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Item 1.01
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Entry into a Material Definitive Agreement
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Indenture
On December 20, 2019, Archrock Partners,
L.P. (the “Partnership”) and its wholly owned subsidiary, Archrock Partners Finance Corp. (“Finance Corp.”
and, together with the Partnership, the “Issuers”), completed a private offering (the “Notes Offering”)
of $500,000,000 aggregate principal amount of 6.250% senior notes due 2028 (the “Notes”), along with the related guarantees
of the Notes (the “Guarantees”).
The Notes and Guarantees were issued pursuant
to an indenture (the “Indenture”), dated December 20, 2019, among the Issuers, Archrock, Inc. (the “Parent”),
certain subsidiaries (other than the Issuers) of the Parent party thereto (collectively with the Parent, the “Guarantors”)
and Wells Fargo Bank, National Association, as trustee (the “Trustee”).
The Notes are fully and unconditionally
guaranteed, jointly and severally, on a senior unsecured basis by the Guarantors. The Notes and the Guarantees rank equally in
right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness.
Interest on the Notes is payable semi-annually
in arrears on April 1 and October 1 of each year, beginning October 1, 2020, at a rate of 6.250% per year. The Notes mature on
April 1, 2028.
At any time prior to April 1, 2023, the
Issuers may redeem all or part of the Notes, at a redemption price equal to 100% of the principal amount of the Notes plus a “make-whole”
premium plus accrued and unpaid interest, if any, to, but not including, the redemption date. At any time prior to April 1, 2023,
the Issuers may also redeem up to 35% of the aggregate principal amount of the Notes with an amount of cash not greater than the
net cash proceeds from one or more equity offerings, at a redemption price of 106.250% of the principal amount of the Notes to
be redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, as long as at least 65% of the
aggregate principal amount of the Notes originally issued on the issue date (excluding notes held by the Parent and its subsidiaries)
remains outstanding after each such redemption and the redemption occurs within 180 days after the date of the closing of such
equity offering.
On or after April 1, 2023, the Issuers may
redeem all or part of the Notes at the redemption prices set forth below, plus accrued and unpaid interest, if any, to, but not
including, the redemption date, beginning on April 1 of the years indicated below:
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Year
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Percentage
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2023
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103.125
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%
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2024
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102.083
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%
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2025
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101.042
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%
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2026 and thereafter
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100.000
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%
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The Indenture contains covenants that will
limit the ability of the Parent and its restricted subsidiaries, including the Issuers, to (i) make distributions on, purchase
or redeem the Parent’s common stock or repurchase or redeem subordinated indebtedness; (ii) make investments; (iii) incur,
assume or guarantee additional indebtedness or issue preferred stock; (iv) create liens to secure indebtedness; (v) sell or otherwise
dispose of assets; (vi) consolidate with or merge with or into, or sell its properties to, another person; (vii) enter into transactions
with affiliates; and (viii) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications.
If the Notes achieve an investment grade rating from each of Moody’s Investors Service, Inc. and S&P Global Ratings and
no default under the Indenture exists, many of the foregoing covenants will terminate.
The Indenture also contains customary events
of default, including (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due
of principal of or premium, if any, on the Notes; (iii) covenant defaults, (iv) cross-defaults to certain indebtedness and (v)
certain events of bankruptcy or insolvency with respect to the Parent or any of the Guarantors (including the Issuers). If an event
of default arises from certain events of bankruptcy, insolvency or reorganization, with respect to the Issuers, the Parent, any
restricted subsidiary of the Parent that is a significant subsidiary or any group of restricted subsidiaries of the Parent that,
taken together, would constitute a significant subsidiary of the Parent, all outstanding Notes will become due and payable immediately
without further action or notice. If an event of default occurs and is continuing, the Trustee or the holders of at least 25% in
aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
If the Partnership experiences certain kinds
of changes of control, holders of the Notes will be entitled to require the Partnership to repurchase all or any part (equal to
$2,000 or an integral multiple of $1,000 in excess of $2,000) of that holder’s Notes pursuant to an offer on the terms set
forth in the Indenture. The Company will offer to make a cash payment equal to 101% of the aggregate principal amount of the Notes
repurchased plus accrued and unpaid interest on the Notes repurchased to, but not including, the date of purchase, subject to the
rights of holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date.
The summary of the Indenture set forth in
this Item 1.01 does not purport to be complete and is qualified by reference to such agreement, a copy of which is being filed
as Exhibit 4.1 hereto and is incorporated herein by reference.