sv4
As filed with the Securities and Exchange
Commission on September 8, 2011
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
Basic Energy Services,
Inc.
(Exact name of registrant as
specified in its charter)
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Delaware
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1389
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54-2091194
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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Co-Registrants
(see next page)
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500 W. Illinois, Suite 100
Midland, Texas 79701
(432) 620-5500
(Address, including zip
code, and telephone number,
including area code, of
registrants principal executive offices)
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Kenneth V. Huseman
President
500 W. Illinois, Suite 100
Midland, Texas 79701
(432) 620-5500
(Name, address, including
zip code,
and telephone number, including
area code of agent for
service)
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Copy to:
David C. Buck
Andrews Kurth LLP
600 Travis, Suite 4200
Houston, Texas 77002
(713) 220-4200
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable
following the effectiveness of this registration statement.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check
the following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act.
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Large
accelerated
filer o |
Accelerated
filer þ |
Non-accelerated
filer o |
Smaller reporting
company o |
(Do not check if a smaller
reporting company)
If applicable, place an X in the box to designate the
appropriate rule provision relied upon in conducting this
transaction:
Exchange Act
Rule 13e-4(i)
(Cross-Border Issuer Tender
Offer) o
Exchange Act
Rule 14d-1(d)
(Cross-Border Third-Party Tender
Offer) o
CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Title of Each Class
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Amount to be
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Offering Price per
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Aggregate Offering
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Amount of
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of Securities to be Registered
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Registered
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Unit
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Price
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Registration Fee
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73/4% Senior
Notes due 2019
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$
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475,000,000
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100
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%
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$
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475,000,000
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$
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55,147.50(1
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Guarantees by certain subsidiaries of Basic Energy Services,
Inc.*
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(2
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(1)
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The registration fee was calculated pursuant to Rule 457(f)
under the Securities Act of 1933. For purposes of this
calculation, the offering price per note was assumed to be the
stated principal amount of each original note that may be
received by the registrant in the exchange transaction in which
the notes will be offered.
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(2)
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Pursuant to Rule 457(n) under the Securities Act of 1933,
no separate fee for the guarantees is payable because the
guarantees relate to other securities that are being registered
concurrently.
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* |
The guarantor subsidiaries of Basic Energy Services, Inc. are
identified on the following page.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
SUBSIDIARY
GUARANTOR CO-REGISTRANTS
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State or Other
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Primary Standard
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Jurisdiction of
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Industrial
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Exact Name of Additional
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Incorporation or
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Classification Code
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I.R.S. Employer
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Registrant as Specified in its Charter
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Organization
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Number
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Identification No.
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Basic Energy Services GP, LLC(1)
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Delaware
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1389
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54-2091197
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Basic Energy Services LP, LLC(1)
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Delaware
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1389
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54-2091195
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Basic Energy Services, L.P.(1)
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Delaware
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1389
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75-2441819
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Basic ESA, Inc.(1)
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Texas
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1389
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75-1772279
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Chaparral Service, Inc.(1)
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New Mexico
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1389
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85-0206424
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Basic Marine Services, Inc.(1)
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Delaware
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1389
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20-2274888
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First Energy Services Company(1)
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Delaware
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1389
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84-1544437
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Hennessey Rental Tools, Inc.(1)
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Oklahoma
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1389
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73-1435063
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Oilwell Fracturing Services, Inc.(1)
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Oklahoma
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1311
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73-1142826
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Wildhorse Services, Inc.(1)
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Oklahoma
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1389
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06-1641442
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LeBus Oil Field Service Co.(1)
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Texas
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4214
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75-2073125
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Globe Well Service, Inc.(1)
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Texas
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1389
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75-1634275
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SCH Disposal, L.L.C.(1)
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Texas
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1389
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75-2788335
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JS Acquisition LLC(1)
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Delaware
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1389
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26-2529500
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JetStar Holdings, Inc.(1)
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Delaware
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1389
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74-3144248
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Acid Services, LLC(1)
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Kansas
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1389
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48-1180455
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JetStar Energy Services, Inc.(1)
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Texas
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1389
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68-0605237
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Sledge Drilling Corp.(1)
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Texas
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1381
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20-4223140
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Permian Plaza, LLC(1)
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Texas
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6512
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26-0753425
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Xterra Fishing & Rental Tools Co.(1)
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Texas
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1389
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76-0647818
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Taylor Industries, LLC(1)
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Texas
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3533
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27-2417037
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Platinum Pressure Services, Inc.(1)
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Texas
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1389
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26-1338379
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Admiral Well Service, Inc.(1)
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Texas
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1389
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26-3164899
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Maverick Coil Tubing Services, LLC(1)
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Colorado
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1389
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84-1563281
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Maverick Solutions, LLC(1)
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Colorado
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1389
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20-0122876
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Maverick Stimulation Company, LLC(1)
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Colorado
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1389
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84-1354572
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Maverick Thru-Tubing Services, LLC(1)
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Colorado
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1389
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27-1501902
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MCM Holdings, LLC(1)
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Colorado
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1389
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84-1520949
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MSM Leasing, LLC(1)
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Colorado
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1389
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27-0629182
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The Maverick Companies, LLC(1)
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Colorado
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1389
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20-5244170
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(1) |
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The address for such Subsidiary Guarantor is
500 W. Illinois, Suite 100, Midland, Texas 79701. |
The
information in this preliminary prospectus is not complete and
may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell these securities and it is not soliciting an offer
to buy these securities in any jurisdiction where the offer or
sale is not permitted.
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Subject to Completion Dated
September 8, 2011
Basic Energy Services,
Inc.
Offer to exchange up
to
$475,000,000 of
73/4% Senior
Notes due 2019
that have been registered under
the Securities Act of 1933
for
$475,000,000 of
73/4% Senior
Notes due 2019
that have not been registered
under the Securities Act of 1933
THE EXCHANGE OFFER WILL EXPIRE
AT 5:00 PM, NEW YORK
CITY TIME,
ON ,
2011, UNLESS WE EXTEND THE DATE
Terms of the Exchange Offer:
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We are offering to exchange up to $475.0 million aggregate
principal amount of registered
73/4% Senior
Notes due 2019, which we refer to as the new notes, for any and
all of our $475.0 million aggregate principal amount of
unregistered
73/4% Senior
Notes due 2019, which we refer to as the old notes.
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We will exchange all outstanding old notes that are validly
tendered and not validly withdrawn prior to the expiration of
the exchange offer for an equal principal amount of new notes.
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The terms of the new notes will be substantially identical to
those of the outstanding old notes, except that the transfer
restrictions, registration rights and liquidated damages
provisions relating to the old notes will not apply to the new
notes.
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You may withdraw tenders of old notes at any time prior to the
expiration of the exchange offer.
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The exchange of new notes for old notes will not be a taxable
transaction for U.S. federal income tax purposes.
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We will not receive any cash proceeds from the exchange offer.
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The old notes are, and the new notes will be, guaranteed on a
senior unsecured basis by each of our material restricted
subsidiaries that guarantees our other indebtedness.
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There is no established trading market for the new notes or the
old notes.
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We do not intend to apply for listing of the new notes on any
national securities exchange or for quotation through any
quotation system.
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See Risk Factors beginning on page 11 for a
discussion of certain risks that you should consider prior to
tendering your outstanding old notes in the exchange offer.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
Each broker-dealer that receives new notes for its own account
pursuant to the exchange offer must acknowledge that it will
deliver a prospectus in connection with any resale of such new
notes. The letter of transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an underwriter within the
meaning of the Securities Act. This prospectus, as it may be
amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of new notes received
in exchange for old notes where such old notes were acquired by
such broker-dealer as a result of market-making activities or
other trading activities. We have agreed that, for a period of
180 days after the consummation of the exchange offer, we
will make this prospectus available to any broker-dealer for use
in connection with any such resale. Please read Plan of
Distribution.
Prospectus
dated ,
2011
TABLE OF
CONTENTS
This prospectus is part of a registration statement we filed
with the Securities and Exchange Commission, referred to in this
prospectus as the SEC. You should read this prospectus together
with the registration statement, the exhibits thereto and the
additional information described under the heading Where
You Can Find More Information. In making your decision to
participate in the exchange offer, you should rely only on the
information contained in this prospectus and in the accompanying
letter of transmittal. We have not authorized anyone to provide
you with any other information. If you received any unauthorized
information, you must not rely on it. We are not making an offer
to sell these securities in any state or jurisdiction where the
offer is not permitted. You should not assume that the
information contained in this prospectus is accurate as of any
date other than the date on the front cover of this prospectus.
Our business, financial condition, results of operations and
prospects may have changed since that date.
In this prospectus, we use the terms Basic Energy
Services, we, us and
our to refer to Basic Energy Services, Inc. together
with its subsidiaries, unless the context otherwise requires.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on
Form S-4,
including exhibits and schedules, under the Securities Act with
respect to the offer to exchange our senior notes. The
registration statement, including the attached exhibits,
contains additional relevant information about us. The rules and
regulations of the SEC allow us to omit some information
included in the registration statement from this prospectus.
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SECs web
site at
http://www.sec.gov.
You may also read and copy any document we file with the SEC at
the SECs Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information regarding the operation of the Public
Reference Room.
These reports and other information may be inspected and copied
at the public reference facilities maintained by the SEC or
obtained from the SECs website as provided above. In
addition, we make available on our web site at
http://www.basicenergyservices.com,
free of charge, our annual reports on
Form 10-K,
quarterly reports on Form 10 Q and current reports on
Form 8-K
(and any amendments to those reports) filed pursuant to
Section 13(a) or 15(d) of the U.S. Securities Exchange
Act of 1934, as amended, and other
i
information filed with or furnished to the SEC, as soon as
reasonably practicable after those reports and other information
are electronically filed with or furnished to the SEC. Unless
otherwise specified, information contained on, or available by
hyperlink from, our web site or contained on the SECs web
site is not incorporated into this prospectus. You may also
request a copy of these filings at no cost, by writing or
telephoning us at the following address: Basic Energy Services,
Inc., Attention: Chief Financial Officer,
500 W. Illinois, Suite 100, Midland, Texas 79701,
(432) 620-5500.
INCORPORATION
BY REFERENCE
We are incorporating by reference the information that we file
with the SEC, which means that we are disclosing important
information to you in those documents. The information
incorporated by reference is an important part of this
prospectus, and the information that we subsequently file with
the SEC will automatically update and supersede information in
this prospectus and in our other filings with the SEC. We
incorporate by reference the documents listed below, which we
have already filed with the SEC, and any future filings we make
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Exchange Act (other than information furnished pursuant to
Items 2.02 or 7.01 of any Current Report on
Form 8-K)
until the exchange offer described in this prospectus is
completed or is otherwise terminated.
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Our annual report on
Form 10-K
for the year ended December 31, 2010, filed with the SEC on
February 25, 2011, which we refer to as our 2010
Form 10-K;
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Our quarterly reports on
Form 10-Q
for the three months ended March 31, 2011, filed with the
SEC on April 27, 2011, and for the three months ended
June 30, 2011, filed with the SEC on July 25,
2011; and
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Our current reports on
Form 8-K
and 8-K/A,
filed with the SEC on February 3, 2011 (Item 8.01
only), February 9, 2011, February 18, 2011,
February 23, 2011, March 16, 2011, April 12,
2011, May 27, 2011 (as amended June 1, 2011),
June 7, 2011, June 13, 2011, June 14, 2011,
July 12, 2011, July 21, 2011, August 2, 2011 and
August 10, 2011.
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Any statement contained in a document all or a portion of which
is incorporated by reference in this prospectus will be deemed
to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or in
any future filings that we incorporate by reference herein
modifies or supersedes the statement. Any such statement or
document so modified or superseded will not be deemed, except as
so modified or superseded, to constitute a part of this
prospectus. You may request a copy of these filings, at no cost,
by writing or telephoning us at the following address and
telephone number:
Basic Energy
Services, Inc.
500 W. Illinois, Suite 100
Midland, Texas 79701
(432) 620-5500
Attn: Investor Relations
ii
FORWARD-LOOKING
STATEMENTS
This prospectus contains certain statements that are, or may be
deemed to be, forward-looking statements within the
meaning of the U.S. federal securities laws. We have based
these forward-looking statements largely on our current
expectations and projections about future events and financial
trends affecting the financial condition of our business. These
forward-looking statements are subject to a number of risks,
uncertainties and assumptions, including, among other things,
the risk factors discussed in this prospectus under the caption
Risk Factors and in our most recent annual report on
Form 10-K
and quarterly reports on
Form 10-Q
and other factors, most of which are beyond our control.
The words believe, may,
estimate, continue,
anticipate, intend, plan,
expect and similar expressions are intended to
identify forward-looking statements. All statements other than
statements of current or historical fact contained in this
prospectus are forward looking-statements. Although we believe
that the forward-looking statements contained in this prospectus
are based upon reasonable assumptions, the forward-looking
events and circumstances discussed in this prospectus may not
occur and actual results could differ materially from those
anticipated or implied in the forward-looking statements.
Important factors that may affect our expectations, estimates or
projections include:
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a decline in, or substantial volatility of, oil or natural gas
prices, and any related changes in expenditures by our customers;
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the effects of the Maverick Companies Acquisition and other
future acquisitions on our business;
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changes in customer requirements in markets or industries we
serve;
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competition within our industry;
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general economic and market conditions;
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our access to current or future financing arrangements;
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our ability to replace or add workers at economic rates; and
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environmental and other governmental regulations.
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Our forward-looking statements speak only as of the date of this
prospectus. Unless otherwise required by law, we undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future
events or otherwise.
This prospectus and the information incorporated herein by
reference include market share data, industry data and forecasts
that we obtained from internal company surveys (including
estimates based on our knowledge and experience in the industry
in which we operate), market research, consultant surveys,
publicly available information, industry publications and
surveys. These sources include Baker Hughes Incorporated
(Baker Hughes), the Association of Energy Service
Companies (AESC), and the Energy Information
Administration of the U.S. Department of Energy
(EIA). Industry surveys and publications, consultant
surveys and forecasts generally state that the information
contained therein has been obtained from sources believed to be
reliable. Although we believe such information is accurate and
reliable, we have not independently verified any of the data
from third-party sources cited or used for our managements
industry estimates, nor have we ascertained the underlying
economic assumptions relied upon therein. For example, the
number of onshore well servicing rigs in the U.S. could be lower
than our estimate to the extent our two larger well servicing
competitors have continued to report as stacked rigs equipment
that is not actually complete or subject to refurbishment.
Statements as to our position relative to our competitors or as
to market share refer to the most recent available data.
iii
PROSPECTUS
SUMMARY
The following is a summary of some of the information
contained elsewhere in this prospectus. It is not complete and
may not contain all the information that you should consider
before making a decision to participate in the exchange offer.
To understand this offering fully, you should read carefully the
entire prospectus, including the risk factors beginning on
page 11 and the consolidated financial statements and the
notes thereto incorporated by reference into this prospectus.
Basic
Energy Services, Inc.
We provide a wide range of well site services to oil and natural
gas drilling and producing companies, including completion and
remedial services, fluid services and well site construction
services, well servicing and contract drilling. These services
are fundamental to establishing and maintaining the flow of oil
and natural gas throughout the productive life of a well. Our
broad range of services enables us to meet multiple needs of our
customers at the well site. Our operations are managed
regionally and are concentrated in major United States onshore
oil and natural gas producing regions located in Texas, New
Mexico, Oklahoma, Arkansas, Kansas, Louisiana, Wyoming, North
Dakota, Colorado, Utah, Montana, West Virginia and Pennsylvania.
Our operations are focused on liquids rich basins that currently
exhibit strong drilling and production economics as well as
natural gas-focused shale plays characterized by prolific
reserves and attractive economics. Specifically, we have
significant presence in the Permian Basin and the Bakken, Eagle
Ford, Haynesville and Marcellus shales. We provide our services
to a diverse group of over 2,000 oil and natural gas companies.
Our four operating segments are Completion and Remedial
Services, Fluid Services, Well Servicing and Contract Drilling.
The following is a description of these segments:
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Completion and Remedial Services. Our
completion and remedial services segment (36% of our revenues in
2010 and 41% of our revenues in the first six months of
2011) currently operates our fleet of pressure pumping
units, an array of specialized rental equipment and fishing
tools, air compressor packages specially configured for
underbalanced drilling operations and cased-hole wireline units
and snubbing units. The largest portion of this business segment
consists of pressure pumping services focused on cementing,
acidizing and fracturing services in niche markets, and we
currently own approximately 259,000 hydraulic horsepower of
pumping capacity.
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Fluid Services. Our fluid services segment
(33% of our revenues in 2010 and 28% of our revenues in the
first six months of 2011) currently utilizes our fleet of
871 fluid service trucks and related assets, including
specialized tank trucks, storage tanks, water wells, disposal
facilities, construction and other related equipment. These
assets provide, transport, store and dispose of a variety of
fluids, as well as provide well site construction and
maintenance services. These services are required in most
workover, completion and remedial projects and are routinely
used in daily producing well operations.
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Well Servicing. Our well servicing segment
(28% of our revenues in 2010 and 28% of our revenues in the
first six months of 2011) currently operates our fleet of
412 well servicing rigs and related equipment. This
business segment encompasses a full range of services performed
with a mobile well servicing rig, including the installation and
removal of downhole equipment and elimination of obstructions in
the well bore to facilitate the flow of oil and natural gas.
These services are performed to establish, maintain and improve
production throughout the productive life of an oil and natural
gas well and to plug and abandon a well at the end of its
productive life. Our well servicing equipment and capabilities
also facilitate most other services performed on a well.
|
|
|
|
Contract Drilling. Our contract drilling
segment (3% of our revenues in 2010 and 3% of our revenues in
the first six months of 2011) currently operates ten
drilling rigs and related equipment. We use these assets to
penetrate the earth to a desired depth and initiate production
from a well.
|
1
Recent
Developments
Maverick
Companies Acquisition
On July 8, 2011, we completed the acquisition of the
outstanding equity interests in each of (i) Maverick
Stimulation Company, LLC, (ii) Maverick Coil Tubing
Services, LLC, (iii) MCM Holdings, LLC, (iv) Maverick
Thru-Tubing, LLC, (v) The Maverick Companies,
(vi) Maverick Solutions, LLC and (vii) MSM Leasing,
LLC (such acquisitions, the Maverick Companies
Acquisition, and such entities collectively,
Maverick). The total cash consideration for the
Maverick Companies Acquisition was $180.0 million, net of
working capital acquired.
Maverick provides a full range of fracturing and stimulation
services with a fleet of approximately 60,000 hydraulic
horsepower of pressure pumping equipment and comprehensive coil
tubing services, including seven coil tubing units, nitrogen and
other related equipment. Mavericks operating area includes
the Rocky Mountain oil and natural gas market with major service
facilities located in Fort Morgan and Grand Junction,
Colorado and depots in Aztec, New Mexico, Trinidad, Colorado,
Vernal, Utah and Bartlesville, Oklahoma. Maverick will operate
our Completion and Remedial Services business segment.
Our primary executive offices are located at
500 W. Illinois, Suite 100, Midland, Texas 79701
and our telephone number is
(432) 620-5500.
Our Internet website is www.basicenergyservices.com. The
information contained on our website or that can be accessed
through our website does not constitute a part of this
prospectus.
Corporate
Structure
Below is a chart that illustrates our corporate structure.
2
The
Exchange Offer
On February 15, 2011, we completed a private offering of
$275,000,000 aggregate principal amount of our
73/4% Senior
Notes due 2019. On June 13, 2011, we completed a private
offering of an additional $200,000,000 aggregate principal
amount of notes of the same series. In this prospectus, we refer
to the notes that we issued in the February 2011 and June 2011
offerings as our old notes. As part of the private offering, we
entered into registration rights agreements with the initial
purchasers of the old notes in which we agreed, among other
things, to deliver this prospectus to you and to use our
reasonable best efforts to consummate the exchange offer within
270 days after February 15, 2011. The following is a
summary of the exchange offer.
|
|
|
Old Notes |
|
73/4% Senior
Notes due February 15, 2019, which were issued in two
separate offerings on February 15, 2011 and June 13,
2011. |
|
New Notes |
|
73/4% Senior
Notes due February 15, 2019. The terms of the new notes are
substantially identical to the terms of the outstanding old
notes, except that the transfer restrictions, registration
rights and liquidated damages provisions relating to the old
notes will not apply to the new notes. |
|
Exchange Offer |
|
We are offering to exchange up to $475.0 million aggregate
principal amount of our new notes that have been registered
under the Securities Act for an equal amount of our outstanding
old notes that have not been registered under the Securities Act
to satisfy our obligations under the registration rights
agreements. |
|
|
|
The new notes will evidence the same debt as the old notes and
will be issued under, and be entitled to the benefits of, the
same indenture that governs the old notes. Holders of the old
notes do not have any appraisal or dissenters rights in
connection with the exchange offer. Because the new notes will
be registered, the new notes will not be subject to transfer
restrictions, and holders of old notes that have tendered and
had their old notes accepted in the exchange offer will have no
registration rights. |
|
|
|
Old notes tendered in the exchange offer must be in
denominations of principal amount of $2,000 and any integral
multiple of $1,000 in excess of $2,000. |
|
Expiration Date |
|
The exchange offer will expire at 5:00 p.m., New York City
time,
on ,
2011, unless we decide to extend it. |
|
Conditions to the Exchange Offer |
|
The exchange offer is subject to customary conditions, which we
may waive. Please read The Exchange Offer
Conditions to the Exchange Offer for more information
regarding the conditions to the exchange offer. |
|
Procedures for Tendering Old Notes |
|
Unless you comply with the procedures described under the
caption The Exchange Offer Procedures for
Tendering Guaranteed Delivery, you must do one
of the following on or prior to the expiration of the exchange
offer to participate in the exchange offer: |
|
|
|
tender your old notes by sending the certificates
for your old notes, in proper form for transfer, a properly
completed and duly executed letter of transmittal, with any
required signature guarantees, and all other documents required
by the letter of transmittal, to Wells Fargo Bank, N.A., as
registrar and exchange agent, at the address listed under the
caption The Exchange Offer Exchange
Agent; or
|
3
|
|
|
|
|
tender your old notes by using the book-entry
transfer procedures described below and transmitting a properly
completed and duly executed letter of transmittal, with any
required signature guarantees, or an agents message
instead of the letter of transmittal, to the exchange agent. In
order for a book-entry transfer to constitute a valid tender of
your old notes in the exchange offer, Wells Fargo Bank, N.A., as
registrar and exchange agent, must receive a confirmation of
book-entry transfer of your old notes into the exchange
agents account at The Depository Trust Company prior
to the expiration of the exchange offer. For more information
regarding the use of book-entry transfer procedures, including a
description of the required agents message, please read
the discussion under the caption The Exchange
Offer Procedures for Tendering
Book-Entry Transfer.
|
|
Guaranteed Delivery Procedures |
|
If you are a registered holder of the old notes and wish to
tender your old notes in the exchange offer, but |
|
|
|
the old notes are not immediately available,
|
|
|
|
time will not permit your old notes or other
required documents to reach the exchange agent before the
expiration of the exchange offer, or
|
|
|
|
the procedure for book-entry transfer cannot be
completed prior to the expiration of the exchange offer,
|
|
|
|
then you may tender old notes by following the procedures
described under the caption The Exchange Offer
Procedures for Tendering Guaranteed Delivery. |
|
Special Procedures for Beneficial Owners
|
|
If you are a beneficial owner whose old notes are registered in
the name of a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender your old notes in the
exchange offer, you should promptly contact the person in whose
name the old notes are registered and instruct that person to
tender on your behalf. |
|
|
|
If you wish to tender in the exchange offer on your own behalf,
prior to completing and executing the letter of transmittal and
delivering the certificates for your old notes, you must either
make appropriate arrangements to register ownership of the old
notes in your name or obtain a properly completed bond power
from the person in whose name the old notes are registered. |
|
Withdrawal; Non-Acceptance |
|
You may withdraw any old notes tendered in the exchange offer at
any time prior to 5:00 p.m., New York City time,
on ,
2011. If we decide for any reason not to accept any old notes
tendered for exchange, the old notes will be returned to the
registered holder at our expense promptly after the expiration
or termination of the exchange offer. In the case of old notes
tendered by book-entry transfer into the exchange agents
account at The Depository Trust Company, any withdrawn or
unaccepted old notes will be credited to the tendering
holders account at The Depository Trust Company. For
further information regarding the withdrawal |
4
|
|
|
|
|
of tendered old notes, please read The Exchange
Offer Withdrawal Rights. |
|
Certain United Stated Federal Income Tax Consequences
|
|
The exchange of new notes for old notes in the exchange offer
will not be a taxable event for U.S. federal income tax
purposes. Please read the discussion under the caption
Certain United States Federal Income Tax
Consequences for more information regarding the tax
consequences to you of the exchange offer. |
|
Use of Proceeds |
|
The issuance of the new notes will not provide us with any new
proceeds. We are making this exchange offer solely to satisfy
our obligations under the registration rights agreements. |
|
Fees and Expenses |
|
We will pay all of our expenses incident to the exchange offer. |
|
Exchange Agent |
|
We have appointed Wells Fargo Bank, N.A. as exchange agent for
the exchange offer. For the address, telephone number and fax
number of the exchange agent, please read The Exchange
Offer Exchange Agent. |
|
Resales of New Notes |
|
Based on interpretations by the staff of the SEC, as set forth
in no-action letters issued to third parties that are not
related to us, we believe that the new notes you receive in the
exchange offer may be offered for resale, resold or otherwise
transferred by you without compliance with the registration and
prospectus delivery provisions of the Securities Act so long as: |
|
|
|
the new notes are being acquired in the ordinary
course of business;
|
|
|
|
you are not participating, do not intend to
participate, and have no arrangement or understanding with any
person to participate in the distribution of the new notes
issued to you in the exchange offer;
|
|
|
|
you are not our affiliate or an affiliate of any of
our subsidiary guarantors; and
|
|
|
|
you are not a broker-dealer tendering old notes
acquired directly from us for your account.
|
|
|
|
The SEC has not considered this exchange offer in the context of
a no-action letter, and we cannot assure you that the SEC would
make similar determinations with respect to this exchange offer.
If any of these conditions are not satisfied, or if our belief
is not accurate, and you transfer any new notes issued to you in
the exchange offer without delivering a resale prospectus
meeting the requirements of the Securities Act or without an
exemption from registration of your new notes from those
requirements, you may incur liability under the Securities Act.
We will not assume, nor will we indemnify you against, any such
liability. Each broker-dealer that receives new notes for its
own account in exchange for old notes, where the old notes were
acquired by such broker-dealer as a result of market-making or
other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such new notes.
Please read Plan of Distribution.
|
5
|
|
|
|
|
Please read The Exchange Offer Resales of New
Notes for more information regarding resales of the new
notes. |
|
Consequences of Not Exchanging Your Old Notes
|
|
If you do not exchange your old notes in this exchange offer,
you will no longer be able to require us to register your old
notes under the Securities Act, except in the limited
circumstances provided under the registration rights agreements.
In addition, you will not be able to resell, offer to resell or
otherwise transfer your old notes unless we have registered the
old notes under the Securities Act, or unless you resell, offer
to resell or otherwise transfer them under an exemption from the
registration requirements of, or in a transaction not subject
to, the Securities Act.
|
|
|
|
For information regarding the consequences of not tendering your
old notes and our obligation to file a registration statement,
please read The Exchange Offer Consequences of
Failure to Exchange Outstanding Securities and
Description of the New Notes. |
6
Description
of the New Notes
The terms of the new notes and those of the outstanding old
notes will be substantially identical, except that the transfer
restrictions, registration rights and liquidated damages
provisions relating to the old notes will not apply to the new
notes. As a result, the new notes will not bear legends
restricting their transfer and will not have the benefit of the
registration rights and special interest provisions contained in
the old notes. The new notes represent the same debt as the old
notes for which they are being exchanged. The new notes are
governed by the same indenture as the old notes are.
The following summary contains basic information about the
new notes and is not intended to be complete. For a more
complete understanding of the new notes, please refer to the
section in this prospectus entitled Description of the New
Notes. When we use the term notes in this
prospectus, unless the context requires otherwise, the term
includes the old notes and the new notes.
|
|
|
Issuer |
|
Basic Energy Services, Inc. |
|
Securities Offered |
|
$475,000,000 aggregate principal amount of our
73/4% Senior
Notes due 2019. |
|
Interest |
|
The new notes will accrue interest from the date of their
issuance at the rate of 7.75% per year. Interest on the new
notes will be payable semi-annually in arrears on each February
15 and August 15, commencing on August 15, 2011. We
have agreed to make additional interest payments to holders of
the new notes under certain circumstances if we do not comply
with our obligations under the registration rights agreements. |
|
Maturity Date |
|
February 15, 2019. |
|
Guarantees |
|
The new notes will be guaranteed by all of our current
subsidiaries, other than three immaterial subsidiaries. The new
notes will be guaranteed by all of our current and certain
material future restricted subsidiaries that guarantee any of
our other indebtedness. |
|
Ranking |
|
The new notes will be our senior indebtedness. Both the new
notes and the subsidiary guarantees will rank: |
|
|
|
equally in right of payment with any of our and the
subsidiary guarantors existing and future senior
indebtedness, including our existing senior notes and the
related guarantees; and
|
|
|
|
effectively junior to all existing or future
liabilities of our subsidiaries that do not guarantee the notes
and to our and the subsidiary guarantors existing or
future secured indebtedness to the extent of the value of the
collateral therefor.
|
|
Optional Redemption |
|
As of June 30, 2011, after giving effect to the offering of
the old notes and the use of the net proceeds from the offering,
(i) we and our subsidiaries would have had approximately
$66.2 million of secured indebtedness outstanding under our
capital lease obligations and (ii) we and our subsidiary
guarantors would have had $700.0 million of unsecured
senior indebtedness outstanding, including the notes. We may
redeem the notes, in whole or in part, at any time on or after
February 15, 2015 at a redemption price equal to 100% of
the principal amount thereof, plus a premium declining ratably
to par and accrued and unpaid interest to the date of
redemption. |
|
|
|
At any time before February 15, 2014, we may redeem up to
35% of the aggregate principal amount of the notes issued under
the indenture with the net cash proceeds of one or more
qualified |
7
|
|
|
|
|
equity offerings at a redemption price equal to 107.75% of the
principal amount of the notes to be redeemed, plus accrued and
unpaid interest to the date of redemption; provided that: |
|
|
|
at least 65% of the aggregate principal amount of
the notes issued under the indenture remains outstanding
immediately after the occurrence of such redemption; and
|
|
|
|
such redemption occurs within 90 days of the
date of the closing of any such qualified equity offering.
|
|
|
|
In addition, at any time before February 15, 2015, we may
redeem some or all of the notes at a redemption price equal to
100% of the principal amount of the notes, plus an applicable
premium and accrued and unpaid interest to the date of
redemption. |
|
Change of Control |
|
Upon a change of control, if we do not redeem the notes, each
holder of notes will be entitled to require us to purchase all
or a portion of its notes at a purchase price equal to 101% of
the principal amount thereof, plus accrued and unpaid interest
to the date of repurchase. Our ability to purchase the notes
upon a change of control will be limited by the terms of our
then outstanding debt agreements. We cannot assure you that we
will have the financial resources to purchase the notes in such
circumstances. |
|
Certain Covenants |
|
The indenture contains covenants that, among other things, limit
our ability and the ability of certain of our subsidiaries to: |
|
|
|
incur additional indebtedness;
|
|
|
|
pay dividends or repurchase or redeem capital stock;
|
|
|
|
make certain investments;
|
|
|
|
incur liens;
|
|
|
|
enter into certain types of transactions with our
affiliates;
|
|
|
|
limit dividends or other payments by our restricted
subsidiaries to us; and
|
|
|
|
sell assets or consolidate or merge with or into
other companies.
|
|
|
|
These and other covenants that are contained in the indenture
are subject to important exceptions and qualifications, which
are described under Description of the New Notes. |
|
Absence of a Public Market for the New Notes
|
|
There is no public trading market for the new notes, and we do
not intend to apply for listing of the new notes on any national
securities exchange or for quotation of the new notes on any
automated dealer quotation system. See Risk
Factors Risks Relating to the Exchange Offer and the
New Notes An active trading market may not develop
for the new notes. |
|
Risk Factors |
|
See Risk Factors beginning on page 11 for
discussion of factors you should carefully consider before
deciding to participate in the exchange offer. |
8
Summary
Historical Financial Information
The following summary historical consolidated financial data as
of December 31, 2010 and 2009 and for the years ended
December 31, 2010, 2009 and 2008 is derived from our
audited consolidated financial statements incorporated by
reference into this prospectus. The following summary historical
consolidated financial data as of June 30, 2011 and for the
six months ended June 30, 2011 and 2010 is derived from our
unaudited interim financial statements incorporated by reference
into this prospectus. The financial data as of and for the six
months ended June 30, 2011 and 2010 includes, in
managements opinion, all adjustments necessary for the
fair presentation of our financial position and results of
operations as of such dates and for such periods, but may not be
indicative of results to be expected for the full year.
The data set forth below is qualified by reference to, and
should be read in conjunction with,
(i) Managements Discussion and Analysis of
Financial Condition and Results of Operations in our
annual report on
Form 10-K
for the year ended December 31, 2010 and our quarterly
report on
Form 10-Q
for the quarter ended June 30, 2011 incorporated by
reference into this prospectus and (ii) our consolidated
financial statements and the notes thereto incorporated by
reference into this prospectus. In addition, please see the
historical consolidated financial statements of The Maverick
Companies beginning on
page F-1,
which financial statements are included with this prospectus in
accordance with
Rule 3-10(g)
of
Regulation S-X
under the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
Six Months Ended June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
|
(Unaudited)
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completion and remedial services
|
|
$
|
261,436
|
|
|
$
|
134,818
|
|
|
$
|
304,326
|
|
|
$
|
219,314
|
|
|
$
|
106,767
|
|
Fluid services
|
|
|
241,164
|
|
|
|
214,822
|
|
|
|
315,768
|
|
|
|
153,760
|
|
|
|
110,948
|
|
Well servicing
|
|
|
204,872
|
|
|
|
160,614
|
|
|
|
343,113
|
|
|
|
153,028
|
|
|
|
91,325
|
|
Contract drilling
|
|
|
20,767
|
|
|
|
16,373
|
|
|
|
41,735
|
|
|
|
16,807
|
|
|
|
9,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
728,239
|
|
|
|
526,627
|
|
|
|
1,004,942
|
|
|
|
542,909
|
|
|
|
318,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completion and remedial services
|
|
|
156,573
|
|
|
|
95,287
|
|
|
|
165,574
|
|
|
|
123,760
|
|
|
|
67,383
|
|
Fluid services
|
|
|
178,152
|
|
|
|
159,079
|
|
|
|
203,205
|
|
|
|
99,916
|
|
|
|
84,365
|
|
Well servicing
|
|
|
156,885
|
|
|
|
121,618
|
|
|
|
215,243
|
|
|
|
105,849
|
|
|
|
68,834
|
|
Contract drilling
|
|
|
15,250
|
|
|
|
13,604
|
|
|
|
28,629
|
|
|
|
11,878
|
|
|
|
6,995
|
|
General and administrative(1)
|
|
|
107,781
|
|
|
|
104,253
|
|
|
|
115,319
|
|
|
|
65,479
|
|
|
|
51,897
|
|
Depreciation and amortization
|
|
|
135,001
|
|
|
|
132,520
|
|
|
|
118,607
|
|
|
|
67,764
|
|
|
|
67,348
|
|
Loss (gain) on disposal of assets
|
|
|
2,856
|
|
|
|
2,650
|
|
|
|
76
|
|
|
|
(763
|
)
|
|
|
1,174
|
|
Goodwill impairment
|
|
|
|
|
|
|
204,014
|
|
|
|
22,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
752,498
|
|
|
|
833,025
|
|
|
|
869,175
|
|
|
|
473,883
|
|
|
|
347,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(24,259
|
)
|
|
|
(306,398
|
)
|
|
|
135,767
|
|
|
|
69,026
|
|
|
|
(29,898
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
(46,368
|
)
|
|
|
(32,386
|
)
|
|
|
(24,630
|
)
|
|
|
(23,156
|
)
|
|
|
(23,392
|
)
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
(3,481
|
)
|
|
|
|
|
|
|
(49,366
|
)
|
|
|
|
|
Gain on bargain purchase
|
|
|
1,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,772
|
|
Other income (expense)
|
|
|
499
|
|
|
|
1,198
|
|
|
|
12,235
|
|
|
|
259
|
|
|
|
192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(68,356
|
)
|
|
|
(341,067
|
)
|
|
|
123,372
|
|
|
|
(3,237
|
)
|
|
|
(51,326
|
)
|
Income tax benefit (expense)
|
|
|
24,793
|
|
|
|
87,529
|
|
|
|
(55,134
|
)
|
|
|
1,294
|
|
|
|
19,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
$
|
(43,563
|
)
|
|
$
|
(253,538
|
)
|
|
$
|
68,238
|
|
|
$
|
(1,943
|
)
|
|
$
|
(32,263
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
$
|
49,383
|
|
|
$
|
89,205
|
|
|
$
|
212,827
|
|
|
$
|
55,581
|
|
|
$
|
(1,596
|
)
|
Cash flows from investing activities
|
|
|
(97,879
|
)
|
|
|
(62,864
|
)
|
|
|
(197,302
|
)
|
|
|
(97,174
|
)
|
|
|
(35,554
|
)
|
Cash flows from financing activities
|
|
|
(28,943
|
)
|
|
|
(12,119
|
)
|
|
|
3,669
|
|
|
|
214,585
|
|
|
|
(14,432
|
)
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired
|
|
|
50,278
|
|
|
|
7,816
|
|
|
|
110,913
|
|
|
|
10
|
|
|
|
10,312
|
|
Property and equipment
|
|
|
63,579
|
|
|
|
43,367
|
|
|
|
91,890
|
|
|
|
114,873
|
|
|
|
25,555
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
As of June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
|
(Unaudited)
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
47,918
|
|
|
$
|
125,357
|
|
|
$
|
111,135
|
|
|
$
|
220,910
|
|
|
$
|
73,775
|
|
Property and equipment, net
|
|
|
625,702
|
|
|
|
666,642
|
|
|
|
740,879
|
|
|
|
693,891
|
|
|
|
633,965
|
|
Total assets
|
|
|
1,029,813
|
|
|
|
1,039,541
|
|
|
|
1,310,711
|
|
|
|
1,329,107
|
|
|
|
1,011,725
|
|
Long-term debt, including current portion
|
|
|
498,859
|
|
|
|
501,812
|
|
|
|
480,323
|
|
|
|
790,006
|
|
|
|
495,635
|
|
Stockholders equity
|
|
|
301,923
|
|
|
|
340,149
|
|
|
|
595,004
|
|
|
|
308,363
|
|
|
|
309,856
|
|
|
|
|
(1) |
|
Includes approximately $5,666,000, $5,152,000, $4,149,000,
$3,758,000 and $2,589,000 of non-cash expenses for the years
ended December 31, 2010, 2009 and 2008, and for the six
months ended June 30, 2011 and 2010, respectively. |
Ratio of
Earnings to Fixed Charges
The following table sets forth our consolidated ratio of
earnings to fixed charges for the periods shown:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
|
|
Year Ended December 31,
|
|
|
June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2011
|
|
|
Ratio of earnings to fixed charges
|
|
|
(a
|
)
|
|
|
(a
|
)
|
|
|
4.7
|
x
|
|
|
5.2
|
x
|
|
|
7.9
|
x
|
|
|
0.9x
|
|
For these ratios, earnings means the sum of income
before income taxes and fixed charges exclusive of capitalized
interest, and fixed charges means interest expensed
and capitalized, amortized premiums, discounts and capitalized
expenses relating to indebtedness and an estimate of the portion
of annual rental expense on capital leases that represents the
interest factor.
|
|
|
(a) |
|
Earnings were inadequate to cover fixed charges for the years
ended December 31, 2010 and December 31, 2009 by
$33 million and $267 million, respectively. |
10
RISK
FACTORS
An investment in the new notes involves various material
risks. Prior to making a decision about investing in the new
notes, and in consultation with your own financial and legal
advisors, you should carefully consider, among other matters,
the following risk factors, as well as those described in
Managements Discussion and Analysis of Financial
Condition and Results of Operations, under the heading
Risk Factors in our most recent annual report on
Form 10-K,
our most recent quarterly reports on
Form 10-Q
and in other filings we may make from time to time with the SEC
and all of the other information included in, or incorporated by
reference into, this prospectus or any prospectus supplement.
Risks
Relating to the Exchange Offer and the New Notes
The
notes are unsecured and are effectively subordinated to our
existing and future secured debt and other secured obligations,
and the guarantees of the notes will be effectively subordinated
to the guarantors secured debt and other secured
obligations.
The notes are not secured by any of our or our
subsidiaries assets. As a result, the notes and the
guarantees are effectively subordinated to all of our and the
guarantors secured obligations to the extent of the value
of the assets securing such obligations. In the event of any
distribution or payment of our or any guarantors assets in
any foreclosure, dissolution,
winding-up,
liquidation, reorganization or other bankruptcy proceeding,
holders of secured debt will have a prior claim to the assets
that constitute their collateral. Holders of the notes will
participate ratably with all holders of our and the
guarantors unsecured senior debt, and potentially with all
of their other general creditors, based upon the respective
amounts owed to each holder or creditor, in or the
guarantors respective remaining assets. In any of the
foregoing events, we cannot assure you that there will be
sufficient assets to pay amounts due on the notes. As a result,
holders of notes may receive less, ratably, than holders of
secured debt. As of June 30, 2011, we and the guarantors
would have had approximately $66.2 million of secured debt
under our capital leases and $19.0 million in letters of
credit issued under our revolving credit facility. The indenture
governing the notes permits us and our subsidiaries to incur
secured debt, including pursuant to our revolving credit
facility, purchase money instruments and other forms of secured
debt.
Our
indebtedness could restrict our operations and make us more
vulnerable to adverse economic conditions.
We now have, and will continue to have, a significant amount of
indebtedness. As of June 30, 2011, our total debt is
$790.0 million. For the six months ended June 30,
2011, we made cash interest payments totaling $18.6 million.
Our current and future indebtedness could have important
consequences. For example, it could:
|
|
|
|
|
impair our ability to make investments and obtain additional
financing for working capital, capital expenditures,
acquisitions or other general corporate purposes;
|
|
|
|
limit our ability to use operating cash flow in other areas of
our business because we must dedicate a substantial portion of
these funds to make principal and interest payments on our
indebtedness;
|
|
|
|
make us more vulnerable to a downturn in our business, our
industry or the economy in general as a substantial portion of
our operating cash flow will be required to make principal and
interest payments on our indebtedness, making it more difficult
to react to changes in our business and in industry and market
conditions;
|
|
|
|
limit our ability to obtain additional financing that may be
necessary to operate or expand our business;
|
|
|
|
put us at a competitive disadvantage to competitors that have
less debt; and
|
|
|
|
increase our vulnerability to interest rate increases to the
extent that we incur variable rate indebtedness.
|
11
If we are unable to generate sufficient cash flow or are
otherwise unable to obtain the funds required to make principal
and interest payments on our indebtedness, or if we otherwise
fail to comply with the various covenants in instruments
governing any existing or future indebtedness, we could be in
default under the terms of such instruments. In the event of a
default, the holders of our indebtedness could elect to declare
all the funds borrowed under those instruments to be due and
payable together with accrued and unpaid interest, secured
lenders could foreclose on any of our assets securing their
loans and we or one or more of our subsidiaries could be forced
into bankruptcy or liquidation. If our indebtedness is
accelerated, or we enter into bankruptcy, we may be unable to
pay all of our indebtedness in full. Any of the foregoing
consequences could restrict our ability to grow our business and
cause the value of our common stock to decline.
Our
revolving credit facility and the indentures governing our 2016
Notes and the notes each impose restrictions on us that may
affect our ability to successfully operate our
business.
Our Revolving Credit Facility and the indentures governing our
2016 Notes and the notes each impose limitations on our ability
to take various actions, such as:
limitations on the incurrence of additional indebtedness;
restrictions on mergers, sales or transfers of assets without
the lenders consent; and
limitations on dividends and distributions.
In addition, our revolving credit facility requires us to
maintain certain financial ratios and to satisfy certain
financial conditions, some of which become more restrictive over
time and may require us to reduce our debt or take some other
action in order to comply with them. The failure to comply with
any of these financial conditions, including the financial
ratios or covenants, would cause a default under our revolving
credit facility. A default under any of our indebtedness, if not
waived, could result in the acceleration of such indebtedness or
other indebtedness, in which case the debt would become
immediately due and payable. In addition, a default or
acceleration of any of our indebtedness under our 2016 Notes,
the notes or our revolving credit facility could result in a
default under or acceleration of other indebtedness with
cross-default or cross-acceleration provisions. In the event of
any acceleration of our indebtedness, we may not be able to pay
our debt or borrow sufficient funds to refinance it, and any
holders of secured indebtedness may seek to foreclose on the
assets securing such indebtedness. Even if new financing is
available, it may not be available on terms that are acceptable
to us. These restrictions could also limit our ability to obtain
future financings, make needed capital expenditures, withstand a
downturn in our business or the economy in general, or otherwise
conduct necessary corporate activities. We also may be prevented
from taking advantage of business opportunities that arise
because of the limitations imposed on us by the restrictive
covenants under our revolving credit facility or existing
limitations on the incurrence of additional indebtedness,
including in connection with acquisitions. Please read
Managements Discussion and Analysis of Financial
Condition and Results of Operations Liquidity and
Capital Resources Revolving Credit Facility in
our quarterly report on
Form 10-Q
for the quarter ended June 30, 2011 incorporated by
reference into this prospectus for a discussion of our revolving
credit facility.
We
will require a significant amount of cash to service our debt.
Our ability to generate cash depends on many factors beyond our
control.
Our ability to make payments on and to refinance our debt,
including the notes, and to fund planned capital expenditures
will depend on our ability to generate cash in the future. This
is subject to general economic, financial, competitive,
legislative, regulatory and other factors that may be beyond our
control. We cannot assure you that our business will generate
sufficient cash flow from operations or that future borrowings
will be available to us under our revolving credit facility or
otherwise in an amount sufficient to enable us to pay our debt,
including the notes, or to fund our other liquidity needs. We
may need to refinance all or a portion of our debt, including
the notes, at or before maturity. We cannot assure you that we
will be able to refinance any of our debt, including our
revolving credit facility, lease facilities, the 2016 Notes or
the notes, on commercially reasonable terms or at all.
12
In
addition to our current indebtedness, we may incur substantially
more debt, including additional secured debt. This could further
exacerbate the risks associated with our substantial
debt.
We and our subsidiaries may be able to incur substantial
additional debt in the future. Although the indenture governing
the notes contains restrictions on the incurrence of additional
debt, these restrictions are subject to a number of
qualifications and exceptions and, under certain circumstances,
debt incurred in compliance with these restrictions could be
substantial. If new debt is added to our current debt levels,
the substantial risks described above would intensify. See
Summary Historical Consolidated Financial Data and
Description of Other Indebtedness.
We are
a holding company with no direct operations.
We are a holding company with no direct operations. Our
principal assets are the equity interests and investments we
hold in our subsidiaries. As a result, we depend on dividends
and other payments from our subsidiaries to generate the funds
necessary to meet our financial obligations, including the
payment of principal of and interest on our outstanding debt.
Our subsidiaries are legally distinct from us and have no
obligation to pay amounts due on our debt or to make funds
available to us for such payment except as provided in the note
guarantees or pursuant to intercompany notes.
Federal
and state statutes may allow courts, under specific
circumstances, to void the guarantees and require noteholders to
return payments received from guarantors.
Under federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be deemed a
fraudulent transfer if the guarantor received less than a
reasonably equivalent value in exchange for giving the
guarantee and
|
|
|
|
|
was insolvent on the date that it gave the guarantee or became
insolvent as a result of giving the guarantee, or
|
|
|
|
was engaged in business or a transaction, or was about to engage
in business or a transaction, for which property remaining with
the guarantor was an unreasonably small capital, or
|
|
|
|
intended to incur, or believed that it would incur, debts that
would be beyond the guarantors ability to pay as those
debts matured.
|
A guarantee could also be deemed a fraudulent transfer if it was
given with actual intent to hinder, delay or defraud any entity
to which the guarantor was or became, on or after the date the
guarantee was given, indebted.
The measures of insolvency for purposes of the foregoing
considerations will vary depending upon the law applied in any
proceeding with respect to the foregoing. Generally, however, a
guarantor would be considered insolvent if:
|
|
|
|
|
the sum of its debts, including contingent liabilities, is
greater than all its assets, at a fair valuation, or
|
|
|
|
the present fair saleable value of its assets is less than the
amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they
become absolute and mature, or
|
|
|
|
it could not pay its debts as they become due.
|
The indenture contains a provision intended to limit each
subsidiary guarantors liability under its guarantee to the
maximum amount that it could incur without causing the guarantee
to be a fraudulent transfer. This provision may not be effective
to protect the subsidiary guarantees from being voided under
fraudulent transfer law.
If a guarantee is deemed to be a fraudulent transfer, it could
be voided altogether, or it could be subordinated to all other
debts of the guarantor. In such case, any payment by the
guarantor pursuant to its guarantee could be required to be
returned to the guarantor or to a fund for the benefit of the
creditors of the
13
guarantor. If a guarantee is voided or held unenforceable for
any other reason, holders of the notes would cease to have a
claim against the subsidiary based on the guarantee and would be
creditors only of Basic Energy Services, Inc. and any guarantor
whose guarantee was not similarly voided or otherwise held
unenforceable.
We may
not have the ability to raise funds necessary to finance any
change of control offer required under the
indenture.
If a change of control (as defined in the indenture) occurs, we
will be required to offer to purchase your notes at 101% of
their principal amount plus accrued and unpaid interest. If a
purchase offer obligation arises under the indenture governing
the notes, a change of control may also occur under our
revolving credit facility, which could result in the
acceleration of the indebtedness outstanding thereunder. In
addition, our revolving credit facility will contain
restrictions on our ability to repay the notes upon a change in
control. Any of our future debt agreements may contain similar
restrictions and provisions. If a purchase offer were required
under the indenture for our debt, we may not have sufficient
funds to pay the purchase price of all debt, including your
notes, that we are required to purchase or repay.
If you
do not properly tender your old notes, you will continue to hold
unregistered outstanding notes and your ability to transfer
outstanding notes will be adversely affected.
We will only issue new notes in exchange for old notes that you
timely and properly tender. Therefore, you should allow
sufficient time to ensure timely delivery of the old notes, and
you should carefully follow the instructions on how to tender
your old notes. Neither we nor the exchange agent is required to
tell you of any defects or irregularities with respect to your
tender of old notes. Please read The Exchange
Offer Procedures for Tendering and
Description of the New Notes.
If you do not exchange your old notes for new notes in the
exchange offer, you will continue to be subject to the
restrictions on transfer of your old notes described in the
legend on the certificates for your old notes. In general, you
may only offer or sell the old notes if they are registered
under the Securities Act and applicable state securities laws,
or offered and sold under an exemption from these requirements.
We do not plan to register any sale of the old notes under the
Securities Act. For further information regarding the
consequences of failing to tender your old notes in the exchange
offer, please read The Exchange Offer
Consequences of Failure to Exchange Outstanding Securities.
Some
holders who exchange their old notes may be deemed to be
underwriters.
If you exchange your old notes in the exchange offer for the
purpose of participating in a distribution of the new notes, you
may be deemed to have received restricted securities and, if so,
will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with
any resale transaction.
An
active trading market may not develop for the new
notes.
The new notes are a new issue of securities. There is no active
public trading market for the new notes, and the new notes will
not be listed on any securities exchange.
We cannot assure you that an active trading market will develop
for the new notes or that the new notes will trade as one class
with the old notes. In addition, the liquidity of the trading
market in the new notes and the market prices quoted for the new
notes may be adversely affected by changes in the overall market
for high yield securities and by changes in our financial
performance or prospects or in the prospects for companies in
our industry generally. As a consequence, an active trading
market may not develop for your notes, you may not be able to
sell your notes, or, even if you can sell your notes, you may
not be able to sell them at an acceptable price.
14
Certain
covenants contained in the indenture will not be applicable
during any period in which the notes are rated investment grade
by both Moodys and S&P.
The indenture provides that certain covenants will not be
applicable during any period in which the notes are rated
investment grade by both Moodys and S&P. The
covenants that may be suspended restrict, among other things,
our ability to pay dividends, incur debt, sell assets, enter
into transactions with affiliates, enter into business
combinations and enter into other transactions. There can be no
assurance that the notes will ever be rated investment grade, or
that if they are rated investment grade, the notes will maintain
such rating. However, suspension of these covenants would allow
us to engage in certain transactions that would not be permitted
while these covenants were in force, and any such actions that
we take while these covenants are not in force will effectively
be grandfathered even if the notes are subsequently
downgraded below investment grade. See Description of the
New Notes Certain Covenants Covenant
Suspension.
15
USE OF
PROCEEDS
The exchange offer is intended to satisfy our obligations under
the registration rights agreements we entered into in connection
with the private offering of the old notes. We will not receive
any proceeds from the issuance of the new notes in the exchange
offer. In consideration for issuing the new notes as
contemplated in this prospectus, we will receive, in exchange,
outstanding old notes in like principal amount. We will cancel
all old notes surrendered in exchange for new notes in the
exchange offer. As a result, the issuance of the new notes will
not result in any increase or decrease in our indebtedness.
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of
earnings to fixed charges for the periods shown:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
|
|
Year Ended December 31,
|
|
|
June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2011
|
|
|
Ratio of earnings to fixed charges
|
|
|
(a
|
)
|
|
|
(a
|
)
|
|
|
4.7
|
x
|
|
|
5.2
|
x
|
|
|
7.9
|
x
|
|
|
0.9x
|
|
For these ratios, earnings means the sum of income
before income taxes and fixed charges exclusive of capitalized
interest, and fixed charges means interest expensed
and capitalized, amortized premiums, discounts and capitalized
expenses relating to indebtedness and an estimate of the portion
of annual rental expense on capital leases that represents the
interest factor.
|
|
|
(a) |
|
Earnings were inadequate to cover fixed charges for the years
ended December 31, 2010 and December 31, 2009 by
$33 million and $267 million, respectively. |
16
SELECTED
HISTORICAL FINANCIAL DATA
The following selected historical consolidated financial data as
of December 31, 2010 and 2009 and for the years ended
December 31, 2010, 2009 and 2008 is derived from our
audited consolidated financial statements incorporated by
reference into this prospectus. The following selected
historical consolidated financial data as of December 31,
2008, 2007 and 2006 and for the years ended December 31,
2007 and 2006 is derived from our audited consolidated financial
statements not included in this prospectus. The following
selected historical consolidated financial data as of
June 30, 2011 and for the six months ended June 30,
2011 and 2010 is derived from our unaudited interim financial
statements incorporated by reference into this prospectus. The
financial data as of and for the six months ended June 30,
2011 and 2010 includes, in managements opinion, all
adjustments necessary for the fair presentation of our financial
position and results of operations as of such dates and for such
periods, but may not be indicative of results to be expected for
the full year.
The data set forth below is qualified by reference to, and
should be read in conjunction with,
(i) Managements Discussion and Analysis of
Financial Condition and Results of Operations included in
our annual report on
Form 10-K
for the year ended December 31, 2010 and our quarterly
report on
Form 10-Q
for the quarter ended June 30, 2011 incorporated by
reference into this prospectus and (ii) our consolidated
financial statements and the notes thereto incorporated by
reference into this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
Year Ended December 31,
|
|
|
Ended June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
|
(Unaudited)
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completion and remedial services
|
|
$
|
261,436
|
|
|
$
|
134,818
|
|
|
$
|
304,326
|
|
|
$
|
240,692
|
|
|
$
|
154,412
|
|
|
$
|
219,314
|
|
|
$
|
106,767
|
|
Fluid services
|
|
|
241,164
|
|
|
|
214,822
|
|
|
|
315,768
|
|
|
|
259,324
|
|
|
|
245,011
|
|
|
|
153,760
|
|
|
|
110,948
|
|
Well servicing
|
|
|
204,872
|
|
|
|
160,614
|
|
|
|
343,113
|
|
|
|
342,697
|
|
|
|
323,755
|
|
|
|
153,028
|
|
|
|
91,325
|
|
Contract drilling
|
|
|
20,767
|
|
|
|
16,373
|
|
|
|
41,735
|
|
|
|
34,460
|
|
|
|
6,970
|
|
|
|
16,807
|
|
|
|
9,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
728,239
|
|
|
|
526,627
|
|
|
|
1,004,942
|
|
|
|
877,173
|
|
|
|
730,148
|
|
|
|
542,909
|
|
|
|
318,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completion and remedial services
|
|
|
156,573
|
|
|
|
95,287
|
|
|
|
165,574
|
|
|
|
125,948
|
|
|
|
74,981
|
|
|
|
123,760
|
|
|
|
67,383
|
|
Fluid services
|
|
|
178,152
|
|
|
|
159,079
|
|
|
|
203,205
|
|
|
|
165,327
|
|
|
|
153,445
|
|
|
|
99,916
|
|
|
|
84,365
|
|
Well servicing
|
|
|
156,885
|
|
|
|
121,618
|
|
|
|
215,243
|
|
|
|
205,132
|
|
|
|
178,028
|
|
|
|
105,849
|
|
|
|
68,834
|
|
Contract drilling
|
|
|
15,250
|
|
|
|
13,604
|
|
|
|
28,629
|
|
|
|
22,510
|
|
|
|
8,400
|
|
|
|
11,878
|
|
|
|
6,995
|
|
General and administrative(a)
|
|
|
107,781
|
|
|
|
104,253
|
|
|
|
115,319
|
|
|
|
99,042
|
|
|
|
81,318
|
|
|
|
65,479
|
|
|
|
51,897
|
|
Depreciation and amortization
|
|
|
135,001
|
|
|
|
132,520
|
|
|
|
118,607
|
|
|
|
93,048
|
|
|
|
62,087
|
|
|
|
67,764
|
|
|
|
67,348
|
|
Loss (gain) on disposal of assets
|
|
|
2,856
|
|
|
|
2,650
|
|
|
|
76
|
|
|
|
477
|
|
|
|
277
|
|
|
|
(763
|
)
|
|
|
1,174
|
|
Goodwill impairment
|
|
|
|
|
|
|
204,014
|
|
|
|
22,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
752,498
|
|
|
|
833,025
|
|
|
|
869,175
|
|
|
|
711,484
|
|
|
|
558,536
|
|
|
|
473,883
|
|
|
|
347,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(24,259
|
)
|
|
|
(306,398
|
)
|
|
|
135,767
|
|
|
|
165,689
|
|
|
|
171,612
|
|
|
|
69,026
|
|
|
|
(29,898
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
(46,368
|
)
|
|
|
(32,386
|
)
|
|
|
(24,630
|
)
|
|
|
(25,136
|
)
|
|
|
(15,504
|
)
|
|
|
(23,156
|
)
|
|
|
(23,392
|
)
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
(3,481
|
)
|
|
|
|
|
|
|
(230
|
)
|
|
|
(2,705
|
)
|
|
|
(49,366
|
)
|
|
|
|
|
Gain on bargain purchase
|
|
|
1,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,772
|
|
Other income (expense)
|
|
|
499
|
|
|
|
1,198
|
|
|
|
12,235
|
|
|
|
176
|
|
|
|
169
|
|
|
|
259
|
|
|
|
192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(68,356
|
)
|
|
|
(341,067
|
)
|
|
|
123,372
|
|
|
|
140,499
|
|
|
|
153,572
|
|
|
|
(3,237
|
)
|
|
|
(51,326
|
)
|
Income tax benefit (expense)
|
|
|
24,793
|
|
|
|
87,529
|
|
|
|
(55,134
|
)
|
|
|
(52,766
|
)
|
|
|
(54,742
|
)
|
|
|
1,294
|
|
|
|
19,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(43,563
|
)
|
|
$
|
(253,538
|
)
|
|
$
|
68,238
|
|
|
$
|
87,733
|
|
|
$
|
98,830
|
|
|
$
|
(1,943
|
)
|
|
$
|
(32,263
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
$
|
49,383
|
|
|
$
|
89,205
|
|
|
$
|
212,827
|
|
|
$
|
198,591
|
|
|
$
|
145,678
|
|
|
$
|
55,581
|
|
|
$
|
(1,596
|
)
|
Cash flows from investing activities
|
|
|
(97,879
|
)
|
|
|
(62,864
|
)
|
|
|
(197,302
|
)
|
|
|
(294,103
|
)
|
|
|
(241,351
|
)
|
|
|
(97,174
|
)
|
|
|
(35,554
|
)
|
Cash flows from financing activities
|
|
|
(28,943
|
)
|
|
|
(12,119
|
)
|
|
|
3,669
|
|
|
|
136,088
|
|
|
|
114,193
|
|
|
|
214,585
|
|
|
|
(14,432
|
)
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired
|
|
|
50,278
|
|
|
|
7,816
|
|
|
|
110,913
|
|
|
|
199,673
|
|
|
|
135,568
|
|
|
|
10
|
|
|
|
10,312
|
|
Property and equipment
|
|
|
63,579
|
|
|
|
43,367
|
|
|
|
91,890
|
|
|
|
98,536
|
|
|
|
104,574
|
|
|
|
114,873
|
|
|
|
25,555
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
As of June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
|
(Unaudited)
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
47,918
|
|
|
$
|
125,357
|
|
|
$
|
111,135
|
|
|
$
|
91,941
|
|
|
$
|
51,365
|
|
|
$
|
220,910
|
|
|
$
|
73,775
|
|
Property and equipment, net
|
|
|
625,702
|
|
|
|
666,642
|
|
|
|
740,879
|
|
|
|
636,924
|
|
|
|
475,431
|
|
|
|
693,891
|
|
|
|
633,965
|
|
Total assets
|
|
|
1,029,813
|
|
|
|
1,039,541
|
|
|
|
1,310,711
|
|
|
|
1,143,609
|
|
|
|
796,260
|
|
|
|
1,329,107
|
|
|
|
1,011,725
|
|
Long-term debt, including current portion
|
|
|
498,859
|
|
|
|
501,812
|
|
|
|
480,323
|
|
|
|
423,719
|
|
|
|
262,743
|
|
|
|
790,006
|
|
|
|
495,635
|
|
Stockholders equity
|
|
|
301,923
|
|
|
|
340,149
|
|
|
|
595,004
|
|
|
|
524,821
|
|
|
|
379,250
|
|
|
|
308,363
|
|
|
|
309,856
|
|
|
|
|
a) |
|
Includes approximately $5,666,000, $5,152,000, $4,149,000,
$3,964,000, $3,429,000 of non-cash expenses for the years ended
December 31, 2010, 2009, 2008, 2007 and 2006, respectively,
and $3,758,000 and $2,589,000 for the six months ended
June 30, 2011 and 2010, respectively. |
18
DESCRIPTION
OF OTHER INDEBTEDNESS
7.125% Senior
Notes due 2016
Our $225 million aggregate principal amount of
7.125% Senior Notes due 2016 were issued pursuant to an
indenture dated as of April 12, 2006, by and among us, the
guarantor parties thereto and The Bank of New York
Trust Company, N.A., as trustee (the 2016 Notes
Indenture). The 2016 Notes are jointly and severally
guaranteed by each of our current subsidiaries, other than three
immaterial subsidiaries. As of June 30, 2011, the
non-guarantor subsidiaries held no assets and performed no
operations.
Interest on the 2016 Notes accrues at a rate of 7.125% per year.
Interest on the 2016 Notes is payable in cash semi-annually in
arrears on April 15 and October 15 of each year. The 2016 Notes
mature on April 15, 2016. The 2016 Notes and the guarantees
are unsecured and rank equally with all of our and the
guarantors existing and future unsecured and
unsubordinated obligations. The 2016 Notes and the guarantees
rank senior in right of payment to any of our and the
guarantors existing and future obligations that are, by
their terms, expressly subordinated in right of payment to the
2016 Notes and the guarantees. The 2016 Notes and the guarantees
are effectively subordinated to our and the guarantors
secured obligations to the extent of the value of the assets
securing such obligations.
The 2016 Notes Indenture contains covenants that limit our
ability and the ability of certain of our subsidiaries to:
|
|
|
|
|
incur additional indebtedness;
|
|
|
|
pay dividends or repurchase or redeem capital stock;
|
|
|
|
make certain investments;
|
|
|
|
incur liens;
|
|
|
|
enter into certain types of transactions with affiliates;
|
|
|
|
limit dividends or other payments by restricted
subsidiaries; and
|
|
|
|
sell assets or consolidate or merge with or into other companies.
|
These limitations are subject to a number of important
qualifications and exceptions.
Upon an Event of Default (as defined in the 2016 Notes
Indenture), the trustee or the holders of at least 25% in
aggregate principal amount of the 2016 Notes then outstanding
may declare all of the amounts outstanding under the 2016 Notes
to be due and payable immediately.
We may now, at our option, redeem all or part of the 2016 Notes
at a redemption price equal to 100% of the principal amount
thereof, plus a premium declining ratably to par and accrued and
unpaid interest, if any, to the date of redemption. In the event
that the Maverick Companies Acquisition is not consummated, we
will use a substantial portion of the net proceeds of this
offering to redeem a portion of the 2016 Notes.
Following a Change of Control, as defined in the 2016 Notes
Indenture, we will be required to make an offer to repurchase
all or any portion of the 2016 Notes at a purchase price of 101%
of their principal amount, plus accrued and unpaid interest to
the date of repurchase.
Revolving
Credit Facility
On February 15, 2011, in connection with the offering of
our
73/4% Senior
Notes, we terminated our previous $30.0 million secured
revolving credit facility with Capital One, National
Association, and entered into a new $165.0 million
revolving credit facility (the Credit Agreement)
with Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Capital One, National Association, as joint
lead arrangers and joint book managers, the lenders party
thereto and Bank of America, N.A., as administrative agent. The
Credit Agreement includes an accordion feature whereby the total
credit available to us can be increased by up to
$100.0 million under certain circumstances, subject to
additional lender commitments. The obligations under the Credit
Agreement are
19
guaranteed on a joint and several basis by each of our current
subsidiaries, other than three immaterial subsidiaries, and are
secured by substantially all of our and the guarantors
assets as collateral under a related Security Agreement (the
Security Agreement). As of June 30, 2011, the
non-guarantor subsidiaries held no assets and performed no
operations. On July 15, 2011, we exercised the accordion
feature and amended the Credit Agreement to increase our total
credit available from $165.0 million to $225.0 million.
Borrowings under the Credit Agreement mature on January 15,
2016, and we have the ability at any time to prepay the Credit
Agreement without premium or penalty. At our option, advances
under the Credit Agreement may be comprised of
(i) alternate base rate loans, at a variable base interest
rate plus a margin ranging from 1.50% to 2.25% based on our
leverage ratio or (ii) Eurodollar loans, at a variable base
interest rate plus a margin ranging from 2.50% to 3.25% based on
our leverage ratio. We will pay a commitment fee equal to 0.50%
on the daily unused amount of the commitments under the Credit
Agreement.
The Credit Agreement contains various covenants that, subject to
agreed upon exceptions, limit our ability and the ability of
certain of our subsidiaries to:
|
|
|
|
|
incur indebtedness;
|
|
|
|
grant liens;
|
|
|
|
enter into sale and leaseback transactions;
|
|
|
|
make loans, capital expenditures, acquisitions and investments;
|
|
|
|
change the nature of business;
|
|
|
|
acquire or sell assets or consolidate or merge with or into
other companies;
|
|
|
|
declare or pay dividends;
|
|
|
|
enter into transactions with affiliates;
|
|
|
|
enter into burdensome agreements;
|
|
|
|
prepay, redeem or modify or terminate other indebtedness;
|
|
|
|
change accounting policies and reporting practices; and
|
|
|
|
amend organizational documents.
|
The Credit Agreement also contains covenants that, among other
things, limit the amount of capital contributions we may make
and require us to maintain specified ratios or conditions as
follows:
|
|
|
|
|
a minimum consolidated interest coverage ratio of not less than
2.50:1.00;
|
|
|
|
a maximum consolidated leverage ratio not to exceed 4.00:1.00
after March 31, 2011; and
|
|
|
|
a maximum consolidated senior secured leverage ratio of
2.00:1.00.
|
If an event of default occurs under the Credit Agreement, then
the lenders may (i) terminate their commitments under the
Credit Agreement, (ii) declare any outstanding loans under
the Credit Agreement to be immediately due and payable after
applicable grace periods and (iii) foreclose on the
collateral secured by the Security Agreement.
We had $21.9 million outstanding under the Credit Agreement
as of June 30, 2011. At June 30, 2011, we were in
compliance with our covenants under the Credit Agreement.
Other
Debt
We have a variety of other capital leases and notes payable
outstanding that is generally customary in our business. None of
these debt instruments is material individually. Our leases with
Banc of America Leasing & Capital, LLC require us to
maintain a minimum debt service coverage ratio of 1.05 to 1.00.
As of June 30, 2011, we had total capital leases of
approximately $66.2 million.
20
THE
EXCHANGE OFFER
Purpose
and Effect of the Exchange Offer
On February 15, 2011, we sold $275.0 million in
aggregate principal amount of the old notes in a private
placement. On June 13, 2011, we sold an $200.0 million
in aggregate principal amount of additional old notes in a
private placement. The old notes were sold to the initial
purchasers who in turn resold the old notes to a limited number
of qualified institutional buyers pursuant to Rule 144A of
the Securities Act of 1933, as amended, or the Securities Act.
In connection with the sale of the old notes, we entered into
registration rights agreements with the initial purchasers of
the old notes, pursuant to which we agreed to file and to use
our reasonable best efforts to cause to be declared effective by
the SEC a registration statement with respect to the exchange of
the old notes for the new notes. We are making the exchange
offer to fulfill our contractual obligations under those
agreements. Copies of the registration rights agreements have
been filed as exhibits to the registration statement of which
this prospectus is a part.
Pursuant to the exchange offer, we will issue the new notes in
exchange for old notes. The terms of the new notes are identical
in all material respects to those of the old notes, except that
the new notes (1) have been registered under the Securities
Act and therefore will not be subject to certain restrictions on
transfer applicable to the old notes and (2) will not have
registration rights or provide for any liquidated damages
related to the obligation to register. Please read
Description of the New Notes for more information on
the terms of the new notes.
We are not making the exchange offer to, and will not accept
tenders for exchange from, holders of old notes in any
jurisdiction in which an exchange offer or the acceptance
thereof would not be in compliance with the securities or blue
sky laws of such jurisdiction. Unless the context requires
otherwise, the term holder with respect to the
exchange offer means any person in whose name the old notes are
registered on our books or any other person who has obtained a
properly completed bond power from the registered holder, or any
person whose old notes are held of record by The Depository
Trust Company, referred to as DTC, who desires to deliver
such old notes by book-entry transfer at DTC.
We make no recommendation to the holders of old notes as to
whether to tender or refrain from tendering all or any portion
of their old notes pursuant to the exchange offer. In addition,
no one has been authorized to make any such recommendation.
Holders of old notes must make their own decision whether to
tender pursuant to the exchange offer and, if so, the aggregate
amount of old notes to tender after reading this prospectus and
the letter of transmittal and consulting with their advisors, if
any, based on their own financial position and requirements.
In order to participate in the exchange offer, you must
represent to us, among other things, that:
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you are acquiring the new notes in the exchange offer in the
ordinary course of your business;
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you do not have, and to your knowledge, no one receiving new
notes from you has, any arrangement or understanding with any
person to participate in the distribution of the new notes;
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you are not one of our or our subsidiary guarantors
affiliates, as defined in Rule 405 of the Securities
Act;
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if you are not a broker-dealer, you are not engaged in, and do
not intend to engage in, a distribution of the new
notes; and
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if you are a broker-dealer that will receive new notes for your
own account in exchange for old notes acquired as a result of
market-making or other trading activities, you will deliver a
prospectus in connection with any resale of the new notes.
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Please read Plan of Distribution.
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Terms of
Exchange
Upon the terms and conditions described in this prospectus and
in the accompanying letter of transmittal, which together
constitute the exchange offer, we will accept for exchange old
notes that are properly tendered at or before the expiration
time and not withdrawn as permitted below. As of the date of
this prospectus, $475.0 million aggregate principal amount
of
73/4% Senior
Notes due 2019 are outstanding. This prospectus, together with
the letter of transmittal, is first being sent on or about the
date on the cover page of the prospectus to all holders of old
notes known to us. Old notes tendered in the exchange offer must
be in denominations of principal amount of $2,000 and any
integral multiple of $1,000 in excess of $2,000.
Our acceptance of the tender of old notes by a tendering holder
will form a binding agreement between the tendering holder and
us upon the terms and subject to the conditions provided in this
prospectus and in the accompanying letter of transmittal.
The form and terms of the new notes being issued in the exchange
offer are the same as the form and terms of the old notes except
that:
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the new notes being issued in the exchange offer will have been
registered under the Securities Act;
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the new notes being issued in the exchange offer will not bear
the restrictive legends restricting their transfer under the
Securities Act;
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the new notes being issued in the exchange offer will not
contain the registration rights contained in the old
notes; and
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the new notes being issued in the exchange offer will not
contain the liquidated damages provisions relating to the old
notes.
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Expiration,
Extension and Amendment
The expiration time of the exchange offer is 5:00 P.M., New
York City time,
on ,
2011. However, we may, in our sole discretion, extend the period
of time for which the exchange offer is open and set a later
expiration date for the offer. The term expiration
time as used herein means the latest time and date at
which the exchange offer expires, after any extension by us (if
applicable). If we decide to extend the exchange offer period,
we will then delay acceptance of any old notes by giving oral or
written notice of an extension to the holders of old notes as
described below. During any extension period, all old notes
previously tendered will remain subject to the exchange offer
and may be accepted for exchange by us. Any old notes not
accepted for exchange will be returned to the tendering holder
after the expiration or termination of the exchange offer.
Our obligation to accept old notes for exchange in the exchange
offer is subject to the conditions described below under
Conditions to the Exchange Offer. We may
decide to waive any of the conditions in our discretion.
Furthermore, we reserve the right to amend or terminate the
exchange offer, and not to accept for exchange any old notes not
previously accepted for exchange, upon the occurrence of any of
the conditions of the exchange offer specified below under the
same heading. We will give oral or written notice of any
extension, amendment, non-acceptance or termination to the
holders of the old notes as promptly as practicable. If we
materially change the terms of the exchange offer, we will
resolicit tenders of the old notes, file a post-effective
amendment to the prospectus and provide notice to you. If the
change is made less than five business days before the
expiration of the exchange offer, we will extend the offer so
that the holders have at least five business days to tender or
withdraw. We will notify you of any extension by means of a
press release or other public announcement no later than
9:00 A.M., New York City time, on the first business day
after the previously scheduled expiration time.
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Procedures
for Tendering
Valid
Tender
Except as described below, a tendering holder must, prior to the
expiration time, transmit to Wells Fargo Bank, N.A., the
exchange agent, at the address listed below under the caption
Exchange Agent:
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a properly completed and duly executed letter of transmittal,
including all other documents required by the letter of
transmittal; or
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if old notes are tendered in accordance with the book-entry
procedures listed below, an agents message transmitted
through DTCs Automated Tender Offer Program, referred to
as ATOP.
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In addition, you must:
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deliver certificates, if any, for the old notes to the exchange
agent at or before the expiration time; or
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deliver a timely confirmation of the book-entry transfer of the
old notes into the exchange agents account at DTC, the
book-entry transfer facility, along with the letter of
transmittal or an agents message; or
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comply with the guaranteed delivery procedures described below.
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The term agents message means a message,
transmitted by DTC to, and received by, the exchange agent and
forming a part of a book-entry confirmation, that states that
DTC has received an express acknowledgment that the tendering
holder agrees to be bound by the letter of transmittal and that
we may enforce the letter of transmittal against such holder.
If the letter of transmittal is signed by a person other than
the registered holder of old notes, the letter of transmittal
must be accompanied by a written instrument of transfer or
exchange in satisfactory form duly executed by the registered
holder with the signature guaranteed by an eligible institution.
The old notes must be endorsed or accompanied by appropriate
powers of attorney. In either case, the old notes must be signed
exactly as the name of any registered holder appears on the old
notes.
If the letter of transmittal or any old notes or powers of
attorney are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, these persons
should so indicate when signing. Unless waived by us, proper
evidence satisfactory to us of their authority to so act must be
submitted.
By tendering, each holder will represent to us that, among other
things, the person is not our affiliate or an affiliate of any
of our subsidiary guarantors, the new notes are being acquired
in the ordinary course of business of the person receiving the
new notes, whether or not that person is the holder, and neither
the holder nor the other person has any arrangement or
understanding with any person to participate in the distribution
of the new notes. Each broker-dealer must represent that it is
not engaged in, and does not intend to engage in, a distribution
of the new notes, and each broker-dealer that receives new notes
for its own account in exchange for old notes, where such old
notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with
any resale of such new notes. Please read Plan of
Distribution.
The method of delivery of old notes, letters of transmittal and
all other required documents is at your election and risk, and
the delivery will be deemed made only upon actual receipt or
confirmation by the exchange agent. If the delivery is by mail,
we recommend that you use registered mail, properly insured,
with return receipt requested. In all cases, you should allow
sufficient time to assure timely delivery. Holders tendering
through DTCs ATOP system should allow sufficient time for
completion of the ATOP procedures during the normal business
hours of DTC on such dates.
No old notes, agents messages, letters of transmittal or
other required documents should be sent to us. Delivery of all
old notes, agents messages, letters of transmittal and
other documents must be made to the exchange agent. Holders may
also request their respective brokers, dealers, commercial
banks, trust companies or nominees to effect such tender for
such holders.
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If you are a beneficial owner whose old notes are registered in
the name of a broker, dealer, commercial bank, trust company or
other nominee, and wish to tender, you should promptly instruct
the registered holder to tender on your behalf. Any registered
holder that is a participant in DTCs ATOP system may make
book-entry delivery of the old notes by causing DTC to transfer
the old notes into the exchange agents account. The tender
by a holder of old notes, including pursuant to the delivery of
an agents message through DTCs ATOP system, will
constitute an agreement between such holder and us in accordance
with the terms and subject to the conditions set forth herein
and in the letter of transmittal.
All questions as to the validity, form, eligibility, time of
receipt and withdrawal of the tendered old notes will be
determined by us in our sole discretion, which determination
will be final and binding. We reserve the absolute right to
reject any and all old notes not validly tendered or any old
notes which, if accepted, would, in the opinion of our counsel,
be unlawful. We also reserve the absolute right to waive any
irregularities or conditions of tender as to particular old
notes. Our interpretation of the terms and conditions of this
exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders
of old notes must be cured within such time as we shall
determine. Although we intend to notify you of defects or
irregularities with respect to tenders of old notes, none of us,
the exchange agent, or any other person shall be under any duty
to give notification of defects or irregularities with respect
to tenders of old notes, nor shall any of them incur any
liability for failure to give such notification. Tenders of old
notes will not be deemed to have been made until such
irregularities have been cured or waived. Any old notes received
by the exchange agent that are not validly tendered and as to
which the defects or irregularities have not been cured or
waived will be returned without cost to such holder by the
exchange agent, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration
date of the exchange offer.
Although we have no present plan to acquire any old notes that
are not tendered in the exchange offer or to file a registration
statement to permit resales of any old notes that are not
tendered in the exchange offer, we reserve the right, in our
sole discretion, to purchase or make offers for any old notes
after the expiration date of the exchange offer, from time to
time, through open market or privately negotiated transactions,
one or more additional exchange or tender offers, or otherwise,
as permitted by law, the indenture and our other debt
agreements. Following consummation of this exchange offer, the
terms of any such purchases or offers could differ materially
from the terms of this exchange offer.
Signature
Guarantees
Signatures on a letter of transmittal or a notice of withdrawal
must be guaranteed, unless the old notes surrendered for
exchange are tendered:
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by a registered holder of the old notes who has not completed
the box entitled Special Issuance Instructions or
Special Delivery Instructions on the letter of
transmittal, or
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for the account of an eligible institution.
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If signatures on a letter of transmittal or a notice of
withdrawal are required to be guaranteed, the guarantees must be
by an eligible institution. An eligible
institution is an eligible guarantor
institution meeting the requirements of the registrar for
the notes within the meaning of
Rule 17Ad-15
under the Exchange Act.
Book-Entry
Transfer
The exchange agent will make a request to establish an account
for the old notes at DTC for purposes of the exchange offer. Any
financial institution that is a participant in DTCs system
may make book-entry delivery of old notes by causing DTC to
transfer those old notes into the exchange agents account
at DTC in accordance with DTCs procedure for transfer. The
participant should transmit its acceptance to DTC at or prior to
the expiration time or comply with the guaranteed delivery
procedures described below. DTC will verify this acceptance,
execute a book-entry transfer of the tendered old notes into the
exchange agents account at DTC and then send to the
exchange agent confirmation of this book-entry transfer. The
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confirmation of this book-entry transfer will include an
agents message confirming that DTC has received an express
acknowledgment from this participant that this participant has
received and agrees to be bound by the letter of transmittal and
that we may enforce the letter of transmittal against this
participant.
Delivery of new notes issued in the exchange offer may be
effected through book-entry transfer at DTC. However, the letter
of transmittal or facsimile of it or an agents message,
with any required signature guarantees and any other required
documents, must:
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be transmitted to and received by the exchange agent at the
address listed under Exchange Agent at
or prior to the expiration time; or
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comply with the guaranteed delivery procedures described below.
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Delivery of documents to DTC in accordance with DTCs
procedures does not constitute delivery to the exchange agent.
Guaranteed
Delivery
If a registered holder of old notes desires to tender the old
notes, and the old notes are not immediately available, or time
will not permit the holders old notes or other required
documents to reach the exchange agent before the expiration
time, or the procedures for book-entry transfer described above
cannot be completed on a timely basis, a tender may nonetheless
be made if:
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the tender is made through an eligible institution;
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prior to the expiration time, the exchange agent receives by
facsimile transmission, mail or hand delivery from such eligible
institution a properly and validly completed and duly executed
notice of guaranteed delivery, substantially in the form
provided by us:
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1. stating the name and address of the holder of old notes
and the amount of old notes tendered,
2. stating that the tender is being made, and
3. guaranteeing that within three New York Stock Exchange
trading days after the expiration time, the certificates for all
physically tendered old notes, in proper form for transfer, or a
book-entry confirmation, as the case may be, and a properly
completed and duly executed letter of transmittal, or an
agents message, and any other documents required by the
letter of transmittal will be deposited by the eligible
institution with the exchange agent; and
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the certificates for all physically tendered old notes, in
proper form for transfer, or a book-entry confirmation, as the
case may be, and a properly completed and duly executed letter
of transmittal, or an agents message, and all other
documents required by the letter of transmittal, are received by
the exchange agent within three New York Stock Exchange trading
days after the date of execution of the notice of guaranteed
delivery.
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Determination
of Validity
We will determine in our sole discretion all questions as to the
validity, form and eligibility of old notes tendered for
exchange. This discretion extends to the determination of all
questions concerning the timing of receipts and acceptance of
tenders. These determinations will be final and binding. We
reserve the right to reject any particular old note not properly
tendered or of which our acceptance might, in our judgment or
our counsels judgment, be unlawful. We also reserve the
right to waive any defects or irregularities or conditions of
the exchange offer as to any particular old note either before
or after the expiration time, including the right to waive the
ineligibility of any tendering holder. Our interpretation of the
terms and conditions of the exchange offer as to any particular
old note either before or after the applicable expiration time,
including the letter of transmittal and the instructions to the
letter of transmittal, shall be final and binding on all
parties. Unless waived, any defects or irregularities in
connection with tenders of old notes must be cured within a
reasonable period of time.
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Neither we, the exchange agent nor any other person will be
under any duty to give notification of any defect or
irregularity in any tender of old notes. Moreover, neither we,
the exchange agent nor any other person will incur any liability
for failing to give notifications of any defect or irregularity.
Acceptance
of Old Notes for Exchange; Issuance of New Notes
Upon the terms and subject to the conditions of the exchange
offer, we will accept, promptly after the expiration time, all
old notes properly tendered. We will issue the new notes
promptly after acceptance of the old notes. For purposes of an
exchange offer, we will be deemed to have accepted properly
tendered old notes for exchange when, as and if we have given
oral or written notice to the exchange agent, with prompt
written confirmation of any oral notice.
For each old note accepted for exchange, the holder will receive
a new note registered under the Securities Act having a
principal amount equal to that of the surrendered old note.
Under the registration rights agreements, we may be required to
make additional payments in the form of liquidated damages to
the holders of the old notes under circumstances relating to the
timing of the exchange offer.
In all cases, issuance of new notes for old notes will be made
only after timely receipt by the exchange agent of:
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a certificate for the old notes, or a timely book-entry
confirmation of the old notes, into the exchange agents
account at the book-entry transfer facility;
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a properly completed and duly executed letter of transmittal or
an agents message; and
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all other required documents.
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Unaccepted or non-exchanged old notes will be returned without
expense to the tendering holder of the old notes. In the case of
old notes tendered by book-entry transfer in accordance with the
book-entry procedures described above, the non-exchanged old
notes will be credited to an account maintained with DTC as
promptly as practicable after the expiration or termination of
the exchange offer. For each old note accepted for exchange, the
holder of the old note will receive a new note having a
principal amount equal to that of the surrendered old note.
Interest
Payments on the New Notes
The new notes will bear interest from the most recent date to
which interest has been paid on the old notes for which they
were exchanged. Accordingly, registered holders of new notes on
the relevant record date for the first interest payment date
following the completion of the exchange offer will receive
interest accruing from February 15, 2011 or, if interest
has already been paid on the old notes, from the most recent
interest payment date on the old notes. Old notes accepted for
exchange will cease to accrue interest from and after the date
of completion of the exchange offer and will be deemed to have
waived their rights to receive the accrued interest on the old
notes.
Withdrawal
Rights
Tender of old notes may be properly withdrawn at any time before
5:00 p.m., New York City time, on the expiration date of
the exchange offer.
For a withdrawal to be effective with respect to old notes, the
exchange agent must receive a written notice of withdrawal
before the expiration time delivered by hand, overnight by
courier or by mail, at the address indicated under
Exchange Agent or, in the case of
eligible institutions, at the facsimile number, or a properly
transmitted Request Message through DTCs ATOP
system. Any notice of withdrawal must:
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specify the name of the person, referred to as the depositor,
having tendered the old notes to be withdrawn;
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identify the old notes to be withdrawn, including certificate
numbers and principal amount of the old notes;
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contain a statement that the holder is withdrawing its election
to have the old notes exchanged;
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other than a notice transmitted through DTCs ATOP system,
be signed by the holder in the same manner as the original
signature on the letter of transmittal by which the old notes
were tendered, including any required signature guarantees, or
be accompanied by documents of transfer to have the trustee with
respect to the old notes register the transfer of the old notes
in the name of the person withdrawing the tender; and
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specify the name in which the old notes are registered, if
different from that of the depositor.
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If certificates for old notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of
these certificates the withdrawing holder must also submit the
serial numbers of the particular certificates to be withdrawn
and signed notice of withdrawal with signatures guaranteed by an
eligible institution, unless this holder is an eligible
institution. If old notes have been tendered in accordance with
the procedure for book-entry transfer described below, any
notice of withdrawal must specify the name and number of the
account at the book-entry transfer facility to be credited with
the withdrawn old notes.
Any old notes properly withdrawn will be deemed not to have been
validly tendered for exchange. New notes will not be issued in
exchange unless the old notes so withdrawn are validly
re-tendered.
Properly withdrawn old notes may be re-tendered by following the
procedures described under Procedures for
Tendering above at any time at or before the expiration
time.
We will determine all questions as to the validity, form and
eligibility, including time of receipt, of notices of withdrawal.
Conditions
to the Exchange Offer
Notwithstanding any other provisions of the exchange offer, or
any extension of the exchange offer, we will not be required to
accept for exchange, or to exchange, any old notes for any new
notes, and, as described below, may terminate the exchange
offer, whether or not any old notes have been accepted for
exchange, or may waive any conditions to or amend the exchange
offer, if any of the following conditions has occurred or exists:
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there shall occur a change in the current interpretation by the
staff of the SEC which permits the new notes issued pursuant to
the exchange offer in exchange for old notes to be offered for
resale, resold and otherwise transferred by the holders (other
than broker-dealers and any holder which is an affiliate)
without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such new notes
are acquired in the ordinary course of such holders
business and such holders have no arrangement or understanding
with any person to participate in the distribution of the new
notes;
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any action or proceeding shall have been instituted or
threatened in any court or by or before any governmental agency
or body seeking to enjoin, make illegal or delay completion of
the exchange offer or otherwise relating to the exchange offer;
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any law, statute, rule or regulation shall have been adopted or
enacted which, in our judgment, would reasonably be expected to
impair our ability to proceed with such exchange offer;
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a banking moratorium shall have been declared by United States
federal or New York State authorities;
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trading on the New York Stock Exchange or generally in the
United States
over-the-counter
market shall have been suspended, or a limitation on prices for
securities imposed, by order of the SEC or any other
governmental authority;
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an attack on the United States, an outbreak or escalation of
hostilities or acts of terrorism involving the United States, or
any declaration by the United States of a national emergency or
war shall have occurred;
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a stop order shall have been issued by the SEC or any state
securities authority suspending the effectiveness of the
registration statement of which this prospectus is a part or
proceedings shall have been initiated or, to our knowledge,
threatened for that purpose or any governmental approval has not
been obtained, which approval we shall, in our sole discretion,
deem necessary for the consummation of the exchange
offer; or
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any change, or any development involving a prospective change,
in our business or financial affairs or any of our subsidiaries
has occurred which is or may be adverse to us or we shall have
become aware of facts that have or may have an adverse impact on
the value of the old notes or the new notes, which in our sole
judgment in any case makes it inadvisable to proceed with the
exchange offer, with the acceptance of old notes for exchange or
with the exchange of old notes for new notes.
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If we determine in our sole discretion that any of the foregoing
events or conditions has occurred or exists, we may, subject to
applicable law, terminate the exchange offer, whether or not any
old notes have been accepted for exchange, or may waive any such
condition or otherwise amend the terms of the exchange offer in
any respect. Please read Expiration, Extension
and Amendment above.
If any of the above events occur, we may:
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terminate the exchange offer and promptly return all tendered
old notes to tendering holders;
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complete
and/or
extend the exchange offer and, subject to your withdrawal
rights, retain all tendered old notes until the extended
exchange offer expires;
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amend the terms of the exchange offer; or
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waive any unsatisfied condition and, subject to any requirement
to extend the period of time during which the exchange offer is
open, complete the exchange offer.
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We may assert these conditions with respect to the exchange
offer regardless of the circumstances giving rise to them. All
conditions to the exchange offer, other than those dependent
upon receipt of necessary government approvals, must be
satisfied or waived by us before the expiration of the exchange
offer. We may waive any condition in whole or in part at any
time in our reasonable discretion. Our failure to exercise our
rights under any of the above circumstances does not represent a
waiver of these rights. Each right is an ongoing right that may
be asserted at any time. Any determination by us concerning the
conditions described above will be final and binding upon all
parties.
If a waiver constitutes a material change to the exchange offer,
we will promptly disclose the waiver by means of a prospectus
supplement that we will distribute to the registered holders of
the old notes, and we will extend the exchange offer for a
period of five to ten business days, as required by applicable
law, depending upon the significance of the waiver and the
manner of disclosure to the registered holders, if the exchange
offer would otherwise expire during the five to ten business day
period.
Resales
of New Notes
Based on interpretations by the staff of the SEC, as described
in no-action letters issued to third parties that are not
related to us, we believe that new notes issued in the exchange
offer in exchange for old notes may be offered for resale,
resold or otherwise transferred by holders of the new notes
without compliance with the registration and prospectus delivery
provisions of the Securities Act, if:
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the new notes are acquired in the ordinary course of the
holders business;
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the holders have no arrangement or understanding with any person
to participate in the distribution of the new notes;
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the holders are not affiliates of ours or of any of
our subsidiary guarantors within the meaning of Rule 405
under the Securities Act; and
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the holders are not broker-dealers who purchased old notes
directly from us for resale pursuant to Rule 144A or any
other available exemption under the Securities Act.
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However, the SEC has not considered the exchange offer described
in this prospectus in the context of a no-action letter. The
staff of the SEC may not make a similar determination with
respect to the exchange offer as in the other circumstances.
Each holder who wishes to exchange old notes for new notes will
be required to represent that it meets the requirements above.
Any holder who is an affiliate of ours or any of our subsidiary
guarantors or who intends to participate in the exchange offer
for the purpose of distributing new notes or any broker-dealer
who purchased old notes directly from us for resale pursuant to
Rule 144A or any other available exemption under the
Securities Act:
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cannot rely on the applicable interpretations of the staff of
the SEC mentioned above;
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will not be permitted or entitled to tender the old notes in the
exchange offer; and
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must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
transaction.
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Each broker-dealer that receives new notes for its own account
pursuant to the exchange offer must acknowledge by way of letter
of transmittal that it will deliver a prospectus in connection
with any resale of such new notes. The letter of transmittal
states that by so acknowledging and by delivering a prospectus,
such broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the Securities
Act. Please read Plan of Distribution. A
broker-dealer may use this prospectus, as it may be amended or
supplemented from time to time, in connection with the resales
of new notes received in exchange for old notes that the
broker-dealer acquired as a result of market-making or other
trading activities. Any holder that is a broker-dealer
participating in the exchange offer must notify the exchange
agent at the telephone number set forth in the enclosed letter
of transmittal and must comply with the procedures for
broker-dealers participating in the exchange offer. We have not
entered into any arrangement or understanding with any person to
distribute the new notes to be received in the exchange offer.
In addition, to comply with state securities laws, the new notes
may not be offered or sold in any state unless they have been
registered or qualified for sale in such state or an exemption
from registration or qualification, with which there has been
compliance, is available. The offer and sale of the new notes to
qualified institutional buyers, as defined under
Rule 144A of the Securities Act, is generally exempt from
registration or qualification under the state securities laws.
We currently do not intend to register or qualify the sale of
new notes in any state where an exemption from registration or
qualification is required and not available.
Exchange
Agent
Wells Fargo Bank, N.A. has been appointed as the exchange agent
for the exchange offer. All executed letters of transmittal and
any other required documents should be directed to the exchange
agent at the address or facsimile number set forth below.
Questions and requests for assistance, requests for additional
copies of this prospectus or of the letter of transmittal and
requests for notices of guaranteed delivery should be directed
to the exchange agent addressed as follows:
By hand delivery, mail or overnight courier at:
Wells Fargo Bank, National Association
Corporate Trust Operations
608 2nd Ave South
Northstar East Building 12th Floor
Minneapolis, MN 55402
29
By registered and certified mail at:
Wells Fargo Bank, National Association
Corporate Trust Operations
MAC N9303-121
P.O. Box 1517
Minneapolis, MN 55480
By regular mail or overnight courier:
Wells Fargo Bank, National Association
Corporate Trust Operations
MAC N9303-121
Sixth & Marquette Avenue
Minneapolis, MN 55479
or
By facsimile transmission
(for eligible institutions only):
(612) 667-6282
Confirm by telephone:
1-800-344-5128
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL
VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE
A VALID DELIVERY OF THE LETTER OF TRANSMITTAL.
Fees and
Expenses
The expenses of soliciting tenders pursuant to this exchange
offer will be paid by us. We have agreed to pay the exchange
agent reasonable and customary fees for its services and will
reimburse it for its reasonable
out-of-pocket
expenses in connection with the exchange offer. We will also pay
brokerage houses and other custodians, nominees and fiduciaries
the reasonable
out-of-pocket
expenses incurred by them in forwarding copies of this
prospectus and related documents to the beneficial owners of old
notes, and in handling or tendering for their customers. We will
not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer.
Holders who tender their old notes for exchange will not be
obligated to pay any transfer taxes on the exchange. If,
however, new notes are to be delivered to, or are to be issued
in the name of, any person other than the registered holder of
the old notes tendered, or if a transfer tax is imposed for any
reason other than the exchange of old notes in connection with
the exchange offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not
submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
Transfer
Taxes
We will pay all transfer taxes, if any, applicable to the
exchange of old notes under the exchange offer. The tendering
holder, however, will be required to pay any transfer taxes,
whether imposed on the registered holder or any other person, if
a transfer tax is imposed for any reason other than the exchange
of old notes under the exchange offer.
30
Consequences
of Failure to Exchange Outstanding Securities
Holders who desire to tender their old notes in exchange for new
notes registered under the Securities Act should allow
sufficient time to ensure timely delivery. Neither the exchange
agent nor us is under any duty to give notification of defects
or irregularities with respect to the tenders of old notes for
exchange.
Old notes that are not tendered or are tendered but not accepted
will, following the completion of the exchange offer, continue
to be subject to the provisions in the indenture regarding the
transfer and exchange of the old notes and the existing
restrictions on transfer set forth in the legend on the old
notes set forth in the indenture for the notes. Except in
limited circumstances with respect to specific types of holders
of old notes, we will have no further obligation to provide for
the registration under the Securities Act of such old notes. In
general, old notes, unless registered under the Securities Act,
may not be offered or sold except pursuant to an exemption from,
or in a transaction not subject to, the Securities Act and
applicable state securities laws.
We do not currently anticipate that we will take any action to
register the old notes under the Securities Act or under any
state securities laws. Upon completion of the exchange offer,
holders of the old notes will not be entitled to any further
registration rights under the registration rights agreements,
except under limited circumstances.
Holders of the new notes issued in the exchange offer, any old
notes which remain outstanding after completion of the exchange
offer and the previously issued notes will vote together as a
single class for purposes of determining whether holders of the
requisite percentage of the class have taken certain actions or
exercised certain rights under the indenture.
Accounting
Treatment
We will record the new notes at the same carrying value as the
old notes, as reflected in our accounting records on the date of
the exchange. Accordingly, we will not recognize any gain or
loss for accounting purposes. The expenses of the exchange offer
will be amortized over the term of the new notes.
Other
Participation in the exchange offer is voluntary, and you should
consider carefully whether to accept. You are urged to consult
your financial and tax advisors in making your own decision on
what action to take.
31
DESCRIPTION
OF THE NEW NOTES
As used below in this Description of the New Notes
section, the Issuer means Basic Energy Services,
Inc., a Delaware corporation, and its successors, but not any of
its subsidiaries. The Issuer issued the old notes under an
Indenture dated February 15, 2011 (the
Indenture), among the Issuer, the Guarantors and
Wells Fargo Bank, N.A., as trustee (the Trustee). On
February 15, 2011, the Issuer issued $275.0 million in
aggregate principal amount of old notes. On June 13, 2011,
the Issuer issued $200.0 million principal amount of
additional old notes under the Indenture, which are identical to
and treated together with the previously issued old notes as a
single class of debt securities under the Indenture and trade as
a single class of securities. The Issuer will issue the new
notes under the same Indenture, and the new notes will represent
the same debt as the old notes for which they are exchanged.
References to the Notes in this section of the
prospectus are to each of the new notes and the old notes,
unless otherwise specified herein. Furthermore, references in
this section to Issue Date mean February 15,
2011, the date on which the Issuer first issued the old notes
under the Indenture. The terms of the Notes include those set
forth in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. You may obtain a copy
of the Indenture from the Issuer at its address set forth
elsewhere in this prospectus.
The following is a summary of the material terms and provisions
of the Notes. The following summary does not purport to be a
complete description of the Notes and is subject to the detailed
provisions of, and qualified in its entirety by reference to,
the Indenture. You can find definitions of certain terms used in
this description under the heading Certain
Definitions.
Principal,
Maturity and Interest
The Notes will mature on February 15, 2019. The Notes will
bear interest at 7.750% per annum, payable in cash semi-annually
in arrears on February 15 and August 15 of each year, commencing
on August 15, 2011, to Holders of record at the close of
business on February 1 or August 1, as the case may be,
immediately preceding the related interest payment date.
Interest on the Notes will accrue from and including the most
recent date to which interest has been paid or, if no interest
has been paid, from and including February 15, 2011, the
original date of issuance of the old Notes. Interest on the
Notes will be computed on the basis of a
360-day year
of twelve
30-day
months.
If an interest payment date falls on a day that is not a
Business Day, the interest payment to be made on such interest
payment date will be made on the next succeeding Business Day
with the same force and effect as if made on such interest
payment date, and no additional interest will accrue solely as a
result of such delayed payment. Interest on overdue principal
and interest and Liquidated Damages, if any, will accrue at the
applicable interest rate on the Notes.
The Issuer will pay Liquidated Damages to Holders of the Notes
if it fails to complete this exchange offer within 270 days
after February 15, 2011 (the initial issue date of the old
Notes) or if certain other conditions contained in the
Registration Rights Agreement are not satisfied. Any Liquidated
Damages due will be paid on the same dates as interest on the
Notes. All references in the Indenture, in any context, to any
interest or other amount payable on or with respect to the Notes
shall be deemed to include any Liquidated Damages pursuant to
the Registration Rights Agreement.
The new Notes will be issued in registered form, without
coupons, and in denominations of $2,000 and integral multiples
of $1,000 in excess of $2,000.
The aggregate principal amount of new Notes being issued in this
exchange offer is $475.0 million. The Issuer may issue
Additional Notes having identical terms and conditions to the
new Notes being issued in this exchange offer, except for issue
date, issue price and first interest payment date, in an
unlimited aggregate principal amount, subject to compliance with
the covenant described under Certain
Covenants Limitations on Additional
Indebtedness.
32
Methods
of Receiving Payments on the Notes
If a Holder of Notes in certificated form has given wire
transfer instructions to the Issuer at least ten Business Days
prior to the applicable payment date, the Issuer will make all
payments on such Holders Notes by wire transfer of
immediately available funds to the account in the United States
specified in those instructions. Otherwise, payments on the
Notes will be made at the office or agency of the paying agent
(the Paying Agent) and registrar (the
Registrar) for the Notes within the City and State
of New York unless the Issuer elects to make interest payments
by check mailed to the Holders at their addresses set forth in
the register of Holders.
Ranking
The Notes will be general unsecured obligations of the Issuer.
The Notes will rank senior in right of payment to all future
obligations of the Issuer that are, by their terms, expressly
subordinated in right of payment to the Notes and pari passu in
right of payment with all existing and future unsecured
obligations of the Issuer that are not so subordinated. Each
Note Guarantee (as defined below) will be a general unsecured
obligation of the applicable Guarantor and will rank senior in
right of payment to all future obligations of such Guarantor
that are, by their terms, expressly subordinated in right of
payment to such Note Guarantee and pari passu in right of
payment with all existing and future unsecured obligations of
such Guarantor that are not so subordinated.
The Notes and each Note Guarantee will be effectively
subordinated to secured Indebtedness of the Issuer and any
applicable Guarantor to the extent of the value of the assets
securing such Indebtedness. The Credit Agreement is and is
expected to continue to be secured by substantially all of the
assets of the Issuer and its Subsidiaries.
The Notes will also be effectively subordinated to all existing
and future obligations, including Indebtedness, of any
Subsidiaries of the Issuer that do not guarantee the Notes,
including any Unrestricted Subsidiaries. Claims of creditors of
these Subsidiaries, including trade creditors, will generally
have priority as to the assets of these Subsidiaries over the
claims of the Issuer and the holders of the Issuers
Indebtedness, including the Notes. As of June 30, 2011, the
Issuers non-guarantor subsidiaries did not have any
outstanding indebtedness.
As of June 30, 2011, assuming completion of this exchange
offer, the Issuer would have had approximately
$66.2 million of secured indebtedness outstanding under its
capital lease obligations, $21.9 million of secured
indebtedness outstanding under the Credit Agreement and up to
$203.1 million of additional availability under the Credit
Agreement which, if borrowed, would be secured. Although the
Indenture contains limitations on the amount of additional
secured Indebtedness that the Issuer and the Restricted
Subsidiaries may incur, under certain circumstances, the amount
of this Indebtedness could be substantial. See
Certain Covenants Limitations on
Additional Indebtedness and Limitations
on Liens.
Note
Guarantees
The Issuers obligations under the Notes and the Indenture
will be jointly and severally guaranteed (the Note
Guarantees) by each Domestic Restricted Subsidiary that
guarantees any Indebtedness under any Credit Facility and each
other Domestic Restricted Subsidiary that the Issuer shall
otherwise cause to become a Guarantor pursuant to the terms of
the Indenture.
As of the closing of the exchange offer, all of the
Issuers current Subsidiaries will be Domestic
Restricted Subsidiaries and will guarantee the Notes,
other than Robota Energy Equipment, LLC, Basic Energy Services
International, LLC and ESA de Mexico, S. de R.L. de C.V., three
immaterial subsidiaries that have no indebtedness and have not
guaranteed other debt. However, under the circumstances
described below under the subheading Certain
Covenants Limitation on Designation of Unrestricted
Subsidiaries, the
33
Issuer will be permitted to designate any of its Subsidiaries as
Unrestricted Subsidiaries. The effect of designating
a Subsidiary as an Unrestricted Subsidiary will be
that:
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an Unrestricted Subsidiary will not be subject to many of the
restrictive covenants in the Indenture;
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an Unrestricted Subsidiary will not guarantee the Notes;
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a Subsidiary that has previously been a Guarantor and that is
designated an Unrestricted Subsidiary will be released from its
Note Guarantee and its obligations under the Indenture and the
Registration Rights Agreement; and
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the assets, income, cash flow and other financial results of an
Unrestricted Subsidiary will not be consolidated with those of
the Issuer for purposes of calculating compliance with the
restrictive covenants contained in the Indenture.
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The obligations of each Guarantor under its Note Guarantee will
be limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of such Guarantor
(including, without limitation, any guarantees under the Credit
Agreement) and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect
of the obligations of such other Guarantor under its Note
Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Guarantor under its
Note Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Nonetheless, in
the event of the bankruptcy or financial difficulty of a
Guarantor, such Guarantors obligations under its Note
Guarantee may be subject to review and avoidance under state and
federal fraudulent transfer laws. Among other things, such
obligations may be avoided if a court concludes that such
obligations were incurred for less than a reasonably equivalent
value or fair consideration at a time when the Guarantor was
insolvent, was rendered insolvent, or was left with inadequate
capital to conduct its business. A court would likely conclude
that a Guarantor did not receive reasonably equivalent value or
fair consideration to the extent that the aggregate amount of
its liability on its Note Guarantee exceeds the economic
benefits it receives from the issuance of the Note Guarantee.
See Risk Factors Risks Relating to the
Exchange Offer and the New Notes Federal and state
statutes may allow courts, under specific circumstances, to void
the guarantees and require noteholders to return payments
received from guarantors.
A Subsidiary Guarantor will be released from its obligations
under its Note Guarantee and its obligations under the Indenture
and the Registration Rights Agreement:
(1) in the event of a sale or other disposition of all or
substantially all of the assets of such Subsidiary Guarantor, by
way of merger, consolidation or otherwise, or a sale or other
disposition of all of the Equity Interests of such Subsidiary
Guarantor then held by the Issuer and the Restricted
Subsidiaries; or
(2) if such Subsidiary Guarantor is designated as an
Unrestricted Subsidiary or otherwise ceases to be a Restricted
Subsidiary, in each case in accordance with the provisions of
the Indenture, upon effectiveness of such designation or when it
first ceases to be a Restricted Subsidiary, respectively.
Optional
Redemption
General
At any time or from time to time on or after February 15,
2015, the Issuer, at its option, may redeem the Notes, in whole
or in part, at the redemption prices (expressed as percentages
of principal amount) set forth below, together with accrued and
unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, if redeemed during the
12-month
period beginning February 15 of the years indicated:
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Year
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Optional Redemption Price
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2015
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103.875
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%
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2016
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101.938
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%
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2017 and thereafter
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100.000
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%
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Redemption
with Proceeds from Equity Offerings
At any time or from time to time prior to February 15,
2014, the Issuer, at its option, may on any one or more
occasions redeem Notes issued under the Indenture with the net
cash proceeds of one or more Qualified Equity Offerings at a
redemption price equal to 107.750% of the principal amount of
the Notes to be redeemed, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of redemption,
provided that:
(1) at least 65% of the aggregate principal amount of Notes
issued under the Indenture remains outstanding immediately after
giving effect to any such redemption; and
(2) the redemption occurs not more than 90 days after
the date of the closing of any such Qualified Equity Offering.
Redemption
at Applicable Premium
The Notes may also be redeemed, in whole or in part, at any time
prior to February 15, 2015 at the option of the Issuer upon
not less than 30 nor more than 60 days prior notice
mailed by first-class mail to each holder of Notes at its
registered address, at a redemption price equal to 100% of the
principal amount of the Notes redeemed plus the Applicable
Premium as of, and accrued and unpaid interest and Liquidated
Damages, if any, to, the applicable redemption date (subject to
the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
Applicable Premium means, with respect to any Note
on any applicable redemption date, the greater of:
(1) 1.0% of the principal amount of such Note; and
(2) the excess, if any, of:
(a) the present value at such redemption date of
(i) the redemption price of such Note at February 15,
2015 (such redemption price being set forth in the table
appearing above under the caption Optional
Redemption General) plus (ii) all
required interest payments (excluding accrued and unpaid
interest to such redemption date) due on such Note through
February 15, 2015, computed using a discount rate equal to
the Treasury Rate as of such redemption date plus 50 basis
points; over
(b) the principal amount of such Note.
Treasury Rate means, as of any redemption
date, the yield to maturity at the time of computation of United
States Treasury securities with a constant maturity (as compiled
and published in the most recent Federal Reserve Statistical
Release H.15 (519) which has become publicly available at
least two Business Days prior to the redemption date (or, if
such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to
the period from the redemption date to February 15, 2015;
provided, however, that if the period from the redemption date
to February 15, 2015 is not equal to the constant maturity
of a United States Treasury security for which a weekly average
yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the
period from the redemption date to February 15, 2015 is
less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant
maturity of one year shall be used. The Issuer will
(1) calculate the Treasury Rate on the third business day
preceding the applicable redemption date and (2) prior to
such redemption date file with the Trustee an officers
certificate setting forth the Applicable Premium and the
Treasury Rate and showing the calculation of each in reasonable
detail.
The Issuer may acquire Notes by means other than a redemption,
whether pursuant to an issuer tender offer, open market purchase
or otherwise, so long as the acquisition does not otherwise
violate the terms of the Indenture.
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Selection
and Notice of Redemption
In the event that less than all of the Notes are to be redeemed
at any time pursuant to an optional redemption, the Trustee will
select the Notes for redemption in compliance with the
requirements of the principal national securities exchange, if
any, on which the Notes are listed or, if the Notes are not then
listed on a national security exchange, on a pro rata basis (or
in case of Global Notes, on as nearly a pro rata basis as is
practicable, subject to the procedures of DTC or any other
depository), by lot or by such method as the Trustee shall deem
fair and appropriate; provided, however, that no Notes of a
principal amount of $1,000 or less shall be redeemed in part. In
addition, if a partial redemption is made pursuant to the
provisions described under Optional
Redemption Redemption with Proceeds from Equity
Offerings, selection of the Notes or portions thereof for
redemption shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rata basis as is practicable (subject to
the procedures of The Depository Trust Company
(DTC)), unless that method is otherwise prohibited.
Notice of redemption will be mailed by first-class mail at least
30, but not more than 60, days before the date of redemption to
each Holder of Notes to be redeemed at its registered address,
except that redemption notices may be mailed more than
60 days prior to a redemption date if the notice is issued
in connection with a satisfaction and discharge of the
Indenture. If any Note is to be redeemed in part only, the
notice of redemption that relates to that Note will state the
portion of the principal amount of the Note to be redeemed. A
new Note in a principal amount equal to the unredeemed portion
of the Note will be issued in the name of the Holder of the Note
upon cancellation of the original Note. On and after the
applicable date of redemption, interest will cease to accrue on
Notes or portions thereof called for redemption so long as the
Issuer has deposited with the paying agent for the Notes funds
in satisfaction of the applicable redemption price (including
accrued and unpaid interest on the Notes to be redeemed)
pursuant to the Indenture.
Change of
Control
Upon the occurrence of any Change of Control, unless the Issuer
has previously or concurrently exercised its right to redeem all
of the Notes as described under Optional
Redemption, each Holder will have the right to require
that the Issuer purchase all or any portion (equal to $1,000 or
an integral multiple thereof) of that Holders Notes for a
cash price (the Change of Control Purchase Price)
equal to 101% of the principal amount of the Notes to be
purchased, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase.
Within 30 days following any Change of Control, the Issuer
will mail, or caused to be mailed, to the Holders, with a copy
to the Trustee, a notice:
(1) describing the transaction or transactions that
constitute the Change of Control;
(2) offering to purchase, pursuant to the procedures
required by the Indenture and described in the notice (a
Change of Control Offer), on a date specified in the
notice (which shall be a Business Day not earlier than
30 days, nor later than 60 days, from the date the
notice is mailed) and for the Change of Control Purchase Price,
all Notes properly tendered by such Holder pursuant to such
Change of Control Offer; and
(3) describing the procedures, as determined by the Issuer,
that Holders must follow to accept the Change of Control Offer.
A Change of Control Offer will be required to remain open for at
least 20 Business Days or for such longer period as is required
by law. The Issuer will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the
date of purchase.
If a Change of Control Offer is made, there can be no assurance
that the Issuer will have available funds sufficient to pay for
all or any of the Notes that might be delivered by Holders
seeking to accept the Change of Control Offer. In addition, the
Issuer cannot assure you that in the event of a Change of
Control the Issuer will be able to obtain the consents necessary
to consummate a Change of Control Offer from the lenders under
agreements governing outstanding Indebtedness which may prohibit
the offer.
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The provisions described above that require the Issuer to make a
Change of Control Offer following a Change of Control will be
applicable regardless of whether any other provisions of the
Indenture are applicable to the transaction giving rise to the
Change of Control. Except as described above with respect to a
Change of Control, the Indenture does not contain provisions
that permit the Holders of the Notes to require that the Issuer
purchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The Issuers obligation to make a Change of Control Offer
will be satisfied if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in the Indenture applicable to a
Change of Control Offer made by the Issuer and purchases all
Notes properly tendered and not withdrawn under such Change of
Control Offer.
With respect to any disposition of assets, the phrase all
or substantially all as used in the Indenture (including
as set forth under the definition of Change of
Control and Certain
Covenants Limitations on Mergers, Consolidations,
Etc. below) varies according to the facts and
circumstances of the subject transaction, has no clearly
established meaning under New York law (which governs the
Indenture) and is subject to judicial interpretation.
Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction
would involve a disposition of all or substantially
all of the assets of the Issuer, and therefore it may be
unclear as to whether a Change of Control has occurred and
whether the Holders have the right to require the Issuer to
purchase Notes.
The Issuer will comply with applicable tender offer rules,
including the requirements of
Rule 14e-1
under the Exchange Act and any other applicable laws and
regulations in connection with the purchase of Notes pursuant to
a Change of Control Offer. To the extent that the provisions of
any securities laws or regulations conflict with the
Change of Control provisions of the Indenture, the
Issuer will comply with the applicable securities laws and
regulations and will not be deemed to have breached its
obligations under the Change of Control provisions
of the Indenture by virtue of this compliance.
The provisions under the Indenture relating to the Issuers
obligation to make a Change of Control Offer may be waived,
modified or terminated prior to the occurrence of the triggering
Change of Control with the written consent of the Holders of a
majority in principal amount of the Notes then outstanding.
Notwithstanding anything to the contrary herein, a Change of
Control Offer may be made in advance of a Change of Control,
conditional upon such Change of Control, if a definitive
agreement is in place for the Change of Control at the time of
making of the Change of Control Offer.
Certain
Covenants
Covenant
Suspension
During any period of time that the Notes have a Moodys
rating of Baa3 or higher or an S&P rating of BBB- or higher
(each, an Investment Grade Rating) and no Default
has occurred and is then continuing, the Issuer and the
Restricted Subsidiaries will not be subject to the following
covenants:
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Change of Control;
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Certain Covenants Limitations on
Additional Indebtedness;
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Certain Covenants Limitations on
Layering Indebtedness;
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Certain Covenants Limitations on
Restricted Payments;
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Certain Covenants Limitations on
Dividend and Other Restrictions Affecting Restricted
Subsidiaries;
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Certain Covenants Limitations on
Transactions with Affiliates;
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Certain Covenants Limitations on
Asset Sales;
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clause (3) of the covenant described under
Certain Covenants Limitations on
Mergers, Consolidations, Etc.;
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Certain Covenants Additional Note
Guarantees; and
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Certain Covenants Conduct of
Business
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(collectively, the Suspended Covenants). In the
event that the Issuer and the Restricted Subsidiaries are not
subject to the Suspended Covenants for any period of time as a
result of the preceding sentence and, subsequently, one or both
of the Rating Agencies, as applicable, withdraws its ratings or
downgrades the ratings assigned to the Notes such that the Notes
do not have an Investment Grade Rating, then the Issuer and the
Restricted Subsidiaries will thereafter again be subject to the
Suspended Covenants, it being understood that no actions taken
by (or omissions of) the Issuer or any of its Restricted
Subsidiaries during the suspension period shall constitute a
Default or an Event of Default under the Suspended Covenants.
Furthermore, after the time of reinstatement of the Suspended
Covenants upon such withdrawal or downgrade, calculations with
respect to Restricted Payments will be made in accordance with
the terms of the covenant described below under
Certain Covenants Limitations on
Restricted Payments as though such covenant had been in
effect during the entire period of time from the Issue Date.
Limitations
on Additional Indebtedness
The Issuer will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, incur any Indebtedness;
provided that the Issuer or any Guarantor may incur additional
Indebtedness and any Restricted Subsidiary may incur Acquired
Indebtedness, in each case, if, after giving effect thereto, the
Consolidated Interest Coverage Ratio would be at least 2.00 to
1.00 (the Coverage Ratio Exception); provided,
however, that Acquired Indebtedness shall not exceed an
aggregate principal amount of $20.0 million at any time
outstanding.
Notwithstanding the above, each of the following shall be
permitted (the Permitted Indebtedness):
(1) Indebtedness of the Issuer and any Guarantor under the
Credit Facilities in an aggregate amount at any time outstanding
not to exceed (a) the greater of
(i) $250.0 million and (ii) 20.0% of the
Issuers Consolidated Tangible Assets, minus (b) to
the extent a permanent repayment
and/or
commitment reduction is required thereunder as a result of such
application, the aggregate amount of Net Available Proceeds
applied to repayments under the Credit Facilities in accordance
with the covenant described under Limitations
on Asset Sales;
(2) Indebtedness under (a) the old Notes and the old
Note Guarantees issued on the Issue Date and (b) the
Exchange Notes and the Note Guarantees in respect thereof to be
issued pursuant to the Registration Rights Agreement;
(3) Indebtedness of the Issuer and the Restricted
Subsidiaries to the extent outstanding on the Issue Date after
giving effect to the intended use of proceeds of the old Notes
(other than Indebtedness referred to in clause (1), (2) or
(5));
(4) Indebtedness under Hedging Obligations entered into for
bona fide hedging purposes of the Issuer or any Restricted
Subsidiary not for the purpose of speculation; provided that in
the case of Hedging Obligations relating to interest rates,
(a) such Hedging Obligations relate to payment obligations
on Indebtedness otherwise permitted to be incurred by this
covenant, and (b) the notional principal amount of such
Hedging Obligations at the time incurred does not exceed the
principal amount of the Indebtedness to which such Hedging
Obligations relate;
(5) Indebtedness of the Issuer owed to a Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary owed to
the Issuer or any other Restricted Subsidiary; provided,
however, that upon any such Restricted Subsidiary ceasing to be
a Restricted Subsidiary or such Indebtedness being owed to any
Person other than the Issuer or a Restricted Subsidiary, the
Issuer or such Restricted Subsidiary, as applicable, shall be
deemed to have incurred Indebtedness not permitted by this
clause (5);
(6) Indebtedness in respect of (a) self-insurance
obligations or completion, bid, performance, appeal or surety
bonds issued for the account of the Issuer or any Restricted
Subsidiary in the ordinary course of business, including
guarantees or obligations of the Issuer or any Restricted
Subsidiary with respect to
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letters of credit supporting such self-insurance, completion,
bid, performance, appeal or surety obligations (in each case
other than for an obligation for money borrowed) or
(b) obligations represented by letters of credit for the
account of the Issuer or any Restricted Subsidiary, as the case
may be, in order to provide security for workers
compensation claims;
(7) Purchase Money Indebtedness incurred by the Issuer or
any Restricted Subsidiary after the Issue Date, and Refinancing
Indebtedness thereof, in an aggregate principal amount not to
exceed at any time outstanding the greater of
(a) $50.0 million or (b) 15.0% of the
Issuers Consolidated Tangible Assets;
(8) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar
instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is
extinguished within five Business Days of incurrence;
(9) Indebtedness arising in connection with endorsement of
instruments for deposit in the ordinary course of business;
(10) Refinancing Indebtedness with respect to Indebtedness
incurred pursuant to the Coverage Ratio Exception or
clause (2) or (3) above or this clause (10);
(11) indemnification, adjustment of purchase price,
earn-out or similar obligations (including without limitation
any Earn Out Obligations), in each case, incurred or assumed in
connection with the acquisition or disposition of any business
or assets of the Issuer or any Restricted Subsidiary or Equity
Interests of a Restricted Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or Equity Interests for the purpose of
financing or in contemplation of any such acquisition; provided
that (a) any amount of such obligations included on the
face of the balance sheet of the Issuer or any Restricted
Subsidiary shall not be permitted under this clause (11)
and (b) in the case of a disposition, the maximum aggregate
liability in respect of all such obligations outstanding under
this clause (11) shall at no time exceed the gross proceeds
actually received by the Issuer and the Restricted Subsidiaries
in connection with such disposition;
(12) Contingent Obligations of the Issuer and the
Guarantors in respect of Indebtedness otherwise permitted under
this covenant;
(13) Indebtedness of Foreign Restricted Subsidiaries in an
aggregate amount outstanding at any one time not to exceed 10%
of such Foreign Restricted Subsidiaries Consolidated
Tangible Assets; and
(14) additional Indebtedness of the Issuer or any
Restricted Subsidiary in an aggregate principal amount not to
exceed $40.0 million at any time outstanding.
For purposes of determining compliance with this covenant, in
the event that an item of Indebtedness meets the criteria of
more than one of the categories of Permitted Indebtedness
described in clauses (1) through (14) above or is
entitled to be incurred pursuant to the Coverage Ratio
Exception, the Issuer shall, in its sole discretion, classify
such item of Indebtedness and may divide and classify such
Indebtedness in more than one of the types of Indebtedness
described, except that Indebtedness incurred under the Credit
Facilities on the Issue Date shall be deemed to have been
incurred under clause (1) above, and may later reclassify
any item of Indebtedness described in clauses (1) through
(14) above (provided that at the time of reclassification
it meets the criteria in such category or categories). In
addition, for purposes of determining any particular amount of
Indebtedness under this covenant, guarantees, Liens or letter of
credit obligations supporting Indebtedness otherwise included in
the determination of such particular amount shall not be
included so long as incurred by a Person that could have
incurred such Indebtedness.
Limitations
on Layering Indebtedness
The Issuer will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, incur any Indebtedness
that is or purports to be by its terms (or by the terms of any
agreement governing such Indebtedness) subordinated to any other
Indebtedness of the Issuer or of such Restricted Subsidiary, as
the case may be, unless such Indebtedness is also by its terms
(or by the terms of any agreement governing such
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Indebtedness) made expressly subordinate to the Notes or the
Note Guarantee of such Restricted Subsidiary, to the same extent
and in the same manner as such Indebtedness is subordinated to
such other Indebtedness of the Issuer or such Restricted
Subsidiary, as the case may be.
For purposes of the foregoing, no Indebtedness will be deemed to
be subordinated in right of payment to any other Indebtedness of
the Issuer or any Restricted Subsidiary solely by virtue of
being unsecured or secured by a Permitted Lien or by virtue of
the fact that the holders of such Indebtedness have entered into
intercreditor agreements or other arrangements giving one or
more of such holders priority over the other holders in the
collateral held by them.
Limitations
on Restricted Payments
The Issuer will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, make any Restricted
Payment if at the time of such Restricted Payment:
(1) a Default shall have occurred and be continuing or
shall occur as a consequence thereof;
(2) the Issuer is not able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness)
pursuant to the Coverage Ratio Exception; or
(3) the amount of such Restricted Payment, when added to
the aggregate amount of all other Restricted Payments made after
the Issue Date (other than Restricted Payments made pursuant to
clauses (2), (3), (4) or (5) of the next paragraph),
exceeds the sum (the Restricted Payments Basket) of
(without duplication):
(a) 50% of Consolidated Net Income for the period (taken as
one accounting period) commencing on the first day of the fiscal
quarter in which the Issue Date occurred to and including the
last day of the fiscal quarter ended immediately prior to the
date of such calculation for which consolidated financial
statements are available (or, if such Consolidated Net Income
shall be a deficit, minus 100% of such deficit), plus
(b) 100% of (A) (i) the aggregate net cash proceeds
and (ii) the Fair Market Value of (x) marketable
securities (other than marketable securities of the Issuer),
(y) Equity Interests of a Person (other than the Issuer or
an Affiliate of the Issuer) engaged in a Permitted Business and
(z) other assets used in any Permitted Business, in the
case of clauses (i) and (ii), received by the Issuer since
the Issue Date as a contribution to its common equity capital or
from the issue or sale of Qualified Equity Interests of the
Issuer or from the issue or sale of convertible or exchangeable
Disqualified Equity Interests or convertible or exchangeable
debt securities of the Issuer that have been converted into or
exchanged for such Qualified Equity Interests (other than Equity
Interests or debt securities sold to a Subsidiary of the
Issuer), and (B) the aggregate net cash proceeds, if any,
received by the Issuer or any of its Restricted Subsidiaries
upon any conversion or exchange described in clause (A)
above, plus
(c) 100% of (A) the aggregate amount by which
Indebtedness (other than any Subordinated Indebtedness) of the
Issuer or any Restricted Subsidiary is reduced on the
Issuers consolidated balance sheet upon the conversion or
exchange after the Issue Date of any such Indebtedness into or
for Qualified Equity Interests of the Issuer and (B) the
aggregate net cash proceeds, if any, received by the Issuer or
any of its Restricted Subsidiaries upon any conversion or
exchange described in clause (A) above, plus
(d) in the case of the disposition or repayment of or
return on any Investment that was treated as a Restricted
Payment made after the Issue Date, an amount (to the extent not
included in the computation of Consolidated Net Income) equal to
the lesser of (i) 100% of the aggregate amount received by
the Issuer or any Restricted Subsidiary in cash or other
property (valued at the Fair Market Value thereof) as the return
of capital with respect to such Investment and (ii) the
amount of such Investment that was treated as a Restricted
Payment, in either case, less the cost of the disposition of
such Investment and net of taxes, plus
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(e) upon a Redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary, the lesser of (i) the Fair Market
Value of the Issuers proportionate interest in such
Subsidiary immediately following such Redesignation, and
(ii) the aggregate amount of the Issuers Investments
in such Subsidiary to the extent such Investments reduced the
Restricted Payments Basket and were not previously repaid or
otherwise reduced.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph will not prohibit:
(1) the payment of (a) any dividend or redemption
payment or the making of any distribution within 60 days
after the date of declaration thereof if, on the date of
declaration, the dividend, redemption or distribution payment,
as the case may be, would have complied with the provisions of
the Indenture or (b) any dividend or similar distribution
by a Restricted Subsidiary of the Issuer to the holders of its
Equity Interests on a pro rata basis;
(2) the redemption or acquisition of any Equity Interests
of the Issuer or any Restricted Subsidiary in exchange for, or
out of the proceeds of the substantially concurrent issuance and
sale of, Qualified Equity Interests;
(3) the purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value of Subordinated
Indebtedness of the Issuer or any Restricted Subsidiary
(a) in exchange for, or out of the proceeds of the
substantially concurrent issuance and sale of, Qualified Equity
Interests, (b) in exchange for, or out of the proceeds of
the substantially concurrent incurrence of, Refinancing
Indebtedness permitted to be incurred under the
Limitations on Additional Indebtedness covenant and
the other terms of the Indenture or (c) upon a Change of
Control or in connection with an Asset Sale to the extent
required by the agreement governing such Subordinated
Indebtedness but only if the Issuer shall have complied with the
covenants described under Change of
Control and Limitations on Asset
Sales and purchased all Notes validly tendered pursuant to
the relevant offer prior to redeeming such Subordinated
Indebtedness;
(4) the redemption, repurchase or other acquisition or
retirement for value of Equity Interests of the Issuer held by
officers, directors or employees or former officers, directors
or employees (or their transferees, estates or beneficiaries
under their estates), either (x) upon any such
individuals death, disability, retirement, severance or
termination of employment or service or (y) pursuant to any
equity subscription agreement, stock option agreement,
stockholders agreement or similar agreement; provided, in
any case, that the aggregate cash consideration paid for all
such redemptions, repurchases or other acquisitions or
retirements shall not exceed (A) $5.0 million during
any calendar year (with unused amounts in any calendar year
being carried forward to the next succeeding calendar year) plus
(B) the amount of any net cash proceeds received by or
contributed to the Issuer from the issuance and sale after the
Issue Date of Qualified Equity Interests of the Issuer to its
officers, directors or employees that have not been applied to
the payment of Restricted Payments pursuant to this clause (4),
plus (C) the net cash proceeds of any key-man
life insurance policies that have not been applied to the
payment of Restricted Payments pursuant to this clause (4);
(5) (a) repurchases, redemptions or other acquisitions
or retirements for value of Equity Interests deemed to occur
upon the exercise of stock options, warrants, rights to acquire
Equity Interests or other convertible securities to the extent
such Equity Interests represent a portion of the exercise or
exchange price thereof and (b) any repurchases, redemptions
or other acquisitions or retirements for value of Equity
Interests made in lieu of withholding taxes in connection with
any exercise or exchange of stock options, warrants or other
similar rights;
(6) dividends on Preferred Stock or Disqualified Equity
Interests issued in compliance with the covenant
Limitations on Additional Indebtedness
to the extent such dividends are included in the definition of
Consolidated Interest Expense;
(7) the payment of cash in lieu of fractional Equity
Interests;
41
(8) payments or distributions to dissenting stockholders
pursuant to applicable law in connection with a merger,
consolidation or transfer of assets that complies with the
provisions described under the caption
Covenants Limitations on Mergers,
Consolidations, Etc.; or
(9) payment of other Restricted Payments from time to time
in an aggregate amount not to exceed $15.0 million in any
fiscal year;
provided that (a) in the case of any Restricted Payment
pursuant to clauses (3), (4) or (9) above, no Default
shall have occurred and be continuing or occur as a consequence
thereof and (b) no issuance and sale of Qualified Equity
Interests used to make a payment pursuant to clauses (2),
(3) or (4)(B) above shall increase the Restricted Payments
Basket.
Limitations
on Dividend and Other Restrictions Affecting Restricted
Subsidiaries
The Issuer will not, and will not permit any Restricted
Subsidiary to create or otherwise cause or permit to exist or
become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary to:
(a) pay dividends or make any other distributions on or in
respect of its Equity Interests;
(b) make loans or advances, or pay any Indebtedness or
other obligation owed, to the Issuer or any other Restricted
Subsidiary; or
(c) transfer any of its assets to the Issuer or any other
Restricted Subsidiary;
except for:
(1) encumbrances or restrictions existing under or by
reason of applicable law, regulation or order;
(2) encumbrances or restrictions existing under the
Indenture, the Notes and the Note Guarantees;
(3) non-assignment provisions of any contract or any lease
entered into in the ordinary course of business;
(4) encumbrances or restrictions existing under agreements
existing on the date of the Indenture (including, without
limitation, the Credit Facilities) as in effect on that date;
(5) restrictions relating to any Lien permitted under the
Indenture imposed by the holder of such Lien;
(6) restrictions imposed under any agreement to sell Equity
Interests or assets, as permitted under the Indenture, to any
Person pending the closing of such sale;
(7) any instrument governing Acquired Indebtedness or
Equity Interests of a Person acquired by the Issuer or any of
its Restricted Subsidiaries, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any
Person, other than the Person or the properties or assets of the
Person so acquired;
(8) any other agreement governing Indebtedness entered into
after the Issue Date that contains encumbrances and restrictions
that are not materially more restrictive with respect to any
Restricted Subsidiary than those in effect on the Issue Date
with respect to that Restricted Subsidiary pursuant to
agreements in effect on the Issue Date;
(9) customary provisions in partnership agreements, limited
liability company organizational governance documents, joint
venture agreements and other similar agreements entered into in
the ordinary course of business that restrict the transfer of
ownership interests in such partnership, limited liability
company, joint venture or similar Person;
(10) Purchase Money Indebtedness incurred in compliance
with the covenant described under Limitations
on Additional Indebtedness that imposes restrictions of
the nature described in clause (c) above on the assets
acquired;
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(11) restrictions on cash or other deposits or net worth
imposed by customers, suppliers or landlords under contracts
entered into in the ordinary course of business;
(12) Indebtedness incurred or Equity Interests issued by
any Restricted Subsidiary, provided that the restrictions
contained in the agreements or instruments governing such
Indebtedness or Equity Interests (a) either (i) apply
only in the event of a payment default or a default with respect
to a financial covenant in such agreement or instrument or
(ii) will not materially affect the Issuers ability
to pay all principal, interest and premium and Liquidated
Damages, if any, on the Notes, as determined in good faith by
the Chief Executive Officer and the Chief Financial Officer of
the Issuer, whose determination shall be conclusive; and
(b) are not materially more disadvantageous to the Holders
of the Notes than is customary in comparable financings (as
determined by the Chief Financial Officer of the Issuer, whose
determination shall be conclusive); and
(13) any encumbrances or restrictions imposed by any
amendments or refinancings of the contracts, instruments or
obligations referred to in clauses (1) through
(12) above; provided that such amendments or refinancings
are, in the good faith judgment of the Issuers Board of
Directors, no more materially restrictive with respect to such
encumbrances and restrictions than those prior to such amendment
or refinancing.
Limitations
on Transactions with Affiliates
The Issuer will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, in one transaction or a
series of related transactions, sell, lease, transfer or
otherwise dispose of any of its assets to, or purchase any
assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (an Affiliate
Transaction), unless:
(1) such Affiliate Transaction is on terms that are no less
favorable to the Issuer or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable
transaction at such time on an arms-length basis by the
Issuer or that Restricted Subsidiary from a Person that is not
an Affiliate of the Issuer or that Restricted
Subsidiary; and
(2) the Issuer delivers to the Trustee, with respect to any
Affiliate Transaction involving aggregate value in excess of
$5.0 million, an Officers Certificate certifying that
such Affiliate Transaction complies with clause (1) above
and a Secretarys Certificate which sets forth and
authenticates a resolution that has been adopted by the
Independent Directors approving such Affiliate Transaction and
determining that the above requirements are met.
The foregoing restrictions shall not apply to:
(1) transactions exclusively between or among (a) the
Issuer and one or more Restricted Subsidiaries or
(b) Restricted Subsidiaries;
(2) reasonable director, officer and employee compensation
(including bonuses) and other benefits (including pursuant to
any employment agreement or any retirement, health, stock option
or other benefit plan) and indemnification arrangements, in each
case, as determined in good faith by the Issuers Board of
Directors or senior management;
(3) the entering into of a tax sharing agreement, or
payments pursuant thereto, between the Issuer
and/or one
or more Subsidiaries, on the one hand, and any other Person with
which the Issuer or such Subsidiaries are required or permitted
to file a consolidated tax return or with which the Issuer or
such Subsidiaries are part of a consolidated group for tax
purposes to be used by such Person to pay taxes, and which
payments by the Issuer and the Restricted Subsidiaries are not
in excess of the tax liabilities that would have been payable by
them on a stand-alone basis;
(4) scheduled payments of Earn Out Obligations of
$5.0 million in any fiscal year of the Issuer;
(5) any Permitted Investments;
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(6) any Restricted Payments which are made in accordance
with the covenant described under Limitations
on Restricted Payments;
(7) (x) any agreement in effect on the Issue Date, as
in effect on the Issue Date or as thereafter amended or replaced
in any manner that, taken as a whole, is not more
disadvantageous to the Holders or the Issuer in any material
respect than such agreement as it was in effect on the Issue
Date or (y) any transaction pursuant to any agreement
referred to in the immediately preceding clause (x);
(8) any transaction with a Person (other than an
Unrestricted Subsidiary of the Issuer) which would constitute an
Affiliate of the Issuer solely because the Issuer or a
Restricted Subsidiary owns an equity interest in or otherwise
controls such Person; and
(9) (a) any transaction with an Affiliate where the
only consideration paid by the Issuer or any Restricted
Subsidiary is Qualified Equity Interests or (b) the
issuance or sale of any Qualified Equity Interests.
Limitations
on Liens
The Issuer shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Lien (other than Permitted Liens)
of any nature whatsoever against any assets of the Issuer or any
Restricted Subsidiary (including Equity Interests of a
Restricted Subsidiary), whether owned at the Issue Date or
thereafter acquired, which Lien secures Indebtedness or trade
payables, unless contemporaneously therewith:
(1) in the case of any Lien securing an obligation that
ranks pari passu with the Notes or a Note Guarantee, effective
provision is made to secure the Notes or such Note Guarantee, as
the case may be, at least equally and ratably with or prior to
such obligation with a Lien on the same collateral; and
(2) in the case of any Lien securing an obligation that is
subordinated in right of payment to the Notes or a Note
Guarantee, effective provision is made to secure the Notes or
such Note Guarantee, as the case may be, with a Lien on the same
collateral that is prior to the Lien securing such subordinated
obligation, in each case, for so long as such obligation is
secured by such Lien.
Limitations
on Asset Sales
The Issuer will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Sale
unless:
(1) the Issuer or such Restricted Subsidiary receives
consideration at the time of such Asset Sale at least equal to
the Fair Market Value of the assets included in such Asset
Sale; and
(2) at least 75% of the total consideration in such Asset
Sale consists of cash or Cash Equivalents.
For purposes of clause (2), the following shall be deemed to be
cash:
(a) the amount (without duplication) of any Indebtedness
(other than Subordinated Indebtedness) of the Issuer or such
Restricted Subsidiary that is expressly assumed by the
transferee of any such assets pursuant to (i) a written
novation agreement that releases the Issuer or such Restricted
Subsidiary from further liability therefor or (ii) an
assignment agreement that includes, in lieu of such a release,
the agreement of the transferee or its parent company to
indemnify and hold harmless the Issuer or such Restricted
Subsidiary from and against any loss, liability or cost in
respect of such assumed liability,
(b) the amount of any obligations received from such
transferee that are within 30 days after such Asset Sale
converted by the Issuer or such Restricted Subsidiary into cash
(to the extent of the cash actually so received), and
(c) the Fair Market Value of (i) any assets (other
than securities) received by the Issuer or any Restricted
Subsidiary to be used by it in a Permitted Business,
(ii) Equity Interests in a Person that is a Restricted
Subsidiary or in a Person engaged in a Permitted Business that
shall become a Restricted
44
Subsidiary immediately upon the acquisition of such Person by
the Issuer or (iii) a combination of (i) and (ii).
If at any time any non-cash consideration received by the Issuer
or any Restricted Subsidiary, as the case may be, in connection
with any Asset Sale is repaid or converted into or sold or
otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then the date
of such repayment, conversion or disposition shall be deemed to
constitute the date of an Asset Sale hereunder and the Net
Available Proceeds thereof shall be applied in accordance with
this covenant.
Any Asset Sale pursuant to a condemnation, appropriation or
other similar taking, including by deed in lieu of condemnation,
or pursuant to the foreclosure or other enforcement of a
Permitted Lien or exercise by the related lienholder of rights
with respect thereto, including by deed or assignment in lieu of
foreclosure shall not be required to satisfy the conditions set
forth in clauses (1) and (2) of the first paragraph of
this covenant.
Notwithstanding the foregoing, the 75% limitation referred to
above shall be deemed satisfied with respect to any Asset Sale
in which the cash or Cash Equivalents portion of the
consideration received therefrom, determined in accordance with
the foregoing provision on an after-tax basis, is equal to or
greater than what the after-tax proceeds would have been had
such Asset Sale complied with the aforementioned 75% limitation.
If the Issuer or any Restricted Subsidiary engages in an Asset
Sale, the Issuer or such Restricted Subsidiary shall, no later
than 365 days following the consummation thereof, apply all
or any of the Net Available Proceeds therefrom to:
(1) satisfy all mandatory repayment obligations under the
Credit Agreement arising by reason of such Asset Sale, and in
the case of any such repayment under any revolving credit
facility, effect a permanent reduction in the availability under
such revolving credit facility;
(2) repay any Indebtedness which was secured by the assets
sold in such Asset Sale;
(3) (A) make any capital expenditure or otherwise
invest all or any part of the Net Available Proceeds thereof in
the purchase of assets (other than securities) to be used by the
Issuer or any Restricted Subsidiary in the Permitted Business,
(B) acquire Qualified Equity Interests in a Person that is
a Restricted Subsidiary or in a Person engaged in a Permitted
Business that shall become a Restricted Subsidiary immediately
upon the consummation of such acquisition or (C) a
combination of (A) and (B); and/or
(4) make a Net Proceeds Offer (and purchase or redeem Pari
Passu Indebtedness) in accordance with the procedures described
below and in the Indenture.
The amount of Net Available Proceeds not applied or invested as
provided in the preceding paragraph will constitute Excess
Proceeds.
When the aggregate amount of Excess Proceeds equals or exceeds
$15.0 million, the Issuer will be required to make an offer
to purchase from all Holders and, if applicable, purchase or
redeem (or make an offer to do so) any Pari Passu Indebtedness
of the Issuer the provisions of which require the Issuer to
purchase or redeem such Indebtedness with the proceeds from any
Asset Sales (or offer to do so), in an aggregate principal
amount of Notes and such Pari Passu Indebtedness equal to the
amount of such Excess Proceeds as follows:
(1) the Issuer will (a) make an offer to purchase (a
Net Proceeds Offer) to all Holders in accordance
with the procedures set forth in the Indenture, and
(b) purchase or redeem (or make an offer to do so) any such
other Pari Passu Indebtedness, pro rata in proportion to the
respective principal amounts of the Notes and such other
Indebtedness required to be purchased or redeemed, the maximum
principal amount of Notes and Pari Passu Indebtedness that may
be purchased or redeemed out of the amount (the Payment
Amount) of such Excess Proceeds;
45
(2) the offer price for the Notes will be payable in cash
in an amount equal to 100% of the principal amount of the Notes
tendered pursuant to a Net Proceeds Offer, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the
date such Net Proceeds Offer is consummated (the Offered
Price), in accordance with the procedures set forth in the
Indenture, and the purchase or redemption price for such Pari
Passu Indebtedness (the Pari Passu Indebtedness
Price) shall be as set forth in the related documentation
governing such Indebtedness;
(3) if the aggregate Offered Price of Notes validly
tendered and not withdrawn by Holders thereof exceeds the pro
rata portion of the Payment Amount allocable to the Notes, Notes
to be purchased will be selected on a pro rata basis; and
(4) upon completion of such Net Proceeds Offer in
accordance with the foregoing provisions, the amount of Excess
Proceeds with respect to which such Net Proceeds Offer was made
shall be deemed to be zero.
To the extent that the sum of the aggregate Offered Price of
Notes tendered pursuant to a Net Proceeds Offer and the
aggregate Pari Passu Indebtedness Price paid to the holders of
such Pari Passu Indebtedness is less than the Payment Amount
relating thereto (such shortfall constituting a Net
Proceeds Deficiency), the Issuer may use the Net Proceeds
Deficiency, or a portion thereof, for any purposes not otherwise
prohibited by the provisions of the Indenture.
Notwithstanding the foregoing, the sale, conveyance or other
disposition of all or substantially all of the assets of the
Issuer and its Restricted Subsidiaries, taken as a whole, will
be governed by the provisions of the Indenture described under
the caption Change of Control
and/or the
provisions described under the caption Certain
Covenants Limitations on Mergers, Consolidations,
Etc. and not by the provisions of the Asset Sale covenant.
The Issuer will comply with applicable tender offer rules,
including the requirements of
Rule 14e-1
under the Exchange Act and any other applicable laws and
regulations in connection with the purchase of Notes pursuant to
a Net Proceeds Offer. To the extent that the provisions of any
securities laws or regulations conflict with the
Limitations on Asset Sales provisions of the
Indenture, the Issuer shall comply with the applicable
securities laws and regulations and will not be deemed to have
breached its obligations under the Limitations on Asset
Sales provisions of the Indenture by virtue of this
compliance.
Limitations
on Designation of Unrestricted Subsidiaries
The Issuer may designate any Subsidiary (including any newly
formed or newly acquired Subsidiary) of the Issuer as an
Unrestricted Subsidiary under the Indenture (a
Designation) only if:
(1) no Default shall have occurred and be continuing at the
time of or after giving effect to such Designation; and
(2) the Issuer would be permitted to make, at the time of
such Designation, (a) a Permitted Investment or (b) an
Investment pursuant to the first paragraph of
Limitations on Restricted Payments
above, in either case, in an amount (the Designation
Amount) equal to the Fair Market Value of the
Issuers proportionate interest in such Subsidiary on such
date.
No Subsidiary shall be Designated as an Unrestricted
Subsidiary unless such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Issuer or any Restricted Subsidiary
unless the terms of the agreement, contract, arrangement or
understanding are no less favorable to the Issuer or the
Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates;
(3) is a Person with respect to which neither the Issuer
nor any Restricted Subsidiary has any direct or indirect
obligation (a) to subscribe for additional Equity Interests
or (b) to maintain or preserve the
46
Persons financial condition or to cause the Person to
achieve any specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Issuer or
any Restricted Subsidiary, except for any guarantee given solely
to support the pledge by the Issuer or any Restricted Subsidiary
of the Equity Interests of such Unrestricted Subsidiary, which
guarantee is not recourse to the Issuer or any Restricted
Subsidiary.
If, at any time, any Unrestricted Subsidiary fails to meet the
preceding requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes
of the Indenture and any Indebtedness of the Subsidiary and any
Liens on assets of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary at such time and, if the
Indebtedness is not permitted to be incurred under the covenant
described under Limitations on Additional
Indebtedness or the Lien is not permitted under the
covenant described under Limitations on
Liens, the Issuer shall be in default of the applicable
covenant.
The Issuer may redesignate an Unrestricted Subsidiary as a
Restricted Subsidiary (a Redesignation) only if:
(1) no Default shall have occurred and be continuing at the
time of and after giving effect to such Redesignation; and
(2) all Liens, Indebtedness and Investments of such
Unrestricted Subsidiary outstanding immediately following such
Redesignation would, if incurred or made at such time, have been
permitted to be incurred or made for all purposes of the
Indenture.
All Designations and Redesignations must be evidenced by
resolutions of the Board of Directors of the Issuer, delivered
to the Trustee certifying compliance with the foregoing
provisions.
Limitations
on Mergers, Consolidations, Etc.
The Issuer will not, directly or indirectly, in a single
transaction or a series of related transactions, consolidate or
merge with or into another Person, or sell, lease, transfer,
convey or otherwise dispose of or assign all or substantially
all of the assets of the Issuer or the Issuer and the Restricted
Subsidiaries (taken as a whole) unless:
(1) either:
(a) the Issuer will be the surviving or continuing
Person; or
(b) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger or to which such sale,
lease, transfer, conveyance or other disposition or assignment
shall be made (collectively, the Successor) is a
corporation, limited liability company or limited partnership
organized and existing under the laws of any State of the United
States of America or the District of Columbia, and the Successor
expressly assumes, by agreements, all of the obligations of the
Issuer under the Notes, the Indenture and the Registration
Rights Agreement;
(2) immediately after giving effect to such transaction and
the assumption of the obligations as set forth in clause (1)(b)
above and the incurrence of any Indebtedness to be incurred in
connection therewith, and the use of any net proceeds therefrom
on a pro forma basis, no Default shall have occurred and be
continuing;
(3) immediately after giving effect to such transaction and
the assumption of the obligations as set forth in clause (1)(b)
above and the incurrence of any Indebtedness to be incurred in
connection therewith, and the use of any net proceeds therefrom
on a pro forma basis, the Issuer or the Successor, as the case
may be, could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the Coverage Ratio
Exception; and
(4) at the time of the transaction the Issuer or the
Successor, as the case may be, will have delivered, or caused to
be delivered, to the Trustee an officers certificate and
an opinion of counsel, each
47
to the effect that such consolidation, merger, transfer, sale,
assignment, conveyance, lease or other transaction and the
agreements in respect thereof comply with the Indenture.
For purposes of this covenant, any Indebtedness of the Successor
which was not Indebtedness of the Issuer immediately prior to
the transaction shall be deemed to have been incurred in
connection with such transaction.
Except as provided in the fifth paragraph under the caption
Note Guarantees, no Guarantor may
consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another Person, unless:
(1) either:
(a) such Guarantor will be the surviving or continuing
Person; or
(b) the Person (if other than such Guarantor) formed by or
surviving any such consolidation or merger is another Guarantor
or assumes, by agreements in form and substance reasonably
satisfactory to the Trustee, all of the obligations of such
Guarantor under the Note Guarantee of such Guarantor, the
Indenture and the Registration Rights Agreement; and
(2) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series
of transactions) of all or substantially all of the properties
or assets of one or more Restricted Subsidiaries, the Equity
Interests of which constitute all or substantially all of the
properties and assets of the Issuer, will be deemed to be the
transfer of all or substantially all of the properties and
assets of the Issuer.
Upon any consolidation, combination or merger of the Issuer or a
Guarantor, or any transfer of all or substantially all of the
assets of the Issuer in accordance with the foregoing, in which
the Issuer or such Guarantor is not the continuing obligor under
the Notes or its Note Guarantee, the surviving entity formed by
such consolidation or into which the Issuer or such Guarantor is
merged or the Person to which the sale, conveyance, lease,
transfer, disposition or assignment is made will succeed to, and
be substituted for, and may exercise every right and power of,
the Issuer or such Guarantor under the Indenture, the Notes and
the Note Guarantees with the same effect as if such surviving
entity had been named therein as the Issuer or such Guarantor
and, except in the case of a lease, the Issuer or such
Guarantor, as the case may be, will be released from the
obligation to pay the principal of and interest on the Notes or
in respect of its Note Guarantee, as the case may be, and all of
the Issuers or such Guarantors other obligations and
covenants under the Notes, the Indenture and its Note Guarantee,
if applicable.
Notwithstanding the foregoing, (i) any Restricted
Subsidiary may consolidate with, merge with or into or convey,
transfer or lease, in one transaction or a series of
transactions, all or substantially all of its assets to the
Issuer or another Restricted Subsidiary and (ii) this
covenant will not apply to a merger of the Issuer with an
Affiliate of the Issuer solely for the purpose of reorganizing
the Issuer in another jurisdiction.
Additional
Note Guarantees
If, after the Issue Date, (a) the Issuer or any Restricted
Subsidiary shall acquire or create another Domestic Restricted
Subsidiary, or (b) any Unrestricted Subsidiary is
Redesignated a Domestic Restricted Subsidiary, and (in each such
case) such Domestic Restricted Subsidiary guarantees any
Indebtedness under any Credit Facility, then the Issuer shall
cause such Domestic Restricted Subsidiary to:
(1) execute and deliver to the Trustee (a) a
supplemental indenture in form and substance satisfactory to the
Trustee pursuant to which such Domestic Restricted Subsidiary
shall unconditionally guarantee all of the Issuers
obligations under the Notes and the Indenture and (b) a
notation of guarantee in respect of its Note Guarantee; and
(2) deliver to the Trustee one or more opinions of counsel
that such supplemental indenture (a) has been duly
authorized, executed and delivered by such Domestic Restricted
Subsidiary and (b) constitutes
48
a valid and legally binding obligation of such Domestic
Restricted Subsidiary in accordance with its terms;
provided, however, that a Domestic Restricted Subsidiary that
owns net assets that have an aggregate fair market value (as
determined in good faith by the Board of Directors of the
Issuer) of less than 5% of the Consolidated Tangible Assets of
the Issuer as of the end of the previous fiscal quarter, need
not become a Guarantor.
Notwithstanding the foregoing, if, as of the end of any fiscal
quarter, the Domestic Restricted Subsidiaries that are not
required to be Guarantors pursuant to the preceding paragraph
collectively own net assets that have an aggregate fair market
value (as determined in good faith by the Board of Directors of
the Issuer) equal to or greater than 5% of the Issuers
Consolidated Tangible Assets, then the Issuer will cause one or
more of such non-Guarantor Domestic Restricted Subsidiaries
promptly to become a Guarantor or Guarantors such that after
giving effect thereto, the total net assets owned by all such
remaining non-Guarantor Domestic Restricted Subsidiaries will
have an aggregate fair market value (as determined in good faith
by the Board of Directors of the Issuer) of less than 5% of the
Consolidated Tangible Assets of the Issuer. Any such Domestic
Restricted Subsidiary so designated must become a Guarantor and
execute a supplemental indenture and deliver an opinion of
counsel to the Trustee within 15 Business Days of the date on
which it was designated.
Conduct
of Business
The Issuer will engage, and will cause its Restricted
Subsidiaries to engage, only in businesses that, when considered
together as a single enterprise, are primarily the Permitted
Business.
Reports
Whether or not required by the SEC, so long as any Notes are
outstanding, the Issuer will furnish to the Holders of Notes, or
file electronically with the SEC through the SECs
Electronic Data Gathering, Analysis and Retrieval System (or any
successor system), within the time periods applicable to the
Issuer under Section 13(a) or 15(d) of the Exchange Act:
(1) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on
Forms 10-Q
and 10-K if
the Issuer were required to file these Forms, including a
Managements Discussion and Analysis of Financial
Condition and Results of Operations and, with respect to
the annual information only, a report on the annual financial
statements by the Issuers certified independent
accountants; and
(2) all current reports that would be required to be filed
with the SEC on
Form 8-K
if the Issuer were required to file these reports.
In addition, whether or not required by the SEC, the Issuer will
file a copy of all of the information and reports referred to in
clauses (1) and (2) above with the SEC for public
availability within the time periods specified in the SECs
rules and regulations (unless the SEC will not accept the
filing) and make the information available to securities
analysts and prospective investors upon request. The Issuer and
the Guarantors have agreed that, for so long as any Notes remain
outstanding, the Issuer will furnish to the Holders and to
securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
Notwithstanding anything to the contrary, the Issuer will be
deemed to have complied with its obligations in the preceding
two paragraphs following the filing of the Exchange Offer
Registration Statement and prior to the effectiveness thereof if
the Exchange Offer Registration Statement includes the
information specified in clause (1) above at the times it
would otherwise be required to file such Forms.
For purposes of this covenant, the Issuer will be deemed to have
furnished the reports, documents and information to the Trustee
and the holders of Notes, and to the extent herein provided, to
prospective investors, as required by this covenant if it has
filed such reports with the SEC using the Electronic Data
Gathering Analysis and Retrieval system (EDGAR) (or
any successor system) or if such system is not
49
available to the Issuer, if the Issuer has filed such reports,
documents and information on the Issuer website, and in each
such case, such reports are publicly available thereon.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only, and the
Trustees receipt of such shall not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Issuers
compliance with any of their covenants hereunder (as to which
the Trustee is entitled to rely exclusively on officers
certificates).
Events of
Default
Each of the following is an Event of Default:
(1) failure to pay interest on, or Liquidated Damages with
respect to, any of the Notes when the same becomes due and
payable and the continuance of any such failure for 30 days;
(2) failure to pay the principal on any of the Notes when
it becomes due and payable, whether at stated maturity, upon
redemption, upon purchase, upon acceleration or otherwise;
(3) failure by the Issuer to comply with any of its
agreements or covenants described above under
Certain Covenants Limitations on
Mergers, Consolidations, Etc., or in respect of its
obligations to make a Change of Control Offer as described under
Change of Control;
(4) failure by the Issuer to comply with any other
agreement or covenant in the Indenture and continuance of this
failure for 60 days after notice of the failure has been
given to the Issuer by the Trustee or by the Holders of at least
25% of the aggregate principal amount of the Notes then
outstanding;
(5) default under any mortgage, indenture or other
instrument or agreement under which there may be issued or by
which there may be secured or evidenced Indebtedness for
borrowed money by the Issuer or any Restricted Subsidiary,
whether such Indebtedness now exists or is incurred after the
Issue Date, which default:
(a) is caused by a failure to pay at final maturity
principal on such Indebtedness within the applicable express
grace period and any extensions thereof, or
(b) results in the acceleration of such Indebtedness prior
to its express final maturity (which acceleration is not
rescinded, annulled or otherwise cured within 30 days of
receipt by the Issuer or such Restricted Subsidiary of notice of
any such acceleration),
and, in each case, the principal amount of such Indebtedness,
together with the principal amount of any other Indebtedness
with respect to which an event described in clause (a) or
(b) has occurred and is continuing, aggregates
$20.0 million or more;
(6) one or more judgments (to the extent not covered by
insurance) for the payment of money in an aggregate amount in
excess of $20.0 million shall be rendered against the
Issuer, any of its Restricted Subsidiaries or any combination
thereof and the same shall remain undischarged for a period of
60 consecutive days during which execution shall not be
effectively stayed;
(7) certain events of bankruptcy affecting the Issuer or
any of its Significant Subsidiaries; or
(8) any Note Guarantee of any Significant Subsidiary ceases
to be in full force and effect (other than in accordance with
the terms of such Note Guarantee and the Indenture) or is
declared null and void and unenforceable or found to be invalid
or any Guarantor denies its liability under its Note Guarantee
(other than by reason of release of a Guarantor from its Note
Guarantee in accordance with the terms of the Indenture and the
Note Guarantee).
If an Event of Default (other than an Event of Default specified
in clause (7) above with respect to the Issuer), shall have
occurred and be continuing under the Indenture, the Trustee, by
written notice to the Issuer, or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding by
written notice to the Issuer and the Trustee, may declare (an
acceleration declaration) all amounts owing under
the Notes
50
to be due and payable. Upon such declaration of acceleration,
the aggregate principal of and accrued and unpaid interest on
the outstanding Notes shall become due and payable (a) if
there is no Indebtedness outstanding under any Credit Facility
at such time, immediately and (b) if otherwise, upon the
earlier of (x) the final maturity (after giving effect to
any applicable grace period or extensions thereof) or an
acceleration of any Indebtedness under any Credit Facility prior
to the express final stated maturity thereof and (y) five
Business Days after the Representative under each Credit
Facility receives the acceleration declaration, but, in the case
of this clause (b) only, if such Event of Default is then
continuing; provided, however, that after such acceleration, but
before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of such outstanding
Notes may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the nonpayment
of accelerated principal and interest, have been cured or waived
as provided in the Indenture. If an Event of Default specified
in clause (7) with respect to the Issuer occurs, all
outstanding Notes shall become due and payable without any
further action or notice to the extent permitted by applicable
law.
Holders of the Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the
Notes notice of any Default or Event of Default (except an Event
of Default relating to the payment of principal or interest or
Liquidated Damages) if it determines that withholding notice is
in their interest.
The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of
the Holders of all of the Notes waive any existing Default or
Event of Default and its consequences under the Indenture except
a continuing Default or Event of Default in the payment of
interest or Liquidated Damages on, or the principal of, the
Notes. The Holders of a majority in principal amount of the then
outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy
available to the Trustee. However, the Trustee may refuse to
follow any direction that conflicts with law or the Indenture,
that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to
the rights of Holders of Notes not joining in the giving of such
direction and may take any other action it deems proper that is
not inconsistent with any such direction received from Holders
of Notes. A Holder may not pursue any remedy with respect to the
Indenture or the Notes unless:
(1) the Holder gives the Trustee written notice of a
continuing Event of Default;
(2) the Holder or Holders of at least 25% in aggregate
principal amount of outstanding Notes make a written request to
the Trustee to pursue the remedy;
(3) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or
expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of
indemnity; and
(5) during such
60-day
period, the Holders of a majority in aggregate principal amount
of the outstanding Notes do not give the Trustee a direction
that is inconsistent with the request.
However, such limitations do not apply to the right of any
Holder of a Note to receive payment of the principal of, premium
or Liquidated Damages, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after
the due date expressed in the Notes, which right will not be
impaired or affected without the consent of the Holder.
The Holders of a majority in aggregate principal amount of the
Notes then outstanding by written notice to the Trustee may, on
behalf of the Holders of all of the Notes, rescind an
acceleration or waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing
Default or Event of Default in the payment of interest or
premium or Liquidated Damages on, or the principal of, the Notes.
The Issuer is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture and, upon any
Officer of the Issuer becoming aware of any Default, a statement
specifying such Default and what action the Issuer is taking or
proposes to take with respect thereto.
51
Legal
Defeasance and Covenant Defeasance
The Issuer may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Notes and
all obligations of any Guarantors discharged with respect to
their Note Guarantees (Legal Defeasance). Legal
Defeasance means that the Issuer and the Guarantors shall be
deemed to have paid and discharged the entire obligations
represented by the Notes and the Note Guarantees, and the
Indenture shall cease to be of further effect as to all
outstanding Notes and Note Guarantees, except as to:
(1) rights of Holders of outstanding Notes to receive
payments in respect of the principal of and interest and
Liquidated Damages, if any, on such Notes when such payments are
due from the trust funds referred to below,
(2) the Issuers obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes, and the maintenance
of an office or agency for payment and money for security
payments held in trust,
(3) the rights, powers, trust, duties, and immunities of
the Trustee, and the Issuers obligation in connection
therewith, and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Issuer may, at its option and at any time,
elect to have its obligations and the obligations of the
Guarantors released with respect to the provisions of the
Indenture described above under Change of
Control and under Covenants (other
than the covenant described under
Covenants Limitations on Mergers,
Consolidations, Etc., except to the extent described
below) and the limitation imposed by clause (3) under
Covenants Limitations on Mergers,
Consolidations, Etc. (such release and termination being
referred to as Covenant Defeasance), and thereafter
any omission to comply with such obligations or provisions will
not constitute a Default or Event of Default. Covenant
Defeasance will not be effective until such time as bankruptcy,
receivership, rehabilitation and insolvency events no longer
apply. In the event Covenant Defeasance occurs in accordance
with the Indenture, the Events of Default described under
clauses (3) through (6) under the caption
Events of Default and the Event of
Default described under clause (7) under the caption
Events of Default (but only with respect
to Significant Subsidiaries of the Issuer), in each case, will
no longer constitute an Event of Default. The Issuer may
exercise its Legal Defeasance option regardless of whether it
previously exercised Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(1) the Issuer must irrevocably deposit with the Trustee,
as trust funds, in trust solely for the benefit of the Holders,
U.S. legal tender, U.S. Government Obligations or a
combination thereof, in such amounts as will be sufficient
(without consideration of any reinvestment of interest) in the
opinion of a nationally recognized investment bank, appraisal
firm or firm of independent public accountants selected by the
Issuer, to pay the principal of and interest and Liquidated
Damages, if any, on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the
case may be,
(2) in the case of Legal Defeasance, the Issuer shall have
delivered to the Trustee an opinion of counsel in the United
States confirming that:
(a) the Issuer has received from, or there has been
published by the Internal Revenue Service, a ruling, or
(b) since the date of the Indenture, there has been a
change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon this
opinion of counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of the Legal
Defeasance and will be subject to U.S. federal income tax
on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not
occurred,
52
(3) in the case of Covenant Defeasance, the Issuer shall
have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming
that the Holders will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such
Covenant Defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the
same times as would have been the case if the Covenant
Defeasance had not occurred,
(4) no Default shall have occurred and be continuing on the
date of such deposit (other than a Default resulting from the
borrowing of funds to be applied to such deposit and the grant
of any Lien securing such borrowings),
(5) the Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a Default
under the Indenture or a default under any other material
agreement or instrument to which the Issuer or any of its
Subsidiaries is a party or by which the Issuer or any of its
Subsidiaries is bound (other than any such Default or default
resulting solely from the borrowing of funds to be applied to
such deposit and the grant of any Lien securing such borrowings),
(6) the Issuer shall have delivered to the Trustee an
Officers Certificate stating that the deposit was not made
by it with the intent of preferring the Holders over any other
of its creditors or with the intent of defeating, hindering,
delaying or defrauding any other of its creditors or
others, and
(7) the Issuer shall have delivered to the Trustee an
Officers Certificate and an opinion of counsel, each
stating that the conditions precedent provided for in, in the
case of the Officers Certificate, clauses (1) through
(6) and, in the case of the opinion of counsel,
clauses (2) and/or (3) and (5) of this paragraph
have been complied with.
If the funds deposited with the Trustee to effect Covenant
Defeasance are insufficient to pay the principal of and interest
on the Notes when due, then the obligations of the Issuer and
the obligations of Guarantors under the Indenture will be
revived and no such defeasance will be deemed to have occurred.
Satisfaction
and Discharge
The Indenture will be discharged and will cease to be of further
effect (except as to rights of registration of transfer or
exchange of Notes which shall survive until all Notes have been
canceled) as to all outstanding Notes when either:
(1) all the Notes that have been authenticated and
delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for whose payment money has been
deposited in trust or segregated and held in trust by the Issuer
and thereafter repaid to the Issuer or discharged from this
trust) have been delivered to the Trustee for
cancellation, or
(2) (a) all Notes not delivered to the Trustee for
cancellation otherwise (i) have become due and payable,
(ii) will become due and payable, or may be called for
redemption, within one year or (iii) have been called for
redemption pursuant to the provisions described under
Optional Redemption, and, in any case,
the Issuer has irrevocably deposited or caused to be deposited
with the Trustee as trust funds, in trust solely for the benefit
of the Holders, U.S. legal tender, U.S. Government
Obligations or a combination thereof, in such amounts as will be
sufficient (without consideration of any reinvestment of
interest) to pay and discharge the entire Indebtedness
(including all principal and accrued interest and Liquidated
Damages, if any) on the Notes not theretofore delivered to the
Trustee for cancellation, (b) the Issuer has paid all other
sums payable by it under the Indenture, and (c) the Issuer
has delivered irrevocable instructions to the Trustee to apply
the deposited money toward the payment of the Notes at maturity
or on the date of redemption, as the case may be.
In addition, the Issuer must deliver an Officers
Certificate and an opinion of counsel stating that all
conditions precedent to satisfaction and discharge have been
complied with.
53
Transfer
and Exchange
A Holder will be able to register the transfer of or exchange
Notes only in accordance with the provisions of the Indenture.
The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the
Indenture. Without the prior consent of the Issuer, the
Registrar is not required (1) to register the transfer of
or exchange any Note selected for redemption, (2) to
register the transfer of or exchange any Note for a period of
15 days before a selection of Notes to be redeemed or
(3) to register the transfer or exchange of a Note between
a record date and the next succeeding interest payment date.
The Notes will be issued in registered form and the registered
Holder will be treated as the owner of such Note for all
purposes.
Amendment,
Supplement and Waiver
Except as otherwise provided in the next three succeeding
paragraphs, the Indenture or the Notes may be amended with the
consent (which may include consents obtained in connection with
a tender offer or exchange offer for Notes) of the Holders of at
least a majority in principal amount of the Notes then
outstanding, and any existing Default under, or compliance with
any provision of, the Indenture may be waived (other than any
continuing Default in the payment of the principal or interest
on the Notes) with the consent (which may include consents
obtained in connection with a tender offer or exchange offer for
Notes) of the Holders of a majority in principal amount of the
Notes then outstanding.
Without the consent of each Holder affected, an amendment or
waiver may not (with respect to any Notes held by a
non-consenting Holder):
(1) reduce, or change the maturity of, the principal of any
Note;
(2) reduce the rate of or extend the time for payment of
interest on any Note;
(3) reduce any premium payable upon redemption of the Notes
or change the date on which any Notes are subject to redemption
or waive any payment with respect to the redemption of the
Notes; provided, however, that solely for the avoidance of
doubt, and without any other implication, any purchase or
repurchase of Notes (including pursuant to the covenants
described above under the captions Change of
Control and Certain
Covenants Limitations on Asset Sales) shall
not be deemed a redemption of the Notes;
(4) make any Note payable in money or currency other than
that stated in the Notes;
(5) modify or change any provision of the Indenture or the
related definitions to affect the ranking of the Notes or any
Note Guarantee in a manner that adversely affects the Holders;
(6) reduce the percentage of Holders necessary to consent
to an amendment or waiver to the Indenture or the Notes;
(7) waive a default in the payment of principal of or
premium or interest or Liquidated Damages, if any, on any Notes
(except a rescission of acceleration of the Notes by the Holders
thereof as provided in the Indenture and a waiver of the payment
default that resulted from such acceleration);
(8) impair the rights of Holders to receive payments of
principal of or interest or Liquidated Damages, if any, on the
Notes on or after the due date therefor or to institute suit for
the enforcement of any payment on the Notes;
(9) release any Guarantor that is a Significant Subsidiary
from any of its obligations under its Note Guarantee or the
Indenture, except as permitted by the Indenture; or
(10) make any change in these amendment and waiver
provisions.
54
Notwithstanding the foregoing, the Issuer and the Trustee may
amend the Indenture, the Note Guarantees or the Notes without
the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(3) to provide for the assumption of the Issuers or a
Guarantors obligations to the Holders in the case of a
merger, consolidation or sale of all or substantially all of the
Issuers or such Guarantors assets in accordance with
Certain Covenants Limitations on
Mergers, Consolidations, Etc.;
(4) to add any Note Guarantee or to effect the release of
any Guarantor from any of its obligations under its Note
Guarantee or the Indenture (to the extent permitted by the
Indenture);
(5) to make any change that would provide any additional
rights or benefits to the Holders or does not materially
adversely affect the rights of any Holder;
(6) to effect or maintain the qualification of the
Indenture under the Trust Indenture Act;
(7) to secure the Notes or any Note Guarantees or any other
obligation under the Indenture;
(8) to evidence and provide for the acceptance of
appointment by a successor trustee;
(9) to conform the text of the Indenture or the Notes to
any provision of the Description of the Notes in the
offering circular dated February 3, 2011 relating to the
original offering of the old Notes to the extent that such
provision in such Description of the Notes was
intended to be a verbatim recitation of a provision of the
Indenture, the Note Guarantees or the old Notes; or
(10) to provide for the issuance of Additional Notes in
accordance with the Indenture.
The consent of the Holders of the Notes is not necessary under
the Indenture to approve the particular form of any proposed
amendment or waiver. It is sufficient if such consent approves
the substance of the proposed amendment or waiver.
After an amendment under the Indenture becomes effective, the
Issuer is required to mail to Holders of the Notes a notice
briefly describing such amendment. However, the failure to give
such notice to all Holders of the Notes, or any defect therein,
will not impair or affect the validity of the amendment.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
the Issuer or any Guarantor will have any liability for any
obligations of the Issuer under the Notes or the Indenture or of
any Guarantor under its Note Guarantee or for any claim based
on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for issuance of the Notes and the Note Guarantees.
The waiver may not be effective to waive liabilities under the
federal securities laws. It is the view of the SEC that this
type of waiver is against public policy.
Concerning
the Trustee
Wells Fargo Bank, N.A. is the Trustee under the Indenture and
has been appointed by the Issuer as Registrar and Paying Agent
with regard to the Notes. The Indenture contains certain
limitations on the rights of the Trustee, should it become a
creditor of the Issuer, to obtain payment of claims in certain
cases, or to realize on certain assets received in respect of
any such claim as security or otherwise. The Trustee will be
permitted to engage in other transactions; however, if it
acquires any conflicting interest (as defined in the Indenture),
it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue (if the Indenture has been
qualified under the Trust Indenture Act) or resign.
The Holders of a majority in principal amount of the then
outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy
available to the Trustee,
55
subject to certain exceptions. The Indenture provides that, in
case an Event of Default occurs and is not cured, the Trustee
will be required, in the exercise of its power, to use the
degree of care of a prudent person in similar circumstances in
the conduct of his own affairs. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any
Holder, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to the Trustee.
Governing
Law
The Indenture is, and the Notes and the Note Guarantees will be,
governed by, and construed in accordance with, the laws of the
State of New York.
Certain
Definitions
Set forth below is a summary of certain of the defined terms
used in the Indenture. Reference is made to the Indenture for
the full definition of all such terms.
Acquired Indebtedness means (1) with
respect to any Person that becomes a Restricted Subsidiary after
the Issue Date, Indebtedness of such Person and its Subsidiaries
(including, for the avoidance of doubt, Indebtedness incurred in
the ordinary course of such Persons business to acquire
assets used or useful in its business) existing at the time such
Person becomes a Restricted Subsidiary that was not incurred in
connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary and (2) with respect to the Issuer or
any Restricted Subsidiary, any Indebtedness of a Person
(including, for the avoidance of doubt, Indebtedness incurred in
the ordinary course of such Persons business to acquire
assets used or useful in its business), other than the Issuer or
a Restricted Subsidiary, existing at the time such Person is
merged with or into the Issuer or a Restricted Subsidiary, or
Indebtedness expressly assumed by the Issuer or any Restricted
Subsidiary in connection with the acquisition of an asset or
assets from another Person, which Indebtedness was not, in any
case, incurred by such other Person in connection with, or in
contemplation of, such merger or acquisition.
Affiliate of any Person means any other
Person which directly or indirectly controls or is controlled
by, or is under direct or indirect common control with, the
referent Person. For purposes of the covenant described under
Certain Covenants Limitations on
Transactions with Affiliates, Affiliates shall be deemed
to include, with respect to any Person, any other Person
(1) which beneficially owns or holds, directly or
indirectly, 10% or more of any class of the Voting Stock of the
referent Person, (2) of which 10% or more of the Voting
Stock is beneficially owned or held, directly or indirectly, by
the referenced Person or (3) with respect to an individual,
any immediate family member of such Person. For purposes of this
definition, control of a Person shall mean the power
to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
amend means to amend, supplement, restate,
amend and restate or otherwise modify, including successively,
and amendment shall have a correlative meaning.
asset means any asset or property.
Asset Acquisition means:
(1) an Investment by the Issuer or any Restricted
Subsidiary of the Issuer in any other Person if, as a result of
such Investment, such Person shall become a Restricted
Subsidiary of the Issuer, or shall be merged with or into the
Issuer or any Restricted Subsidiary of the Issuer, or
(2) the acquisition by the Issuer or any Restricted
Subsidiary of the Issuer of all or substantially all of the
assets of any other Person (other than a Restricted Subsidiary
of the Issuer) or any division or line of business of any such
other Person (other than in the ordinary course of business).
Asset Sale means any sale, issuance,
conveyance, transfer, lease, assignment or other disposition by
the Issuer or any Restricted Subsidiary to any Person other than
the Issuer or any Restricted Subsidiary (including by means of a
sale and leaseback transaction or a merger or consolidation)
(collectively, for purposes of this definition, a
transfer), in one transaction or a series of related
transactions, of any assets of the Issuer or any
56
of its Restricted Subsidiaries other than in the ordinary course
of business. For purposes of this definition, the term
Asset Sale shall not include:
(1) transfers of cash or Cash Equivalents;
(2) transfers of assets (including Equity Interests) that
are governed by, and made in accordance with, the covenants
described under Change of Control or
Certain Covenants Limitations on
Mergers, Consolidations, Etc.;
(3) Permitted Investments and Restricted Payments permitted
under the covenant described under Certain
Covenants Limitations on Restricted Payments;
(4) the creation of or realization on any Lien permitted
under the Indenture and any disposition of assets resulting from
the enforcement or foreclosure of any such Lien;
(5) transfers of damaged, worn-out or obsolete equipment or
assets that, in the Issuers reasonable judgment, are no
longer used or useful in the business of the Issuer or its
Restricted Subsidiaries;
(6) sales or grants of licenses or sublicenses to use the
patents, trade secrets, know-how and other intellectual
property, and licenses, leases or subleases of other assets, of
the Issuer or any Restricted Subsidiary to the extent not
materially interfering with the business of Issuer and the
Restricted Subsidiaries;
(7) any sale, lease, conveyance or other disposition of any
assets or any sale or issuance of Equity Interests in each case,
made pursuant to a Permitted Joint Venture Investment;
(8) the trade or exchange by the Issuer or any Restricted
Subsidiary of any asset for any other asset or assets; provided,
that the Fair Market Value of the asset or assets received by
the Issuer or any Restricted Subsidiary in such trade or
exchange (including any such cash or Cash Equivalents) is at
least equal to the Fair Market Value (as determined in good
faith by the Board of Directors or an executive officer of the
Issuer or of such Restricted Subsidiary with responsibility for
such transaction, which determination shall be conclusive
evidence of compliance with this provision) of the asset or
assets disposed of by the Issuer or any Restricted Subsidiary
pursuant to such trade or exchange; and, provided, further, that
if any cash or Cash Equivalents are used in such trade or
exchange to achieve an exchange of equivalent value, that the
amount of such cash
and/or Cash
Equivalents shall be deemed proceeds of an Asset
Sale, subject to the following clause (9); and
(9) any transfer or series of related transfers that, but
for this clause, would be Asset Sales, if after giving effect to
such transfers, the aggregate Fair Market Value of the assets
transferred in such transaction or any such series of related
transactions does not exceed $3.0 million per occurrence or
$10.0 million in any fiscal year.
Board of Directors means, with respect to any
Person, (i) in the case of any corporation, the board of
directors of such Person, (ii) in the case of any
partnership, the Board of Directors of the general partner of
such Person and (iii) in any other case, the functional
equivalent of the foregoing or, in each case, other than for
purposes of the definition of Change of Control, any
duly authorized committee of such body.
Business Day means a day other than a
Saturday, Sunday or other day on which banking institutions in
New York are authorized or required by law to close.
Capitalized Lease means a lease required to
be capitalized for financial reporting purposes in accordance
with GAAP.
Capitalized Lease Obligations of any Person
means the obligations of such Person to pay rent or other
amounts under a Capitalized Lease, and the amount of such
obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
57
Cash Equivalents means:
(1) marketable obligations issued or directly and fully
guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith
and credit of the United States of America is pledged in support
thereof), maturing within 360 days of the date of
acquisition thereof;
(2) demand and time deposits and certificates of deposit of
any Lender or any commercial bank having, or which is the
principal banking subsidiary of a bank holding company organized
under the laws of the United States, any state thereof or the
District of Columbia having, capital and surplus aggregating in
excess of $300.0 million and a rating of A (or
such other similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) maturing
within 360 days of the date of acquisition by such person;
(3) commercial paper issued by any person incorporated in
the United States rated at least
A-1 or the
equivalent thereof by S&P or at least
P-1 or the
equivalent thereof by Moodys or an equivalent rating by a
nationally recognized rating agency if both S&P and
Moodys cease publishing ratings of commercial paper
issuers generally, and in each case maturing not more than one
year after the date of acquisition by such person;
(4) repurchase obligations with a term of not more than
30 days for underlying securities of the types described in
clause (1) above entered into with any bank meeting the
qualifications specified in clause (2) above;
(5) securities issued and fully guaranteed by any state,
commonwealth or territory of the United States of America, or by
any political subdivision or taxing authority thereof, rated at
least A by Moodys Investors Service, Inc. or
Standard & Poors Rating Services and having
maturities of not more than one year from the date of
acquisition;
(6) investments in money market or other mutual funds
substantially all of whose assets comprise securities of the
types described in clauses (1) through
(5) above; and
(7) demand deposit accounts maintained in the ordinary
course of business.
Change of Control means the occurrence of any
of the following events:
(1) the direct or indirect sale, transfer, conveyance or
other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of
all or substantially all of the properties or assets of the
Issuer and its Restricted Subsidiaries, taken as a whole, to any
person (as that term is used in
Section 13(d)(3) of the Exchange Act) other than a
Permitted Holder;
(2) any person or group (as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act, except that for purposes of this clause
that person or group shall be deemed to have beneficial
ownership of all securities that any such person or group
has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of Voting Stock representing 50% or more of the
voting power of the total outstanding Voting Stock of the
Issuer; provided, however, that such event shall not be deemed
to be a Change of Control so long as the Permitted Holders own
Voting Stock representing in the aggregate a greater percentage
of the total voting power of the Voting Stock of the Issuer than
such other person or group;
(3) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election to
such Board of Directors or whose nomination for election by the
stockholders of the Issuer was approved by a vote of
662/3%
of the directors of the Issuer then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of
Directors of the Issuer; and
58
(4) the adoption by the stockholders of the Issuer of a
Plan of Liquidation.
For purposes of this definition, a Person shall not be deemed to
have beneficial ownership of securities subject to a stock
purchase agreement, merger agreement or similar agreement until
the consummation of the transactions contemplated by such
agreement.
Consolidated Amortization Expense for any
period means the amortization expense of the Issuer and the
Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
Consolidated Cash Flow for any period means,
without duplication, the sum of the amounts for such period of
(1) Consolidated Net Income, plus
(2) in each case only to the extent (and in the same
proportion) deducted in determining Consolidated Net Income and
with respect to the portion of Consolidated Net Income
attributable to any Restricted Subsidiary only if a
corresponding amount would be permitted at the date of
determination to be distributed to the Issuer by such Restricted
Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted
Subsidiary or its stockholders,
(a) Consolidated Income Tax Expense,
(b) Consolidated Amortization Expense (but only to the
extent not included in Consolidated Interest Expense),
(c) Consolidated Depreciation Expense,
(d) Consolidated Interest Expense, and
(e) all other non-cash items reducing the Consolidated Net
Income (excluding any non-cash charge that results in an accrual
of a reserve for cash charges in any future period) for such
period, in each case determined on a consolidated basis in
accordance with GAAP, minus
(3) the aggregate amount of all non-cash items, determined
on a consolidated basis, to the extent such items increased
Consolidated Net Income for such period.
Consolidated Depreciation Expense for any
period means the depreciation expense of the Issuer and the
Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
Consolidated Income Tax Expense for any
period means the provision for taxes of the Issuer and the
Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
Consolidated Interest Coverage Ratio means
the ratio of Consolidated Cash Flow during the most recent four
consecutive full fiscal quarters for which financial statements
are available (the Four-Quarter Period) ending on or
prior to the date of the transaction giving rise to the need to
calculate the Consolidated Interest Coverage Ratio (the
Transaction Date) to Consolidated Interest Expense
for the Four-Quarter Period. For purposes of this definition,
Consolidated Cash Flow and Consolidated Interest Expense shall
be calculated after giving effect on a pro forma basis for the
period of such calculation to:
(1) the incurrence of any Indebtedness or the issuance of
any Preferred Stock of the Issuer or any Restricted Subsidiary
(and the application of the proceeds thereof) and any repayment,
repurchase or redemption of other Indebtedness or other
Preferred Stock (and the application of the proceeds therefrom)
(other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes
pursuant to any revolving credit arrangement) occurring during
the Four-Quarter Period or at any time subsequent to the last
day of the Four-Quarter Period and on or prior to the
Transaction Date, as if such incurrence, repayment, repurchase,
issuance or redemption, as the case may be (and the application
of the proceeds thereof), occurred on the first day of the
Four-Quarter Period; and
(2) any Asset Sale or Asset Acquisition (including, without
limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of the Issuer or any
Restricted Subsidiary (including
59
any Person who becomes a Restricted Subsidiary as a result of
such Asset Acquisition) incurring Acquired Indebtedness and also
including any Consolidated Cash Flow (including any pro forma
expense and cost reductions calculated in good faith on a
reasonable basis by a responsible financial or accounting
Officer of the Issuer) occurring during the Four-Quarter Period
or at any time subsequent to the last day of the Four-Quarter
Period and on or prior to the Transaction Date), as if such
Asset Sale or Asset Acquisition (including the incurrence of, or
assumption or liability for, any such Indebtedness or Acquired
Indebtedness) occurred on the first day of the Four-Quarter
Period; provided, that the Officer making the pro forma
calculation described above may in his discretion include any
pro forma changes to Consolidated Cash Flow, including any pro
forma reductions of expenses and costs, that have occurred or
are reasonably expected by such Officer to occur within one year
of closing of such Asset Sale or Asset Acquisition (regardless
of whether such expense or cost savings or any other operating
improvements could then be reflected properly in pro forma
financial statements prepared in accordance with
Regulation S-X
under the Securities Act or any other regulation or policy of
the SEC).
In calculating Consolidated Interest Expense for purposes of
determining the denominator (but not the numerator) of this
Consolidated Interest Coverage Ratio:
(1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date;
(2) if interest on any Indebtedness actually incurred on
the Transaction Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on the Transaction Date will be deemed
to have been in effect during the Four-Quarter Period; and
(3) notwithstanding clause (1) or (2) above,
interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by agreements relating to
Hedging Obligations, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of these
agreements.
Consolidated Interest Expense for any period
means the sum, without duplication, of the total interest
expense of the Issuer and the Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with
GAAP and including, without duplication,
(1) imputed interest on Capitalized Lease Obligations,
(2) commissions, discounts and other fees and charges owed
with respect to letters of credit securing financial
obligations, bankers acceptance financing and receivables
financings,
(3) the net costs associated with Hedging Obligations
related to interest rates,
(4) amortization of debt issuance costs, debt discount or
premium and other financing fees and expenses,
(5) the interest portion of any deferred payment
obligations,
(6) all other non-cash interest expense,
(7) capitalized interest,
(8) all dividend payments on any series of Disqualified
Equity Interests of the Issuer or any of its Restricted
Subsidiaries or any Preferred Stock of any Restricted Subsidiary
(other than dividends on Equity Interests payable solely in
Qualified Equity Interests of the Issuer or to the Issuer or a
Restricted Subsidiary of the Issuer),
(9) all interest payable with respect to discontinued
operations, and
(10) all interest on any Indebtedness described in
clause (7) or (8) of the definition of Indebtedness.
Consolidated Net Income for any period means
the net income (or loss) of the Issuer and the Restricted
Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP;
60
provided that there shall be excluded from such net income (to
the extent otherwise included therein), without duplication:
(1) the net income (or loss) of any Person (other than a
Restricted Subsidiary) in which any Person other than the Issuer
and the Restricted Subsidiaries has an ownership interest,
except to the extent that cash in an amount equal to any such
income has actually been received by the Issuer or any of its
Restricted Subsidiaries during such period;
(2) except to the extent includible in the consolidated net
income of the Issuer pursuant to the foregoing clause (1), the
net income (or loss) of any Person that accrued prior to the
date that (a) such Person becomes a Restricted Subsidiary
or is merged into or consolidated with the Issuer or any
Restricted Subsidiary or (b) the assets of such Person are
acquired by the Issuer or any Restricted Subsidiary;
(3) the net income of any Restricted Subsidiary during such
period to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary
of that income is not permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that
Subsidiary during such period, except that the Issuers
equity in a net loss of any such Restricted Subsidiary for such
period shall be included in determining Consolidated Net Income;
(4) for the purposes of calculating the Restricted Payments
Basket only, in the case of a successor to the Issuer by
consolidation, merger or transfer of its assets, any income (or
loss) of the successor prior to such merger, consolidation or
transfer of assets;
(5) other than for purposes of calculating the Restricted
Payments Basket, any gain (or loss), together with any related
provisions for taxes on any such gain (or the tax effect of any
such loss), realized during such period by the Issuer or any
Restricted Subsidiary upon (a) the acquisition of any
securities, or the extinguishment of any Indebtedness, of the
Issuer or any Restricted Subsidiary or (b) any Asset Sale
by the Issuer or any Restricted Subsidiary;
(6) gains and losses due solely to fluctuations in currency
values and the related tax effects according to GAAP;
(7) unrealized gains and losses with respect to Hedging
Obligations;
(8) the cumulative effect of any change in accounting
principles; and
(9) other than for purposes of calculating the Restricted
Payments Basket, any extraordinary or nonrecurring gain (or
extraordinary or nonrecurring loss), together with any related
provision for taxes on any such extraordinary or nonrecurring
gain (or the tax effect of any such extraordinary or
nonrecurring loss), realized by the Issuer or any Restricted
Subsidiary during such period.
In addition, any return of capital with respect to an Investment
that increased the Restricted Payments Basket pursuant to clause
(3)(d) of the first paragraph under Certain
Covenants Limitations on Restricted Payments
or decreased the amount of Investments outstanding pursuant to
clause (16) of the definition of Permitted
Investments shall be excluded from Consolidated Net Income
for purposes of calculating the Restricted Payments Basket.
For purposes of this definition of Consolidated Net
Income, nonrecurring means any gain or loss as
of any date that is not reasonably likely to recur within the
two years following such date; provided that if there was a gain
or loss similar to such gain or loss within the two years
preceding such date, such gain or loss shall not be deemed
nonrecurring.
Consolidated Tangible Assets means, with
respect to any Person as of any date, the amount which, in
accordance with GAAP, would be set forth under the caption
Total Assets (or any like caption) on a consolidated
balance sheet of such Person and its Restricted Subsidiaries,
less all goodwill, patents, tradenames, trademarks, copyrights,
franchises, experimental expenses, organization expenses and any
other amounts classified as intangible assets in accordance with
GAAP.
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Contingent Obligation shall mean, as to any
person, any obligation, agreement, understanding or arrangement
of such person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations
(primary obligations) of any other person (the
primary obligor) in any manner, whether directly or
indirectly, including, without limitation, any obligation of
such person, whether or not contingent, (a) to purchase any
such primary obligation or any property constituting direct or
indirect security therefor; (b) to advance or supply funds
(i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor; (c) to purchase
property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary
obligation; (d) with respect to bankers acceptances
and letters of credit, until a reimbursement obligation arises
(which obligation shall constitute Indebtedness); or
(e) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or
collection in the ordinary course of business or any product
warranties for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount
of such primary obligation for which such person may be liable,
whether severally or jointly, pursuant to the terms of the
instrument evidencing such Contingent obligation) or, if not
stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such person is required
to perform thereunder) as determined by such person in good
faith.
Coverage Ratio Exception has the meaning set
forth in the proviso in the first paragraph of the covenant
described under Certain Covenants
Limitations on Additional Indebtedness.
Credit Agreement means the Credit Agreement
dated as of the Issue Date, by and among the Issuer, as
Borrower, the subsidiary guarantors party thereto, Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Capital
One, National Association, as joint lead arrangers, and the
other lenders named therein, including any notes, guarantees,
collateral and security documents, instruments and agreements
executed in connection therewith (including Hedging Obligations
related to the Indebtedness incurred thereunder), and in each
case as further amended or refinanced from time to time.
Credit Facilities means one or more debt
facilities (which may be outstanding at the same time and
including, without limitation, the Credit Agreement) providing
for revolving credit loans, term loans or letters of credit and,
in each case, as such agreements may be amended, refinanced or
otherwise restructured, in whole or in part from time to time
(including increasing the amount of available borrowings
thereunder or adding Subsidiaries of the Issuer as additional
borrowers or guarantors thereunder) with respect to all or any
portion of the Indebtedness under such agreement or agreements
or any successor or replacement agreement or agreements and
whether by the same or any other agent, lender or group of
lenders.
Default means (1) any Event of Default
or (2) any event, act or condition that, after notice or
the passage of time or both, would be an Event of Default.
Designation has the meaning given to this
term in the covenant described under Certain
Covenants Limitations on Designation of Unrestricted
Subsidiaries.
Designation Amount has the meaning given to
this term in the covenant described under
Certain Covenants Limitations on
Designation of Unrestricted Subsidiaries.
Disqualified Equity Interests of any Person
means any class of Equity Interests of such Person that, by its
terms, or by the terms of any related agreement or of any
security into which it is convertible, puttable or exchangeable
(in each case, at the option of the holder thereof), is, or upon
the happening of any event or the passage of time would be,
required to be redeemed by such Person, at the option of the
holder thereof, or matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, in whole or
in part, on or prior to the date which is 91 days after the
final maturity date of the Notes; provided, however, that any
class of Equity Interests of such Person that, by its terms,
authorizes such Person to satisfy in full its obligations with
respect to the payment of dividends or upon maturity, redemption
(pursuant to a sinking fund
62
or otherwise) or repurchase thereof or otherwise by the delivery
of Equity Interests that are not Disqualified Equity Interests,
and that is not convertible, puttable or exchangeable for
Disqualified Equity Interests or Indebtedness, will not be
deemed to be Disqualified Equity Interests so long as such
Person satisfies its obligations with respect thereto solely by
the delivery of Equity Interests that are not Disqualified
Equity Interests; provided, further, however, that any Equity
Interests that would not constitute Disqualified Equity
Interests but for provisions thereof giving holders thereof (or
the holders of any security into or for which such Equity
Interests are convertible, exchangeable or exercisable) the
right to require the Issuer to repurchase or redeem such Equity
Interests upon the occurrence of a change in control or an asset
sale occurring prior to the 91st day after the final
maturity date of the Notes shall not constitute Disqualified
Equity Interests if the change of control or asset sale
provisions applicable to such Equity Interests are no more
favorable to such holders than the provisions described under
Change of Control and
Certain Covenants Limitations on
Asset Sales, respectively, and such Equity Interests
specifically provide that the Issuer will not repurchase or
redeem any such Equity Interests pursuant to such provisions
prior to the Issuers purchase of the Notes as required
pursuant to the provisions described under
Change of Control and
Certain Covenants Limitations on
Asset Sales, respectively.
Domestic Restricted Subsidiary means
(i) each Restricted Subsidiary of the Issuer organized or
existing under the laws of the United States, any state thereof
or the District of Columbia and (ii) any other Restricted
Subsidiary that guarantees any Indebtedness under any Credit
Facility.
Earn Out Obligation means those contingent
obligations of the Issuer incurred in favor of a seller (or
other third party entitled thereto) under or with respect to any
Permitted Acquisition (as such term is defined in the Credit
Agreement as of the Issue Date).
Equity Interests of any Person means
(1) any and all shares or other equity interests (including
common stock, preferred stock, limited liability company
interests and partnership interests) in such Person and
(2) all rights to purchase, warrants or options (whether or
not currently exercisable), participations or other equivalents
of or interests in (however designated) such shares or other
interests in such Person, but excluding from all of the
foregoing any debt securities convertible into Equity Interests,
regardless of whether such debt securities include any right of
participation with Equity Interests.
Exchange Act means the U.S. Securities
Exchange Act of 1934, as amended.
Fair Market Value means, with respect to any
asset, the price (after taking into account any liabilities
relating to such assets) that would be negotiated in an
arms-length transaction for cash between a willing seller
and a willing and able buyer, neither of which is under any
compulsion to complete the transaction, as such price is
determined in good faith by the Board of Directors of the Issuer
or a duly authorized committee thereof, as evidenced by a
resolution of such Board of Directors or committee.
Foreign Restricted Subsidiary means any
Restricted Subsidiary of the Issuer other than a Domestic
Restricted Subsidiary.
GAAP means generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession of the United
States, as in effect from time to time.
guarantee means a direct or indirect
guarantee by any Person of any Indebtedness of any other Person
and includes any obligation, direct or indirect, contingent or
otherwise, of such Person (1) to purchase or pay (or
advance or supply funds for the purchase or payment of)
Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keepwell, to
purchase assets, goods, securities or services (unless such
purchase arrangements are on arms-length terms and are
entered into in the ordinary course of business), to
take-or-pay,
or to maintain financial statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other
manner the obligee of such Indebtedness of the payment thereof
or to protect such obligee against loss in respect thereof (in
whole or in part); guarantee, when used as a verb,
and guaranteed have correlative meanings.
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Guarantors means each Domestic Restricted
Subsidiary of the Issuer on the Issue Date, and each other
Person that is required to, or at the election of the Issuer
does, become a Guarantor by the terms of the Indenture after the
Issue Date, in each case, until such Person is released from its
Note Guarantee in accordance with the terms of the Indenture.
Hedging Obligations of any Person means the
obligations of such Person under swap, cap, collar, forward
purchase or similar agreements or arrangements dealing with
interest rates, currency exchange rates or commodity prices,
either generally or under specific contingencies.
Holder means any registered holder, from time
to time, of the Notes.
incur means, with respect to any Indebtedness
or Obligation, incur, create, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or
otherwise, with respect to such Indebtedness or Obligation;
provided that (1) the Indebtedness of a Person existing at
the time such Person became a Restricted Subsidiary of the
Issuer shall be deemed to have been incurred by such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary of the
Issuer and (2) neither the accrual of interest nor the
accretion of original issue discount or the accretion or
accumulation of dividends on any Equity Interests shall be
deemed to be an incurrence of Indebtedness.
Indebtedness of any Person at any date means,
without duplication:
(1) all liabilities, contingent or otherwise, of such
Person for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a
portion thereof);
(2) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(3) all reimbursement obligations of such Person in respect
of letters of credit, letters of guaranty, bankers
acceptances and similar credit transactions;
(4) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, except trade
payables and accrued expenses incurred by such Person in the
ordinary course of business in connection with obtaining goods,
materials or services;
(5) the maximum fixed redemption or repurchase price of all
Disqualified Equity Interests of such Person;
(6) all Capitalized Lease Obligations of such Person;
(7) all Indebtedness of others secured by a Lien on any
asset of such Person, whether or not such Indebtedness is
assumed by such Person;
(8) all Indebtedness of others guaranteed by such Person to
the extent of such guarantee; provided that Indebtedness of the
Issuer or its Subsidiaries that is guaranteed by the Issuer or
the Issuers Subsidiaries shall only be counted once in the
calculation of the amount of Indebtedness of the Issuer and its
Subsidiaries on a consolidated basis;
(9) to the extent not otherwise included in this
definition, Hedging Obligations of such Person;
(10) all obligations of such Person under conditional sale
or other title retention agreements relating to assets purchased
by such Person; and
(11) all Contingent Obligations (other than Earn Out
Obligations) of such person in respect of Indebtedness or
obligations of others of the kinds referred to in
clauses (1) through (10) above.
The amount of any Indebtedness which is incurred at a discount
to the principal amount at maturity thereof as of any date shall
be deemed to have been incurred at the accreted value thereof as
of such date. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all
unconditional obligations as described above, the maximum
liability of such Person for any such contingent obligations at
such date and, in the case of clause (7), the lesser of
(a) the Fair Market Value of any asset subject to a Lien
securing the Indebtedness of others on the date that the Lien
attaches and (b) the amount of
64
the Indebtedness secured. For purposes of clause (5), the
maximum fixed redemption or repurchase price of any
Disqualified Equity Interests that do not have a fixed
redemption or repurchase price shall be calculated in accordance
with the terms of such Disqualified Equity Interests as if such
Disqualified Equity Interests were redeemed or repurchased on
any date on which an amount of Indebtedness outstanding shall be
required to be determined pursuant to the Indenture.
Independent Director means a director of the
Issuer who
(1) is independent with respect to the transaction at issue;
(2) does not have any material financial interest in the
Issuer or any of its Affiliates (other than as a result of
holding securities of the Issuer); and
(3) has not and whose Affiliates or affiliated firm has
not, at any time during the twelve months prior to the taking of
any action hereunder, directly or indirectly, received, or
entered into any understanding or agreement to receive, any
compensation, payment or other benefit, of any type or form,
from the Issuer or any of its Affiliates, other than customary
directors fees for serving on the Board of Directors of
the Issuer or any Affiliate and reimbursement of
out-of-pocket
expenses for attendance at the Issuers or Affiliates
board and board committee meetings.
Independent Financial Advisor means an
accounting, appraisal or investment banking firm of nationally
recognized standing that is, in the reasonable judgment of the
Issuers Board of Directors, qualified to perform the task
for which it has been engaged and disinterested and independent
with respect to the Issuer and its Affiliates.
Intellectual Property means all patents,
patent applications, trademarks, trade names, service marks,
copyrights, technology, trade secrets, proprietary information,
domain names, know how and processes necessary for the conduct
of the Issuers or any Restricted Subsidiarys
business as currently conducted.
Investments of any Person means:
(1) all direct or indirect investments by such Person in
any other Person in the form of loans, advances or capital
contributions or other credit extensions constituting
Indebtedness of such other Person, and any guarantee of
Indebtedness of any other Person;
(2) all purchases (or other acquisitions for consideration)
by such Person of Indebtedness, Equity Interests or other
securities of any other Person (other than any such purchase
that constitutes a Restricted Payment of the type described in
clause (2) of the definition thereof);
(3) all other items that would be classified as investments
on a balance sheet of such Person prepared in accordance with
GAAP (including, if required by GAAP, purchases of assets
outside the ordinary course of business); and
(4) the Designation of any Subsidiary as an Unrestricted
Subsidiary.
Except as otherwise expressly specified in this definition, the
amount of any Investment (other than an Investment made in cash)
shall be the Fair Market Value thereof on the date such
Investment is made. The amount of Investment pursuant to
clause (4) shall be the Designation Amount determined in
accordance with the covenant described under
Certain Covenants Limitations on
Designation of Unrestricted Subsidiaries. If the Issuer or
any Restricted Subsidiary sells or otherwise disposes of any
Equity Interests of any Restricted Subsidiary, or any Restricted
Subsidiary issues any Equity Interests, in either case, such
that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary, the Issuer shall be deemed to
have made an Investment on the date of any such sale or other
disposition equal to the Fair Market Value of the Equity
Interests of and all other Investments in such Restricted
Subsidiary retained. Notwithstanding the foregoing, purchases or
redemptions of Equity Interests of the Issuer shall be deemed
not to be Investments.
Issue Date means February 15, 2011, the
date of original issuance of the old Notes.
65
Lien means, with respect to any asset, any
mortgage, deed of trust, lien (statutory or other), pledge,
lease, easement, restriction, covenant, charge, security
interest or other encumbrance of any kind or nature in respect
of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale
or other title retention agreement.
Liquidated Damages has the meaning set forth
in the Registration Rights Agreement.
Moodys means Moodys Investors
Service, Inc., and its successors.
Net Available Proceeds means, with respect to
any Asset Sale, the proceeds thereof in the form of cash or Cash
Equivalents received by the Issuer or any of its Restricted
Subsidiaries from such Asset Sale, net of
(1) brokerage commissions and other fees and expenses
(including fees, discounts and expenses of legal counsel,
accountants and investment banks, consultants and placement
agents) of such Asset Sale;
(2) provisions for taxes payable as a result of such Asset
Sale (after taking into account any available tax credits or
deductions and any tax sharing arrangements);
(3) amounts required to be paid to any Person (other than
the Issuer or any Restricted Subsidiary and other than under a
Credit Facility) owning a beneficial interest in the assets
subject to the Asset Sale or having a Lien thereon;
(4) payments of unassumed liabilities (not constituting
Indebtedness) relating to the assets sold at the time of, or
within 30 days after the date of, such Asset Sale; and
(5) appropriate amounts to be provided by the Issuer or any
Restricted Subsidiary, as the case may be, as a reserve required
in accordance with GAAP against any adjustment in the sale price
of such asset or assets or liabilities associated with such
Asset Sale and retained by the Issuer or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including
pensions and other postemployment benefit liabilities,
liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset
Sale, all as reflected in an Officers Certificate
delivered to the Trustee; provided, however, that any amounts
remaining after adjustments, revaluations or liquidations of
such reserves shall constitute Net Available Proceeds.
Non-Recourse Debt means Indebtedness of an
Unrestricted Subsidiary:
(1) as to which neither the Issuer nor any Restricted
Subsidiary (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly
liable as a guarantor or otherwise, or (c) constitutes the
lender; and
(2) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action
against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of any other Indebtedness
(other than the Credit Agreement or the Notes) of the Issuer or
any Restricted Subsidiary to declare a default on the other
Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity.
Obligation means any principal, interest,
penalties, fees, indemnification, reimbursements, costs,
expenses, damages and other liabilities payable under the
documentation governing any Indebtedness.
Officer means any of the following of the
Issuer: the Chairman of the Board of Directors, the Chief
Executive Officer, the Chief Financial Officer, the President,
any Vice President, the Treasurer or the Secretary.
Officers Certificate means a
certificate signed by two Officers.
Pari Passu Indebtedness means any
Indebtedness of the Issuer or any Guarantor that ranks pari
passu in right of payment with the Notes or the Note Guarantees,
as applicable.
Permitted Business means the businesses
engaged in by the Issuer and its Subsidiaries on the Issue Date
as described in the Issuers offering circular dated
February 3, 2011 and businesses that are reasonably related
thereto or reasonable extensions thereof.
66
Permitted Holder means Credit Suisse, a Swiss
Bank, Credit Suisse Group, Credit Suisse Holdings (USA), Inc.,
Credit Suisse (USA), Inc. and their respective Affiliates.
Permitted Investment means:
(1) (i) Investments by the Issuer or any Subsidiary
Guarantor in (a) any Subsidiary Guarantor or (b) any
Person that will become immediately after such Investment a
Subsidiary Guarantor or that will merge or consolidate into the
Issuer or any Subsidiary Guarantor and (ii) Investments by
any Restricted Subsidiary that is not a Subsidiary Guarantor in
any other Restricted Subsidiary;
(2) Investments in the Issuer by any Restricted Subsidiary;
(3) loans and advances to directors, employees and officers
of the Issuer and the Restricted Subsidiaries (i) in the
ordinary course of business (including payroll, travel and
entertainment related advances) (other than any loans or
advances to any director or executive officer (or equivalent
thereof) that would be in violation of Section 402 of the
Sarbanes Oxley Act) and (ii) to purchase Equity Interests
of the Issuer not in excess of $2.5 million at any one time
outstanding;
(4) Hedging Obligations entered into for bona fide hedging
purposes of the Issuer or any Restricted Subsidiary not for the
purpose of speculation;
(5) Investments in cash and Cash Equivalents;
(6) receivables owing to the Issuer or any Restricted
Subsidiary if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms
may include such concessionary trade terms as the Issuer or any
such Restricted Subsidiary deems reasonable under the
circumstances;
(7) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers;
(8) Investments made by the Issuer or any Restricted
Subsidiary as a result of consideration received in connection
with an Asset Sale made in compliance with the covenant
described under Certain Covenants
Limitations on Asset Sales;
(9) lease, utility and other similar deposits in the
ordinary course of business;
(10) Investments made by the Issuer or a Restricted
Subsidiary for consideration consisting only of Qualified Equity
Interests of the Issuer or any of its Subsidiaries;
(11) stock, obligations or securities received in
settlement of debts created in the ordinary course of business
and owing to the Issuer or any Restricted Subsidiary or in
satisfaction of judgments;
(12) Permitted Joint Venture Investments made by the Issuer
or any of its Restricted Subsidiaries, in an aggregate amount
(measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this
clause (12) after the Issue Date, that does not exceed
$20.0 million;
(13) Investments existing on the Issue Date;
(14) repurchases of, or other Investments in, the Notes;
(15) advances, deposits and prepayments for purchases of
any assets, including any Equity Interests; and
(16) other Investments in any Person having an aggregate
Fair Market Value (measured on the date each such Investment was
made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to
this clause (16) since the Issue Date, not to exceed the
greater of (a) $25.0 million or (b) 5.0% of the
Issuers Consolidated Tangible Assets.
67
In determining whether any Investment is a Permitted Investment,
the Issuer may allocate or reallocate all or any portion of an
Investment among the clauses of this definition and any of the
provisions of the covenant described under the caption
Covenants Limitations on
Restricted Payments.
Permitted Joint Venture Investment means,
with respect to an Investment by any specified Person, an
Investment by such specified Person in any other Person engaged
in a Permitted Business (a) over which the specified Person
is responsible (either directly or through a services agreement)
for
day-to-day
operations or otherwise has operational and managerial control
of such other Person, or veto power over significant management
decisions affecting such other Person and (b) of which at
least 30% of the outstanding Equity Interests of such other
Person is at the time owned directly or indirectly by the
specified Person.
Permitted Liens means the following types of
Liens:
(1) inchoate Liens for taxes, assessments or governmental
charges or levies which (a) are not yet due and payable or
delinquent or (b) are being contested in good faith by
appropriate proceedings and as to which the Issuer or the
Restricted Subsidiaries shall have set aside on its books such
reserves as may be required pursuant to GAAP;
(2) Liens in respect of property of the Issuer or any
Restricted Subsidiary imposed by law, which were not incurred or
created to secure Indebtedness for borrowed money, such as
carriers, warehousemens, materialmens,
landlords, workmens, suppliers,
repairmens and mechanics Liens and other similar
Liens arising in the ordinary course of business, and which do
not in the aggregate materially detract from the value of the
property of the Issuer or its Restricted Subsidiaries, taken as
a whole, and do not materially impair the use thereof in the
operation of the business of the Issuer and its Restricted
Subsidiaries, taken as a whole;
(3) Liens (i) imposed by law or deposits made in
connection therewith in the ordinary course of business in
connection with workers compensation, unemployment
insurance and other types of social security, (ii) incurred
in the ordinary course of business to secure the performance of
tenders, statutory obligations (other than excise taxes),
surety, stay, customs and appeal bonds, statutory bonds, bids,
leases, government contracts, trade contracts, performance and
return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money) or
(iii) arising by virtue of deposits made in the ordinary
course of business to secure liability for premiums to insurance
carriers;
(4) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Persons
obligations in respect of bankers acceptances issued or
created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(5) Liens arising out of judgments or awards not resulting
in a Default or an Event of Default;
(6) easements, rights of way, restrictions (including
zoning restrictions), covenants, encroachments, protrusions and
other similar charges or encumbrances, and minor title
deficiencies on or with respect to any Real Property, in each
case whether now or hereafter in existence, not
(i) securing Indebtedness, (ii) individually or in the
aggregate materially impairing the value or marketability of
such Real Property and (iii) individually or in the
aggregate materially interfering with the conduct of the
business of the Issuer and its Restricted Subsidiaries at such
Real Property;
(7) Liens securing reimbursement obligations with respect
to commercial letters of credit which encumber documents and
other assets relating to such letters of credit and products and
proceeds thereof;
(8) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty
requirements of the Issuer or any Restricted Subsidiary,
including rights of offset and setoff;
(9) bankers Liens, rights of setoff and other similar
Liens existing solely with respect to cash and Cash Equivalents
on deposit in one or more of accounts maintained by the Issuer
or any Restricted Subsidiary, in each case granted in the
ordinary course of business in favor of the bank or banks with
which such accounts are maintained, securing amounts owing to
such bank with respect to cash
68
management and operating account arrangements, including those
involving pooled accounts and netting arrangements;
(10) Leases with respect to the assets or properties of the
Issuer and any Restricted Subsidiary, in each case entered into
in the ordinary course of the Issuers or such Restricted
Subsidiarys business so long as such Leases do not,
individually or in the aggregate, (i) interfere in any
material respect with the ordinary conduct of the business of
the Issuer or any Restricted Subsidiary or (ii) materially
impair the use (for its intended purposes) or the value of the
property subject thereto;
(11) the filing of financing statements solely as a
precautionary measure in connection with operating leases or
consignment of goods;
(12) Liens securing all of the Notes and Liens securing any
Note Guarantee;
(13) Liens securing Hedging Obligations entered into for
bona fide hedging purposes of the Issuer or any Restricted
Subsidiary not for the purpose of speculation;
(14) Liens existing on the Issue Date securing Indebtedness
outstanding on the Issue Date; provided that (i) the
aggregate principal amount of the Indebtedness, if any, secured
by such Liens does not increase; and (ii) such Liens do not
encumber any property other than the property subject thereto on
the Issue Date;
(15) Liens in favor of the Issuer or a Guarantor;
(16) Liens securing Indebtedness under the Credit
Facilities incurred and then outstanding pursuant to
clause (1) of the second paragraph of
Limitations on Additional Indebtedness;
(17) Liens arising pursuant to Purchase Money Indebtedness
incurred pursuant to clause (7) of the second paragraph of
Limitations on Additional Indebtedness;
provided that (i) the Indebtedness secured by any such Lien
(including refinancings thereof) does not exceed 100% of the
cost of the property being acquired or leased at the time of the
incurrence of such Indebtedness and (ii) any such Liens
attach only to the property being financed pursuant to such
Purchase Money Indebtedness and do not encumber any other
property of the Issuer or any Restricted Subsidiary.
(18) Liens securing Acquired Indebtedness permitted to be
incurred under the Indenture; provided that the Liens do not
extend to assets not subject to such Lien at the time of
acquisition (other than improvements thereon) and are no more
favorable to the lienholders than those securing such Acquired
Indebtedness prior to the incurrence of such Acquired
Indebtedness by the Issuer or a Restricted Subsidiary;
(19) Liens on property of a person existing at the time
such person is acquired or merged with or into or consolidated
with the Issuer or any Restricted Subsidiary (and not created in
anticipation or contemplation thereof); provided that such Liens
do not extend to property not subject to such Liens at the time
of acquisition (other than improvements thereon) and are no more
favorable to the lienholders than the existing Lien;
(20) Liens to secure Refinancing Indebtedness of
Indebtedness secured by Liens referred to in the foregoing
clauses (12), (14), (17), (18) and (19); provided that in
the case of Liens securing Refinancing Indebtedness of
Indebtedness secured by Liens referred to in the foregoing
clauses (14), (17), (18) and (19), such Liens do not extend
to any additional assets (other than improvements thereon and
replacements thereof);
(21) licenses of Intellectual Property granted by the
Issuer or any Restricted Subsidiary in the ordinary course of
business and not interfering in any material respect with the
ordinary conduct of the business of the Issuer or such
Restricted Subsidiary;
(22) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of
goods entered into by Issuer or any Restricted Subsidiary in the
ordinary course of business in accordance with the past
practices of the Issuer or such Restricted Subsidiary;
69
(23) Liens on assets of any Foreign Restricted Subsidiary
to secure Indebtedness of such Foreign Restricted Subsidiary
which Indebtedness is permitted by the Indenture;
(24) Liens of franchisors arising in the ordinary course of
business not securing Indebtedness;
(25) Liens in favor of the Trustee as provided for in the
Indenture on money or property held or collected by the Trustee
in its capacity as Trustee; and
(26) other Liens with respect to obligations that do not in
the aggregate exceed the greater of (a) $15.0 million
or (b) 3.0% of the Issuers Consolidated Tangible
Assets at any time outstanding.
Person means any individual, corporation,
partnership, limited liability company, joint venture,
incorporated or unincorporated association, joint-stock company,
trust, unincorporated organization or government or other agency
or political subdivision thereof or other entity of any kind.
Plan of Liquidation with respect to any
Person, means a plan that provides for, contemplates or the
effectuation of which is preceded or accompanied by (whether or
not substantially contemporaneously, in phases or otherwise):
(1) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of such Person otherwise than
as an entirety or substantially as an entirety; and (2) the
distribution of all or substantially all of the proceeds of such
sale, lease, conveyance or other disposition of all or
substantially all of the remaining assets of such Person to
holders of Equity Interests of such Person.
Preferred Stock means, with respect to any
Person, any and all preferred or preference stock or other
equity interests (however designated) of such Person whether now
outstanding or issued after the Issue Date.
principal means, with respect to the Notes,
the principal of, and premium, if any, on the Notes.
Purchase Money Indebtedness means
Indebtedness, including Capitalized Lease Obligations, of the
Issuer or any Restricted Subsidiary incurred for the purpose of
financing all or any part of the purchase price of property,
plant or equipment used in the business of the Issuer or any
Restricted Subsidiary or the cost of installation, construction
or improvement thereof; provided, however, that (except in the
case of Capitalized Lease Obligations) (1) the amount of
such Indebtedness shall not exceed such purchase price or cost
and (2) such Indebtedness shall be incurred within
90 days after such acquisition of such asset by the Issuer
or such Restricted Subsidiary or such installation, construction
or improvement.
Qualified Equity Interests of any Person
means Equity Interests of such Person other than Disqualified
Equity Interests; provided that such Equity Interests shall not
be deemed Qualified Equity Interests to the extent sold or owed
to a Subsidiary of such Person or financed, directly or
indirectly, using funds (1) borrowed from such Person or
any Subsidiary of such Person until and to the extent such
borrowing is repaid or (2) contributed, extended,
guaranteed or advanced by such Person or any Subsidiary of such
Person (including, without limitation, in respect of any
employee stock ownership or benefit plan). Unless otherwise
specified, Qualified Equity Interests refer to Qualified Equity
Interests of the Issuer.
Qualified Equity Offering means the issuance
and sale of Qualified Equity Interests of the Issuer to Persons
other than (x) any Permitted Holder or (y) any other
Person who is, prior to such issuance and sale, an Affiliate of
the Issuer; provided, however, that cash proceeds therefrom
equal to not less than the redemption price of the Notes to be
redeemed are received by the Issuer as a capital contribution
immediately prior to such redemption.
Rating Agencies means Moodys and
S&P.
Real Property means, collectively, all right,
title and interest (including any leasehold estate) in and to
any and all parcels of or interests in real property owned,
leased or operated by any person, whether by lease, license or
other means, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all
improvements and appurtenant fixtures and equipment, all general
intangibles and contract rights and other property and rights
incidental to the ownership, lease or operation thereof.
Redesignation has the meaning given to such
term in the covenant described under Certain
Covenants Limitations on Designation of Unrestricted
Subsidiaries.
70
Refinance means to refinance, repay, prepay,
replace, renew or refund.
Refinancing Indebtedness means Indebtedness
of the Issuer or a Restricted Subsidiary incurred in exchange
for, or the proceeds of which are used to redeem, refinance,
replace, defease, discharge, refund or otherwise retire for
value, in whole or in part, any Indebtedness of the Issuer or
any Restricted Subsidiary (the Refinanced
Indebtedness); provided that:
(1) the principal amount (and accreted value, in the case
of Indebtedness issued at a discount) of the Refinancing
Indebtedness does not exceed the principal amount (and accreted
value, as the case may be) of the Refinanced Indebtedness plus
the amount of accrued and unpaid interest on the Refinanced
Indebtedness, any reasonable premium paid to the holders of the
Refinanced Indebtedness and reasonable expenses incurred in
connection with the incurrence of the Refinancing Indebtedness;
(2) the obligor of Refinancing Indebtedness does not
include any Person (other than the Issuer or any Guarantor) that
is not an obligor of the Refinanced Indebtedness;
(3) if the Refinanced Indebtedness was subordinated in
right of payment to the Notes or the Note Guarantees, as the
case may be, then such Refinancing Indebtedness, by its terms,
is subordinate in right of payment to the Notes or the Note
Guarantees, as the case may be, at least to the same extent as
the Refinanced Indebtedness;
(4) the Refinancing Indebtedness has a final stated
maturity either (a) no earlier than the Refinanced
Indebtedness being repaid or amended or (b) after the
maturity date of the Notes;
(5) the portion, if any, of the Refinancing Indebtedness
that is scheduled to mature on or prior to the maturity date of
the Notes has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred that is equal to or
greater than the Weighted Average Life to Maturity of the
portion of the Refinanced Indebtedness being repaid that is
scheduled to mature on or prior to the maturity date of the
Notes; and
(6) the proceeds of the Refinancing Indebtedness shall be
used substantially concurrently with the incurrence thereof to
redeem, refinance, replace, defease, discharge, refund or
otherwise retire for value the Refinanced Indebtedness, unless
the Refinanced Indebtedness is not then due and is not
redeemable or prepayable at the option of the obligor thereof or
is redeemable or prepayable only with notice, in which case such
proceeds shall be held in a segregated account of the obligor of
the Refinanced Indebtedness until the Refinanced Indebtedness
becomes due or redeemable or prepayable or such notice period
lapses and then shall be used to refinance the Refinanced
Indebtedness; provided that in any event the Refinanced
Indebtedness shall be redeemed, refinanced, replaced, defeased,
discharged, refunded or otherwise retired for value within one
year of the incurrence of the Refinancing Indebtedness.
Registration Rights Agreement means
(i) the Registration Rights Agreement dated as of the Issue
Date among the Issuer, the Guarantors and the initial purchasers
of the old Notes issued on the Issue Date and (ii) any
other registration rights agreement entered into in connection
with an issuance of Additional Notes in a private offering after
the Issue Date.
Restricted Payment means any of the following:
(1) the declaration or payment of any dividend or any other
distribution on Equity Interests of the Issuer or any Restricted
Subsidiary or any payment made to the direct or indirect holders
(in their capacities as such) of Equity Interests of the Issuer
or any Restricted Subsidiary, including, without limitation, any
payment in connection with any merger or consolidation involving
the Issuer but excluding (a) dividends or distributions
payable solely in Qualified Equity Interests or through
accretion or accumulation of such dividends on such Equity
Interests and (b) in the case of Restricted Subsidiaries,
dividends or distributions payable to the Issuer or to a
Restricted Subsidiary and pro rata dividends or distributions
payable to minority stockholders of any Restricted Subsidiary;
(2) the purchase, redemption, defeasance or other
acquisition or retirement for value of any Equity Interests of
the Issuer or any Restricted Subsidiary (including, without
limitation, any payment in
71
connection with any merger or consolidation involving the
Issuer) but excluding any such Equity Interests held by the
Issuer or any Restricted Subsidiary;
(3) any Investment other than a Permitted
Investment; or
(4) any principal payment on, purchase, redemption,
defeasance, prepayment, decrease or other acquisition or
retirement for value prior to any scheduled maturity or prior to
any scheduled repayment of principal or sinking fund payment, as
the case may be, in respect of Subordinated Indebtedness (other
than any Subordinated Indebtedness owed to and held by the
Issuer or any Restricted Subsidiary).
Restricted Payments Basket has the meaning
given to such term in the first paragraph of the covenant
described under Certain Covenants
Limitations on Restricted Payments.
Restricted Subsidiary means any Subsidiary of
the Issuer other than an Unrestricted Subsidiary.
S&P means Standard &
Poors Ratings Services, a division of the McGraw-Hill
Companies, Inc., and its successors.
SEC means the U.S. Securities and
Exchange Commission.
Secretarys Certificate means a
certificate signed by the Secretary of the Issuer.
Securities Act means the U.S. Securities
Act of 1933, as amended.
Significant Subsidiary means (1) any
Restricted Subsidiary that would be a significant
subsidiary as defined in
Regulation S-X
promulgated pursuant to the Securities Act as such Regulation is
in effect on the Issue Date and (2) any Restricted
Subsidiary that, when aggregated with all other Restricted
Subsidiaries that are not otherwise Significant Subsidiaries and
as to which any event described in clause (7) under
Events of Default has occurred and is
continuing, or which are being released from their Guarantees
(in the case of clause (9) of the provisions described
under Amendment, Supplement and Waiver),
would constitute a Significant Subsidiary under clause (1)
of this definition.
Subordinated Indebtedness means Indebtedness
of the Issuer or any Restricted Subsidiary that is expressly
subordinated in right of payment to the Notes or the Note
Guarantees, respectively.
Subsidiary means, with respect to any Person:
(1) any corporation, limited liability company, association
or other business entity of which more than 50% of the total
voting power of the Equity Interests entitled (without regard to
the occurrence of any contingency) to vote in the election of
the Board of Directors thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of such Person (or a combination
thereof); and
(2) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners
of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
Unless otherwise specified, Subsidiary refers to a
Subsidiary of the Issuer.
Subsidiary Guarantor means any Guarantor that
is a Subsidiary.
Trust Indenture Act means the
Trust Indenture Act of 1939, as amended.
Unrestricted Subsidiary means (1) any
Subsidiary that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors of the
Issuer in accordance with the covenant described under
Certain Covenants Limitations on
Designation of Unrestricted Subsidiaries and (2) any
Subsidiary of an Unrestricted Subsidiary.
U.S. Government Obligations means direct
non-callable obligations of, or guaranteed by, the United States
of America for the payment of which guarantee or obligations the
full faith and credit of the United States is pledged.
72
Voting Stock with respect to any Person,
means securities of any class of Equity Interests of such Person
entitling the holders thereof (whether at all times or only so
long as no senior class of stock or other relevant equity
interest has voting power by reason of any contingency) to vote
in the election of members of the Board of Directors of such
Person.
Weighted Average Life to Maturity when
applied to any Indebtedness at any date, means the number of
years obtained by dividing (1) the sum of the products
obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other
required payment of principal, including payment at final
maturity, in respect thereof by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment by (2) the then
outstanding principal amount of such Indebtedness.
Book-Entry,
Delivery and Form
The new Notes, like the old notes, will be represented by one or
more permanent global notes in registered form without interest
coupons (the Global Notes).
The Global Notes will be deposited upon issuance with the
trustee as custodian for The Depository Trust Company
(DTC), in New York, New York, and registered in the
name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described
below.
Except as set forth below, the Global Notes may be transferred,
in whole but not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the
Global Notes may not be exchanged for new Notes in registered,
certificated form (Certificated Notes) except in the
limited circumstances described below. See
Exchange of Global Notes for Certificated
Notes. Except in the limited circumstances described
below, owners of beneficial interests in the Global Notes will
not be entitled to receive physical delivery of Certificated
Notes.
In addition, transfers of beneficial interests in the Global
Notes will be subject to the applicable rules and procedures of
DTC and its direct or indirect participants, including,
Euroclear Bank S.A./N.V., as operator of the Euroclear System
(Euroclear), and Clearstream Banking S.A.
(Clearstream), which may change from time to time.
Depositary
Procedures
The following description of the operations and procedures of
DTC, Euroclear and Clearstream is provided solely as a matter of
convenience. These operations and procedures are solely within
the control of the respective settlement systems and are subject
to changes by them. We take no responsibility for these
operations and procedures and urge investors to contact the
system or their participants directly to discuss these matters.
DTC has advised the Issuer that DTC is a limited-purpose trust
company created to hold securities for its participating
organizations (collectively, the Participants) and
to facilitate the clearance and settlement of transactions in
those securities between Participants through electronic
book-entry changes in accounts of its Participants. The
Participants include securities brokers and dealers (including
the initial purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to
DTCs system is also available to other entities such as
banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the Indirect
Participants). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in,
each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
DTC has also advised the Issuer that, pursuant to procedures
established by it:
(1) upon deposit of the Global Notes, DTC will credit the
accounts of Participants designated by the initial purchasers
with portions of the principal amount of the Global
Notes; and
73
(2) ownership of these interests in the Global Notes will
be shown on, and the transfer of ownership of these interests
will be effected only through, records maintained by DTC (with
respect to the Participants) or by the Participants and the
Indirect Participants (with respect to other owners of
beneficial interests in the Global Notes).
Investors in the Global Notes who are Participants in DTCs
system may hold their interests therein directly through DTC.
Investors in the Global Notes who are not Participants may hold
their interests therein indirectly through organizations
(including Euroclear and Clearstream) which are Participants in
such system. Those interests held through Euroclear or
Clearstream may also be subject to the procedures and
requirements of such systems.
The laws of some states require that certain Persons take
physical delivery in definitive form of securities that they
own. Consequently, the ability to transfer beneficial interests
in a Global Note to such Persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in
turn act on behalf of Indirect Participants, the ability of a
Person having beneficial interests in a Global Note to pledge
such interests to Persons that do not participate in the DTC
system, or otherwise take actions in respect of such interests,
may be affected by the lack of a physical certificate evidencing
such interests.
Except as described below, owners of an interest in the
Global Notes will not have Notes registered in their names, will
not receive physical delivery of Certificated Notes and will not
be considered the registered owners or Holders
thereof under the indenture for any purpose.
Payments in respect of the principal of, and interest and
premium, if any, on a Global Note registered in the name of DTC
or its nominee will be payable to DTC, or its nominee, in its
capacity as the registered Holder under the indenture. Under the
terms of the indenture, the Issuer and the trustee will treat
the Persons in whose names the new Notes, including the Global
Notes, are registered as the owners of the new Notes for the
purpose of receiving payments and for all other purposes.
Consequently, neither the Issuer, the trustee nor any agent of
the Issuer or the trustee has or will have any responsibility or
liability for:
(1) any aspect of DTCs records or any
Participants or Indirect Participants records
relating to or payments made on account of beneficial ownership
interests in the Global Notes or for maintaining, supervising or
reviewing any of DTCs records or any Participants or
Indirect Participants records relating to the beneficial
ownership interests in the Global Notes; or
(2) any other matter relating to the actions and practices
of DTC or any of its Participants or Indirect Participants.
DTC has advised the Issuer that its current practice, at the due
date of any payment in respect of securities such as the new
Notes, is to credit the accounts of the relevant Participants
with the payment on the payment date unless DTC has reason to
believe it will not receive payment on such payment date. Each
relevant Participant is credited with an amount proportionate to
its beneficial ownership of an interest in the principal amount
of the relevant security as shown on the records of DTC.
Payments by the Participants and the Indirect Participants to
the beneficial owners of new Notes will be governed by standing
instructions and customary practices and will be the
responsibility of the Participants or the Indirect Participants
and will not be the responsibility of DTC, the trustee or the
Issuer. Neither the Issuer nor the trustee will be liable for
any delay by DTC or any of its Participants or Indirect
Participants in identifying the beneficial owners of the new
Notes, and the Issuer and the trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its
nominee for all purposes.
Transfers between Participants will be effected in accordance
with DTCs procedures, and will be settled in
same-day
funds, and transfers between participants in Euroclear and
Clearstream will be effected in accordance with their respective
rules and operating procedures.
Subject to compliance with the transfer restrictions applicable
to the new Notes described herein, cross-market transfers
between the Participants, on the one hand, and Euroclear or
Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTCs rules on behalf of
Euroclear or Clearstream, as the case may be, by its respective
depositary; however, such cross-market transactions will
74
require delivery of instructions to Euroclear or Clearstream, as
the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the
established deadlines (Brussels time) of such system. Euroclear
or Clearstream, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement
on its behalf by delivering or receiving interests in the
relevant Global Note in DTC, and making or receiving payment in
accordance with normal procedures for
same-day
funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly
to the depositaries for Euroclear or Clearstream.
DTC has advised the Issuer that it will take any action
permitted to be taken by a Holder of Notes only at the direction
of one or more Participants to whose account DTC has credited
the interests in the Global Notes and only in respect of such
portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such
direction. However, if there is an Event of Default under the
Notes, DTC reserves the right to exchange the Global Notes for
legended new Notes in registered, certificated form, and to
distribute such new Notes to its Participants.
Although DTC, Euroclear and Clearstream have agreed to the
foregoing procedures to facilitate transfers of interests in the
Global Notes among participants in DTC, Euroclear and
Clearstream, they are under no obligation to perform or to
continue to perform such procedures, and may discontinue such
procedures at any time. None of the Issuer, the trustee or any
of their respective agents will have any responsibility for the
performance by DTC, Euroclear or Clearstream or their respective
participants or indirect participants of their respective
obligations under the rules and procedures governing their
operations.
Exchange
of Global Notes for Certificated Notes
A Global Note is exchangeable for Certificated Notes if:
(1) DTC (a) notifies the Issuer that it is unwilling
or unable to continue as depositary for any Global Note, or
(b) has ceased to be a clearing agency registered under the
Exchange Act, and, in either event, the Issuer fails to appoint
a successor depositary; or
(2) the Issuer, at its option, but subject to the
procedures of the depositary, notifies the trustee in writing
that it elects to cause the issuance of the Certificated Notes.
In all cases, Certificated Notes delivered in exchange for any
Global Note or beneficial interests in Global Notes will be
registered in the names, and issued in any approved
denominations, requested by or on behalf of DTC (in accordance
with its customary procedures).
Same-Day
Settlement and Payment
The Issuer will make payments in respect of the new Notes
represented by the Global Notes (including principal, interest
and premium, if any) by wire transfer of immediately available
funds to the accounts specified by the Global Note Holder. The
Issuer will make all payments of principal, interest and
premium, if any, with respect to Certificated Notes by wire
transfer of immediately available funds to the accounts
specified by the holders of the Certificated Notes. All other
payments on the new Notes will be made as the office or agency
of the paying agent within New York, New York unless the Issuer
elects to make interest payments by check mailed to the Holders
at their addresses set forth in the register of Holders. The new
Notes represented by the Global Notes are expected to be
eligible to trade in DTCs
Same-Day
Funds Settlement System, and any permitted secondary market
trading activity in such new Notes will, therefore, be required
by DTC to be settled in immediately available funds. The Issuer
expects that secondary trading in any Certificated Notes will
also be settled in immediately available funds.
75
Because of time zone differences, the securities account of a
Euroclear or Clearstream participant purchasing an interest in a
Global Note from a Participant in DTC will be credited, and any
such crediting will be reported to the relevant Euroclear or
Clearstream participant, during the securities settlement
processing day (which must be a business day for Euroclear and
Clearstream) immediately following the settlement date of DTC.
DTC has advised the Issuer that cash received in Euroclear or
Clearstream as a result of sales of beneficial interests in a
Global Note by or through a Euroclear or Clearstream participant
to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant
Euroclear or Clearstream cash account only as of the business
day for Euroclear or Clearstream following DTCs settlement
date.
76
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion of certain U.S. federal income tax
consequences relevant to the exchange of new notes for old notes
pursuant to the exchange offer does not purport to be a complete
analysis of all potential tax effects. The discussion is based
upon the Internal Revenue Code of 1986, as amended, Treasury
Regulations, Internal Revenue Service rulings and pronouncements
and judicial decisions now in effect, all of which may be
subject to change at any time by legislative, judicial or
administrative action. These changes may be applied
retroactively in a manner that could adversely affect a holder
of new notes. The description does not consider the effect of
any applicable foreign, state, local or other tax laws or estate
or gift tax consequences.
The exchange of new notes for old notes pursuant to the exchange
offer will not be a taxable exchange for U.S. federal
income tax purposes. A holder will not recognize any taxable
gain or loss as a result of the exchange and will have the same
tax basis and holding period in the new notes as the holder had
in the old notes immediately before the exchange.
77
PLAN OF
DISTRIBUTION
Each broker-dealer that receives new notes for its own account
pursuant to the exchange offer must acknowledge that it will
deliver a prospectus in connection with any resale of such new
notes. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes
where such old notes were acquired as a result of market-making
activities or other trading activities. We have agreed that, for
a period of 180 days after the consummation of the exchange
offer, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any
such resale. In addition,
until ,
2011, all dealers effecting transactions in the new notes may be
required to deliver a prospectus.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their
own account pursuant to the exchange offer may be sold from time
to time in one or more transactions in the
over-the-counter
market, in negotiated transactions, through the writing of
options on the new notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such
broker-dealer or the purchasers of any such new notes. Any
broker-dealer that resells new notes that were received by it
for its own account pursuant to the exchange offer and any
broker or dealer that participates in a distribution of such new
notes may be deemed to be an underwriter within the
meaning of the Securities Act and any profit on any such resale
of new notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and be delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an underwriter within the meaning of the
Securities Act.
For a period of 180 days after the consummation of the
exchange offer, we will promptly send additional copies of this
prospectus and any amendment or supplement to this prospectus to
any broker-dealer that requests such documents in the letter of
transmittal. We have agreed to pay all expenses incident to the
exchange offer (including the expenses of one counsel for the
holders of the notes) other than commissions or concessions of
any brokers or dealers and will indemnify the holders of the old
notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
Following completion of the exchange offer, we may, in our sole
discretion, commence one or more additional exchange offers to
holders of old notes who did not exchange their old notes for
new notes in the exchange offer on terms which may differ from
those contained in this prospectus and the enclosed letter of
transmittal. This prospectus, as it may be amended or
supplemented from time to time, may be used by us in connection
with any additional exchange offers. These additional exchange
offers may take place from time to time until all outstanding
old notes have been exchanged for new notes, subject to the
terms and conditions in the prospectus and letter of transmittal
distributed by us in connection with these additional exchange
offers.
78
LEGAL
MATTERS
The validity of the new notes offered hereby will be passed upon
for us by Andrews Kurth LLP, Houston, Texas.
EXPERTS
The consolidated financial statements and related financial
statement schedules of Basic Energy Services, Inc. and
subsidiaries as of December 31, 2010 and 2009, and for each
of the years in the three-year period ended December 31,
2010, and managements assessment of the effectiveness of
internal control over financial reporting as of
December 31, 2010 have been incorporated by reference in
this prospectus and in the registration statement in reliance
upon the reports of KPMG LLP, independent registered public
accounting firm, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The audit report on the effectiveness of internal control over
financial reporting as of December 31, 2010, contains an
explanatory paragraph that states that the Company acquired
Taylor Rigs, LLC, Platinum Pressure Services, Inc., and Admiral
Well Service, Inc. (collectively the Acquisitions)
during 2010, and management excluded from its assessment of the
effectiveness of the Companys internal control over
financial reporting as of December 31, 2010, the
Acquisitions internal control over financial reporting
associated with total assets of $61.8 million and total
revenues of $3.6 million included in the consolidated
financial statements of Basic Energy Services, Inc. and
subsidiaries as of and for the year ended December 31,
2010. KPMG LLPs audit of internal control over financial
reporting of Basic Energy Services, Inc. also excluded an
evaluation of the internal control over financial reporting of
the Acquisitions.
The combined financial statements of The Maverick Companies as
of December 31, 2010, and for the year then ended, have
been included in the prospectus and in the registration
statement in reliance upon the reports of KPMG LLP, independent
registered public accounting firm, appearing elsewhere in this
prospectus, and upon the authority of said firm as experts in
accounting and auditing.
79
Independent
Auditors Report
The Board of Directors
Basic Energy Services, Inc.:
We have audited the accompanying combined balance sheet of The
Maverick Companies (Maverick Stimulation Company, LLC, Maverick
Coil Tubing Services, LLC, Maverick Companies, LLC, MCM
Holdings, LLC, MSM Leasing, LLC, Maverick Solutions, LLC and
Maverick Thru-Tubing Services, LLC) as of December 31,
2010, and the related combined statements of operations,
members capital, and cash flows for the year then ended.
These combined financial statements are the responsibility of
the Companies management. Our responsibility is to express
an opinion on these combined financial statements based on our
audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes consideration
of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Companies internal control
over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to
above present fairly, in all material respects, the financial
position of The Maverick Companies as of December 31, 2010,
and the results of their operations and their cash flows for the
year then ended in conformity with U.S. generally accepted
accounting principles.
September 7, 2011
F-2
THE
MAVERICK COMPANIES
Combined
Balance Sheets
June 30,
2011 (unaudited) and December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,414,969
|
|
|
|
1,325,117
|
|
Trade accounts receivable (net of allowance of $45,000 and
$152,718, respectively)
|
|
|
14,443,756
|
|
|
|
6,898,220
|
|
Inventories
|
|
|
1,467,687
|
|
|
|
1,488,270
|
|
Prepaids and other
|
|
|
1,087,606
|
|
|
|
1,159,369
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
18,414,018
|
|
|
|
10,870,976
|
|
Property and equipment, net
|
|
|
55,435,974
|
|
|
|
47,068,934
|
|
Other assets
|
|
|
389,830
|
|
|
|
334,179
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
74,239,822
|
|
|
|
58,274,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Members Capital
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Outstanding checks in excess of bank balance
|
|
$
|
|
|
|
|
7,895
|
|
Accounts payable trade
|
|
|
3,214,597
|
|
|
|
2,623,932
|
|
Accrued liabilities
|
|
|
2,047,403
|
|
|
|
1,760,786
|
|
Customer advance
|
|
|
4,254,500
|
|
|
|
3,600,000
|
|
Lines of credit
|
|
|
1,331,030
|
|
|
|
3,283,631
|
|
Related party notes payable current portion
|
|
|
|
|
|
|
1,413,704
|
|
Long-term debt current portion
|
|
|
5,385,522
|
|
|
|
3,498,917
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
16,233,052
|
|
|
|
16,188,865
|
|
Long-term deferred compensation
|
|
|
379,050
|
|
|
|
334,179
|
|
Related party notes payable
|
|
|
5,565,000
|
|
|
|
4,151,296
|
|
Long-term debt
|
|
|
11,901,588
|
|
|
|
10,057,316
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
34,078,690
|
|
|
|
30,731,656
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members capital
|
|
|
40,161,132
|
|
|
|
27,542,433
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and members capital
|
|
$
|
74,239,822
|
|
|
|
58,274,089
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to combined financial statements.
F-3
THE
MAVERICK COMPANIES
Combined
Statements of Operations
Six
months ended June 30, 2011 (unaudited) and year ended
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
|
|
Revenue
|
|
$
|
53,953,864
|
|
|
|
52,275,637
|
|
Cost of revenue
|
|
|
30,294,504
|
|
|
|
34,123,928
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
23,659,360
|
|
|
|
18,151,709
|
|
General and administrative expenses
|
|
|
8,343,809
|
|
|
|
9,228,808
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
15,315,551
|
|
|
|
8,922,901
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(794,491
|
)
|
|
|
(897,472
|
)
|
Other income
|
|
|
65,389
|
|
|
|
498,900
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense) net
|
|
|
(729,102
|
)
|
|
|
(398,572
|
)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
14,586,449
|
|
|
|
8,524,329
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to combined financial statements.
F-4
THE
MAVERICK COMPANIES
Combined
Statements of Members Capital
Six
months ended June 30, 2011 (unaudited) and year ended
December 31, 2010
|
|
|
|
|
Balance December 31, 2009
|
|
$
|
19,868,104
|
|
Net income for the year ended December 31, 2010
|
|
|
8,524,329
|
|
Members distributions
|
|
|
(850,000
|
)
|
|
|
|
|
|
Balance December 31, 2010
|
|
|
27,542,433
|
|
Net income for the period ended June 30, 2011
|
|
|
14,586,449
|
|
Members distributions
|
|
|
(1,967,750
|
)
|
|
|
|
|
|
Balance June 30, 2011 (unaudited)
|
|
$
|
40,161,132
|
|
|
|
|
|
|
See accompanying notes to combined financial statements.
F-5
THE
MAVERICK COMPANIES
Combined
Statements of Cash Flows
Six
months ended June 30, 2011 (unaudited) and year ended
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
14,586,449
|
|
|
|
8,524,329
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
4,429,129
|
|
|
|
5,869,212
|
|
Change in allowance for doubtful accounts
|
|
|
(107,718
|
)
|
|
|
127,718
|
|
(Gain) loss on sale of assets
|
|
|
39,272
|
|
|
|
(16,892
|
)
|
Deferred compensation
|
|
|
(10,780
|
)
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(7,437,818
|
)
|
|
|
(2,755,552
|
)
|
Inventories
|
|
|
20,583
|
|
|
|
(723,870
|
)
|
Prepaids and other
|
|
|
71,763
|
|
|
|
(808,586
|
)
|
Accounts payable trade
|
|
|
590,665
|
|
|
|
974,109
|
|
Accrued liabilities
|
|
|
286,617
|
|
|
|
1,033,118
|
|
Customer advance
|
|
|
654,500
|
|
|
|
2,750,450
|
|
Outstanding checks in excess of bank balance
|
|
|
(7,895
|
)
|
|
|
7,895
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities
|
|
|
13,114,767
|
|
|
|
14,981,931
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(12,856,541
|
)
|
|
|
(24,869,830
|
)
|
Sale of property and equipment
|
|
|
21,100
|
|
|
|
119,012
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities
|
|
|
(12,835,441
|
)
|
|
|
(24,750,818
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
Member distributions
|
|
|
(1,967,750
|
)
|
|
|
(850,000
|
)
|
Borrowings under line of credit
|
|
|
15,288,576
|
|
|
|
35,733,331
|
|
Repayment of lines of credit
|
|
|
(17,241,177
|
)
|
|
|
(33,983,700
|
)
|
Proceeds from issuances of long-term debt
|
|
|
5,437,405
|
|
|
|
11,745,100
|
|
Repayment of long-term debt
|
|
|
(1,706,528
|
)
|
|
|
(2,616,117
|
)
|
Proceeds from related party notes payable
|
|
|
|
|
|
|
800,000
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) financing activities
|
|
|
(189,474
|
)
|
|
|
10,828,614
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
89,852
|
|
|
|
1,059,727
|
|
Cash and cash equivalents, beginning of period
|
|
|
1,325,117
|
|
|
|
265,390
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
1,414,969
|
|
|
|
1,325,117
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
808,843
|
|
|
|
963,185
|
|
See accompanying notes to combined financial statements.
F-6
THE
MAVERICK COMPANIES
Notes to
Combined Financial Statements
June 30,
2011 (unaudited) and December 31, 2010
The Maverick Companies are limited liability companies formed
under the Colorado Limited Liability Company Act.
The Companies provide pressure pumping, coil tubing, and other
oil field services to the petroleum industry primarily in the
Rocky Mountain region and surrounding areas. The Companies
pressure pumping services consist of well stimulation, and
process and pipeline services. Stimulation services include
fracturing, acidizing, and nitrogen services. Process and
pipeline services involve pressure testing of the integrity of
pipe connections.
|
|
(2)
|
Summary
of Significant Accounting Policies
|
The accompanying combined financial statements of The Maverick
Companies (the Companies) have been prepared in accordance with
accounting principles generally accepted in the United States.
The following summary of significant accounting policies is
presented to assist the reader in evaluating the Companies
combined financial statements.
|
|
(a)
|
Principles
of Combination
|
The combined financial statements include Maverick Stimulation
Company, LLC, Maverick Coil Tubing Services, LLC, Maverick
Companies, LLC, MCM Holdings, LLC, MSM Leasing, LLC, Maverick
Solutions, LLC and Maverick Thru-Tubing Services, LLC. All
material intercompany accounts and transactions have been
eliminated in combination. These entities are presented on a
combined basis to reflect the common management and ownership
group of the entities.
The preparation of the Companies combined financial
statements in conformity with accounting principles generally
accepted in the United States requires the Companies
management to make estimates and assumptions that affect the
amounts reported in the accompanying combined financial
statements. Actual results could differ from those estimates.
The Companies consider all highly-liquid investments with an
original maturity of three months or less to be cash equivalents.
Inventories consist primarily of products which are consumed in
the Companies services provided to customers and spare
parts for equipment used in providing these services.
Inventories are stated at lower of cost or market with cost
being determined using the average cost method.
|
|
(e)
|
Property
and Equipment
|
Property and equipment is carried at cost. Depreciation is
computed on the straight-line method based on the estimated
useful life of the asset. The estimated useful life of buildings
is 20 to 40 years, while the estimated useful lives of
equipment and trucks range from 5 to 8 years, vehicles
range from 5 to 8 years, office furniture and fixtures is
5 years and iron and pipe is 5 years.
In 2011, the Companies entered into lease agreements for certain
property which are accounted for as capital leases. Accordingly,
the assets and liabilities are recorded at the amount equal to
the lesser of
F-7
THE
MAVERICK COMPANIES
Notes to
Combined Financial Statements
June 30,
2011 (unaudited) and December 31,
2010 (Continued)
the present value of the minimum lease payments or the fair
value of the leased property at the beginning of the lease term.
Such assets are amortized on a straight-line basis over the
lesser of the related lease term or their economic lives. This
amortization is included in depreciation and amortization
expense.
Long-lived assets, such as property and equipment, are reviewed
for impairment at a minimum annually, or whenever in
managements judgment events or changes in circumstances
indicate that the carrying amount of such assets may not be
recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of such assets
to estimated undiscounted future cash flows expected to be
generated by the assets. Expected future cash flows and carrying
values are aggregated at their lowest identifiable level. If the
carrying amount of such assets exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which
the carrying amount of such assets exceeds the fair value of the
assets.
A Colorado limited liability company has the election to be
treated as either a partnership or a corporation for federal and
state income tax purposes. The Companies have elected to file
separate partnership income tax returns. Accordingly, no
provision for income taxes is made in the accompanying financial
statements since the payment of income taxes would be the
obligation of the individual members.
The Companies recognize revenue when services are performed,
collection of the relevant receivables is probable, persuasive
evidence of an arrangement exists and the price is fixed or
determinable.
|
|
(i)
|
Concentrations
of Credit Risk
|
The Companies financial instruments that are exposed to
concentrations of credit risk consist primarily of cash and cash
equivalents and trade accounts receivable. The Companies
cash and cash equivalents are deposited with financial
institutions. Such deposit accounts at times may exceed
federally insured limits. The Companies have not experienced any
losses in such accounts.
Concentrations of credit risk with respect to trade accounts
receivable are generally limited due to customers dispersed
across geographic areas and generally short payment terms.
Ongoing credit evaluations of customers financial
condition are performed and generally no collateral is required.
The companies provide services primarily in the Rocky Mountain
region and surrounding areas for several main customers. Two
major customers represented 23% and 11% of revenue for the six
months ended June 30, 2011. Three customers made up 20%,
16%, and 8% of trade accounts receivable at June 30, 2011.
Two major customers represented 15% and 13% of revenue for the
year ended December 31, 2010. Three customers made up 23%,
18%, and 10% of trade accounts receivable at December 31,
2010.
Trade receivables are carried at their estimated collectible
amounts. Trade credit is generally extended on a short-term
basis; thus trade receivables do not bear interest.
F-8
THE
MAVERICK COMPANIES
Notes to
Combined Financial Statements
June 30,
2011 (unaudited) and December 31,
2010 (Continued)
Trade accounts receivable are periodically evaluated for
collectability based on past credit history with customers and
their current financial condition. Trade receivables are charged
against the allowance account when such receivables are deemed
to be uncollectible.
The Companies maintain an allowance for doubtful accounts based
on managements analysis of uncollectible accounts. At
June 30, 2011, the allowance was $45,000. Trade receivables
past due more than 90 days at June 30, 2011 were
$19,126. At December 31, 2010, the allowance was $152,718.
Trade receivables past due more than 90 days at
December 31, 2010 were $129,675.
|
|
(k)
|
Fair
Value Measurements
|
The Companies utilize valuation techniques that maximize the use
of observable inputs and minimize the use of unobservable inputs
to the extent possible. The Companies determine fair value based
on assumptions that market participants would use in pricing an
asset or liability in the principal or most advantageous market.
When considering market participant assumptions in fair value
measurements, the following fair value hierarchy distinguishes
between observable and unobservable inputs, which are
categorized in one of the following levels:
|
|
|
|
|
Level 1 Inputs: Unadjusted quoted prices
in active markets for identical assets or liabilities accessible
to the reporting entity at the measurement date.
|
|
|
|
Level 2 Inputs: Other than quoted prices
included in Level 1 inputs that are observable for the
asset or liability, either directly or indirectly, for
substantially the full term of the asset or liability.
|
|
|
|
Level 3 Inputs: Unobservable inputs for
the asset or liability used to measure fair value to the extent
that observable inputs are not available, thereby allowing for
situations in which there is little, if any, market activity for
the asset or liability at measurement date.
|
The Companies maintain an investment account to fund a deferred
compensation obligation to certain key employees. The investment
account is recorded at fair market value and is included in
other assets. The Companies utilize level 1 inputs in
determining the fair value of the investment account.
On July 8, 2011, the outstanding equity interests of The
Maverick Companies were acquired by Basic Energy Services, Inc.
for total cash consideration of $180.0 million, net of
working capital acquired. In connection with this acquisition,
the Companies paid off and terminated all debt facilities and
related party notes payable (see notes 5 and 7). In
addition, the Companies paid approximately $550,000 in
compensation to various employees in connection with the
acquisition. Additionally, as a result of the change in control,
the deferred compensation plan was terminated and the amounts
were distributed. The affects of these transactions have not
been reflected in the balances and notes to the combined
financial statements for the periods ending June 30, 2011
and December 31, 2010.
Management has evaluated subsequent events through
September 7, 2011, the date which the combined financial
statements were available to be issued.
The operating agreements of the Companies provide for profits
and losses to be allocated in accordance with each members
ownership interest. The operating agreements provide for cash
distributions for each members income tax liabilities
resulting from each members ownership interest in the
Companies. Other cash distributions may be made to members out
of available cash, provided that the initial bank debt of the
Companies is current and working capital is sufficient.
F-9
THE
MAVERICK COMPANIES
Notes to
Combined Financial Statements
June 30,
2011 (unaudited) and December 31,
2010 (Continued)
|
|
(4)
|
Property
and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
|
|
Land
|
|
$
|
1,464,333
|
|
|
|
1,464,333
|
|
Leasehold improvements
|
|
|
494,820
|
|
|
|
237,078
|
|
Buildings
|
|
|
8,968,413
|
|
|
|
7,722,566
|
|
Equipment and trucks
|
|
|
69,992,741
|
|
|
|
63,020,021
|
|
Cars and pickups
|
|
|
2,926,937
|
|
|
|
2,898,304
|
|
Office furniture and fixtures
|
|
|
629,876
|
|
|
|
906,157
|
|
Iron and pipe
|
|
|
3,257,704
|
|
|
|
643,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,734,824
|
|
|
|
76,891,769
|
|
Less accumulated depreciation
|
|
|
32,298,850
|
|
|
|
29,822,835
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
55,435,974
|
|
|
|
47,068,934
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
$
|
4,429,129
|
|
|
|
5,869,212
|
|
F-10
THE
MAVERICK COMPANIES
Notes to
Combined Financial Statements
June 30,
2011 (unaudited) and December 31,
2010 (Continued)
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
|
|
One Stimulation term loan with UMB with interest of 5.75%,
maturing in 2014, secured by a first lien on all accounts
receivable, inventory, and furniture, fixtures, equipment and
vehicles, guaranteed by the members
|
|
$
|
268,492
|
|
|
|
303,000
|
|
One Stimulation line of credit with UMB, refinanced in March
2011 with interest of 5.95%, maturing in 2016, secured by
various commercial security agreements covering all accounts
receivable, equipment and general intangibles and guaranteed by
members
|
|
|
6,802,596
|
|
|
|
4,871,800
|
|
Five Coil Tubing Services term loans with UMB with interest
ranging from 3.75% to 5.75%, maturing in 2011 through 2014,
secured by a first lien on all accounts receivable, inventory,
equipment, and vehicles, guaranteed by the members and by
Maverick Stimulation Company
|
|
|
4,801,966
|
|
|
|
5,839,022
|
|
One Solutions term loan with UMB with interest of 4.00%,
maturing in 2014, secured by a first lien on all inventory,
equipment and vehicles, guaranteed by members
|
|
|
70,698
|
|
|
|
139,452
|
|
Five MCM Holdings term loans with UMB maturing in 2011 through
2014, with interest ranging from 5.95% to 7.75%, secured by
property in Fort Morgan and Englewood, Colorado and Vernal,
Utah
|
|
|
1,762,468
|
|
|
|
669,207
|
|
Two MSM Leasing term loans with UMB maturing in 2014 and 2015
with interest at 5.75% secured by all account, equipment and
general intangibles and assignment of lease with Maverick
Stimulation Company
|
|
|
1,527,506
|
|
|
|
1,733,752
|
|
Capital leases
|
|
|
2,053,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,287,110
|
|
|
|
13,556,233
|
|
Less current portion of long-term debt, including current
portion of capital lease payments of $539,693 and $0 as of
June 30, 2011 and December 31, 2010, respectively
|
|
|
5,385,522
|
|
|
|
3,498,917
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
11,901,588
|
|
|
|
10,057,316
|
|
|
|
|
|
|
|
|
|
|
F-11
THE
MAVERICK COMPANIES
Notes to
Combined Financial Statements
June 30,
2011 (unaudited) and December 31,
2010 (Continued)
As of December 31, 2010 the aggregate maturities of debt
for the next five years are as follows:
|
|
|
|
|
|
|
Amount
|
|
|
Year ending December 31:
|
|
|
|
|
2011
|
|
$
|
3,498,917
|
|
2012
|
|
|
3,232,741
|
|
2013
|
|
|
3,380,680
|
|
2014
|
|
|
3,399,907
|
|
2015
|
|
|
43,988
|
|
|
|
|
|
|
|
|
$
|
13,556,233
|
|
|
|
|
|
|
|
|
(6)
|
Revolving
Lines of Credit
|
In 2010, the Companies renewed six revolving lines of credit
agreements with UMB for $11,047,000, not to exceed 75% of
qualifying accounts receivable. The lines bear interest at the
higher of the banks index rate or 3.75% (3.75% at
December 31, 2010). The lines are cross-collateralized by
the term loans (note 5), secured by substantially all
assets of the Companies and guaranteed by the members. The
balance on the lines at June 30, 2011 and December 31,
2010 was $1,331,030 and $3,283,631, respectively. The lines
expire in September 2011.
In November 2010, Maverick Stimulation entered into a line of
credit of $7,000,000 with UMB for certain capital purchases. The
line expires in May 2011. It is collateralized by the equipment
purchased and bears interest at 3.75%. The balance at
June 30, 2011 and December 31, 2010 was $6,802,596 and
$4,871,800, respectively. This balance was refinanced in March
2011 to an amortizing loan with interest of 5.95%, maturing in
2016. The outstanding balance of this facility is included in
long-term debt on the balance sheet.
|
|
(7)
|
Related
Party Transactions
|
The Companies have a lease agreement for the use of an airplane.
The airplane is owned by Aero Aviation Enterprises, LLC, an
entity with partial common ownership. The Companies paid
approximately $117,167 for the six months ended June 30,
2011 and $277,084 for the year ended December 31, 2010 in
lease payments.
The Companies have various related party notes payable with
members as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
|
|
One Stimulation term loan with Stimulation members, maturing in
2015 with interest of 7.00% uncollateralized, interest accrued
of $70,217 and $33,562 at June 30, 2011 and
December 31, 2010, respectively
|
|
$
|
1,000,000
|
|
|
|
1,000,000
|
|
Six MSM Leasing term loans with MSM members maturing in 2014 and
2015 with interest ranging from 7.00% to 7.25%,
uncollateralized, interest accrued of $581,716 and $327,337 at
June 30, 2011 and December 31, 2010, respectively
|
|
|
4,565,000
|
|
|
|
4,565,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,565,000
|
|
|
|
5,565,000
|
|
Less current portion of related party notes payable
|
|
|
|
|
|
|
1,413,704
|
|
|
|
|
|
|
|
|
|
|
Total related party notes payable
|
|
$
|
5,565,000
|
|
|
|
4,151,296
|
|
|
|
|
|
|
|
|
|
|
F-12
THE
MAVERICK COMPANIES
Notes to
Combined Financial Statements
June 30,
2011 (unaudited) and December 31,
2010 (Continued)
As of December 31, 2010 the aggregate maturities of related
party notes payable for the next five years are as follows:
|
|
|
|
|
|
|
Amount
|
|
|
Year ending December 31:
|
|
|
|
|
2011
|
|
$
|
1,413,704
|
|
2012
|
|
|
1,069,698
|
|
2013
|
|
|
1,148,290
|
|
2014
|
|
|
1,232,655
|
|
2015
|
|
|
700,653
|
|
|
|
|
|
|
|
|
$
|
5,565,000
|
|
|
|
|
|
|
During 2011, the members holding related party notes payable
agreed to suspend regular payments until further notice. As a
result, member notes are due upon maturity in 2014 and 2015.
During 1997, the Companies implemented a savings plan which
allows the participant to make contributions by salary reduction
pursuant to Section 401(k) of the Internal Revenue Code.
Employees are required to work for the Companies one year before
they become eligible to participate in the Plan. The Companies
match 20% of the employees contributions up to 6% of the
employees salary. Employee contributions are completely
vested when made. The Companies matching contribution is
vested 20% per year beginning in year two. The Companies
contributions to the Plan were approximately $52,099 for the six
months ended June 30, 2011 and $54,989 for the year ended
December 31, 2010.
|
|
(9)
|
Deferred
Compensation Plan
|
During 1998, the Companies established a deferred compensation
plan for a group of key employees. Under the terms of the
agreement, the Companies acquired a life insurance policy for
five employees in the face amount of $100,000 each, with a total
cash value of $74,931 and $74,473 at June 30, 2011 and
December 31, 2010, respectively and also invested
approximately $314,900 and $259,706, respectively, in mutual
funds to be set aside for the five employees. These are included
in other assets on the balance sheet. Benefits vest at 20% per
year, and the Plan was fully vested in 2003.
Payment of the amount allocated to an employee will be deferred
until such employees retirement, disability, or death, or
if certain other events occur. Until such events occur, the
investments referred to above remain in the name of the
Companies. A liability has been recorded in the financial
statements for the benefits currently vested, approximately
$379,050 and $334,179 at June 30, 2011 and
December 31, 2010, respectively.
Maverick Stimulation Company has an agreement with a customer to
receive up to $7,000,000 in prepayments for future work through
February 2011 which has been presented as customer advance on
the balance sheet.
In return Maverick Stimulation Company has agreed to provide
specified levels of equipment and personnel to this customer
through February 2016, with a mutual option to extend for
another five
F-13
THE
MAVERICK COMPANIES
Notes to
Combined Financial Statements
June 30,
2011 (unaudited) and December 31,
2010 (Continued)
years. The prepayments received will be applied to work
performed by Maverick Stimulation within 12 months of the
prepayment.
At June 30, 2010, the entire $7,000,000 advance allowed
under the agreement had be received by the Company, of which the
Company earned $2,745,500 for work performed. The remaining
$4,254,000 is recognized as customer advance on the balance
sheet.
At December 31, 2010, $3,600,000 had been received from
this customer under the agreement and no work had been performed
as of that date. Therefore all advances were presented as
customer advance on the balance sheet.
F-14
Prospectus
,
2011
Until , 2011, all dealers that
effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers obligation
to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
PART II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
|
|
ITEM 20.
|
Indemnification
of Directors and Officers.
|
Delaware
Corporation Guarantors
Basic Energy Services, Inc., Basic Marine Services, Inc., First
Energy Services Company and JetStar Holdings, Inc. are
incorporated under the laws of the State of Delaware.
Section 145 of the Delaware General Corporation Law
(DGCL) provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was 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 expenses
(including attorneys fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. Section 145
further provides that a corporation similarly may indemnify any
such person serving in any such capacity who was or is a party
or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he is or was 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 expenses (including attorneys fees)
actually and reasonably incurred in connection with the defense
or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or such other court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Delaware Court of Chancery or such other court shall deem proper.
Basic Energy Services certificate of incorporation and
bylaws provide that indemnification shall be to the fullest
extent permitted by the DGCL for all current or former directors
or officers of Basic Energy Services. As permitted by the DGCL,
the certificate of incorporation provides that directors of
Basic Energy Services shall have no personal liability to Basic
Energy Services or its stockholders for monetary damages for
breach of fiduciary duty as a director, except (1) for any
breach of the directors duty of loyalty to Basic Energy
Services or its stockholders, (2) for acts or omissions not
in good faith or which involve intentional misconduct or knowing
violation of law, (3) under Section 174 of the DGCL or
(4) for any transaction from which a director derived an
improper personal benefit.
We have also entered into indemnification agreements with all of
our directors and some of our executive officers (including each
of our named executive officers). These indemnification
agreements are intended to permit indemnification to the fullest
extent now or hereafter permitted by the General Corporation Law
of the State of Delaware. It is possible that the applicable law
could change the degree to which indemnification is expressly
permitted.
The indemnification agreements cover expenses (including
attorneys fees), judgments, fines and amounts paid in
settlement incurred as a result of the fact that such person, in
his or her capacity as a director or officer, is made or
threatened to be made a party to any suit or proceeding. The
indemnification agreements generally cover claims relating to
the fact that the indemnified party is or was an officer,
director, employee or agent of us or any of our affiliates, or
is or was serving at our request in such a position for another
entity. The indemnification agreements also obligate us to
promptly advance all reasonable expenses incurred in connection
with any claim. The indemnitee is, in turn, obligated to
reimburse us for all amounts so advanced
II-1
if it is later determined that the indemnitee is not entitled to
indemnification. The indemnification provided under the
indemnification agreements is not exclusive of any other
indemnity rights; however, double payment to the indemnitee is
prohibited.
We are not obligated to indemnify the indemnitee with respect to
claims brought by the indemnitee against:
|
|
|
|
|
claims regarding the indemnitees rights under the
indemnification agreement;
|
|
|
|
claims to enforce a right to indemnification under any statute
or law; and
|
|
|
|
counter-claims against us in a proceeding brought by us against
the indemnitee; or
|
|
|
|
|
|
any other person, except for claims approved by our board of
directors.
|
We have also agreed to obtain and maintain director and officer
liability insurance for the benefit of each of the above
indemnitees. These policies will include coverage for losses for
wrongful acts and omissions and to ensure our performance under
the indemnification agreements. Each of the indemnitees will be
named as an insured under such policies and provided with the
same rights and benefits as are accorded to the most favorably
insured of our directors and officers.
Delaware
Limited Liability Company Guarantors
Basic Energy Services GP, LLC, Basic Energy Services LP, LLC and
JS Acquisition LLC are organized under the laws of the State of
Delaware. Under the Delaware Limited Liability Company Act, a
limited liability company may, and shall have the power to,
indemnify and hold harmless any member or manager or other
person from and against any and all claims and demands
whatsoever.
Each of the Agreements of Limited Liability Company of these
subsidiaries provides that a member shall not be liable to such
subsidiary for any act or omission based upon errors of judgment
or other fault in connection with the business or affairs of
such subsidiary if such members conduct does not
constitute gross negligence or willful misconduct. Furthermore,
a member shall be indemnified and held harmless by such
subsidiary to the fullest extent permitted by law, from and
against any and all losses, claims, damages and settlements
arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or
investigative, in which the member is involved, as a party or
otherwise, by reason of the management of the affairs of such
subsidiary, provided that no member shall be entitled to
indemnification for such losses, claims, damages and settlements
arising as a result of the gross negligence or willful
misconduct of such member.
Texas
Guarantors
Basic ESA, Inc., LeBus Oil Field Service Co., Globe Well
Service, Inc., JetStar Energy Services, Inc., Sledge Drilling
Corp., Xterra Fishing and Rental Tools Co., Admiral Well
Service, Inc. and Platinum Pressure Services, Inc. are
incorporated under the laws of the State of Texas. SCH Disposal,
L.L.C., Permian Plaza, LLC and Taylor Industries, LLC are
organized under the laws of the State of Texas.
The Texas Business Organizations Code (TBOC) governs
each of the above listed Texas corporations and limited
liability companies. Section 8.051 of the TBOC states that:
(a) An enterprise shall indemnify a governing person,
former governing person, or delegate against reasonable expenses
actually incurred by the person in connection with a proceeding
in which the person is a respondent because the person is or was
a governing person or delegate if the person is wholly
successful, on the merits or otherwise, in the defense of the
proceeding. (b) A court that determines, in a suit for
indemnification, that a governing person, former governing
person, or delegate is entitled to indemnification under this
section shall order indemnification and award to the person the
expenses incurred in securing the indemnification.
Section 8.052 states that: (a) On application of
a governing person, former governing person, or delegate and
after notice is provided as required by the court, a court may
order an enterprise to indemnify the person
II-2
to the extent the court determines that the person is fairly and
reasonably entitled to indemnification in view of all the
relevant circumstances. (b) This section applies without
regard to whether the governing person, former governing person,
or delegate applying to the court satisfies the requirements of
Section 8.101 or has been found liable: (1) to the
enterprise; or (2) because the person improperly received a
personal benefit, without regard to whether the benefit resulted
from an action taken in the persons official capacity.
(c) The indemnification ordered by the court under this
section is limited to reasonable expenses if the governing
person, former governing person, or delegate is found liable:
(1) to the enterprise; or (2) because the person
improperly received a personal benefit, without regard to
whether the benefit resulted from an action taken in the
persons official capacity.
Section 8.101 states that: (a) An enterprise may
indemnify a governing person, former governing person, or
delegate who was, is, or is threatened to be made a respondent
in a proceeding to the extent permitted by Section 8.102 if
it is determined in accordance with Section 8.103 that:
(1) the person: (A) acted in good faith;
(B) reasonably believed: (i) in the case of conduct in
the persons official capacity, that the persons
conduct was in the enterprises best interests; and
(ii) in any other case, that the persons conduct was
not opposed to the enterprises best interests; and
(C) in the case of a criminal proceeding, did not have a
reasonable cause to believe the persons conduct was
unlawful; (2) with respect to expenses, the amount of
expenses other than a judgment is reasonable; and
(3) indemnification should be paid. (b) Action taken
or omitted by a governing person or delegate with respect to an
employee benefit plan in the performance of the persons
duties for a purpose reasonably believed by the person to be in
the interest of the participants and beneficiaries of the plan
is for a purpose that is not opposed to the best interests of
the enterprise. (c) Action taken or omitted by a delegate
to another enterprise for a purpose reasonably believed by the
delegate to be in the interest of the other enterprise or its
owners or members is for a purpose that is not opposed to the
best interests of the enterprise. (d) A person does not
fail to meet the standard under Subsection (a)(1) solely because
of the termination of a proceeding by: (1) judgment;
(2) order; (3) settlement; (4) conviction; or
(5) a plea of nolo contendere or its equivalent.
Section 8.102 states that: (a) Subject to
Subsection (b), an enterprise may indemnify a governing person,
former governing person, or delegate against: (1) a
judgment; and (2) expenses, other than a judgment, that are
reasonable and actually incurred by the person in connection
with a proceeding. (b) Indemnification under this
subchapter of a person who is found liable to the enterprise or
is found liable because the person improperly received a
personal benefit: (1) is limited to reasonable expenses
actually incurred by the person in connection with the
proceeding; (2) does not include a judgment, a penalty, a
fine, and an excise or similar tax, including an excise tax
assessed against the person with respect to an employee benefit
plan; and (3) may not be made in relation to a proceeding
in which the person has been found liable for: (A) willful
or intentional misconduct in the performance of the
persons duty to the enterprise; (B) breach of the
persons duty of loyalty owed to the enterprise; or
(C) an act or omission not committed in good faith that
constitutes a breach of a duty owed by the person to the
enterprise. (c) A governing person, former governing
person, or delegate is considered to have been found liable in
relation to a claim, issue, or matter only if the liability is
established by an order, including a judgment or decree of a
court, and all appeals of the order are exhausted or foreclosed
by law.
Section 8.105(b) states that: An enterprise shall indemnify
an officer to the same extent that indemnification is required
under this chapter for a governing person.
Oklahoma
Guarantors
Oilwell Fracturing Services, Inc., Hennessey Rental Tools, Inc.
and Wildhorse Services, Inc. are incorporated under the laws of
the State of Oklahoma. Section 1031 of the Oklahoma General
Corporation Act authorizes a court to award, or a
corporations board of directors to grant, indemnity under
certain circumstances to directors, officers employees or agents
in connection with actions, suits or proceedings, by reason of
the fact that the person is or was a director, officer, employee
or agent, against expenses and liabilities incurred in such
actions, suits or proceedings so long as they acted in good
faith and in a manner the person reasonable believed to be in,
or not opposed to, the best interests of the company, and with
respect to any criminal action if they had no reasonable cause
to believe their conduct was unlawful. With respect to suits by
or in the right of such corporation, however, indemnification is
generally limited to attorneys fees
II-3
and other expenses and is not available if such person is
adjudged to be liable to such corporation unless the court
determines that indemnification is appropriate.
Kansas
Guarantor
Acid Services, LLC is organized under the laws of the State of
Kansas.
Section 17-7670
of the Kansas General Corporation Law provides that a limited
liability company may indemnify and hold harmless any member or
manager or other person from and against any and all claims and
demands whatsoever. Furthermore, if a member, manager, officer,
employee or agent has been successful on the merits or otherwise
or the defenses of any action, suits or proceeding, or in
defense of any issue or matter therein, such person shall be
indemnified against expenses actually and reasonably incurred in
connection therewith, including attorney fees.
New
Mexico Guarantor
Chaparral Service, Inc. is incorporated under the laws of the
State of New Mexico. Under
Section 53-11-4.1
of New Mexico Business Corporation Act, a corporation shall have
power to indemnify any person made a party to any proceeding by
reason of the fact that the person is or was a director if:
(i) the person acted in good faith; (ii) the person
reasonably believed: (x) in the case of conduct in the
persons official capacity with the corporation, that the
persons conduct was in its best interests; and (y) in
all other cases, that the persons conduct was at least not
opposed to its best interests; and (iii) in the case of any
criminal proceeding, the person had no reasonable cause to
believe the persons conduct was unlawful. Indemnification
may be made against judgments, penalties, fines, settlements and
reasonable expenses, actually incurred by the person in
connection with the proceeding; except that if the proceeding
was by or in the right of the corporation, indemnification may
be made only against such reasonable expenses and shall not be
made in respect of any proceeding in which the person shall have
been adjudged to be liable to the corporation. However, a
director shall not be indemnified in respect of any proceeding
charging improper personal benefit to the director, whether or
not involving action in the directors official capacity,
in which the director shall have been adjudged to be liable on
the basis that personal benefit was improperly received by the
director. The indemnification authorized by
Section 53-11-4.1
is not exclusive of any other rights to which an officer or
director may be entitled under the articles of incorporation,
the bylaws, an agreement, a resolution of shareholders or
directors or otherwise.
Colorado
Guarantors
Maverick Stimulation Company, LLC, Maverick Coil Tubing
Services, LLC, MCM Holdings, LLC, Maverick Thru-Tubing Services,
LLC, The Maverick Companies, LLC, Maverick Solutions, LLC, and
MSM Leasing, LLC (such entities, collectively,
Maverick) are each organized under the laws of the
State of Colorado. Under Title 7, Article 80 of the
Colorado Limited Liability Company Act, a limited liability
company shall reimburse a person who is or was a member or
manager for payments made, and indemnify a person who is or was
a member or manager for liabilities incurred by the person, in
the ordinary course of the business of the limited liability
company or for the preservation of its business or property, if
such payments were made or liabilities incurred without
violation of the persons duties to the limited liability
company.
The Operating Agreements, as amended from time to time, of each
of the Maverick entities provide that each such company shall
indemnify its respective member and such members
affiliates, the manager and such companys officers to the
fullest extent permitted by law, unless it is established that:
(a) the act or omission of such person was material to the
matter giving rise to the proceeding and either was committed in
bad faith or was the result of active and deliberate dishonesty;
(b) such person did not reasonably believe that it was
acting in the best interests of the company; (c) such
person actually received an improper personal benefit in money,
property or services; or (d) in the case of any criminal
proceeding, such person had reasonable cause to believe that the
act or omission was unlawful.
II-4
|
|
ITEM 21.
|
Exhibit
and Financial Statement Schedules.
|
(a) Exhibits.
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
1
|
.1
|
|
Purchase Agreement dated February 3, 2011, by and among
Basic Energy Services, Inc., the guarantors party thereto and
the initial purchasers party thereto. (Incorporated by reference
to Exhibit 10.1 of the Companys Current Report on
Form 8-K/A
(SEC File
No. 001-32693),
filed on February 9, 2011)
|
|
1
|
.2
|
|
Purchase Agreement dated June 8, 2011, by and among Basic
Energy Services, Inc., the guarantors party thereto and the
initial purchasers party thereto. (Incorporated by reference to
Exhibit 10.1 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on June 13, 2011)
|
|
2
|
.1
|
|
Agreement and Plan of Merger, dated January 8, 2007, by and
among Basic Energy Services, Inc., JS Acquisition LLC and
JetStar Consolidated Holdings, Inc. (Incorporated by reference
to Exhibit 2.1 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on March 8, 2007)
|
|
2
|
.2
|
|
Amendment to Merger Agreement, dated March 5, 2007, by and
among Basic Energy Services, Inc., JS Acquisition LLC and
JetStar Consolidated Holdings, Inc. (Incorporated by reference
to Exhibit 2.2 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on March 8, 2007)
|
|
3
|
.1
|
|
Amended and Restated Certificate of Incorporation of Basic
Energy Services, Inc., dated September 22, 2005.
(Incorporated by reference to Exhibit 3.1 of the
Companys Registration Statement on
Form S-1
(SEC File
No. 333-127517),
filed on September 28, 2005)
|
|
3
|
.2
|
|
Amended and Restated Bylaws of Basic Energy Services, Inc.,
effective March 9, 2010. (Incorporated by reference to
Exhibit 3.1 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on March 15, 2010)
|
|
3
|
.3
|
|
Certificate of Formation of Basic Energy Services GP, LLC, dated
January 7, 2003. (Incorporated by reference to
Exhibit 3.3 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.4
|
|
Limited Liability Company Agreement of Basic Energy Services GP,
LLC, dated January 7, 2003. (Incorporated by reference to
Exhibit 3.4 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.5
|
|
Certificate of Formation of Basic Energy Services LP, LLC, dated
January 7, 2003. (Incorporated by reference to
Exhibit 3.5 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.6
|
|
Limited Liability Company Agreement of Basic Energy Services LP,
LLC, dated January 7, 2003. (Incorporated by reference to
Exhibit 3.6 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.7
|
|
Certificate of Limited Partnership of Basic Energy Services,
L.P., dated January 24, 2003. (Incorporated by reference to
Exhibit 3.7 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.8
|
|
Agreement of Limited Partnership of Basic Energy Services, L.P.,
dated January 24, 2003. (Incorporated by reference to
Exhibit 3.8 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.9
|
|
Articles of Incorporation of Basic ESA, Inc., dated
July 10, 1981. (Incorporated by reference to
Exhibit 3.9 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.10
|
|
Bylaws of Basic ESA, Inc., as amended. (Incorporated by
reference to Exhibit 3.10 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.11
|
|
Certificate of Formation of JS Acquisition LLC, dated
January 4, 2007. (Incorporated by reference to
Exhibit 3.11 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
II-5
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
3
|
.12
|
|
Limited Liability Company Agreement of JS Acquisition LLC, dated
January 5, 2007. (Incorporated by reference to
Exhibit 3.12 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.13
|
|
Amended and Restated Articles of Organization of Acid Services,
LLC, dated April 24, 2006. (Incorporated by reference to
Exhibit 3.13 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.14
|
|
Second Amended and Restated Operating Agreement of Acid
Services, LLC, dated February 17, 2006. (Incorporated by
reference to Exhibit 3.14 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.15
|
|
Second Amended and Restated Certificate of Incorporation of
JetStar Holdings, Inc., dated April 24, 2006. (Incorporated
by reference to Exhibit 3.15 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.16
|
|
Bylaws of JetStar Holdings, Inc., dated May 12, 2005.
(Incorporated by reference to Exhibit 3.16 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.17
|
|
Articles of Incorporation of JetStar Energy Services, Inc.,
dated April 18, 2005. (Incorporated by reference to
Exhibit 3.17 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.18
|
|
Bylaws of JetStar Energy Services, Inc., dated May 12,
2005. (Incorporated by reference to Exhibit 3.18 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.19
|
|
Certificate of Incorporation of Basic Marine Services, Inc., as
amended, dated January 28, 2005. (Incorporated by reference
to Exhibit 3.15 of the Companys Registration
Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.20
|
|
Bylaws of Basic Marine Services, Inc., dated March 11,
2005. (Incorporated by reference to Exhibit 3.16 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.21*
|
|
Amended and Restated Certificate of Incorporation of First
Energy Services Company, dated October 24, 2003.
|
|
3
|
.22
|
|
Bylaws of First Energy Services Company. (Incorporated by
reference to Exhibit 3.18 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.23
|
|
Articles of Incorporation of Oilwell Fracturing Services, Inc.,
dated November 20, 1981. (Incorporated by reference to
Exhibit 3.19 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.24
|
|
Bylaws of Oilwell Fracturing Services, Inc., as amended.
(Incorporated by reference to Exhibit 3.24 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.25
|
|
Articles of Incorporation of LeBus Oil Field Service Co., dated
December 19, 1985. (Incorporated by reference to
Exhibit 3.27 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.26
|
|
Bylaws of LeBus Oil Field Service Co. (Incorporated by reference
to Exhibit 3.28 of the Companys Registration
Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.27
|
|
Articles of Incorporation of Globe Well Service, Inc., as
amended, dated February 6, 1979. (Incorporated by reference
to Exhibit 3.29 of the Companys Registration
Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.28
|
|
Bylaws of Globe Well Service, Inc., dated July 12, 2006.
(Incorporated by reference to Exhibit 3.30 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.29
|
|
Articles of Organization of SCH Disposal, L.L.C., dated
October 30, 1998. (Incorporated by reference to
Exhibit 3.31 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
II-6
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
3
|
.30
|
|
Regulations of SCH Disposal, L.L.C., dated November 2,
1998. (Incorporated by reference to Exhibit 3.32 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.31
|
|
Articles of Incorporation of Sledge Drilling Corp., dated
November 22, 2005. (Incorporated by reference to
Exhibit 3.31 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.32
|
|
Bylaws of Sledge Drilling Corp. (Incorporated by reference to
Exhibit 3.32 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.33
|
|
Certificate of Incorporation of Wildhorse Services, Inc., dated
July 30, 2002. (Incorporated by reference to
Exhibit 3.33 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.34
|
|
Bylaws of Wildhorse Services, Inc., dated August 9, 2002.
(Incorporated by reference to Exhibit 3.34 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.35
|
|
Articles of Incorporation of Xterra Fishing & Rental
Tools Co., as amended, dated June 1, 2000. (Incorporated by
reference to Exhibit 3.35 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.36
|
|
Bylaws of Xterra Fishing & Rental Tools Co.
(Incorporated by reference to Exhibit 3.36 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.37
|
|
Articles of Incorporation of Chaparral Service, Inc., dated
July 18, 1969. (Incorporated by reference to
Exhibit 3.37 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.38
|
|
Amended and Restated Bylaws of Chaparral Service, Inc., dated
March 31, 2006. (Incorporated by reference to
Exhibit 3.38 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.39
|
|
Certificate of Incorporation of Hennessey Rental Tools, Inc.,
dated September 29, 1993. (Incorporated by reference to
Exhibit 3.39 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.40
|
|
Bylaws of Hennessey Rental Tools, Inc., dated October 1,
1993. (Incorporated by reference to Exhibit 3.40 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.41
|
|
Certificate of Formation of Permian Plaza, LLC, dated
August 20, 2007. (Incorporated by reference to
Exhibit 3.41 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.42
|
|
Company Agreement of Permian Plaza, LLC. (Incorporated by
reference to Exhibit 3.42 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.43*
|
|
Certificate of Formation of Taylor Industries, LLC, dated
April 22, 2010.
|
|
3
|
.44*
|
|
Company Agreement of Taylor Industries, LLC, dated
April 23, 2010.
|
|
3
|
.45*
|
|
Certificate of Formation of Admiral Well Service, Inc., dated
November 11, 2008, as amended.
|
|
3
|
.46*
|
|
Bylaws of Admiral Well Service, Inc.
|
|
3
|
.47*
|
|
Certificate of Formation of Platinum Pressure Services, Inc.,
dated October 23, 2007, as amended.
|
|
3
|
.48*
|
|
Bylaws of Platinum Pressure Services, Inc.
|
|
3
|
.49*
|
|
Articles of Organization of Maverick Coil Tubing Services, LLC,
dated October 24, 2000, as amended.
|
|
3
|
.50*
|
|
Second Amended and Restated Operating Agreement of Maverick Coil
Tubing Services, LLC, dated July 25, 2011.
|
|
3
|
.51*
|
|
Articles of Organization of Maverick Solutions, LLC, dated
July 31, 2003, as amended.
|
II-7
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
3
|
.52*
|
|
Second Amended and Restated Operating Agreement of Maverick
Solutions, LLC, dated July 25, 2011.
|
|
3
|
.53*
|
|
Articles of Organization of Maverick Stimulation Company, LLC,
dated August 13, 1996.
|
|
3
|
.54*
|
|
Second Amended and Restated Operating Agreement of Maverick
Stimulation Company, LLC, dated July 25, 2011.
|
|
3
|
.55*
|
|
Articles of Organization of Maverick Thru-Tubing Services, LLC,
dated December 17, 2009.
|
|
3
|
.56*
|
|
Second Amended and Restated Operating Agreement of Maverick
Thru-Tubing Services, LLC, dated July 25, 2011.
|
|
3
|
.57*
|
|
Articles of Organization of MCM Holdings, LLC, dated May 3,
2001, as amended.
|
|
3
|
.58*
|
|
Second Amended and Restated Operating Agreement of MCM Holdings,
LLC, dated July 25, 2011.
|
|
3
|
.59*
|
|
Articles of Organization of MSM Leasing, LLC, dated
July 28, 2009.
|
|
3
|
.60*
|
|
Second Amended and Restated Operating Agreement of MSM Leasing,
LLC, dated July 25, 2011.
|
|
3
|
.61*
|
|
Articles of Organization of The Maverick Companies, LLC, dated
July 21, 2006, as amended.
|
|
3
|
.62*
|
|
Second Amended and Restated Operating Agreement of The Maverick
Companies, LLC, dated July 25, 2011.
|
|
4
|
.1
|
|
Specimen Stock Certificate representing common stock of Basic
Energy Services, Inc. (Incorporated by reference to
Exhibit 4.1 of the Companys Registration Statement on
Form S-1
(SEC File
No. 333-127517),
filed on November 4, 2005)
|
|
4
|
.2
|
|
Indenture dated April 12, 2006, among Basic Energy
Services, Inc., the Guarantors named therein and The Bank of New
York Trust Company, N.A., as trustee. (Incorporated by
reference to Exhibit 4.1 of the Companys Current
Report on
Form 8-K
(SEC File
No. 001-32693),
filed on April 13, 2006)
|
|
4
|
.3
|
|
Form of 7.125% Senior Note due 2016. (Included in the
Indenture filed as Exhibit 4.1 of the Companys
Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on April 13, 2006)
|
|
4
|
.4
|
|
First Supplemental Indenture dated as of July 14, 2006 to
Indenture dated as of April 12, 2006 among Basic Energy
Services, Inc., as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Trust Company, N.A., as
trustee. (Incorporated by reference to Exhibit 4.1 of the
Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on July 20, 2006)
|
|
4
|
.5
|
|
Second Supplemental Indenture dated as of April 26, 2007
and effective as of March 7, 2007 to Indenture dated as of
April 12, 2006 among Basic Energy Services, Inc. as Issuer,
the Subsidiary Guarantors named therein and The Bank of New York
Trust Company, N.A., as trustee. (Incorporated by reference
to Exhibit 4.1 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on May 1, 2007)
|
|
4
|
.6
|
|
Third Supplemental Indenture dated as of April 26, 2007 to
Indenture dated as of April 12, 2006 among Basic Energy
Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Trust Company, N.A., as
trustee. (Incorporated by reference to Exhibit 4.2 of the
Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on May 1, 2007)
|
|
4
|
.7
|
|
Fourth Supplemental Indenture dated as of February 9, 2009
to Indenture dated as of April 12, 2006 among Basic Energy
Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company,
N.A., as trustee. (Incorporated by reference to Exhibit 4.7
of the Companys Annual Report on
Form 10-K
(SEC File
No. 001-32693),
filed on March 9, 2009)
|
|
4
|
.8
|
|
Fifth Supplemental Indenture dated as of July 23, 2009 to
Indenture dated as of April 12, 2006 among Basic Energy
Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company,
N.A., as trustee. (Incorporated by reference to Exhibit 4.8
of the Companys Annual Report on
Form 10-K
(SEC File
No. 001-32693),
filed on March 1, 2010)
|
|
4
|
.9
|
|
Sixth Supplemental Indenture dated as of December 22, 2010
to Indenture dated as of April 12, 2006, by and among Basic
Energy Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company, N.A.
as trustee. (Incorporated by reference to Exhibit 10.4 of
the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on December 22, 2010)
|
II-8
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
4
|
.10
|
|
Seventh Supplemental Indenture dated as of August 5, 2011
to Indenture dated as of April 12, 2006, by and among Basic
Energy Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company, N.A.
as trustee. (Incorporated by reference to Exhibit 10.1 of
the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 10, 2011)
|
|
4
|
.11
|
|
Indenture dated as of July 31, 2009, by and among Basic
Energy Services, Inc. as Issuer, the Guarantors named therein
and The Bank of New York Mellon Trust Company, N.A., as
trustee. (Incorporated by reference to Exhibit 4.1 of the
Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 4, 2009)
|
|
4
|
.12
|
|
Form of 11.625% Senior Secured Note due 2014. (Included as
Exhibit A to Exhibit 4.1 of the Companys Current
Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 4, 2009)
|
|
4
|
.13
|
|
First Supplemental Indenture dated as of December 22, 2010
to Indenture dated as of July 31, 2009 among Basic Energy
Services, Inc., as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company,
N.A., as trustee. (Incorporated by reference to
Exhibit 10.2 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on December 22, 2010)
|
|
4
|
.14
|
|
Second Supplemental Indenture dated as of February 15, 2011
to Indenture dated as of July 31, 2009 among Basic Energy
Services, Inc., as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company,
N.A., as trustee. (Incorporated by reference to Exhibit 4.1
of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on February 18, 2011)
|
|
4
|
.15
|
|
Security Agreement dated as of July 31, 2009, by and
between Basic Energy Services, Inc. and each of the other
Grantors party thereto in favor of The Bank of New York Mellon
Trust Company, N.A., as trustee. (Incorporated by reference
to Exhibit 4.3 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 4, 2009)
|
|
4
|
.16
|
|
Supplement No. 1 dated as of December 22, 2010 to
Security Agreement dated as of July 31, 2009, by and
between Basic Energy Services, Inc. and each of the other
Grantors party thereto in favor of The Bank of New York Mellon
Trust Company, N.A., as trustee. (Incorporated by reference
to Exhibit 10.3 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on December 22, 2010)
|
|
4
|
.17
|
|
Indenture dated as of February 15, 2011, among Basic Energy
Services, Inc. as Issuer, the Guarantors named therein and Wells
Fargo Bank, N.A., as trustee. (Incorporated by reference to
Exhibit 4.2 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on February 18, 2011)
|
|
4
|
.18
|
|
Form of 7.75% Senior Note due 2019. (Included as
Exhibit A to Exhibit 4.2 of the Companys Current
Report on
Form 8-K
(SEC File
No. 001-32693),
filed on February 18, 2011)
|
|
4
|
.19
|
|
First Supplemental Indenture dated as of August 5, 2011 to
Indenture dated as of February 15, 2011, by and among the
Company as Issuer, the New Guarantors, the Existing Guarantors
and Wells Fargo Bank, N.A. as Trustee. (Incorporated by
reference to Exhibit 10.2 of the Companys Current
Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 10, 2011)
|
|
4
|
.20
|
|
Registration Rights Agreement dated as of February 15,
2011, by and among Basic, the Guarantors named therein and the
initial purchasers party thereto. (Incorporated by reference to
Exhibit 4.4 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on February 18, 2011)
|
|
4
|
.21
|
|
Registration Rights Agreement dated as of June 13, 2011, by
and among Basic, the Guarantors named therein and the initial
purchasers party thereto. (Incorporated by reference to
Exhibit 4.3 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on June 14, 2011)
|
|
5
|
.1*
|
|
Opinion of Andrews Kurth LLP regarding the validity of the new
notes
|
|
8
|
.1*
|
|
Opinion of Andrews Kurth LLP regarding certain tax matters
|
|
12
|
.1*
|
|
Statement regarding computation of ratio of earnings to fixed
charges
|
|
21
|
.1*
|
|
Subsidiaries of the Company
|
|
23
|
.1*
|
|
Consent of KPMG LLP
|
|
23
|
.2*
|
|
Consent of KPMG LLP
|
|
23
|
.3*
|
|
Consent of Andrews Kurth LLP (included in Exhibit 5.1)
|
|
24
|
.1*
|
|
Powers of Attorney (included on signature pages).
|
II-9
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
25
|
.1*
|
|
Form T-1
Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of The Bank of New York Mellon
Trust Company, N.A. to act as trustee under the Indenture
|
|
99
|
.1*
|
|
Form of Letter of Transmittal
|
|
99
|
.2*
|
|
Form of Guidelines for Certification of Taxpayer Identification
Number
|
|
99
|
.3*
|
|
Form of Notice of Guaranteed Delivery
|
|
99
|
.4*
|
|
Form of Letter to Brokers
|
|
99
|
.5*
|
|
Form of Letter to Clients
|
|
|
|
* |
|
Indicates exhibits filed herewith. |
|
|
|
Management contract or compensatory plan or arrangement. |
(a) Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum aggregate
offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the registration
statement is on
Form S-8,
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the
registration statement; and
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section
do not apply if the registration statement is on
Form S-3
or
Form F-3
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
II-10
(4) That, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser, if the registrant
is subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in
the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such date of first use.
(5) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities, in a primary
offering of securities of the undersigned registrant pursuant to
this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any
of the following communications, the undersigned registrant will
be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
(6) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(b) Each undersigned registrant hereby undertakes to
respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b),
11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the
effective date of the registration statement through the date of
responding to the request.
(c) Each undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement on
Form S-4
to be signed on its behalf by the undersigned, thereunder duly
authorized, in Midland, Texas on September 8, 2011.
BASIC ENERGY SERVICES, INC.
By:
/s/ Kenneth
V. Huseman
Name: Kenneth V. Huseman
|
|
|
|
Title:
|
President and Chief Executive Officer
|
POWER OF
ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
officers and directors of the Registrant hereby constitutes and
appoints Alan Krenek and John Cody Bissett his true and lawful
attorney-in-fact and agent, with full power of substitution, for
him and on his behalf and in his name, place and stead, in any
and all capacities, to sign, execute and file this registration
statement under the Securities Act of 1933, as amended, and any
or all amendments (including, without limitation, post-effective
amendments), with all exhibits and any and all documents
required to be filed with respect thereto, with the Securities
and Exchange Commission or any regulatory authority, granting
unto such attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he
himself might or could do, if personally present, hereby
ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or
cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Kenneth
V. Huseman
Kenneth
V. Huseman
|
|
President, Chief Executive Officer and Director (Principal
Executive Officer)
|
|
September 8, 2011
|
|
|
|
|
|
/s/ Alan
Krenek
Alan
Krenek
|
|
Senior Vice President, Chief Financial Officer, Treasurer and
Secretary (Principal Financial Officer and Principal Accounting
Officer)
|
|
September 8, 2011
|
|
|
|
|
|
/s/ Steven
A. Webster
Steven
A. Webster
|
|
Chairman of the Board
|
|
September 8, 2011
|
|
|
|
|
|
/s/ James
S. DAgostino, Jr.
James
S. DAgostino, Jr.
|
|
Director
|
|
September 8, 2011
|
|
|
|
|
|
/s/ William
E. Chiles
William
E. Chiles
|
|
Director
|
|
September 8, 2011
|
|
|
|
|
|
/s/ Robert
F. Fulton
Robert
F. Fulton
|
|
Director
|
|
September 8, 2011
|
II-12
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Sylvester
P. Johnson, IV
Sylvester
P. Johnson, IV
|
|
Director
|
|
September 8, 2011
|
|
|
|
|
|
/s/ Thomas
P. Moore, Jr.
Thomas
P. Moore, Jr.
|
|
Director
|
|
September 8, 2011
|
|
|
|
|
|
/s/ Antonio
O. Garza, Jr.
Antonio
O. Garza, Jr.
|
|
Director
|
|
September 8, 2011
|
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement on
Form S-4
to be signed on its behalf by the undersigned, thereunder duly
authorized, in Midland, Texas on September 8, 2011.
Each of the Guarantors Named on
Schedule A-1
Hereto (the Guarantors)
By:
/s/ Kenneth
V. Huseman
Name: Kenneth V. Huseman
POWER OF
ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
officers and directors of the Registrant hereby constitutes and
appoints Alan Krenek and John Cody Bissett his true and lawful
attorney-in-fact and agent, with full power of substitution, for
him and on his behalf and in his name, place and stead, in any
and all capacities, to sign, execute and file this registration
statement under the Securities Act of 1933, as amended, and any
or all amendments (including, without limitation, post-effective
amendments), with all exhibits and any and all documents
required to be filed with respect thereto, with the Securities
and Exchange Commission or any regulatory authority, granting
unto such attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he
himself might or could do, if personally present, hereby
ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or
cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Kenneth
V. Huseman
Kenneth
V. Huseman
|
|
President and Director (Principal Executive Officer)
|
|
September 8, 2011
|
|
|
|
|
|
/s/ Alan
Krenek
Alan
Krenek
|
|
Chief Financial Officer (Principal Financial Officer and
Principal Accounting Officer)
|
|
September 8, 2011
|
II-14
Schedule A-1
GUARANTORS
Basic Energy Services GP, LLC
Basic Energy Services, L.P.
Basic ESA Inc.
Chaparral Service, Inc.
Basic Marine Services, Inc.
First Energy Services Company
Hennessey Rental Tools, Inc.
Oilwell Fracturing Services, Inc.
Wildhorse Services, Inc.
LeBus Oil Field Service Co.
Globe Well Service, Inc.
SCH Disposal, L.L.C.
JS Acquisition LLC
JetStar Holdings, Inc.
Acid Services, LLC
JetStar Energy Services, Inc.
Sledge Drilling Corp.
Permian Plaza, LLC
Xterra Fishing & Rental Tools Co.
Taylor Industries, LLC
Admiral Well Service, Inc.
Platinum Pressure Services, Inc.
Maverick Coil Tubing Services, LLC
Maverick Solutions, LLC
Maverick Stimulation Company, LLC
Maverick Thru-Tubing Services, LLC
MCM Holdings, LLC
MSM Leasing, LLC
The Maverick Companies, LLC
II-15
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement on
Form S-4
to be signed on its behalf by the undersigned, thereunder duly
authorized, in Midland, Texas on September 8, 2011.
BASIC ENERGY SERVICES LP, LLC
Name: Jerry Tufly
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Jerry
Tufly
Jerry
Tufly
|
|
President, Secretary, Treasurer and Sole Manager (Principal
Executive Officer, Principal Financial Officer and Principal
Accounting Officer)
|
|
September 8, 2011
|
II-16
EXHIBIT INDEX
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
1
|
.1
|
|
Purchase Agreement dated February 3, 2011, by and among
Basic Energy Services, Inc., the guarantors party thereto and
the initial purchasers party thereto. (Incorporated by reference
to Exhibit 10.1 of the Companys Current Report on
Form 8-K/A
(SEC File
No. 001-32693),
filed on February 9, 2011)
|
|
1
|
.2
|
|
Purchase Agreement dated June 8, 2011, by and among Basic
Energy Services, Inc., the guarantors party thereto and the
initial purchasers party thereto. (Incorporated by reference to
Exhibit 10.1 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on June 13, 2011)
|
|
2
|
.1
|
|
Agreement and Plan of Merger, dated January 8, 2007, by and
among Basic Energy Services, Inc., JS Acquisition LLC and
JetStar Consolidated Holdings, Inc. (Incorporated by reference
to Exhibit 2.1 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on March 8, 2007)
|
|
2
|
.2
|
|
Amendment to Merger Agreement, dated March 5, 2007, by and
among Basic Energy Services, Inc., JS Acquisition LLC and
JetStar Consolidated Holdings, Inc. (Incorporated by reference
to Exhibit 2.2 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on March 8, 2007)
|
|
3
|
.1
|
|
Amended and Restated Certificate of Incorporation of Basic
Energy Services, Inc., dated September 22, 2005.
(Incorporated by reference to Exhibit 3.1 of the
Companys Registration Statement on
Form S-1
(SEC File
No. 333-127517),
filed on September 28, 2005)
|
|
3
|
.2
|
|
Amended and Restated Bylaws of Basic Energy Services, Inc.,
effective March 9, 2010. (Incorporated by reference to
Exhibit 3.1 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on March 15, 2010)
|
|
3
|
.3
|
|
Certificate of Formation of Basic Energy Services GP, LLC, dated
January 7, 2003. (Incorporated by reference to
Exhibit 3.3 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.4
|
|
Limited Liability Company Agreement of Basic Energy Services GP,
LLC, dated January 7, 2003. (Incorporated by reference to
Exhibit 3.4 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.5
|
|
Certificate of Formation of Basic Energy Services LP, LLC, dated
January 7, 2003. (Incorporated by reference to
Exhibit 3.5 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.6
|
|
Limited Liability Company Agreement of Basic Energy Services LP,
LLC, dated January 7, 2003. (Incorporated by reference to
Exhibit 3.6 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.7
|
|
Certificate of Limited Partnership of Basic Energy Services,
L.P., dated January 24, 2003. (Incorporated by reference to
Exhibit 3.7 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.8
|
|
Agreement of Limited Partnership of Basic Energy Services, L.P.,
dated January 24, 2003. (Incorporated by reference to
Exhibit 3.8 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.9
|
|
Articles of Incorporation of Basic ESA, Inc., dated
July 10, 1981. (Incorporated by reference to
Exhibit 3.9 of the Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.10
|
|
Bylaws of Basic ESA, Inc., as amended. (Incorporated by
reference to Exhibit 3.10 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.11
|
|
Certificate of Formation of JS Acquisition LLC, dated
January 4, 2007. (Incorporated by reference to
Exhibit 3.11 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.12
|
|
Limited Liability Company Agreement of JS Acquisition LLC, dated
January 5, 2007. (Incorporated by reference to
Exhibit 3.12 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
3
|
.13
|
|
Amended and Restated Articles of Organization of Acid Services,
LLC, dated April 24, 2006. (Incorporated by reference to
Exhibit 3.13 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.14
|
|
Second Amended and Restated Operating Agreement of Acid
Services, LLC, dated February 17, 2006. (Incorporated by
reference to Exhibit 3.14 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.15
|
|
Second Amended and Restated Certificate of Incorporation of
JetStar Holdings, Inc., dated April 24, 2006. (Incorporated
by reference to Exhibit 3.15 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.16
|
|
Bylaws of JetStar Holdings, Inc., dated May 12, 2005.
(Incorporated by reference to Exhibit 3.16 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.17
|
|
Articles of Incorporation of JetStar Energy Services, Inc.,
dated April 18, 2005. (Incorporated by reference to
Exhibit 3.17 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.18
|
|
Bylaws of JetStar Energy Services, Inc., dated May 12,
2005. (Incorporated by reference to Exhibit 3.18 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.19
|
|
Certificate of Incorporation of Basic Marine Services, Inc., as
amended, dated January 28, 2005. (Incorporated by reference
to Exhibit 3.15 of the Companys Registration
Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.20
|
|
Bylaws of Basic Marine Services, Inc., dated March 11,
2005. (Incorporated by reference to Exhibit 3.16 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.21*
|
|
Amended and Restated Certificate of Incorporation of First
Energy Services Company, dated October 24, 2003.
|
|
3
|
.22
|
|
Bylaws of First Energy Services Company. (Incorporated by
reference to Exhibit 3.18 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.23
|
|
Articles of Incorporation of Oilwell Fracturing Services, Inc.,
dated November 20, 1981. (Incorporated by reference to
Exhibit 3.19 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.24
|
|
Bylaws of Oilwell Fracturing Services, Inc., as amended.
(Incorporated by reference to Exhibit 3.24 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.25
|
|
Articles of Incorporation of LeBus Oil Field Service Co., dated
December 19, 1985. (Incorporated by reference to
Exhibit 3.27 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.26
|
|
Bylaws of LeBus Oil Field Service Co. (Incorporated by reference
to Exhibit 3.28 of the Companys Registration
Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.27
|
|
Articles of Incorporation of Globe Well Service, Inc., as
amended, dated February 6, 1979. (Incorporated by reference
to Exhibit 3.29 of the Companys Registration
Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.28
|
|
Bylaws of Globe Well Service, Inc., dated July 12, 2006.
(Incorporated by reference to Exhibit 3.30 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.29
|
|
Articles of Organization of SCH Disposal, L.L.C., dated
October 30, 1998. (Incorporated by reference to
Exhibit 3.31 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.30
|
|
Regulations of SCH Disposal, L.L.C., dated November 2,
1998. (Incorporated by reference to Exhibit 3.32 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-135807),
filed on July 17, 2006)
|
|
3
|
.31
|
|
Articles of Incorporation of Sledge Drilling Corp., dated
November 22, 2005. (Incorporated by reference to
Exhibit 3.31 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
3
|
.32
|
|
Bylaws of Sledge Drilling Corp. (Incorporated by reference to
Exhibit 3.32 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.33
|
|
Certificate of Incorporation of Wildhorse Services, Inc., dated
July 30, 2002. (Incorporated by reference to
Exhibit 3.33 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.34
|
|
Bylaws of Wildhorse Services, Inc., dated August 9, 2002.
(Incorporated by reference to Exhibit 3.34 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.35
|
|
Articles of Incorporation of Xterra Fishing & Rental
Tools Co., as amended, dated June 1, 2000. (Incorporated by
reference to Exhibit 3.35 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.36
|
|
Bylaws of Xterra Fishing & Rental Tools Co.
(Incorporated by reference to Exhibit 3.36 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.37
|
|
Articles of Incorporation of Chaparral Service, Inc., dated
July 18, 1969. (Incorporated by reference to
Exhibit 3.37 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.38
|
|
Amended and Restated Bylaws of Chaparral Service, Inc., dated
March 31, 2006. (Incorporated by reference to
Exhibit 3.38 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.39
|
|
Certificate of Incorporation of Hennessey Rental Tools, Inc.,
dated September 29, 1993. (Incorporated by reference to
Exhibit 3.39 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.40
|
|
Bylaws of Hennessey Rental Tools, Inc., dated October 1,
1993. (Incorporated by reference to Exhibit 3.40 of the
Companys Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.41
|
|
Certificate of Formation of Permian Plaza, LLC, dated
August 20, 2007. (Incorporated by reference to
Exhibit 3.41 of the Companys Registration Statement
on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.42
|
|
Company Agreement of Permian Plaza, LLC. (Incorporated by
reference to Exhibit 3.42 of the Companys
Registration Statement on
Form S-4
(SEC File
No. 333-161693),
filed on September 2, 2009)
|
|
3
|
.43*
|
|
Certificate of Formation of Taylor Industries, LLC, dated
April 22, 2010.
|
|
3
|
.44*
|
|
Company Agreement of Taylor Industries, LLC, dated
April 23, 2010.
|
|
3
|
.45*
|
|
Certificate of Formation of Admiral Well Service, Inc., dated
November 11, 2008, as amended.
|
|
3
|
.46*
|
|
Bylaws of Admiral Well Service, Inc.
|
|
3
|
.47*
|
|
Certificate of Formation of Platinum Pressure Services, Inc.,
dated October 23, 2007, as amended.
|
|
3
|
.48*
|
|
Bylaws of Platinum Pressure Services, Inc.
|
|
3
|
.49*
|
|
Articles of Organization of Maverick Coil Tubing Services, LLC,
dated October 24, 2000, as amended.
|
|
3
|
.50*
|
|
Second Amended and Restated Operating Agreement of Maverick Coil
Tubing Services, LLC, dated July 25, 2011.
|
|
3
|
.51*
|
|
Articles of Organization of Maverick Solutions, LLC, dated
July 31, 2003, as amended.
|
|
3
|
.52*
|
|
Second Amended and Restated Operating Agreement of Maverick
Solutions, LLC, dated July 25, 2011.
|
|
3
|
.53*
|
|
Articles of Organization of Maverick Stimulation Company, LLC,
dated August 13, 1996.
|
|
3
|
.54*
|
|
Second Amended and Restated Operating Agreement of Maverick
Stimulation Company, LLC, dated July 25, 2011.
|
|
3
|
.55*
|
|
Articles of Organization of Maverick Thru-Tubing Services, LLC,
dated December 17, 2009.
|
|
3
|
.56*
|
|
Second Amended and Restated Operating Agreement of Maverick
Thru-Tubing Services, LLC, dated July 25, 2011.
|
|
3
|
.57*
|
|
Articles of Organization of MCM Holdings, LLC, dated May 3,
2001, as amended.
|
|
3
|
.58*
|
|
Second Amended and Restated Operating Agreement of MCM Holdings,
LLC, dated July 25, 2011.
|
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
3
|
.59*
|
|
Articles of Organization of MSM Leasing, LLC, dated
July 28, 2009.
|
|
3
|
.60*
|
|
Second Amended and Restated Operating Agreement of MSM Leasing,
LLC, dated July 25, 2011.
|
|
3
|
.61*
|
|
Articles of Organization of The Maverick Companies, LLC, dated
July 21, 2006, as amended.
|
|
3
|
.62*
|
|
Second Amended and Restated Operating Agreement of The Maverick
Companies, LLC, dated July 25, 2011.
|
|
4
|
.1
|
|
Specimen Stock Certificate representing common stock of Basic
Energy Services, Inc. (Incorporated by reference to
Exhibit 4.1 of the Companys Registration Statement on
Form S-1
(SEC File
No. 333-127517),
filed on November 4, 2005)
|
|
4
|
.2
|
|
Indenture dated April 12, 2006, among Basic Energy
Services, Inc., the Guarantors named therein and The Bank of New
York Trust Company, N.A., as trustee. (Incorporated by
reference to Exhibit 4.1 of the Companys Current
Report on
Form 8-K
(SEC File
No. 001-32693),
filed on April 13, 2006)
|
|
4
|
.3
|
|
Form of 7.125% Senior Note due 2016. (Included in the
Indenture filed as Exhibit 4.1 of the Companys
Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on April 13, 2006)
|
|
4
|
.4
|
|
First Supplemental Indenture dated as of July 14, 2006 to
Indenture dated as of April 12, 2006 among Basic Energy
Services, Inc., as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Trust Company, N.A., as
trustee. (Incorporated by reference to Exhibit 4.1 of the
Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on July 20, 2006)
|
|
4
|
.5
|
|
Second Supplemental Indenture dated as of April 26, 2007
and effective as of March 7, 2007 to Indenture dated as of
April 12, 2006 among Basic Energy Services, Inc. as Issuer,
the Subsidiary Guarantors named therein and The Bank of New York
Trust Company, N.A., as trustee. (Incorporated by reference
to Exhibit 4.1 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on May 1, 2007)
|
|
4
|
.6
|
|
Third Supplemental Indenture dated as of April 26, 2007 to
Indenture dated as of April 12, 2006 among Basic Energy
Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Trust Company, N.A., as
trustee. (Incorporated by reference to Exhibit 4.2 of the
Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on May 1, 2007)
|
|
4
|
.7
|
|
Fourth Supplemental Indenture dated as of February 9, 2009
to Indenture dated as of April 12, 2006 among Basic Energy
Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company,
N.A., as trustee. (Incorporated by reference to Exhibit 4.7
of the Companys Annual Report on
Form 10-K
(SEC File
No. 001-32693),
filed on March 9, 2009)
|
|
4
|
.8
|
|
Fifth Supplemental Indenture dated as of July 23, 2009 to
Indenture dated as of April 12, 2006 among Basic Energy
Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company,
N.A., as trustee. (Incorporated by reference to Exhibit 4.8
of the Companys Annual Report on
Form 10-K
(SEC File
No. 001-32693),
filed on March 1, 2010)
|
|
4
|
.9
|
|
Sixth Supplemental Indenture dated as of December 22, 2010
to Indenture dated as of April 12, 2006, by and among Basic
Energy Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company, N.A.
as trustee. (Incorporated by reference to Exhibit 10.4 of
the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on December 22, 2010)
|
|
4
|
.10
|
|
Seventh Supplemental Indenture dated as of August 5, 2011
to Indenture dated as of April 12, 2006, by and among Basic
Energy Services, Inc. as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company, N.A.
as trustee. (Incorporated by reference to Exhibit 10.1 of
the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 10, 2011)
|
|
4
|
.11
|
|
Indenture dated as of July 31, 2009, by and among Basic
Energy Services, Inc. as Issuer, the Guarantors named therein
and The Bank of New York Mellon Trust Company, N.A., as
trustee. (Incorporated by reference to Exhibit 4.1 of the
Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 4, 2009)
|
|
4
|
.12
|
|
Form of 11.625% Senior Secured Note due 2014. (Included as
Exhibit A to Exhibit 4.1 of the Companys Current
Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 4, 2009)
|
|
4
|
.13
|
|
First Supplemental Indenture dated as of December 22, 2010
to Indenture dated as of July 31, 2009 among Basic Energy
Services, Inc., as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company,
N.A., as trustee. (Incorporated by reference to
Exhibit 10.2 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on December 22, 2010)
|
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
4
|
.14
|
|
Second Supplemental Indenture dated as of February 15, 2011
to Indenture dated as of July 31, 2009 among Basic Energy
Services, Inc., as Issuer, the Subsidiary Guarantors named
therein and The Bank of New York Mellon Trust Company,
N.A., as trustee. (Incorporated by reference to Exhibit 4.1
of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on February 18, 2011)
|
|
4
|
.15
|
|
Security Agreement dated as of July 31, 2009, by and
between Basic Energy Services, Inc. and each of the other
Grantors party thereto in favor of The Bank of New York Mellon
Trust Company, N.A., as trustee. (Incorporated by reference
to Exhibit 4.3 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 4, 2009)
|
|
4
|
.16
|
|
Supplement No. 1 dated as of December 22, 2010 to
Security Agreement dated as of July 31, 2009, by and
between Basic Energy Services, Inc. and each of the other
Grantors party thereto in favor of The Bank of New York Mellon
Trust Company, N.A., as trustee. (Incorporated by reference
to Exhibit 10.3 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on December 22, 2010)
|
|
4
|
.17
|
|
Indenture dated as of February 15, 2011, among Basic Energy
Services, Inc. as Issuer, the Guarantors named therein and Wells
Fargo Bank, N.A., as trustee. (Incorporated by reference to
Exhibit 4.2 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on February 18, 2011)
|
|
4
|
.18
|
|
Form of 7.75% Senior Note due 2019. (Included as
Exhibit A to Exhibit 4.2 of the Companys Current
Report on
Form 8-K
(SEC File
No. 001-32693),
filed on February 18, 2011)
|
|
4
|
.19
|
|
First Supplemental Indenture dated as of August 5, 2011 to
Indenture dated as of February 15, 2011, by and among the
Company as Issuer, the New Guarantors, the Existing Guarantors
and Wells Fargo Bank, N.A. as Trustee. (Incorporated by
reference to Exhibit 10.2 of the Companys Current
Report on
Form 8-K
(SEC File
No. 001-32693),
filed on August 10, 2011)
|
|
4
|
.20
|
|
Registration Rights Agreement dated as of February 15,
2011, by and among Basic, the Guarantors named therein and the
initial purchasers party thereto. (Incorporated by reference to
Exhibit 4.4 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on February 18, 2011)
|
|
4
|
.21
|
|
Registration Rights Agreement dated as of June 13, 2011, by
and among Basic, the Guarantors named therein and the initial
purchasers party thereto. (Incorporated by reference to
Exhibit 4.3 of the Companys Current Report on
Form 8-K
(SEC File
No. 001-32693),
filed on June 14, 2011)
|
|
5
|
.1*
|
|
Opinion of Andrews Kurth LLP regarding the validity of the new
notes
|
|
8
|
.1*
|
|
Opinion of Andrews Kurth LLP regarding certain tax matters
|
|
12
|
.1*
|
|
Statement regarding computation of ratio of earnings to fixed
charges
|
|
21
|
.1*
|
|
Subsidiaries of the Company
|
|
23
|
.1*
|
|
Consent of KPMG LLP
|
|
23
|
.2*
|
|
Consent of KPMG LLP
|
|
23
|
.3*
|
|
Consent of Andrews Kurth LLP (included in Exhibit 5.1)
|
|
24
|
.1*
|
|
Powers of Attorney (included on signature pages).
|
|
25
|
.1*
|
|
Form T-1
Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of The Bank of New York Mellon
Trust Company, N.A. to act as trustee under the Indenture
|
|
99
|
.1*
|
|
Form of Letter of Transmittal
|
|
99
|
.2*
|
|
Form of Guidelines for Certification of Taxpayer Identification
Number
|
|
99
|
.3*
|
|
Form of Notice of Guaranteed Delivery
|
|
99
|
.4*
|
|
Form of Letter to Brokers
|
|
99
|
.5*
|
|
Form of Letter to Clients
|
|
|
|
* |
|
Indicates exhibits filed herewith. |
|
|
|
Management contract or compensatory plan or arrangement |