption of Executory Contracts and Unexpired Leases hereunder may include the assignment of certain of such contracts to Affiliates.
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| (x) | Compromise and Settlement¾Section 1123(b)(3). |
29. In accordance with section 1123(b)(3)(A) of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, distributions, releases, and other benefits provided under the Plan, upon the Effective Date, the provisions of the Plan shall constitute a good-faith compromise and settlement of all Claims, Interests, Causes of Action, and controversies released, settled, compromised, discharged, satisfied, or otherwise resolved pursuant to the Plan. The compromises and settlements embodied in the Plan are the result of extensive, arm’s-length, good-faith negotiations that, in addition to the Plan, resulted in the execution of the RSA, which preserve value for the Debtors, their Estates, and all their stakeholders, avoid extended, uncertain, time-consuming, and value-destructive litigation, and represent a fair and reasonable compromise of all Claims, Interests, Causes of Action, and controversies, and entry into which represented a sound exercise of the Debtors’ business judgment. The compromises and settlements in the Plan are fair, equitable, reasonable, and in the best interests of the Debtors and their Estates and satisfy the requirements of applicable law for approval pursuant to Bankruptcy Rule 9019.
| (xi) | Debtor Release. |
30. Article VIII.C of the Plan describes certain releases granted by the Debtors in accordance with section 1123(b) of the Bankruptcy Code (the “Debtor Release”). The Debtors have demonstrated that the releases provided under the Debtor Release constitute a sound exercise of their business judgment, and the Debtors have otherwise established the propriety of the Debtor Release and satisfied the requirements of Bankruptcy Rule 9019 with respect thereto. Each of the Released Parties has made a substantial contribution to the Plan and to the Debtors’ reorganization. The Debtor Release is a necessary and integral element of the Plan, and is fair, equitable, reasonable, and in the best interests of the Debtors, the Estates, and Holders of Claims and Interests. The Debtors’ or the Reorganized Debtors’ pursuit of any such Claims and Causes of Action against the Released Parties is not in the best interests of the Estates’ various constituencies because the costs involved would outweigh any potential benefit from pursuing such Claims and Causes of Action.
31. The Debtor Release appropriately offers protection to parties who provided consideration to the Debtors and whose participation in the Debtors’ restructuring process and these Chapter 11 Cases was and continues to be critical to the Debtors’ successful implementation of the Restructuring Transactions and emergence. Specifically, the Released Parties under the Plan made significant concessions and contributions to these Chapter 11 Cases, including by actively supporting the Plan and these Chapter 11 Cases. In particular, the Holders of Senior Secured Notes Claims comprise the Voting Class and voted in favor of the Plan. The Consenting Noteholders and the Consenting ABL Lenders have supported and committed to continue to support the Debtors’ restructuring pursuant to the RSA. The Required Consenting Noteholders agreed to equitize their secured claims to facilitate the Debtors’ reorganization efforts and negotiated for the use of their cash collateral. The Holders of Prepetition ABL Claims, DIP Lenders, and DIP Agent provided the DIP Facility, which enabled the Company to fund operations and the costs of the Restructuring Transactions during the pendency of these Chapter 11 Cases, and agreed to provide the Exit ABL Facility upon consumption of the Plan, affording the Company access to necessary go-forward liquidity.
32. The Debtor Release for the Debtors’ current and former directors, officers, and managers is appropriate because the Debtors’ directors, officers, and managers share an identity of interest with the Debtors, supported and made substantial contributions to the success of the Plan and these Chapter 11 Cases, and actively participated in meetings and negotiations during these Chapter 11 Cases. Additionally, the Senior Secured Notes Trustee, the Prepetition ABL Agent, and the DIP Agent consented to the Debtors’ use of cash collateral, providing the Debtors with necessary liquidity to maintain operations while funding the administration of these Chapter 11 Cases. In sum, the Released Parties played an integral role in the formulation of the Plan, made significant contributions that are essential to the Plan’s success, and expended significant time and resources analyzing and negotiating the Plan and the issues presented by the Debtors’ prepetition capital structure. The Debtor Release applies solely to those parties who affirmatively supported the Plan and the Debtor Release embodied therein.
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33. As such, the Debtor Release is: (a) the result of a sound exercise of the Debtors’ business judgment; (b) an essential part of the agreement among those participating in the negotiations and formulation of the Plan; (c) in exchange for the good and valuable consideration provided by or on behalf of the Released Parties; (d) a good faith settlement and compromise of the Claims and Causes of Action released herein negotiated at arm’s-length; (e) in the best interests of the Debtors, their Estates, all Holders of Claims and Interests, and any other parties in interest; (f) fair, equitable, and reasonable; (g) given and made after due notice and opportunity for hearing; and (h) without limiting the Debtor Release, a bar to any of the Debtors, the Reorganized Debtors, or the Debtors’ Estates from asserting any Claim or Cause of Action released pursuant to the Debtor Release. Further, as described in the Schwinger Declaration, the Independent Directors conducted an investigation that analyzed and considered all potential Claims and Causes of Action held by the Debtors and determined that the Debtor Release was appropriate and necessary under the circumstances. In light of the foregoing, the Debtor Release is approved.
| (xii) | Release by Holders of Claims and Interests. |
34. Article VIII.D of the Plan describes certain releases granted by the Releasing Parties (the “Third-Party Release”). The Third-Party Release is: (a) consensual; (b) essential to the Confirmation; (c) given in exchange for the good and valuable consideration provided by the Released Parties; (d) a good faith settlement and compromise of such Claims and Causes of Action; (e) in the best interests of the Debtors, their Estates, Holders of Claims and Interests, and all other parties in interest; (f) fair, equitable, and reasonable; (g) given and made after due notice and opportunity for hearing; and (h) a bar to any of the Releasing Parties asserting any Claim or Cause of Action released pursuant to the Third-Party Release.
35. The Third-Party Release is an integral part of the Plan. Similar to the Debtor Release, the Third-Party Release was integral to the formulation of the Plan. Like the Debtor Release, the Third-Party Release was critical to incentivizing parties to support the Plan, facilitated participation in the RSA, the Plan, and the chapter 11 process generally, and prevented potentially significant, time-consuming, and value-depleting litigation. The Third-Party Release was a core negotiation point and an integral component of the RSA and was instrumental in developing a Plan that maximized value for the Debtors’ Estates. As such, the Third-Party Release appropriately offers certain protections to parties who constructively participated in the Debtors’ restructuring process by, among other things, supporting the Plan.
36. The Third-Party Release is consensual as to all relevant parties, including all Releasing Parties, and such parties were provided sufficient notice of these Chapter 11 Cases, the Plan, and the deadline to object to Confirmation, received the Combined Hearing Notice and the Opt-Out Form or a Ballot, as applicable, and were properly informed that the Holders of Claims against or Interests in the Debtors that did not check a prominently featured and clearly labeled box on the applicable Ballot or Opt-Out Form, returned in advance of the Voting Deadline, would be deemed to have expressly, unconditionally, generally, individually, and collectively consented to the release and discharge of all Claims and Causes of Action against the Debtors and the Released Parties. Furthermore, the Third-Party Release provides that any Entity shall not be a Released Party if it timely opts out of, or objects to, the Third-Party Release. Additionally, the release provisions of the Plan were conspicuous, emphasized with boldface type in the Plan, the Disclosure Statement, the Ballots, the Opt-Out Form, and the Combined Hearing Notice. The Ballot and Opt-Out Form also contained information on how to return the Opt-Out Form by mail and how to access an electronic online portal whereby a Holder can opt out of the Third-Party Release.
37. The Third-Party Release provides finality for the Debtors, the Reorganized Debtors, and the Released Parties regarding the parties’ respective obligations under the Plan and with respect to the Reorganized Debtors. The Third-Party Release is specific in language, is integral to and a condition of the compromises and settlements embodied in the Plan, and is appropriately tailored under the facts and circumstances of these Chapter 11 Cases. The Combined Hearing Notice sent to Holders of Claims and Interests and published in The New York Times on February 10, 2026, and The New York Times International Edition on February 11, 2026, and the Ballots sent to all Holders of Claims and Interests entitled to vote on the Plan, in each case, unambiguously stated that the Plan contains the Third-Party Release. The Releasing Parties were given due and adequate notice of the Third-Party Release, including the deadline to object to, or opt out of, the Third-Party Release, and thus the Third-Party Release is consensual under controlling precedent in the Fifth Circuit as to those Releasing Parties that did not timely object or elect to opt out of granting the Third-Party Release. The Third-Party Release is authorized and approved.
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| (xiii) | Exculpation. |
38. The exculpation provision set forth in Article VIII.E of the Plan and incorporated into this Confirmation Order is essential to the Plan. The record in these Chapter 11 Cases fully supports the exculpation and the exculpation provision set forth in Article VIII.E of the Plan, which are appropriately tailored to protect the Debtors and the Exculpated Parties from inappropriate litigation. The exculpation, including the carve-out for actual fraud, willful misconduct, and/or gross negligence, is consistent with section 1125(e) of the Bankruptcy Code. The Debtors and the Exculpated Parties subject to the exculpation provision have, and upon entry of this Confirmation Order will be deemed to have, participated in good faith and in compliance with the applicable laws with regard to the solicitation of votes and distribution of consideration pursuant to the Plan, and, therefore, are not, and on account of such distributions shall not be, liable at any time for the violation of any applicable Law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan, or such distributions made pursuant to the Plan.
| (xiv) | Injunction. |
39. The injunction provision set forth in Article VIII.F of the Plan is necessary to implement, preserve, and enforce the Debtors’ discharge, the Debtor Release, the Third-Party Release, and exculpation provision. The injunction provisions are appropriately tailored to achieve those purposes. Without limiting Article VIII.F of the Plan, and notwithstanding anything to the contrary in this Confirmation Order, no Person or Entity may commence or pursue a Claim or Cause of Action, as applicable, of any kind against the Exculpated Parties, as applicable, that relates to or is reasonably likely to relate to any act or omission in connection with, relating to, or arising out of a Claim or Cause of Action, as applicable, subject to the terms of the Plan, without the Bankruptcy Court (a) first determining, after notice and a hearing, that such Claim or Cause of Action represents a colorable Claim not subject to exculpation under the Plan, and (b) specifically authorizing such Person or Entity to bring such Claim or Cause of Action, as applicable, against any such Exculpated Party.
| (xv) | Preservation of Claims and Causes of Action. |
40. Article IV.Q of the Plan appropriately provides that the Reorganized Debtors will retain and may enforce all rights to commence and pursue, as appropriate, any and all Causes of Action of the Debtors, whether arising before or after the Petition Date, including any actions specifically enumerated in the Schedule of Retained Causes of Action, in accordance with section 1123(b)(3)(B) of the Bankruptcy Code. The Reorganized Debtors’ rights to commence, prosecute, or settle such Causes of Action shall be preserved notwithstanding the occurrence of the Effective Date, other than the Causes of Action released by the Debtors pursuant to the releases and exculpations contained in the Plan, including in Article VIII of the Plan. The provisions regarding the preservation of Causes of Action in the Plan, including the Schedule of Retained Causes of Action, are appropriate, fair, equitable, and reasonable, and are in the best interests of the Debtors, the Estates, and all Holders of Claims and Interests.
| (xvi) | Release of Liens. |
41. The release and discharge of all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estates (and the exceptions to such release and discharge provided in the Exit ABL Facility Documents, the Plan, this Confirmation Order, or in any contract, instrument, release, or other agreement or document created pursuant to the Plan) described in Article VIII.B of the Plan (the “Release of Liens”) are necessary to implement the Plan; provided that the Liens granted to the DIP Agent pursuant to the DIP Credit Agreement shall remain in full force and effect solely to the extent provided for in the Plan or the Exit ABL Facility Documents. The provisions of the Release of Liens are appropriate, fair, equitable, and reasonable, and are in the best interests of the Debtors, the Estates, and Holders of Claims and Interests.
| (xvii) | Additional Plan Provisions¾Section 1123(b)(6). |
42. The other discretionary provisions of the Plan are appropriate and consistent with the applicable provisions of the Bankruptcy Code, thereby satisfying section 1123(b)(6) of the Bankruptcy Code.
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| (xviii) | Cure of Defaults¾Section 1123(d). |
43. Article V.B of the Plan provides for the satisfaction of Cures associated with each Executory Contract and Unexpired Lease to be assumed in accordance with section 365(b)(1) of the Bankruptcy Code. The Debtors or the Reorganized Debtors, as applicable, shall pay the Cure amount, if any, on the Effective Date or as soon as reasonably practicable thereafter. Unless otherwise agreed upon in writing by the parties to the applicable Executory Contract or Unexpired Lease all requests for payment of Cures that differ from the amounts paid or proposed to be paid, including in the ordinary course, by the Debtors or the Reorganized Debtors to a counterparty must be Filed with the Bankruptcy Court on or before thirty (30) days after the Effective Date. Any such request that is not timely Filed shall be disallowed and forever barred, estopped, and enjoined from assertion, and shall not be enforceable against any Reorganized Debtor, without the need for any objection by the Reorganized Debtors or any other party in interest or any further notice to or action, order, or approval of the Bankruptcy Court. Any Cure shall be deemed fully satisfied, released, and discharged upon payment by the Debtors or the Reorganized Debtors of the Cure in the Debtors’ ordinary course of business; provided that nothing in the Plan shall prevent the Reorganized Debtors from paying any Cure despite the failure of the relevant counterparty to File such request for payment of such Cure. The Reorganized Debtors also may settle any Cure without any further notice to or action, order, or approval of the Bankruptcy Court. In addition, any objection to the assumption of an Executory Contract or Unexpired Lease under the Plan must be Filed with the Bankruptcy Court on or before thirty (30) days after the Effective Date. Any counterparty to an Executory Contract or Unexpired Lease that fails to timely object to the proposed assumption of any Executory Contract or Unexpired Lease will be deemed to have consented to such assumption.
44. If there is any dispute regarding any Cure, the ability of the Reorganized Debtors or any assignee to provide “adequate assurance of future performance” within the meaning of section 365 of the Bankruptcy Code, or any other matter pertaining to assumption, then payment of the Cure amount shall occur as soon as reasonably practicable after entry of a Final Order resolving such dispute, approving such assumption (and, if applicable assignment), or as may be agreed upon by the Debtors or the Reorganized Debtors, as applicable, and the counterparty to the Executory Contract or Unexpired Lease.
O. Debtors’ Compliance with the Bankruptcy Code¾Section 1129(a)(2).
45. The Debtors complied with the applicable provisions of the Bankruptcy Code and, thus, satisfied the requirements of section 1129(a)(2) of the Bankruptcy Code. Specifically, each Debtor:
| a. | is an eligible debtor under section 109 of the Bankruptcy Code, and a proper proponent of the Plan under section 1121(a), of the Bankruptcy Code; |
| b. | has complied with applicable provisions of the Bankruptcy Code, except as otherwise provided or permitted by orders of the Bankruptcy Court; and |
| c. | complied with the applicable provisions of the Bankruptcy Code, including sections 1125 and 1126, the Bankruptcy Rules, the Bankruptcy Local Rules, any applicable non-bankruptcy law, rule, regulation, and all other applicable Law, in transmitting the Solicitation Packages, and related documents and notices, and in soliciting and tabulating the votes on the Plan. |
P. Plan Proposed in Good Faith¾Section 1129(a)(3).
46. The Plan satisfies the requirements of section 1129(a)(3) of the Bankruptcy Code. The Debtors proposed the Plan and the Restructuring Transactions (and all documents necessary to effectuate the Plan, including the Plan Supplement) in good faith and not by any means forbidden by law, and all acceptances and rejections of the Plan were solicited and submitted in good faith and not by any means forbidden by law. In so determining, the Bankruptcy Court has examined the totality of the circumstances surrounding the Filing of these Chapter 11 Cases, the Plan, the Plan Supplement, the RSA, all Definitive Documents, the process leading to Confirmation, including its overwhelming support by Holders of Claims in the Voting Class, and the transactions to be implemented pursuant thereto. The Debtors and their agents Filed these Chapter 11 Cases and proposed the Plan in good faith with the legitimate purpose of allowing the Debtors to implement the Restructuring Transactions on an expedited timeline so as to minimize disruption to the Debtors’ business operations, reorganize, and emerge from bankruptcy with a capital and organizational structure that will allow the Reorganized Debtors to conduct their business and satisfy their obligations with sufficient liquidity.
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Q. Payment for Services or Costs and Expenses¾Section 1129(a)(4).
47. The procedures set forth in the Plan for the Bankruptcy Court’s review and ultimate determination of the fees and expenses to be paid by the Debtors in connection with these Chapter 11 Cases, or in connection with the Plan and incident to these Chapter 11 Cases, satisfy the objectives of, and are in compliance with, section 1129(a)(4) of the Bankruptcy Code.
R. Directors, Officers, and Insiders¾Section 1129(a)(5).
48. Article IV.J of the Plan provides that the identities of the members of the New Board, the initial members of which (a) will be designated and appointed in accordance with the terms set forth in the New Organizational Documents; and (b) were disclosed in the Plan Supplement to the extent known. Accordingly, the Debtors satisfy the requirements of section 1129(a)(5) of the Bankruptcy Code.
S. No Rate Changes¾Section 1129(a)(6).
49. Section 1129(a)(6) of the Bankruptcy Code is not applicable to these Chapter 11 Cases. The Plan does not contain any rate changes subject to the jurisdiction of any governmental regulatory commission and will not require governmental regulatory approval.
T. Best Interest of Creditors¾Section 1129(a)(7).
50. The Plan satisfies the requirements of section 1129(a)(7) of the Bankruptcy Code. The Liquidation Analysis attached to the Disclosure Statement as Exhibit D, the Rush Declaration, and the other evidence related thereto in support of the Plan that was proffered or adduced at, prior to, or in connection with the Combined Hearing: (a) are reasonable, persuasive, credible, and accurate as of the dates such analysis or evidence was prepared, presented, or proffered; (b) utilize reasonable and appropriate methodologies and assumptions; (c) have not been controverted by other evidence; and (d) establish that Holders of Allowed Claims and Interests in each Class will recover at least as much under the Plan on account of such Claim or Interest, as of the Effective Date, as such Holder would receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code.
U. Acceptance by Certain Classes¾Section 1129(a)(8).
51. Classes 1, 2, 3, and 5 constitute Unimpaired Classes, each of which is conclusively presumed to accept the Plan in accordance with section 1126(f) of the Bankruptcy Code. The Voting Class (Class 4) voted to accept the Plan. Classes 6 and 7 are conclusively presumed to accept the Plan (to the extent reinstated) or are Impaired and deemed to reject the Plan (to the extent canceled), and, in either event, are not entitled to vote to accept or reject the Plan. The Deemed Rejecting Classes (Classes 8 and 9) are conclusively deemed to reject the plan and consequently are not entitled to vote on the Plan. Given not all Classes have accepted the Plan, the Plan does not satisfy section 1129(a)(8) of the Bankruptcy Code; however, as discussed below, the Plan can be confirmed pursuant to section 1129(b) of the Bankruptcy Code.
V. Treatment of Claims Entitled to Priority under Section 507(a) of the Bankruptcy Code¾Section 1129(a)(9).
52. The treatment of Allowed Administrative Claims, Priority Tax Claims, DIP Claims, and Professional Fee Claims under Article II of the Plan, and of Other Priority Claims, under Article III of the Plan, satisfies the requirements of, and complies in all respects with, section 1129(a)(9) of the Bankruptcy Code.
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W. Acceptance by At Least One Impaired Class¾Section 1129(a)(10).
53. The Plan satisfies the requirements of section 1129(a)(10) of the Bankruptcy Code. As evidenced by the Voting Report, the Voting Class voted to accept the Plan by the requisite numbers and amount of Claims, without including any acceptance of the Plan by any insider (as that term is defined in section 101(31) of the Bankruptcy Code), specified under the Bankruptcy Code.
X. Feasibility¾Section 1129(a)(11).
54. The Plan satisfies the requirements of section 1129(a)(11) of the Bankruptcy Code. The Financial Projections attached to the Disclosure Statement as Exhibit C, the Rush Declaration, and the other evidence supporting Confirmation proffered or adduced by the Debtors at, or prior to, the Combined Hearing: (a) are reasonable, persuasive, credible, and accurate as of the dates such analysis or evidence was prepared, presented, or proffered; (b) utilize reasonable and appropriate methodologies and assumptions; (c) have not been controverted by other evidence; (d) establish that the Plan is feasible and Confirmation is not likely to be followed by the liquidation, or the need for further financial reorganization of, the Reorganized Debtors or any successor to the Reorganized Debtors under the Plan, except as provided in the Plan; and (e) establish that the Reorganized Debtors will have sufficient funds to meet their obligations under the Plan.
Y. Payment of Fees¾Section 1129(a)(12).
55. The Plan satisfies the requirements of section 1129(a)(12) of the Bankruptcy Code. Article XII of the Plan provides for the payment of all fees payable by the Debtors or the Reorganized Debtors (or the Disbursing Agent on behalf of each of the Debtors or Reorganized Debtors) under 28 U.S.C. § 1930(a).
Z. Continuation of Retiree Benefits¾Section 1129(a)(13).
56. The Plan satisfies the requirements of section 1129(a)(13) of the Bankruptcy Code. Article IV.N of the Plan provides that, except as otherwise set forth in the Plan, the Debtors shall (a) assume all employment agreements, indemnification agreements, or other employment-related agreements entered into with current or former employees as of the Petition Date or (b) enter into new agreements with such employees on terms and conditions acceptable to the Reorganized Debtors and such employees.
AA. Non-Applicability of Certain Sections¾Sections 1129(a)(14), (15), and (16).
57. Sections 1129(a)(14), 1129(a)(15), and 1129(a)(16) of the Bankruptcy Code do not apply to these Chapter 11 Cases. The Debtors owe no domestic support obligations, are not individuals, and each of the Debtors is a moneyed, business, or commercial corporation.
BB. “Cram Down” Requirements¾Section 1129(b)
58. Notwithstanding the fact that the Deemed Rejecting Classes have deemed to reject the Plan, the Plan may be confirmed pursuant to section 1129(b)(1) of the Bankruptcy Code. First, all of the requirements of section 1129(a) of the Bankruptcy Code other than section 1129(a)(8) of the Bankruptcy Code have been met. Second, the Plan is fair and equitable with respect to the Deemed Rejecting Classes. The Plan has been proposed in good faith, is reasonable, and meets the requirements that (a) no Holder of any Impaired Claim or Interest that is junior to each such rejecting Class will receive or retain any property under the Plan on account of such junior Claim or Interest and (b) no Holder of a Claim or Interest in a Class senior to such Impaired Class is receiving more than 100% on account of its Claim. Accordingly, the Plan is fair and equitable to all Holders of Claims and Interests in the Deemed Rejecting Classes. Third, the Plan does not discriminate unfairly with respect to the Deemed Rejecting Classes because similarly situated creditors and interest Holders in such Classes that have not accepted the Plan will receive substantially similar treatment on account of their Claims and Interests irrespective of Class.
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59. As a result, the Plan satisfied the requirements of section 1129(b) of the Bankruptcy Code and can be confirmed even though not all Impaired Classes have voted to accept the Plan and section 1129(a)(8) is not satisfied. After entry of this Confirmation Order and upon the occurrence of the Effective Date, the Plan shall be binding on the members of the Deemed Rejecting Classes.
CC. Only One Plan¾Section 1129(c).
60. The Plan satisfies the requirements of section 1129(c) of the Bankruptcy Code. The Plan is the only chapter 11 plan Filed in each of these Chapter 11 Cases.
DD. Principal Purpose of the Plan¾Section 1129(d).
61. The Plan satisfies the requirements of section 1129(d) of the Bankruptcy Code. The principal purpose of the Plan is not the avoidance of taxes or the avoidance of the application of section 5 of the Securities Act.
EE. Small Business Case—Section 1129(e).
62. None of these Chapter 11 Cases are a “small business case,” as that term is defined in the Bankruptcy Code, and, accordingly, section 1129(e) of the Bankruptcy Code is inapplicable.
FF. Good Faith Solicitation¾Section 1125(e).
63. The Exculpated Parties, the directors and officers of any of the Debtors, each of the Debtors and Reorganized Debtors, the DIP Agent and DIP Lenders, and with respect to the foregoing, the Related Parties thereto, have acted fairly, in “good faith” within the meaning of section 1125(e) of the Bankruptcy Code, and in a manner consistent with the Disclosure Statement, the Bankruptcy Code, the Bankruptcy Rules, and all other applicable rules, laws, and regulations in connection with all of their respective activities relating to support and consummation of the Plan, including the execution, delivery, and performance of the RSA, the solicitation and tabulation of votes on the Plan, and the activities described in section 1125 of the Bankruptcy Code, as applicable, and are entitled to the protections afforded by section 1125(e) of the Bankruptcy Code.
64. The Debtors and their agents participated in good faith and in compliance with the applicable provisions of the Bankruptcy Code, including section 1125(g), with regard to the offering, issuance, and distribution of recoveries under the Plan and therefore are not, and on account of such distributions will not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or distributions made pursuant to the Plan, so long as such distributions are made consistent with and pursuant to the Plan.
GG. Satisfaction of Confirmation Requirements.
65. Based on the foregoing, the Plan satisfies the requirements for Confirmation set forth in section 1129 of the Bankruptcy Code.
HH. Satisfaction of Conditions Precedent to the Effective Date.
66. The Plan shall not become effective unless and until the conditions set forth in Article IX.A of the Plan have been satisfied or waived in accordance with Article IX.B of the Plan. The Debtors are authorized to take all actions necessary to satisfy each of the conditions precedent to the Effective Date set forth in Article IX.A of the Plan that have not yet been satisfied or waived in accordance with Article IX.B of the Plan.
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II. Implementation.
67. All documents and agreements necessary to implement the Plan, including those contained in the Plan Supplement, the Definitive Documents, and all other relevant and necessary documents, have been or will be negotiated in good faith and at arm’s-length, are in the best interests of the Debtors, and shall, upon completion of documentation and execution, be valid, binding, and enforceable documents and agreements not in conflict with any federal, state, or local law. The documents and agreements are essential elements of the Plan, and entry into and consummation of the transactions contemplated by each such document or agreement are in the best interests of the Debtors, the Estates, and the Holders of Claims and Interests. The Debtors have exercised reasonable business judgment in determining which documents and agreements to enter into and have provided sufficient and adequate notice of such documents and agreements. The Debtors and the Reorganized Debtors, as applicable, are authorized, without any further notice to or action, order or approval of the Court, to finalize, execute, and deliver all agreements, documents, instruments, and certificates relating thereto and perform their obligations thereunder in accordance with the Plan.
JJ. Disclosure of Facts.
68. The Debtors disclosed all material facts regarding the Plan, including with respect to consummation of the Restructuring Transactions, and the fact that each Debtor will emerge from its respective Chapter 11 Case as a validly existing separate corporate entity, limited liability company, partnership, or other form, as applicable.
KK. Good Faith.
69. The Debtors proposed the Plan in good faith and not by any means prohibited by law, with the legitimate and honest purpose of maximizing the value of the Debtors’ Estates for the benefit of their stakeholders. The Plan accomplishes this goal. The Plan is the product of extensive, good faith, arm’s-length negotiations among the Debtors and their principal constituencies, including the Consenting Stakeholders. Accordingly, the Debtors, the Released Parties, and the Exculpated Parties have been, are, and will continue to be acting in good faith within the meaning of section 1125(e) of the Bankruptcy Code if they proceed to: (a) consummate the Restructuring Transactions in accordance with the Plan and the agreements, settlements, transactions, transfers, and other actions contemplated thereby, regardless of whether such agreements, settlements, transactions, transfers, and other actions are expressly authorized by this Confirmation Order; and (b) take any actions authorized and directed or contemplated by this Confirmation Order.
LL. Essential Elements of the Plan.
70. The Exit ABL Facility Documents and the New Organizational Documents are essential elements of the Plan, are necessary for Confirmation and Consummation of the Plan, and are critical to the overall success and feasibility of the Plan. The execution, performance, and incurrence of all obligations by the Reorganized Debtors, and/or any successors, assigns, or transferees of the applicable Debtors or the Reorganized Debtors, including in connection with the Restructuring Transactions, are necessary and appropriate for Confirmation and the operations of the Reorganized Debtors. The Debtors have exercised sound business judgment in deciding to pursue and enter into the Exit ABL Facility Documents and the New Organizational Documents and have provided adequate notice thereof.
71. The Debtors have provided sufficient and adequate notice of the material terms of the Exit ABL Facility Documents and the New Organizational Documents to all parties in interest in these Chapter 11 Cases. The execution, delivery, or performance by the Debtors or the Reorganized Debtors, as applicable, of all Definitive Documents and any agreements related thereto and compliance by the Debtors or the Reorganized Debtors, as applicable, with the terms thereof is authorized by, and will not conflict with, the terms of the Plan or this Confirmation Order.
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MM. Valuation.
72. The evidence with respect to the valuation analysis of the Debtors set forth in the Disclosure Statement and introduced at the Combined Hearing, as applicable, and in the Confirmation Declarations, provides the basis and support for the distributions and recoveries to Holders of Claims and Interests, as applicable, under the Plan, is reasonable, persuasive, and credible, and uses reasonable and appropriate methodologies and assumptions. All parties in interest have been given a fair and reasonable opportunity to challenge the valuation analysis. Given such valuation of the Debtors, pursuant to the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules, the Plan’s treatment of Claims and Interests is appropriate and reasonable as set forth herein.
ORDER
IT IS ORDERED, ADJUDGED, DECREED, AND DETERMINED THAT:
73. Disclosure Statement. The Disclosure Statement is APPROVED in all respects.
74. Confirmation. The Plan is approved in its entirety and CONFIRMED under section 1129 of the Bankruptcy Code. The terms of the Plan, including the Plan Supplement (including any supplements, amendments, or modifications thereof in accordance with this Confirmation Order and the Plan, including the consent rights of the Consenting Stakeholders thereunder and under the RSA) and the Definitive Documents, are incorporated by reference into and are an integral part of this Confirmation Order. Without any further notice to or action, order or approval of the Court, the Debtors, the Reorganized Debtors, and their successors are authorized and empowered to make all modifications to all documents included as part of the Plan Supplement that are consistent with and subject to the Plan, including the consent rights of the Consenting Stakeholders thereunder and under the RSA.
75. Solicitation. To the extent applicable, the solicitation of votes on the Plan complied with the Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Local Rules, and was appropriate and satisfactory and is approved in all respects.
76. Objections Overruled. To the extent that any objections (including any reservations of rights, joinders, or statements contained therein) pertaining to the final approval of the Disclosure Statement or Confirmation of the Plan that have not been withdrawn, waived, or settled before entry of this Confirmation Order, are not cured by the relief granted in this Confirmation Order, or have not otherwise been resolved as stated on the record at the Combined Hearing, all such objections (including any reservation of rights, joinders, or statements contained therein), are hereby OVERRULED in their entirety and DENIED on the merits.
77. All objections to Confirmation or final approval of the Disclosure Statement not Filed and served prior to the Objection Deadline set forth in the Conditional Disclosure Statement Order are deemed waived and shall not be considered by the Bankruptcy Court.
78. Deemed Acceptance of Plan. In accordance with section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019, all Holders of Claims who voted to accept the Plan or who are conclusively presumed to accept the Plan are deemed to accept the Plan.
79. No Action Required. Under section 1142(b) of the Bankruptcy Code and any other comparable provisions under applicable law, no further action of the respective directors, managers, or members of the Debtors is required to authorize the Debtors to enter into, execute, deliver, file, adopt, amend, restate, consummate, or effectuate, as the case may be, the Plan, the Restructuring Transactions, and any contract, assignment, certificate, instrument, or other document to be executed, delivered, adopted, or amended in connection with the implementation of the Plan, including the Definitive Documents.
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80. The transactions described in the Plan (as may be subsequently amended, modified, or supplemented from time to time consistent with the Plan, including the consent rights of the Consenting Stakeholders thereunder and under the RSA), the Plan Supplement (as may be subsequently amended, modified, or supplemented from time to time consistent with the Plan, including the consent rights of the Consenting Stakeholders thereunder and under the RSA), the Definitive Documents, and this Confirmation Order, including the Restructuring Transactions, are hereby approved. Whether prior to, on or after the Effective Date, as applicable, and without any further order of the Court, the Debtors, the Reorganized Debtors, all Holders of Claims and Interests, as applicable, and their respective directors, managers, officers, employees, members, agents, attorneys, financial advisors, and investment bankers, are hereby authorized, directed, and empowered pursuant to section 1142(b) of the Bankruptcy Code and any other applicable law to, and shall take any action that the Debtors or Reorganized Debtors determine is reasonably necessary, advisable, or appropriate to implement, effectuate, and consummate the Plan, the Plan Supplement, the Definitive Documents, the Restructuring Transactions, or any other transaction set forth in, contemplated by, or consistent with the Plan (including the Plan Supplement) or this Confirmation Order.
81. Binding Effect. Upon the occurrence of the Effective Date, the terms of the Plan (including, for the avoidance of doubt, the Plan Supplement) shall be immediately effective and enforceable and deemed binding upon the Debtors, the Reorganized Debtors, and any and all Holders of Claims or Interests (irrespective of whether such Claims or Interests are presumed to have accepted or deemed to reject the Plan), all Entities that are parties to or are subject to the settlements, compromises, releases, discharges, and injunctions described in the Plan, each Entity acquiring property under the Plan, and any and all Non-Debtor parties to Executory Contracts and Unexpired Leases with the Debtors. For the avoidance of doubt, upon the occurrence of the Effective Date, recipients of New Equity Interests shall become bound by the New Organizational Documents regardless of whether or not such recipients actually return signature pages thereto.
82. Incorporation by Reference. The terms and provisions of the Plan, the Plan Supplement, this Confirmation Order, the Definitive Documents, all other relevant and necessary documents, and each of the foregoing’s schedules and exhibits constitute essential elements of the Plan and shall, on and after the Effective Date, be incorporated herein by reference and are an integral part of this Confirmation Order.
83. Vesting of Assets in the Reorganized Debtors. Except as otherwise provided in this Confirmation Order, the Plan, or any agreement, instrument, or other document incorporated herein, on the Effective Date, all property in each Estate, all Causes of Action, and any property acquired by any of the Debtors pursuant to the Plan shall vest in each respective Reorganized Debtor, free and clear of all Liens, Claims, charges, Causes of Action, or other encumbrances (except for Liens granted to secure the obligations under the Exit ABL Facility Documents). On and after the Effective Date, except as otherwise provided in the Plan, this Confirmation Order, or any agreement, instrument, or other document incorporated in the Plan, each Reorganized Debtor may operate its business and may use, acquire, or dispose of property and compromise or settle any Claims, Interests, or Causes of Action without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules. For the avoidance of doubt, no Reorganized Debtor shall be treated as being liable on any Claim that is discharged pursuant to the Plan. After the Effective Date, a certified copy of this Confirmation Order may be Filed with the appropriate clerk or recorded with the recorder of any federal, state, province, country, or local authority whether foreign or domestic, to effectuate the transfer of all property in each Estate to each respective Reorganized Debtor, vesting the Reorganized Debtors with all right, title, and interest of the Debtors to the property in each Estate, free and clear of all Liens, Claims, Interests, and other encumbrances of record. The terms and provisions of the Plan, the Plan Supplement, this Confirmation Order, the Definitive Documents, all other relevant and necessary documents, and each of the foregoing’s schedules and exhibits shall, on and after the Effective Date, be binding in all respects upon, and shall inure to the benefit of, the Debtors and Reorganized Debtors, the Debtors’ Estates and their creditors, and their respective successors and assigns, any affected third parties, all Holders of Claims and Interests, whether known or unknown, against the Debtors, including to any trustees, examiners, administrators, responsible state officers, estate representatives, or similar entities for the Debtors, if any, subsequently appointed in any of these Chapter 11 Cases or upon a conversion to chapter 7 under the Bankruptcy Code of any of these Chapter 11 Cases, and each of their respective affiliates, successors, and assigns.
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84. Cancellation of Existing Securities, Agreements, and Interests. On the Effective Date, except as otherwise provided in the Plan, this Confirmation Order, or other Definitive Documents (including the Plan Supplement and the Exit ABL Facility Documents), as applicable, all notes, instruments, certificates, credit agreements, note purchase agreements, indentures, and other documents evidencing Claims (including, for the avoidance of doubt, the Senior Secured Notes Documents, the Prepetition ABL Credit Agreement, and all related collateral and credit documentation, other than with respect to the DIP Claims), and the Nine Energy Equity Interests, shall, be canceled, and any rights of any Holder in respect thereof shall be deemed canceled and of no force or effect, and all prior, present and future obligations and liabilities, actions, suits, accounts or demands, covenants, and indemnities (both actual and contingent), under or in connection with the DIP Credit Agreement, Senior Secured Notes Documents, and the Prepetition ABL Credit Agreement of the Debtors or Reorganized Debtors, as applicable, and any Non-Debtor Affiliates, or any other parties thereunder, or in any way related thereto, shall be deemed satisfied in full, released, canceled, discharged, and of no force or effect, and the Agents/Trustees and each of the lenders and holders and their respective agents, successors and assigns, shall each be automatically and fully released and discharged of and from all duties and obligations thereunder without any need for further action or approval by the Bankruptcy Court or for a Holder to take further action; provided that the Liens granted to the DIP Agent pursuant to the DIP Credit Agreement shall remain in full force and effect solely to the extent provided for in the Plan or the Exit ABL Facility Documents.
85. Effectiveness of All Actions. All actions contemplated by the Plan, including all actions in connection with or pursuant to the RSA and the Definitive Documents, may be modified, in accordance with their respective terms (including the consent rights of the Consenting Stakeholders under the Plan and the RSA), from time to time prior to the Effective Date (including any restructuring transaction steps set forth in one or more exhibits to the Plan Supplement), are hereby effective and authorized to be taken on, prior to, or after the Effective Date, as applicable, under this Confirmation Order, without further application to, or order of the Bankruptcy Court, or further action by the respective officers, directors, managers, or members of the Debtors or the Reorganized Debtors and with the effect that such actions had been taken by the unanimous action, consent, approval, and vote of each of such officers, directors, managers, or members.
86. Restructuring Transactions. The Debtors or the Reorganized Debtors, as applicable, are authorized to enter into and effectuate the Restructuring Transactions contemplated by the Plan, the RSA, and the other Definitive Documents, and to take any actions as may be necessary or appropriate to effectuate any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan (including the Plan Supplement) that are consistent with and pursuant to the terms and conditions of the Plan, including the transactions described in Article IV.B of the Plan. Any transfers of assets or equity interests effectuated or any obligations incurred through the Restructuring Transactions are hereby approved and shall not constitute fraudulent conveyances or fraudulent transfers or otherwise be subject to avoidance. To the fullest extent permitted by section 1146(a) of the Bankruptcy Code, all transfers contemplated herein and in the Plan shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, transfer tax, sales tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, or other similar tax or governmental assessment, and the appropriate state or local governmental officials or agents shall forego the collection of any such tax or governmental assessment and accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax, recordation fee, or governmental assessment.
87. Distributions. The provisions governing distributions contained in Article VI of the Plan are approved in their entirety. The distributions and payments made pursuant to the Plan shall be permanent, irrevocable, and indefeasible and shall not be subject to avoidance, turnover, recharacterization, or adjustment in any respect unless otherwise specifically provided in the Plan or this Confirmation Order.
88. Claims Register. Any duplicate Claim or any Claim that has been paid, satisfied, amended, or superseded may be adjusted or expunged (including pursuant to the Plan) on the Claims Register by the Debtors or Reorganized Debtors or the Claims and Noticing Agent without the Debtors or Reorganized Debtors having to File an application, motion, complaint, objection, or any other legal proceeding seeking to object to such Claim and without any further notice to or action, order, or approval of the Bankruptcy Court.
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89. Exit ABL Facility. On the Effective Date, the Reorganized Debtors shall enter into the Exit ABL Facility, pursuant to the Exit ABL Facility Documents and which terms shall be in all respects consistent with the RSA and the Plan. Confirmation shall constitute (a) approval of the Exit ABL Facility and the Exit ABL Facility Documents and the transactions contemplated thereby; and (b) authorization for the Debtors and the Reorganized Debtors, as applicable, to take any and all actions necessary or appropriate to consummate the Exit ABL Facility, including executing and delivering the Exit ABL Facility Documents, in each case, without any further notice to or order of the Bankruptcy Court. The financial accommodations to be extended pursuant to the Exit ABL Facility are being extended, and shall be deemed to have been extended, in good faith, following arm’s-length negotiations, for legitimate business purposes, are reasonable, shall not be subject to avoidance, turnover, recharacterization, adjustment, or subordination (including equitable subordination) for any purposes whatsoever, and shall not constitute preferential transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any other applicable non-bankruptcy Law. On the Effective Date, the Exit ABL Facility shall be issued and distributed pursuant to, and in accordance with, the Plan. On the Effective Date, all of the Liens and security interests to be granted, carried forward, continued, amended, extended, and/or reaffirmed (including in connection with any DIP Claims that are refinanced by the Exit ABL Facility) by the Debtors or Reorganized Debtors, as applicable in accordance with the Exit ABL Facility Documents: (a) shall be deemed to be granted, carried forward, continued, amended, extended, reaffirmed, and deemed automatically perfected on the Effective Date; (b) shall be continuing legal, valid, binding, automatically perfected, non-avoidable, first-priority, and enforceable Liens on, and security interests in, the applicable collateral specified in the Exit ABL Facility Documents; and (c) shall not be subject to avoidance, recharacterization, turnover, adjustment, or subordination (including equitable subordination) for any purposes whatsoever and shall not constitute preferential transfers, fraudulent transfers, fraudulent conveyances, or other voidable transfers under the Bankruptcy Code or any applicable non-bankruptcy Law. The Reorganized Debtors and the Entities granted such Liens and security interests are authorized to make all filings and recordings, and to obtain all governmental approvals and consents necessary to establish and perfect such Liens and security interests under the provisions of the applicable state, provincial, federal, or other Law (whether domestic or foreign) that would be applicable in the absence of the Plan and this Confirmation Order (it being understood that perfection shall occur automatically by virtue of the entry of this Confirmation Order, and any such filings, recordings, approvals, and consents shall not be required), and shall thereafter cooperate to make all other filings and recordings that otherwise would be necessary under applicable Law to give notice of such Liens and security interests to third parties. For the avoidance of doubt, the Liens and security interests granted by the Reorganized Debtors and the Entities pursuant to the Exit ABL Facility Documents are automatically perfected as of the Effective Date, including the Liens and Security Interests in any deposit account of any such Reorganized Debtor and/or Entity and without the necessity of entering into any lockbox or deposit account control agreement with respect to such deposit account. On the Effective Date, the Exit ABL Facility Documents shall constitute legal, valid, binding, and authorized obligations of the Reorganized Debtors in accordance with their terms.
90. Issuance of the New Equity Interests. On the Effective Date, subject to the terms and conditions of the Plan and the Plan Supplement, Reorganized Nine Energy shall issue the New Equity Interests, which distribution or issuance shall be governed by the terms and conditions of the instruments evidencing or relating to such distribution or issuance, including the New Organizational Documents, which terms and conditions shall bind each Entity receiving such distribution or issuance. The issuance of the New Equity Interests, including equity awards reserved for the Management Incentive Plan, shall be authorized without the need for any further corporate action or without any further action by the Debtors or Reorganized Debtors. Any Entity’s acceptance of New Equity Interests shall be deemed as its agreement to the New Organizational Documents, as the same may be amended or modified from time to time following the Effective Date in accordance with their terms. For the avoidance of doubt, upon the occurrence of the Effective Date recipients of New Equity Interests shall become bound by the New Organizational Documents regardless of whether or not such recipients actually return signature pages thereto.
91. Distributions Exempt from Securities Laws. Pursuant to section 1145 of the Bankruptcy Code, or, to the extent that section 1145 of the Bankruptcy Code is either not permitted or not applicable, section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, Regulation S under the Securities Act, and/or other available exemptions from registration, the offering, issuance, and distribution of the New Equity Interests as contemplated in the Plan and/or the offering, issuance, and distribution of Other Securities, if any, shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act and any other applicable U.S. federal, state, or local laws requiring registration prior to the offering, issuance, distribution, or sale of Securities. The offering of such New Equity Interests and/or Other Securities prior to the Petition Date shall be exempt from the registration requirements of the Securities Act in reliance upon section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, and/or in reliance on Regulation S under the Securities Act.
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92. The shares of New Equity Interests and the Other Securities, if any, to be issued under the Plan on account of Allowed Claims in accordance with, and pursuant to, section 1145 of the Bankruptcy Code will be freely transferable under the Securities Act by the recipients thereof, subject to: (a) the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 1145(b) of the Bankruptcy Code, and compliance with applicable securities laws and any rules and regulations of the United States Securities and Exchange Commission or state or local securities laws, if any, applicable at the time of any future transfer of such Securities or instruments; and (b) any restrictions on the transferability of such New Equity Interests and/or Other Securities in the New Organizational Documents. The Reorganized Debtors need not provide any further evidence other than the Plan or this Confirmation Order to any Entity (including DTC, any nominee thereof or any transfer agent for the New Equity Interests and/or Other Securities) with respect to the treatment of the New Equity Interests and/or Other Securities to be issued under the Plan under applicable securities laws.
93. Compromise of Controversies. In consideration for the distributions and other benefits, including releases, provided under the Plan, the provisions of the Plan constitute a good faith compromise and settlement of all Claims, Interests, and controversies settled, compromised, satisfied, or otherwise resolved under the Plan and the entry of this Confirmation Order constitutes approval of such compromise and settlement under Bankruptcy Rule 9019.
94. Assumption and Assignment of Contracts and Leases. On the Effective Date, any Executory Contract or Unexpired Lease of the Debtors not listed on the Rejected Executory Contract and Unexpired Lease List is deemed to be an Assumed Executory Contract or Unexpired Lease, without the need for any further notice to or action, order, or approval of the Bankruptcy Court, in accordance with the provisions and requirements of section 365 of the Bankruptcy Code, and the payment of Cures, if any, shall be paid in accordance with Article V.B of the Plan. The Debtors or the Reorganized Debtors, as applicable, may alter, amend, modify, or supplement the Rejected Executory Contract and Unexpired Lease List at any time through and including forty-five (45) days after the Effective Date.
95. To the maximum extent permitted by Law, to the extent any provision in any Executory Contract or Unexpired Lease assumed or assumed and assigned pursuant to the Plan restricts or prevents, or purports to restrict or prevent, or is breached or deemed breached by, the assumption or assumption and assignment of such Executory Contract or Unexpired Lease (including any “change of control” provision), then such provision shall be deemed modified such that the transactions contemplated by the Plan shall not entitle the Non-Debtor party thereto to terminate such Executory Contract or Unexpired Lease or to exercise any other default-related rights with respect thereto.
96. Assumption of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise and full payment of any applicable Cure pursuant to Article V of the Plan, in the amount and at the time dictated by the Debtors’ ordinary course of business, shall result in the full release and satisfaction of any Cures, Claims, or defaults, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed Executory Contract or Unexpired Lease at any time prior to the effective date of assumption. Any and all Proofs of Claim based upon Executory Contracts or Unexpired Leases that have been assumed in these Chapter 11 Cases, including pursuant to this Confirmation Order, and for which any Cure has been fully paid pursuant to Article V of the Plan, in the amount and at the time dictated by the Debtors’ ordinary course of business, shall be deemed disallowed and expunged as of the Effective Date without the need for any objection thereto or any further notice to or action, order, or approval of the Bankruptcy Court.
97. The provisions governing the treatment of Executory Contracts and Unexpired Leases set forth in Article V of the Plan (including the procedures regarding the resolution of any and all disputes concerning the assumption and assignment, as applicable, of such Executory Contracts and Unexpired Leases) shall be, and hereby are, approved in their entirety.
98. Indemnification. All indemnification provisions in place as of the Effective Date shall be (a) reinstated and remain intact, irrevocable, and shall survive the Effective Date on terms no less favorable to such current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of, or acting on behalf of, the Debtors than the indemnification provisions in place prior to the Effective Date, and (b) shall be assumed by the Reorganized Debtors.
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99. Authorization to Consummate. The Debtors are authorized to consummate the Plan in accordance with the terms thereof after the entry of this Confirmation Order, subject to satisfaction or waiver (by the required parties) of the conditions precedent to Consummation set forth in Article IX of the Plan.
100. Professional Compensation. All final requests for payment of Professional Fee Claims for services rendered and reimbursement of expenses incurred prior to the Confirmation Date must be Filed no later than forty-five (45) days after the Effective Date. The Bankruptcy Court shall determine the Allowed amounts of such Professional Fee Claims after notice and a hearing in accordance with the procedures established by the Bankruptcy Court. The Reorganized Debtors shall pay Professional Fee Claims in Cash in the amount the Bankruptcy Court allows as soon as reasonably practicable after such Professional Fee Claims are Allowed by entry of an order of the Bankruptcy Court, including from the Professional Fee Escrow Account, which the Reorganized Debtors will establish in trust for the Professionals and fund with Cash equal to the Professional Fee Amount on the Effective Date. When all such Allowed amounts owing to Professionals have been paid in full, any remaining amount in the Professional Fee Escrow Account shall promptly be paid to the Reorganized Debtors without any further action, order, or approval of the Bankruptcy Court.
101. From and after the Confirmation Date, any requirement that Professionals comply with sections 327 through 331, 363, and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall terminate and the Debtors or the Reorganized Debtors, as applicable, may employ and pay any Professional without any further notice to or action, order, or approval of the Bankruptcy Court.
102. Restructuring Expenses. The provision governing payment of Restructuring Expenses and Senior Secured Notes Trustee Fees and Expenses in Article II.E of the Plan is approved in its entirety. The provision governing payment of fees, costs, and expenses of the Disbursing Agent (including the Agents/Trustees with respect to their respective debt facilities) in Article VI.C.2 of the Plan is approved in its entirety.
103. Release, Exculpation, Discharge, and Injunction Provisions. The release, exculpation, discharge, and injunction provisions set forth in Article VIII of the Plan are, subject to the occurrence of the Effective Date, approved and authorized in their entirety, and such provisions are effective and binding on all parties and Entities to the extent provided therein.
| a. | Discharge of Claims and Termination of Interests. |
104. The following discharge of Claims and termination of Interests in Article VIII.A of the Plan is approved:
Pursuant to section 1141(d) of the Bankruptcy Code and except as otherwise specifically provided herein, in the Plan, or in any contract, instrument, or other agreement or document created pursuant to the Plan or Plan Supplement, the distributions, rights, and treatment that are provided herein shall be in complete satisfaction, discharge, and release, effective as of the Effective Date, of Claims (including any Intercompany Claims that the Reorganized Debtors resolve or compromise after the Effective Date), Interests, and Causes of Action of any nature whether known or unknown, including any interest accrued on Claims or Interests from and after the Petition Date, whether known or unknown, against, liabilities of, Liens on, obligations of, rights against, and Interests in the Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan on account of such Claims and Interests, including demands, liabilities, and Causes of Action that arose before the Effective Date, any liability (including withdrawal liability) to the extent such Claims or Interests relate to services that employees of the Debtors have performed prior to the Effective Date, and that arise from a termination of employment, any contingent or noncontingent liability on account of representations or warranties issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not (a) a Proof of Claim based upon such debt or right is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code; (b) a Claim or Interest based upon such debt, right, or Interest is Allowed pursuant to section 502 of the Bankruptcy Code; or (c) the Holder of such a Claim or Interest has accepted the Plan. Any default or “event of default” by the Debtors with respect to any Claim or Interest that existed immediately prior to or on account of the Filing of the Chapter 11 Cases shall be deemed cured (and no longer continuing) as of the Effective Date. Without prejudice to the distributions, rights, and treatment that are provided by the Plan, this Confirmation Order shall be a judicial determination of the discharge of all Claims (other than Reinstated Claims) and Interests subject to the occurrence of the Effective Date, and, upon the Effective Date, all Holders of such Claims and Interests shall be forever precluded and enjoined, pursuant to Section 524 of the Bankruptcy Code, from prosecuting or asserting any such Claim or Interest against the Debtors, Reorganized Debtors, or any of their assets or property.
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b. Release of Liens.
105. The following Release of Liens in Article VIII.B of the Plan is approved:
Except as otherwise provided in the Exit ABL Facility Documents, the Plan, this Confirmation Order, or any contract, instrument, release, or other agreement or document created pursuant to the Plan, on the Effective Date and concurrently with the applicable distributions made pursuant to the Plan and, in the case of a Secured Claim satisfaction in full of the portion of the Secured Claim that is Allowed as of the Effective Date, except for Other Secured Claims that the Debtors elect to Reinstate in accordance with the Plan, all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estates shall be fully released and discharged, and all of the right, benefit, title, and interest of any Holder of such mortgages, deeds of trust, Liens, pledges, or other security interests shall revert and, as applicable, be reassigned, surrendered, reconveyed, or retransferred to the Reorganized Debtors and their successors and assigns. Any Holder of such Secured Claim (and the applicable agents for such Holder, including the Agents/Trustees and the DIP Agent) shall be authorized and directed, at the sole cost and expense of the Reorganized Debtors, to release any collateral or other property of any Debtor (including any Cash Collateral and possessory collateral) held by such Holder (and the applicable agents for such Holder, including the Agents/Trustees) and to take such actions as may be reasonably requested by the Reorganized Debtors to evidence the release of such Lien, including the execution, delivery, and filing or recording of such releases. The presentation or Filing of this Confirmation Order to or with any federal, state, provincial, or local agency or department shall constitute good and sufficient evidence of, but shall not be required to effect, the termination of such Liens.
To the extent that any Holder of a Secured Claim that has been satisfied or discharged in full pursuant to the Plan, or any agent for such Holder, has filed or recorded publicly any Liens and/or security interests to secure such Holder’s Secured Claim, then as soon as practicable on or after the Effective Date, such Holder (or the agent for such Holder) shall take any and all steps reasonably requested by the Debtors or the Reorganized Debtors, that are necessary or desirable to record or effectuate the cancellation and/or extinguishment of such Liens and/or security interests, including the making of any applicable filings or recordings, and the Reorganized Debtors shall be entitled to make any such filings or recordings on such Holder’s behalf.
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c. Releases by the Debtors.
106. The following releases by the Debtors in Article VIII.C of the Plan are approved:
Except as otherwise provided in the Plan or this Confirmation Order to the contrary, pursuant to section 1123(b) of the Bankruptcy Code, in exchange for good and valuable consideration, including the obligations of the Debtors under the Plan and the contributions and services of the Released Parties in facilitating the implementation of the restructuring contemplated by the Plan, the adequacy of which is hereby confirmed, on and after the Effective Date, each Released Party is, and is deemed to be, hereby conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged by the Debtors, their Estates, the Reorganized Debtors, and any Person seeking to exercise the rights of the Debtors or their Estates, including any successors to the Debtors or any Estates or any Estate representatives appointed or selected pursuant to section 1123(b)(3) of the Bankruptcy Code, in each case on behalf of themselves and their respective successors, assigns, and representatives, and any and all other Entities who may purport to assert any Claim or Cause of Action, directly or derivatively, by, through, for, or because of the foregoing Entities, from any and all Claims and Causes of Action whatsoever, including any Avoidance Actions and any derivative Claims, asserted or assertable on behalf of any of the Debtors, Reorganized Debtors, and their Estates, whether liquidated or unliquidated, known or unknown, foreseen or unforeseen, matured or unmatured, asserted or unasserted, accrued or unaccrued, existing or hereafter arising, contingent or noncontingent, in Law, equity, contract, tort or otherwise, that the Debtors, their Estates, or the Reorganized Debtors, including any successors to the Debtors or any Estate representatives appointed or selected, would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim against, or Interest in, a Debtor, the Reorganized Debtors, their Estates, or other Entity, or that any Holder of any Claim against, or Interest in, a Debtor or other Entity could have asserted on behalf of the Debtors or other Entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors (including the Debtors’ capital structure, management, ownership, or operation thereof), the purchase, sale, or recission of any Security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements or interaction between or among any Debtor and any Released Party, the ownership and/or operation of the Debtors by any Released Party or the distribution of any Cash or other property of the Debtors to any Released Party, the assertion or enforcement of rights and remedies against the Debtors, the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions, any related adversary proceedings, intercompany transactions between or among a Debtor and another Debtor or an Affiliate of a Debtor, the decision to File the Chapter 11 Cases, the formulation, documentation, preparation, dissemination, solicitation, negotiation, entry into or Filing of the RSA, the DIP Documents, the DIP Facility, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, the Plan (including, for the avoidance of doubt, the Plan Supplement), before or during the Chapter 11 Cases, any other Definitive Document or any Restructuring Transaction, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan or the reliance by any Released Party on the Plan or this Confirmation Order in lieu of such legal opinion) created or entered into in connection with the RSA, the DIP Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, Management Incentive Plan, the Disclosure Statement, the Plan, any other Definitive Document, or any Restructuring Transactions before or during the Chapter 11 Cases, the Filing of the Chapter 11 Cases, the Disclosure Statement or the Plan, the solicitation of votes with respect to the Plan, the pursuit of Confirmation, the pursuit of Consummation of the Restructuring Transactions, the administration and implementation of the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date relating to any of the foregoing.
Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any Causes of Action identified in the Schedule of Retained Causes of Action, (b) any post-Effective Date obligations of any party or Entity under the Plan, this Confirmation Order, any Restructuring Transaction, or any document, instrument, or agreement (including any Definitive Document, the Exit ABL Facility, the Exit ABL Facility Documents, the New Organizational Documents, and other documents set forth in the Plan Supplement) executed to implement the Plan or any Claim or obligation arising under the Plan, or (c) any Released Party from any claim or Cause of Action arising from an act or omission that is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
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Entry of this Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Debtor Release, which includes by reference each of the related provisions and definitions contained in the Plan, and further, shall constitute the Bankruptcy Court’s finding that the Debtor Release is: (a) in exchange for the good and valuable consideration provided by each of the Released Parties, including the Released Parties’ substantial contributions to facilitating the Restructuring Transactions and implementing the Plan; (b) a good faith settlement and compromise of the Claims released by the Debtor Release; (c) in the best interests of the Debtors and all Holders of Claims and Interests; (d) fair, equitable, and reasonable; (e) given and made after due notice and opportunity for hearing; and (f) a bar to any of the Debtors, the Reorganized Debtors, or the Debtors’ Estates asserting any Claim or Cause of Action released pursuant to the Debtor Release.
d. Releases by the Releasing Parties.
107. The following Third-Party Release in Article VIII.D of the Plan is approved:
Except as otherwise provided in the Plan or this Confirmation Order to the contrary, on and after the Effective Date, in exchange for good and valuable consideration, including the obligations of the Debtors under the Plan and the contributions and services of the Released Parties in facilitating the implementation of the restructuring contemplated by the Plan, the adequacy of which is hereby confirmed, pursuant to section 1123(b) of the Bankruptcy Code, in each case except for Claims arising under, or preserved by, the Plan, to the fullest extent permitted under applicable law, each Released Party is, and is deemed to be, hereby conclusively, absolutely, unconditionally, irrevocably and forever, released and discharged by each and every Releasing Party, in each case on behalf of themselves and their respective successors, assigns, and representatives, and any and all other Entities who may purport to assert any Claims or Cause of Action, directly or derivatively, by, through, for, or because of the foregoing Entities, from any and all Claims and Causes of Action arising at any time prior to the Effective Date, including any Avoidance Actions and any derivative claims assertable, whether liquidated or unliquidated, known or unknown, foreseen or unforeseen, matured or unmatured, existing on or before the Effective Date, contingent or noncontingent, in law, equity, contract, tort, including any derivative Claims asserted or assertable on behalf of any of the Debtors, that such Entities would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim against, or Interest in, a Debtor, the Reorganized Debtors, or their Estates or other Entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Reorganized Debtors, and their Estates (including the capital structure, management, ownership, or operation thereof), the Chapter 11 Cases, the purchase, sale, or recission of any Security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements or interaction between or among any Debtor and any Released Party, the assertion or enforcement of rights and remedies against the Debtors, the Debtors’ in- or out-of-court restructuring efforts, intercompany transactions between or among a Debtor and another Debtor or Affiliate of a Debtor, the decision to File the Chapter 11 Cases, the formulation, documentation, preparation, dissemination, solicitation, negotiation, entry into, or Filing of the RSA, the DIP Facility, the DIP Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, the Plan (including, for the avoidance of doubt, the Plan Supplement), before or during the Chapter 11 Cases, any other Definitive Document or any Restructuring Transaction, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan or the reliance by any Released Party on the Plan or this Confirmation Order in lieu of such legal opinion) relating to any of the foregoing, created or entered into in connection with the RSA, the DIP Facility, the DIP Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, the Plan, or the Plan Supplement, before or during the Chapter 11 Cases, or any Restructuring Transactions, any preference, fraudulent transfer, or other avoidance claim arising pursuant to chapter 5 of the Bankruptcy Code or other applicable Law, the Filing of the Chapter 11 Cases, the Disclosure Statement, or the Plan, the solicitation of votes with respect to the Plan, the pursuit of Confirmation, the pursuit of Consummation of the Restructuring Transactions, the administration and implementation of the Plan and the Restructuring Transactions, including the issuance or distribution of Securities pursuant to the Restructuring Transactions and/or Plan, or the distribution of property under the Plan or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date relating to any of the foregoing.
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Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any post-Effective Date obligations of any party or Entity under the Plan, this Confirmation Order, any Restructuring Transaction, or any document, instrument, or agreement (including any Definitive Document, the Exit ABL Facility Documents, the New Organizational Documents, and other documents set forth in the Plan Supplement) executed to implement the Plan or any Claim or obligation arising under the Plan, or (b) any Released Party from any claim or Cause of Action arising from an act or omission that is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
Entry of this Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Third-Party Release, which includes by reference each of the related provisions and definitions contained herein, and, further, shall constitute the Bankruptcy Court’s finding that the Third-Party Release is: (a) consensual; (b) essential to the Confirmation; (c) given in exchange for the good and valuable consideration provided by each of the Released Parties, including the Released Parties’ substantial contributions to facilitating the Restructuring Transactions and implementing the Plan; (d) a good faith settlement and compromise of the Claims released by the Third-Party Release; (e) in the best interests of the Debtors and their Estates; (f) fair, equitable, and reasonable; (g) given and made after due notice and opportunity for hearing; and (h) a bar to any of the Releasing Parties asserting any Claim or Cause of Action released pursuant to the Third-Party Release.
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e. Exculpation.
108. Pursuant to section 1125(e) of the Bankruptcy Code, the following exculpation of the Exculpation Parties in Article VIII.E of the Plan is approved:
Notwithstanding anything contained in the Plan to the contrary, to the fullest extent permissible under applicable law and without affecting or limiting either the Debtor Release or Third-Party Release, effective as of the Effective Date, no Exculpated Party shall have or incur liability or obligation for, and each Exculpated Party is hereby released and exculpated from, any Cause of Action for any Claim arising from the Petition Date through the Effective Date related to any act or omission in connection with, relating to, or arising out of, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, Filing, or termination of the RSA and related prepetition transactions, the DIP Facility, the DIP Documents, the Definitive Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, the Plan, the Plan Supplement, the Restructuring Transactions, or any wind down transaction, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan or the reliance by any Released Party on the Plan or this Confirmation Order in lieu of such legal opinion) in connection with the RSA and related prepetition transactions, the DIP Facility, the DIP Documents, the Definitive Documents, the New Equity Interests, the Exit ABL Facility, the Exit ABL Facility Documents, the Management Incentive Plan, the Disclosure Statement, the Plan, the Plan Supplement, the Restructuring Transactions, any preference, fraudulent transfer, or other avoidance Claim arising pursuant to chapter 5 of the Bankruptcy Code or other applicable law, the Filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of consummation of the Restructuring Transactions, the administration and implementation of the Plan, including the issuance or distribution of Securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date, except for Claims related to any act or omission that is determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence, but in all respects such Entities shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan.
f. Injunction.
109. The following injunction in Article VIII.F of the Plan is approved:
Except as otherwise expressly provided in the Plan or in this Confirmation Order, or for obligations or distributions issued or required to be paid pursuant to the Plan or this Confirmation Order, all Entities who have held, hold, or may hold Claims, Interests, or Causes of Action that have been extinguished, released, discharged, or are subject to exculpation, are permanently enjoined, from and after the Effective Date, from taking any of the following actions against, as applicable, the Debtors, the Reorganized Debtors, the Exculpated Parties, and the Released Parties: (a) commencing or continuing in any manner any action, suit, or other proceeding of any kind on account of or in connection with or with respect to any such released Claims, Interests, or Causes of Action; (b) enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order against such Entities on account of or in connection with or with respect to any such Claims, Interests, liabilities, or Causes of Action; (c) creating, perfecting, or enforcing any Lien or encumbrance of any kind against such Entities or the property or the Estates of such Entities on account of or in connection with or with respect to any such Claims, Interests, liabilities, or Causes of Action; (d) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from such Entities or against the property or the Estates of such Entities on account of or in connection with or with respect to any such Claims or Interests, unless such Holder has timely Filed a motion with the Bankruptcy Court expressly requesting the right to perform such setoff, subrogation or recoupment on or before the Effective Date, and notwithstanding an indication of a Claim, Interest, or Cause of Action or otherwise that such Holder asserts, has, or intends to preserve any right of setoff pursuant to applicable Law or otherwise; and (e) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Claims, Interests, liabilities, or Causes of Action released or settled pursuant to the Plan.
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Upon entry of this Confirmation Order, all Holders of Claims and Interests and their respective current and former employees, agents, officers, directors, managers, principals, and direct and indirect Affiliates, in their capacities as such, shall be enjoined from taking any actions to interfere with the implementation or Consummation of the Plan. Each Holder of an Allowed Claim or Allowed Interest, as applicable, by accepting or being eligible to accept distributions under or Reinstatement of such Claim or Interest, as applicable, pursuant to the Plan (as may be amended, restated, supplemented, or otherwise modified from time to time), shall be deemed to have consented to the injunction provisions set forth in the Plan.
No Person or Entity may commence or pursue a Claim or Cause of Action of any kind against the Exculpated Parties that relates to or is reasonably likely to relate to any act or omission in connection with, relating to, or arising out of a Claim or Cause of Action, as applicable, subject to Article VIII.E of the Plan, without the Bankruptcy Court (i) first determining, after notice and a hearing, that such Claim or Cause of Action represents a colorable Claim not subject to exculpation under the Plan, and (ii) specifically authorizing such Person or Entity to bring such Claim or Cause of Action, as applicable, against any such Exculpated Party.
110. New Organizational Documents. On or immediately prior to the Effective Date, except as otherwise provided in the Plan and subject to local Law requirements, the New Organizational Documents shall be automatically adopted or amended by the Reorganized Debtors as may be necessary to effectuate the transactions contemplated by the Plan. To the extent required under the Plan or applicable non-bankruptcy Law, each of the Reorganized Debtors will file its New Organizational Documents with the Secretaries of State and/or other applicable authorities in its respective state, province, or country of incorporation in accordance with the corporate Laws of the respective state, province, or country of incorporation to the extent such filing is required for each such document. The New Organizational Documents will, among other things (a) authorize the issuance of the New Equity Interests and (b) prohibit the issuance of non-voting Equity Securities to the extent required under section 1123(a)(6) of the Bankruptcy Code. After the Effective Date, the Reorganized Debtors may amend and restate their respective New Organizational Documents as permitted by the laws of its jurisdiction of incorporation or formation and in accordance with the terms thereof, and the Reorganized Debtors may file such amended certificates or articles of incorporation, bylaws, or such other applicable formation documents, and other constituent documents as permitted by the Laws of the respective states, provinces, or countries of incorporation or formation and the New Organizational Documents. For the avoidance of doubt, upon the occurrence of the Effective Date, recipients of New Equity Interests shall be deemed bound by the terms of the New Organizational Documents regardless of whether or not they have actually returned signature pages thereto.
111. Cooperation by the DTC. To the extent any Securities are issued via DTC, the Reorganized Debtors need not provide any further evidence other than the Plan or this Confirmation Order to any Entity (including DTC and any transfer agent for the New Equity Interests) with respect to the treatment of the New Equity Interests to be issued under the Plan under applicable Securities Laws. Should the Reorganized Debtors elect on or after the Effective Date to reflect any ownership of the New Equity Interests through the facilities of DTC, DTC shall be required to accept and conclusively rely upon the Plan and Confirmation Order in lieu of a legal opinion regarding whether the Securities to be issued under the Plan are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services. Notwithstanding anything to the contrary in the Plan, no Entity (including, for the avoidance of doubt, DTC or any transfer agent for Securities) may require a legal opinion regarding the validity of any transaction contemplated by the Plan, including, for the avoidance of doubt, whether the Securities to be issued under the Plan are exempt from registration and/or eligible for book-entry delivery, settlement, and depository services (to the extent applicable).
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112. Directors and Officers of the Reorganized Debtors. As of the Effective Date, the term of the current members of the board of directors or other Governing Body of each of the Debtors shall expire, such current directors shall be deemed to have resigned, and all of the directors for the initial term of the New Board and the other Governing Bodies shall be appointed in accordance with the New Organizational Documents. Each such member and officer of the Reorganized Debtors shall serve from and after the Effective Date pursuant to the terms of the New Organizational Documents and other constituent documents of the Reorganized Debtors.
113. Compliance with Tax Requirements. In connection with the Plan, to the extent applicable, the Debtors, the Reorganized Debtors, the Disbursing Agent, and any applicable withholding or reporting agent shall comply with all tax withholding and reporting requirements imposed on them by any Governmental Unit, and all distributions made pursuant to the Plan shall be subject to such withholding and reporting requirements. Notwithstanding any provision in the Plan to the contrary, any applicable withholding or reporting agent shall be authorized to take all actions necessary or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes, withholding distributions pending receipt of information necessary to facilitate such distributions, or establishing any other mechanisms they believe are reasonable and appropriate. The Debtors and the Reorganized Debtors reserve the right to allocate all distributions made under the Plan in compliance with all applicable wage garnishments, alimony, child support, and other spousal awards, Liens, and encumbrances.
114. Documents, Mortgages, and Instruments. This Confirmation Order is, and shall be, binding upon and shall govern the acts of all Persons or Entities including all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds, administrative agencies, governmental departments, secretaries of state, federal and state officials, and corresponding officials in all applicable jurisdictions, both foreign and domestic, and all other Persons and Entities who may be required, by operation of Law, the duties of their office, or contract, to accept, file, register, or otherwise record or release any document or instrument. Each and every federal, state, local, and foreign government agency is hereby directed to accept any and all documents and instruments necessary, useful, advisable, or appropriate (including financing statements under the applicable uniform commercial code) to effectuate, implement, and consummate the transactions contemplated by the Plan, including the Restructuring Transactions, and this Confirmation Order and, to the extent such Persons or Entities are not identified by the Debtors or Reorganized Debtors, as applicable, after reasonable due inquiry, the Debtors or Reorganized Debtors, as applicable, shall be granted power of attorney to sign on behalf of such Person or Entity.
115. Continued Effect of Stays and Injunction. Unless otherwise provided in the Plan or this Confirmation Order, all injunctions or stays in effect in these Chapter 11 Cases pursuant to sections 105 or 362 of the Bankruptcy Code or any order of the Bankruptcy Court, and extant on the Confirmation Date (excluding any injunctions or stays contained in the Plan or this Confirmation Order) shall remain in full force and effect until the Effective Date. All injunctions or stays contained in the Plan or this Confirmation Order shall remain in full force and effect in accordance with their terms.
116. Reversal/Stay/Modification/Vacatur of Confirmation Order. Except as otherwise provided in this Confirmation Order, if any or all of the provisions of this Confirmation Order are hereafter reversed, modified, vacated, or stayed by subsequent order of the Bankruptcy Court, or any other court, such reversal, stay, modification, or vacatur shall not affect the validity or enforceability of any act, obligation, indebtedness, liability, priority, or lien incurred or undertaken under or in connection with the Plan before the Effective Date of any such reversal, stay, modification, or vacatur, including the validity of any obligation, indebtedness, or liability incurred by the Reorganized Debtors. Notwithstanding any such reversal, stay, modification, or vacatur of this Confirmation Order, any such act or obligation incurred or undertaken pursuant to, or in reliance on, this Confirmation Order prior to the Effective Date of such reversal, stay, modification, or vacatur shall be governed in all respects by the provisions of this Confirmation Order and the Plan or any amendments or modifications thereto.
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117. Nonseverability of Plan Provisions Upon Confirmation. Each provision of the Plan is: (a) valid and enforceable pursuant to its terms; (b) integral to the Plan and may not be deleted or modified without the Debtors’ and the Required Consenting Stakeholders’ consent; and (c) nonseverable and mutually dependent.
118. Post-Confirmation Modifications. Without need for further order or authorization of the Bankruptcy Court, the Debtors or the Reorganized Debtors, as applicable, are authorized and empowered, to make any and all modifications to any and all documents that are necessary to effectuate the Plan that do not materially modify the terms of such documents and are consistent with the Plan, subject to the terms of the Plan and the RSA (including the consent rights of the Consenting Stakeholders under the Plan and the RSA).
119. Applicable Non-bankruptcy Law. The provisions of this Confirmation Order, the Plan and related documents, or any amendments or modifications thereto, shall apply and be enforceable notwithstanding any otherwise applicable non-bankruptcy law.
120. Waiver of Filings. Any requirement under section 521 of the Bankruptcy Code or Bankruptcy Rule 1007 obligating the Debtors to File any list, schedule, or statement with the Bankruptcy Court or the U.S. Trustee is permanently waived as to any such list, schedule, or statement not Filed as of the Confirmation Date.
121. Reporting. After entry of this Confirmation Order, the Debtors or Reorganized Debtors, as applicable, shall have no obligation to File with the Bankruptcy Court, serve on any parties, or otherwise provide any party with any other report that the Debtors or Reorganized Debtors, as applicable, were obligated to provide under the Bankruptcy Code or an order of the Bankruptcy Court, including obligations to provide any reports to any parties otherwise required under the “first” and “second” day orders entered in these Chapter 11 Cases.
122. Waiver of Section 341 Meeting of Creditors; Waiver of Schedules and Statements. Any requirement under section 341(e) for the United States Trustee to convene a meeting of creditors is permanently waived as of the Confirmation Date. Any requirement for the Debtors to File schedules of assets and liabilities and statements of financial affairs is permanently waived as of the Confirmation Date.
123. Governmental Approvals Not Required. This Confirmation Order shall constitute all approvals and consents required, if any, by the laws, rules, or regulations of any state, federal, or other governmental authority with respect to the dissemination, implementation, or consummation of the Plan and the Disclosure Statement, any certifications, documents, instruments, or agreements, and any amendments or modifications thereto, and any other acts referred to in, or contemplated by, the Plan and the Disclosure Statement.
124. Protections Against Discriminatory Treatment. Consistent with section 525 of the Bankruptcy Code and the Supremacy Clause of the United States Constitution, all Entities, including Governmental Units, shall not discriminate against the Reorganized Debtors or deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, the Reorganized Debtors, or another Entity with whom the Reorganized Debtors have been associated, solely because each Debtor has been a debtor under chapter 11 of the Bankruptcy Code, has been insolvent before the commencement of these Chapter 11 Cases (or during these Chapter 11 Cases but before the Debtors are granted or denied a discharge), or has not paid a debt that is dischargeable in these Chapter 11 Cases.
125. Provisions Regarding Certain Tax Authorities. Except to the extent that a Holder of an Allowed Priority Tax Claim agrees to a less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for each Allowed Priority Tax Claim, each Holder of such Allowed Priority Tax Claim shall receive Cash equal to the full amount of its Claim or such other treatment in accordance with the terms set forth in section 1129(a)(9)(C) of the Bankruptcy Code.
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126. Provisions Regarding Chevron Agreements. Notwithstanding anything to the contrary in the Plan, this Confirmation Order, any document or agreement attached to or referenced in this Confirmation Order, or any other document or order related to these Chapter 11 Cases, the Debtors’ agreements with Chevron U.S.A. Inc. and its Company Affiliates (as defined in Wells Services Contract No. 2021.001172 between Chevron U.S.A. Inc. and Nine Energy Service, Inc., effective September 1, 2021, as amended from time to time, together, “Chevron”), including Wells Services Contract No. 2021.001172 and Contract No. 2023.009811 between Chevron and Nine Energy Service, Inc., and Well Services Agreement Contract No. CW2277589 between Hess Corporation and Nine Energy Services, Inc., as may be amended and supplemented from time to time (together, the “Chevron Contracts”), and any and all associated contracts, sub-agreements, purchase orders and Work Orders issued in connection with, pursuant to, and/or referencing the Chevron Contracts (all such agreements, Purchase Orders and Work Orders, collectively, the “Chevron Agreements”), are deemed assumed upon the occurrence of the Effective Date. Until the Effective Date, the Debtors, and on and after the Effective Date, the Reorganized Debtors, shall continue to have and perform the obligations under the Chevron Agreements in accordance with their terms. Subject to section 365(e) of the Bankruptcy Code in connection with these Chapter 11 cases, all rights and claims of the parties under the Chevron Agreements are expressly preserved and nothing in, about or related to these Chapter 11 cases (including this Confirmation Order), shall prevent the parties from maintaining, asserting, or pursuing any right, claim, or defense arising under the Chevron Agreements (including to audit rights or claims arising from any audit, indemnification rights, or setoff and recoupment rights and all warranty rights or claims available to Chevron). Notwithstanding anything to the contrary in this Confirmation Order, any document or agreement attached to or referenced in this Confirmation Order (including the Plan), or any other document or order related to these Chapter 11 Cases, nothing releases any entity from any right, claim, defense or Causes of Action of the parties to the Chevron Agreements.
127. Provisions Regarding NCS Multistage, LLC and NCS Multistage, Inc. Notwithstanding anything to the contrary in the Disclosure Statement, Plan, the Stipulation and Order Granting Relief from the Automatic Stay as it Applies to the Debtors’ Pending Appeal of the Patent Infringement Judgment [Docket No. 146] (the “Stipulation”), or herein, the rights, Claims, interests, or Causes of Action of NCS Multistage, LLC and NCS Multistage, Inc. (collectively, “NCS”) shall not be discharged, enjoined, released, or terminated by the Plan or this Confirmation Order. For the avoidance of doubt, NCS is not a Releasing Party under the Plan and not subject to the Third-Party Release in Art. VIII.D of the Plan. Further, nothing in the Disclosure Statement, Plan, Confirmation Order, or the Stipulation, shall impact or limit any claims, rights or remedies under applicable non-bankruptcy law that NCS has or may in the future have against the Debtor(s) and/or under the letters of credit and/or bonds issued in favor of NCS; and NCS’s claims, rights and remedies and litigation shall be unimpaired and unaffected by this Confirmation Order, the Plan, the Disclosure Statement or the Stipulation. In addition, notwithstanding anything to the contrary contained in the Disclosure Statement, Plan, Stipulation, or herein, NCS shall have no obligation to file a proof of claim in any of the Chapter 11 Cases for any claim it may have against the Debtor(s), including in respect of the pending litigation or the underlying claims related thereto, and all such claims shall be unimpaired and reinstated.
128. Provisions Regarding Texas Taxing Authorities. Notwithstanding anything to the contrary in the Definitive Documents, the tax year 2026 and prior ad valorem tax liens held by the Texas Taxing Authorities (the “Tax Liens”) are retained on the Debtors’ assets located within the Texas Taxing Authorities’ taxing jurisdictions until all such tax years have been paid in full. The lien priority of the Tax Liens shall not be primed or subordinated by any exit financing approved by the Court in conjunction with Confirmation, solely to the extent the Texas Taxing Authorities’ liens (i) arose in the ordinary course of business pursuant to applicable non-bankruptcy law, and (ii) are valid, senior, properly perfected, binding, enforceable, and non-avoidable pursuant to applicable non-bankruptcy law. The claims and liens of the Texas Taxing Authorities shall remain subject to any objections any party would otherwise be entitled to raise as to the priority, validity, extent, or amount of such claims and liens. Subject to the Debtors’ and the Reorganized Debtors’ reservation of rights below, in the event that collateral that secures the Allowed Claims of the Texas Taxing Authorities with respect to ad valorem taxes (the “Texas Taxing Authority Claims”) is sold or returned to a creditor holding a lien that is junior to the Tax Liens, the Debtors shall first pay all ad valorem property taxes owed to the Texas Taxing Authorities that are secured by such collateral, solely to the extent the Debtors are liable for such ad valorem property taxes under applicable non-bankruptcy law. The Debtors shall pay all post-petition ad valorem tax liabilities (tax year 2027 and subsequent tax years) owing to the Texas Taxing Authorities in the ordinary course of business as such tax debt comes due and prior to said ad valorem taxes becoming delinquent without the need of the Texas Taxing Authorities to file an administrative expense claim and/or request for payment. All rights and defenses of the Debtors and Reorganized Debtors under non-bankruptcy Law and the Bankruptcy Code are reserved and preserved with respect to this provision of the Confirmation Order and the Texas Taxing Authority Claims, including their right to dispute or object to the Texas Taxing Authority Claims and liens.
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129. Provisions Regarding the Texas Comptroller. Notwithstanding anything else to the contrary in the Plan or this Confirmation Order, the Texas Comptroller of Public Accounts (the “Texas Comptroller”) reserves the following rights: (1) any statutory or common law setoff rights in accordance with section 553 of the Bankruptcy Code; (2) any rights to pursue any non-debtor third parties for tax debts or claims; (3) the payment of interest on the Texas Comptroller’s allowed administrative expense tax claims, if any; (4) to the extent that interest is payable under applicable bankruptcy and non-bankruptcy law with respect to any allowed administrative expense, priority, or secured tax claim of the Texas Comptroller, payment of interest at the statutory rate of interest pursuant to Texas Tax Code § 111.060; and (5) the Texas Comptroller is not required to File a motion or application for payment of administrative expense claims pursuant to section 503(b)(1)(D) of the Bankruptcy Code.
130. The Texas Comptroller is not a Releasing Party and affirmatively opts out of the Third-Party Release. For the avoidance of doubt, the Texas Comptroller will receive interest on its Allowed Priority Tax Claims after the Effective Date as required by sections 511 and 1129(a)(9)(C) of the Bankruptcy Code.
131. Should the Reorganized Debtors fail to make any payments as to an agency of the State of Texas that are required in the Plan or this Confirmation Order, the Texas Comptroller shall provide written notice of that such default to the Reorganized Debtors and the Reorganized Debtors’ attorneys advising of that default. Following receipt of such notice, the Reorganized Debtors shall have twenty-one (21) days to cure the default. The Reorganized Debtors shall be allowed to cure up to two such defaults. Upon the third such default, the Texas Comptroller may pursue all rights and remedies available under applicable Texas law to collect the full amount of all taxes, penalties, and interest owed. Notwithstanding anything in this or the foregoing paragraphs to the contrary, (a) Debtors reserve the right to object to any Claim of the Texas Comptroller, and (b) nothing in this or the foregoing paragraphs shall be construed as an admission by any party of liability to the Texas Comptroller.
132. Provisions Regarding Trisura Insurance Company. Notwithstanding anything to the contrary in this Plan, the following contracts with the Debtor, Nine Energy Service, Inc. are not executory contracts within the scope of section 365 of the Bankruptcy Code: (1) the Supersedeas Bond, No. TIC02915, with a penal sum of $775,000.00 in favor of Plaintiffs/Obligees, NCS where Nine Energy is the principal and Defendant in litigation pending in the United States District Court for the Western District of Texas (Waco Division), Case No. 6:20-CV-00277-ADA, dated June 30, 2022 and (2) the “Short Form Indemnity Agreement” dated June 27, 2022 that was executed by Nine Energy in favor of Trisura Insurance Company.
133. Notice of Confirmation and Effective Date. The Reorganized Debtors shall cause to be served a notice of entry of this Confirmation Order and the occurrence of the Effective Date, substantially in the form attached hereto as Exhibit B (as may be revised to the applicable Debtors, the “Notice of Effective Date”), in accordance with Bankruptcy Rules 2002 and 3020(c) on all Holders of Claims and Interests within ten (10) Business Days after the Effective Date. Notwithstanding the above, no notice of Confirmation or Consummation or service of any kind shall be required to be mailed or made upon any Entity to whom the Debtors mailed the Combined Hearing Notice, but received such notice returned marked “undeliverable as addressed,” “moved, left no forwarding address,” “forwarding order expired,” or similar reason, unless the Debtors have been informed in writing by such Entity, or are otherwise aware, of that Entity’s new address. The Combined Hearing Notice and the Notice of Effective Date are adequate under the particular circumstances of these Chapter 11 Cases and no other or further notice is necessary.
134. Failure of Consummation. If Consummation does not occur, the Plan shall be null and void in all respects and nothing contained in the RSA, the Plan, or the Disclosure Statement shall: (a) constitute a waiver or release of any Claims by the Debtors or any Holder of Claims or Interests, or any other Entity; (b) prejudice in any manner the rights of the Debtors, any Holders of Claims or Interests, or any other Entity; or (c) constitute an admission, acknowledgment, offer, or undertaking by the Debtors, any Holders of Claims or Interests, or any other Entity, respectively; provided that all provisions of the RSA that survive termination thereof shall remain in effect in accordance with the terms thereof.
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135. Substantial Consummation. On the Effective Date, the Plan shall be deemed to be substantially consummated under sections 1101(2) of the Bankruptcy Code.
136. Waiver of Stay. For good cause shown, any stay of this Confirmation Order provided by any Bankruptcy Rule or Bankruptcy Local Rule is waived, and this Confirmation Order shall be effective and enforceable immediately upon its entry by the Bankruptcy Court.
137. References to and Omissions of Plan Provisions. References to articles, sections, and provisions of the Plan are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of the Plan. The failure to specifically include or to refer to any particular article, section, or provision of the Plan in this Confirmation Order shall not diminish or impair the effectiveness of such article, section, or provision, it being the intent of the Bankruptcy Court that the Plan be confirmed in its entirety, except as expressly modified herein, and incorporated herein by this reference.
138. Headings. Headings utilized herein are for convenience and reference only, and do not constitute a part of the Plan or this Confirmation Order for any other purpose.
139. Effect of Conflict. This Confirmation Order supersedes any Bankruptcy Court order entered prior to the Confirmation Date that may be inconsistent with this Confirmation Order. If there is any inconsistency between this Confirmation Order and the Plan, this Confirmation Order shall control.
140. Final Order. This Confirmation Order is a Final Order, and the period in which an appeal must be Filed shall commence upon the entry hereof.
141. Retention of Jurisdiction. The Bankruptcy Court may properly, and upon the Effective Date shall, to the full extent set forth in the Plan, retain jurisdiction over all matters arising out of, and related to, these Chapter 11 Cases, including the matters set forth in Article XI of the Plan and section 1142 of the Bankruptcy Code.
| Houston, Texas | |
| Dated: March 4, 2026 | |
| /s/ Christopher M. Lopez | |
| HONORABLE CHRISTOPHER M. LOPEZ | |
| UNITED STATES BANKRUPTCY JUDGE |
34
Exhibit A
Plan
Filed at Docket No. 173
Exhibit B
Notice of Effective Date
IN THE
UNITED STATES BANKRUPTCY COURT
for the Southern District of TexaS
HOUSTON DIVISION
| ) | ||
| In re: | ) | Chapter 11 |
| ) | ||
| NINE ENERGY SERVICE, INC., et al.,1 | ) | Case No. 26-90295 (CML) |
| ) | ||
| Debtors. | ) | (Jointly Administered) |
| ) |
NOTICE OF (I) ENTRY OF ORDER
(A) APPROVING THE DEBTORS’ DISCLOSURE
STATEMENT FOR THE JOINT PREPACKAGED PLAN
OF REORGANIZATION OF NINE ENERGY SERVICE, INC.
AND ITS DEBTOR AFFILIATES PURSUANT TO CHAPTER 11
OF THE BANKRUPTCY CODE, (B) CONFIRMING THE AMENDED
JOINT PREPACKAGED PLAN OF REORGANIZATION OF NINE ENERGY
SERVICE, INC. AND ITS DEBTOR AFFILIATES
PURSUANT TO CHAPTER 11
OF THE BANKRUPTCY CODE AND (II) OCCURRENCE OF EFFECTIVE DATE
On March [●], 2026, the Honorable Christopher M. Lopez, United States Bankruptcy Judge for the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”), entered the Order (I) Approving the Debtors’ Disclosure Statement for the Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. And Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code, (II) Confirming the Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. And Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code, and (III) Granting Related Relief [Docket No. [●]] (the “Confirmation Order”) confirming the Plan2 of the above-captioned debtors (collectively, the “Debtors”).
The Effective Date of the Plan occurred on March [●], 2026.
The Confirmation Order, the Plan, and copies of all documents Filed in these Chapter 11 Cases are available free of charge by (a) calling the Debtors’ restructuring hotline at (877) 269-3874 (U.S. & Canada toll free) or +1 (971) 257-1895 (international); or (b) visiting the Debtors’ restructuring website at: https://dm.epiq11.com/NineEnergy. You may also obtain copies of any pleadings Filed in these Chapter 11 Cases for a fee via PACER at: www.txs.uscourts.gov.
The Bankruptcy Court has approved certain discharge, release, exculpation, injunction, and related provisions in Article VIII of the Plan.
The Plan and its provisions are binding on the Debtors, the Reorganized Debtors, the Disbursing Agent, and any Holder of a Claim or an Interest and such Holder’s respective successors and assigns regardless of whether the Claim or the Interest of such Holder is Impaired under the Plan and whether such Holder voted to accept the Plan.
The Plan and this Confirmation Order contain other provisions that may affect your rights. You are encouraged to review the Plan and this Confirmation Order in their entirety.
[Remainder of Page Intentionally Left Blank.]
| 1 | A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ claims and noticing agent at https://dm.epiq11.com/NineEnergy. The location of Nine Energy Service, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 2001 Kirby Drive, Suite 200, Houston, TX 77019. |
| 2 | Capitalized terms used but not otherwise defined herein have the meanings given to them in the Amended Joint Prepackaged Plan of Reorganization of Nine Energy Service, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code] [Docket No. 173] (as may be modified, amended, and supplemented from time to time, the “Plan”) or the Confirmation Order, as applicable. |
| Dated: [●], 2026 | ||||
| Houston, Texas | ||||
| /s/ [DRAFT] | ||||
| KANE RUSSELL COLEMAN LOGAN PC | KIRKLAND & ELLIS LLP | |||
| John J. Kane (TX Bar No. 24066794) | KIRKLAND & ELLIS INTERNATIONAL LLP | |||
| Kyle Woodard (TX Bar No. 24102661) | Chad J. Husnick, P.C. (admitted pro hac vice) | |||
| JaKayla J. DaBera (TX Bar No. 24129114) | 333 West Wolf Point Plaza | |||
| 901 Main Street, Suite 5200 | Chicago, Illinois 60654 | |||
| Dallas, Texas 75202 | Telephone: | (312) 862-2000 | ||
| Telephone: | (713) 425-7400 | Facsimile: | (312) 862-2200: | |
| Facsimile: | (713) 425-7700 | Email: | chad.husnick@kirkland.com | |
| Email: | jkane@krcl.com | |||
| kwoodard@krcl.com | ||||
| jdabera@krcl.com | ||||
| -and- | -and- | |||
| Michael P. Ridulfo (TX Bar No. 16902020) | Ross J. Fiedler (admitted pro hac vice) | |||
| Sage Plaza, 5151 San Felipe, Suite 800 | 601 Lexington Avenue | |||
| Houston, Texas 77056 | New York, New York 10022 | |||
| Telephone: | (713) 425-7400 | Telephone: | (212) 446-4800 | |
| Facsimile: | (713) 425-7700 | Facsimile: | (212) 446-4900 | |
| Email: | mridulfo@krcl.com | Email: | ross.fiedler@kirkland.com | |
| Proposed Co-Counsel for the Debtors | Proposed Co-Counsel for the Debtors | |||
| and Debtors in Possession | and Debtors in Possession | |||
Certificate of Service
I certify that on March [●], 2026, I caused a copy of the foregoing document to be served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas. Additionally, the foregoing document will be served as set forth in a forthcoming affidavit filed by the Debtors’ proposed claims agent.
| /s/ [DRAFT] | |
| JaKayla J. DaBera |