Exhibit 10.3

Execution Version

 

 

 

LOAN, SECURITY AND GUARANTY AGREEMENT

Dated as of February 13, 2018

 

 

QUINTANA ENERGY SERVICES INC.,

QUINTANA ENERGY SERVICES LP

and

EACH PERSON JOINED HERETO AS A BORROWER FROM TIME TO TIME,

as Borrowers

 

 

BANK OF AMERICA, N.A.,

as Agent, Joint Lead Arranger and Sole Bookrunner,

ZB, N.A. DBA AMEGY BANK,

as Joint Lead Arranger, and

CITIBANK, N.A.,

as Joint Lead Arranger

 

 

 

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TABLE OF CONTENTS

 

 

          Page  

Section 1.

  

DEFINITIONS; RULES OF CONSTRUCTION

     1  

1.1.

   Definitions      1  

1.2.

   Accounting Terms      34  

1.3.

   Uniform Commercial Code      34  

1.4.

   Certain Matters of Construction      34  

1.5.

   Currency Equivalents      34  

1.6.

   Pro Forma Calculations      35  

Section 2.

  

CREDIT FACILITIES

     36  

2.1.

   Revolver Commitment      36  

2.2.

   [Reserved]      37  

2.3.

   Letter of Credit Facility      38  

Section 3.

  

INTEREST, FEES AND CHARGES

     40  

3.1.

   Interest      40  

3.2.

   Fees      41  

3.3.

   Computation of Interest, Fees, Yield Protection      42  

3.4.

   Reimbursement Obligations      42  

3.5.

   Illegality      42  

3.6.

   Inability to Determine Rates      43  

3.7.

   Increased Costs; Capital Adequacy      43  

3.8.

   Mitigation      44  

3.9.

   Funding Losses      44  

3.10.

   Maximum Interest      44  

Section 4.

  

LOAN ADMINISTRATION

     45  

4.1.

   Manner of Borrowing and Funding Revolver Loans      45  

4.2.

   Defaulting Lender      46  

4.3.

   Number and Amount of LIBOR Loans; Determination of Rate      47  

4.4.

   Borrower Agent      47  

4.5.

   One Obligation      47  

4.6.

   Effect of Termination      47  

Section 5.

  

PAYMENTS

     48  

5.1.

   General Payment Provisions      48  

5.2.

   Repayment of Revolver Loans      48  

5.3.

   [Reserved]      48  

5.4.

   Payment of Other Obligations      48  

5.5.

   Marshaling; Payments Set Aside      48  

5.6.

   Application and Allocation of Payments      48  

5.7.

   Dominion Account      49  

5.8.

   Account Stated      50  

5.9.

   Taxes      50  

5.10.

   Lender Tax Information      52  

5.11.

   Guarantees; Joint and Several Liability of Obligors      53  

Section 6.

  

CONDITIONS PRECEDENT

     55  

6.1.

   Conditions Precedent to Closing Date      55  

6.2.

   Conditions Precedent to All Credit Extensions      57  

Section 7.

  

COLLATERAL

     57  

7.1.

   Grant of Security Interest      57  

7.2.

   Lien on Deposit Accounts; Cash Collateral      58  

7.3.

   [Reserved]      58  

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7.4.

   Other Collateral      58  

7.5.

   Limitations      59  

7.6.

   Further Assurances      59  

Section 8.

  

COLLATERAL ADMINISTRATION

     59  

8.1.

   Borrowing Base Reports      59  

8.2.

   Accounts      59  

8.3.

   Inventory      60  

8.4.

   Equipment      61  

8.5.

   Deposit Accounts      61  

8.6.

   General Provisions      61  

8.7.

   Power of Attorney      63  

Section 9.

  

REPRESENTATIONS AND WARRANTIES

     63  

9.1.

   General Representations and Warranties      63  

9.2.

   Complete Disclosure      68  

Section 10.

  

COVENANTS AND CONTINUING AGREEMENTS

     68  

10.1.

   Affirmative Covenants      68  

10.2.

   Negative Covenants      73  

10.3.

   Fixed Charge Coverage Ratio      79  

Section 11.

  

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

     80  

11.1.

   Events of Default      80  

11.2.

   Remedies upon Default      81  

11.3.

   License      82  

11.4.

   Setoff      82  

11.5.

   Remedies Cumulative; No Waiver      83  

Section 12.

  

AGENT

     83  

12.1.

   Appointment, Authority and Duties of Agent      83  

12.2.

   Agreements Regarding Collateral and Borrower Materials      84  

12.3.

   Reliance By Agent      85  

12.4.

   Action Upon Default      85  

12.5.

   Ratable Sharing      85  

12.6.

   Indemnification      85  

12.7.

   Limitation on Responsibilities of Agent      85  

12.8.

   Successor Agent and Co-Agents      86  

12.9.

   Due Diligence and Non-Reliance      86  

12.10.

   Remittance of Payments and Collections      87  

12.11.

   Individual Capacities      87  

12.12.

   Titles      87  

12.13.

   Bank Product Providers      88  

12.14.

   No Third Party Beneficiaries      88  

Section 13.

  

BENEFIT OF AGREEMENT; ASSIGNMENTS

     88  

13.1.

   Successors and Assigns      88  

13.2.

   Participations      88  

13.3.

   Assignments      89  

13.4.

   Replacement of Certain Lenders      90  

Section 14.

  

MISCELLANEOUS

     90  

14.1.

   Consents, Amendments and Waivers      90  

14.2.

   Indemnity      91  

14.3.

   Notices and Communications      91  

14.4.

   Performance of Obligors’ Obligations      92  

14.5.

   Credit Inquiries      93  

14.6.

   Severability      93  

14.7.

   Cumulative Effect; Conflict of Terms      93  

 

(ii)

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14.8.

   Counterparts; Execution      93  

14.9.

   Entire Agreement      93  

14.10.

   Relationship with Lenders      93  

14.11.

   No Advisory or Fiduciary Responsibility      94  

14.12.

   Confidentiality      94  

14.13.

   [Reserved]      94  

14.14.

   GOVERNING LAW      94  

14.15.

   Consent to Forum; Bail-In of EEA Financial Institutions      95  

14.16.

   Waivers by Obligors      95  

14.17.

   Patriot Act Notice      96  

14.18.

   NO ORAL AGREEMENT      96  

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A

  

Assignment

Exhibit B

  

Assignment Notice

 

Schedule 1.1

  

Commitments of Lenders

Schedule 1.2

  

Existing Letters of Credit

Schedule 8.5

  

Deposit Accounts

Schedule 8.6.1

  

Business Locations

Schedule 9.1.4

  

Names and Capital Structure

Schedule 9.1.11

  

Patents, Trademarks, Copyrights and Licenses

Schedule 9.1.14

  

Environmental Matters

Schedule 9.1.15

  

Restrictive Agreements

Schedule 9.1.16

  

Litigation and Commercial Tort Claims

Schedule 9.1.18

  

Pension Plans

Schedule 9.1.20

  

Labor Contracts

Schedule 10.1.9

  

Unrestricted Subsidiaries

Schedule 10.2.1(y)

  

Existing Debt

Schedule 10.2.2

  

Existing Liens

Schedule 10.2.5

  

Existing Investments

Schedule 10.2.6

  

Certain Permitted Dispositions of Assets

Schedule 10.2.17

  

Existing Affiliate Transactions

 

(iii)

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LOAN, SECURITY AND GUARANTY AGREEMENT

THIS LOAN, SECURITY AND GUARANTY AGREEMENT is dated as of February 13, 2018,
among QUINTANA ENERGY SERVICES INC., a Delaware corporation (“Parent”), QUINTANA
ENERGY SERVICES LP, a Delaware limited partnership (“Quintana LP”), each other
Person named on the signature pages hereto as a Borrower or joined hereto as a
Borrower from time to time (together with Parent and Quintana LP, collectively,
“Borrowers”, and individually, each a “Borrower”), the other Obligors party to
this Agreement from time to time, the financial institutions party to this
Agreement from time to time as Lenders, and BANK OF AMERICA, N.A., a national
banking association (“Bank of America”), as agent for the Lenders (in such
capacity, “Agent”).

R E C I T A L S:

WHEREAS, Borrowers have requested that Lenders provide a credit facility to
Borrowers to finance their mutual and collective business enterprise and Lenders
are willing to provide the credit facility on the terms and conditions set forth
in this Agreement;

WHEREAS, Borrowers have agreed to secure all of their Obligations by granting to
Agent, for the benefit of the Secured Parties, a Lien on certain of their assets
in accordance with the terms and conditions of this Agreement; and

WHEREAS, Guarantors from time to time party hereto have agreed to guarantee the
Obligations of Borrowers hereunder and to secure their respective Obligations by
granting to Agent, for the benefit of the Secured Parties, a Lien on certain of
their assets in accordance with the terms and conditions of this Agreement;

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

1.1. Definitions . As used herein, the following terms have the meanings set
forth below:

Accounts Formula Amount: (a) 85% of the Value of Eligible Billed Accounts plus
(b) 75% of the Value of Eligible Unbilled Accounts, provided that the amount in
this clause (b) shall not exceed 25% of the Borrowing Base.

Acquisition: a transaction or series of transactions resulting in
(a) acquisition of a business, division or substantially all assets of a Person
or (b) record or beneficial ownership of more than 50% of the Equity Interests
of a Person (whether through purchase, merger, consolidation or combination).

Adjusted EBITDA: for any period the sum of (i) EBITDA, plus (ii) the following
to the extent deducted in the calculation of net income (or loss) of Parent on a
Consolidated Basis for such period (without duplication):

(A) all amounts incurred and payable for all fees, commissions and charges under
this Agreement and the other Loan Documents and with respect to any Loan, or
other Borrowed Money, including any amendment, modification, or supplement
hereof or thereof; plus

(B) all non-cash charges, losses or expenses; plus

(C) [Reserved]; plus

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(D) an amount equal to the sum of cash dividends received by an Obligor in the
ordinary course of business from an Unrestricted Subsidiary which are made with
cash from the operating cash flow of such Unrestricted Subsidiary, less (to the
extent not deducted in the calculation of net income (or loss) of Parent on a
Consolidated Basis) the amount of Investments in or repayments of Debt to such
Unrestricted Subsidiary; plus

(E) all non-capitalized fees and expenses paid in connection with the
consummation of any Qualified IPO, in each case, as evidenced by supporting
documentation as Agent may require in its Permitted Discretion; plus

(F) non-cash losses (or minus non-cash gains) arising from the sale of capital
assets, plus

(G) [Reserved]; plus

(H) reasonable and customary fees, expenses, premiums and other charges in
connection with the issuance or repayment of Debt, the issuance of Equity
Interests (including the Qualified IPO) or any refinancing transaction,
amendment or other modification of any debt instrument, the making of any
Investment, or any non-ordinary course asset sale, in each case whether or not
consummated; plus

(I) any non-cash losses (or minus any non-cash gains) resulting from mark to
market accounting of Hedging Agreements; plus

(J) the amount of “run-rate” cost savings, operating expense reductions,
restructuring charges and expenses and cost-saving synergies projected by the
Borrower Agent in good faith to be realized, as a result of actions taken or
expected to be taken, within 12 months of the end of such period (calculated on
a pro forma basis as though such cost savings, operating expense reductions,
restructuring charges and expenses and cost-saving synergies had been realized
on the first day of such period), net of the amount of actual benefits realized
during such period from such actions; provided that (1) such cost savings,
operating expense reductions, restructuring charges and expenses and cost-saving
synergies are reasonably identifiable and factually supportable, (2) no cost
savings, operating expense reductions, restructuring charges and expenses and
cost-saving synergies may be added pursuant to this subclause (J) to the extent
duplicative of any expenses or charges relating thereto that are either excluded
in computing consolidated net income or included (i.e., added back) in computing
Adjusted EBITDA for such period, (3) such adjustments may be incremental to (but
not duplicative of) pro forma adjustments made pursuant to Section 1.6 and
(4) the aggregate amount of cost savings, operating expense reductions and cost
saving synergies added pursuant to this subclause (J) together with any amounts
added pursuant to subclause (K) below shall not exceed, for any Measurement
Period, (A) the greater of (a) $4,000,000 and (b) the lesser of (x) $35,000,000
and (y) 15.0% of Adjusted EBITDA for such Measurement Period (prior to giving
effect to the addbacks pursuant to this subclause (J) and subclause (K) below)
plus (B) the amount of any such cost savings, operating expense reductions,
restructuring charges and expenses and cost-savings synergies that would be
permitted to be included in financial statements prepared in accordance with
Regulation S-X under the Securities Act of 1933 during such Measurement Period;
plus

(K) the amount of any restructuring charge or reserve, integration cost or other
business optimization expense, retention, non-recurring charges or expenses,
severance costs, recruiting, relocation and signing bonuses and expenses,
systems establishment costs, costs associated with office and facilities
opening, closing and consolidating, transaction fees and expenses provided that
the amounts added pursuant to this clause subclause (K) together with any
amounts added pursuant to subclause (J) above shall not exceed, in any
Measurement Period, (A) the greater of (a) $4,000,000 and (b) the lesser of (x)
$35,000,000 and (y) 15.0% of Adjusted EBITDA for such Measurement Period (prior
to giving effect to the addbacks pursuant to this subclause (K) and subclause
(J) above) plus (B) the amount of any such restructuring charge or reserve,
integration cost or other business optimization expense that would be permitted
to be included in financial statements prepared in accordance with Regulation
S-X under the Securities Act of 1933 during such Measurement Period; plus

 

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(L) any proceeds from business interruption insurance received by the Obligors
during such period, to the extent the associated losses arising out of the event
that resulted in the payment of such business interruption insurance proceeds
were included in computing net income and such losses were not previously or
concurrently excluded from the calculation of EBITDA; plus

(M) any costs or expense incurred pursuant to any management equity plan or
stock option plan or other management or employee benefit plan or agreement or
any stock subscription or shareholder agreement; plus

(N) acquisition, integration and divestiture costs, and costs and expenses
incurred by any Obligor in connection with the acquisition, deployment or
opening of any new hydraulic fracturing spread and related equipment or similar
charges in an aggregate amount not to exceed $5,000,000 per Measurement Period;
plus

(O) one time litigation costs and expenses of an Obligor in an aggregate amount
not to exceed $2,500,000 to the extent such costs and expenses are incurred in
connection with the litigation described on Schedule 9.1.16 hereto as of the
Closing Date (excluding, for the avoidance of doubt, any Commercial Tort Claims
of an Obligor described therein); plus

(P) such other adjustments as may be agreed to by Required Lenders.

Affiliate: with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have correlative meanings.

Agent: as defined in the preamble and shall include its successors and assigns.

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates,
agents and attorneys.

Agent Professionals: attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.

Agreement: this Loan, Security and Guaranty Agreement, as the same may be
amended, restated, joined, extended, supplemented and/or otherwise modified from
time to time.

Agreement Currency: as defined in Section 1.5.

Allocable Amount: as defined in Section 5.11.3(b).

Anti-Terrorism Law: any law relating to terrorism or money laundering, including
the Patriot Act.

Applicable Law: all laws, rules, regulations and governmental guidelines
applicable to the Person or matter in question, including statutory law, common
law and equitable principles, as well as provisions of constitutions, treaties,
statutes, rules, regulations, orders and decrees of Governmental Authorities, in
each case having the force of law.

 

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Applicable Margin: the margin set forth below, as determined by the average
daily Availability for the most recently ended Fiscal Quarter:

 

Level

   Average Daily
Availability, as a
percentage of the
aggregate Revolver
Commitments     Base
Rate
Revolver
Loans     LIBOR
Revolver
Loans  

I

     > 50 %      1.50 %      2.50 % 

II

     £ 50% > 25 %      1.75 %      2.75 % 

III

     £25 %      2.00 %      3.00 % 

Until July 1, 2018, margins shall be determined as if Level II were applicable.
Thereafter, margins shall be subject to increase or decrease by Agent on the
first day of the calendar month following each Fiscal Quarter end. If Agent is
unable to calculate average daily Availability for a Fiscal Quarter due to
Borrowers’ failure to deliver any Borrowing Base Report when required hereunder,
then, at the option of Agent or Required Lenders, margins shall be determined as
if Level II were applicable until the first day of the calendar month following
its receipt.

Approved Fund: any Person (other than a natural Person) engaged in making,
purchasing, holding or otherwise investing in commercial loans in its ordinary
course of activities.

Asset Disposition: a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor, including any disposition in connection
with a sale-leaseback transaction or synthetic lease.

Assignment: an assignment agreement between a Lender and Eligible Assignee, in
the form of Exhibit A or otherwise satisfactory to Agent.

Availability: the Borrowing Base minus Revolver Usage.

Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve; (b) the Rent and Charges Reserve; (c) the Bank Product Reserve; (d) the
aggregate amount of liabilities secured by Liens upon Collateral that are senior
to Agent’s Liens (but imposition of any such reserve shall not waive an Event of
Default arising therefrom); and (e) such additional reserves, in such amounts
and with respect to such matters, as Agent in its Permitted Discretion may elect
to impose from time to time; provided that unless an Event of Default exists and
is continuing (in which case no notice shall be required and any changes shall
take effect immediately), no change in respect of a new category of reserves
shall take effect until the third (3rd) Business Day following delivery by Agent
of written notification to Borrower Agent of such new category (during which
period Agent shall be available to discuss any such proposed new reserve
category with the Borrowers and Borrowers may take such action as may be
required to eliminate the event, condition or matter that is the basis for such
new category).

Bail-In Action: the exercise of any Write-Down and Conversion Powers by the
applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

Bail-In Legislation: with respect to any EEA Member Country implementing Article
55 of Directive 2014/59/EU of the European Parliament and of the Council of the
European Union, the implementing law for such EEA Member Country from time to
time which is described in the EU Bail-In Legislation Schedule.

Bank of America Indemnitees: Bank of America and its officers, directors,
employees, Affiliates, agents and attorneys.

 

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Bank Product: any of the following products or services extended to an Obligor
by a Lender or any of its Affiliates: (a) Cash Management Services; (b) products
under Hedging Agreements (i) at the time when such Person who enters into a
Hedging Agreement with an Obligor not prohibited under this Agreement is a
Lender or an Affiliate of a Lender, or (ii) at the time such Person becomes a
Lender, is a party to such Hedging Agreement with an Obligor not prohibited
under this Agreement, in each case, in its capacity as a party to such Hedging
Agreement (even if such Person ceases to be a Lender or such Person’s Affiliate
ceased to be a Lender); provided, in the case of a Hedging Agreement with a
Person who is no longer a Lender (or Affiliate of a Lender), such Hedging
Agreement shall be deemed a Bank Product only through the stated termination
date (without extension or renewal) of such Hedging Agreement; (c) commercial
credit card and merchant card services; and (d) other banking products or
services, other than Letters of Credit.

Bank Product Reserve: the aggregate amount of reserves established by Agent from
time to time in its Permitted Discretion with respect to Secured Bank Product
Obligations.

Bankruptcy Code: Title 11 of the United States Code.

Base Rate: for any day, a per annum rate equal to the greater of (a) the Prime
Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or
(c) LIBOR for a 30 day interest period as of such day, plus 1.0%.

Base Rate Loan: any Loan that bears interest based on the Base Rate.

Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base
Rate.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt
that (i) arises from the lending of money by any Person to such Obligor, (ii) is
evidenced by notes, drafts, bonds, debentures, credit documents or similar
instruments, (iii) accrues interest or is a type upon which interest charges are
customarily paid (excluding trade payables owing in the Ordinary Course of
Business), or (iv) was issued or assumed as full or partial payment for
Property; (b) Capital Leases; (c) letter of credit reimbursement obligations;
(d) Term Debt , if any, and (e) guaranties of any of the foregoing owing by
another Person.

Borrower Agent: as defined in Section 4.4.

Borrower Materials: Borrowing Base Reports, Compliance Certificates and other
information, reports, financial statements and other materials delivered by
Borrowers hereunder, as well as other Reports and information provided by Agent
to Lenders.

Borrowers: as defined in the preamble. At the request of the Borrower Agent and
with the consent of Agent, any Restricted Subsidiary of the Parent that is a
Domestic Subsidiary may be designated as a Borrower, subject to (a) executing
and delivering a joinder agreement to this Agreement and such other documents as
Agent reasonably requests in which case such Borrower shall be jointly and
severally liable with the other Borrowers for all Obligations under this
Agreement and (b) the Agent shall have received all documentation and other
information required by regulatory authorities under applicable “know your
customer”, anti-corruption laws and Anti-Terrorism Laws requested by the
Lenders.

Borrowing: a group of Loans that are made or converted together on the same day
and have the same interest option and, if applicable, Interest Period.

 

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Borrowing Base: on any date of determination, an amount equal to the lesser of
(a) the aggregate Revolver Commitments; or (b) the sum of the Accounts Formula
Amount, plus the Inventory Formula Amount, minus the Availability Reserve.

Borrowing Base Report: a report setting forth the calculation of the Borrowing
Base, in form and substance satisfactory to Agent in its Permitted Discretion.

Business Day: any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, North Carolina or Texas, and if such day relates to a LIBOR Loan, any
such day on which dealings in Dollar deposits are conducted in the London
interbank market.

Capital Expenditures: all liabilities incurred or expenditures made by an
Obligor for the acquisition of fixed assets, or any improvements, replacements,
substitutions or additions thereto with a useful life of more than one year.

Capital Lease: any lease required to be capitalized for financial reporting
purposes in accordance with GAAP.

Captive Insurance Subsidiary: any Restricted Subsidiary that is subject to
regulation as an insurance company (or any Restricted Subsidiary thereof).

Cash Collateral: cash delivered to Agent to Cash Collateralize any Obligations,
and all interest, dividends, earnings and other proceeds relating thereto.

Cash Collateralize: the delivery of cash to Agent, as security for the payment
of Obligations, in an amount equal to (a) with respect to LC Obligations, 105%
of the aggregate LC Obligations, and (b) with respect to any inchoate,
contingent or other Obligations (including Secured Bank Product Obligations),
Agent’s good faith estimate of the amount due or to become due, including fees
and other amounts relating to such Obligations. “Cash Collateralization” has a
correlative meaning.

Cash Equivalents: (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the U.S. government,
maturing within 12 months of the date of acquisition; (b) certificates of
deposit, time deposits and bankers’ acceptances maturing within 12 months of the
date of acquisition, and overnight bank deposits, in each case which are issued
by Bank of America or a commercial bank organized under the laws of the United
States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or
better) by Moody’s at the time of acquisition, and (unless issued by a Lender)
not subject to offset rights; (c) repurchase obligations with a term of not more
than 30 days for underlying investments of the types described in clauses
(a) and (b) entered into with any bank described in clause (b); (d) commercial
paper issued by Bank of America or rated A-1 (or better) by S&P or P-1 (or
better) by Moody’s, and maturing within nine months of the date of acquisition;
and (e) shares of any money market fund that has substantially all of its assets
invested continuously in the types of investments referred to above, has net
assets of at least $500,000,000 and has the highest rating obtainable from
either Moody’s or S&P.

Cash Management Services: services relating to operating, collections, payroll,
trust, or other depository or disbursement accounts, including automated
clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled
disbursement, overdraft, depository, information reporting, lockbox and stop
payment services.

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).

 

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CFC: a “controlled foreign corporation” within the meaning of Section 957 of the
Code.

Change in Law: the occurrence, after the date hereof, of (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof; or (c) the making, issuance or
application of any request, guideline, requirement or directive (whether or not
having the force of law) by any Governmental Authority; provided, however, that
“Change in Law” shall include, regardless of the date enacted, adopted or
issued, all requests, rules, guidelines, requirements or directives (i) under or
relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or
(ii) promulgated pursuant to Basel III by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any similar
authority) or any other Governmental Authority.

Change of Control: (a) Parent ceases to own and control, beneficially and of
record, directly or indirectly, all Equity Interests in all Obligors other than
as a result of a transaction permitted under this Agreement pursuant to which
100% of the Equity Interests of such Obligor are sold or otherwise transferred;
(b) any Person or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision) including any
group acting for the purpose of acquiring, holding or disposing of securities
(within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than
Sponsor, acquires directly or indirectly, in a single transaction or in a
related series of transactions, by way of merger, consolidation or other
business combination or purchase of beneficial ownership (within the meaning of
Rule 13d3 under the Exchange Act, or any successor provision), directly or
indirectly more than 35% of the total voting power of the voting Equity
Interests of the Parent; (c) during any period of 24 consecutive months, a
majority of the members of the board of directors of the Parent shall cease to
be composed of individuals (i) who were members of that board on the first day
of such period, (ii) whose election or nomination to that board was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or (iii) whose election
or nomination to that board was approved by individuals referred to in clauses
(i) and (ii) above constituting at the time of such election or nomination at
least a majority of that board; or (d) the sale or transfer of all or
substantially all assets of an Obligor, except to another Obligor or other than
as a result of a transaction permitted under this Agreement.

Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees (limited to one (1) lead
counsel for Agent and Lenders, one (1) additional local counsel in each
applicable jurisdiction and solely in the case of a conflict of interest, one
(1) additional counsel to Agent and the affected Lenders) and Extraordinary
Expenses) at any time (including after Full Payment or replacement of Agent or
any Lender) incurred by any Indemnitee or asserted against any Indemnitee by any
Obligor or other Person, in any way relating to (a) any Loans, Letters of
Credit, Loan Documents, Borrower Materials, or the use thereof or transactions
relating thereto, (b) any action taken or omitted in connection with any Loan
Documents, (c) the existence or perfection of any Liens, or realization upon any
Collateral, (d) exercise of any rights or remedies under any Loan Documents or
Applicable Law, or (e) failure by any Obligor to perform or observe any terms of
any Loan Document, in each case including all costs and expenses relating to any
investigation, litigation, arbitration or other proceeding (including an
Insolvency Proceeding or appellate proceedings), whether or not the applicable
Indemnitee is a party thereto.

Closing Date: as defined in Section 6.1.

Code: the Internal Revenue Code of 1986.

Collateral: all Property described in Section 7.1, all Property described in any
Security Documents as security for any Obligations, and all other Property that
now or hereafter secures (or is intended to secure) any Obligations, in each
case, other than Excluded Property.

 

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Commitment: for any Lender, the aggregate amount of such Lender’s Revolver
Commitment. “Commitments” means the aggregate amount of all Revolver
Commitments.

Commitment Termination Date: the earliest to occur of (a) the Revolver
Termination Date; (b) the date on which Borrowers terminate the Revolver
Commitments pursuant to Section 2.1.4(a); or (c) the date on which the Revolver
Commitments are terminated pursuant to Section 11.2.

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

Compliance Certificate: a certificate, in form and substance satisfactory to
Agent, by which Borrower Agent certifies compliance with Section 10.3 (whether
or not a Covenant Trigger Period is in effect).

Connection Income Taxes: Other Connection Taxes that are imposed on or measured
by net income (however denominated), or are franchise or branch profits Taxes.

Contingent Obligation: any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease,
dividend or other obligation (“primary obligations”) of another obligor
(“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person under any (a) guaranty, endorsement, co-making or sale
with recourse of an obligation of a primary obligor; (b) obligation to make
take-or-pay or similar payments regardless of nonperformance by any other party
to an agreement; and (c) arrangement (i) to purchase any primary obligation or
security therefor, (ii) to supply funds for the purchase or payment of any
primary obligation, (iii) to maintain or assure working capital, equity capital,
net worth or solvency of the primary obligor, (iv) to purchase Property or
services for the purpose of assuring the ability of the primary obligor to
perform a primary obligation, or (v) otherwise to assure or hold harmless the
holder of any primary obligation against loss in respect thereof. The amount of
any Contingent Obligation shall be deemed to be the stated or determinable
amount of the primary obligation (or, if less, the maximum amount for which such
Person may be liable under the instrument evidencing the Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
with respect thereto.

Covenant Trigger Period: the period (a) commencing on any day that
(i) Availability is less than the greater of (x) $9,300,000 and (y) 15% of the
Borrowing Base and (b) continuing until, during each of the preceding 30
consecutive days, Availability has been more than the greater of (x) $9,300,000
and (y) 15% of the Borrowing Base. The termination of a Covenant Trigger Period
as provided herein shall in no way limit, waive or delay the occurrence of a
subsequent Covenant Trigger Period in the event that the conditions set forth in
this definition again arise.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: as applied to any Person, without duplication, (a) all obligations of such
Person for borrowed money; (b) all obligations issued, undertaken or assumed as
the deferred purchase price of Property or services, but excluding (i) trade
payables and accrued obligations incurred and being paid in the Ordinary Course
of Business and (ii) trade payables and accrued obligations which are
(A) outstanding for not more than 90 days past due or (B) being contested in
good faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor; (c) all Contingent Obligations; (d) all
reimbursement obligations in connection with letters of credit issued for the
account of such person; (e) all obligations of such Person evidenced by bonds,
debentures, notes, credit documents or similar instruments, including
obligations so incurred in connection with the acquisition of Property, assets
or businesses; (f) all Capital Leases; and (g) all Debt of others secured by (or
for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on Property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed. The
Debt of a Person shall include any recourse Debt of any partnership or joint
venture in which such Person is a general partner or joint venturer.

 

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Default: an event or condition that, with the lapse of time or giving of notice,
would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.

Defaulting Lender: any Lender that (a) has failed to comply with its funding
obligations hereunder, and such failure is not cured within two Business Days;
(b) has notified Agent or any Borrower that such Lender does not intend to
comply with its funding obligations hereunder or under any other credit
facility, or has made a public statement to that effect; (c) has failed, within
three Business Days following request by Agent or any Borrower, to confirm in a
manner satisfactory to Agent and Borrowers that such Lender will comply with its
funding obligations hereunder; or (d) has, or has a direct or indirect parent
company that has, become the subject of an Insolvency Proceeding (including
reorganization, liquidation, or appointment of a receiver, custodian,
administrator or similar Person by the Federal Deposit Insurance Corporation or
any other regulatory authority) or Bail-In Action; provided, however, that a
Lender shall not be a Defaulting Lender solely by virtue of a Governmental
Authority’s ownership of an equity interest in such Lender or parent company
unless the ownership provides immunity for such Lender from jurisdiction of
courts within the United States or from enforcement of judgments or writs of
attachment on its assets, or permits such Lender or Governmental Authority to
repudiate or otherwise to reject such Lender’s agreements.

Deposit Account Control Agreement: control agreement satisfactory to Agent in
its Permitted Discretion executed by an institution maintaining a Deposit
Account (other than an Excluded Account) for an Obligor, to perfect Agent’s Lien
on such account.

Designated Jurisdiction: a country or territory that is the subject of a
Sanction.

Distribution: any declaration or payment of a distribution, interest or dividend
on any Equity Interest (other than payment-in-kind); distribution, advance or
repayment of Debt to a holder of Equity Interests; or purchase, redemption, or
other acquisition or retirement for value of any Equity Interest; provided that
in no event shall a “Distribution” include (a) the cashless exercise of options,
(b) the retirement of fractional shares, (c) repurchases of Equity Interests
deemed to occur in connection with the surrender of shares of Equity Interests
to satisfy tax withholding obligations or (d) the cashless exercise of warrants.

Dollars: lawful money of the United States.

Domestic Subsidiary: any Restricted Subsidiary incorporated or organized under
the laws of the United States, any state thereof or the District of Columbia.

Dominion Account: a special account established by Obligors at Bank of America
or another bank acceptable to Agent, over which Agent has exclusive Control (as
defined in the UCC).

Dominion Trigger Period: the period (a) commencing on any day that (i) an Event
of Default occurs or (ii) Availability is less than the greater of (x)
$9,300,000 and (y) 15% of the Borrowing Base, in either case (with respect to
this clause (ii)) for 3 consecutive Business Days; and (b) continuing until,
during each of the preceding 30 consecutive days, no Event of Default has
existed and Availability has been more than the greater of (x) $9,300,000 and
(y) 15% of the Borrowing Base. The termination of a Dominion Trigger Period as
provided herein shall in no way limit, waive or delay the occurrence of a
subsequent Dominion Trigger Period in the event that the conditions set forth in
this definition again arise.

 

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EBITDA: for any period with respect to Parent on a Consolidated Basis, the sum
of (a) net income (or loss) for such period (excluding extraordinary gains and
losses determined in accordance with GAAP), plus (b) all interest expense for
such period, plus (c) all charges against income for such period for federal,
state and local taxes, plus (d) depreciation expenses for such period, plus
(e) amortization expenses for such period.

EEA Financial Institution: (a) any credit institution or investment firm
established in an EEA Member Country that is subject to the supervision of an
EEA Resolution Authority; (b) any entity established in an EEA Member Country
that is a parent of an institution described in clause (a) above; or (c) any
financial institution established in an EEA Member Country that is a subsidiary
of an institution described in the foregoing clauses and is subject to
consolidated supervision with its parent.

EEA Member Country: any of the member states of the European Union, Iceland,
Liechtenstein and Norway.

EEA Resolution Authority: any public administrative authority or any Person
entrusted with public administrative authority of an EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

Eligible Assignee: (a) a Lender, Affiliate of a Lender or Approved Fund; (b) an
assignee approved by Borrower Agent (which approval shall not be unreasonably
withheld or delayed, and shall be deemed given if no objection is made within
ten days after notice of the proposed assignment) and Agent; or (c) during an
Event of Default, any Person acceptable to Agent in its Permitted Discretion.

Eligible Billed Account: with respect to each Obligor, each Account (subject to
the requirements of this definition) of such Obligor arising in the Ordinary
Course of Business that is subject to Agent’s first priority perfected security
interest and no other Lien (other than Permitted Liens), and is evidenced by an
invoice or other documentary evidence satisfactory to Agent in its Permitted
Discretion. In addition, no Account shall be an Eligible Billed Account if:

(a) it arises out of a sale made by any Obligor to an Affiliate of any Obligor
or to a Person controlled by an Affiliate of any Obligor;

(b) it is due and unpaid more than sixty (60) days after the due date or ninety
(90) days after the original invoice date;

(c) 50% or more of the Accounts from a referenced Account Debtor are deemed
ineligible hereunder;

(d) any representation or warranty contained in this Agreement with respect to
such Account has been breached in any material respect, or any covenant
contained in this Agreement with respect to such Accounts has been breached and
the resultant Event of Default has not been waived;

(e) the Account Debtor shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts as
they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary case
or proceeding under any state or federal bankruptcy laws (as now or hereafter in
effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take

 

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advantage of any other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, any petition which is filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing (provided, that solely to the extent
approved by Agent in its sole discretion, so long as an order exists permitting
payment of trade creditors specifically with respect to such Account Debtor and
such Account Debtor has obtained adequate post-petition financing to pay such
Accounts, the Accounts of such Account Debtor shall not be deemed ineligible
under the provisions of this clause to the extent the order permitting such
financing allows the payment of the applicable Account);

(f) the sale is to an Account Debtor located outside the United States of
America or Canada, unless the sale is on letter of credit, guaranty or
acceptance terms acceptable to Agent in its Permitted Discretion;

(g) the sale to Account Debtor is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper with respect to which Agent does not have
a perfected first priority security interest (subject to Permitted Liens that
are junior in priority);

(h) the Account Debtor is the United States of America, any state or any
department, agency or instrumentality of any of them, unless the applicable
Borrower assigns its right to payment of such Account to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq.
and 41 U.S.C. Sub-Section 15 et seq.) and any other steps necessary to perfect
the Lien of the Agent in such Account and to confirm enforceability by Agent
have been complied with to the Agent’s satisfaction;

(i) the goods giving rise to such Account have not been delivered to and
accepted by the Account Debtor or the services giving rise to such Account have
not been performed by the applicable Obligor or accepted by the Account Debtor
or the Account otherwise does not represent a final sale;

(j) the Accounts of the Account Debtor exceed a credit limit determined by
Agent, in its Permitted Discretion and reasonably taking into account the credit
and financial circumstances of the Account Debtor, to the extent such Account
exceeds such limit;

(k) the Account is subject to any offset, deduction, defense, dispute, or
counterclaim (to the extent of such offset, deduction, defense, dispute or
counterclaim), or the Account Debtor is also a creditor or supplier of an
Obligor (to the extent of any amounts owed by such Borrower to such Account
Debtor as a creditor or supplier), or the obligations of the Account Debtor to
make payment with respect to such Account is otherwise contingent, unliquidated
or unfixed (but only to the extent of such contingency);

(l) the applicable Obligor has made any agreement with the applicable Account
Debtor for any deduction therefrom for prompt payment, except for (x) discounts
or allowances made in the Ordinary Course of Business, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto or (y) any such deduction, only to the extent the
maximum potential amount of such deduction against the applicable Account is
reflected in the calculation of the Borrowing Base;

(m) any return, rejection or repossession of the merchandise has occurred or the
rendition of services has been disputed;

(n) such Account is payable by an Obligor;

 

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(o) such Account is not otherwise satisfactory to Agent as determined by Agent
in the exercise of its Permitted Discretion; or

(p) when aggregated with other Accounts owing by any such Account Debtor, it
exceeds (i) with respect to the Eligible Billed Accounts and Eligible Unbilled
Accounts of EOG Resources, Inc. or its Affiliates, 35% or (ii) with respect to
any Eligible Billed Accounts and Eligible Unbilled Accounts other than pursuant
to the foregoing clause (i), 20%, in either case of the aggregate Eligible
Billed Accounts and Eligible Unbilled Accounts; provided that, any such Account
shall only be excluded to the extent of such excess.

Eligible Inventory: with respect to each Obligor, Inventory (subject to the
requirements of this definition) of such Obligor arising in the Ordinary Course
of Business that is subject to Agent’s first priority perfected security
interest and no other Lien (other than Permitted Liens). Without limiting the
foregoing, no Inventory shall be Eligible Inventory unless it (a) is finished
goods, work-in-process or raw materials, and not packaging or shipping
materials, labels, samples, display items, bags, replacement parts or
manufacturing supplies; (b) is not held on consignment, nor subject to any
deposit or down payment; (c) is in new and saleable condition and is not
damaged, defective, shopworn or otherwise unfit for sale; (d) is not
slow-moving, perishable, obsolete or unmerchantable, and does not constitute
returned or repossessed goods; (e) meets all standards imposed by any
Governmental Authority in all material respects, has not been acquired from a
Person subject to any Sanction or on any specially designated nationals list
maintained by OFAC, and does not constitute hazardous materials under any
Environmental Law; (f) conforms with the covenants and representations herein;
(g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien
(other than Permitted Liens that are junior in priority); (h) is within the
continental United States or Canada, is not in transit except between locations
of Obligors and is not consigned to any Person; (i) is not subject to any
warehouse receipt or negotiable Document except to the extent Agent’s security
interest in such warehouse receipt or negotiable Document is perfected; (j) is
not subject to any License or other arrangement that restricts such Borrower’s
or Agent’s right to dispose of such Inventory, unless Agent has received an
appropriate Lien Waiver; (k) is not located on leased premises or in the
possession of a warehouseman, processor, repairman, mechanic, shipper, freight
forwarder or other Person, unless the lessor or such Person has delivered a Lien
Waiver or an appropriate Rent and Charges Reserve has been established and
(l) such Inventory is not otherwise unsatisfactory to Agent as determined by
Agent in the exercise of its Permitted Discretion.

Eligible Unbilled Accounts: with respect to each Obligor, each Account (other
than Eligible Billed Accounts and subject to the requirements of this
definition) of such Obligor arising in the Ordinary Course of Business that is
subject to Agent’s first priority perfected security interest and no other Lien
(other than Permitted Liens), and is evidenced by an invoice or other
documentary evidence satisfactory to Agent in its Permitted Discretion. In
addition, no Account shall be an Eligible Unbilled Account if:

(a) it arises out of a sale made by any Obligor to an Affiliate of any Obligor
or to a Person controlled by an Affiliate of any Obligor;

(b) more than thirty (30) days have elapsed from the date on which the goods or
services to which such Account related was delivered or performed;

(c) 50% or more of the Accounts from a referenced Account Debtor are deemed
ineligible hereunder;

(d) any representation or warranty contained in this Agreement with respect to
such Account has been breached in any material respect, or any covenant
contained in this Agreement with respect to such Accounts has been breached and
the resultant Event of Default has not been waived;

 

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(e) the Account Debtor shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts as
they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary case
or proceeding under any state or federal bankruptcy laws (as now or hereafter in
effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing (provided, that
solely to the extent approved by Agent in its sole discretion, so long as an
order exists permitting payment of trade creditors specifically with respect to
such Account Debtor and such Account Debtor has obtained adequate post-petition
financing to pay such Accounts, the Accounts of such Account Debtor shall not be
deemed ineligible under the provisions of this clause to the extent the order
permitting such financing allows the payment of the applicable Account);

(f) the sale is to an Account Debtor located outside the United States of
America or Canada, unless the sale is on letter of credit, guaranty or
acceptance terms acceptable to Agent in its Permitted Discretion;

(g) the sale to the Account Debtor is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper with respect to which Agent does not have
a perfected first priority security interest (subject to Permitted Liens);

(h) Agent believes, in its Permitted Discretion, that collection of such Account
is insecure or that such Account may not be paid, in either case by reason of
the Account Debtor’s financial inability to pay;

(i) the Account Debtor is the United States of America, any state or any
department, agency or instrumentality of any of them, unless the applicable
Borrower assigns its right to payment of such Account to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq.
and 41 U.S.C. Sub-Section 15 et seq.) and any other steps necessary to perfect
the Lien of the Agent and to confirm the enforceability of the Agent in such
Account have been complied with to the Agent’s satisfaction;

(j) the goods giving rise to such Account have not been delivered to and
accepted by the Account Debtor or the services giving rise to such Account have
not been performed by the applicable Obligor or accepted by the Account Debtor
or the Account otherwise does not represent a final sale;

(k) the Accounts of the Account Debtor exceed a credit limit determined by
Agent, in its Permitted Discretion and reasonably taking into account the credit
and financial circumstances of the Account Debtor, to the extent such Account
exceeds such limit;

(1) the Account is subject to any offset, deduction, defense, dispute, or
counterclaim (to the extent of such offset, deduction, defense, dispute or
counterclaim), or the Account Debtor is also a creditor or supplier of an
Obligor (to the extent of any amounts owed by such Borrower to such Account
Debtor as a creditor or supplier), or the obligations of the Account Debtor to
make payment with respect to such Account is otherwise contingent, unliquidated
or unfixed (but only to the extent of such contingency);

 

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(m) the applicable Obligor has made any agreement with the applicable Account
Debtor for any deduction therefrom for prompt payment, except for (x) discounts
or allowances made in the Ordinary Course of Business, all of which discounts or
allowances are reflected in the calculation of the amount of the applicable
Account related thereto or (y) any such deduction, only to the extent the
maximum potential amount of such deduction against the applicable Account is
reflected in the calculation of the Borrowing Base;

(n) any return, rejection or repossession of the merchandise has occurred or the
rendition of services has been disputed;

(o) such Account is payable by an Obligor;

(p) such Account is not otherwise satisfactory to Agent as determined by Agent
in the exercise of its Permitted Discretion; or

(q) when aggregated with other Accounts owing by any such Account Debtor, it
exceeds (i) with respect to the Eligible Billed Accounts and Eligible Unbilled
Accounts of EOG Resources, Inc. or its Affiliates, 35% or (ii) with respect to
any Eligible Billed Accounts and Eligible Unbilled Accounts other than pursuant
to the foregoing clause (i), 20%, in either case of the aggregate Eligible
Billed Accounts and Eligible Unbilled Accounts; provided that, any such Account
shall only be excluded to the extent of such excess.

Enforcement Action: any action to enforce any Obligations (other than Secured
Bank Product Obligations) or Loan Documents or to exercise any rights or
remedies relating to any Collateral, whether by judicial action, self-help,
notification of Account Debtors, setoff or recoupment, credit bid, deed in lieu
of foreclosure, action in an Insolvency Proceeding or otherwise.

Environmental Laws: Applicable Laws (including programs, permits and guidance
promulgated by regulators) relating to public health (with respect to exposure
to hazardous substances or wastes, but excluding occupational safety and health
to the extent regulated by OSHA) or the protection or pollution of the
environment, including CERCLA, RCRA and CWA or to the conditions of the
workplace, or any emission or substance capable of causing harm to any living
organism or the environment.

Environmental Notice: a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of a
possible violation of, litigation relating to, or potential fine or liability
under any Environmental Law, or with respect to any Environmental Release,
environmental pollution or hazardous materials, including any complaint,
summons, citation, order, claim, demand or request for correction, remediation
or otherwise.

Environmental Release: a release as defined in CERCLA or under any other
Environmental Law.

Equity Interest: the interest of any (a) shareholder in a corporation;
(b) partner in a partnership (whether general, limited, limited liability or
joint venture); (c) member in a limited liability company; or (d) other Person
having any other form of equity security or ownership interest.

ERISA: the Employee Retirement Income Security Act of 1974.

ERISA Affiliate: any trade or business (whether or not incorporated) under
common control with an Obligor within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

ERISA Event: (a) a Reportable Event with respect to a Pension Plan;
(b) withdrawal of an Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) complete or
partial

 

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withdrawal of an Obligor or ERISA Affiliate from a Multiemployer Plan;
(d) filing of a notice of intent to terminate, treatment of a Pension Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or institution
of proceedings by the PBGC to terminate a Pension Plan; (e) determination that a
Pension Plan is considered an at-risk plan or a plan in critical or endangered
status under the Code or ERISA; (f) an event or condition that constitutes
grounds under Section 4042 of ERISA for termination of, or appointment of a
trustee to administer, any Pension Plan; (g) imposition of any liability on an
Obligor or ERISA Affiliate under Title IV of ERISA, other than for PBGC premiums
due but not delinquent under Section 4007 of ERISA; or (h) failure by an Obligor
or ERISA Affiliate to meet all applicable requirements under the Pension Funding
Rules in respect of a Pension Plan, whether or not waived, or to make a required
contribution to a Multiemployer Plan.

EU Bail-In Legislation Schedule: the EU Bail-In Legislation Schedule published
by the Loan Market Association, as in effect from time to time.

Event of Default: as defined in Section 11.1.

Exchange Act: the Securities Exchange Act of 1934, as amended.

Excluded Account: (i) any Deposit Account used exclusively for payroll, trust,
petty cash, payroll taxes or employee benefits, (ii) Deposit Accounts used
exclusively as disbursement accounts and (iii) any Deposit Account with a
balance of less than $250,000 at any time and the aggregate balance of all such
Deposit Accounts does not exceed $2,000,000 at any time.

Excluded Property: each of the following: (a) Real Estate, (b) fixtures, (c)
Equity Interests of any Excluded Subsidiary or Unrestricted Subsidiary,
(d) Equity Interests of (i) any Foreign Subsidiary and (ii) any Domestic
Subsidiary that has no material assets other than the stock or indebtedness of
one or more Foreign Subsidiaries that are CFCs, in each case, in excess of 65%
of the issued and outstanding voting Equity Interests and 100% of the issued and
outstanding non-voting Equity Interests in any such Person, (e) any lease,
license, contract or agreement to which any Obligor is a party, and any of its
rights or interests thereunder and any joint venture or minority Equity
Interests, in each case, if and to the extent that a security interest therein
(x) is prohibited by or in violation of any Applicable Law, (y) would give any
other party the right to terminate its obligations thereunder or (z) is
prohibited by or in violation of a term, provision or condition of any such
lease, license, contract or agreement (unless in each case, such Applicable Law,
term, provision or condition would be rendered ineffective with respect to the
creation of such security interest pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the Uniform Commercial Code (or any successor provision or provisions)
of any relevant jurisdiction or any other Applicable Law or principles of
equity) provided, however, that the foregoing shall cease to be treated as
“Excluded Property” (and shall constitute Collateral) immediately at such time
as the contractual or legal prohibition shall no longer be applicable and to the
extent severable, such security interest shall attach immediately to any portion
of such lease, license, contract or agreement not subject to the prohibitions
specified in (x), (y) or (z) above, provided, further, that Excluded Property
shall not include any proceeds of any such lease, license, contract, property,
equipment or agreement or any goodwill of Obligors’ business associated
therewith or attributable thereto, (f) Excluded Accounts, (g) all motor vehicles
and other assets subject to a certificate of title the perfection of a security
interest in which is excluded from the UCC in the relevant jurisdiction,
(h) Property (and proceeds thereof) owned by any Obligor on the date hereof or
hereafter acquired that is subject to a Lien securing a purchase money
obligation or Capital Lease permitted to be incurred pursuant to this Agreement,
for so long as the contract or other agreement in which such Lien is granted (or
the documentation providing for such purchase money obligation or Capital Lease)
validly prohibits the creation of any other Lien on such Property (and, in the
case of Property hereafter acquired, so long as such prohibition was not entered
into in contemplation of such acquisition), (i) applications filed in the United
States Patent and Trademark Office to register trademarks or service marks on
the basis of any Obligor’s “intent to use” such trademarks or service marks
unless and

 

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until the filing of a “Statement of Use” or “Amendment to Allege Use” has been
filed and accepted, whereupon such applications shall be automatically subject
to the Lien granted herein and deemed included in the Collateral, (j) any
property or assets to the extent that such grant of a security interest is
prohibited by any Applicable Law or requires a consent not obtained of any
Governmental Authority pursuant to such Applicable Law, (k) cash collateral that
is the subject of a deposit or pledge constituting a Permitted Lien, but only to
the extent the agreements governing such deposit or pledge prohibit the
existence of a Lien therein in favor of the Agent, (l) Margin Stock or
(m) Property in circumstances where the Agent determines in its Permitted
Discretion that the cost of obtaining or perfecting a security interest in such
Property is excessive in relation to the benefit to the Lenders of the security
to be afforded thereby.

Excluded Subsidiary: (a) any Captive Insurance Subsidiary, (b) any Foreign
Subsidiary or any Domestic Subsidiary that is a Subsidiary of a Foreign
Subsidiary that is a CFC, (c) any Domestic Subsidiary that has no material
assets other than the stock or indebtedness of one or more Foreign Subsidiaries
that are CFCs, (d) any not-for-profit Subsidiary, (e) any other Subsidiary with
respect to which, in the reasonable judgment of Agent and the Borrower Agent,
the burden or cost (including any adverse tax consequences) of providing the
guarantee shall outweigh the benefits to be obtained by the Lenders therefrom,
(f) each Unrestricted Subsidiary, (g) any special purpose securitization vehicle
(or similar entity) and (h) QES Holdco LLC, a Delaware limited liability company
and Quintana Energy Services GP LLC, a Delaware limited liability company, so
long as such entities are merged with and into an Obligor (with such Obligor
surviving such merger) within five (5) Business Days after the Closing Date;
provided that no Subsidiary that guarantees any Debt of an Obligor shall be
deemed to be an Excluded Subsidiary at any time such guarantee is in effect.

Excluded Swap Obligation: with respect to an Obligor, each Swap Obligation as to
which, and only to the extent that, such Obligor’s guaranty of or grant of a
Lien as security for such Swap Obligation is or becomes illegal under the
Commodity Exchange Act because the Obligor does not constitute an “eligible
contract participant” as defined in the act (determined after giving effect to
any keepwell, support or other agreement for the benefit of such Obligor and all
guarantees of Swap Obligations by other Obligors) when such guaranty or grant of
Lien becomes effective with respect to the Swap Obligation. If a Hedging
Agreement governs more than one Swap Obligation, only the Swap Obligation(s) or
portions thereof described in the foregoing sentence shall be Excluded Swap
Obligation(s) for the applicable Obligor.

Excluded Taxes: (a) Taxes imposed on or measured by a Recipient’s net income
(however denominated), franchise Taxes and branch profits Taxes (i) as a result
of such Recipient being organized under the laws of, or having its principal
office or applicable Lending Office located in, the jurisdiction imposing such
Tax (or any political subdivision thereof), or (ii) constituting Other
Connection Taxes; (b) U.S. federal withholding Taxes imposed on amounts payable
to or for the account of a Lender with respect to its interest in a Loan or
Commitment pursuant to a law in effect on the date on which (i) such Lender
acquires such interest in such Loan or Commitment (other than pursuant to an
assignment request by the Agent or Borrower Agent under Section 13.4) or
(ii) such Lender changes its Lending Office, except in each case to the extent
that, pursuant to Section 5.9, amounts with respect to such Taxes were payable
either to such Lender’s assignor immediately prior to such Lender becoming a
party hereto or immediately prior to its change in Lending Office; (c) Taxes
attributable to a Recipient’s failure to comply with Section 5.10; and (d) U.S.
federal withholding Taxes imposed pursuant to FATCA.

Existing PIK Notes: the Debt evidenced by that certain Second Lien Credit
Agreement, dated as of December 19, 2016 (as amended, amended and restated,
supplemented or otherwise modified from time to time prior to the date hereof,
among Quintana LP, certain subsidiaries of Quintana LP, as guarantors, the
lenders party thereto and Cortland Capital Market Services LLC, as
administrative agent for such lenders.

 

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Extraordinary Expenses: all costs, expenses or advances that Agent may incur
during a Default or Event of Default, or during the pendency of an Insolvency
Proceeding of an Obligor, including those relating to (a) any audit, inspection,
repossession, storage, repair, appraisal, insurance, manufacture, preparation or
advertising for sale, sale, collection, or other preservation of or realization
upon any Collateral; (b) subject to Section 14.2, any action, arbitration or
other proceeding (whether instituted by or against Agent, any Lender, any
Obligor, any representative of creditors of an Obligor or any other Person) in
any way relating to any Collateral (including the validity, perfection, priority
or avoidability of Agent’s Liens with respect to any Collateral), Loan
Documents, Letters of Credit or Obligations, including any lender liability or
other Claims; (c) the exercise of any rights or remedies of Agent in, or the
monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of
taxes, charges or Liens with respect to any Collateral; (e) any Enforcement
Action; and (f) negotiation and documentation of any modification, waiver,
workout, restructuring or forbearance with respect to any Loan Documents or
Obligations. Such costs, expenses and advances include transfer fees, Other
Taxes, storage fees, insurance costs, permit fees, utility reservation and
standby fees, legal fees, appraisal fees, brokers’ and auctioneers’ fees and
commissions, accountants’ fees, environmental study fees, wages and salaries
paid to employees of any Obligor or independent contractors in liquidating any
Collateral, and travel expenses.

FATCA: Sections 1471 through 1474 of the Code, as of the date of this Agreement,
(or any amended or successor version that is substantively comparable and not
materially more onerous to comply with), any current or future regulations or
official interpretations thereof, any agreement entered into pursuant to
Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in
connection with the implementation of such Sections of the Code and any fiscal
or regulatory legislation, rules or practices adopted pursuant to such
intergovernmental agreement.

Federal Funds Rate: (a) the weighted average of interest rates on overnight
federal funds transactions with members of the Federal Reserve System on the
applicable day (or the preceding Business Day, if the applicable day is not a
Business Day), as published by the Federal Reserve Bank of New York on the next
Business Day; or (b) if no such rate is published on the next Business Day, the
average rate (rounded up to the nearest 1/8 of 1%) charged to Bank of America on
the applicable day on such transactions, as determined by Agent; provided, that
in no event shall such rate be less than zero.

Fiscal Quarter: each period of three months, commencing on the first day of a
Fiscal Year.

Fiscal Year: the fiscal year of Parent and Subsidiaries for accounting and tax
purposes, ending on December 31 of each year.

Fixed Charge Coverage Ratio: the ratio, with respect to Parent on a Consolidated
Basis for the most recent Measurement Period, of (a) Adjusted EBITDA minus
Capital Expenditures (except those Capital Expenditures (i) financed with
Borrowed Money other than Revolver Loans, (ii) constituting an Acquisition
permitted by Section 10.2.5, (iii) made in connection with the replacement,
substitution, restoration or repair of assets to the extent financed with
(x) insurance proceeds or other reimbursements or payments by third parties paid
on account of the loss or damage to the assets being replaced, substituted,
restored or repaired, or (y) award of compensation arising from the taking by
eminent domain or condemnation of the assets being replaced, substituted,
restored or repaired, (iv) the purchase of plant, property or equipment to the
extent financed with the proceeds of Asset Dispositions (other than dispositions
of inventory in the Ordinary Course of Business) or (v) financed with proceeds
of any sale or issuance of Equity Interests by the Parent) and cash taxes paid
(net of tax refunds received), to (b) Fixed Charges.

Fixed Charges: the sum of interest expense (other than payment-in-kind and
amortization of fees and costs), scheduled principal payments (excluding
mandatory payment out of excess cash flow on terms and conditions satisfactory
to Agent in its Permitted Discretion) on Borrowed Money (paid or payable in

 

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cash and as such may have been reduced by prior prepayments) pursuant to the
terms of the governing document thereof, and Distributions paid in cash (other
than Upstream Payments); provided, however, that for purposes of calculating the
Fixed Charge Coverage Ratio as used in the definition of “Permitted Payment
Conditions,” Fixed Charges shall also include all prepayments of principal on
Borrowed Money that result in a permanent reduction of commitments and loans
outstanding with respect thereto.

FLSA: the Fair Labor Standards Act of 1938.

Foreign Lender: any Lender that is not a U.S. Person.

Foreign Plan: any employee benefit plan or arrangement (a) maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States; or (b) mandated by a government other than the United States
for employees of any Obligor or Subsidiary.

Foreign Subsidiary: means any Subsidiary that is not a Domestic Subsidiary.

Fronting Exposure: a Defaulting Lender’s interest in LC Obligations, Swingline
Loans and Protective Advances, except to the extent Cash Collateralized by the
Defaulting Lender or allocated to other Lenders hereunder.

Full Payment: with respect to any Obligations (other than contingent obligations
not then due and owing or for which no claim has been made), (a) the full and
indefeasible cash payment thereof, including any interest, fees and other
charges accruing during an Insolvency Proceeding (whether or not allowed in the
proceeding); and (b) if such Obligations are LC Obligations, Cash
Collateralization thereof (or delivery of a standby letter of credit acceptable
to Agent in its discretion, in the amount of required Cash Collateral). Full
Payment of the Loans shall not be deemed to have occurred until all Revolver
Commitments are terminated.

GAAP: generally accepted accounting principles in effect in the United States
from time to time.

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental Authority: any federal, state, local, foreign or other agency,
authority, body, commission, court, instrumentality, political subdivision,
central bank, or other entity or officer exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions for any
governmental, judicial, investigative, regulatory or self-regulatory authority
(including the Financial Conduct Authority, the Prudential Regulation Authority
and any supra-national bodies such as the European Union or European Central
Bank).

Guarantor Payment: as defined in Section 5.11.3(b).

Guarantors: (a) each Subsidiary of the Parent existing on the Closing Date that
is not a Borrower hereunder (other than an Excluded Subsidiary or a Foreign
Subsidiary), (b) each Borrower, other than with respect to its own Obligations
and (c) each other Subsidiary of the Parent that has executed and delivered a
joinder to this Agreement pursuant to Section 10.1.9 after the Closing Date.

Hedging Agreement: a “swap agreement” as defined in Bankruptcy Code
Section 101(53B)(A).

Indemnified Taxes: (a) Taxes, other than Excluded Taxes, imposed on or relating
to any payment of an Obligation; and (b) to the extent not otherwise described
in clause (a), Other Taxes.

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and
Bank of America Indemnitees.

 

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Insolvency Proceeding: any case or proceeding commenced by or against a Person
under any state, federal or foreign law for, or any agreement of such Person to,
(a) the entry of an order for relief under the Bankruptcy Code, or any other
insolvency, debtor relief or debt adjustment law; (b) the appointment of a
receiver, trustee, liquidator, administrator, conservator or other custodian for
such Person or any part of its Property; or (c) an assignment or trust mortgage
for the benefit of creditors.

Intellectual Property: all intellectual and similar Property of a Person,
including inventions, designs, patents, copyrights, trademarks, service marks,
trade names, trade secrets, confidential or proprietary information, customer
lists, know-how, software and databases; all embodiments or fixations thereof
and all related documentation, applications, registrations and franchises; all
licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit
or otherwise) that an Obligor’s ownership, use, marketing, sale or distribution
of any Inventory, Equipment, Intellectual Property or other Property violates
another Person’s Intellectual Property.

Intercreditor Agreement: any intercreditor agreement reasonably acceptable to
Required Lenders, for the benefit of the Secured Parties, entered into by and
among Term Agent (if any), in its capacity as agent for the Term Loan Lenders,
the Term Loan Lenders (if applicable) and Agent, and acknowledged by the
Obligors, dated as of the date of the Term Debt Documents, as amended,
supplemented, restated, amended and restated, or otherwise modified from time to
time in accordance with the terms thereof.

Interest Period: as defined in Section 3.1.3.

Inventory: as defined in the UCC, including all goods intended for sale, lease,
display or demonstration; all work in process; and all raw materials, and other
materials and supplies of any kind that are or could be used in connection with
the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in an Obligor’s business
(but excluding Equipment).

Inventory Formula Amount: the lesser of (a) 65% of the Value of Eligible
Inventory and (b) 85% of the NOLV Percentage of Eligible Inventory, provided
that the amount in this clause (b) shall not exceed 25% of the Borrowing Base.

Inventory Reserve: reserves established by Agent to reflect factors that may
negatively impact the Value of Inventory, including change in salability,
obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or
mix, markdowns and vendor chargebacks.

Investment: an Acquisition, an acquisition of record or beneficial ownership of
any Equity Interests of a Person, or any loan, advance or capital contribution
to or other investment in a Person.

IP Assignment: a collateral assignment or security agreement pursuant to which
an Obligor grants a Lien on its Intellectual Property to Agent, as security for
its Obligations.

IRS: the United States Internal Revenue Service.

Issuing Bank: (a) Bank of America (including any Lending Office of Bank of
America), or any replacement issuer appointed pursuant to Section 2.3.4 (b) with
respect to the Letters of Credit described on Schedule 1.2, ZB, N.A. dba Amegy
Bank (including any Lending Office of ZB, N.A. dba Amegy Bank), (c) Citibank,
N.A. and (d) Barclays Bank PLC.

 

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Issuing Bank Indemnitees: Issuing Bank and its officers, directors, employees,
Affiliates, agents and attorneys.

Judgment Currency: as defined in Section 1.5.

LC Application: an application by Borrower Agent to Issuing Bank for issuance of
a Letter of Credit, in form and substance reasonably satisfactory to Issuing
Bank and Agent.

LC Conditions: upon giving effect to issuance of a Letter of Credit, (a) the
conditions in Section 6.2 are satisfied; (b) total LC Obligations do not exceed
the Letter of Credit Subline and Revolver Usage does not exceed the Borrowing
Base; (c) the Letter of Credit and payments thereunder are denominated in
Dollars or other currency satisfactory to Agent and Issuing Bank; and (d) the
purpose and form of the Letter of Credit are satisfactory to Agent in its
Permitted Discretion and Issuing Bank in their discretion.

LC Documents: all documents, instruments and agreements (including LC Requests
and LC Applications) delivered by Borrowers or any Affiliate or beneficiary of
any Letter of Credit to Issuing Bank or Agent in connection with such Letter of
Credit.

LC Obligations: the sum (without duplication) of (a) all amounts owing by
Borrowers for drawings under Letters of Credit; and (b) the Stated Amount of all
outstanding Letters of Credit.

LC Request: a request for issuance of a Letter of Credit, to be provided by
Borrower Agent to Issuing Bank, in form satisfactory to Agent in its Permitted
Discretion and Issuing Bank.

Lender Indemnitees: Lenders and Secured Bank Product Providers, and their
respective officers, directors, employees, Affiliates, agents and attorneys.

Lenders: lenders party to this Agreement (including Agent in its capacity as
provider of Swingline Loans) and any Person who hereafter becomes a “Lender”
pursuant to an Assignment, including any Lending Office of the foregoing.

Lending Office: the office (including any domestic or foreign Affiliate or
branch) designated as such by a Lender or Issuing Bank by notice to Agent and
Borrower Agent.

Letter of Credit: (a) any standby or documentary letter of credit, foreign
guaranty, documentary bankers acceptance, indemnity, reimbursement agreement or
similar instrument issued by Issuing Bank for the account or benefit of a
Borrower or Affiliate of a Borrower and (b) any Letter of Credit issued by any
Issuing Lender prior to the date of this Agreement and listed on Schedule 1.2.

Letter of Credit Subline: $20,000,000.

LIBOR: the per annum rate of interest (rounded up to the nearest 1/8th of 1%)
determined by Agent at or about 11:00 a.m. (London time) two Business Days prior
to an interest period, for a term equivalent to such period, equal to the London
Interbank Offered Rate, or comparable or successor rate approved by Agent, as
published on the applicable Reuters screen page (or other commercially available
source designated by Agent from time to time); provided, that any comparable or
successor rate shall be applied by Agent, if administratively feasible, in a
manner consistent with market practice; provided further, that in no event shall
LIBOR be less than zero.

LIBOR Loan: each set of LIBOR Revolver Loans having a common length and
commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

 

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License: any license or agreement under which an Obligor is authorized to use
Intellectual Property in connection with any manufacture, marketing,
distribution or disposition of Collateral, any use of Property or any other
conduct of its business.

Licensor: any Person from whom an Obligor obtains the right to use any
Intellectual Property.

Lien: a Person’s interest in Property securing an obligation owed to, or a claim
by, such Person, including any lien, security interest, pledge, hypothecation,
assignment, trust, reservation, encroachment, easement, right-of-way, covenant,
condition, restriction, lease, or other title exception or encumbrance;
provided, however, that non-exclusive licenses of Intellectual Property in the
Ordinary Course of Business are not Liens.

Lien Waiver: an agreement, in form and substance satisfactory to Agent, by which
(a) for any material Collateral located on leased premises, the lessor waives or
subordinates any Lien it may have on the Collateral, and agrees to permit Agent
to enter upon the premises and remove the Collateral or to use the premises to
store or dispose of the Collateral; (b) for any Collateral held by a
warehouseman, processor, shipper, customs broker or freight forwarder, such
Person waives or subordinates any Lien it may have on the Collateral, agrees to
hold any Documents in its possession relating to the Collateral as agent for
Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any
Collateral held by a repairman, mechanic or bailee, such Person acknowledges
Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and
agrees to deliver the Collateral to Agent upon request; and (d) for any
Collateral subject to a Licensor’s Intellectual Property rights, the Licensor
grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens
with respect to the Collateral, including the right to dispose of it with the
benefit of the Intellectual Property, whether or not a default exists under any
applicable License.

Loan: a Revolver Loan.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Loan Year: each 12 month period commencing on the Closing Date or an anniversary
thereof.

Margin Stock: as defined in Regulation U of the Board of Governors.

Material Adverse Effect: (a) a material adverse change in, or a material adverse
effect upon, the operations, business, assets, properties, liabilities, or
financial condition of the Obligors and their Subsidiaries, taken as a whole;
(b) a material impairment of the rights and remedies of Agent or any Lender
under the Loan Documents, or of the ability of the Obligors, taken as a whole,
to perform their obligations under the Loan Documents; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability against the
Obligors, taken as a whole, of this Agreement or the Security Documents.

Material Contract: any agreement or arrangement to which an Obligor is party
(other than the Loan Documents) (a) that is deemed to be a material contract
under any securities law applicable to such Person, including the Securities Act
of 1933; or (b) for which breach, termination, nonperformance or failure to
renew could reasonably be expected to have a Material Adverse Effect.

Measurement Period: at any date of determination, the most recently completed
twelve (12) calendar months for which financial statements were required to have
been delivered pursuant to the terms of this Agreement.

 

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Monthly Financial Statements: unaudited balance sheets as of the end of such
calendar month and the related statements of income and cash flow for such
calendar month and for the portion of the Fiscal Year then elapsed, of Parent on
a Consolidated Basis (and including on a consolidating basis, if requested by
Agent in its Permitted Discretion, during the existence of an Excluded
Subsidiary or an Unrestricted Subsidiary), setting forth in comparative form
corresponding figures for the preceding Fiscal Year to the extent available and
certified by the chief financial officer of Borrower Agent as prepared in
accordance with GAAP and fairly presenting the financial position and results of
operations for such calendar month, subject to normal year-end adjustments and
the absence of footnotes.

Moody’s: Moody’s Investors Service, Inc. or any successor acceptable to Agent.

Multiemployer Plan: any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which an Obligor or ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

Net Proceeds: with respect to an Asset Disposition, proceeds (including, when
received, any deferred or escrowed payments) received by an Obligor in cash from
such disposition, net of (a) reasonable and customary costs and expenses
actually incurred in connection therewith, including attorneys fees,
accountants’ fees and investment banking fees; (b) amounts applied to repayment
of Debt secured by a Permitted Lien senior to Agent’s Liens on Collateral sold;
(c) transfer or similar taxes and the Borrower Agent’s good faith estimate of
income taxes paid or payable in connection with such sale; (d) reserves for
indemnities and purchase price adjustments, until such reserves are no longer
needed; and (e) the Borrower Agent’s good faith estimate of payments required to
be made with respect to unassumed liabilities relating to the assets sold
(provided that, to the extent such cash proceeds are not so used within 180 days
of such Asset Disposition, such cash proceeds shall constitute Net Proceeds).

Net Debt: (a) the aggregate principal amount of Debt of the Parent on a
Consolidated basis outstanding on such date, in an amount that would be
reflected on a balance sheet prepared as of such date on a Consolidated basis in
accordance with GAAP, minus (b) the aggregate amount of cash and Cash
Equivalents, in each case, included on the balance sheet of the Parent on a
Consolidated Basis.

Net Leverage Ratio: the ratio of (a) Net Debt outstanding on such date to
(b) Adjusted EBITDA for the last Measurement Period ending on such date.

NOLV Percentage: the net orderly liquidation value of Inventory, expressed as a
percentage of such value, expected to be realized at an orderly, negotiated sale
held within a reasonable period of time, net of all liquidation expenses, as
determined from the most recent appraisal of Borrowers’ Inventory performed by
an appraiser and on terms satisfactory to Agent.

Notice of Borrowing: a request by Borrower Agent for a Borrowing of Revolver
Loans, in form satisfactory to Agent in its Permitted Discretion.

Notice of Conversion/Continuation: a request by Borrower Agent for conversion or
continuation of a Loan as a LIBOR Loan, in form satisfactory to Agent in its
Permitted Discretion.

Obligations: all (a) principal of and premium, if any, on the Loans, (b) LC
Obligations and other obligations of Obligors with respect to Letters of Credit,
(c) interest, expenses, fees, indemnification obligations, Extraordinary
Expenses and other amounts payable by Obligors under Loan Documents, (d) Secured
Bank Product Obligations, and (e) other Debts, obligations and liabilities of
any kind owing by Obligors pursuant to the Loan Documents, whether now existing
or hereafter arising, whether evidenced by a note or other writing, whether
allowed in any Insolvency Proceeding, whether arising from an extension of
credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several;
provided, that Obligations of an Obligor shall not include its Excluded Swap
Obligations.

 

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Obligor: each Borrower, Guarantor or other Person that is liable for payment of
any Obligations or that has granted a Lien on its assets in favor of Agent to
secure any Obligations.

OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

Ordinary Course of Business: the ordinary course of business of the Obligors,
undertaken in good faith and consistent with Applicable Law and past practices.

Organic Documents: with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, articles of organization, limited liability
agreement, operating agreement, members agreement, shareholders agreement,
partnership agreement, certificate of partnership, certificate of formation,
voting trust agreement, or similar agreement or instrument governing the
formation or operation of such Person.

OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: each LC Document, fee letter, Intercreditor Agreement, Lien
Waiver, Borrowing Base Report, Compliance Certificate, Borrower Materials,
subordination agreement or other note, document, instrument or agreement (other
than this Agreement or a Security Document) now or hereafter delivered by an
Obligor to Agent or a Lender in connection with any transactions relating to
this Agreement.

Other Connection Taxes: Taxes imposed on a Recipient due to a present or former
connection between it and the taxing jurisdiction (other than connections
arising from the Recipient having executed, delivered, become party to,
performed obligations or received payments under, received or perfected a Lien
or engaged in any other transaction pursuant to, enforced, or sold or assigned
an interest in, any Loan or Loan Document).

Other Taxes: all present or future stamp, court, documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a Lien under, or otherwise with respect to, any Loan
Document, except Other Connection Taxes imposed with respect to an assignment
(other than an assignment made pursuant to Section 13.4).

Overadvance: as defined in Section 2.1.5.

Parent: as defined in the preamble.

Parent on a Consolidated Basis: the consolidation in accordance with GAAP of the
accounts or other items of Parent and its Restricted Subsidiaries (but excluding
its Unrestricted Subsidiaries).

Participant: as defined in Section 13.2.1.

Patriot Act: the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).

Payment Item: each check, draft or other item of payment payable to a Borrower,
including those constituting proceeds of any Collateral.

PBGC: the Pension Benefit Guaranty Corporation.

 

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Pension Funding Rules: Code and ERISA rules regarding minimum required
contributions (including installment payments) to Pension Plans set forth in,
for plan years ending prior to the Pension Protection Act of 2006 effective
date, Section 412 of the Code and Section 302 of ERISA, both as in effect prior
to such act, and thereafter, Sections 412, 430, 431, 432 and 436 of the Code and
Sections 302, 303, 304 and 305 of ERISA.

Pension Plan: any employee pension benefit plan (as defined in Section 3(2) of
ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA
and is sponsored or maintained by any Obligor or ERISA Affiliate or to which the
Obligor or ERISA Affiliate contributes or has an obligation to contribute, or in
the case of a multiple employer or other plan described in Section 4064(a) of
ERISA, has made contributions at any time during the preceding five plan years.

Permitted Acquisition: any Acquisition so long as the Permitted Investment
Payment Conditions are satisfied.

Permitted Asset Disposition: an Asset Disposition that is (a) a sale of
Inventory in the Ordinary Course of Business; (b) a disposition of Equipment
that, in the aggregate during any Fiscal Year, has a fair market or book value
(whichever is more) of $5,000,000 or less; (c) disposition of property that is
obsolete, unmerchantable, uneconomical, negligible, worn-out, surplus or
otherwise unsaleable in the Ordinary Course of Business; (d) termination of a
lease of real or personal Property that is not necessary for the Ordinary Course
of Business, could not reasonably be expected to have a Material Adverse Effect
and does not result from an Obligor’s default; (e) the leasing (including
subleasing) or non-exclusive licensing (including sublicensing) of Intellectual
Property, personal Property or real Property in the Ordinary Course of Business
or the abandonment of Intellectual Property in the Ordinary Course of Business;
(f) sales of Cash Equivalents and marketable securities; (g) sales, transfers,
leases, exchanges and dispositions (i) among the Obligors or (ii) to the extent
constituting an Investment permitted hereunder, from Obligors to Unrestricted
Subsidiaries; (h)(i) granting of Permitted Liens; (ii) Distributions permitted
to be made pursuant to Section 10.2.4; (iii) dividends, distributions and
purchases of Equity Interests excluded from the definition of “Distributions”
pursuant to the proviso therein; and (iv) Investments otherwise permitted
hereunder; (i) mergers, consolidations, amalgamations, liquidations and
dissolutions to the extent permitted by Section 10.2.9; (j) termination of any
Hedging Agreement; (k) any disposition of Real Estate to a Governmental
Authority as a result of casualty or condemnation of such Real Estate;
(l) issuances of Equity Interests to qualifying directors of Foreign
Subsidiaries or to Persons (other than the Obligors) required by Applicable Law
to hold shares in a Subsidiary; (m) the capitalization or forgiveness of Debt
owed to it by other Obligors or Subsidiaries if such capitalization or
forgiveness is required in order to comply with so-called “thin capitalization”
rules; (n) the cancellation, forgiveness, set off or acceptance of prepayments
of Debt owed to an Obligor to the extent not otherwise prohibited by the terms
of this Agreement; (o) dispositions in connection with the settlement of claims
or disputes and the settlement, release or surrender of tort or other litigation
claims; (p) dispositions set forth on Schedule 10.2.6; (q) any Permitted
Sale-Leaseback; (r) the sale or issuance of common Equity Interests of any
Obligor to another Obligor (provided that in the case of such issuance of common
Equity Interests of a Subsidiary that is not a wholly owned Subsidiary, Equity
Interests of such Subsidiary may be also issued to other owners thereof to the
extent such issuance is not dilutive to the ownership of the Obligors); (s) a
disposition of Property for fair market value (as reasonably determined in good
faith by the Borrowers) not to exceed $10,000,000 each Fiscal Year; provided
that (i) no Default or Event of Default has occurred and is continuing or would
result therefrom, (ii) immediately after giving effect thereto, Availability is
greater than $1.0, and (iii) if the disposition involved the disposition of
Eligible Accounts and/or Eligible Inventory, the Borrower Agent shall have
delivered to Agent a Borrowing Base Report, prepared on a Pro Forma Basis,
giving effect to the subject disposition and the proceeds from such disposition
(in an amount determined in accordance with the last sentence of Section 5.2)
shall applied to the outstanding balance of the Loan; (t) dispositions of
investments in joint ventures to the extent required by, or made pursuant to
customary buy/sell agreements between, the joint venture parties set forth in
the joint venture agreements and

 

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similar binding agreements; (u) sales of equipment or real property to the
extent that (i) such property is exchanged for credit against the purchase price
of similar replacement property or (ii) the proceeds of such disposition are
reasonably promptly applied to the purchase price of such replacement property;
(v) dispositions of defaulted receivables or claims against customers, other
industry partners or any other Person, including in connection with workouts or
bankruptcy, insolvency or similar proceedings with respect thereto; provided the
proceeds from such disposition are applied to the outstanding balance of the
Loan; (w) dispositions of drill pipe or down hole equipment lost, abandoned or
destroyed in the Ordinary Course of Business; or (x) approved in writing by
Agent and Required Lenders.

Permitted Contingent Obligations: Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course
of Business; (b) arising from Hedging Agreements permitted hereunder;
(c) existing on the Closing Date, and any extension or renewal thereof that does
not increase the amount of such Contingent Obligation when extended or renewed;
(d) incurred in the Ordinary Course of Business with respect to surety, appeal
or performance bonds, or other similar obligations; (e) arising from customary
indemnification obligations in favor of (i) purchasers of Equity Interests or in
connection with Permitted Asset Dispositions and (ii) sellers in connection with
Acquisitions permitted hereunder; (f) arising under the Loan Documents; or
(g) in an aggregate amount of $5,000,000 or less at any time.

Permitted Discretion: a determination made in the exercise, in good faith, of
commercially reasonable business judgment (from the perspective of a secured,
asset-based lender). In exercising its Permitted Discretion with respect to
modifying eligibility criteria for Eligible Accounts and Eligible Inventory, so
long as no Event of Default has occurred and is continuing, Agent will use
commercially reasonable efforts to notify Borrower Agent prior to modifying the
criteria provided in the definitions thereof on the Closing Date or thereafter.

Permitted Investment Payment Conditions: with respect to any Acquisition or
other Investment, (a) as of the date of any such Acquisition or other
Investment, and immediately after giving effect thereto, (i) no Event of Default
exists and is continuing, and (ii) during each of the preceding 30 consecutive
days (assuming such Acquisition or other Investment occurred on the first day of
such 30 consecutive day period), either (A) Availability has not been less than
the greater of (x) $10,850,000 and (y) 17.5% of the Borrowing Base or (B) during
each of the preceding 30 consecutive days (assuming such Acquisition or other
Investment occurred on the first day of such 30 consecutive day period), (1)
Availability has not been less than the greater of (x) $7,750,000 and (y) 12.5%
of the Borrowing Base and (2) the Fixed Charge Coverage Ratio, determined on a
pro forma basis giving effect to such Investment or Acquisition, is not less
than 1.0 to 1.0, whether or not a Covenant Trigger Period exists, and
(b) Borrower Agent delivers to Agent, at least 5 Business Days prior to a
Permitted Acquisition, copies of all material agreements relating thereto and a
certificate, in form and substance satisfactory to Agent in its Permitted
Discretion, stating that the Acquisition is a “Permitted Acquisition” and
demonstrating compliance with the foregoing requirements.

Permitted Lien: as defined in Section 10.2.2.

Permitted Payment Conditions: with respect to any Distribution pursuant to
Section 10.2.4 or any other payment (whether voluntary or mandatory, or a
prepayment, or redemption) pursuant to Section 10.2.8, (a) as of the date of any
such Distribution or other payment, and immediately after giving effect thereto,
(i) no Event of Default exists and is continuing, and (ii) during each of the
preceding 30 consecutive days (assuming such Distribution or other payment
occurred on the first day of such 30 consecutive day period), either
(A) Availability has not been less than the greater of (x) $12,400,000 and (y)
20% of the Borrowing Base or (B) during each of the preceding 30 consecutive
days (assuming such Distribution or other payment occurred on the first day of
such 30 consecutive day period), (1) Availability has not been less than the
greater of (x) $9,300,000 and (y) 15% of the Borrowing Base and

 

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(2) the Fixed Charge Coverage Ratio, determined on a pro forma basis giving
effect to such Distribution or other payment, is not less than 1.0 to 1.0,
whether or not a Covenant Trigger Period exists, and (b) Borrower Agent delivers
to Agent, at least 5 Business Days prior to the Distribution or other payment,
as applicable, copies of all material agreements relating thereto and a
certificate, in form and substance satisfactory to Agent, stating that the
Distribution or other payment is permitted and demonstrating compliance with the
foregoing requirements.

Permitted Purchase Money Debt: Purchase Money Debt of Obligors that is unsecured
or secured only by a Purchase Money Lien, as long as the aggregate amount does
not exceed $20,000,000 at any time.

Permitted Ratio Debt: means Debt of the Obligors, or any of them; provided that:

(a) such Debt is either (i) senior unsecured or (ii) subordinated in right of
payment to the Obligations;

(b) such Debt does not mature prior to the date that is ninety-one (91) days
after the Revolver Termination Date at the time such Debt is incurred,

(c) such Debt has no scheduled amortization or scheduled payments of principal
and is not subject to mandatory redemption, repurchase, prepayment or sinking
fund obligation (other than customary offers to repurchase upon a change of
control, asset sale or casualty event and customary acceleration rights after an
event of default) prior to the date that is ninety-one (91) days after the
Revolver Termination Date at the time such Debt is incurred,

(d) such Debt is issued on market terms for the type of Debt issued and for
issuers having a similar credit profile and in any event with covenants that are
not more restrictive (taken as a whole) with respect to the Obligors than the
covenants in this Agreement as reasonably determined by the Borrowers in good
faith; provided that a certificate of the Borrower Agent as to the satisfaction
of the conditions described in this clause (e) delivered to Agent at least five
(5) Business Days prior to the incurrence of such Debt, together with a
reasonably detailed description of the material covenants of the Debt proposed
to be issued or drafts of documentation relating thereto, stating that the
Borrower Agent has reasonably determined in good faith that the terms of such
Debt satisfy the foregoing requirements, shall be conclusive unless the Agent
notifies the Borrower Agent within three (3) Business Days of the receipt of
such certificate that it disagrees with such determination (including a
reasonably detailed description of the basis upon which it disagrees); and

(e) after giving pro forma effect to the incurrence of such Debt, the Net
Leverage Ratio shall not exceed 5.00 to 1.00.

Permitted Sale-Leaseback: Asset Dispositions by Borrowers or Restricted
Subsidiaries of fixed or capital assets pursuant to sale-leaseback transactions
where the sale is for cash consideration in an amount not less than the fair
value of such fixed or capital asset (as reasonably determined in good faith by
the Borrower Agent).

Person: any individual, corporation, limited liability company, partnership,
joint venture, association, trust, unincorporated organization, Governmental
Authority or other entity.

Plan: an employee benefit plan (as defined in Section 3(3) of ERISA, but
excluding a Multiemployer Plan) maintained for employees of an Obligor, or to
which an Obligor is required to contribute on behalf of its employees.

 

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Platform: as defined in Section 14.3.3.

Prime Rate: the rate of interest announced by Agent from time to time as its
prime rate. Such rate is set by Agent on the basis of various factors, including
its costs and desired return, general economic conditions and other factors, and
is used as a reference point for pricing some loans, which may be priced at,
above or below such rate. Any change in such rate publicly announced by Agent
shall take effect at the opening of business on the day specified in the
announcement.

Pro Rata: with respect to any Lender, a percentage (rounded to the ninth decimal
place) determined (a) by dividing the amount of such Lender’s Revolver
Commitment by the aggregate outstanding Revolver Commitments; or (b) following
termination of the Revolver Commitments, by dividing the amount of such Lender’s
Loans and LC Obligations by the aggregate outstanding Loans and LC Obligations
or, if all Loans and LC Obligations have been paid in full and/or Cash
Collateralized, by dividing such Lender’s and its Affiliates’ remaining
Obligations by the aggregate remaining Obligations, in each case, other than
contingent obligations not then due and owing or for which no claim has been
made.

Properly Contested: with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP;
(d) non-payment could not have a Material Adverse Effect, nor result in
forfeiture or sale of any assets of the Obligor; (e) no Lien is imposed on
assets of the Obligor, unless bonded and stayed to the satisfaction of Agent in
its Permitted Discretion; and (f) if the obligation results from entry of a
judgment or other order, such judgment or order is stayed pending appeal or
other judicial review.

Property: any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

Protective Advances: as defined in Section 2.1.6.

Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of
the purchase price of fixed assets; (b) Debt (other than the Obligations)
incurred within ninety (90) days before or after acquisition of any fixed
assets, for the purpose of financing any of the purchase price thereof; and
(c) any renewals, extensions or refinancings or replacements thereof in an
aggregate principal amount that does not exceed the principal amount of the Debt
being renewed, extended, refinanced or replaced (except by the amount of any
accrued interest, payment in kind interest, reasonable closing costs, expenses,
fees and premium paid in connection with such renewal, extension, refinancing or
replacement) thereof; provided that, for the avoidance of doubt, Purchase Money
Debt shall include Capital Leases.

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only
the fixed assets acquired with such Debt (and proceeds thereof) and constituting
a Capital Lease or a purchase money security interest under the UCC; provided,
that, individual financings of equipment provided by one lender may be
cross-collateralized to other financings of equipment provided by such lender.

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another Person to qualify as an “eligible contract participant”
under Section 1a(18)(A)(v)(II) of such act.

Qualified IPO: the issuance by Parent of its Equity Interests in an underwritten
primary public offering (other than a public offering pursuant to a registration
statement on Form S-8) pursuant to an effective registration statement filed
with the Securities and Exchange Commission.

 

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Quarterly Financial Statements: unaudited balance sheets as of the end of such
Fiscal Quarter and the related statements of income and cash flow for such
Fiscal Quarter and for the portion of the Fiscal Year then elapsed, of Parent on
a Consolidated Basis (and including on a consolidating basis, if requested by
Agent in its Permitted Discretion, during the existence of an Excluded
Subsidiary or an Unrestricted Subsidiary), setting forth in comparative form
corresponding figures for the preceding Fiscal Year and certified by the chief
financial officer of Borrower Agent as prepared in accordance with GAAP and
fairly presenting the financial position and results of operations for such
Fiscal Quarter, subject to normal year-end adjustments and the absence of
footnotes.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

Recipient: Agent, Issuing Bank, any Lender or any other recipient of a payment
to be made by an Obligor under a Loan Document or on account of an Obligation.

Refinancing Conditions: (a) the Refinancing Debt is in an aggregate principal
amount that does not exceed the principal amount of the Debt being extended,
renewed, refinanced or replaced (except by the amount of any accrued interest,
payment in kind interest, reasonable closing costs, expenses, fees and premium
paid in connection with such extension, renewal, refinancing or replacement);
(b) the Refinancing Debt has a final stated maturity no sooner than a weighted
average life of the Debt being extended, renewed, refinanced or replaced;
(c) the Refinancing Debt, and/or the Liens securing the Refinancing Debt, as
applicable, is subordinated to the Obligations at least to the same extent as
the Debt, or the Liens securing the Debt, as applicable, being extended,
renewed, (d) the representations, covenants and defaults applicable to it, taken
as a whole, are not materially more restrictive than those applicable to the
Debt being extended, renewed, refinanced or replaced; (e) the Refinancing Debt
is not secured by any Property or assets other than the Property or assets that
were collateral (and then only with the same priority) for the Debt being
extended, renewed or refinanced at the time of such extension, renewal or
refinancing (unless the Agent is simultaneously granted a Lien on such Property
or assets); (f) the obligor or obligors under any such Refinancing Debt are the
same as the obligor(s) under the Debt being extended, renewed, refinanced or
replaced on such Debt (unless such obligors simultaneously guarantee the
Obligations); and (g) upon giving effect to it, no Default or Event of Default
exists.

Refinancing Debt: Borrowed Money that is the result of an extension, renewal or
refinancing of Debt permitted under Section 10.2.1(b), (d), (f), (i), (t) and
(z).

Reimbursement Date: as defined in Section 2.3.2.

Removal Effective Date: as defined in Section 12.8.1.

Rent and Charges Reserve: the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder, broker or other Person who possesses any
Collateral or could assert a Lien on any Collateral; and (b) a reserve at least
equal to three months rent and other charges that could be payable to any such
Person, unless it has executed a Lien Waiver.

Report: as defined in Section 12.2.3.

Reportable Event: any event set forth in Section 4043(c) of ERISA, other than an
event for which the 30 day notice period has been waived.

 

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Reporting Trigger Period: the period (a) commencing on any day that
(i) Availability is less than the greater of (x) $10,850,000 and (y) 17.5% of
the Borrowing Base and (b) continuing until, during each of the preceding 30
consecutive days, Availability has been not less than the greater of (x)
$10,850,000 and (y) 17.5% of the Borrowing Base. The termination of a Reporting
Trigger Period as provided herein shall in no way limit, waive or delay the
occurrence of a subsequent Reporting Trigger Period in the event that the
conditions set forth in this definition again arise.

Required Lenders: Secured Parties holding more than 50% of (a) the aggregate
outstanding Revolver Commitments; or (b) after termination of the Revolver
Commitments, the aggregate outstanding Loans and LC Obligations or, upon Full
Payment of all Loans and LC Obligations, the aggregate remaining Obligations
(other than contingent obligations for which no claim has been made); provided,
however, that Commitments, Loans and other Obligations held by a Defaulting
Lender and its Affiliates shall be disregarded in making such calculation, but
any related Fronting Exposure shall be deemed held as a Loan or LC Obligation by
the Lender that funded the applicable Loan or issued the applicable Letter of
Credit; provided further that if there are two (2) or more unaffiliated Lenders
at such time, “Required Lenders” must include at least two (2) unaffiliated
Lenders.

Restoration: as defined in Section 8.6.2(c).

Restricted Investment: any Investment by an Obligor, other than (a) Investments
in Subsidiaries to the extent existing on the Closing Date and other Investments
existing on the Closing Date and set forth on Schedule 10.2.5; (b) Cash
Equivalents; provided, however, that, to the extent such Cash Equivalents
constitute Collateral, such Cash Equivalents are subject to Agent’s Lien and
control, pursuant to documentation in form and substance satisfactory to Agent
in its Permitted Discretion to the extent required by this Agreement;
(c) Investments consisting of lease, utility and other similar deposits or any
other deposit permitted under Section 10.2.2; (d) prepayments and deposits to
suppliers in the Ordinary Course of Business; (e) Hedging Agreements to the
extent permitted by Section 10.2.15; (f) Investments (i) by an Obligor in any
other Obligor, or (ii) by Obligors into Unrestricted Subsidiaries to the extent
otherwise permitted hereunder; (g) the establishment of wholly owned
Subsidiaries subject to compliance with Section 10.1.9 (to the extent
applicable); provided that any Subsidiary established in reliance on this clause
(g) may be less than wholly owned solely to the extent necessary due to any
issuance of Equity Interests to qualifying directors of Foreign Subsidiaries or
to Persons (other than any Obligor) required by Applicable Law to hold shares in
such Subsidiary; (h) Investments in securities or other assets of trade
creditors, customers or other Persons in the Ordinary Course of Business that
are received in settlement of bona fide disputes or pursuant to any plan of
reorganization or liquidation or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers; (i) guarantees, Contingent
Obligations and other Investments permitted under Section 10.2.1;
(j) Investments to the extent such Investments reflect an increase in the value
of Investments otherwise permitted herein; (k) the capitalization or forgiveness
of Debt owed to it by other Obligors or Subsidiaries if such capitalization or
forgiveness is required in order to comply with so-called “thin capitalization”
rules; (l) the cancellation, forgiveness, set off or acceptance of prepayments
of Debt owed to any Obligor to the extent not otherwise prohibited by the terms
of this Agreement; (m) loans and advances to an officer or employee for salary,
travel expenses, commissions and similar items in the Ordinary Course of
Business, not to exceed, in the aggregate, $1,000,000 at any time outstanding;
(n) prepaid expenses and extensions of trade credit made in the Ordinary Course
of Business; (o) deposits with financial institutions permitted hereunder;
(p) Investments arising in connection with Permitted Asset Dispositions
permitted hereunder (other than Permitted Asset Dispositions made pursuant to
clause (h)(iv) of the definition of “Permitted Asset Disposition”); (q) any
intermediate Investment necessary to facilitate the ultimate consummation of an
Investment otherwise permitted hereby; (r) investments not to exceed $5,000,000
in the aggregate at any time outstanding; (s) investments of any Person existing
at the time such person becomes a Restricted Subsidiary or consolidates or
merges with a Borrower or any of the Restricted Subsidiaries (including in
connection with a Permitted Acquisition) so long as such investments were not
made in contemplation of such Person

 

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becoming a Restricted Subsidiary of such merger; or (t) any Investments that
satisfy the Permitted Investment Payment Conditions (including Permitted
Acquisitions); provided that notwithstanding the foregoing, at the time of
making any Investment in one or more Unrestricted Subsidiaries, all such
Investments in the aggregate shall not exceed 5% of the greater of
(1) consolidated revenues or (2) total assets of the Parent and its Restricted
Subsidiaries for or as of the end of, as applicable, the most recent Measurement
Period (which, for any Unrestricted Subsidiary or proposed Unrestricted
Subsidiary organized or acquired subsequent to the end of such Measurement
Period, shall be determined on a pro forma basis as if such Unrestricted
Subsidiary were in existence on such date).

Restricted Subsidiary: at any time, any direct or indirect Subsidiary of the
Parent that is not then an Unrestricted Subsidiary; provided that upon an
Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such
Subsidiary shall be included in the definition of “Restricted Subsidiary.” Other
than with respect to Subsidiaries designated as Unrestricted Subsidiaries on the
Closing Date, designation of any Unrestricted Subsidiary as a Restricted
Subsidiary shall constitute (i) the incurrence at the time of designation of any
Investment, Debt or Liens of such Subsidiary existing at such time and (ii) a
return on any Investment by the Parent in such Unrestricted Subsidiary in an
amount equal to the fair market value at the date of such designation of the
Borrowers’ Investment in such Subsidiary.

Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of any Obligor to incur or repay Borrowed Money, to grant
Liens on any assets in favor of the Agent or Lenders, to declare or make
Distributions, to modify, extend or renew any agreement evidencing Borrowed
Money, or to repay any intercompany Debt.

Revolver Commitment: for any Lender, its obligation to make Revolver Loans and
to participate in LC Obligations up to the maximum principal amount shown on
Schedule 1.1, as hereafter modified pursuant to Section 2.1.4(b), Section 2.1.7
or an Assignment to which it is a party. “Revolver Commitments” means the
aggregate amount of such commitments of all Lenders.

Revolver Loan: any loan made pursuant to Section 2.1.1 or as a Swingline Loan.

Revolver Termination Date: the earlier to occur of (i) February 13, 2023 or
(ii) ninety (90) days prior to the maturity of the Term Loan Agreement.

Revolver Usage: (a) the aggregate amount of outstanding Revolver Loans
(including, for purposes of calculating the Unused Line Fee, only Swingline
Loans with respect to which Lenders have funded their participation interest
therein, and not other Swingline Loans); plus (b) the aggregate Stated Amount of
outstanding Letters of Credit, except to the extent Cash Collateralized by
Borrowers.

S&P: Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill
Companies, Inc., or any successor acceptable to Agent.

Sanction: any sanction administered or enforced by the U.S. Government
(including OFAC), United Nations Security Council, European Union, Her Majesty’s
Treasury or other sanctions authority.

Secured Bank Product Obligations: Debt, obligations and other liabilities with
respect to Bank Products owing by an Obligor to a Secured Bank Product Provider;
provided, that Secured Bank Product Obligations of an Obligor shall not include
its Excluded Swap Obligations.

Secured Bank Product Provider: (a) Bank of America or any of its Affiliates; and
(b) any other Lender or Affiliate of a Lender that is providing a Bank Product,
provided such provider delivers written notice to Agent, in form and substance
satisfactory to Agent, within 10 days following the later of the Closing Date or
creation of the Bank Product, (i) describing the Bank Product and setting forth
the maximum amount to be secured by the Collateral and the methodology to be
used in calculating such amount, and (ii) agreeing to be bound by Section 12.13.

 

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Secured Parties: Agent, Issuing Bank, Lenders and Secured Bank Product
Providers.

Security Documents: this Agreement, IP Assignments (if any), Deposit Account
Control Agreements, and all other documents, instruments and agreements now or
hereafter securing (or given with the intent to secure) any Obligations.

Senior Officer: the chairman of the board, president, chief executive officer,
managing director, executive vice president, any vice president, treasurer,
controller, director of finance, chief financial officer or finance officer of a
Borrower, or, if the context requires, an Obligor.

Settlement Report: a report summarizing Revolver Loans and participations in LC
Obligations outstanding as of a given settlement date, allocated to Lenders on a
Pro Rata basis in accordance with their Revolver Commitments.

Solvent: as to any Person, after taking into account all other payments made by,
and indemnification payments from, and reimbursement and contribution
obligations of, any other Persons with respect thereto, such Person (a) owns
Property whose fair saleable value is greater than the amount required to pay
all of its debts (including contingent, subordinated, unmatured and unliquidated
liabilities); (b) owns Property whose present fair saleable value (as defined
below) is greater than the probable total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of such Person as they
become absolute and matured; (c) is able to pay all of its debts as they mature;
(d) has capital that is not unreasonably small for its business and is
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage; (e) is not “insolvent” within the
meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by
way of assumption or otherwise) any obligations or liabilities (contingent or
otherwise) under any Loan Documents, or made any conveyance in connection
therewith, with actual intent to hinder, delay or defraud either present or
future creditors of such Person or any of its Affiliates. “Fair saleable value”
means the amount that could be obtained for assets within a reasonable time,
either through collection or through sale under ordinary selling conditions by a
capable and diligent seller to an interested buyer who is willing (but under no
compulsion) to purchase.

Specified Obligor: an Obligor that is not then an “eligible contract
participant” under the Commodity Exchange Act (determined prior to giving effect
to Section 5.11).

Specified Transaction: (a) any disposition of all or substantially all the
assets of or all the Equity Interests of any Subsidiary or of any division or
product line of an Obligor, (b) any Acquisition, (c) any proposed incurrence of
Debt, (d) the proposed making of a Distribution or (e) after the Closing Date,
the designation by Borrower Agent of any Restricted Subsidiary as an
Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted
Subsidiary, in each case, to the extent permitted hereunder.

Sponsor: means, individually and collectively, Quintana Equity Partners, L.P., a
Cayman Islands limited partnership, Quintana Energy Fund-TE, LP, a Cayman
Islands limited partnership, Quintana Energy Fund–FI, LP, a Cayman Islands,
limited partnership, Archer Holdco LLC, a Texas limited liability company,
Geveran Investments Limited, a Cyprus limited company, Robertson QES Investment
LLC, a Delaware limited liability company and any Affiliate of any of the
foregoing.

Spot Rate: the exchange rate, as determined by Agent, that is applicable to
conversion of one currency into another currency, which is (a) the exchange rate
reported by Bloomberg (or other commercially available source designated by
Agent) as of the end of the preceding business day in the

 

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financial market for the first currency; or (b) if such report is unavailable
for any reason, the spot rate for the purchase of the first currency with the
second currency as in effect during the preceding business day in Agent’s
principal foreign exchange trading office for the first currency.

Stated Amount: the maximum outstanding undrawn amount of a Letter of Credit,
including any automatic increase or tolerance (whether or not then in effect)
provided by the Letter of Credit or related LC Documents.

Subordinated Debt: Debt incurred by an Obligor that is expressly subordinate and
junior in right of payment to Full Payment of all Obligations pursuant to a
customary subordination agreement in form and substance satisfactory to Required
Lenders in their Permitted Discretion; provided, after giving pro forma effect
to the incurrence of such Debt, the Net Leverage Ratio shall not exceed 5.00 to
1.00.

Subsidiary: any entity more than 50% of whose voting securities or Equity
Interests is owned by a Borrower or combination of Borrowers (including indirect
ownership through other entities in which a Borrower directly or indirectly owns
more than 50% of the voting securities or Equity Interests).

Supermajority Lenders: Secured Parties holding more than 66 2/3% of (a) the
aggregate outstanding Revolver Commitments; or (b) after termination of the
Revolver Commitments, the aggregate outstanding Loans and LC Obligations or,
upon Full Payment of all Loans and LC Obligations, the aggregate remaining
Obligations; provided, however, that Commitments, Loans and other Obligations
held by a Defaulting Lender and its Affiliates shall be disregarded in making
such calculation, but any related Fronting Exposure shall be deemed held as a
Loan or LC Obligation by the Lender that funded the applicable Loan or issued
the applicable Letter of Credit; provided further that if there are two (2) or
more unaffiliated Lenders at such time, “Supermajority Lenders” must include at
least two (2) unaffiliated Lenders.

Swap Obligations: with respect to an Obligor, its obligations under a Hedging
Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the
Commodity Exchange Act.

Swingline Loan: any Borrowing of Base Rate Revolver Loans funded with Agent’s
funds, until such Borrowing is settled among Lenders or repaid by Borrowers.

Taxes: all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

Term Agent: the agent, if any, for the Term Loan Lenders as provided for in the
Term Loan Agreement.

Term Debt: all Borrowed Money, if any, owed to the Term Loan Lenders pursuant to
the Term Debt Documents.

Term Debt Documents: (i) the Term Loan Agreement and (ii) each of the other
agreements, instruments and other documents with respect to the Term Debt, each
upon terms and conditions satisfactory to Required Lenders in their Permitted
Discretion and in form and substance satisfactory to Required Lenders in their
Permitted Discretion, all as in effect on the date of the Intercreditor
Agreement, or as may be amended, modified or supplemented from time to time in
accordance with the Intercreditor Agreement.

 

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Term Loan Agreement: a loan agreement, note purchase agreement or indenture in
form and substance satisfactory to Agent in its Permitted Discretion between any
of the Obligors, as borrowers and/or guarantors, the Term Agent, if any, and the
Term Loan Lenders, as in effect on the date of the Intercreditor Agreement or as
it may be amended, modified or supplemented from time to time in accordance with
the Intercreditor Agreement.

Term Loan Lenders: each “Lender” as defined in the Term Loan Agreement and each
other holder of Term Debt or other obligations arising under the Term Debt
Documents.

Transferee: any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.

UCC: the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other jurisdiction govern the perfection or enforcement of any
Lien, the Uniform Commercial Code of such jurisdiction.

Unrestricted Subsidiary: (a) as of the Closing Date, each Subsidiary of the
Parent listed on Schedule 10.1.9, (b) any Subsidiary of the Parent designated by
the Borrower Agent as an Unrestricted Subsidiary pursuant to this definition
subsequent to the Closing Date, and (c) any Subsidiary of an Unrestricted
Subsidiary. The Borrower Agent may at any time after the Closing Date designate
any Restricted Subsidiary an Unrestricted Subsidiary; provided that
(i) immediately before and after such designation, no Event of Default shall
have occurred and be continuing, (ii) after giving effect to such designation on
a pro forma basis, the Fixed Charge Coverage Ratio for the Measurement Period
most recently ended on or prior to the date of such designation is at least 1.0
to 1.0, (iii) the Obligors shall have satisfied the Permitted Investment Payment
Conditions, and (iv) no Restricted Subsidiary may be designated as an
Unrestricted Subsidiary if it is a “Restricted Subsidiary” for the purpose
guaranteeing any other Debt of the Obligors. Other than with respect to
Subsidiaries designated as Unrestricted Subsidiaries on the Closing Date, the
designation of any Restricted Subsidiary as an Unrestricted Subsidiary after the
Closing Date shall constitute an Investment at the date of designation in an
amount equal to the fair market value of the investment therein.

Unused Line Fee Rate: a per annum rate equal to (a) 0.625%, if average daily
Revolver Usage was less than 33% of the Revolver Commitments during the
preceding Fiscal Quarter, or (b) 0.50%, if average daily Revolver Usage was
equal to or more than 33% of the Revolver Commitments during such Fiscal
Quarter.

Upstream Payment: a Distribution by a Restricted Subsidiary of an Obligor to
such Obligor.

U.S. Person: “United States Person” as defined in Section 7701(a)(30) of the
Code.

U.S. Tax Compliance Certificate: as defined in Section 5.10.2(b)(iii).

Value: (a) for Inventory, its value determined on the basis of the lower of
average cost or market, calculated on a first-in, first-out basis, and excluding
any portion of cost attributable to intercompany profit among Borrowers and
their Affiliates; and (b) for an Account, its face amount, net of any returns,
rebates, discounts (calculated on the shortest terms), credits, allowances or
Taxes (including sales, excise or other taxes) that have been or could be
claimed by the Account Debtor or any other Person.

Write-Down and Conversion Powers: the write-down and conversion powers of the
applicable EEA Resolution Authority from time to time under the Bail-In
Legislation for the applicable EEA Member Country, which powers are described in
the EU Bail-In Legislation Schedule.

 

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1.2. Accounting Terms. Under the Loan Documents (except as otherwise specified
therein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Borrowers delivered to Agent before the Closing Date and
(a) using the same inventory valuation method as used in such financial
statements, except for any change required or permitted by GAAP if Borrowers’
certified public accountants concur in such change, the change is disclosed to
Agent, and, if necessary or appropriate in Agent’s Permitted Discretion,
Section 10.3 is amended in a manner satisfactory to Required Lenders to take
into account the effects of the change and (b) the accounting for operating
leases and capital leases under GAAP as in effect on the Closing Date
(including, without limitation, Accounting Standards Codification 840) shall
apply for the purposes of determining compliance with the provisions of this
Agreement with respect to operating leases and Capital Lease (it being
understood, for avoidance of doubt, that no operating leases, or obligations in
respect of operating leases, shall be treated as Capital Leases hereunder).

1.3. Uniform Commercial Code. As used herein, the following terms are defined in
accordance with the UCC in effect in the State of New York from time to time:
“Account,” “Account Debtor,” “Chattel Paper,” “Commercial Tort Claim,” “Deposit
Account,” “Document,” “Equipment,” “General Intangibles,” “Goods,” “Instrument,”
“Investment Property,” “Letter-of-Credit Right” and “Supporting Obligation.”

1.4. Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. In the computation of periods of time from a
specified date to a later specified date, “from” means “from and including,” and
“to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws include all related regulations, interpretations,
supplements, amendments and successor provisions; (b) any document, instrument
or agreement include any amendments, waivers and other modifications, extensions
or renewals (to the extent permitted by the Loan Documents); (c) any section
mean, unless the context otherwise requires, a section of this Agreement;
(d) any exhibits or schedules mean, unless the context otherwise requires,
exhibits and schedules attached hereto, which are hereby incorporated by
reference; (e) any Person include successors and assigns; (f) time of day mean
time of day at Agent’s notice address under Section 14.3.1; or (g) discretion of
Agent, Issuing Bank or any Lender mean the sole and absolute discretion of such
Person exercised at any time. All references to Value, Borrowing Base
components, Loans, Letters of Credit, Obligations and other amounts herein shall
be denominated in Dollars, unless expressly provided otherwise, and all
determinations (including calculations of Borrowing Base and financial
covenants) made from time to time under the Loan Documents shall be made in
light of the circumstances existing at such time. Borrowing Base calculations
shall be consistent with historical methods of valuation and calculation, and
otherwise satisfactory to Agent (and not necessarily calculated in accordance
with GAAP). Obligors shall have the burden of establishing any alleged
negligence, misconduct or lack of good faith by Agent, Issuing Bank or any
Lender under any Loan Documents. No provision of any Loan Documents shall be
construed against any party by reason of such party having, or being deemed to
have, drafted the provision. Reference to an Obligor’s “knowledge” or similar
concept means actual knowledge of a Senior Officer, or knowledge that a Senior
Officer would have obtained if he or she had engaged in good faith and diligent
performance of his or her duties, including reasonably specific inquiries of
employees or agents and a good faith attempt to ascertain the matter.

1.5. Currency Equivalents.

1.5.1. Calculations. All references in the Loan Documents to Loans, Letters of
Credit, Obligations, Borrowing Base components and other amounts shall be
denominated in Dollars, unless expressly provided otherwise. The Dollar
equivalent of any amounts denominated or reported

 

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under a Loan Document in a currency other than Dollars shall be determined by
Agent on a daily basis, based on the current Spot Rate. Borrowers shall report
Value and other Borrowing Base components to Agent in the currency invoiced by
Borrowers (for Accounts) or shown in Borrowers’ financial records (for all other
assets), and unless expressly provided otherwise, shall deliver financial
statements and calculate financial covenants in Dollars. Notwithstanding
anything herein to the contrary, if an Obligation is funded or expressly
denominated in a currency other than Dollars, Obligors shall repay such
Obligation in such other currency.

1.5.2. Judgments. If, in connection with obtaining judgment in any court, it is
necessary to convert a sum from the currency provided under a Loan Document
(“Agreement Currency”) into another currency, the Spot Rate shall be used as the
rate of exchange. Notwithstanding any judgment in a currency (“Judgment
Currency”) other than the Agreement Currency, an Obligor shall discharge its
obligation in respect of any sum due under a Loan Document only if, on the
Business Day following receipt by Agent of payment in the Judgment Currency,
Agent can use the amount paid to purchase the sum originally due in the
Agreement Currency. If the purchased amount is less than the sum originally due,
such Obligor agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify Agent and Lenders against such loss. If the purchased
amount is greater than the sum originally due, Agent shall return the excess
amount to such Obligor (or to the Person legally entitled thereto).

1.6. Pro Forma Calculations.

1.6.1. Notwithstanding anything to the contrary herein, the Fixed Charge
Coverage Ratio and the Net Leverage Ratio shall be calculated in the manner
prescribed by this Section 1.6.

1.6.2. For purposes of calculating the Fixed Charge Coverage Ratio and the Net
Leverage Ratio, Specified Transactions (and the repayment of any Debt in
connection therewith) that have been made (i) during the applicable Measurement
Period and (ii) subsequent to such Measurement Period and prior to or
simultaneously with the event for which the calculation of any such ratio is
made shall be calculated on a pro forma basis assuming that all such Specified
Transactions (and any increase or decrease in Adjusted EBITDA and the component
financial definitions used therein attributable to any Specified Transaction)
had occurred on the first day of the applicable Measurement Period. If since the
beginning of any applicable Measurement Period any Person that subsequently
became a Restricted Subsidiary or was merged, amalgamated or consolidated with
or into any Obligor since the beginning of such Measurement Period shall have
made any Specified Transaction that would have required adjustment pursuant to
this Section 1.6, then the Fixed Charge Coverage Ratio and the Net Leverage
Ratio shall be calculated to give pro forma effect thereto in accordance with
this Section 1.6.

1.6.3. Whenever pro forma effect is to be given to a Specified Transaction, the
pro forma calculations shall be made in good faith by a Senior Officer of
Borrower Agent and may include, without duplication, cost savings, operating
expense reductions, restructuring charges and expenses and cost-saving synergies
resulting from such Specified Transaction, in each case calculated in the manner
described in the definition of Adjusted EBITDA.

1.6.4. Interest on a Capital Lease obligation shall be deemed to accrue at an
interest rate reasonably determined by a Senior Officer of Borrower Agent to be
the rate of interest implicit in such Capital Lease obligation in accordance
with GAAP. Interest on Debt that may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a London interbank offered
rate, or other rate, shall be determined to have been based upon the rate
actually chosen, or if none, then based upon such optional rate chosen as
Borrower Agent or Subsidiary may designate.

 

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SECTION 2. CREDIT FACILITIES

2.1. Revolver Commitment.

2.1.1. Revolver Loans. Each Lender agrees, severally on a Pro Rata basis up to
its Revolver Commitment, on the terms set forth herein, to make Revolver Loans
to Borrowers from time to time through the Commitment Termination Date. The
Revolver Loans may be repaid and reborrowed as provided herein. In no event
shall Lenders have any obligation to honor a request for a Revolver Loan if
Revolver Usage at such time plus the requested Loan would exceed the Borrowing
Base.

2.1.2. Notes. Loans and interest accruing thereon shall be evidenced by the
records of Agent and the applicable Lender. At the request of a Lender,
Borrowers shall deliver promissory note(s) to such Lender, evidencing its Loans.

2.1.3. Use of Proceeds. The proceeds of Revolver Loans shall be used by
Borrowers and the Subsidiaries solely (a) to satisfy existing Debt; (b) to pay
Obligations in accordance with this Agreement; and (c) for lawful corporate
purposes of Borrowers, including working capital. Borrowers shall not, directly
or indirectly, use any Letter of Credit or Loan proceeds, nor use, lend,
contribute or otherwise make available any Letter of Credit or Loan proceeds to
any Subsidiary, joint venture partner or other Person, (i) to fund any
activities of or business with any Person, or in any Designated Jurisdiction,
that, at the time of issuance of the Letter of Credit or funding of the Loan, is
the subject of any Sanction; or (ii) in any manner that would result in a
violation of a Sanction by any Person (including any Secured Party or other
individual or entity participating in any transaction).

2.1.4. Voluntary Reduction or Termination of Revolver Commitments.

(a) The Revolver Commitments shall terminate on the Revolver Termination Date,
unless sooner terminated in accordance with this Agreement. Upon at least 20
days’ prior written notice to Agent, the Borrower Agent may, at its option,
terminate the Revolver Commitments and this credit facility. Any notice of
termination given by the Borrower Agent shall be irrevocable; provided that a
notice of termination of the Revolver Commitments delivered by the Borrower
Agent may state that such notice is conditioned upon the effectiveness of other
credit facilities, in which case such notice may be revoked by the Borrower
Agent (by notice to the Agent on or prior to the specified effective date) if
such condition is not satisfied. On the applicable termination date, Borrowers
shall make Full Payment of all Obligations.

(b) Borrower Agent may permanently reduce the Revolver Commitments, on a ratable
basis for all Lenders, upon at least 15 days’ prior written notice to Agent,
which notice shall specify the amount of the reduction and shall be irrevocable
once given. Each reduction shall be in a minimum amount of $1,000,000, or an
increment of $1,000,000 in excess thereof.

2.1.5. Overadvances. If Revolver Usage exceeds the Borrowing Base
(“Overadvance”) at any time, the excess shall be payable by Borrowers on demand
by Agent and shall constitute an Obligation secured by the Collateral, entitled
to all benefits of the Loan Documents. Agent may require Lenders to fund Base
Rate Revolver Loans that cause or constitute an Overadvance and to forbear from
requiring Borrowers to cure an Overadvance, as long as the total Overadvance
does not exceed 10% of the Borrowing Base and does not continue for more than 30
consecutive days without the consent of Required Lenders; provided that at the
written direction of the Required Lenders, the Agent shall cease making such
Overadvances but any Overadvances shall continue in effect and be due and
payable pursuant to their terms. In no event shall Loans be required that would
cause Revolver Usage to exceed the aggregate Revolver Commitments. No funding or
sufferance of an Overadvance shall constitute a waiver by Agent or Lenders of
the Event of Default caused thereby. No Obligor shall be a beneficiary of this
Section nor authorized to enforce any of its terms.

 

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2.1.6. Protective Advances. Agent shall be authorized, in its discretion, at any
time that any conditions in Section 6.2 are not satisfied, to make Base Rate
Revolver Loans (“Protective Advances”) (a) up to an aggregate outstanding amount
of 10% of the aggregate Revolver Commitments, if Agent deems such Loans
necessary or desirable to preserve or protect Collateral, or to enhance the
collectability or repayment of Obligations, as long as such Loans do not cause
Revolver Usage to exceed the aggregate Revolver Commitments; or (b) to pay any
other amounts chargeable to Obligors under any Loan Documents, including
interest, costs, fees and expenses. Lenders shall participate on a Pro Rata
basis in Protective Advances outstanding from time to time. Required Lenders may
at any time revoke Agent’s authority to make further Protective Advances under
clause (a) by written notice to Agent. Absent such revocation, Agent’s
determination that funding of a Protective Advance is appropriate shall be
conclusive.

2.1.7. Increase in Revolver Commitments. Borrower Agent may request an increase
in Revolver Commitments from time to time upon notice to Agent, as long as
(a) the requested increase is in a minimum amount of $5,000,000 and is offered
on the same terms as existing Revolver Commitments, except for arrangement,
closing, upfront or similar fees agreed to among Borrowers, existing Lenders and
new Lenders (if applicable) providing such increased Revolver Commitments,
(b) total increases in Revolver Commitments under this Section do not exceed
$50,000,000, (c) no more than five (5) increases in Revolver Commitments are
made, (d) Borrowers pay all reasonable and documented out of pocket fees and
expenses incurred by Agent and Lenders providing such increase in Revolver
Commitments required to be paid under this Agreement upon effectiveness of such
increase, (e) neither the funding of such increase in Revolver Commitments nor
the existence of the liens securing the same would violate the terms of any
indenture or other agreement governing material Debt for Borrowed Money of the
Obligors (and the incurrence of such increase in Revolver Commitments shall not
violate the terms of such indenture or agreement regarding the amount of
indebtedness permitted with respect to the Revolver Commitments), (f) any such
increase in Revolver Commitment shall benefit from the same guarantees as, and
be secured on a pari passu basis by the Collateral, and (g) the requested
increase does not cause the Commitments to exceed 90% of any applicable cap
under any Subordinated Debt agreement or under any Term Debt Documents. Agent
shall promptly notify Lenders of the requested increase and, within 10 Business
Days thereafter, each Lender shall notify Agent if and to what extent such
Lender commits to increase its Revolver Commitment. Any Lender not responding
within such period shall be deemed to have declined an increase. If Lenders fail
to commit to the full requested increase, Eligible Assignees may issue
additional Revolver Commitments and become Lenders hereunder, provided that, any
such new Lender assumes all of the rights and obligations of a “Lender” under
this Agreement. Agent may allocate, in its discretion, the increased Revolver
Commitments among committing Lenders and, if necessary, Eligible Assignees.
Provided the conditions set forth in Section 6.2 are satisfied, total Revolver
Commitments shall be increased by the requested amount (or such lesser amount
committed by Lenders and Eligible Assignees) on a date agreed upon by Agent and
Borrower Agent, but no later than 45 days following Borrowers’ increase request.
Agent, Borrowers, and new and existing Lenders shall execute and deliver such
documents and agreements as Agent deems appropriate to evidence the increase in
and allocations of Revolver Commitments. On the effective date of an increase,
the Revolver Usage and other exposures under the Revolver Commitments shall be
reallocated among Lenders, and settled by Agent as necessary, in accordance with
Lenders’ adjusted shares of such commitments.

2.2. [Reserved].

 

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2.3. Letter of Credit Facility.

2.3.1. Issuance of Letters of Credit. Issuing Bank shall issue Letters of Credit
from time to time until the Commitment Termination Date, on the terms set forth
herein, including the following:

(a) Each Borrower acknowledges that Issuing Bank’s issuance of any Letter of
Credit is conditioned upon Issuing Bank’s receipt of a LC Application with
respect to the requested Letter of Credit, as well as such other instruments and
agreements as Issuing Bank may customarily require for issuance of a letter of
credit of similar type and amount. Issuing Bank shall have no obligation to
issue any Letter of Credit unless (i) Issuing Bank receives a LC Request and LC
Application at least three Business Days prior to the requested date of
issuance; (ii) each LC Condition is satisfied; and (iii) if a Defaulting Lender
exists, such Lender or Borrowers have entered into arrangements satisfactory to
Agent and Issuing Bank to eliminate any Fronting Exposure associated with such
Lender. If, in sufficient time to act, Issuing Bank receives written notice from
Agent or Required Lenders that a LC Condition has not been satisfied, Issuing
Bank shall not issue the requested Letter of Credit. Prior to receipt of any
such notice, Issuing Bank shall not be deemed to have knowledge of any failure
of LC Conditions.

(b) Letters of Credit may be requested by a Borrower to support obligations
incurred by a Borrower or any other Obligor in the Ordinary Course of Business,
or as otherwise approved by Agent. Increase, renewal or extension of a Letter of
Credit shall be treated as issuance of a new Letter of Credit, except that
Issuing Bank may require a new LC Application in its discretion.

(c) Borrowers assume all risks of the acts, omissions or misuses of any Letter
of Credit by the beneficiary. In connection with any Letter of Credit, none of
Agent, Issuing Bank or any Lender shall be responsible for the existence,
character, quality, quantity, condition, packing, value or delivery of any goods
purported to be represented by any Documents; any differences or variation in
the character, quality, quantity, condition, packing, value or delivery of any
goods from that expressed in any Documents; the form, validity, sufficiency,
accuracy, genuineness or legal effect of any Documents or of any endorsements
thereon; the time, place, manner or order in which shipment of goods is made;
partial or incomplete shipment of, or failure to ship, any goods referred to in
a Letter of Credit or Documents; any deviation from instructions, delay, default
or fraud by any shipper or other Person in connection with any goods, shipment
or delivery; any breach of contract between a shipper or vendor and a Borrower;
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or
otherwise; errors in interpretation of technical terms; the misapplication by a
beneficiary of any Letter of Credit or the proceeds thereof; or any consequences
arising from causes beyond the control of Issuing Bank, Agent or any Lender,
including any act or omission of a Governmental Authority. Issuing Bank shall be
fully subrogated to the rights and remedies of any beneficiary whose claims
against Borrowers are discharged with proceeds of a Letter of Credit. The rights
and remedies of Issuing Bank under the Loan Documents shall be cumulative.

(d) In connection with its administration of and enforcement of rights or
remedies under any Letters of Credit or LC Documents, Issuing Bank shall be
entitled to act, and shall be fully protected in acting, upon any certification,
documentation or communication in whatever form believed by Issuing Bank, in
good faith, to be genuine and correct and to have been signed, sent or made by a
proper Person. Issuing Bank may use legal counsel, accountants and other experts
to advise it concerning its obligations, rights and remedies, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by such experts. Issuing Bank may employ
agents and attorneys-in-fact in connection with any matter relating to Letters
of Credit or LC Documents, and shall not be liable for the negligence or
misconduct of agents and attorneys-in-fact selected with reasonable care.

(e) Notwithstanding anything herein to the contrary, Barclays Bank PLC will only
issue standby Letters of Credit and shall have no obligation hereunder to issue,
and shall not issue, any commercial or trade Letters of Credit.

 

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2.3.2. Reimbursement; Participations.

(a) If Issuing Bank honors any request for payment under a Letter of Credit,
Borrowers shall pay to Issuing Bank, on the same day (“Reimbursement Date”), the
amount paid by Issuing Bank under such Letter of Credit, together with interest
at the interest rate for Base Rate Revolver Loans from the Reimbursement Date
until payment by Borrowers. The obligation of Borrowers to reimburse Issuing
Bank for any payment made under a Letter of Credit shall be absolute,
unconditional, irrevocable, and joint and several, and shall be paid without
regard to any lack of validity or enforceability of any Letter of Credit or the
existence of any claim, setoff, defense or other right that Borrowers may have
at any time against the beneficiary. Whether or not Borrower Agent submits a
Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing of
Base Rate Revolver Loans in an amount necessary to pay all amounts due Issuing
Bank on any Reimbursement Date and each Lender shall fund its Pro Rata share of
such Borrowing whether or not the Commitments have terminated, an Overadvance
exists or is created thereby, or the conditions in Section 6.2 are satisfied.

(b) Each Lender hereby irrevocably and unconditionally purchases from Issuing
Bank, without recourse or warranty, an undivided Pro Rata participation in all
LC Obligations outstanding from time to time. Issuing Bank is issuing Letters of
Credit in reliance upon this participation. If Borrowers do not make a payment
to Issuing Bank when due hereunder, Agent shall promptly notify Lenders and each
Lender shall within one Business Day after such notice pay to Agent, for the
benefit of Issuing Bank, the Lender’s Pro Rata share of such payment. Upon
request by a Lender, Issuing Bank shall provide copies of Letters of Credit and
LC Documents in its possession at such time.

(c) The obligation of each Lender to make payments to Agent for the account of
Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit
shall be absolute, unconditional and irrevocable, not subject to any
counterclaim, setoff, qualification or exception whatsoever, and shall be made
in accordance with this Agreement under all circumstances, irrespective of any
lack of validity or unenforceability of any Loan Documents; any draft,
certificate or other document presented under a Letter of Credit having been
determined to be forged, fraudulent, noncompliant, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
any waiver by Issuing Bank of a requirement that exists for its protection (and
not a Borrower’s protection) or that does not materially prejudice a Borrower;
any honor of an electronic demand for payment even if a draft is required; any
payment of an item presented after a Letter of Credit’s expiration date if
authorized by the UCC or applicable customs or practices; or any setoff or
defense that an Obligor may have with respect to any Obligations. Issuing Bank
does not assume any responsibility for any failure or delay in performance or
any breach by any Borrower or other Person of any obligations under any LC
Documents. Issuing Bank does not make to Lenders any express or implied
warranty, representation or guaranty with respect to any Letter of Credit,
Collateral, LC Document or Obligor. Issuing Bank shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of any LC Documents; the validity, genuineness, enforceability,
collectability, value or sufficiency of any Collateral or the perfection of any
Lien therein; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor.

(d) No Issuing Bank Indemnitee shall be liable to any Lender or other Person for
any action taken or omitted to be taken in connection with any Letter of Credit
or LC Document except as a result of its gross negligence or willful misconduct.
Issuing Bank may refrain from taking any action with respect to a Letter of
Credit until it receives written instructions (and in its discretion,
appropriate assurances) from the Lenders.

2.3.3. Cash Collateral. Subject to Section 2.1.5, if at any time (a) an Event of
Default exists, (b) the Commitment Termination Date occurs, or (c) five (5)
Business Days prior to the Revolver Termination Date, then Borrowers shall, at
Issuing Bank’s or Agent’s request, Cash Collateralize all outstanding Letters of
Credit. Borrowers shall, at Issuing Bank’s or Agent’s request at

 

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any time, Cash Collateralize the Fronting Exposure of any Defaulting Lender. If
Borrowers fail to provide any Cash Collateral as required hereunder, Lenders may
(and shall upon direction of Agent) advance, as Revolver Loans, the amount of
Cash Collateral required (whether or not the Commitments have terminated, an
Overadvance exists or the conditions in Section 6.2 are satisfied). If Borrowers
are required to provide any amount of Cash Collateral hereunder as a result of
the occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to Borrowers promptly after all Events of Default
have been waived.

2.3.4. Resignation of Issuing Bank. Issuing Bank may resign at any time upon
notice to Agent and Borrowers, and any resignation of Agent hereunder shall
automatically constitute its concurrent resignation as Issuing Bank. From the
effective date of such resignation, Issuing Bank shall have no obligation to
issue, amend, renew, extend or otherwise modify any Letter of Credit, but shall
otherwise continue to have all rights and obligations of an Issuing Bank
hereunder relating to any Letter of Credit issued by it prior to such date.
Agent shall promptly appoint a replacement Issuing Bank, which, as long as no
Event of Default exists, shall be reasonably acceptable to Borrowers.

2.3.5. Existing Letters of Credit. Any Letter of Credit Listed on Schedule 1.2
shall be deemed to have been issued pursuant hereto as of the Closing Date and
shall be subject to and governed by the terms and conditions hereof.

SECTION 3. INTEREST, FEES AND CHARGES

3.1. Interest.

3.1.1. Rates and Payment of Interest.

(a) The Obligations shall bear interest (i) if a Base Rate Loan, at the Base
Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR
Loan, at LIBOR for the applicable Interest Period, plus the Applicable Margin;
and (iii) if any other past due Obligation (including, to the extent permitted
by law, interest not paid when due), at the Base Rate in effect from time to
time, plus the Applicable Margin for Base Rate Revolver Loans.

(b) During an Insolvency Proceeding with respect to any Borrower, or during an
Event of Default pursuant to Section 11.1(a) if Agent or Required Lenders in
their discretion so elect, past due Obligations shall bear interest at the
Default Rate (whether before or after any judgment), payable on demand.

(c) Interest shall accrue from the date a Loan is advanced or Obligation is
incurred or payable, until paid in full by Borrowers, and shall in no event be
less than zero at any time. Interest accrued on Base Rate Loans shall be due and
payable in arrears, (i) on the first day of each Fiscal Quarter; (ii) on any
date of prepayment, with respect to the principal amount being prepaid; and
(iii) on the Commitment Termination Date. Interest accrued on LIBOR Loans shall
be due and payable in arrears, (i) on the last day of the Interest Period, or
for Interest Periods greater than 3 months, quarterly; (ii) on any date of
prepayment, with respect to the principal amount being prepaid; and (iii) on the
Commitment Termination Date. Interest accrued on any other Obligations shall be
due and payable as provided in the Loan Documents or, if no payment date is
specified, on demand.

3.1.2. Application of LIBOR to Outstanding Loans.

(a) Borrowers may on any Business Day elect to convert any portion of the Base
Rate Loans to, or to continue any LIBOR Loan at the end of its Interest Period
as, a LIBOR Loan. During any Default or Event of Default, Agent may (and shall
at the direction of Required Lenders) declare that no Loan may be made,
converted or continued as a LIBOR Loan.

 

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(b) To convert or continue Loans as LIBOR Loans, Borrower Agent shall give Agent
a Notice of Conversion/Continuation, no later than 11:00 a.m. at least two
Business Days before the requested conversion or continuation date. Promptly
after receiving any such notice, Agent shall notify each Lender thereof. Subject
to Section 3.5 and Section 3.6, each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be 30 days if not
specified). If, upon the expiration of any Interest Period for any LIBOR Loan,
Borrowers shall have failed to deliver a Notice of Conversion/Continuation, they
shall be deemed to have elected to convert such Loan into a Base Rate Loan.
Agent does not warrant or accept responsibility for, nor shall it have any
liability with respect to, administration, submission or any other matter
related to any rate described in the definition of LIBOR.

3.1.3. Interest Periods. In connection with the making, conversion or
continuation of any LIBOR Loans, Borrowers shall select an interest period
(“Interest Period”) to apply, which interest period shall be 30, 60, 90 or 180
days (if available from all Lenders); provided, however, that:

(a) the Interest Period shall begin on the date the Loan is made or continued
as, or converted into, a LIBOR Loan, and shall expire on the numerically
corresponding day in the calendar month at its end.

(b) if any Interest Period begins on a day for which there is no corresponding
day in the calendar month at its end or if such corresponding day falls after
the last Business Day of such month, then the Interest Period shall expire on
the last Business Day of such month; and if any Interest Period would otherwise
expire on a day that is not a Business Day, the period shall expire on the next
Business Day; and

(c) no Interest Period shall extend beyond the Revolver Termination Date.

3.1.4. Interest Rate Not Ascertainable. If, due to any circumstance affecting
the London interbank market, Agent determines that adequate and fair means do
not exist for ascertaining LIBOR on any applicable date or that any Interest
Period is not available on the basis provided herein, then Agent shall
immediately notify Borrowers of such determination. Until Agent notifies
Borrowers that such circumstance no longer exists, the obligation of Lenders to
make affected LIBOR Loans shall be suspended and no further Loans may be
converted into or continued as such LIBOR Loans. Upon receipt of such notice,
Borrower Agent may revoke any pending request for a Borrowing of, conversion to
or continuation of a LIBOR Loan or, failing that, will be deemed to have
submitted a request for a Base Rate Loan.

3.2. Fees.

3.2.1. Unused Line Fee. Borrowers shall pay to Agent, for the Pro Rata benefit
of Lenders, a fee equal to the Unused Line Fee Rate times the amount by which
the Revolver Commitments exceed the average daily Revolver Usage during any
Fiscal Quarter. Such fee shall be payable in arrears, on the first day of each
Fiscal Quarter and on the Commitment Termination Date.

3.2.2. LC Facility Fees. Borrowers shall pay (a) to Agent, for the Pro Rata
benefit of Lenders, a fee equal to the Applicable Margin in effect for LIBOR
Revolver Loans times the average daily Stated Amount of Letters of Credit, which
fee shall be payable quarterly in arrears, on the first day of each Fiscal
Quarter; (b) to Agent, for its own account, a fronting fee equal to 0.125% per

 

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annum on the Stated Amount of each Letter of Credit, which fee shall be payable
quarterly in arrears, on the first day of each Fiscal Quarter; and (c) to
Issuing Bank, for its own account, all customary charges associated with the
issuance, amending, negotiating, payment, processing, transfer and
administration of Letters of Credit, which charges shall be paid as and when
incurred.

3.2.3. [Reserved].

3.2.4. Fee Letters. Borrowers shall pay all fees set forth in any fee letter
signed by a Borrower which is executed in connection with this Agreement.

3.3. Computation of Interest, Fees, Yield Protection. All interest, as well as
fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days (365 days or 366 days, as
applicable for Base Rate Loans). Each determination by Agent of any interest,
fees or interest rate hereunder shall be final, conclusive and binding for all
purposes, absent manifest error. All fees shall be fully earned when due and
shall not be subject to rebate, refund or proration. All fees payable under
Section 3.2 are compensation for services and are not, and shall not be deemed
to be, interest or any other charge for the use, forbearance or detention of
money. A certificate as to amounts payable by Borrowers under Section 3.4, 3.6,
3.7, 3.9 or 5.9, submitted to Borrower Agent by Agent or the affected Lender
shall be final, conclusive and binding for all purposes, absent manifest error,
and Borrowers shall pay such amounts to the appropriate party within 10 days
following receipt of the certificate.

3.4. Reimbursement Obligations. Obligors shall pay all Extraordinary Expenses
promptly upon written request (including documentation reasonably supporting
such request). Borrowers shall also reimburse (a) (i) Agent (and with respect to
clause (a)(i)(B), during the continuation of an Event of Default, the Lenders)
for all reasonable and documented out-of-pocket legal, accounting, appraisal,
consulting, and other fees and expenses (which in the case of clauses (A) and
(B) of this Section 3.4(a)(i), includes such fees and expenses of one (1) lead
counsel for Agent and Lenders, one (1) additional local counsel in each
applicable jurisdiction, and with respect to clause (a)(i)(B), solely in the
case of a conflict of interest, one (1) additional counsel to Agent and the
affected Lenders) incurred by it in connection with (A) negotiation and
preparation of any Loan Documents, including any modification thereof; and
(B) administration of and actions relating to any Collateral, Loan Documents and
transactions contemplated thereby, including any actions taken to perfect or
maintain priority of Agent’s Liens on any Collateral, to maintain any insurance
required hereunder or to verify Collateral; (b) subject to the limits of
Section 10.1.1(b), Agent for all reasonable and documented fees and expenses
associated with any examination or appraisal with respect to any Obligor or
Collateral by Agent’s personnel or a third party; and (c) while an Event of
Default exists, Agent for all reasonable and documented out-of-pocket fees and
expenses of other advisors and professional engaged by Agent. If, for any reason
(including inaccurate reporting in any Borrower Materials), it is determined
that a higher Applicable Margin should have applied to a period than was
actually applied, then the proper margin shall be applied retroactively and
Borrowers shall promptly pay to Agent, for the ratable benefit of Lenders, an
amount equal to the difference between the amount of interest and fees that
would have accrued using the proper margin and the amount actually paid. All
amounts payable by Borrowers under this Section shall be due promptly following
written demand as set forth herein.

3.5. Illegality. If any Lender determines that any Applicable Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender to perform any of its obligations hereunder, to make, maintain,
fund or charge applicable interest or fees with respect to any Loan or Letter of
Credit, or to determine or charge interest based on LIBOR, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by such Lender to Agent, any obligation of such
Lender to perform such obligations, to make, maintain or fund the Loan or
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in the Letter of Credit (or to charge interest or fees with respect thereto), or
to continue or convert Loans as LIBOR Loans, shall be suspended until such
Lender notifies Agent that the circumstances giving rise to such determination
no longer exist. Upon delivery of such notice, Borrowers shall prepay the
applicable Loan, Cash Collateralize the applicable LC Obligations or, if
applicable, convert LIBOR Loan(s) of such Lender to Base Rate Loan(s), either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain the LIBOR Loan to such day, or immediately, if such Lender
may not lawfully continue to maintain the LIBOR Loan. Upon any such prepayment
or conversion, Borrowers shall also pay accrued interest on the amount so
prepaid or converted.

3.6. Inability to Determine Rates. Agent will promptly notify Borrower Agent and
Lenders if, in connection with any Loan or request for a Loan, (a) Agent
determines that (i) Dollar deposits are not being offered to banks in the London
interbank Eurodollar market for the applicable Loan amount or Interest Period,
or (ii) adequate and reasonable means do not exist for determining LIBOR for the
Interest Period; or (b) Agent or Required Lenders determine for any reason that
LIBOR for the Interest Period does not adequately and fairly reflect the cost to
Lenders of funding the Loan. Thereafter, Lenders’ obligations to make or
maintain affected LIBOR Loans and utilization of the LIBOR component (if
affected) in determining Base Rate shall be suspended until Agent (upon
instruction by Required Lenders) withdraws the notice. Upon receipt of such
notice, Borrower Agent may revoke any pending request for a LIBOR Loan or,
failing that, will be deemed to have requested a Base Rate Loan.

3.7. Increased Costs; Capital Adequacy.

3.7.1. Increased Costs Generally. If any Change in Law shall:

(a) impose, modify or deem applicable any reserve, liquidity, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in calculating LIBOR) or
Issuing Bank;

(b) subject any Recipient to Taxes (other than (i) Indemnified Taxes, (ii) Taxes
described in clauses (b) through (d) of the definition of Excluded Taxes, and
(iii) Connection Income Taxes) with respect to any Loan, Letter of Credit,
Commitment or other obligations, or its deposits, reserves, other liabilities or
capital attributable thereto; or

(c) impose on any Lender, Issuing Bank or interbank market any other condition,
cost or expense (in each case, other than Taxes) affecting any Loan, Letter of
Credit, participation in LC Obligations, Commitment or Loan Document; and the
result thereof shall be to increase the cost to a Lender of making or
maintaining any Loan or Commitment, or converting to or continuing any interest
option for a Loan, or to increase the cost to a Lender or Issuing Bank of
participating in, issuing or maintaining any Letter of Credit (or of maintaining
its obligation to participate in or to issue any Letter of Credit), or to reduce
the amount of any sum received or receivable by a Lender or Issuing Bank
hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or Issuing Bank, Borrowers will pay to it such additional
amount(s) as will compensate it for the additional costs incurred or reduction
suffered.

3.7.2. Capital Requirements. If a Lender or Issuing Bank determines that a
Change in Law affecting such Lender or Issuing Bank or its holding company, if
any, regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s, Issuing Bank’s or holding
company’s capital as a consequence of this Agreement, or such Lender’s or
Issuing Bank’s Commitments, Loans, Letters of Credit or participations in LC
Obligations or Loans, to a level below that which such Lender, Issuing Bank or
holding company could have achieved but for such

 

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Change in Law (taking into consideration its policies with respect to capital
adequacy), then from time to time Borrowers will pay to such Lender or Issuing
Bank, as the case may be, such additional amounts as will compensate it or its
holding company for the reduction suffered.

3.7.3. LIBOR Loan Reserves. If any Lender is required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits, Borrowers shall pay additional interest to such Lender on each
LIBOR Loan equal to the costs of such reserves allocated to the Loan by the
Lender (as determined by it in good faith, which determination shall be
conclusive). The additional interest shall be due and payable on each interest
payment date for the Loan; provided, however, that if the Lender notifies
Borrowers (with a copy to Agent) of the additional interest less than 10 days
prior to the interest payment date, then such interest shall be payable 10 days
after Borrowers’ receipt of the notice.

3.7.4. Compensation. Failure or delay on the part of any Lender or Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
its right to demand such compensation, but Borrowers shall not be required to
compensate a Lender or Issuing Bank for any increased costs or reductions
suffered more than nine months (plus any period of retroactivity of the Change
in Law giving rise to the demand) prior to the date that the Lender or Issuing
Bank notifies Borrower Agent of the applicable Change in Law and of such
Lender’s or Issuing Bank’s intention to claim compensation therefor.

3.8. Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if Borrowers are required to pay any
Indemnified Taxes or additional amounts with respect to a Lender under
Section 5.9, then at the request of Borrower Agent, such Lender shall use
reasonable efforts to designate a different Lending Office or to assign its
rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the judgment of such Lender, such designation or assignment
(a) would eliminate the need for such notice or reduce amounts payable or to be
withheld in the future, as applicable; and (b) would not subject the Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
it or unlawful. Borrowers shall promptly pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

3.9. Funding Losses. If for any reason (a) any Borrowing, conversion or
continuation of a LIBOR Loan does not occur on the date specified therefor in a
Notice of Borrowing or Notice of Conversion/Continuation (whether or not
withdrawn), (b) any repayment or conversion of a LIBOR Loan occurs on a day
other than the end of its Interest Period, (c) Borrowers fail to repay a LIBOR
Loan when required hereunder, or (d) a Lender (other than a Defaulting Lender)
is required to assign a LIBOR Loan prior to the end of its Interest Period
pursuant to Section 13.4, then Borrowers shall pay to Agent its customary
administrative charge and to each Lender all losses, expenses and fees arising
from redeployment of funds or termination of match funding. For purposes of
calculating amounts payable under this Section, a Lender shall be deemed to have
funded a LIBOR Loan by a matching deposit or other borrowing in the London
interbank market for a comparable amount and period, whether or not the Loan was
in fact so funded.

3.10. Maximum Interest. Notwithstanding anything to the contrary contained in
any Loan Document, the interest paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by Applicable Law (“maximum rate”). If Agent or any Lender shall receive
interest in an amount that exceeds the maximum rate, the excess interest shall
be applied to the principal of the Obligations or, if it exceeds such unpaid
principal, refunded to Borrowers. In determining whether the interest contracted
for, charged or received by Agent or a Lender exceeds the maximum rate, such
Person may, to the extent permitted by Applicable Law, (a) characterize any
payment that is not principal as an expense, fee or premium rather than
interest; (b) exclude voluntary prepayments and the effects thereof; and
(c) amortize, prorate, allocate and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.

 

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SECTION 4. LOAN ADMINISTRATION

4.1. Manner of Borrowing and Funding Revolver Loans.

4.1.1. Notice of Borrowing.

(a) To request Revolver Loans, Borrower Agent shall give Agent a Notice of
Borrowing by 11:00 a.m. (i) on the requested funding date, in the case of Base
Rate Loans, and (ii) at least two Business Days prior to the requested funding
date, in the case of LIBOR Loans. Notices received by Agent after such time
shall be deemed received on the next Business Day. Subject to Section 3.5 and
Section 3.6, each Notice of Borrowing shall be irrevocable and shall specify
(A) the Borrowing amount, (B) the requested funding date (which must be a
Business Day), (C) whether the Borrowing is to be made as a Base Rate Loan or
LIBOR Loan, and (D) in the case of a LIBOR Loan, the applicable Interest Period
(which shall be deemed to be 30 days if not specified).

(b) Unless payment is otherwise timely made by Borrowers, the becoming due of
any Obligation (whether principal, interest, fees or other charges, including
Extraordinary Expenses, LC Obligations, Cash Collateral and Secured Bank Product
Obligations) shall be deemed to be a request for a Base Rate Revolver Loan on
the due date in the amount due and the Loan proceeds shall be disbursed as
direct payment of such Obligation. In addition, Agent may, at its option, charge
such amount against any operating, investment or other account of a Borrower
maintained with Agent or any of its Affiliates.

(c) If a Borrower maintains a controlled disbursement account with Agent or any
of its Affiliates, then presentation for payment in the account of a Payment
Item when there are insufficient funds to cover it shall be deemed to be a
request for a Base Rate Revolver Loan on the presentation date, in the amount of
the Payment Item. Proceeds of the Loan may be disbursed directly to the account
or other applicable account.

4.1.2. Fundings by Lenders. Except for Swingline Loans, Agent shall endeavor to
notify Lenders of each Notice of Borrowing (or deemed request for a Borrowing)
by 1:00 p.m. on the proposed funding date for a Base Rate Loan or by 3:00 p.m.
two Business Days before a proposed funding of a LIBOR Loan. Each Lender shall
fund its Pro Rata share of a Borrowing in immediately available funds not later
than 3:00 p.m. on the requested funding date, unless Agent’s notice is received
after the times provided above, in which case Lender shall fund by 11:00 a.m. on
the next Business Day. Subject to its receipt of such amounts from Lenders,
Agent shall disburse the Borrowing proceeds in a manner directed by Borrower
Agent and acceptable to Agent. Unless Agent receives (in sufficient time to act)
written notice from a Lender that it will not fund its share of a Borrowing,
Agent may assume that such Lender has deposited or promptly will deposit its
share with Agent, and Agent may disburse a corresponding amount to Borrowers. If
a Lender’s share of a Borrowing or of a settlement under Section 4.1.3(b) is not
received by Agent, then Borrowers agree to repay to Agent on demand the amount
of such share, together with interest thereon from the date disbursed until
repaid, at the rate applicable to the Borrowing. A Lender or Issuing Bank may
fulfill its obligations under Loan Documents through one or more Lending
Offices, and this shall not affect any obligation of Obligors under the Loan
Documents or with respect to any Obligations.

4.1.3. Swingline Loans; Settlement.

(a) Generally. To fulfill any request for a Base Rate Revolver Loan hereunder,
Agent may in its discretion advance Swingline Loans to Borrowers, up to an
aggregate outstanding amount of 10% of the aggregate Revolver Commitments.
Swingline Loans shall constitute Revolver Loans for all purposes, except that
payments thereon shall be made to Agent for its own account until Lenders have
funded their participations therein as provided below.

 

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(b) Settlement. Settlement of Loans, including Swingline Loans, among Lenders
and Agent (which settlement is solely among them and not for the benefit of or
enforceable by the Borrower) shall take place on a date determined from time to
time by Agent (but at least weekly, unless the settlement amount is de minimis),
on a Pro Rata basis in accordance with the Settlement Report delivered by Agent
to Lenders. Between settlement dates, Agent may in its discretion apply payments
on Revolver Loans to Swingline Loans, regardless of any designation by Borrowers
or anything herein to the contrary. Each Lender hereby purchases, without
recourse or warranty, an undivided Pro Rata participation in all Swingline Loans
outstanding from time to time until settled. If a Swingline Loan cannot be
settled among Lenders, whether due to an Obligor’s Insolvency Proceeding or for
any other reason, each Lender shall pay the amount of its participation in the
Loan to Agent, in immediately available funds, within one Business Day after
Agent’s request therefor. Lenders’ obligations to make settlements and to fund
participations are absolute, irrevocable and unconditional, without offset,
counterclaim or other defense, and whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6.2 are
satisfied.

4.1.4. Notices. If Borrowers request, convert or continue Loans, select interest
rates or transfer funds based on telephonic or electronic instructions to Agent,
Borrowers shall confirm each such request by prompt delivery to Agent of a
Notice of Borrowing or Notice of Conversion/Continuation, as applicable. Neither
Agent nor any Lender shall have any liability for any loss suffered by a
Borrower as a result of Agent or any Lender acting upon its understanding of
telephonic or electronic instructions from a person believed in good faith to be
authorized to give such instructions on a Borrower’s behalf.

4.2. Defaulting Lender. Notwithstanding anything herein to the contrary:

4.2.1. Reallocation of Pro Rata Share; Amendments. For purposes of determining
Lenders’ obligations or rights to fund, participate in or receive collections
with respect to Loans and Letters of Credit (including existing Swingline Loans,
Protective Advances and LC Obligations), Agent may in its discretion reallocate
Pro Rata shares of Loans and Letters of Credit by excluding a Defaulting
Lender’s Commitments and Loans from the calculation of shares. A Defaulting
Lender shall have no right to vote on any amendment, waiver or other
modification of a Loan Document, except as provided in Section 14.1.1(c).

4.2.2. Payments; Fees. Agent may, in its discretion, receive and retain any
amounts payable to a Defaulting Lender under the Loan Documents, and a
Defaulting Lender shall be deemed to have assigned to Agent such amounts until
all Obligations owing to Agent, non-Defaulting Lenders and other Secured Parties
have been paid in full. Agent may use such amounts to cover the Defaulting
Lender’s defaulted obligations, to Cash Collateralize such Lender’s Fronting
Exposure, to readvance the amounts to Borrowers or to repay Obligations. A
Lender shall not be entitled to receive any fees accruing hereunder while it is
a Defaulting Lender and its unfunded Commitment shall be disregarded for
purposes of calculating the unused line fee under Section 3.2.1. If any LC
Obligations owing to a Defaulted Lender are reallocated to other Lenders, fees
attributable to such LC Obligations under Section 3.2.2 shall be paid to such
Lenders. Agent shall be paid all fees attributable to LC Obligations that are
not reallocated.

4.2.3. Status; Cure. Agent may determine in its discretion that a Lender
constitutes a Defaulting Lender and the effective date of such status shall be
conclusive and binding on all parties, absent manifest error. Borrowers, Agent
and Issuing Bank may agree in writing that a Lender has ceased to be a
Defaulting Lender, whereupon Pro Rata shares shall be reallocated without
exclusion of the

 

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reinstated Lender’s Commitments and Loans, and the Revolver Usage and other
exposures under the Revolver Commitments shall be reallocated among Lenders and
settled by Agent (with appropriate payments by the reinstated Lender, including
its payment of breakage costs for reallocated LIBOR Loans) in accordance with
the readjusted Pro Rata shares of Loans and Letters of Credit. Unless expressly
agreed by Borrowers, Agent and Issuing Bank, or as expressly provided herein
with respect to Bail-In Actions and related matters, no reallocation of
Commitments and Loans to non-Defaulting Lenders or reinstatement of a Defaulting
Lender shall constitute a waiver or release of claims against such Lender. The
failure of any Lender to fund a Loan, to make a payment in respect of LC
Obligations or otherwise to perform obligations hereunder shall not relieve any
other Lender of its obligations under any Loan Document. No Lender shall be
responsible for default by another Lender.

4.3. Number and Amount of LIBOR Loans; Determination of Rate. Each Borrowing of
LIBOR Loans when made shall be in a minimum amount of $1,000,000, plus an
increment of $500,000 in excess thereof. No more than seven (7) Borrowings of
LIBOR Loans may be outstanding at any time, and all LIBOR Loans having the same
length and beginning date of their Interest Periods shall be aggregated together
and considered one Borrowing for this purpose. Upon determining LIBOR for any
Interest Period requested by Borrowers, Agent shall promptly notify Borrowers
thereof by telephone or electronically and, if requested by Borrowers, shall
confirm any telephonic notice in writing.

4.4. Borrower Agent. Each Borrower hereby designates Parent (“Borrower Agent”)
as its representative and agent for all purposes under the Loan Documents,
including requests for and receipt of Loans and Letters of Credit, designation
of interest rates, delivery or receipt of communications, delivery of Borrower
Materials, payment of Obligations, requests for waivers, amendments or other
accommodations, actions under the Loan Documents (including in respect of
compliance with covenants), and all other dealings with Agent, Issuing Bank or
any Lender. Borrower Agent hereby accepts such appointment. Agent and Lenders
shall be entitled to rely upon, and shall be fully protected in relying upon,
any notice or communication (including any notice of borrowing) delivered by
Borrower Agent on behalf of any Borrower. Agent and Lenders may give any notice
or communication with a Borrower hereunder to Borrower Agent on behalf of such
Borrower. Each of Agent, Issuing Bank and Lenders shall have the right, in its
discretion, to deal exclusively with Borrower Agent for all purposes under the
Loan Documents. Each Borrower agrees that any notice, election, communication,
delivery, representation, agreement, action, omission or undertaking by Borrower
Agent shall be binding upon and enforceable against such Borrower.

4.5. One Obligation. The Loans, LC Obligations and other Obligations constitute
one general obligation of Obligors and are secured by Agent’s Lien on all
Collateral; provided, however, that Agent and each Lender shall be deemed to be
a creditor of, and the holder of a separate claim against, each Obligor to the
extent of any Obligations jointly or severally owed by such Obligor.

4.6. Effect of Termination. On the effective date of the termination of all
Commitments, the Obligations shall be immediately due and payable, and each
Secured Bank Product Provider may terminate its Bank Products. Until Full
Payment, all undertakings of Obligors contained in the Loan Documents shall
continue, and Agent shall retain its Liens in the Collateral and all of its
rights and remedies under the Loan Documents. Notwithstanding Full Payment, in
the event Agent has incurred any damages as a result of the dishonor or return
of any Payment Item previously applied to the Obligations, Agent’s Liens shall
not be terminated until Agent receives (a) a written agreement, executed by
Borrowers indemnifying Agent and Lenders from any such damages or (b) such Cash
Collateral as Agent, in its Permitted Discretion, deems necessary to protect
against such damages. Upon Full Payment (other than contingent obligations for
which no claims have been asserted), Agent shall execute and deliver any and all
releases of Liens, termination statements or other documents reasonably
requested by Borrowers and/or file such instruments, releases, UCC-3 filings and
other documents as requested by the Borrowers to evidence such release, all at
the sole expense of the Borrowers. Upon Full Payment, all promissory

 

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note(s) to delivered to a Lender pursuant to Section 2.1.2 shall be deemed
automatically cancelled and of no further force or effect and the recipient of
any such promissory note(s) shall, upon reasonable request of Borrower Agent,
return such promissory note(s) to Borrower Agent. Sections 2.3, 3.4, 3.6, 3.7,
3.9, 5.5, 5.9, 5.10, 12, 14.2, this Section 4.6, and each indemnity or waiver
given by an Obligor or Lender in any Loan Document, shall survive Full Payment.

SECTION 5. PAYMENTS

5.1. General Payment Provisions. All payments of Obligations shall be made in
Dollars, without offset, counterclaim or defense of any kind, free and clear of
(and, except as provided by Applicable Law, without deduction for) any Taxes,
and in immediately available funds, not later than 12:00 noon on the due date.
Any payment after such time shall be deemed made on the next Business Day. Any
payment of a LIBOR Loan prior to the end of its Interest Period shall be
accompanied by all amounts due under Section 3.9.

5.2. Repayment of Revolver Loans. Revolver Loans shall be due and payable in
full on the Revolver Termination Date, unless payment is sooner required
hereunder. Revolver Loans may be prepaid from time to time in a minimum amount
of $1,000,000, or an increment of $500,000 in excess thereof, without penalty or
premium other than all amounts due under Section 3.9, with prior written notice
by Borrower Agent to Agent. Subject to Section 2.1.5, if an Overadvance exists
at any time, Borrowers shall, on the sooner of Agent’s demand or the first
Business Day after any Borrower has knowledge thereof, repay Revolver Loans in
an amount sufficient to reduce Revolver Usage to the Borrowing Base. If any
Asset Disposition includes the disposition of Accounts or Inventory, Borrowers
shall apply Net Proceeds to repay Revolver Loans equal to the greater of (a) the
net book value of such Accounts and Inventory, or (b) the reduction in Borrowing
Base resulting from the disposition.

5.3. [Reserved].

5.4. Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Obligors as provided in
the applicable Loan Documents or, if no payment date is specified, promptly upon
written demand in accordance with the terms hereof.

5.5. Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of any Obligor or against any
Obligations. If any payment by or on behalf of Borrowers is made to Agent,
Issuing Bank or any Lender, or if Agent, Issuing Bank or any Lender exercises a
right of setoff, and any of such payment or setoff is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by Agent, Issuing Bank or a Lender in
its discretion) to be repaid to a trustee, receiver or any other Person, then
the Obligation originally intended to be satisfied, and all Liens, rights and
remedies relating thereto, shall be revived and continued in full force and
effect as if such payment or setoff had not occurred.

5.6. Application and Allocation of Payments.

5.6.1. Application. Payments made by Borrowers hereunder shall be applied
(a) first, as specifically required hereby; (b) second, to Obligations then due
and owing in such manner as Agent deems advisable, but whenever possible, any
prepayment of Loans shall be applied first to Base Rate Loans and then to LIBOR
Loans; (b) third, to other Obligations specified by Borrowers; and (c) fourth,
as determined by Agent in its discretion.

 

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5.6.2. Post-Default Allocation. Notwithstanding anything in any Loan Document to
the contrary, during an Event of Default under Section 11.1(j), or during any
other Event of Default at the discretion of Agent or Required Lenders, monies to
be applied to the Obligations, whether arising from payments by Obligors,
realization on Collateral, setoff or otherwise, shall be allocated as follows:

(a) first, to all fees, indemnification, costs and expenses, including
Extraordinary Expenses, owing to Agent;

(b) second, to all other amounts owing to Agent, including Swingline Loans,
Protective Advances, and Loans and participations that a Defaulting Lender has
failed to settle or fund;

(c) third, to all amounts owing to Issuing Bank;

(d) fourth, to all Obligations (other than Secured Bank Product Obligations)
constituting fees, indemnification, costs or expenses owing to Lenders;

(e) fifth, to all Obligations (other than Secured Bank Product Obligations)
constituting interest;

(f) sixth, to all Loans, to Cash Collateralize all LC Obligations and to Secured
Bank Product Obligations arising under Hedge Agreements (including Cash
Collateralization thereof) up to the amount of Reserves existing therefor;

(g) seventh, to all other Secured Bank Product Obligations;

(h) eighth, to all remaining Obligations; and

(i) last, to the Obligors.

Amounts shall be applied to payment of each category of Obligations only after
Full Payment of amounts payable from time to time under all preceding
categories. If amounts are insufficient to satisfy a category, they shall be
paid ratably among outstanding Obligations in the category. Monies and proceeds
obtained from an Obligor shall not be applied to its Excluded Swap Obligations,
but appropriate adjustments shall be made with respect to amounts obtained from
other Obligors to preserve the allocations in each category. Agent shall have no
obligation to calculate the amount of any Secured Bank Product Obligation and
may request a reasonably detailed calculation thereof from a Secured Bank
Product Provider. If the provider fails to deliver the calculation within five
days following request, Agent may assume the amount is zero. The allocations set
forth in this Section are solely to determine the rights and priorities among
Secured Parties, and may be changed by agreement of the affected Secured
Parties, without the consent of any Obligor. This Section is not for the benefit
of or enforceable by any Obligor, and each Borrower irrevocably waives the right
to direct the application of any payments or Collateral proceeds subject to this
Section.

5.6.3. Erroneous Application. Agent shall not be liable for any application of
amounts made by it in good faith and, if any such application is subsequently
determined to have been made in error, the sole recourse of any Lender or other
Person to which such amount should have been paid shall be to recover the amount
from the Person that actually received it (and, if such amount was received by a
Secured Party, the Secured Party agrees to return it).

5.7. Dominion Account. During any Dominion Trigger Period, the ledger balance in
the main Dominion Account as of the end of a Business Day shall be applied to
the Obligations at the beginning of the next Business Day. Any resulting credit
balance shall not accrue interest in favor of Borrowers and shall be made
available to Borrowers as long as no Event of Default exists.

 

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5.8. Account Stated. Agent shall maintain, in accordance with its customary
practices, loan account(s) evidencing the Debt of Borrowers hereunder. Any
failure of Agent to record anything in a loan account, or any error in doing so,
shall not limit or otherwise affect the obligation of Borrowers to pay any
amount owing hereunder. Entries made in a loan account shall constitute
presumptive evidence of the information contained therein. If any information
contained in a loan account is provided to or inspected by any Person, the
information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific information is
subject to dispute.

5.9. Taxes.

5.9.1. Payments Free of Taxes; Obligation to Withhold; Tax Payment.

(a) All payments of Obligations by Obligors shall be made without deduction or
withholding for any Taxes, except as required by Applicable Law. If Applicable
Law (as determined by Agent or an Obligor in its good faith discretion) requires
the deduction or withholding of any Tax from any such payment by Agent or an
Obligor, then Agent or such Obligor shall be entitled to make such deduction or
withholding.

(b) Subject to Section 5.9.1(a), if Agent or any Obligor is required by the Code
to withhold or deduct Taxes, including backup withholding and withholding taxes,
from any payment, then (i) Agent shall pay the full amount that it determines is
to be withheld or deducted to the relevant Governmental Authority pursuant to
the Code, and (ii) to the extent the withholding or deduction is made on account
of Indemnified Taxes, the sum payable by the applicable Obligor shall be
increased as necessary so that the Recipient receives an amount equal to the sum
it would have received had no such withholding or deduction been made.

(c) If Agent or any Obligor is required by any Applicable Law other than the
Code to withhold or deduct Taxes from any payment, then (i) Agent or such
Obligor, to the extent required by Applicable Law, shall timely pay the full
amount to be withheld or deducted to the relevant Governmental Authority, and
(ii) to the extent any such withholding or deduction is made on account of
Indemnified Taxes, the sum payable by the applicable Obligor shall be increased
as necessary so that the Recipient receives an amount equal to the sum it would
have received had no such withholding or deduction been made.

5.9.2. Payment of Other Taxes. Without limiting the foregoing, Borrowers shall
timely pay to the relevant Governmental Authority in accordance with Applicable
Law, or at Agent’s option, timely reimburse Agent for payment of, any Other
Taxes.

5.9.3. Tax Indemnification.

(a) Each Obligor shall indemnify and hold harmless, on a joint and several
basis, each Recipient against any Indemnified Taxes (including those imposed or
asserted on or attributable to amounts payable under this Section) payable or
paid by a Recipient or required to be withheld or deducted from a payment to a
Recipient, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. Each Obligor
shall indemnify and hold harmless Agent against any amount that a Lender or
Issuing Bank fails for any reason to pay indefeasibly to Agent as required
pursuant to paragraph (b) of this Section; provided that, such Lender or Issuing
Bank shall indemnify the applicable Obligor and shall make payment in respect
thereof, within 10 days after written demand therefor, to the extent of any
payment by such Obligor to the Agent pursuant to this sentence with respect to
Taxes described in clauses (ii) and (iii) of Section 5.9.3(b). Each Obligor
shall make payment within 10 days after demand for any amount or liability
payable under this Section. A certificate as to the amount of such payment or
liability delivered to Borrower Agent by a Lender or Issuing Bank (with a copy
to Agent), or by Agent on its own behalf or on behalf of any Recipient, shall be
conclusive absent manifest error.

 

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(b) Each Lender and Issuing Bank shall indemnify and hold harmless, on a several
basis, (i) Agent against any Indemnified Taxes attributable to such Lender or
Issuing Bank (but only to the extent Obligors have not already paid or
reimbursed Agent therefor and without limiting Obligors’ obligation to do so),
(ii) Agent and Obligors, as applicable, against any Taxes attributable to such
Lender’s failure to maintain a Participant register as required hereunder, and
(iii) Agent and Obligors, as applicable, against any Excluded Taxes attributable
to such Lender or Issuing Bank, in each case, that are payable or paid by Agent
or an Obligor in connection with any Obligations, and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. Each Lender and Issuing Bank shall make payment within 10 days after
demand for any amount or liability payable under this Section. A certificate as
to the amount of such payment or liability delivered to any Lender or Issuing
Bank by Agent shall be conclusive absent manifest error.

5.9.4. Evidence of Payments. As soon as practicable after payment by an Obligor
of any Taxes pursuant to this Section, Borrower Agent shall deliver to Agent the
original or a certified copy of a receipt issued by the appropriate Governmental
Authority evidencing the payment, a copy of any return required by Applicable
Law to report the payment or other evidence of payment satisfactory to Agent in
its Permitted Discretion.

5.9.5. Treatment of Certain Refunds. Unless required by Applicable Law, at no
time shall Agent have any obligation to file for or otherwise pursue on behalf
of a Lender or Issuing Bank, nor have any obligation to pay to any Lender or
Issuing Bank, any refund of Taxes withheld or deducted from funds paid for the
account of a Lender or Issuing Bank. If a Recipient determines in its discretion
exercised in good faith that it has received a refund of Taxes that were
indemnified by Borrowers or with respect to which a Borrower paid additional
amounts pursuant to this Section, it shall pay the amount of such refund to
Borrowers (but only to the extent of indemnity payments or additional amounts
actually paid by Borrowers with respect to the Taxes giving rise to the refund),
net of all out-of-pocket expenses (including Taxes) incurred by such Recipient
and without interest (other than interest paid by the relevant Governmental
Authority with respect to such refund). Obligors shall, upon request by the
Recipient, repay to the Recipient such amount paid over to Obligors (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) if the Recipient is required to repay such refund to the Governmental
Authority. Notwithstanding anything herein to the contrary, no Recipient shall
be required to pay any amount to Borrowers if such payment would place it in a
less favorable net after-Tax position than it would have been in if the Tax
subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional
amounts with respect to such Tax had never been paid. In no event shall Agent or
any Recipient be required to make its tax returns (or any other information
relating to its taxes that it deems confidential) available to any Obligor or
other Person.

5.9.6. Survival. Each party’s obligations under Sections 5.9 and 5.10 shall
survive the resignation or replacement of Agent or any assignment of rights by
or replacement of a Lender or Issuing Bank, the termination of the Commitments,
and the repayment, satisfaction, discharge or Full Payment of any Obligations.

 

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5.10. Lender Tax Information.

5.10.1. Status of Lenders. Any Lender that is entitled to an exemption from or
reduction of withholding Tax with respect to payments of Obligations shall
deliver to Borrower Agent and Agent properly completed and executed
documentation reasonably requested by Borrower Agent or Agent as will permit
such payments to be made without or at a reduced rate of withholding. In
addition, any Lender, if reasonably requested by Borrower Agent or Agent, shall
deliver such other documentation prescribed by Applicable Law or reasonably
requested by Borrowers or Agent to enable them to determine whether such Lender
is subject to backup withholding or information reporting requirements.
Notwithstanding the foregoing, such documentation (other than documentation
described in Sections 5.10.2(a), (b) and (d)) shall not be required if a Lender
reasonably believes delivery of the documentation would subject it to any
material unreimbursed cost or expense or would materially prejudice its legal or
commercial position.

5.10.2. Documentation. Without limiting the foregoing, if any Borrower is a U.S.
Person,

(a) Any Lender that is a U.S. Person shall deliver to Borrower Agent and Agent
on or prior to the date on which such Lender becomes a Lender hereunder (and
from time to time thereafter upon reasonable request of Borrowers or Agent),
executed copies of IRS Form W-9, certifying that such Lender is exempt from U.S.
federal backup withholding Tax;

(b) Any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower Agent and Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender hereunder (and from time to time thereafter upon reasonable
request of Borrower Agent or Agent), whichever of the following is applicable:

(i) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party, (x) with respect to payments of
interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or IRS
Form W-8BEN, as applicable) establishing an exemption from or reduction of U.S.
federal withholding Tax pursuant to the “interest” article of such tax treaty,
and (y) with respect to other payments under the Loan Documents, IRS Form
W-8BEN-E (or IRS Form W-8BEN, as applicable) establishing an exemption from or
reduction of U.S. federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;

(ii) executed copies of IRS Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate in form
satisfactory to Agent to the effect that such Foreign Lender is not a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the
Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of
the Code (“U.S. Tax Compliance Certificate”), and (y) executed copies of IRS
Form W-8BEN-E (or IRS Form W-8BEN, as applicable); or

(iv) to the extent a Foreign Lender is not the beneficial owner, executed copies
of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E (or IRS
Form W-8BEN, as applicable), a U.S. Tax Compliance Certificate in form
satisfactory to Agent, IRS Form W-9, and/or other certification documents from
each beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more of its direct or indirect partners is claiming the
portfolio interest exemption, such Foreign Lender may provide a U.S. Tax
Compliance Certificate on behalf of each such partner;

(c) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower Agent and Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender hereunder (and from time to time thereafter

 

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upon reasonable request), executed copies of any other form prescribed by
Applicable Law as a basis for claiming exemption from or a reduction in U.S.
federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by Applicable Law to permit Borrowers or
Agent to determine the withholding or deduction required to be made; and

(d) if payment of an Obligation to a Lender would be subject to U.S. federal
withholding Tax imposed by FATCA if such Lender were to fail to comply with the
applicable reporting requirements of FATCA (including those contained in
Section 1471(b) or 1472(b) of the Code), such Lender shall deliver to Borrower
Agent and Agent, at the time(s) prescribed by law and otherwise upon reasonable
request, such documentation prescribed by Applicable Law (including
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation as may
be appropriate for Borrowers or Agent to comply with their obligations under
FATCA and to determine that such Lender has complied with its obligations under
FATCA or to determine the amount to deduct and withhold from such payment.
Solely for purposes of this clause (d), “FATCA” shall include any amendments
made to FATCA after the date hereof.

5.10.3. Status of Agent. On or before the date of this Agreement, the Agent (or
any successor or replacement Agent, on or before the date on which it becomes an
Agent hereunder), shall deliver to the Borrower to executed copies of IRS Form
W-9.

5.10.4. Redelivery of Documentation.If any form or certification previously
delivered by a Lender or Agent pursuant to this Section expires or becomes
obsolete or inaccurate in any respect, such Lender or Agent shall promptly
update the form or certification or notify Borrowers and Agent in writing of its
inability to do so.

5.11. Guarantees; Joint and Several Liability of Obligors.

5.11.1. Joint and Several Liability. Each Obligor agrees that it is jointly and
severally liable for, and absolutely and unconditionally, and jointly and
severally, guarantees to Agent and the other Secured Parties the prompt payment
and performance of, all Obligations, except its Excluded Swap Obligations. Each
Obligor agrees that its guaranty of the Obligations as an Obligor hereunder
constitutes a continuing guaranty of payment and performance and not of
collection, that such guaranty shall not be discharged until Full Payment, and
that such guaranty is absolute and unconditional, irrespective of (a) the
genuineness, validity, regularity, enforceability, subordination or any future
modification of, or change in, any Obligations or Loan Document, or any other
document, instrument or agreement to which any Obligor is or may become a party
or be bound; (b) the absence of any action to enforce this Agreement (including
this Section) or any other Loan Document, or any waiver, consent or indulgence
of any kind by Agent or any Lender with respect thereto; (c) the existence,
value or condition of, or failure to perfect a Lien or to preserve rights
against, any security or guaranty for any Obligations or any action, or the
absence of any action, by Agent or any other Secured Party in respect thereof
(including the release of any security or guaranty); (d) the insolvency of any
other Obligor; (e) any election by Agent or any other Secured Party in an
Insolvency Proceeding for the application of Section 1111(b)(2) of the
Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as
debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise;
(g) the disallowance of any claims of Agent or any Lender against any Obligor
for the repayment of any Obligations under Section 502 of the Bankruptcy Code or
otherwise; or (h) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
except Full Payment of all Obligations.

 

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5.11.2. Waivers.

(a) Each Obligor expressly waives all rights that it may have now or in the
future under any statute, at common law, in equity or otherwise, to compel Agent
or any other Secured Party to marshal assets or to proceed against any other
Obligor, other Person or security for the payment or performance of any
Obligations before, or as a condition to, proceeding against such Obligor. Each
Obligor waives all defenses available to a surety, guarantor or accommodation
co-obligor other than Full Payment of Obligations and waives, to the maximum
extent permitted by law, any right to revoke any guaranty of Obligations as long
as it is an Obligor. It is agreed among each Obligor, Agent and Lenders that the
provisions of this Section 5.11 are of the essence of the transaction
contemplated by the Loan Documents and that, but for such provisions, Agent and
Lenders would decline to make Loans and issue Letters of Credit. Each Obligor
acknowledges that its guaranty pursuant to this Section is necessary to the
conduct and promotion of its business, and can be expected to benefit such
business.

(b) Agent and Lenders may, in their discretion, pursue such rights and remedies
as they deem appropriate, including realization upon Collateral by judicial
foreclosure or nonjudicial sale or enforcement, without affecting any rights and
remedies under this Section 5.11. If, in taking any action in connection with
the exercise of any rights or remedies, Agent or any Lender shall forfeit any
other rights or remedies, including the right to enter a deficiency judgment
against any Obligor or other Person, whether because of any Applicable Laws
pertaining to “election of remedies” or otherwise, each Obligor consents to such
action and waives any claim based upon it, even if the action may result in loss
of any rights of subrogation that any Obligor might otherwise have had. Any
election of remedies that results in denial or impairment of the right of Agent
or any Lender to seek a deficiency judgment against any Obligor shall not impair
any other Obligor’s obligation to pay the full amount of the Obligations. Each
Obligor waives all rights and defenses arising out of an election of remedies,
such as nonjudicial foreclosure with respect to any security for Obligations,
even though that election of remedies destroys such Obligor’s rights of
subrogation against any other Person. Agent may bid Obligations, in whole or
part, at any foreclosure, trustee or other sale, including any private sale, and
the amount of such bid need not be paid by Agent but shall be credited against
the Obligations. The amount of the successful bid at any such sale, whether
Agent or any other Person is the successful bidder, shall be conclusively deemed
to be the fair market value of the Collateral, and the difference between such
bid amount and the remaining balance of the Obligations shall be conclusively
deemed to be the amount of the Obligations guaranteed under this Section 5.11,
notwithstanding that any present or future law or court decision may have the
effect of reducing the amount of any deficiency claim to which Agent or any
Lender might otherwise be entitled but for such bidding at any such sale.

5.11.3. Extent of Liability; Contribution.

(a) Notwithstanding anything herein to the contrary, each Obligor’s liability
under this Section 5.11 shall not exceed the greater of (i) all amounts for
which such Obligor is primarily liable, as described in clause (c) below, and
(ii) such Obligor’s Allocable Amount.

(b) If any Obligor makes a payment under this Section 5.11 of any Obligations
(other than amounts for which such Obligor is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments previously or
concurrently made by any other Obligor, exceeds the amount that such Obligor
would otherwise have paid if each Obligor had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such Obligor’s
Allocable Amount bore to the total Allocable Amounts of all Obligors, then such
Obligor shall be entitled to receive contribution and indemnification payments
from, and to be reimbursed by, each other Obligor for the amount of such excess,
ratably based on their respective Allocable Amounts in effect immediately prior
to such Guarantor Payment. The “Allocable Amount” for any Obligor shall be the
maximum amount that could then be recovered from such Obligor under this
Section 5.11 without rendering such payment voidable under Section 548 of the
Bankruptcy Code or under any applicable state fraudulent transfer or conveyance
act, or similar statute or common law.

 

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(c) Section 5.11.3(a) shall not limit the liability of any Obligor to pay or
guarantee Loans made directly or indirectly to it (including Loans advanced
hereunder to any other Person and then re-loaned or otherwise transferred to, or
for the benefit of, such Obligor), LC Obligations relating to Letters of Credit
issued to support its business, Secured Bank Product Obligations incurred to
support its business, and all accrued interest, fees, expenses and other related
Obligations with respect thereto, for which such Obligor shall be primarily
liable for all purposes hereunder. Agent and Lenders shall have the right, at
any time in their discretion, to condition Loans and Letters of Credit upon a
separate calculation of borrowing availability for each Borrower and to restrict
the disbursement and use of Loans and Letters of Credit to a Borrower based on
that calculation.

(d) Each Obligor that is a Qualified ECP when its guaranty of or grant of Lien
as security for a Swap Obligation becomes effective hereby jointly and
severally, absolutely, unconditionally and irrevocably undertakes to provide
funds or other support to each Specified Obligor with respect to such Swap
Obligation as may be needed by such Specified Obligor from time to time to honor
all of its obligations under the Loan Documents in respect of such Swap
Obligation (but, in each case, only up to the maximum amount of such liability
that can be hereby incurred without rendering such Qualified ECP’s obligations
and undertakings under this Section 5.11 voidable under any applicable
fraudulent transfer or conveyance act). The obligations and undertakings of each
Qualified ECP under this Section shall remain in full force and effect until
Full Payment of all Obligations. Each Obligor intends this Section to
constitute, and this Section shall be deemed to constitute, a guarantee of the
obligations of, and a “keepwell, support or other agreement” for the benefit of,
each Obligor for all purposes of the Commodity Exchange Act.

5.11.4. Joint Enterprise. Each Borrower has requested that Agent and Lenders
make this credit facility available to Borrowers on a combined basis, in order
to finance Borrowers’ business most efficiently and economically. Borrowers’
business is a mutual and collective enterprise, and the successful operation of
each Borrower is dependent upon the successful performance of the integrated
group. Borrowers believe that consolidation of their credit facility will
enhance the borrowing power of each Borrower and ease administration of the
facility, all to their mutual advantage. Borrowers acknowledge that Agent’s and
Lenders’ willingness to extend credit and to administer the Collateral on a
combined basis hereunder is done solely as an accommodation to Borrowers and at
Borrowers’ request.

5.11.5. Subordination. Each Obligor hereby subordinates any claims, including
any rights at law or in equity to payment, subrogation, reimbursement,
exoneration, contribution, indemnification or set off, that it may have at any
time against any other Obligor or such other Obligor’s assets, howsoever
arising, to the Full Payment of its Obligations.

SECTION 6. CONDITIONS PRECEDENT

6.1. Conditions Precedent to Closing Date. In addition to the conditions set
forth in Section 6.2, Lenders shall not be required to fund any requested Loan,
issue any Letter of Credit, or otherwise extend credit to Borrowers hereunder,
until the date (“Closing Date”) that each of the following conditions has been
satisfied:

(a) As required by Agent to be executed as of the Closing Date, each Loan
Document shall have been duly executed and delivered to Agent by each of the
signatories thereto.

(b) All filings or recordations necessary to perfect the Agent’s Liens in the
Collateral (other than any such filings to occur after the Closing Date in
accordance with the terms hereof) shall have been made, and Agent shall have
received UCC and Lien searches and other evidence satisfactory to Agent that
such Liens are the only Liens upon the Collateral, except Permitted Liens.

 

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(c) Parent shall have consummated a Qualified IPO which results in gross
proceeds to Parent of at least $90,000,000 and, in any event, in an amount
sufficient to provide for the payment in full of all fees, costs and expenses
incurred in respect of the Qualified IPO and the closing of this credit
facility.

(d) Agent shall have received a duly executed Deposit Account Control Agreement
for each of Obligor’s Deposit Accounts (other than Excluded Accounts) in
existence on the Closing Date, to the extent requested by the Agent.

(e) Agent shall have received certificates, in form and substance satisfactory
to it, from a knowledgeable Senior Officer of Parent certifying on behalf of
each Borrower that, after giving effect to the initial Loans and transactions
hereunder, (i) such Borrower is Solvent; (ii) no Default or Event of Default
exists; and (iii) the representations and warranties set forth in Section 9 are
true and correct in all material respects as of the Closing Date, except to the
extent such representations and warranties refer to a specified date, in which
case the same shall continue on the Closing Date to be true and correct as of
the applicable specified date (or, in the event such representations and
warranties are qualified by materiality or Material Adverse Effect or language
of similar import, such representations shall be true and correct in all
respects as of the Closing Date).

(f) Agent shall have received a certificate of a duly authorized officer of each
Obligor, certifying (i) that attached copies of such Obligor’s Organic Documents
are true and complete, and in full force and effect, without amendment except as
shown; (ii) that an attached copy of resolutions authorizing execution and
delivery of the Loan Documents is true and complete, and that such resolutions
are in full force and effect, were duly adopted, have not been amended, modified
or revoked, and constitute all resolutions adopted with respect to this credit
facility; and (iii) to the title, name and signature of each Person authorized
to sign the Loan Documents on behalf of such Obligor. Agent may conclusively
rely on this certificate until it is otherwise notified by the applicable
Obligor in writing.

(g) Agent shall have received a written opinion of (i) Vinson & Elkins LLP,
counsel to the Obligors and (ii) McAfee & Taft, Oklahoma counsel to the
Obligors, in each case, in form and substance satisfactory to Agent in its
Permitted Discretion.

(h) Agent shall have received copies of the charter documents of each Obligor,
certified by the Secretary of State or other appropriate official of such
Obligor’s jurisdiction of organization. Agent shall have received good standing
certificates for each Obligor, issued by the Secretary of State or other
appropriate official of such Obligor’s jurisdiction of organization.

(i) Agent shall have received certificates of insurance for the insurance
policies carried by Borrowers, all in compliance with the Loan Documents.

(j) Agent shall have completed its business, financial and legal due diligence
of Obligors, including a roll-forward of its previous field examination, with
results satisfactory to Agent. No material adverse change in the financial
condition of any Obligor or in the quality, quantity or value of any Collateral
shall have occurred since December 31, 2016.

(k) Borrowers shall have paid all fees and expenses to be paid to Agent and
Lenders on the Closing Date to the extent invoiced at least one (1) Business Day
prior thereto.

(l) The Existing PIK Notes shall have been, or shall simultaneously be, repaid,
terminated or converted; provided that the amounts thereof payable in cash shall
not exceed $13,000,000, and all other existing Debt for Borrowed Money of the
Obligors shall have been paid in full.

 

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(m) Agent shall have received a Borrowing Base Report prepared as of January 31,
2018. Upon giving effect to the Qualified IPO referenced in Section 6.1(c), the
calculation of (i) Availability, less (ii) an amount equal to all amounts due
and owing to any of Borrowers’ trade creditors which are outstanding more than
thirty (30) days after the original invoice date, shall be at least $50,000,000.

The Agent shall notify the Borrower Agent and the Lenders of the Closing Date,
and such notice shall be conclusive and binding.

6.2. Conditions Precedent to All Credit Extensions. Agent, Issuing Bank and
Lenders shall in no event be required to make any credit extension hereunder
(including funding any Loan, arranging any Letter of Credit, or granting any
other accommodation to or for the benefit of any Borrower), if the following
conditions are not satisfied on such date and upon giving effect thereto:

(a) No Default or Event of Default exists;

(b) The representations and warranties of each Obligor in the Loan Documents are
true and correct in all material respects on the date of, and upon giving effect
to, such funding, issuance or grant (unless such representation or warranty is
qualified as to materiality or Material Adverse Effect, in which case such
representation or warranty shall be true and correct in all respects, and/or
(ii) limited to an earlier date, in which case such representation or warrant
shall remain true and correct in all respects or in all material respects, as
applicable, as of such earlier date);

(d) With respect to a Letter of Credit issuance, all LC Conditions are
satisfied;

(e) The Revolver Usage shall be less than or equal to the aggregate Revolver
Commitments; and

(f) The Revolver Usage shall be less than or equal to the Borrowing Base.

Each request (or deemed request) by a Borrower for any credit extension shall
constitute a representation by Borrowers that the foregoing conditions are
satisfied on the date of such request and on the date of the credit extension.

SECTION 7. COLLATERAL

7.1. Grant of Security Interest. To secure the prompt payment and performance of
its Obligations, each Obligor hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon all personal Property
of such Obligor, including all of the following Property, whether now owned or
hereafter acquired, and wherever located:

(a) all Accounts;

(b) all Chattel Paper, including electronic chattel paper;

(c) all Commercial Tort Claims, including those shown on Schedule 9.1.16;

(d) all Deposit Accounts;

(e) all Documents;

(f) all General Intangibles, including Intellectual Property;

(g) all Goods, including Inventory and Equipment;

 

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(h) all Instruments;

(i) all Investment Property;

(j) all Letter-of-Credit Rights;

(k) all Supporting Obligations;

(l) all monies, whether or not in the possession or under the control of Agent,
a Lender, or a bailee or Affiliate of Agent or a Lender, including any Cash
Collateral;

(m) all accessions to, substitutions for, and all replacements, products, and
cash and non-cash proceeds of the foregoing, including proceeds of and unearned
premiums with respect to insurance policies, and claims against any Person for
loss, damage or destruction of any Collateral; and

(n) all books and records (including customer lists, files, correspondence,
tapes, computer programs, print-outs and computer records) pertaining to the
foregoing.

Notwithstanding the foregoing, Collateral shall not include any Excluded
Property.

7.2. Lien on Deposit Accounts; Cash Collateral.

7.2.1. Deposit Accounts. To further secure the prompt payment and performance of
its Obligations, each Obligor hereby grants to Agent a continuing security
interest in and Lien upon all amounts credited to any Deposit Account (other
than an Excluded Account) of such Obligor, including sums in any blocked,
lockbox, sweep or collection account. Each Obligor hereby authorizes and directs
each bank or other depository that maintains such Deposit Account to deliver to
Agent, during any Dominion Trigger Period (if so requested by Agent), all
balances in any Deposit Account (other than an Excluded Account) maintained for
such Obligor, without inquiry into the authority or right of Agent to make such
request.

7.2.2. Cash Collateral. Cash Collateral may be invested, at Agent’s discretion
(with the consent of Borrower Agent, provided no Event of Default exists), but
Agent shall have no duty to do so, regardless of any agreement or course of
dealing with any Obligor, and shall have no responsibility for any investment or
loss. As security for its Obligations, each Obligor hereby grants to Agent a
security interest in and Lien upon all Cash Collateral delivered hereunder from
time to time, whether held in a segregated cash collateral account or otherwise.
Agent may apply Cash Collateral to payment of such Obligations as they become
due, in accordance with Section 5.6. All Cash Collateral and related deposit
accounts shall be under the sole dominion and control of Agent, and no Obligor
or other Person shall have any right to any Cash Collateral until Full Payment
or such amounts are due to be returned to the Borrowers in accordance with the
terms of this Agreement.

7.3. [Reserved].

7.4. Other Collateral.

7.4.1. Commercial Tort Claims. Obligors shall promptly notify Agent in writing
if any Obligor has a Commercial Tort Claim (other than, as long as no Default or
Event of Default exists, a Commercial Tort Claim for less than $1,000,000),
shall promptly amend Schedule 9.1.16 to include such claim, and shall take such
actions as Agent deems appropriate to subject such claim to a duly perfected,
first priority Lien in favor of Agent, subject to Permitted Liens.

 

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7.4.2. Certain After-Acquired Collateral. Obligors shall promptly notify Agent
in writing if, after the Closing Date, any Obligor obtains any interest in any
Collateral consisting of (a) Deposit Accounts (other than Excluded Accounts) and
(b) Chattel Paper, Documents, Instruments, Intellectual Property, Investment
Property or Letter-of-Credit Rights, with a value in excess of $1,000,000, in
the aggregate; and, upon Agent’s request, shall promptly take such actions as
Agent deems appropriate to effect Agent’s duly perfected, first priority Lien
(subject to Permitted Liens) upon such Collateral, including using commercially
reasonable efforts to obtain any appropriate possession, control agreement or
Lien Waiver. If any Collateral is in the possession of a third party, at Agent’s
request, Obligors shall use commercially reasonable efforts to obtain an
acknowledgment that such third party holds the Collateral for the benefit of
Agent subject to Permitted Liens, upon such Collateral.

7.5. Limitations. The Lien on Collateral granted hereunder is given as security
only and shall not subject Agent or any Lender to, or in any way modify, any
obligation or liability of Obligors relating to any Collateral. In no event
shall the grant of any Lien under any Loan Document secure an Excluded Swap
Obligation of the granting Obligor.

7.6. Further Assurances. All Liens granted to Agent under the Loan Documents are
for the benefit of Secured Parties. Promptly upon request, Obligors shall
deliver such instruments and agreements, and shall take such actions, as Agent
deems appropriate in its Permitted Discretion under Applicable Law to evidence
or perfect its Lien on any Collateral, or otherwise to give effect to the intent
of this Agreement. Each Obligor authorizes Agent to file any financing statement
that describes the Collateral as “all assets” or “all personal property” of such
Obligor, or words to similar effect, and ratifies any action taken by Agent
before the Closing Date to effect or perfect its Lien on any Collateral.

SECTION 8. COLLATERAL ADMINISTRATION

8.1. Borrowing Base Reports. By the 20th day of each month (or by Wednesday of
each calendar week during any Reporting Trigger Period), Borrower Agent shall
deliver to Agent (and Agent shall promptly deliver same to Lenders) a Borrowing
Base Report as of the close of business of the previous month (or as of the
close of business on the last Business Day of the previous calendar week during
any Reporting Trigger Period). All information (including calculation of
Availability) in a Borrowing Base Report shall be certified by Borrower Agent.
Agent may from time to time adjust such report in its Permitted Discretion
(a) to reflect Agent’s reasonable estimate of declines in value of Collateral,
due to collections received in the Dominion Account or otherwise; (b) to adjust
advance rates to reflect changes in dilution, quality, mix and other factors
affecting Collateral; and (c) to the extent any information or calculation does
not comply with this Agreement.

8.2. Accounts.

8.2.1. Records and Schedules of Accounts. Each Obligor shall keep accurate and
complete records of its Accounts, including all payments and collections
thereon, and shall submit to Agent sales, collection, reconciliation and other
reports in form satisfactory to Agent, on such periodic basis as Agent may
request. Each Obligor shall also provide to Agent, on or before the 20th day of
each month (or by Wednesday of each calendar week during any Reporting Trigger
Period), a detailed accounts receivable aging of all Accounts as of the end of
the preceding month (or as of the close of business on the last Business Day of
the previous calendar week during any Reporting Trigger Period), specifying each
Account’s Account Debtor name and address, amount, invoice date and due date,
showing any discount, allowance, credit, authorized return or dispute, and
including such proof of delivery, copies of invoices and invoice registers,
copies of related documents, repayment histories, status reports and other
information as Agent may request in its Permitted Discretion. If Accounts in an
aggregate face amount of $1,000,000 or more cease to be Eligible Billed Accounts
and Eligible Unbilled Accounts, Borrower Agent shall notify Agent of such
occurrence promptly (and in any event within one Business Day) after any
Borrower has knowledge thereof.

 

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8.2.2. Taxes. If an Account of any Obligor includes a charge for any Taxes then
due and payable, Agent is authorized, in its discretion, to pay the amount
thereof to the proper taxing authority for the account of such Obligor and to
charge Obligors therefor; provided, however, that neither Agent nor Lenders
shall be liable for any Taxes that may be due from Obligors or with respect to
any Collateral.

8.2.3. Account Verification. Whether or not a Default or Event of Default
exists, Agent shall have the right at any reasonable time determined in Agent’s
Permitted Discretion, in the name of Agent, any designee of Agent or any
Obligor, to verify the validity, amount or any other matter relating to any
Accounts of Obligors by mail, telephone or otherwise. Obligors shall cooperate
fully with Agent in an effort to facilitate and promptly conclude any such
verification process.

8.2.4. Maintenance of Dominion Account. Obligors shall maintain one or more
Dominion Accounts (which are not Excluded Accounts) pursuant to lockbox or other
arrangements acceptable to Agent. Obligors shall obtain an agreement (in form
and substance satisfactory to Agent) from each lockbox servicer and Dominion
Account bank, establishing Agent’s control over and Lien in the lockbox or
Dominion Account (other than Excluded Accounts), which may be exercised by Agent
(unless otherwise elected by Agent, in its sole discretion) during any Dominion
Trigger Period, requiring immediate deposit of all remittances received in the
lockbox to a Dominion Account, and waiving or subordinating offset rights of
such servicer or bank, except for customary administrative charges. If such
Dominion Account is not maintained with Agent, Agent, in its sole discretion,
may, during any Dominion Trigger Period, require (unless otherwise elected by
Agent, in its sole discretion) immediate transfer of all funds in such account
to a Dominion Account maintained with Agent. Agent and Lenders assume no
responsibility to Obligors for any lockbox arrangement or Dominion Account,
including any claim of accord and satisfaction or release with respect to any
Payment Items accepted by any bank. Notwithstanding the foregoing, Obligors
obligations with respect to this Section 8.2.4 are subject to Sections 10.1.9
and 10.1.10.

8.2.5. Proceeds of Collateral. Obligors shall request in writing and otherwise
take all necessary steps to ensure that all payments on Accounts or otherwise
relating to Collateral are made directly to a Deposit Account subject to a
Deposit Account Control Agreement. If any Obligor receives cash or Payment Items
with respect to any Collateral, it shall hold same in trust for Agent and
promptly (not later than the next Business Day) deposit same into such a Deposit
Account. Notwithstanding the foregoing, Obligors obligations with respect to
this Section 8.2.5 are subject to Sections 10.1.9 and 10.1.10.

8.3. Inventory.

8.3.1. Records and Reports of Inventory. Each Obligor shall keep accurate and
complete records of its Inventory, including costs and daily withdrawals and
additions, and shall submit to Agent inventory and reconciliation reports in
form satisfactory to Agent, on or before the 20th day of each month (or by
Wednesday of each calendar week during any Reporting Trigger Period). Each
Obligor shall conduct a physical inventory at least once per calendar year (and
on a more frequent basis if requested by Agent when an Event of Default exists)
and periodic cycle counts consistent with historical practices, and shall
provide to Agent a report based on each such inventory and count promptly upon
completion thereof, together with such supporting information as Agent may
request. Agent may participate in and observe each physical count, provided that
Agent shall be reimbursed for its participation only in connection with
inspections in accordance with Section 10.1.1.

8.3.2. Returns of Inventory. No Obligor shall return any Inventory to a
supplier, vendor or other Person, whether for cash, credit or otherwise, unless
(a) such return is in the Ordinary Course of Business; (b) no Default, Event of
Default or Overadvance exists or would result therefrom; (c) Agent is promptly
notified if the aggregate Value of all Inventory returned in any month exceeds
$2,500,000; and (d) any net cash payment received by an Obligor for a return is
promptly remitted to Agent for application to the Obligations.

 

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8.3.3. Acquisition, Sale and Maintenance. No Obligor shall acquire or accept any
Inventory on consignment or approval, and shall take all steps to assure that
all Inventory is produced in accordance with Applicable Law in all material
respects, including the FLSA. No Obligor shall sell any Inventory on consignment
or approval or any other basis under which the customer may return or require an
Obligor to repurchase such Inventory, other than in the Ordinary Course of
Business. Obligors shall use, store and maintain all material Inventory with
reasonable care and caution, in accordance with applicable standards of any
insurance and in conformity with all Applicable Law in all material respects,
and shall make current rent payments (within applicable grace periods provided
for in leases) at all locations owned or leased by Obligors where any material
Collateral is located.

8.4. Equipment.

8.4.1. Records and Schedules of Equipment. Each Obligor shall keep accurate and
complete records of its Equipment, including kind, quality, quantity, cost,
acquisitions and dispositions thereof, and shall submit to Agent, on such
periodic basis as Agent may request in its Permitted Discretion (but not more
than once per calendar quarter), a current schedule thereof, in form
satisfactory to Agent in its Permitted Discretion.

8.4.2. Dispositions of Equipment. No Obligor shall sell, lease or otherwise
dispose of any Equipment, without the prior written consent of Agent, other than
a Permitted Asset Disposition.

8.4.3. Condition of Equipment. The material Equipment is in good operating
condition and repair, and all necessary replacements and repairs have been made
so that the value and operating efficiency of the material Equipment is
preserved at all times, reasonable wear and tear excepted.

8.5. Deposit Accounts. Schedule 8.5 shows all Deposit Accounts maintained by
Obligors, including Dominion Accounts, as of the Closing Date. Subject to
Sections 10.1.9 and 10.1.10, each Obligor shall take all actions necessary to
establish Agent’s first priority Lien (subject to Permitted Liens) on each
Deposit Account (other than an Excluded Account). Obligors shall be the sole
account holders of each Deposit Account and shall not allow any Person (other
than Agent and the depository bank) to have control over their Deposit Accounts
or any Property deposited therein. Obligors shall promptly notify Agent of any
opening or closing of a Deposit Account.

8.6. General Provisions.

8.6.1. Location of Collateral. All Inventory constituting Collateral, other than
Inventory (i) in transit, (ii) located at the site of one of Obligor’s
customers, (iii) out for processing, or (iv) out for repair, refurbishment,
processing, or in the possession of employees in the Ordinary Course of
Business, shall at all times be kept by Obligors at the business locations set
forth in Schedule 8.6.1 (as amended from time to time) except that Obligors may
(a) make sales or other dispositions of Inventory in accordance with
Section 10.2.6, (b) move Inventory to any location in the United States, and
(c) move Inventory in the Ordinary Course of Business.

8.6.2. Insurance of Collateral; Condemnation Proceeds.

 

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(a) Each Obligor shall maintain insurance with respect to the Collateral and the
Properties and businesses of the Obligors, in each case, with financially sound
and reputable insurance companies insurance on all such property and against all
such risks as is consistent and in accordance with industry practice for
companies similarly situated owning similar properties and engaged in similar
businesses as the Obligors. From time to time upon request, Obligors shall
deliver to Agent the originals or certified copies of its insurance policies and
updated flood plain searches. No later than thirty (30) days after the Closing
Date, unless Agent shall agree otherwise, each policy shall include satisfactory
endorsements (i) showing Agent as lender loss payee or additional insured, as
applicable; (ii) to the extent available, requiring 30 days’ prior written
notice to Agent in the event of cancellation of the policy for any reason
whatsoever; and (iii) to the extent available, specifying that the interest of
Agent shall not be impaired or invalidated by any act or neglect of any Obligor
or the owner of the Property, nor by the occupation of the premises for purposes
more hazardous than are permitted by the policy. If any Obligor fails to provide
and pay for any insurance, Agent may, at its option, but shall not be required
to, procure the insurance and charge Obligors therefor. Each Obligor agrees to
deliver to Agent, promptly as rendered, copies of all reports made to insurance
companies. While no Event of Default exists, Obligors may settle, adjust or
compromise any insurance claim, as long as the proceeds are delivered to Agent
to the extent required by this Agreement. If an Event of Default exists, only
Agent shall be authorized to settle, adjust and compromise such claims.

(b) Any proceeds of insurance (other than proceeds from workers’ compensation or
D&O insurance) relating to any Collateral and any awards arising from
condemnation of any Collateral shall be paid to Agent to be applied, subject to
clause (c) below, to payment of the Revolver Loans, and then to other
Obligations.

(c) If requested by Obligors in writing within fifteen (15) days after Agent’s
receipt of any insurance proceeds or condemnation awards relating to any loss or
destruction of Collateral to repair, replace or restore the insured property
which was the subject of the insurable loss to a condition better than or at
least as good as the condition of such insured property immediately prior to
such loss (a “Restoration”) within one hundred eighty (180) days of such
insurable loss, Agent will apply such insurance proceeds or condemnation awards
to the Loan and Agent shall implement a reserve equal to the amount of such
insurance proceeds or condemnation awards pursuant to part (e) of the definition
of “Availability Reserves.” Borrowers may request Loans in the amount of the
insurance proceeds or condemnation awards (or such portion thereof) to pay to
repair or replace such Collateral (and until so used, the proceeds shall be held
by Agent as Cash Collateral) as long as (i) no Default or Event of Default
exists; (ii) such repair or replacement is promptly undertaken and concluded, in
accordance with plans satisfactory to Agent; (iii) the repaired or replaced
Property is free of Liens, other than Permitted Liens that are not Purchase
Money Liens; (iv) Obligors comply with disbursement procedures for such repair
or replacement as Agent may require in its Permitted Discretion; (v) the
Obligors agree to use the proceeds of the Loan to pay the cost of such
Restoration; and (vi) all conditions to funding set forth in Section 6.2 have
been satisfied.

8.6.3. Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to any Person to realize upon
any Collateral, shall be borne and paid by Obligors. Agent shall not be liable
or responsible in any way for the safekeeping of any Collateral, for any loss or
damage thereto (except for reasonable care in its custody while Collateral is in
Agent’s actual possession), for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency or other Person
whatsoever, but the same shall be at Obligors’ sole risk.

8.6.4. Defense of Title. Each Obligor shall defend its title to Collateral and
Agent’s Liens therein against all Persons, claims and demands, except Permitted
Liens.

 

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8.7. Power of Attorney. Each Obligor hereby irrevocably constitutes and appoints
Agent (and all Persons designated by Agent) as such Obligor’s true and lawful
attorney (and agent-in-fact) for the purposes provided in this Section. This
power of attorney is coupled with an interest and shall be irrevocable until
this Agreement is terminated. Agent, or Agent’s designee, may, without notice
and in either its or a Obligor’s name, but at the cost and expense of Obligors:

(a) Endorse an Obligor’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into Agent’s possession
or control; and

(b) During an Event of Default, (i) notify any Account Debtors of the assignment
of their Accounts, demand and enforce payment of Accounts by legal proceedings
or otherwise, and generally exercise any rights and remedies with respect to
Accounts; (ii) settle, adjust, modify, compromise, discharge or release any
Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral
upon such terms, for such amounts and at such times as Agent deems advisable;
(iv) collect, liquidate and receive balances in Deposit Accounts or investment
accounts, and take control, in any manner, of proceeds of Collateral;
(v) prepare, file and sign an Obligor’s name to a proof of claim or other
document in a bankruptcy of an Account Debtor, or to any notice, assignment or
satisfaction of Lien or similar document; (vi) receive, open and dispose of mail
addressed to an Obligor, and notify postal authorities to deliver any such mail
to an address designated by Agent; (vii) endorse any Chattel Paper, Document,
Instrument, bill of lading, or other document or agreement relating to any
Accounts, Inventory or other Collateral; (viii) use an Obligor’s stationery and
sign its name to verifications of Accounts and notices to Account Debtors;
(ix) use information contained in any data processing, electronic or information
systems relating to Collateral; (x) make and adjust claims under insurance
policies; (xi) take any action as may be necessary or appropriate to obtain
payment under any letter of credit, banker’s acceptance or other instrument for
which an Obligor is a beneficiary; and (xii) take all other actions as Agent
deems appropriate to fulfill any Obligor’s obligations under the Loan Documents.

SECTION 9. REPRESENTATIONS AND WARRANTIES

9.1. General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make available the Commitments, Loans and
Letters of Credit, each Obligor represents and warrants that:

9.1.1. Organization and Qualification. Each Obligor and Restricted Subsidiary is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each Obligor and Restricted Subsidiary is duly
qualified, authorized to do business and in good standing as a foreign
corporation in each jurisdiction where failure to be so qualified could
reasonably be expected to have a Material Adverse Effect. No Obligor is an EEA
Financial Institution.

9.1.2. Power and Authority. Each Obligor is duly authorized to execute, deliver
and perform its Loan Documents. The execution, delivery and performance of the
Loan Documents have been duly authorized by all necessary corporate action, and
do not (a) require any consent or approval of any holders of Equity Interests of
any Obligor, except those already obtained; (b) contravene the Organic Documents
of any Obligor; (c) violate or cause a default under any Applicable Law or
Material Contract except to the extent such violation or failure could not
reasonably be expected to result in a Material Adverse Effect; or (d) result in
or require imposition of a Lien (other than Permitted Liens) on any Obligor’s
Property.

9.1.3. Enforceability. Each Loan Document is a legal, valid and binding
obligation of each Obligor party thereto, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally.

 

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9.1.4. Capital Structure. Schedule 9.1.4 shows, as of the Closing Date, for each
Obligor and Subsidiary, its name, jurisdiction of organization, authorized and
issued Equity Interests, holders of its Equity Interests, and agreements binding
on such holders with respect to such Equity Interests. As of the Closing Date,
except as disclosed on Schedule 9.1.4, in the five years preceding the Closing
Date, no Obligor or Subsidiary has acquired any substantial assets from any
other Person other than in the Ordinary Course of Business, nor been the
surviving entity in a merger or combination. Each Obligor has good title to its
Equity Interests in its Subsidiaries, subject only to Agent’s Lien and other
Permitted Liens, and all such Equity Interests are, to the extent applicable,
duly issued, fully paid and non-assessable. As of the Closing Date, except as
disclosed on Schedule 9.1.4, there are no outstanding purchase options,
warrants, subscription rights, agreements to issue or sell, convertible
interests, phantom rights or powers of attorney relating to Equity Interests of
any Obligor or Subsidiary.

9.1.5. Title to Properties; Priority of Liens. Each Obligor and Restricted
Subsidiary has good title to all of its material personal Property, including
all such Property reflected in any financial statements delivered to Agent or
Lenders, in each case free of Liens except Permitted Liens and minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such Property for its intended purposes. Each
Obligor and Restricted Subsidiary has paid and discharged all lawful material
claims that, if unpaid, could become a Lien on its Properties, other than
Permitted Liens. To the extent required by the Loan Documents, all Liens of
Agent in the Collateral are duly perfected, first priority Liens, subject only
to Permitted Liens.

9.1.6. Accounts. Agent may rely, in determining which Accounts are Eligible
Billed Accounts and Eligible Unbilled Accounts, on all statements and
representations made by Obligors with respect thereto. Obligors warrant, with
respect to each Account shown as an Eligible Billed Account and an Eligible
Unbilled Account in a Borrowing Base Report, that:

(a) it is genuine and in all respects what it purports to be;

(b) it arises out of a completed, bona fide sale and delivery of goods or
rendition of services in the Ordinary Course of Business, and substantially in
accordance with any purchase order, contract or other document relating thereto;

(c) it is for a sum certain, maturing as stated in the applicable invoice, a
copy of which has been furnished or is available to Agent on request;

(d) it is not subject to any offset, Lien (other than Agent’s Lien and Permitted
Liens), deduction, defense, dispute, counterclaim or other adverse condition
except as arising in the Ordinary Course of Business and disclosed to Agent; and
it is absolutely owing by the Account Debtor, without contingency of any kind;

(e) no purchase order, agreement, document or Applicable Law restricts
assignment of the Account to Agent (regardless of whether, under the UCC, the
restriction is ineffective), and the applicable Obligor is the sole payee or
remittance party shown on the invoice;

(f) no extension, compromise, settlement, modification, credit, deduction or
return has been authorized or is in process with respect to the Account, except
discounts or allowances granted in the Ordinary Course of Business for prompt
payment that are reflected on the face of the invoice related thereto or in
Obligors’ records with respect thereto and in the reports submitted to Agent
hereunder; and

 

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(g) to Obligors’ knowledge, (i) there are no facts or circumstances that are
reasonably likely to impair the enforceability or collectability of such
Account; (ii) the Account Debtor had the capacity to contract when the Account
arose, continues to meet the applicable Obligor’s customary credit standards, is
Solvent, is not contemplating or subject to an Insolvency Proceeding, and has
not failed, or suspended or ceased doing business; and (iii) there are no
proceedings or actions threatened or pending against any Account Debtor that
could reasonably be expected to have a material adverse effect on the Account
Debtor’s financial condition.

9.1.7. Financial Statements. The consolidated (and including on a consolidating
basis, if requested by Agent in its Permitted Discretion, during the existence
of an Excluded Subsidiary or an Unrestricted Subsidiary) balance sheets, and
related statements of income, cash flow and shareholders equity, of Parent on a
Consolidated Basis that have been and are hereafter delivered to Agent and
Lenders, are prepared in accordance with GAAP, and fairly present in all
material respects the financial positions and results of operations of Obligors
and Restricted Subsidiaries at the dates and for the periods indicated , subject
to, in the case of monthly or quarterly balance sheets and related statements,
the absence of footnotes and year end audit adjustments. All projections
delivered from time to time to Agent and Lenders have been prepared in good
faith, based on reasonable assumptions in light of the circumstances at such
time, it being acknowledged, and agreed by Lenders, however, that projections as
to future events are not viewed as facts and that the actual results during the
period or periods covered by said projections may differ from the projected
results and that the differences may be material. Since December 31, 2016, there
has been no change in the condition, financial or otherwise, of any Obligor or
Restricted Subsidiary that could reasonably be expected to have a Material
Adverse Effect. No financial statement delivered to Agent or Lenders at any time
contains any untrue statement of a material fact, nor fails to disclose any
material fact necessary to make such statement not materially misleading. Each
Obligor and Restricted Subsidiary is Solvent.

9.1.8. Surety Obligations. No Obligor or Restricted Subsidiary is obligated as
surety or indemnitor under any bond or other contract that assures payment or
performance of any obligation of any Person, except as permitted hereunder.

9.1.9. Taxes. Each Obligor and Restricted Subsidiary has filed all material
federal, state and local tax returns and other material reports that it is
required by law to file, and has paid, or made provision for the payment of, all
material Taxes upon it, its income and its Properties that are due and payable,
except to the extent being Properly Contested. The provision for Taxes on the
books of each Obligor and Restricted Subsidiary is adequate in all material
respects for all years not closed by applicable statutes, and for its current
Fiscal Year.

9.1.10. Brokers. There are no brokerage commissions, finder’s fees or investment
banking fees payable in connection with any transactions (other than the
Qualified IPO) contemplated by the Loan Documents (other than payable by any
Obligor to Agent or any Lender or Affiliate thereof).

9.1.11. Intellectual Property. Each Obligor and Restricted Subsidiary owns or
has the lawful right to use all Intellectual Property necessary for the conduct
of its business, without conflict with any rights of others to the extent such
conflict could reasonably be expected to have a Material Adverse Effect. There
is no pending or, to any Obligor’s knowledge, threatened Intellectual Property
Claim with respect to any Obligor, any Restricted Subsidiary or any of their
Property (including any Intellectual Property) that could reasonably be expected
to have a Material Adverse Effect. All Intellectual Property registered or
applied for with the United States Patent and Trademark Office or the United
States Copyright Office, or an equivalent thereof in any state of the United
States or any foreign jurisdiction, that is owned by any Obligor as of the
Closing Date is shown on Schedule 9.1.11.

 

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9.1.12. Governmental Approvals. Each Obligor and Restricted Subsidiary has
obtained, is in compliance with, and is in good standing with respect to, all
Governmental Approvals necessary to conduct its business and to own, lease and
operate its Properties except to the extent such failure could reasonably be
expected to have a Material Adverse Effect. All necessary import, export or
other licenses, permits or certificates for the import or handling of any goods
or other Collateral have been procured and are in effect, and Obligors and
Restricted Subsidiaries have complied with all foreign and domestic laws with
respect to the shipment and importation of any goods or Collateral, except where
noncompliance could not reasonably be expected to have a Material Adverse
Effect.

9.1.13. Compliance with Laws. Each Obligor and Restricted Subsidiary has duly
complied, and its Properties and business operations are in compliance, in all
material respects with all Applicable Law, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect. There have been no
citations, notices or orders of material noncompliance issued to any Obligor or
Restricted Subsidiary under any Applicable Law that could reasonably be expected
to have a Material Adverse Effect. No Inventory has been produced in violation
of the FLSA.

9.1.14. Compliance with Environmental Laws. As of the Closing Date, except as
disclosed on Schedule 9.1.14, no Obligor’s or Restricted Subsidiary’s past or
present operations, or Properties are subject to any federal, state or local
investigation to determine whether any remedial action is needed to address any
environmental pollution, hazardous material or environmental clean-up. No
Obligor or Restricted Subsidiary has received any Environmental Notice which
could reasonably be expected to result in a material liability to Borrowers. No
Obligor or Restricted Subsidiary has any contingent liability with respect to
any Environmental Release, environmental pollution or hazardous material on any
Real Estate now or previously owned, leased or operated by it that could
reasonably be expected to have a Material Adverse Effect.

9.1.15. Restrictive Agreements; Burdensome Contracts. No Obligor or Restricted
Subsidiary is a party to or subject to any contract, agreement or charter
restriction that could reasonably be expected to have a Material Adverse Effect.
No Obligor or Restricted Subsidiary is party or subject to any Restrictive
Agreement, except as shown as of the Closing Date on Schedule 9.1.15 or as
otherwise permitted pursuant to Section 10.2.14. No such Restrictive Agreement
prohibits the execution, delivery or performance of any Loan Document by an
Obligor.

9.1.16. Litigation. Except as shown on Schedule 9.1.16, there are no proceedings
or investigations pending or, to any Obligor’s knowledge, threatened against any
Obligor or Subsidiary, or any of their businesses, operations, Properties or
conditions, that (a) relate to any Loan Documents or transactions contemplated
thereby; or (b) could reasonably be expected to have a Material Adverse Effect
if determined adversely to any Obligor or Subsidiary. Except as shown on such
Schedule, no Obligor has a Commercial Tort Claim (other than, as long as no
Default or Event of Default exists, a Commercial Tort Claim for less than
$1,000,000). No Obligor or Subsidiary is in default with respect to any order,
injunction or judgment of any Governmental Authority.

9.1.17. No Defaults. No event or circumstance has occurred or exists that
constitutes a Default or an Event of Default. No Obligor or Restricted
Subsidiary is in default, and no event or circumstance has occurred or exists
that with the passage of time or giving of notice would constitute a default
(after giving effect to any cure or grace period and waivers or amendments
thereof), under any Material Contract in any material respect or in the payment
of any Borrowed Money that solely with respect to the payment of Borrowed Money,
could reasonably be expected to have a Material Adverse Effect. As of the
Closing Date, there is no basis upon which any party (other than an Obligor or
Restricted Subsidiary) could terminate a Material Contract prior to its
scheduled termination date.

 

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9.1.18. ERISA. Except as disclosed on Schedule 9.1.18:

(a) Except as could not reasonably be expected to have a Material Adverse
Effect: (i) each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and other federal and state laws; and
(ii) each Plan that is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter or prototype opinion from the IRS or
an application for such a letter is currently being processed by the IRS with
respect thereto and, to the knowledge of Obligors, nothing has occurred which
would prevent, or cause the loss of, such qualification. Each Obligor and ERISA
Affiliate made all required contributions to each Pension Plan, and no
application for a waiver of the minimum funding standards or an extension of any
amortization period has been made with respect to any Plan.

(b) There are no pending or, to the knowledge of Obligors, threatened in writing
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted in or could
reasonably be expected to have a Material Adverse Effect.

(c) Except as could not reasonably be expected to have a Material Adverse
Effect: (i) no ERISA Event has occurred or is reasonably expected to occur;
(ii) as of the most recent valuation date for any Pension Plan, the funding
target attainment percentage (as defined in Section 430(d)(2) of the Code) is at
least 60%; and no Obligor or ERISA Affiliate knows of any reason that such
percentage could reasonably be expected to drop below 60%; (iii) no Obligor or
ERISA Affiliate has incurred any liability to the PBGC except for the payment of
premiums, and no premium payments are due and unpaid; (iv) no Obligor or ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA; and (v) no Pension Plan has been terminated by its plan
administrator or the PBGC, and no fact or circumstance exists that could
reasonably be expected to cause the PBGC to institute proceedings to terminate a
Pension Plan.

(d) Except as could not reasonably be expected to have a Material Adverse
Effect, with respect to any Foreign Plan; (i) all employer and employee
contributions required by law or by the terms of the Foreign Plan have been
made, or, if applicable, accrued, in accordance with normal accounting
practices; (ii) the fair market value of the assets of each funded Foreign Plan,
the liability of each insurer for any Foreign Plan funded through insurance,
and/or the book reserve established for any Foreign Plan, together with any
accrued contributions, is sufficient to procure or provide for the accrued
benefit obligations with respect to all current and former participants in such
Foreign Plan according to the actuarial assumptions and valuations most recently
used to account for such obligations in accordance with applicable generally
accepted accounting principles; and (iii) it has been registered as required and
has been maintained in good standing with applicable regulatory authorities.

9.1.19. Trade Relations. There exists no actual or threatened termination,
limitation or modification of any business relationship between any Obligor or
Restricted Subsidiary and any customer or supplier, or any group of customers or
suppliers that could reasonably be expected to have a Material Adverse Effect.
There exists no condition or circumstance that could reasonably be expected to
materially impair the ability of the Obligors, taken as a whole, to conduct
their business at any time hereafter in substantially the same or similar manner
as conducted on the Closing Date.

9.1.20. Labor Relations. As of the Closing Date, except as described on Schedule
9.1.20, no Obligor or Restricted Subsidiary is party to or bound by any
collective bargaining agreement, management agreement or consulting agreement.
There are no material grievances, disputes or controversies with any union or
other organization of any Obligor’s or Restricted Subsidiary’s employees, or, to
any Obligor’s knowledge, any asserted or threatened strikes, work stoppages or
demands for collective bargaining.

 

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9.1.21. Payable Practices. No Obligor or Restricted Subsidiary has made any
material change in its historical accounts payable practices from those in
effect on the Closing Date except as disclosed in writing to (and approved by)
the Agent.

9.1.22. Not a Regulated Entity. No Obligor is (a) an “investment company” or a
“person directly or indirectly controlled by or acting on behalf of an
investment company” within the meaning of the Investment Company Act of 1940; or
(b) subject to regulation under the Federal Power Act, the Interstate Commerce
Act, any public utilities code or any other Applicable Law regarding its
authority to incur Debt.

9.1.23. Margin Stock. No Obligor or Restricted Subsidiary is engaged,
principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No Loan
proceeds or Letters of Credit will be used by Obligors to purchase or carry, or
to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock
or for any related purpose governed by Regulations T, U or X of the Board of
Governors.

9.1.24. OFAC. No Obligor, Restricted Subsidiary, or, to the knowledge of any
Obligor, any director, officer, employee, agent, affiliate or representative
thereof, is or is owned or controlled by any individual or entity that is
currently the subject or target of any Sanction or is located, organized or
resident in a Designated Jurisdiction.

9.1.25. Anti-Corruption and Anti-Terrorism Laws. Each Obligor and Restricted
Subsidiary has conducted its business in accordance in all material respects
with applicable anti-corruption laws and Anti-Terrorism Laws and has instituted
and maintained policies and procedures designed to promote and achieve
compliance with such laws.

9.2. Complete Disclosure. No Loan Document (as amended, restated, amended and
restated, supplemented, modified or updated as provided for herein) (including,
without limitation, any financial statements delivered to Agent or Lenders at
any time), other than (i) projections, budgets, estimates and other forward
looking statements, and (ii) information of a general economic or general
industry nature, contained, when delivered to Agent or Lenders and taken as a
whole, any untrue statement of a material fact, nor fails to disclose any
material fact necessary to make the statements contained therein not materially
misleading in light of all of the circumstances under which such statements are
made (after giving effect to all supplements and updates thereto). There is no
fact or circumstance that any Obligor has failed to disclose to Agent in writing
that could reasonably be expected to have a Material Adverse Effect.

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

10.1. Affirmative Covenants. As long as any Commitments or Obligations are
outstanding (other than contingent indemnification claims for which a claim has
not been asserted), each Obligor shall, and shall (except in the case of the
covenants set forth in Sections 10.1.2 and 10.1.3) cause each Restricted
Subsidiary to:

10.1.1. Inspections; Appraisals.

(a) Keep its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP in all material respects and permit Agent from time to time, subject
(unless an Event of Default exists) to reasonable prior notice and during normal
business hours, to visit and inspect the Properties of any Obligor or Restricted
Subsidiary, inspect, audit and make extracts from any Obligor’s or Restricted
Subsidiary’s books and records, and, subject to paragraph (b) below, discuss
with its officers, employees, agents,

 

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advisors and independent accountants such Obligor’s or Restricted Subsidiary’s
business, financial condition, assets, prospects and results of operations;
provided, however, the Obligors shall, absent a continuing Event of Default, be
given the opportunity to be present at any communications with their
accountants. Lenders may participate in any such visit or inspection, at their
own expense. Secured Parties shall have no duty to any Obligor to make any
inspection, nor to share any results of any inspection, appraisal or report with
any Obligor. Obligors acknowledge that all inspections, appraisals and reports
are prepared by Agent and Lenders for their purposes, and Obligors shall not be
entitled to rely upon them.

(b) Reimburse Agent for all its charges, costs and expenses in connection with
(i) examinations of Obligors’ books and records or any other financial or
Collateral matters as it deems appropriate, up to one (1) time per Loan Year (or
two (2) times per Loan Year during any time in which Availability is less than
the greater of (A) $15,500,000 and (B) 25% of the Borrowing Base); and
(ii) appraisals of Inventory up to one (1) time per Loan Year (or two (2) times
per Loan Year during any time in which Availability is less than the greater of
(A) $15,500,000 and (B) 25% of the Borrowing Base); provided, however, that if
an examination or appraisal is initiated during an Event of Default, all
charges, costs and expenses relating thereto shall be reimbursed by Borrowers
without regard to such limits on examinations and appraisals (it being
understood that any such examination once commenced, may be completed at
Borrowers’ expense notwithstanding the cessation of such Event of Default).
Obligors shall pay Agent’s then standard charges for examination activities,
including charges for its internal examination and appraisal groups, as well as
the charges of any third party used for such purposes. No Borrowing Base
calculation shall include Collateral acquired in a Permitted Acquisition or
otherwise outside the Ordinary Course of Business until completion of applicable
field examinations and appraisals (which shall not be included in the limits
provided above) satisfactory to Agent.

10.1.2. Financial and Other Information. Keep adequate records and books of
account with respect to its business activities, in which proper entries are
made in accordance with GAAP reflecting all financial transactions; and furnish
to Agent and Lenders:

(a) as soon as available, and in any event within ninety (90) days after the
close of each Fiscal Year, balance sheets as of the end of such Fiscal Year and
the related statements of income, cash flow and shareholders equity for such
Fiscal Year, with respect to Parent on a Consolidated Basis (and including on a
consolidating basis, if requested by Agent in its Permitted Discretion, during
the existence of an Excluded Subsidiary or an Unrestricted Subsidiary), which
consolidated statements shall be audited and certified (without qualification or
exception as to “going concern” or scope of the audit other than with respect
to, or resulting from, (i) an upcoming maturity date or (ii) any potential
inability to satisfy any financial covenant on a future date or for a future
period) by a firm of independent certified public accountants of recognized
standing selected by Borrowers and acceptable to Agent, and shall set forth in
comparative form corresponding figures for the preceding Fiscal Year and other
information acceptable to Agent;

(b) as soon as available, and in any event within forty-five (45) days after the
last month in a Fiscal Quarter, Quarterly Financial Statements; provided that,
if at any time (i) Availability is less than the greater of (x) $15,500,000 and
(y) 25% of the Borrowing Base, or (ii) an Event of Default has occurred and is
continuing, then Monthly Financial Statements must be delivered instead, as soon
as available, and in any event within thirty (30) days after the last day in any
calendar month, until such time (if any) that (1) in the case of the preceding
clause (i), Availability is greater than or equal to the greater of (x)
$15,500,000 and (y) 25% of the Borrowing Base or (2) in the case of the
preceding clause (ii), no Event of Default exists;

(c) [Reserved].

 

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(d) concurrently with delivery of financial statements under clauses (a) and (b)
above, or more frequently if requested by Agent while an Event of Default
exists, a Compliance Certificate executed by the chief financial officer of
Borrower Agent;

(e) concurrently with delivery of financial statements under clause (a) above,
copies of all management letters and other material reports submitted to
Obligors by their accountants in connection with such financial statements;

(f) not later than 30 days after the end of each Fiscal Year, projections of
Obligors’ consolidated balance sheets, results of operations, cash flow and
Availability for the next Fiscal Year, month by month, and for the next three
Fiscal Years, year by year;

(g) at Agent’s request, a summary listing of each Obligor’s trade payables,
specifying the trade creditor and balance due, and a detailed trade payable
aging, all in form satisfactory to Agent;

(h) promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or reports that any Obligor has made generally
available to its shareholders; copies of any regular, periodic and special
reports or registration statements or prospectuses that any Obligor files with
the Securities and Exchange Commission or any other Governmental Authority, or
any securities exchange; and copies of any press releases or other statements
made available by an Obligor to the public concerning material changes to or
developments in the business of such Obligor;

(i) promptly following Agent’s request, after the sending or filing thereof,
copies of any annual report to be filed in connection with each Plan or Foreign
Plan; and

(j) such other reports and information (financial or otherwise) as Agent may
request in its Permitted Discretion from time to time in connection with any
Collateral or any Borrower’s, Restricted Subsidiary’s or other Obligor’s
financial condition or business.

Information delivered pursuant to this Section 10.1.2 to Agent may be made
available by Agent to Lenders by posting such information on the Platform.
Information delivered pursuant to this Section 10.1.2 may also be delivered by
electronic communication pursuant to procedures approved by Agent pursuant to
Section 14.3 hereto. Information required to be delivered pursuant to this
Section 10.1.2 shall be in a format which is suitable for transmission.

10.1.3. Notices. Notify Agent in writing, promptly after an Obligor’s obtaining
knowledge thereof, of any of the following that affects an Obligor: (a) the
threat or commencement of any proceeding or investigation, whether or not
covered by insurance, if an adverse determination could have a Material Adverse
Effect; (b) any pending or threatened material labor dispute, strike or walkout,
or the expiration of any material labor contract; (c) any material default under
or termination of a Material Contract, the Term Loan Agreement or any other Term
Debt Document, any Subordinated Debt, or any contract that relates to Debt
(other than intercompany Debt) in an aggregate amount of $5,000,000 or more;
(d) the existence of any Default or Event of Default; (e) any judgment in an
amount exceeding $2,500,000; (f) the assertion of any Intellectual Property
Claim, if an adverse resolution could have a Material Adverse Effect; (g) any
violation or asserted violation of any Applicable Law (including ERISA, OSHA,
FLSA, or any Environmental Laws), if an adverse resolution could have a Material
Adverse Effect; (h) any material Environmental Release by an Obligor or on any
Property owned, leased or occupied by an Obligor; or receipt of any
Environmental Notice that could reasonably be expected to have a Material
Adverse Effect or materially impact the value of any Property of such Obligor;
(i) the occurrence of any ERISA Event that could reasonably be expected to have
a Material Adverse Effect either individually or in the aggregate; (j) material
notices under the Subordinated Debt (if any) or (k) material notices from Term
Agent in respect of the Term Debt (if any).

 

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10.1.4. Landlord and Storage Agreements. Promptly following request, provide
Agent with copies of all existing material agreements, and promptly after
execution thereof provide Agent with copies of all future material agreements,
between an Obligor and any landlord, warehouseman, processor, shipper, bailee or
other Person that owns any premises at which any material Collateral may be kept
or that otherwise may possess or handle any material Collateral.

10.1.5. Compliance with Laws. Comply with all Applicable Laws, including ERISA,
Environmental Laws, FLSA, OSHA and Anti-Terrorism Laws (in all material
respects) and maintain all Governmental Approvals necessary to the ownership of
its Properties or conduct of its business, unless failure to comply (other than
failure to comply with Anti-Terrorism Laws, which shall not be subject to the
“Material Adverse Effect” qualification in this sentence) or maintain could not
reasonably be expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, if any material Environmental Release occurs at or
on any Properties of any Obligor or Restricted Subsidiary, it shall act promptly
and diligently to investigate and report to Agent and all appropriate
Governmental Authorities the extent of, and to make appropriate remedial action
to eliminate, such Environmental Release if required by Environmental Law or
otherwise necessary to preserve the material value of such Property.

10.1.6. Taxes. Pay and discharge all material Taxes prior to the date on which
they become delinquent or penalties attach, unless such Taxes are being Properly
Contested.

10.1.7. Maintenance of Property; Insurance.

(a) Keep, and cause each other Obligor to keep, all material tangible personal
property that is necessary in the business of each Borrower or such other
Obligor or Restricted Subsidiary in good working order and condition in all
material respects, except (i) for ordinary wear and tear and casualty and
(ii) for damage from any fire, other casualty or condemnation.

(b) In addition to the insurance required hereunder with respect to Collateral,
maintain insurance, with financially sound and reputable insurance companies,
with respect to the Properties and business of Borrowers and Restricted
Subsidiaries of such type, in such amounts, and with such coverages and
deductibles as required pursuant to Section 8.6.2.

10.1.8. Licenses. Keep each License affecting any Collateral (including the
manufacture, distribution or disposition of Inventory) or any other material
Property of Obligors and Restricted Subsidiaries in full force and effect to the
extent the failure to do so could reasonably be expected to have a Material
Adverse Effect; promptly notify Agent of any proposed modification to any such
License that could reasonably be expected to have a Material Adverse Effect; pay
all royalties and other amounts when due under any License to the extent the
failure to do so could reasonably be expected to have a Material Adverse Effect;
and notify Agent of any default or breach asserted in writing by any Person to
have occurred under any License that could reasonably be expected to have a
Material Adverse Effect.

10.1.9. Additional Obligors and Collateral.

(a) (i) Notify Agent promptly after any Person becomes a Subsidiary (other than
any Excluded Subsidiary but including any Unrestricted Subsidiary being
reclassified as a Restricted Subsidiary) of the Parent, and promptly thereafter
(and in any event within thirty (30) Business Days (or such longer date as Agent
may agree)) if requested by Agent, (A) cause any such Person (other than a
Foreign Subsidiary) to become a Borrower or Guarantor by executing and
delivering to Agent a joinder

 

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agreement to this Agreement or such other document as Agent shall deem
reasonably appropriate for such purpose, (B) subject to the requirements of
Section 10.1.9(b), grant a Lien to Agent on such Person’s assets which are the
same types of assets which constitute Collateral under this Agreement to secure
the Obligations, and (C) deliver to Agent documents of the types referred to in
Sections 6.1(f) and 6.1(h) and if requested by Agent, favorable opinions of
counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
clause (i) of this Section 10.1.9(a)), and (ii) if any Equity Interests or Debt
of such Person are owned by or on behalf of any Obligor, to pledge such Equity
Interests and promissory notes evidencing such Debt, in each case in form,
content and scope reasonably satisfactory to the Agent. In no event shall
compliance with this Section 10.1.9 waive or be deemed a waiver or consent to
any transaction giving rise to the need to comply with this Section 10.1.9 if
such transaction was not otherwise expressly permitted by this Agreement or
constitute or be deemed to constitute, with respect to any such Subsidiary, an
approval of such Person as a Borrower or Guarantor or permit the inclusion of
any acquired assets of such Person in the computation of the Borrowing Base.

(b) If any material assets of the type constituting Collateral are acquired by
any Obligor after the Closing Date and are not subject to a Lien in favor of the
Agent, notify the Agent, and the Obligors will, within sixty (60) days after
such acquisition, cause such assets of the type constituting Collateral to be
subjected to a Lien securing the Obligations and take such actions as shall be
reasonably necessary to perfect such Liens, including actions described in
Section 7.6, all at the expense of the Obligors. In no event shall compliance
with this Section 10.1.9(b) waive or be deemed a waiver or consent to any
transaction giving rise to the need to comply with this Section 10.1.9(b) if
such transaction was not otherwise expressly permitted by this Agreement or
constitute or be deemed to constitute consent to the inclusion of any such
acquired assets in the computation of the Borrowing Base.

10.1.10. Post-Closing Covenant. No later than the date that is thirty (30) days
after the Closing Date, or such later date as may be agreed by Bank of America
in its Permitted Discretion, Borrowers shall have established a Deposit Account
at Bank of America.

10.1.11. Anti-Corruption Laws. Conduct its business in compliance in all
material respects with applicable anti-corruption laws and maintain policies and
procedures designed to promote and achieve compliance with such laws.

10.1.12. Maintenance of Existence. Subject to Section 10.2.9, maintain and
preserve, and cause each other Obligor to maintain and preserve, (a) its
existence and good standing in the jurisdiction of its organization and (b) its
qualification to do business and good standing in each jurisdiction where the
nature of its business makes such qualification necessary, other than where the
failure to be qualified or in good standing could not reasonably be expected to
have a Material Adverse Effect.

10.1.13. Information Regarding Collateral.

(a) Furnish to Agent at least fifteen (15) days (or such shorter period as Agent
may agree) prior written notice of any change in: (i) any Obligor’s legal name;
(ii) the location of any Obligor’s chief executive office, its principal place
of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility, but
excluding in-transit Collateral, Collateral out for repair, and Collateral
temporarily stored at a customer’s location in connection with the providing of
services to such customer); (iii) any Obligor’s organizational structure or
jurisdiction of incorporation or formation; or (iv) any Obligor’s Federal
Taxpayer Identification Number or organizational identification number assigned
to it by its state of organization. The Obligors shall not effect or permit any
change referred to in the preceding sentence unless the Obligors have undertaken
all

 

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such action, if any, reasonably requested by Agent under the UCC or otherwise
that is required in order for Agent to continue at all times following such
change to have a valid, legal and perfected first priority security interest in
all the Collateral (subject to Permitted Liens) for its own benefit and the
benefit of the other Secured Parties. Notwithstanding the foregoing, the
requirements of this Section 10.1.13 shall not be required in connection with
the change in the form of organization of Quintana LP from a Delaware limited
partnership to a Delaware limited liability company so long as such change takes
place within five (5) Business Days after the Closing Date.

(b) From time to time as may be reasonably requested by Agent, the Borrower
Agent shall supplement each Schedule hereto, or any representation herein or in
any other Loan Document, with respect to any matter arising after the Closing
Date that is required to be set forth or described in such Schedule or as an
exception to such representation or that is necessary to correct any information
in such Schedule or representation which has been rendered inaccurate thereby
(and, in the case of any supplements to any Schedule, such Schedule shall be
appropriately marked to show the changes made therein). Notwithstanding the
foregoing, no supplement or revision to any Schedule or representation shall be
deemed the Secured Parties’ consent to the matters reflected in such updated
Schedules or revised representations nor permit the Obligors to undertake any
actions otherwise prohibited hereunder or fail to undertake any action required
hereunder from the restrictions and requirements in existence prior to the
delivery of such updated Schedules or such revision of a representation; nor
shall any such supplement or revision to any Schedule or representation be
deemed the Secured Parties’ waiver of any Default resulting from the matters
disclosed therein.

10.1.14. Use of Proceeds. Each Borrower will use the proceeds of the Loans only
as provided in Section 2.1.3. No part of the proceeds of any Loans or Letters of
Credit hereunder will be used, by any Obligor or any of its Restricted
Subsidiaries for the purpose of funding any operations in, financing any
investments or activities in or making any payments in violation of Sanctions,
Anti-Terrorism Laws, anti-money laundering laws, United States Foreign Corrupt
Practices Act of 1977, as amended or any similar Applicable Law.

10.2. Negative Covenants. As long as any Commitments or Obligations are
outstanding (other than contingent indemnification claims for which a claim has
not been asserted), no Obligor shall, nor shall it permit any Restricted
Subsidiary to, directly or indirectly:

10.2.1. Permitted Debt. Create, incur, guarantee or suffer to exist any Debt,
except:

(a) the Obligations;

(b) Subordinated Debt;

(c) Permitted Purchase Money Debt;

(d) [Reserved];

(e) Debt with respect to Bank Products incurred in the Ordinary Course of
Business, as long as the aggregate mark-to-market obligations under Hedging
Agreements do not exceed $1,000,000 at any time;

(f) Debt (excluding Debt incurred or assumed in connection with a Permitted
Acquisition) that is in existence when a Person becomes a Restricted Subsidiary
or that is secured by an asset when acquired by an Obligor in accordance
herewith, as long as such Debt was not incurred in contemplation of such Person
becoming a Restricted Subsidiary or such acquisition, and does not exceed
$2,500,000 in the aggregate at any time;

 

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(g) Permitted Contingent Obligations;

(h) Refinancing Debt as long as each Refinancing Condition is satisfied;

(i) the Term Debt so long as (i) the maximum principal amount does not exceed
(x) $100,000,000 at the time of incurrence of such Debt and (y) thereafter, the
maximum amount permitted under the Intercreditor Agreement and (ii) such Term
Debt is subject to a satisfactory Intercreditor Agreement and Agent has approved
in its Permitted Discretion and received true, correct and complete copies of
all material Term Debt Documents prior to their effectiveness;

(j) intercompany Debt to the extent permitted by Section 10.2.5;

(k) Debt in respect of workers’ compensation claims, health, disability, or
other employee benefits, property, casualty, liability or self-insurance
obligations, performance bonds, export or import indemnitees or similar
instruments, customs bonds, governmental contracts, leases, surety, appeal or
similar bonds and completion guarantees provided by an Obligor or Restricted
Subsidiary in the Ordinary Course of its Business;

(l) Debt in respect of taxes, assessments or governmental charges to the extent
that payment thereof shall not at the time such debt is incurred be required to
be made in accordance with Section 10.1.6;

(m) Debt consisting of incentive, non-compete, consulting, deferred
compensation, or other similar arrangements entered in the Ordinary Course of
Business;

(n) Debt in respect of netting services and overdraft protections or other cash
management services in connection with deposit accounts and securities accounts,
in each case in the Ordinary Course of Business;

(o) Contingent Obligations in respect of Debt otherwise permitted under this
Section 10.2.1 or in respect of obligations not constituting Debt that are
permitted hereunder, in each case, subject, if applicable, to Section 10.2.6;

(p) Contingent Obligations of an Obligor in respect of Debt of another Obligor
otherwise permitted under this Section 10.2.1 or in respect of other obligations
of another Obligor permitted hereunder;

(q) Debt incurred in connection with the financing of insurance premiums in the
Ordinary Course of Business;

(r) without duplication of any other Debt, non-cash accruals of interest,
accretion or amortization of original issue discount and payment-in-kind
interest with respect to Debt permitted hereunder;

(s) Debt constituting any indemnification obligation, adjustment of purchase
price, earn-out obligation or other post-closing balance sheet adjustment prior
to such time as it becomes a liability on the balance sheet of such Person in
accordance with GAAP or that exists on the balance sheet of such Person on a
non-interest bearing basis and is paid within thirty days of the date such
obligation becomes a liability on the balance sheet;

 

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(t) Debt incurred or assumed in connection with a Permitted Acquisition and does
not exceed $2,500,000 in the aggregate at any time, so long as (i) the Fixed
Charge Coverage Ratio is not less than 1.00 to 1.00 on a pro forma basis and
(ii) no Default or Event of Default exists or would result therefrom;

(u) Debt incurred pursuant to any Permitted Sale-Leaseback;

(v) accrued FAS 143 asset retirement obligations;

(w) Debt under any Hedging Agreement to the extent such Hedging Agreement is
permitted by this Agreement;

(x) Debt that is not included in any of the preceding clauses of this Section,
is not secured by a Lien and does not exceed $10,000,000 in the aggregate at any
time;

(y) existing Debt shown on Schedule 10.2.1(y);

(z) Permitted Ratio Debt; and

(aa) Guarantees of any of the foregoing.

10.2.2. Permitted Liens. Create or suffer to exist any Lien upon any of its
Property, except the following (collectively, “Permitted Liens”):

(a) Liens in favor of Agent;

(b) Purchase Money Liens securing Permitted Purchase Money Debt;

(c) Liens for Taxes not yet due or being Properly Contested (without regard to
clause (e) of the definition of Properly Contested so long as no efforts to
enforce such Liens have been commenced);

(d) statutory Liens (other than Liens for Taxes or imposed under ERISA) arising
in the Ordinary Course of Business, but only if (i) payment of the obligations
secured thereby is not yet due or is being Properly Contested, and (ii) such
Liens do not materially impair the value or use of the Property or materially
impair operation of the business of any Obligor;

(e) Liens incurred or deposits made in the Ordinary Course of Business to secure
the performance of tenders, bids, contracts (except those relating to Borrowed
Money), surety, stay customs and appeal bonds, statutory obligations and similar
obligations, or arising as a result of progress payments under government
contracts;

(f) Liens arising in the Ordinary Course of Business that are subject to Lien
Waivers;

(g) Liens arising by virtue of a judgment or judicial order that do not
constitute an Event of Default;

(h) easements, rights-of-way, restrictions, covenants or other agreements of
record, and other similar charges or encumbrances on Real Estate, that do not
secure any monetary obligation and do not interfere with the Ordinary Course of
Business;

(i) municipal and zoning ordinances, building and other land use laws imposed by
any governmental authority which are not violated in any material respect by
existing improvements or the present use of Property;

 

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(j) leases, subleases, licenses, sublicenses granted to others in the Ordinary
Course of Business;

(k) any interest or title of a lessor or sublessor, licensor or sublicensor
under any lease or license not prohibited by this Agreement or the other
Security Documents, including any interest of a bailor;

(l) normal and customary rights of setoff upon deposits in favor of depository
institutions or brokerages, and Liens of a collecting bank on Payment Items in
the course of collection, bankers’ Liens securing amounts owing to such bank
with respect to overdrafts, cash management and operating account arrangements,
including those involving pooled accounts and netting arrangements; provided
that in no case shall such Liens secure (either directly or indirectly) the
repayment of any Debt (other than on account of such overdrafts, netting or cash
management);

(m) Liens on assets (other than Accounts and Inventory) acquired in a Permitted
Acquisition, securing Debt permitted by Section 10.2.1(f) or Section 10.2.1(t);

(n) contractual Liens and Liens imposed by law (other than Liens for Taxes or
imposed under ERISA) such as carriers’, warehousemen’s, materialmen’s,
landlords’, workmen’s, suppliers’, repairmen’s and mechanics’ Liens and other
similar Liens arising in the Ordinary Course of Business, but only if
(i) payment of the obligations secured thereby is not yet delinquent or is being
Properly Contested, and (ii) such Liens do not materially impair the value or
use of the Property or materially impair operation of the business of any
Obligor;

(o) Liens on unearned premiums under insurance policies in connection with the
financing of insurance premiums;

(p) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by such Person in the
Ordinary Course of Business in accordance with the past practices of such
Person;

(q) Liens on property or assets acquired pursuant to a Permitted Acquisition, or
on property or assets of a Restricted Subsidiary in existence at the time such
Restricted Subsidiary or property is acquired pursuant to a Permitted
Acquisition; provided that (x) any Debt that is secured by such Liens is
permitted hereunder and (y) such Liens are not incurred in connection with, or
in contemplation or anticipation of, such Permitted Acquisition and do not
attach to any other property or assets of the Obligors or any Restricted
Subsidiaries other than the property and assets subject to such Liens at the
time of such Permitted Acquisition, together with any extensions, renewals and
replacements of the foregoing, so long as the Debt secured by such Liens is
permitted hereunder and such extension, renewal or replacement does not encumber
any additional assets or properties of the Obligors;

(r) security given to a public or private utility or any Governmental Authority
as required in the Ordinary Course of Business;

(s) the filing of financing statements solely as a precautionary measure in
connection with operating leases or consignments;

(t) Liens with respect to obligations that do not in the aggregate exceed
$1,000,000 at any time outstanding;

 

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(u) the replacement, extension or renewal of any Permitted Lien; provided, that
such Lien shall at no time be extended to cover any assets or property other
than such assets or property subject thereto on the date such Lien was incurred;

(v) Liens securing the Debt that is permitted under Section 10.2.1(i); provided
that such Liens are at all times subject to the terms of the Intercreditor
Agreement; and

(w) existing Liens shown on Schedule 10.2.2.

(x) any interest or title of a lessor under any lease entered into by any
Obligor in the Ordinary Course of Business and covering only the assets so
leased;

(y) Liens arising out of any Permitted Sale-Leaseback;

(z) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods
in the Ordinary Course of Business;

(aa) Liens encumbering Equity Interests issued by a joint venture that is not a
Restricted Subsidiary and arising under rights of first offer, rights of first
refusal, tag-along rights, drag-along rights, and other customary restrictions
on the transfer of such Equity Interests contained in organizational documents
governing the terms of such joint venture to which an Obligor is a party or by
which such Person is bound;

(bb) Liens securing obligations in an aggregate principal amount not to exceed
$5,000,000; provided, that, in the event such Liens are granted in Collateral
such Liens are junior in priority to the Liens granted to the Agent.

10.2.3. [Reserved].

10.2.4. Distributions; Upstream Payments. Declare or make any Distributions
except (a) Upstream Payments, (b) dispositions by Obligors permitted hereunder,
(c) so long as no Event of Default has occurred and is continuing at the time
such Distributions are declared or made, Distributions not exceeding $2,500,000
during any Fiscal Year pursuant to and in accordance with stock option plans or
other benefit plans for management, directors or employees of the Obligors,
(d) the Parent may make Distributions to purchase, redeem, retire or otherwise
acquire its Equity Interests to the extent such Distribution is made from the
substantially concurrent receipt by the Parent of capital contributions or the
substantially concurrent issuance of new Equity Interests of the Parent and
(e) other Distributions so long as the Permitted Payment Conditions have been
satisfied.

10.2.5. Restricted Investments. Make any Restricted Investment.

10.2.6. Disposition of Assets. Make any Asset Disposition, except a Permitted
Asset Disposition.

10.2.7. [Reserved]

10.2.8. Restrictions on Payment of Certain Debt. Make any payments (whether
voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or
acquisition) with respect to any (a) Permitted Ratio Debt or Subordinated Debt,
except (i) any scheduled payment, or other contractually required payment, as
and when due and payable in accordance with the terms of the definitive
documentation governing such Permitted Ratio Debt or Subordinated Debt
(including any applicable subordination agreements), (ii) fees and expenses
payable to holders of such Permitted Ratio Debt or Subordinated Debt required
under the definitive documentation governing such Permitted Ratio

 

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Debt or Subordinated Debt (including any applicable subordination agreements),
(iii) in connection with, and to the extent permitted hereby, any Refinancing
Debt in connection with such Permitted Ratio Debt or Subordinated Debt and
(iv) any other payments (whether voluntary or mandatory, or a prepayment,
redemption, retirement, defeasance or acquisition) so long as the Permitted
Payment Conditions have been satisfied; or (b) Term Debt, except (i) any
scheduled payment, or other contractually required payment, as and when due and
payable in accordance with the terms of the definitive documentation governing
such Term Debt (including any applicable Intercreditor Agreement), (ii) fees and
expenses payable to Term Agent and Term Lenders required under the Term Loan
Debt Documents, (iii) in connection with, and to the extent permitted hereby,
any Refinancing Debt in connection with such Term Debt and (iii) other payments
to the extent expressly permitted in the Intercreditor Agreement and (iv) any
other payments (whether voluntary or mandatory, or a prepayment, redemption,
retirement, defeasance or acquisition) so long as the Permitted Payment
Conditions have been satisfied.

10.2.9. Fundamental Changes. (a) Unless notice is delivered in accordance with
Section 10.1.13, as applicable, change its name or conduct business under any
fictitious name; change its tax, charter or other organizational identification
number; change its form or state of organization; or (b) liquidate, wind up its
affairs or dissolve itself; or merge, combine or consolidate with any Person,
whether in a single transaction or in a series of related transactions, in each
case in this clause (b), except for (i) mergers or consolidations of a Borrower
or wholly-owned Restricted Subsidiary with or into another wholly-owned
Restricted Subsidiary or Borrower, (ii) Permitted Acquisitions, (iii) mergers
with any Unrestricted Subsidiary so long as the Obligor is the surviving party,
(iv) liquidations which result in all of the material Property (if any) of the
liquidating entity being transferred to, or acquired by, any Obligor and (v) the
change in the form of organization of Quintana LP from a Delaware limited
partnership to a Delaware limited liability company within five (5) Business
Days after the Closing Date.

10.2.10. Subsidiaries. Form or acquire any Subsidiary after the Closing Date,
except in accordance with Sections 10.1.9, 10.2.5 or 10.2.9; or permit any
existing Restricted Subsidiary to issue any additional Equity Interests except
(a) directors’ qualifying shares, (b) as permitted pursuant to the definition of
Permitted Asset Disposition or (c) to any other Obligor.

10.2.11. Organic Documents. Amend, modify or otherwise change any of its Organic
Documents as in effect on the Closing Date to the extent such amendment,
modification or change could reasonably be expected to result in a Material
Adverse Effect.

10.2.12. Tax Consolidation. File or consent to the filing of any consolidated
income tax return for U.S. federal income tax purposes with any Person other
than Obligors and Unrestricted Subsidiaries.

10.2.13. Accounting Changes. Make any material change in accounting treatment or
reporting practices, except as required by GAAP and in accordance with
Section 1.2; or change its Fiscal Year without the consent of Agent.

10.2.14. Restrictive Agreements. Become a party to any Restrictive Agreement,
except a Restrictive Agreement (a) in effect on the Closing Date; (b) relating
to secured Debt permitted hereunder, as long as the restrictions apply only to
collateral for such Debt; (c) constituting customary restrictions on assignment,
encumbrances or subletting in leases and other contracts; (d) Restrictive
Agreements in effect at the time such Restricted Subsidiary becomes a
Subsidiary, so long as such agreement was not entered into in contemplation of
such Person becoming a Restricted Subsidiary; (e) restrictions and conditions
imposed by Law or any Loan Document; (f) customary restrictions and conditions
contained in agreements relating to the sale of an Obligor or an asset pending
such sale, provided that such restrictions and conditions apply only to the
Obligor or such asset that is to be sold and such sale is permitted under this
Agreement; (g) customary provisions in joint venture agreements and

 

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other similar agreements applicable to joint ventures entered into in the
Ordinary Course of Business; or (h) constituting a Term Loan Document, as
amended, restated, supplemented or otherwise modified as permitted under the
Intercreditor Agreement, including any Refinancing Debt in respect thereof.

10.2.15. Hedging Agreements. Enter into any Hedging Agreement, except to hedge
risks arising in the Ordinary Course of Business and not for speculative
purposes.

10.2.16. Conduct of Business. Engage in any business, other than its business as
conducted on the Closing Date and any activities ancillary, incidental,
complementary or reasonably related thereto.

10.2.17. Affiliate Transactions. Enter into or be party to any transaction with
an Affiliate, except (a) transactions contemplated by or permitted by the Loan
Documents; (b) payment of reasonable compensation and benefits to officers and
employees for services actually rendered, and payment of customary directors’
fees and indemnities, and loans and investments permitted by Section 10.2.5; (c)
transactions solely among Obligors; (d) transactions with Affiliates consummated
prior to the Closing Date, as shown on Schedule 10.2.17; (e) transactions in
furtherance of the Qualified IPO; (f) any issuances of securities or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment agreements, stock options and stock ownership plans in
each case, as permitted by this Agreement; or (g) transactions with Affiliates
in the Ordinary Course of Business, upon fair and reasonable terms and no less
favorable (taken as a whole) than would be obtained in a comparable arm’s-length
transaction with a non-Affiliate.

10.2.18. Plans. Become party to any Multiemployer Plan or Foreign Plan, other
than any in existence on the Closing Date, which, in any such case, would
reasonably be expected to have a Material Adverse Effect.

10.2.19. Amendments to Term Debt Documents, Permitted Ratio Debt or Subordinated
Debt. Amend, supplement or otherwise modify (a) any document, instrument or
agreement relating to any Permitted Ratio Debt if such modification
(i) increases the principal balance of such Debt (other than as a result of the
capitalization of fees and interest), or increases any required payment of
principal or interest (other than as a result of the capitalization of fees and
interest); (ii) accelerates the date on which any installment of principal or
any interest is due, or adds any additional redemption, put or prepayment
provisions; (iii) shortens the final maturity date or otherwise accelerates
amortization; or (iv) modifies any covenant in a manner or adds any
representation, covenant or default that is more onerous or restrictive in any
material respect (taken as a whole) for any Obligor or Restricted Subsidiary, or
that is otherwise materially adverse to any Obligor, any Restricted Subsidiary
or Lenders, (b) the Term Loan Agreement except as permitted under the
Intercreditor Agreement or (c) any Subordinated Debt except as permitted under
the subordination agreement with respect thereto; provided that, for the
avoidance of doubt, any Refinancing Debt in respect thereof which is otherwise
permitted under this Agreement shall not constitute an amendment, supplement or
waiver for purposes of this Section 10.2.19.

10.2.20. Use of Proceeds. Use the proceeds of any credit extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, in
violation of Section 2.1.3 of this Agreement.

10.3. Fixed Charge Coverage Ratio. As long as any Commitments or Obligations are
outstanding (other than contingent indemnification claims for which a claim has
not been asserted), Borrowers shall maintain a Fixed Charge Coverage Ratio of at
least 1.0 to 1.0 while a Covenant Trigger Period is in effect, measured as of
the last day of the Measurement Period immediately prior to the Covenant Trigger
Period and as of the last day of each Measurement Period ending thereafter until
the

 

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Covenant Trigger Period is no longer in effect; provided that the results of
operation and indebtedness of any Unrestricted Subsidiaries shall not be taken
into account for purposes of compliance with this Section 10.3 (except with
respect to any cash received by an Obligor from an Unrestricted Subsidiary).

SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

11.1. Events of Default. Each of the following shall be an “Event of Default” if
it occurs for any reason whatsoever, whether voluntary or involuntary, by
operation of law or otherwise:

(a) Any Obligor fails to pay (i) any principal on its Obligations when due, or
(ii) within three (3) Business Days of when due, any interest on its Obligations
or any other fee, charge, amount or liability provided for herein or in the Loan
Documents, in each case, whether at stated maturity, on demand, upon
acceleration or otherwise;

(b) Any representation, warranty or other written statement of an Obligor made
in connection with any Loan Documents or transactions contemplated thereby is
incorrect or misleading in any material respect (without duplication of any
material qualifier applicable thereto) when made;

(c) An Obligor breaches or fails to perform any covenant contained in
Section 7.2, 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.2, 10.1.3(d), 10.2 or 10.3;

(d) An Obligor breaches or fails to perform any other covenant contained in any
Loan Documents (other than (a), (b) or (c) above), and such breach or failure is
not cured within 30 days after a Senior Officer of such Obligor has knowledge
thereof or receives notice thereof from Agent, whichever is sooner; provided,
however, that such notice and opportunity to cure shall not apply if the breach
or failure to perform is not capable of being cured within such period or is a
willful breach by an Obligor;

(e) A Guarantor repudiates, revokes or attempts to revoke its guaranty under
this Agreement, in each case, in writing; an Obligor denies or contests the
validity or enforceability of any Loan Documents or Obligations, or the
perfection or priority of any Lien granted to Agent except for Collateral with a
value not in excess of $2,500,000, in each case, in writing; or any Loan
Document ceases to be in full force or effect for any reason (other than as a
result of a waiver or release by Agent and Lenders or as otherwise permitted
hereunder or thereunder);

(f) Any breach or default (beyond the period of grace, if any, provided in the
instrument or agreement under which the Debt was created) of an Obligor or
Restricted Subsidiary occurs under any documentation evidencing or executed in
connection with the Term Debt or any instrument or agreement to which it is a
party or by which it or any of its Properties is bound, relating to any Debt
(other than the Obligations or the Term Debt) in excess of $5,000,000 that, in
either case, has not been waived, if the maturity of or any payment with respect
to such Debt or Term Debt may be accelerated or demanded due to such breach;

(g) Any judgment or order for the payment of money is entered against an Obligor
in an amount that exceeds, individually or cumulatively with all unsatisfied
judgments or orders against all Obligors, $5,000,000 (net of insurance coverage
therefor that has not been denied by the insurer), and such final judgment(s) or
order(s) shall not have been satisfied, vacated, discharged, stayed or bonded
pending appeal within thirty (30) days from the entry thereof;

 

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(h) A loss, theft, damage or destruction occurs with respect to any Collateral
if the amount not covered by insurance could reasonably be expected to have a
Material Adverse Effect;

(i) The Obligors, taken as a whole, are enjoined, restrained or in any way
prevented by any Governmental Authority from conducting any material part of
their business; there is a cessation of any material part of the Obligors’
business for a material period of time (other than as permitted hereunder); any
material Collateral or Property of the Obligors, taken as a whole, is taken or
impaired through condemnation; an Obligor agrees to or commences any
liquidation, dissolution or winding up of its affairs (except as otherwise
permitted hereunder); or the Obligor is not Solvent;

(j) An Insolvency Proceeding is commenced by an Obligor or a Restricted
Subsidiary; an Obligor or a Restricted Subsidiary makes an offer of settlement,
extension or composition to its unsecured creditors generally; a trustee is
appointed to take possession of any substantial Property of or to operate any of
the business of an Obligor a Restricted Subsidiary; or an Insolvency Proceeding
is commenced against an Obligor or a Restricted Subsidiary and such Obligor or
Restricted Subsidiary consents to institution of the proceeding, the petition
commencing the proceeding is not timely contested by such Obligor or Restricted
Subsidiary, the petition is not dismissed or stayed within 60 days after filing,
or an order for relief is entered in the proceeding;

(k) An ERISA Event occurs that has resulted or could reasonably be expected to
result in a Material Adverse Effect, or that constitutes grounds for appointment
of a trustee for or termination by the PBGC of any Pension Plan or Multiemployer
Plan; an Obligor, a Restricted Subsidiary or ERISA Affiliate fails to pay when
due any material installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan; or any event similar to
the foregoing occurs or exists with respect to a Foreign Plan;

(l) An Obligor or any of its Senior Officers is criminally indicted or convicted
for (i) a felony committed in the conduct of the Obligor’s business, or
(ii) violating any state or federal law (including the Controlled Substances
Act, Money Laundering Control Act of 1986 and Illegal Exportation of War
Materials Act) which, in either case, could lead to forfeiture of any material
Collateral; or

(m) A Change of Control occurs; or any event occurs or condition exists that has
a Material Adverse Effect.

(n) Any Lien on Collateral with a value in excess of $2,500,000 created
hereunder or provided for hereby or under any related agreement for any reason
ceases to be or is not a valid and perfected first priority Lien (subject only
to Permitted Liens that are expressly allowed to have priority over Agent’s
Liens), other than as a result of a waiver or release by Agent and Lenders or as
otherwise permitted under any Loan Document.

11.2. Remedies upon Default . If an Event of Default described in
Section 11.1(j) occurs with respect to any Obligor, then to the extent permitted
by Applicable Law, all Obligations (other than Secured Bank Product Obligations)
shall become automatically due and payable and all Commitments shall terminate,
without any action by Agent or notice of any kind. In addition, or if any other
Event of Default exists, Agent may in its discretion (and shall upon written
direction of Required Lenders) do any one or more of the following from time to
time:

(a) declare any Obligations (other than Secured Bank Product Obligations)
immediately due and payable, whereupon they shall be due and payable without
diligence, presentment, demand, protest or notice of any kind, all of which are
hereby waived by Borrowers to the fullest extent permitted by law;

(b) terminate, reduce or condition any Commitment or adjust the Borrowing Base;

 

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(c) require Obligors to Cash Collateralize their LC Obligations, Secured Bank
Product Obligations and other Obligations that are contingent or not yet due and
payable, and if Obligors fail to deposit such Cash Collateral, Agent may (and
shall upon the direction of Required Lenders) advance the required Cash
Collateral as Revolver Loans (whether or not an Overadvance exists or is created
thereby, or the conditions in Section 6.2 are satisfied); provided, that if
Borrowers are required to provide an amount of Cash Collateral pursuant to this
Section 11.2, such amount (to the extent not applied in accordance with
Section 5.6) shall be returned to Borrowers within three Business Days after all
Events of Default have been waived; and

(d) exercise any other rights or remedies afforded under any agreement, by law,
at equity or otherwise, including the rights and remedies of a secured party
under the UCC. Such rights and remedies include the rights to (i) take
possession of any Collateral; (ii) require Obligors to assemble Collateral, at
Obligors’ expense, and make it available to Agent at a place designated by
Agent; (iii) subject to the terms of any Lien Wavier, as applicable, enter any
premises where Collateral is located and store Collateral on such premises until
sold (and if the premises are owned or leased by an Obligor, Obligors agree not
to charge for such storage); and (iv) sell or otherwise dispose of any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale, with such notice as may be
required by Applicable Law, in lots or in bulk, at such locations, all as Agent,
in its discretion, deems advisable. Each Obligor agrees that 10 days’ notice of
any proposed sale or other disposition of Collateral by Agent shall be
reasonable, and that any sale conducted on the internet or to a licensor of
Intellectual Property shall be commercially reasonable. Agent may conduct sales
on any Obligor’s premises, without charge, and any sale may be adjourned from
time to time in accordance with Applicable Law. Agent shall have the right to
sell, lease or otherwise dispose of any Collateral for cash, credit or any
combination thereof, and Agent may purchase any Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of the purchase
price, may credit bid and set off the amount of such price against the
Obligations.

11.3. License. For the purpose of enabling Agent, upon the occurrence and during
the continuance of an Event of Default, to exercise the rights and remedies
under Section 11.2 at such time as Agent shall be lawfully entitled to exercise
such rights and remedies, and for no other purpose, Agent is hereby granted an
irrevocable, non-exclusive license or other right to use, license or sub-license
(without payment of royalty or other compensation to any Person) any or all
Intellectual Property of Obligors, computer hardware and software, trade
secrets, brochures, customer lists, promotional and advertising materials,
labels, packaging materials and other Property, in advertising for sale,
marketing, selling, collecting, completing manufacture of, or otherwise
exercising any rights or remedies with respect to, any Collateral. Each
Obligor’s rights and interests under Intellectual Property shall inure to
Agent’s benefit.

11.4. Setoff. At any time during an Event of Default, Agent, Issuing Bank,
Lenders, and any of their Affiliates are authorized, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) (other than tax, payroll,
trust or employee benefit accounts) at any time owing by Agent, Issuing Bank,
such Lender or such Affiliate to or for the credit or the account of an Obligor
against its Obligations, whether or not Agent, Issuing Bank, such Lender or such
Affiliate shall have made any demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured or are
owed to a branch or office of Agent, Issuing Bank, such Lender or such Affiliate
different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of Agent, Issuing Bank, each Lender and each such
Affiliate under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Person may have.

 

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11.5. Remedies Cumulative; No Waiver .

11.5.1. Cumulative Rights. All agreements, warranties, guaranties, indemnities
and other undertakings of Obligors under the Loan Documents are cumulative and
not in derogation of each other. The rights and remedies of Agent and Lenders
under the Loan Documents are cumulative, may be exercised at any time and from
time to time, concurrently or in any order, and are not exclusive of any other
rights or remedies available by agreement, by law, at equity or otherwise. All
such rights and remedies shall continue in full force and effect until Full
Payment of all Obligations.

11.5.2. Waivers. No waiver or course of dealing shall be established by (a) the
failure or delay of Agent or any Lender to require strict performance by any
Obligor under any Loan Document, or to exercise any rights or remedies with
respect to Collateral or otherwise; (b) the making of any Loan or issuance of
any Letter of Credit during a Default, Event of Default or other failure to
satisfy any conditions precedent; or (c) acceptance by Agent or any Lender of
any payment or performance by an Obligor under any Loan Documents in a manner
other than that specified therein. Any failure to satisfy a financial covenant
on a measurement date shall not be cured or remedied by satisfaction of such
covenant on a subsequent date.

SECTION 12. AGENT

12.1. Appointment, Authority and Duties of Agent.

12.1.1. Appointment and Authority. Each Secured Party appoints and designates
Bank of America as Agent under all Loan Documents. Agent may, and each Secured
Party authorizes Agent to, enter into all Loan Documents to which Agent is
intended to be a party and accept all Security Documents. Any action taken by
Agent in accordance with the provisions of the Loan Documents, and the exercise
by Agent of any rights or remedies set forth therein, together with all other
powers reasonably incidental thereto, shall be authorized by and binding upon
all Secured Parties. Without limiting the generality of the foregoing, Agent
shall have the sole and exclusive authority to (a) act as the disbursing and
collecting agent for Lenders with respect to all payments and collections
arising in connection with the Loan Documents; (b) execute and deliver as Agent
each Loan Document, including any intercreditor or subordination agreement, and
accept delivery of each Loan Document; (c) act as collateral agent for Secured
Parties for purposes of perfecting and administering Liens under the Loan
Documents, and for all other purposes stated therein; (d) manage, supervise or
otherwise deal with Collateral; and (e) take any Enforcement Action or otherwise
exercise any rights or remedies with respect to any Collateral or under any Loan
Documents, Applicable Law or otherwise. Agent alone shall be authorized to
determine eligibility and applicable advance rates under the Borrowing Base,
whether to impose or release any reserve, or whether any conditions to funding
or issuance of a Letter of Credit have been satisfied, which determinations and
judgments, if exercised in good faith, shall exonerate Agent from liability to
any Secured Party or other Person for any error in judgment.

12.1.2. Duties. The title of “Agent” is used solely as a matter of market custom
and the duties of Agent are administrative in nature only. Agent has no duties
except those expressly set forth in the Loan Documents, and in no event does
Agent have any agency, fiduciary or implied duty to or relationship with any
Secured Party or other Person by reason of any Loan Document or related
transaction. The conferral upon Agent of any right shall not imply a duty to
exercise such right, unless instructed to do so by Lenders in accordance with
this Agreement.

12.1.3. Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by an Agent Professional. Agent shall not
be responsible for the negligence or misconduct of any agents, employees or
Agent Professionals selected by it with reasonable care.

 

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12.1.4. Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of joining
any other party, unless required by Applicable Law. In determining compliance
with a condition for any action hereunder, including satisfaction of any
condition in Section 6, Agent may presume that the condition is satisfactory to
a Secured Party unless Agent has received notice to the contrary from such
Secured Party before Agent takes such action. Agent may request instructions
from Required Lenders with respect to any act (including the failure to act) in
connection with any Loan Documents or Collateral, and may seek assurances to its
satisfaction from Secured Parties of their indemnification obligations against
Claims that could be incurred by Agent. Agent may refrain from any act until it
has received such instructions or assurances, and shall not incur liability to
any Person by reason of so refraining. Instructions of Required Lenders shall be
binding upon all Secured Parties, and no Secured Party shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting pursuant to instructions of Required Lenders. Notwithstanding the
foregoing, instructions by and consent of specific parties shall be required to
the extent provided in Section 14.1.1. In no event shall Agent be required to
take any action that it determines in its discretion is contrary to Applicable
Law or any Loan Documents or could subject any Agent Indemnitee to liability.

12.2. Agreements Regarding Collateral and Borrower Materials.

12.2.1. Lien Releases; Care of Collateral. Secured Parties authorize Agent to
release any Lien on any Collateral (a) upon Full Payment; (b) that is the
subject of a disposition or Lien that Parent certifies in writing is a Permitted
Asset Disposition or a Permitted Lien entitled to priority over Agent’s Liens
(and Agent may rely conclusively on such certificate without further inquiry);
(c) that does not constitute a material part of the Collateral; or (d) subject
to Section 14.1, with the consent of Required Lenders. Secured Parties authorize
Agent to subordinate its Liens to any Purchase Money Lien or other Lien entitled
to priority under this Agreement. Secured Parties hereby authorize Agent to
execute and deliver any instruments, documents and agreements necessary or
desirable to evidence and confirm the release of any Collateral, or the
subordination of the Lien encumbering any Collateral, pursuant to the foregoing
provisions of this paragraph, all without the further consent or joinder of any
Lender. Agent has no obligation to assure that any Collateral exists or is owned
by an Obligor, or is cared for, protected or insured, nor to assure that Agent’s
Liens have been properly created, perfected or enforced, or are entitled to any
particular priority, nor to exercise any duty of care with respect to any
Collateral.

12.2.2. Possession of Collateral. Agent and Secured Parties appoint each Secured
Party as agent (for the benefit of Secured Parties) for the purpose of
perfecting Liens in Collateral held or controlled by it, to the extent such
Liens are perfected by possession or control. If a Secured Party obtains
possession or control of any Collateral, it shall notify Agent thereof and,
promptly upon Agent’s request, deliver such Collateral to Agent or otherwise
deal with it in accordance with Agent’s instructions.

12.2.3. Reports. Agent shall promptly provide to Lenders, when complete, any
field examination, audit or appraisal report prepared for Agent with respect to
any Obligor or Collateral (“Report”). Reports and other Borrower Materials may
be made available to Lenders by providing access to them on the Platform, but
Agent shall not be responsible for system failures or access issues that may
occur from time to time, except such system failures or access issues that arise
as a result of Agent’s gross negligence or willful misconduct. Each Lender
agrees (a) that Reports are not intended to be comprehensive audits or
examinations, and that Agent or any other Person performing an audit or
examination will inspect only limited information and will rely significantly
upon Borrowers’ books, records and representations; (b) that Agent makes no
representation or warranty as to the accuracy or completeness of any Borrower
Materials and shall not be liable for any information contained in or omitted
from any Borrower Materials, including any Report; and (c) to keep all Borrower
Materials confidential and strictly for such Lender’s internal use, not to
distribute any Report or other Borrower Materials (or the contents thereof) to
any Person (except to such Lender’s Participants, attorneys and accountants),
and to use all Borrower Materials solely for administration of the Obligations.
Each Lender

 

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shall indemnify and hold harmless Agent and any other Person preparing a Report
from any action such Lender may take as a result of or any conclusion it may
draw from any Borrower Materials, as well as from any Claims arising as a direct
or indirect result of Agent furnishing same to such Lender, via the Platform or
otherwise.

12.3. Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy, e-mail or other
electronic means) believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person. Agent shall have a reasonable and
practicable amount of time to act upon any instruction, notice or other
communication under any Loan Document, and shall not be liable for any delay in
acting.

12.4. Action Upon Default. Agent shall not be deemed to have knowledge of any
Default or Event of Default, or of any failure to satisfy any conditions in
Section 6, unless it has received written notice from a Borrower or Required
Lenders specifying the occurrence and nature thereof. If a Lender acquires
knowledge of a Default, Event of Default or failure of such conditions, it shall
promptly notify Agent and the other Lenders thereof in writing. Each Secured
Party agrees that, except as otherwise provided in any Loan Documents or with
the written consent of Agent and Required Lenders, it will not take any
Enforcement Action, accelerate Obligations (other than Secured Bank Product
Obligations) or assert any rights relating to any Collateral.

12.5. Ratable Sharing. If any Lender obtains any payment or reduction of any
Obligation, whether through set-off or otherwise, in excess of its ratable share
of such Obligation, such Lender shall forthwith purchase from Secured Parties
participations in the affected Obligation as are necessary to share the excess
payment or reduction on a Pro Rata basis or in accordance with Section 5.6.2, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Notwithstanding
the foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn over the full amount thereof to Agent for
application under Section 4.2.2 and it shall provide a written statement to
Agent describing the Obligation affected by such payment or reduction. No Lender
shall set off against a Dominion Account without Agent’s prior consent.

12.6. Indemnification. EACH SECURED PARTY SHALL INDEMNIFY AND HOLD HARMLESS
AGENT INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY
OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR
ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED THAT ANY CLAIM AGAINST AN AGENT
INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY
OF AGENT). In Agent’s discretion, it may reserve for any Claims made against an
Agent Indemnitee or Issuing Bank Indemnitee, and may satisfy any judgment, order
or settlement relating thereto, from proceeds of Collateral prior to making any
distribution of Collateral proceeds to Secured Parties. If Agent is sued by any
receiver, trustee or other Person for any alleged preference or fraudulent
transfer, then any monies paid by Agent in settlement or satisfaction of such
proceeding, together with all interest, costs and expenses (including attorneys’
fees) incurred in the defense of same, shall be promptly reimbursed to Agent by
each Secured Party to the extent of its Pro Rata share.

12.7. Limitation on Responsibilities of Agent. Agent shall not be liable to any
Secured Party for any action taken or omitted to be taken under the Loan
Documents, except for losses directly and solely caused by Agent’s gross
negligence or willful misconduct. Agent does not assume any responsibility for
any failure or delay in performance or any breach by any Obligor, Lender or
other Secured Party of any obligations under the Loan Documents. Agent does not
make any express or implied representation, warranty or guarantee to Secured
Parties with respect to any Obligations, Collateral, Liens, Loan Documents or
Obligor. No Agent Indemnitee shall be responsible to Secured

 

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Parties for any recitals, statements, information, representations or warranties
contained in any Loan Documents or Borrower Materials; the execution, validity,
genuineness, effectiveness or enforceability of any Loan Documents; the
genuineness, enforceability, collectability, value, sufficiency, location or
existence of any Collateral, or the validity, extent, perfection or priority of
any Lien therein; the validity, enforceability or collectability of any
Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or Account
Debtor. No Agent Indemnitee shall have any obligation to any Secured Party to
ascertain or inquire into the existence of any Default or Event of Default, the
observance by any Obligor of any terms of the Loan Documents, or the
satisfaction of any conditions precedent contained in any Loan Documents.

12.8. Successor Agent and Co-Agents.

12.8.1. Resignation; Successor Agent. Agent may resign at any time by giving at
least 30 days written notice thereof to Lenders and Borrowers. Required Lenders
may appoint a successor that is (a) a Lender or Affiliate of a Lender; or (b) a
financial institution reasonably acceptable to Required Lenders and (provided no
Event of Default exists) Borrowers. If no successor is appointed by the
effective date of Agent’s resignation, then on such date, Agent may appoint a
successor acceptable to it in its discretion (which shall be a Lender unless no
Lender accepts the role) or, in the absence of such appointment, Required
Lenders shall automatically assume all rights and duties of Agent. The successor
Agent shall thereupon succeed to and become vested with all the powers and
duties of the retiring Agent without further act. The retiring Agent shall be
discharged from its duties hereunder on the effective date of its resignation,
but shall continue to have all rights and protections available to Agent under
the Loan Documents with respect to actions, omissions, circumstances or Claims
relating to or arising while it was acting or transferring responsibilities as
Agent or holding any Collateral on behalf of Secured Parties, including the
indemnification set forth in Sections 12.6 and 14.2, and all rights and
protections under this Section 12. Any successor to Bank of America by merger or
acquisition of stock or this loan shall continue to be Agent hereunder without
further act on the part of any Secured Party or Obligor. If the Agent is a
Defaulting Lender pursuant to clause (d) of the definition thereof, the Required
Lenders may, to the extent permitted by Applicable Law, by notice in writing to
the Borrower Agent and Agent, remove such Agent and appoint a successor that is
(a) a Lender or Affiliate of a Lender; or (b) a financial institution reasonably
acceptable to Required Lenders and (provided no Event of Default exists)
Borrowers. If no such successor shall have been so appointed pursuant to the
foregoing sentence and shall have accepted such appointment within thirty
(30) days (or such earlier day as shall be agreed by the Required Lenders) (the
“Removal Effective Date”), then such removal shall nonetheless become effective
in accordance with such notice on the Removal Effective Date and the Required
Lenders shall automatically assume all rights and duties of Agent.

12.8.2. Co-Collateral Agent. If appropriate under Applicable Law, Agent may
appoint a Person to serve as a co-collateral agent or separate collateral agent
under any Loan Document. Each right, remedy and protection intended to be
available to Agent under the Loan Documents shall also be vested in such agent.
Secured Parties shall execute and deliver any instrument or agreement that Agent
may request to effect such appointment. If any such agent shall die, dissolve,
become incapable of acting, resign or be removed, then all the rights and
remedies of the agent, to the extent permitted by Applicable Law, shall vest in
and be exercised by Agent until appointment of a new agent.

12.9. Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that
it has, independently and without reliance upon Agent or any other Lenders, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Agreement and to fund Loans and participate in LC Obligations
hereunder. Each Secured Party has made such inquiries as it feels necessary
concerning the Loan Documents, Collateral and Obligors. Each Secured Party
acknowledges and agrees that the other Secured Parties have made no
representations or warranties concerning any Obligor, any Collateral or the
legality,

 

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validity, sufficiency or enforceability of any Loan Documents or Obligations.
Each Secured Party will, independently and without reliance upon any other
Secured Party, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans and participating in LC Obligations,
and in taking or refraining from any action under any Loan Documents. Except for
notices, reports and other information expressly requested by a Lender, Agent
shall have no duty or responsibility to provide any Secured Party with any
notices, reports or certificates furnished to Agent by any Obligor or any credit
or other information concerning the affairs, financial condition, business or
Properties of any Obligor (or any of its Affiliates) which may come into
possession of Agent or its Affiliates.

12.10. Remittance of Payments and Collections.

12.10.1. Remittances Generally. Payments by any Secured Party to Agent shall be
made by the time and date provided herein, in immediately available funds. If no
time for payment is specified or if payment is due on demand and request for
payment is made by Agent by 1:00 p.m. on a Business Day, then payment shall be
made by the Secured Party by 3:00 p.m. on such day, and if request is made after
1:00 p.m., then payment shall be made by 11:00 a.m. on the next Business Day.
Payment by Agent to any Secured Party shall be made by wire transfer, in the
type of funds received by Agent. Any such payment shall be subject to Agent’s
right of offset for any amounts due from such payee under the Loan Documents.

12.10.2. Failure to Pay. If any Secured Party fails to deliver when due any
amount payable by it to Agent hereunder, such amount shall bear interest, from
the due date until paid in full, at the greater of the Federal Funds Rate or the
rate determined by Agent as customary for interbank compensation for two
Business Days and thereafter at the Default Rate for Base Rate Revolver Loans.
In no event shall Borrowers be entitled to credit for any interest paid by a
Secured Party to Agent, nor shall a Defaulting Lender be entitled to interest on
amounts held by Agent pursuant to Section 4.2.

12.10.3. Recovery of Payments. If Agent pays an amount to a Secured Party in the
expectation that a related payment will be received by Agent from an Obligor and
such related payment is not received, then Agent may recover such amount from
the Secured Party. If Agent determines that an amount received by it must be
returned or paid to an Obligor or other Person pursuant to Applicable Law or
otherwise, then Agent shall not be required to distribute such amount to any
Secured Party. If Agent is required to return any amounts applied by it to
Obligations held by a Secured Party, such Secured Party shall pay to Agent, on
demand, its share of the amounts required to be returned.

12.11. Individual Capacities. As a Lender, Bank of America shall have the same
rights and remedies under the Loan Documents as any other Lender, and the terms
“Lenders,” “Required Lenders” or any similar term shall include Bank of America
in its capacity as a Lender. Agent, Lenders and their Affiliates may accept
deposits from, lend money to, provide Bank Products to, act as financial or
other advisor to, and generally engage in any kind of business with, Obligors
and their Affiliates, as if they were not Agent or Lenders hereunder, without
any duty to account therefor to any Secured Party. In their individual
capacities, Agent, Lenders and their Affiliates may receive information
regarding Obligors, their Affiliates and their Account Debtors (including
information subject to confidentiality obligations), and shall have no
obligation to provide such information to any Secured Party.

12.12. Titles. Each Lender, other than Bank of America, that is designated in
connection with this credit facility as an “Arranger,” “Bookrunner” or “Agent”
of any kind shall have no right or duty under any Loan Documents other than
those applicable to all Lenders, and shall in no event have any fiduciary duty
to any Secured Party.

 

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12.13. Bank Product Providers. Each Secured Bank Product Provider, by delivery
of a notice to Agent of a Bank Product, agrees to be bound by the Loan
Documents, including Sections 5.6, 14.3.3 and 12. Each Secured Bank Product
Provider shall indemnify and hold harmless Agent Indemnitees, to the extent not
reimbursed by Obligors, against all Claims that may be incurred by or asserted
against any Agent Indemnitee in connection with such provider’s Secured Bank
Product Obligations.

12.14. No Third Party Beneficiaries. This Section 12 is an agreement solely
among Secured Parties and Agent, and shall survive Full Payment. This Section 12
does not confer any rights or benefits upon Borrowers or any other Person. As
between Borrowers and Agent, any action that Agent may take under any Loan
Documents or with respect to any Obligations shall be conclusively presumed to
have been authorized and directed by Secured Parties.

SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS

13.1. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Obligors, Agent, Lenders, Secured Parties, and their respective
successors and assigns, except that (a) no Obligor shall have the right to
assign its rights or delegate its obligations under any Loan Documents; and
(b) any assignment by a Lender must be made in compliance with Section 13.3.
Agent may treat the Person which made any Loan as the owner thereof for all
purposes until such Person makes an assignment in accordance with Section 13.3.
Any authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender.

13.2. Participations.

13.2.1. Permitted Participants; Effect. Subject to Section 13.3.3, any Lender
may sell to a financial institution (“Participant”) a participating interest in
the rights and obligations of such Lender under any Loan Documents. Despite any
sale by a Lender of participating interests to a Participant, such Lender’s
obligations under the Loan Documents shall remain unchanged, it shall remain
solely responsible to the other parties hereto for performance of such
obligations, it shall remain the holder of its Loans and Commitments for all
purposes, all amounts payable by Obligors shall be determined as if it had not
sold such participating interests, and Obligors and Agent shall continue to deal
solely and directly with such Lender in connection with the Loan Documents. Each
Lender shall be solely responsible for notifying its Participants of any matters
under the Loan Documents, and Agent and the other Lenders shall not have any
obligation or liability to any such Participant. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 5.9 unless Borrowers agree otherwise in writing. A Participant shall be
entitled to the benefits of Sections 3.3 and 3.7.

13.2.2. Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of a Loan Document other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Commitment in which such Participant has an interest, postpones
the Commitment Termination Date or any date fixed for any regularly scheduled
payment of principal, interest or fees on such Loan or Commitment, or releases
any Borrower, Guarantor or substantially all Collateral (other than as expressly
contemplated herein).

13.2.3. Participant Register. Each Lender that sells a participation shall,
acting as a non-fiduciary agent of Borrowers (solely for tax purposes), maintain
a register in which it enters the Participant’s name, address and interest in
Commitments, Loans (and stated interest) and LC Obligations. Entries in the
register shall be conclusive, absent manifest error, and such Lender shall treat
each Person recorded in the register as the owner of the participation for all
purposes, notwithstanding any notice to the contrary. No Lender shall have an
obligation to disclose any information in such register except to the

 

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extent necessary to establish that a Participant’s interest is in registered
form under United States Treasury Regulation Section 5f.103-1(c), proposed
United States Treasury Regulation Section 1.163-5 or any applicable temporary,
final or other successor regulations.

13.2.4. Benefit of Setoff. Each Participant shall have a right of set-off in
respect of its participating interest to the same extent as if such interest
were owing directly to a Lender, and each Lender shall also retain the right of
set-off with respect to any participating interests sold by it. By exercising
any right of set-off, a Participant agrees to share with Lenders all amounts
received through its set-off, in accordance with Section 12.5 as if such
Participant were a Lender.

13.3. Assignments.

13.3.1. Permitted Assignments. A Lender may assign to an Eligible Assignee any
of its rights and obligations under the Loan Documents, as long as (a) each
assignment is of a constant, and not a varying, percentage of the transferor
Lender’s rights and obligations under the Loan Documents and, in the case of a
partial assignment, is in a minimum principal amount of $5,000,000 (unless
(i) such partial assignment is to a Lender, Affiliate of a Lender or Approved
Fund or (ii) otherwise agreed by Borrower Agent and Agent in their discretion)
and integral multiples of $1,000,000 in excess of that amount; (b) except in the
case of an assignment in whole of a Lender’s rights and obligations, the
aggregate amount of the Commitments retained by the transferor Lender is at
least $5,000,000 (unless otherwise agreed by Agent in its discretion); and
(c) the parties to each such assignment shall execute and deliver an Assignment
to Agent for acceptance and recording. Nothing herein shall limit the right of a
Lender to pledge or assign any rights under the Loan Documents to secure
obligations of such Lender, including a pledge or assignment to a Federal
Reserve Bank; provided, however, that no such pledge or assignment shall release
the Lender from its obligations hereunder nor substitute the pledge or assignee
for such Lender as a party hereto.

13.3.2. Effect; Effective Date. Upon delivery to Agent of an assignment notice
in the form of Exhibit B and a processing fee of $3,500 (unless otherwise agreed
by Agent in its discretion), the assignment shall become effective as specified
in the notice, if it complies with this Section 13.3. From such effective date,
the Eligible Assignee shall for all purposes be a Lender under the Loan
Documents, and shall have all rights and obligations of a Lender thereunder.
Upon consummation of an assignment, the transferor Lender, Agent and Borrowers
shall make appropriate arrangements for issuance of replacement and/or new
notes, if applicable. The transferee Lender shall comply with Section 5.10 and
deliver, upon request, an administrative questionnaire satisfactory to Agent.

13.3.3. Certain Assignees. No assignment or participation may be made to a
Borrower, Affiliate of a Borrower, Defaulting Lender or natural person. Agent
shall have no obligation to determine whether any assignment is permitted under
the Loan Documents. Any assignment by a Defaulting Lender must be accompanied by
satisfaction of its outstanding obligations under the Loan Documents in a manner
satisfactory to Agent, including payment by the Defaulting Lender or Eligible
Assignee of an amount sufficient upon distribution (through direct payment,
purchases of participations or other methods acceptable to Agent in its
discretion) to satisfy all funding and payment liabilities of the Defaulting
Lender. If any assignment by a Defaulting Lender (by operation of law or
otherwise) does not comply with the foregoing, the assignee shall be deemed a
Defaulting Lender for all purposes until compliance occurs.

13.3.4. Register. Agent, acting as a non-fiduciary agent of Borrowers (solely
for tax purposes), shall maintain (a) a copy (or electronic equivalent) of each
Assignment and Acceptance delivered to it, and (b) a register for recordation of
the names, addresses and Commitments of, and the Loans, interest and LC
Obligations owing to, each Lender. Entries in the register shall be conclusive,
absent manifest error, and Borrowers, Agent and Lenders shall treat each Person
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as a Lender for all purposes under the Loan Documents, notwithstanding any
notice to the contrary. Agent may choose to show only one Borrower as the
borrower in the register, without any effect on the liability of any Obligor
with respect to the Obligations. The register shall be available for inspection
by Borrowers or any Lender, from time to time upon reasonable notice.

13.4. Replacement of Certain Lenders. If a Lender (a) within the last 120 days
failed to give its consent to any amendment, waiver or action for which consent
of all Lenders or Supermajority Lenders was required and Required Lenders
consented, (b) is a Defaulting Lender, or (c) within the last 120 days gave a
notice under Section 3.5 or requested payment or compensation under Section 3.7
or 5.9 (and has not designated a different Lending Office pursuant to
Section 3.8), then Agent or Borrower Agent may, upon 10 days notice to such
Lender, require it to assign its rights and obligations under the Loan Documents
to Eligible Assignee(s), pursuant to appropriate Assignment(s), within 20 days
after the notice. Agent is irrevocably appointed as attorney-in-fact to execute
any such Assignment if the Lender fails to execute it. Such Lender shall be
entitled to receive, in cash, concurrently with such assignment, all amounts
owed to it under the Loan Documents through the date of assignment.

SECTION 14. MISCELLANEOUS

14.1. Consents, Amendments and Waivers.

14.1.1. Amendment. No modification of any Loan Document, including any extension
or amendment of a Loan Document or any waiver of a Default or Event of Default,
shall be effective without the prior written agreement of Agent (with the
consent of Required Lenders) and each Obligor party to such Loan Document;
provided, however, that

(a) without the prior written consent of Agent, no modification shall alter any
provision in a Loan Document that relates to any rights, duties or discretion of
Agent;

(b) without the prior written consent of Issuing Bank, no modification shall
alter Section 2.3 or any other provision in a Loan Document that relates to
Letters of Credit or any rights, duties or discretion of Issuing Bank;

(c) without the prior written consent of each affected Lender, including a
Defaulting Lender, no modification shall (i) increase the Commitment of such
Lender; (ii) reduce the amount of, or waive or delay payment of, any principal,
interest or fees payable to such Lender (other than a waiver of default interest
or of any Default or Event of Default each of which shall only require Required
Lender consent and except as provided in Section 4.2); (iii) extend the Revolver
Termination Date applicable to such Lender’s Obligations; or (iv) amend this
clause (c);

(d) without the prior written consent of Supermajority Lenders, no modification
shall amend the definition of Borrowing Base, Accounts Formula Amount or
Inventory Formula Amount (or any defined term used in such definitions) if the
effect of such amendment is to increase borrowing availability;

(e) without the prior written consent of all Lenders (except any Defaulting
Lender), no modification shall (i) alter Section 5.6.2 or 14.1.1; (ii) amend the
definitions of Pro Rata, Required Lenders, or Supermajority Lenders;
(iii) release all or substantially all Collateral except pursuant to
transactions otherwise permitted by this Agreement; (v) except in connection
with a merger, disposition or similar transaction expressly permitted by this
Agreement, release any Obligor from liability for any Obligations or (vi) except
in a transaction permitted by this Agreement, subordinate the Obligations of
Obligors (other than in respect of debtor-in-possession financings provided
under the Bankruptcy Code or similar debtor relief or debt adjustments laws of
the United States or other applicable jurisdictions from time to time in
effect).

 

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(f) without the prior written consent of a Secured Bank Product Provider, no
modification shall affect its relative payment priority under Section 5.6.2.

14.1.2. Limitations. The agreement of Borrowers shall not be required for any
modification of a Loan Document that deals solely with the rights and duties of
Lenders, Agent and/or Issuing Bank as among themselves. Only the consent of the
parties to any agreement relating to fees or a Bank Product shall be required
for modification of such agreement, and no Bank Product provider (in such
capacity) shall have any right to consent to modification of any Loan Document
other than its Bank Product agreement. Any waiver or consent granted by Agent or
Lenders hereunder shall be effective only if in writing and only for the matter
specified.

14.1.3. Payment for Consents. No Borrower will, directly or indirectly, pay any
remuneration or other thing of value, whether by way of additional interest, fee
or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent.

14.1.4. Technical Amendments. Notwithstanding anything to the contrary contained
in Section 14.1, if Agent and Borrowers shall have jointly identified any error
of a technical nature in any provision of the Loan Documents, then Agent and
Borrowers shall be permitted to amend such provision and such amendment shall
become effective without any further action or consent of any other party to any
Loan Document.

14.2. Indemnity. EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE,
INCLUDING CLAIMS ASSERTED BY ANY OBLIGOR OR OTHER PERSON OR ARISING FROM THE
NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document have
any obligation thereunder to indemnify or hold harmless an Indemnitee with
respect to a Claim that (i) is determined in a final, non-appealable judgment by
a court of competent jurisdiction to result from the gross negligence, bad faith
or willful misconduct of such Indemnitee or a material breach by such Indemnitee
of the Loan Documents or (ii) arises from any dispute solely among the
Indemnitees and not from any act or omission of any Obligor or its Affiliates,
other than Claims against any agent or arranger in their capacities as such.
This Section 14.2 shall not apply with respect to Taxes other than any Taxes
that represent losses, claims, damages, etc. arising from any non-Tax claim.

14.3. Notices and Communications.

14.3.1. Notice Address. Subject to Section 14.3.2, all notices and other
communications by or to a party hereto shall be in writing and shall be given to
any Borrower, at Borrower Agent’s address shown on the signature pages hereof,
and to any other Person at its address shown on the signature pages hereof (or,
in the case of a Person who becomes a Lender after the Closing Date, at the
address shown on its Assignment), or at such other address as a party may
hereafter specify by notice in accordance with this Section 14.3. Each
communication shall be effective only (a) if given by facsimile transmission,
when transmitted to the applicable facsimile number, if confirmation of receipt
is received; (b) if given by mail, three Business Days after deposit in the U.S.
mail, with first-class postage pre-paid, addressed to the applicable address; or
(c) if given by personal delivery, when duly delivered to the notice address
with receipt acknowledged. Notwithstanding the foregoing, no notice to Agent
pursuant to Section 2.1.4, 2.3, 3.1.2 or 4.1.1 shall be effective until actually
received by the individual to whose attention at Agent such notice is required
to be sent. Any written communication that is not sent in conformity with the
foregoing provisions shall nevertheless be effective on the date actually
received by the noticed party. Any notice received by Borrower Agent shall be
deemed received by all Borrowers.

 

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14.3.2. Electronic Communications. Electronic and telephonic communications
(including e-mail, messaging, voice mail and websites) may be used only for
routine communications, such as financial statements, Borrowing Base Reports and
other information required by Section 10.1.2, administrative matters,
distribution of Loan Documents for execution and delivery of executed signature
pages, matters permitted under Section 4.1.4 and such other communications as
agreed by Agent. Secured Parties make no assurance as to the privacy or security
of electronic or telephonic communications. E-mail and voice mail shall not be
effective notices under the Loan Documents.

14.3.3. Platform. Borrower Materials shall be delivered pursuant to procedures
approved by Agent, including electronic delivery (if possible) upon request by
Agent to an electronic system maintained by Agent (“Platform”). Obligors shall
notify Agent of each posting of Borrower Materials to be provided by them, which
notice may be communicated electronically in accordance with Section 14.3.2 and
the Borrower Materials on the Platform and the materials shall be deemed
received by Agent only upon its receipt of such notice. Borrower Materials and
other information relating to this credit facility may be made available to
Secured Parties on the Platform. The Platform is provided “as is” and “as
available.” Agent does not warrant the accuracy or completeness of any
information on the Platform nor the adequacy or functioning of the Platform, and
expressly disclaims liability for any errors or omissions in the Borrower
Materials or any issues involving the Platform , except to the extent such
errors, omissions or issues arise as a result of Agent’s gross negligence or
willful misconduct. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS, IS MADE BY AGENT WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM. No
Agent Indemnitee shall have any liability to Obligors, Secured Parties or any
other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) relating to use by any Person of the
Platform, including any unintended recipient, nor for delivery of Borrower
Materials and other information via the Platform, internet, e-mail, or any other
electronic platform or messaging system except to the extent such losses,
claims, damages, liabilities or expenses of any kind (whether in tort, contract
or otherwise) arise as a result of Agent’s gross negligence or willful
misconduct.

14.3.4. Public Information. Obligors and Secured Parties acknowledge that
“public” information may not be segregated from material non-public information
on the Platform. Secured Parties acknowledge that Borrower Materials may include
Obligors’ material non-public information, and should not be made available to
personnel who do not wish to receive such information or may be engaged in
investment or other market-related activities with respect to an Obligor’s
securities.

14.3.5. Non-Conforming Communications. Agent and Lenders may rely upon any
communications purportedly given by or on behalf of any Borrower even if they
were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. Each Borrower shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
electronic or telephonic communication purportedly given by or on behalf of a
Borrower.

14.4. Performance of Obligors’ Obligations. Agent may, in its Permitted
Discretion at any time and from time to time, at Obligors’ expense with, unless
an Event of Default is continuing, five (5) days prior written notice to
Borrowers (provided that Agent shall be limited to one (1) lead counsel for
Agent and Lenders, one (1) additional local counsel in each applicable
jurisdiction, and solely in the case

 

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of a conflict of interest, one (1) additional counsel to Agent and the affected
Lenders), pay any amount or do any act required of a Borrower under any Loan
Documents or otherwise lawfully requested by Agent to (a) enforce any Loan
Documents or collect any Obligations; (b) protect, insure, maintain or realize
upon any Collateral; or (c) defend or maintain the validity or priority of
Agent’s Liens in any Collateral, including any payment of a judgment, insurance
premium, warehouse charge, finishing or processing charge, or landlord claim, or
any discharge of a Lien. All payments, costs and expenses (including
Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent
by Obligors, promptly following written demand therefor, with interest from the
date incurred until the date of payment in full thereof, at the Default Rate
applicable to Base Rate Revolver Loans. Any payment made or action taken by
Agent under this Section shall be without prejudice to any right to assert an
Event of Default or to exercise any other rights or remedies under the Loan
Documents.

14.5. Credit Inquiries. Agent and Lenders may (but shall have no obligation) to
respond to usual and customary credit inquiries from third parties concerning
any Obligor or Subsidiary.

14.6. Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.

14.7. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
limitations or measurements to regulate similar matters, and they agree that
these are cumulative and that each must be performed as provided. Except as
otherwise provided in another Loan Document (by specific reference to the
applicable provision of this Agreement), if any provision contained herein is in
direct conflict with any provision in another Loan Document, the provision
herein shall govern and control.

14.8. Counterparts; Execution. Any Loan Document may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement shall become
effective when Agent has received counterparts bearing the signatures of all
parties hereto. Agent may (but shall have no obligation to) accept any
signature, contract formation or record-keeping through electronic means, which
shall have the same legal validity and enforceability as manual or paper-based
methods, to the fullest extent permitted by Applicable Law, including the
Federal Electronic Signatures in Global and National Commerce Act, the New York
State Electronic Signatures and Records Act, or any similar state law based on
the Uniform Electronic Transactions Act. Upon request by Agent, any electronic
signature or delivery shall be promptly followed by a manually executed or paper
document.

14.9. Entire Agreement. Time is of the essence with respect to all Loan
Documents and Obligations. The Loan Documents constitute the entire agreement,
and supersede all prior understandings and agreements, among the parties
relating to the subject matter thereof.

14.10. Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Agreement and no action of Agent, Lenders or any other Secured
Party pursuant to the Loan Documents or otherwise shall be deemed to constitute
Agent and any Secured Party to be a partnership, joint venture or similar
arrangement, nor to constitute control of any Obligor.

 

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14.11. No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated by any Loan Document, Obligors acknowledge and
agree that (a)(i) this credit facility and any arranging or other services by
Agent, any Lender, any of their Affiliates or any arranger are arm’s-length
commercial transactions between Obligors and their Affiliates, on one hand, and
Agent, any Lender, any of their Affiliates or any arranger, on the other hand;
(ii) Obligors have consulted their own legal, accounting, regulatory and tax
advisors to the extent they have deemed appropriate; and (iii) Obligors are
capable of evaluating, and understand and accept, the terms, risks and
conditions of the transactions contemplated by the Loan Documents; (b) each of
Agent, Lenders, their Affiliates and any arranger is and has been acting solely
as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for Obligors, their Affiliates or any other Person, and has no
obligation with respect to the transactions contemplated by the Loan Documents
except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates
and any arranger may be engaged in a broad range of transactions that involve
interests that differ from those of Obligors and their Affiliates, and have no
obligation to disclose any of such interests to Obligors or their Affiliates. To
the fullest extent permitted by Applicable Law, each Obligor hereby waives and
releases any claims that it may have against Agent, Lenders, their Affiliates
and any arranger with respect to any breach of agency or fiduciary duty in
connection with any transaction contemplated by a Loan Document.

14.12. Confidentiality. Each of Agent, Lenders and Issuing Bank shall maintain
the confidentiality of all Information (as defined below), except that
Information may be disclosed (a) to its Affiliates, and to its and their
partners, directors, officers, employees, agents, advisors and representatives
(provided they are informed of the confidential nature of the Information and
instructed to keep it confidential); (b) to the extent requested by any
governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates; (c) to the extent required by Applicable
Law or by any subpoena or other legal process; (d) to any other party hereto;
(e) in connection with any action or proceeding relating to any Loan Documents
or Obligations; (f) subject to an agreement containing provisions substantially
the same as this Section, to any Transferee or any actual or prospective party
(or its advisors) to any Bank Product or to any swap, derivative or other
transaction under which payments are to be made by reference to an Obligor or
Obligor’s obligations; (g) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) is
available to Agent, any Lender, Issuing Bank or any of their Affiliates on a
nonconfidential basis from a source other than Borrowers; (h) on a confidential
basis to a provider of a Platform; or (i) with the consent of Borrower Agent.
Notwithstanding the foregoing, Agent and Lenders may publish or disseminate
general information concerning this credit facility for league table, tombstone
and advertising purposes, and may use Borrowers’ logos, trademarks or product
photographs in advertising materials. As used herein, “Information” means
information received from an Obligor or Subsidiary relating to it or its
business that is identified as confidential when delivered. A Person required to
maintain the confidentiality of Information pursuant to this Section shall be
deemed to have complied if it exercises a degree of care similar to that
accorded its own confidential information. Each of Agent, Lenders and Issuing
Bank acknowledges that (i) Information may include material non-public
information; (ii) it has developed compliance procedures regarding the use of
such information; and (iii) it will handle the material non-public information
in accordance with Applicable Law.

14.13. [Reserved].

14.14. GOVERNING LAW. UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL CLAIMS SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES EXCEPT FEDERAL LAWS RELATING TO NATIONAL BANKS.

 

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14.15. Consent to Forum; Bail-In of EEA Financial Institutions.

14.15.1. Forum. EACH OBLIGOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF
ANY STATE COURT SITTING IN NEW YORK, NEW YORK OR THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK, IN ANY DISPUTE, ACTION, LITIGATION
OR OTHER PROCEEDING RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT
ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT BY IT
SOLELY IN ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY AND UNCONDITIONALLY WAIVES
ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING ANY SUCH COURT’S
PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY
HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH
COURTS AND CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 14.3.1. A final judgment in any proceeding of any such court shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
any other manner provided by Applicable Law.

14.15.2. Other Jurisdictions. Nothing herein shall limit the right of Agent or
any Lender to bring proceedings against any Obligor in any other court, nor
limit the right of any party to serve process in any other manner permitted by
Applicable Law. Nothing in this Agreement shall be deemed to preclude
enforcement by Agent of any judgment or order obtained in any forum or
jurisdiction.

14.15.3. Acknowledgement and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among the parties, each party hereto
(including each Secured Party) acknowledges that any liability arising under a
Loan Document of any Secured Party that is an EEA Financial Institution, to the
extent such liability is unsecured, may be subject to the write-down and
conversion powers of an EEA Resolution Authority, and agrees and consents to,
and acknowledges and agrees to be bound by, (a) the application of any
Write-Down and Conversion Powers by an EEA Resolution Authority to any such
liabilities arising under any Loan Documents which may be payable to it by any
Secured Party that is an EEA Financial Institution; and (b) the effects of any
Bail-in Action on any such liability, including (i) a reduction in full or in
part or cancellation of any such liability; (ii) a conversion of all, or a
portion of, such liability into shares or other instruments of ownership in such
EEA Financial Institution, its parent undertaking, or a bridge institution that
may be issued to it or otherwise conferred on it, and that such shares or other
instruments of ownership will be accepted by it in lieu of any rights with
respect to any such liability under any Loan Document; or (iii) the variation of
the terms of such liability in connection with the exercise of the write-down
and conversion powers of any EEA Resolution Authority.

14.16. Waivers by Obligors. To the fullest extent permitted by Applicable Law,
each Obligor waives (a) the right to trial by jury (which Agent, Issuing Bank
and each Lender hereby also waive) in any proceeding or dispute of any kind
relating in any way to any Loan Documents, Obligations or Collateral;
(b) presentment, demand, protest, notice of presentment, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of any
commercial paper, accounts, documents, instruments, chattel paper and guaranties
at any time held by Agent on which an Obligor may in any way be liable, and
hereby ratifies anything Agent may do in this regard; (c) notice prior to taking
possession or control of any Collateral; (d) any bond or security that might be
required by a court prior to allowing Agent to exercise any rights or remedies;
(e) the benefit of all valuation, appraisement and exemption laws; (f) any claim
against Agent, Issuing Bank or any Lender, on any theory of liability, for
special, indirect, consequential, exemplary or punitive damages (as opposed to
direct or actual damages) in any way relating to any Enforcement Action,
Obligations, Loan Documents or transactions relating thereto; and (g) notice of
acceptance hereof. Each Obligor acknowledges that the foregoing waivers are a
material inducement to Agent, Issuing Bank and Lenders entering into this
Agreement and that they are relying upon the foregoing in their dealings with
Obligors. Each Obligor has reviewed the foregoing waivers with its legal counsel
and has knowingly and voluntarily waived its jury trial and other rights
following consultation with legal counsel. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.

 

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14.17. Patriot Act Notice. Agent and Lenders hereby notify Obligors that
pursuant to the Patriot Act, Agent and Lenders are required to obtain, verify
and record information that identifies each Obligor, including its legal name,
address, tax ID number and other information that will allow Agent and Lenders
to identify it in accordance with the Patriot Act. Agent and Lenders will also
require information regarding any personal guarantor and may require information
regarding Obligors’ management and owners, such as legal name, address, social
security number and date of birth. Obligors shall, promptly upon request,
provide all documentation and other information as Agent, Issuing Bank or any
Lender may request from time to time in order to comply with any obligations
under any “know your customer,” anti-money laundering or other requirements of
Applicable Law.

14.18. NO ORAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

[Remainder of page intentionally left blank; signatures begin on following page]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

BORROWERS: QUINTANA ENERGY SERVICES INC. QES INTERMEDIATE LLC QES MANAGEMENT LLC
By:     /s/ Keefer M. Lehner Name:     Keefer M. Lehner Title:     Executive
Vice President and Chief Financial Officer Address:     Quintana Energy Services
Inc.     1415 Louisiana Street, Suite 2900     Houston, Texas 77002     Attn:
Keefer M. Lehner     Telecopy:                                

 

QUINTANA ENERGY SERVICES LP By:   Quintana Energy Services GP LLC, its general
partner

 

By:     /s/ Keefer M. Lehner Name:     Keefer M. Lehner Title:     Executive
Vice President and Chief Financial Officer Address:     Quintana Energy Services
Inc.     1415 Louisiana Street, Suite 2900     Houston, Texas 77002     Attn:
Keefer M. Lehner     Telecopy:                                

 

QES DIRECTIONAL DRILLING, LLC Q CONSOLIDATED OIL WELL SERVICES, LLC CENTERLINE
TRUCKING, LLC CONSOLIDATED OWS MANAGEMENT, INC. OKLAHOMA OILWELL CEMENTING
COMPANY Q DIRECTIONAL MGMT, INC. QES PRESSURE CONTROL LLC QES PRESSURE PUMPING
LLC QES WIRELINE LLC TWISTER DRILLING TOOLS, LLC CIS-OKLAHOMA, LLC

 

By:     /s/ Keefer M. Lehner Name:     Keefer M. Lehner Title:     Vice
President Address:     Quintana Energy Services Inc.     1415 Louisiana Street,
Suite 2900     Houston, Texas 77002     Attn: Keefer M. Lehner    
Telecopy:                                

[Signature Page to Loan, Security and Guaranty Agreement]

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AGENT AND LENDERS: BANK OF AMERICA, N.A., as Agent and Lender

 

By:     /s/ Catherine T. Ngo Name:     Catherine T. Ngo Title:     Senior Vice
President Address:     Bank of America, N.A.     901 Main Street, 11th Floor    
Mail Code: TX1-492-11-23     Dallas, TX 75202-3714     Attn: Asset Based
Portfolio Specialist - Quintana     Telecopy: 214-209-4766

[Signature Page to Loan, Security and Guaranty Agreement]

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ZB, N.A., dba Amegy Bank as a Lender

 

By:     /s/ Steven Taylor Name:     Steven Taylor Title:     Vice President
Address:     ZB, N.A.     1717 West Loop South, 23rd Floor     Houston, TX 77027
    Attn:     Telecopy:

[Signature Page to Loan, Security and Guaranty Agreement]

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CITIBANK, N.A., as a Lender

 

By:     /s/ William H. Moul, Jr. Name:     William H. Moul, Jr. Title:    
Authorized Signatory Address:     601 Lexington Avenue     21st Floor     New
York, NY 10022     Attn: William Moul     Telecopy: 212-793-2091

[Signature Page to Loan, Security and Guaranty Agreement]

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BARCLAYS BANK PLC as a Lender

 

By:     /s/ Joseph Jordan Name:     Joseph Jordan Title:     Managing Director
Address:     Barclays Bank PLC     745 7th Avenue, 25th     New York, NY, 10019
    Attn: Oksana Shtogrin, Bank Debt Management     Telecopy: 212-526-5115

[Signature Page to Loan, Security and Guaranty Agreement]

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EXHIBIT A

to

Loan, Security and Guaranty Agreement

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Loan, Security and Guaranty Agreement dated as of
February 13, 2018 (as amended, amended and restated, supplemented and/or
otherwise modified from time to time, the “Loan Agreement”), among QUINTANA
ENERGY SERVICES INC., a Delaware corporation (“Parent”), QUINTANA ENERGY
SERVICES LP, a Delaware limited partnership (“Quintana LP”), each other Person
named on the signature pages thereto as a Borrower or joined thereto as a
Borrower from time to time (together with Parent and Quintana LP, collectively,
“Borrowers”, and individually, each a “Borrower”), the other Obligors party to
the Loan Agreement from time to time, the financial institutions party to the
Loan Agreement from time to time as Lenders, and BANK OF AMERICA, N.A., a
national banking association (“Bank of America”), as agent for the Lenders (in
such capacity, “Agent”). Terms are used herein as defined in the Loan Agreement.

                                                  (“Assignor”) and
                                         (“Assignee”) agree as follows:

1. Assignor hereby assigns to Assignee and Assignee hereby purchases and assumes
from Assignor (a) a principal amount of $                     of Assignor’s
outstanding Revolver Loans and $                     of Assignor’s
participations in LC Obligations and (b) the amount of $                     of
Assignor’s Revolver Commitment (which represents             % of the total
Revolver Commitments) (the foregoing items being, collectively, “Assigned
Interest”), together with an interest in the Loan Documents corresponding to the
Assigned Interest. This Agreement shall be effective as of the date (“Effective
Date”) indicated in the corresponding Assignment Notice delivered to Agent,
provided such Assignment Notice is executed by Assignor, Assignee, Agent and
Borrower Agent, if applicable. From and after the Effective Date, Assignee
hereby expressly assumes, and undertakes to perform, all of Assignor’s
obligations in respect of the Assigned Interest, and all principal, interest,
fees and other amounts which would otherwise be payable to or for Assignor’s
account in respect of the Assigned Interest shall be payable to or for
Assignee’s account, to the extent such amounts accrue on or after the Effective
Date.

2. Assignor (a) represents that as of the date hereof, prior to giving effect to
this assignment, its Revolver Commitment is $                    , the
outstanding balance of its Revolver Loans and participations in LC Obligations
is $                    ; (b) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Agreement or any other instrument or document furnished pursuant thereto, other
than that Assignor is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; and (c) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrowers or the performance by
Borrowers of their obligations under the Loan Documents. [Assignor is attaching
the promissory note[s] held by it and requests that Agent exchange such note[s]
for new promissory notes payable to Assignee [and Assignor].]

3. Assignee (a) represents and warrants that it is legally authorized to enter
into this Assignment; (b) confirms that it has received copies of the Loan
Agreement and such other Loan Documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment; (c) agrees that it shall, independently and without reliance upon
Assignor and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents; (d) confirms that it is an

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Eligible Assignee; (e) appoints and authorizes Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Agreement as are
delegated to Agent by the terms thereof, together with such powers as are
incidental thereto; (f) agrees that it will observe and perform all obligations
that are required to be performed by it as a “Lender” under the Loan Documents;
and (g) represents and warrants that the assignment evidenced hereby will not
result in a non-exempt “prohibited transaction” under Section 406 of ERISA.

4. This Agreement shall be governed by the laws of the State of New York. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of this
Agreement shall remain in full force and effect.

5. Each notice or other communication hereunder shall be in writing, shall be
sent by messenger, by telecopy or facsimile transmission, or by first-class
mail, shall be deemed given when sent and shall be sent as follows:

 

  (a) If to Assignee, to the following address (or to such other address as
Assignee may designate from time to time):

 

                                                                
                                                             
                                                          

 

  (b) If to Assignor, to the following address (or to such other address as
Assignor may designate from time to time):

 

                                                                
                                                             
                                                             
                                                          

Payments hereunder shall be made by wire transfer of immediately available
Dollars as follows:

If to Assignee, to the following account (or to such other account as Assignee
may designate from time to time):

 

                                                                
                                                              ABA
No.                                          
                                                              Account
No.                                      
Reference:                                   

If to Assignor, to the following account (or to such other account as Assignor
may designate from time to time):

 

                                                                
                                                              ABA
No.                                          
                                                              Account
No.                                      
Reference:                                       

 

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IN WITNESS WHEREOF, this Assignment and Acceptance is executed as of
                    .

 

  (“Assignee”) By       Title:   (“Assignor”) By       Title:

 

-- 3 --

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EXHIBIT B

to

Loan, Security and Guaranty Agreement

ASSIGNMENT NOTICE

Reference is made to (1) the Loan, Security and Guaranty Agreement dated as of
February 13, 2018 (as amended, amended and restated, supplemented and/or
otherwise modified from time to time, the “Loan Agreement”), among QUINTANA
ENERGY SERVICES INC., a Delaware corporation (“Parent”), QUINTANA ENERGY
SERVICES LP, a Delaware limited partnership (“Quintana LP”), each other Person
named on the signature pages thereto as a Borrower or joined thereto as a
Borrower from time to time (together with Parent and Quintana LP, collectively,
“Borrowers”, and individually, each a “Borrower”), the other Obligors party to
the Loan Agreement from time to time, the financial institutions party to the
Loan Agreement from time to time as Lenders, and BANK OF AMERICA, N.A., a
national banking association (“Bank of America”), as agent for the Lenders (in
such capacity, “Agent”); and (2) the Assignment and Acceptance dated as of
____________, 20__ (“Assignment”), between __________________ (“Assignor”) and
____________________ (“Assignee”). Terms are used herein as defined in the Loan
Agreement.

Assignor hereby notifies Borrowers and Agent of Assignor’s intent to assign to
Assignee pursuant to the Assignment (a) a principal amount of $             of
Assignor’s outstanding Revolver Loans and $             of Assignor’s
participations in LC Obligations and (b) the amount of $             of
Assignor’s Revolver Commitment (which represents     % of the total Revolver
Commitments) (the foregoing items being, collectively, the “Assigned Interest”),
together with an interest in the Loan Documents corresponding to the Assigned
Interest. This Agreement shall be effective as of the date (“Effective Date”)
indicated below, provided this Assignment Notice is executed by Assignor,
Assignee, Agent and Borrower Agent, if applicable. Pursuant to the Assignment,
Assignee has expressly assumed all of Assignor’s obligations under the Loan
Agreement to the extent of the Assigned Interest, as of the Effective Date.

For purposes of the Loan Agreement, Agent shall deem Assignor’s Revolver
Commitment to be reduced by $            , and Assignee’s Revolver Commitment to
be increased by $            .

The address of Assignee to which notices and information are to be sent under
the terms of the Loan Agreement is:

 

                               

The address of Assignee to which payments are to be sent under the terms of the
Loan Agreement is shown in the Assignment.

This Notice is being delivered to Borrowers and Agent pursuant to Section 13.3
of the Loan Agreement. Please acknowledge your acceptance of this Notice by
executing and returning to Assignee and Assignor a copy of this Notice.

IN WITNESS WHEREOF, this Assignment Notice is executed as of _____________.

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  (“Assignee”)

By       Title:

  (“Assignor”)

By       Title:

ACKNOWLEDGED AND AGREED,

AS OF THE DATE SET FORTH ABOVE:

 

BORROWER AGENT:*  

By       Title:

 

* No signature required if Assignee is a Lender, Affiliate of a Lender or
Approved Fund, or if an Event of Default exists.

 

BANK OF AMERICA, N.A.,

as Agent

By       Title:

 

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