Exhibit 10.1

THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER OR SOLICITATION WITH
RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN
WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR
SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS
OF THE BANKRUPTCY CODE. NOTHING CONTAINED IN THIS RESTRUCTURING SUPPORT
AGREEMENT SHALL BE AN ADMISSION OF FACT OR LIABILITY OR, UNTIL THE OCCURRENCE OF
THE AGREEMENT EFFECTIVE DATE ON THE TERMS DESCRIBED IN THIS AGREEMENT, DEEMED
BINDING ON ANY OF THE PARTIES TO THIS AGREEMENT.

RESTRUCTURING SUPPORT AGREEMENT

This RESTRUCTURING SUPPORT AGREEMENT (including all exhibits, annexes, and
schedules attached to this agreement in accordance with Section 15.02,
this “Agreement”) is made and entered into as of February 28, 2020 (the
“Execution Date”), by and among the following parties (each of the following
described in sub-clauses (i) through (iv) of this preamble, collectively,
the “Parties”):1

 

  (i)

(a) Pioneer Energy Services Corp. (“Pioneer”), a company incorporated under the
Laws of Texas, and (b) each of its affiliates listed on Exhibit A to this
Agreement that has executed and delivered a counterpart signature page to this
Agreement to counsel to the Consenting Stakeholders (the Entities in this clause
(i), collectively, the “Company Parties”);

 

  (ii)

the undersigned holders of or investment advisors, sub-advisors, or managers of
discretionary accounts that hold, Term Loan Claims that have executed and
delivered counterpart signature pages to this Agreement, a Joinder, or a
Transfer Agreement to counsel to the Company Parties (the Entities in this
clause (ii), collectively, the “Consenting Term Lenders”); and

 

  (iii)

the undersigned holders of, or investment advisors, sub-advisors, or managers of
discretionary accounts that hold, Notes Claims that have executed and delivered
counterpart signature pages to this Agreement, a Joinder, or a Transfer
Agreement to counsel to the Company Parties (the Entities in this clause (iii),
collectively, the “Consenting Noteholders” and together with the Consenting Term
Lenders, the “Consenting Stakeholders”).

RECITALS

WHEREAS, the Company Parties and the Consenting Stakeholders have in good faith
and at arm’s length negotiated or been apprised of certain restructuring and
recapitalization transactions with respect to the Company Parties’ capital
structure on the terms set forth in: this Agreement, including the term sheet
setting forth the terms of the Restructuring Transactions, attached as Exhibit B
to this Agreement (including all exhibits, annexes and schedules attached
thereto, the “Term Sheet” and, such transactions as described in this Agreement,
the “Restructuring Transactions”);

 

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Capitalized terms used but not defined in the preamble and recitals to this
Agreement have the meanings ascribed to them in Section 1.

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WHEREAS, the Company Parties will implement the Restructuring Transactions in
connection with prepackaged cases under chapter 11 of the Bankruptcy Code in the
Bankruptcy Court (the cases commenced, the “Chapter 11 Cases”); and

WHEREAS, the Parties have agreed to take certain actions in support of the
Restructuring Transactions on the terms and conditions set forth in this
Agreement and the Term Sheet.

NOW, THEREFORE, in consideration of the covenants and agreements contained in
this Agreement, and for other valuable consideration, the receipt and
sufficiency of which are acknowledged, each Party, intending to be legally bound
by this Agreement, agrees as follows:

AGREEMENT

Section 1. Definitions and Interpretation.

1.01. Definitions. The following terms shall have the following definitions:

“ABL Credit Agreement” means the Credit Agreement, dated as of November 8, 2017,
by and among Pioneer, as the parent and a borrower, the other borrowers party
thereto, the lenders party thereto, and Wells Fargo Bank, National Association,
as administrative agent, as may be amended, supplemented, or otherwise modified
from time to time.

“ABL Claim” means any Claim under the ABL Credit Agreement and the other Loan
Documents (as defined in the ABL Credit Agreement).

“Ad Hoc Group of Noteholders” means the ad hoc group of holders of Notes Claims
that is represented by Davis Polk & Wardwell LLP, Haynes and Boone LLP and
Houlihan Lokey, Inc.

“Agreement” has the meaning set forth in the preamble hereto and, for the
avoidance of doubt, includes all the exhibits, annexes, and schedules attached
hereto in accordance with Section 15.02 (including the Term Sheet).

“Agreement Effective Date” means the date on which the conditions set forth in
Section 2 have been satisfied or waived by the appropriate Party or Parties in
accordance with this Agreement.

“Agreement Effective Period” means, with respect to a Party, the period from the
Agreement Effective Date to the Termination Date applicable to that Party.

 

 

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“Alternative Restructuring Proposal” means any dissolution, winding up,
liquidation, reorganization, recapitalization, assignment for the benefit of
creditors, merger, transaction, consolidation, business combination, joint
venture, partnership, sale of all or substantially all assets, financing (debt
or equity), restructuring (in each case, of all or substantially all of one or
more Company Parties, its assets, or its capital structure), or repurchase,
refinancing, extension or repayment of a material portion of the funded debt of
one or more of the Company Parties (in each case, outside of the ordinary course
of business) other than in accordance with or in furtherance of the
Restructuring Transactions.

“Backstop Commitment Agreement” has the meaning set forth in the Term Sheet.

“Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§
101–1532, as amended.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern
District of Texas (Houston Division) presiding over the Chapter 11 Cases.

“Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure, as
applicable to the Chapter 11 Cases, promulgated under section 2075 of title 28
of the United States Code, 28 U.S.C. § 2075, and the general, local and chambers
rules of the Court, as may be amended from time to time.

“Business Day” means 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, the state of New York.

“Causes of Action” means any action, Claim, cause of action, controversy,
demand, right, action, lien, indemnity, Equity Interest, guaranty, suit,
obligation, liability, damage, judgment, account, defense, offset, power,
privilege, license, and franchise of any kind or character whatsoever, whether
known, unknown, contingent or noncontingent, matured or unmatured, suspected or
unsuspected, liquidated or unliquidated, disputed or undisputed, secured or
unsecured, assertable directly or derivatively, in contract or in tort, in law
or in equity, or pursuant to any other theory of law.

“Chapter 11 Cases” has the meaning set forth in the recitals to this Agreement.

“Claim” has the meaning ascribed to it in section 101(5) of the Bankruptcy Code.

“Company Claims/Interests” means any Claim against, or Equity Interest in, a
Company Party, including the ABL Claims and Notes Claims, and with respect to
Term Loan Claims, any Claim against a Company Party.

“Company Parties” has the meaning set forth in the recitals to this Agreement.

“Confidentiality Agreement” means an executed confidentiality agreement between
the Company Parties and a Consenting Stakeholder, including with respect to the
issuance of a “cleansing letter” or other public disclosure of material
non-public information agreement, in connection with any proposed Restructuring
Transactions.

“Confirmation Order” means the confirmation order with respect to the Plan.

 

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“Consenting Noteholders” has the meaning set forth in the preamble to this
Agreement.

“Consenting Noteholder Termination Event” has the meaning set forth in
Section 13.01.

“Consenting Stakeholders” has the meaning set forth in the preamble to this
Agreement.

“Consenting Stakeholder Termination Event” has the meaning set forth in
Section 13.02.

“Consenting Term Lenders” has the meaning set forth in the preamble to this
Agreement.

“Consenting Term Lender Fees and Expenses” has the meaning set forth in the Term
Sheet.

“Consenting Term Lender Termination Event” has the meaning set forth in
Section 13.02.

“Corporate Governance Documents” means, with respect to a Reorganized Debtor,
any documents, certificates or other agreements for the governance of such
Reorganized Debtor, including, without limitation, the certificate of
incorporation, certificate of formation, bylaws, limited liability company
agreements, shareholder agreement (if any), operating agreement, any Employee
Incentive Plan (as defined in the Term Sheet), or other similar organizational
or formation documents, as applicable, of such Reorganized Debtor.

“Definitive Documents” means the documents set forth in Section 3.01.

“DIP Agent” means PNC Bank, National Association, in its capacity as the
administrative agent and collateral agent under the DIP Facility, and any
successors thereto.

“DIP Claim” means any Claim under the DIP Credit Agreement and the other DIP
Documents.

“DIP Credit Agreement” means the credit agreement with respect to the DIP
Facility.

“DIP Documents” means the DIP Order, the DIP Motion, the DIP-to-Exit Commitment
Letter and the DIP Credit Agreement, any guaranty related thereto, any
collateral and security documentation related thereto and any budget related
thereto.

“DIP Facility” has the meaning set forth in the Term Sheet.

“DIP Lenders” means the banks, financial institutions and other parties
identified as lenders in the DIP Credit Agreement.

“DIP Motion” means the motion filed by the Company Parties seeking entry of an
interim and final DIP Order.

 

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“DIP Order” means any order entered in the Chapter 11 Cases authorizing debtor
in possession financing or the use of cash collateral (whether interim or
final).

“DIP-to-Exit Commitment Letter” has the meaning set forth in the Term Sheet.

“Disclosure Statement” means the related disclosure statement with respect to
the Plan.

“Disclosure Statement Order” means the order of the Bankruptcy Court approving
the Disclosure Statement and the other Solicitation Materials.

“Entity” shall have the meaning set forth in section 101(15) of the Bankruptcy
Code.

“Equity Interests” means, collectively, any (a) equity security (as such term is
defined in Bankruptcy Code section 101(16)), (b) any other instrument evidencing
an ownership interest, whether or not transferable, (c) any option, warrant, or
right, contractual or otherwise, to acquire, sell or subscribe for any such
interest, and (d) any and all Claims that are otherwise determined by the
Bankruptcy Court to be an equity interest, including any Claim or debt that is
recharacterized as an equity interest.

“Execution Date” has the meaning set forth in the preamble to this Agreement.

“Exit ABL Credit Agreement” means the credit agreement with respect to the Exit
ABL Facility.

“Exit ABL Documents” means the Exit ABL Credit Agreement, the DIP-to-Exit
Commitment Letter, any guaranty related thereto, and any collateral and security
documentation related thereto.

“Exit ABL Facility” has the meaning set forth in the Term Sheet.

“Final Order” means an order or judgment of the Bankruptcy Court or other court
of competent jurisdiction with respect to the relevant subject matter which has:
(a) not been reversed, stayed, modified or amended, as to which the time to
appeal, petition for certiorari or move for reargument, reconsideration or
rehearing has expired and no appeal, petition for certiorari or motion for
reargument, reconsideration or rehearing has been timely filed; or (b) as to
which any appeal, petition for certiorari or motion for reargument,
reconsideration or rehearing that has been or may be filed has been resolved by
the highest court to which the order or judgment was appealed or from which
certiorari, reargument, reconsideration or rehearing was sought; provided that
the possibility that a motion under Rule 60 of the Federal Rules of Civil
Procedure, or any analogous rule under the Bankruptcy Rules, may be filed
relating to such order shall not prevent such order from being a Final Order.

“First Day Pleadings” means the “first-day” pleadings that the Company Parties
file upon the commencement of the Chapter 11 Cases.

“Indenture” means the Indenture, dated March 18, 2014, by and among Pioneer, as
the issuer, the guarantors party thereto, and Wells Fargo Bank, National
Association, as trustee, pursuant to which the Notes were issued, as may be
amended, supplemented, or otherwise modified from time to time.

 

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“Interest” means any equity interest (as defined in section 101(16) of the
Bankruptcy Code) in a Company Party, including all ordinary shares, units,
common stock, preferred stock, membership interest, partnership interest or
other instrument, evidencing any fixed or contingent ownership interest in such
Company Party, whether or not transferable, including any option, warrant, or
other right, contractual or otherwise, to acquire any such interest in such
Company Party, that existed immediately before the Plan Effective Date, and
including any equity interest issued to such Company Party’s current or former
employees and non-employee directors, various forms of long-term incentive
compensation including stock options, stock appreciation rights, restricted
stock, restricted stock units, performance shares/units, incentive awards, cash
awards, and other stock-based awards.

“Joinder” means a joinder to this Agreement substantially in the form attached
to this Agreement as Exhibit C.

“Law” means any federal, state, local, or foreign law (including common law),
statute, code, ordinance, rule, regulation, order, ruling, or judgment, in each
case, that is validly adopted, promulgated, issued, or entered by a governmental
authority of competent jurisdiction (including the Bankruptcy Court).

“Milestones” means the milestones set forth in Section 4.

“New Convertible Bonds” means the 5% convertible senior unsecured
payment-in-kind bonds issued pursuant to the New Convertible Bond Indenture, in
the initial aggregate principal amount as of the Plan Effective Date of up to
$134,584,000 (inclusive of the Rights Offering Convertible Bonds, the Management
Commitment Convertible Bonds and the Premium Convertible Bonds (each as defined
in the Term Sheet)).

“New Convertible Bond Indenture” means that certain unsecured indenture, dated
as of the Plan Effective Date, by and among Reorganized Pioneer, as issuer, and
the New Convertible Bonds Indenture Trustee, including all agreements, notes,
instruments and any other documents delivered pursuant thereto or in connection
therewith (in each case, as amended, modified or supplemented from time to time)
which shall be filed with the Plan Supplement, and subject to the consent rights
set forth in this Agreement and as may be modified consistent with this
Agreement.

“New Convertible Bond Indenture Trustee” means the trustee under the New
Convertible Bonds Indenture, to be selected by the Company Parties with the
prior written consent of the Required Consenting Noteholders.

“New Equity” means the new common stock or common equity issued by Reorganized
Pioneer.

“New Secured Bonds” has the meaning set forth in the Term Sheet.

“New Secured Bonds Commitment” has the meaning set forth in Section 11.

 

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“New Secured Bonds Commitment Parties” has the meaning set forth in Section 11.

“New Secured Bonds Documents” means the New Secured Bonds Indenture, any
guaranty related thereto, and any collateral and security documentation related
thereto.

“New Secured Bonds Indenture” means the indenture with respect to the New
Secured Bonds.

“Notes” means the 6.125% Senior Notes due 2022 issued by Pioneer pursuant to the
Indenture.

“Notes Claim” means any Claim against any Company Party on account of the Notes,
including any guarantee of the Notes pursuant to the Indenture.

“Parties” has the meaning set forth in the preamble to this Agreement.

“Permitted Transferee” means each transferee of any Company Claims/Interests who
meets the requirements of Section 9.01.

“Petition Date” means the first date any of the Company Parties commences a
Chapter 11 Case.

“Pioneer” has the meaning set forth in the Preamble to this Agreement.

“Plan” means the plan of reorganization with respect to the Restructuring
Transactions.

“Plan Effective Date” means the date upon which (a) the Confirmation Order has
become a Final Order, (b) all conditions precedent to the effectiveness of the
Plan have been satisfied or are expressly waived in accordance with the terms
thereof, as the case may be, (c) the transactions to occur on the Plan Effective
Date pursuant to the Plan become effective or are consummated, and (d) the
substantial consummation (as defined in section 1101 of the Bankruptcy Code) of
the Plan occurs.

“Plan Supplement” means the compilation of documents and forms of documents,
schedules, and exhibits to the Plan that will be filed by the Company Parties
with the Bankruptcy Court.

“Qualified Marketmaker” means an entity that (a) holds itself out to the public
or the applicable private markets as standing ready in the ordinary course of
business to purchase from customers and sell to customers Company
Claims/Interests (or enter with customers into long and short positions in
Company Claims/Interests), in its capacity as a dealer or market maker in
Company Claims/Interests and (b) is, in fact, regularly in the business of
making a market in claims against issuers or borrowers (including debt
securities or other debt).

“Reorganized Debtor” means each of the affiliates of Pioneer listed on Exhibit A
hereto, as reorganized pursuant to and under the Plan, or any successor or
assign thereto, by merger, amalgamation, consolidation, or otherwise, on or
after the Plan Effective Date.

 

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“Reorganized Pioneer” means either (a) Pioneer, as reorganized pursuant to and
under the Plan, or any successor or assign thereto, by merger, amalgamation,
consolidation, or otherwise, on or after the Plan Effective Date, or (b) a new
corporation or limited liability company that may be formed to, among other
things, directly or indirectly acquire substantially all of the assets and/or
stock of the debtors in the Chapter 11 Cases and issue the New Equity to be
distributed pursuant to the Plan.

“Required New Secured Bonds Commitment Parties” means, as of the relevant date,
New Secured Bonds Commitment Parties holding at least 50.01% of the aggregate
New Secured Bonds Commitments.

“Required Consenting Noteholders” means, as of the relevant date, Consenting
Noteholders holding at least 66.67% of the aggregate outstanding principal
amount of the Notes Claims that are held by all Consenting Noteholders.

“Required Consenting Stakeholders” means the Required Consenting Term Lenders
and the Required Consenting Noteholders.

“Required Consenting Term Lenders” means, as of the relevant date, the
Consenting Term Lenders holding at least 66.67% of the aggregate outstanding
principal amount of the Term Loan Claims that are held by all Consenting Term
Lenders.

“Restructuring Expenses” has the meaning set forth in the Term Sheet.

“Restructuring Transactions” has the meaning set forth in the preamble to this
Agreement.

“Rights Offering” has the meaning set forth in the Term Sheet.

“Rights Offering Documents” has the meaning set forth in the Term Sheet.

“Rights Offering Procedures” has the meaning set forth in the Term Sheet.

“Rules” means Rule 501(a)(1), (2), (3), and (7) of Regulation D under the
Securities Act.

“Second Day Pleadings” means the “second-day” pleadings that the Company Parties
file following the commencement of the Chapter 11 Cases.

“Securities Act” means the Securities Act of 1933, as amended.

“Solicitation Materials” means all solicitation materials in respect of the
Plan.

“Superior Proposal” means a bona fide Alternative Restructuring Proposal that
the board of directors of Pioneer determines in good faith would, if
consummated, result in a superior restructuring transaction to the Company
Parties and their estates than the transactions contemplated by this Agreement,
after consultation with a financial advisor and outside legal counsel and taking
into account (x) the likelihood and timing of consummation and (y) all material
legal, financial (including the financing terms of any such proposal),
conditionality, and other aspects of such proposal, in each case as compared to
the transactions contemplated by this Agreement.

 

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“Termination Date” means the date on which termination of this Agreement as to a
Party is effective in accordance with Sections 13.01-13.05.

“Term Loan Agreement” means the Term Loan Agreement, dated as of November 8,
2017, by and among Pioneer, as the borrower, the lenders party thereto and
Wilmington Trust, National Association, as the administrative agent, as may be
amended, supplemented, or otherwise modified from time to time.

“Term Loan Claim” means any Claim against a Company Party under the Term Loan
Agreement and the other Credit Documents (as defined in the Term Loan Credit
Agreement).

“Term Sheet” has the meaning set forth in the preamble to this Agreement.

“Transfer” means to sell, resell, reallocate, use, pledge, assign, transfer,
hypothecate, participate, donate, or otherwise encumber or dispose of, directly
or indirectly (including through derivatives, options, swaps, pledges, forward
sales, or other transactions); provided, however, that any pledge in favor of
(a) a bank or broker dealer at which a Consenting Stakeholder maintains an
account, where such bank or broker dealer holds a security interest or other
encumbrance over property in the account generally or (b) any lender, agent or
trustee to secure obligations generally under debt issued by the applicable fund
or account, in each case shall not be deemed a “Transfer” for any purposes
hereunder.

“Transfer Agreement” means an executed form of the transfer agreement providing,
among other things, that a transferee is bound by the terms of this Agreement
and substantially in the form attached to this Agreement as Exhibit D.

“United States Trustee” means the Office of the United States Trustee for the
Southern District of Texas (Houston Division).

1.02. Interpretation. For purposes of this Agreement:

(a) in the appropriate context, each term, whether stated in the singular or the
plural, shall include both the singular and the plural, and pronouns stated in
the masculine, feminine, or neuter gender shall include the masculine, feminine,
and the neuter gender;

(b) capitalized terms defined only in the plural or singular form shall
nonetheless have their defined meanings when used in the opposite form;

(c) unless otherwise specified, any reference in this Agreement to a contract,
lease, instrument, release, indenture, or other agreement or document being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions;

 

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(d) unless otherwise specified, any reference in this Agreement to an existing
document, schedule, or exhibit shall mean such document, schedule, or exhibit,
as it may have been or may be amended, restated, supplemented, or otherwise
modified from time to time; notwithstanding the foregoing, any capitalized terms
in this Agreement that are defined with reference to another agreement, are
defined with reference to such other agreement as of the date of this Agreement,
without giving effect to any termination of such other agreement or amendments
to such capitalized terms in any such other agreement following the date of this
Agreement;

(e) unless otherwise specified, all references in this Agreement to “Sections”
are references to Sections of this Agreement;

(f) captions and headings to Sections are inserted for convenience of reference
only and are not intended to be a part of or to affect the interpretation of
this Agreement;

(g) references to “shareholders,” “directors,” and/or “officers” shall also
include “members” and/or “managers,” as applicable, as such terms are defined
under the applicable limited liability company Laws;

(h) the use of “include” or “including” is without limitation, whether stated or
not; and

(i) the phrase “counsel to the Consenting Stakeholders” refers in this Agreement
to each counsel specified in Section 15.10 other than counsel to the Company
Parties.

Section 2. Effectiveness of this Agreement. This Agreement shall become
effective and binding upon each of the Parties at 12:00 a.m., prevailing Eastern
Time, on the Agreement Effective Date, which is the date on which all of the
following conditions have been satisfied or waived in accordance with this
Agreement:

(a) each of the Company Parties shall have executed and delivered counterpart
signature pages of this Agreement to counsel to each of the Parties;

(b) holders of at least two thirds (2/3) of the aggregate outstanding principal
amount of Term Loan Claims shall have executed and delivered counterpart
signature pages of this Agreement to counsel to each of the Parties;

(c) holders of at least two thirds (2/3) of the aggregate outstanding principal
amount of Notes Claims shall have executed and delivered counterpart signature
pages of this Agreement to counsel to each of the Parties;

(d) the Company Parties shall have paid, or caused to be paid, (i) all
Restructuring Expenses of the Ad Hoc Group of Noteholders and (ii) all
Consenting Term Lender Fees and Expenses, in each case for which an invoice has
been received by the Company Parties by no later than February 28, 2020; and

(e) counsel to the Company Parties shall have given notice to counsel to the
Consenting Stakeholders in the manner set forth in Section 15.10 (by email or
otherwise) that the other conditions to the Agreement Effective Date set forth
in this Section 2 have occurred.

 

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Section 3. Definitive Documents.

3.01. The “Definitive Documents” governing the Restructuring Transactions shall
consist of the following: (a) the Plan and its exhibits, ballots, and
solicitation procedures; (b) the Confirmation Order; (c) the DIP Documents;
(d) the Disclosure Statement; (e) the Disclosure Statement Order; (f) the First
Day Pleadings, the Second Day Pleadings, and all orders sought pursuant thereto;
(g) the Plan Supplement; (h) New Convertible Bond Indenture; (i) the Exit ABL
Documents; (j) the Corporate Governance Documents; (k) New Secured Bonds
Documents; (l) the Backstop Commitment Agreement; and (m) the Rights Offering
Documents.

3.02. The Definitive Documents shall be in form and substance consistent with
this Agreement or otherwise acceptable or reasonably acceptable (as applicable)
to the applicable Consenting Noteholders as set forth in this Section 3.02. The
Definitive Documents not executed or in a form attached to this Agreement as of
the Execution Date remain subject to negotiation and completion. Upon
completion, the Definitive Documents shall reflect and contain terms,
conditions, representations, warranties, and covenants consistent with the terms
of this Agreement (including the Term Sheet), as it may be modified, amended, or
supplemented in accordance with Section 14, and otherwise (i) in the case of the
Plan, Plan Supplement, Confirmation Order, Disclosure Statement and Disclosure
Statement Order, DIP Documents, New Secured Bonds Documents, Exit ABL Documents,
Corporate Governance Documents, New Convertible Bond Indenture and the Rights
Offering Documents, be in form and substance acceptable to the Company Parties
and the Required Consenting Noteholders, including any modifications, amendments
or supplements thereto, (ii) any provision in the Plan or the Confirmation Order
provides that the Term Loan Claims held by the Consenting Term Lenders shall
receive a treatment other than as set forth in the Term Sheet, such provision
shall be in form and substance acceptable to the Required Consenting Term
Lenders, (iii) any provision in the DIP Order that is applicable to the
Consenting Term Lenders shall be in form and substance reasonably acceptable to
the Required Consenting Term Lenders and (iv) in the case of all other
Definitive Documents, be in form and substance reasonably acceptable to the
Company Parties and the Required Consenting Noteholders.

3.03. The Company Parties acknowledge and agree that they will provide advance
initial draft copies of Definitive Documents to the Ad Hoc Group of Noteholders
and Consenting Term Lenders at least three (3) business days prior to the date
when any Company Parties intend to file the applicable Definitive Documents with
the Bankruptcy Court; provided, that if three (3) business days in advance is
not reasonably practicable, such initial draft Definitive Document shall be
provided as soon as reasonably practicable prior to filing, but in no event
later than twenty-four (24) hours in advance of any filing thereof.

Section 4. Milestones. The following Milestones shall apply to this Agreement
unless extended or waived in writing (email being sufficient) by the Company
Parties and the Required Consenting Noteholders:

(a) no later than one (1) calendar day prior to the Petition Date, the Company
Parties shall commence solicitation of votes to approve or reject the Plan.

(b) no later than March 3, 2020, the Petition Date shall have occurred;

 

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(c) no later than one (1) calendar day after the Petition Date, the Company
Parties shall have filed the Plan, the Disclosure Statement and the DIP Motion
with the Bankruptcy Court;

(d) no later than five (5) calendar days after the Petition Date, the Bankruptcy
Court shall have entered an interim DIP Order;

(e) no later than forty five (45) calendar days after the Petition Date, the
Bankruptcy Court shall have entered a final DIP Order;

(f) no later than forty five (45) calendar days after the Petition Date, the
Bankruptcy Court shall have entered an order approving the Disclosure Statement;

(g) no later than forty five (45) calendar days after the Petition Date, the
Bankruptcy Court shall have entered the Confirmation Order (the “Confirmation
Date”); and

(h) no later than fourteen (14) calendar days after the Confirmation Date, the
Plan Effective Date shall have occurred.

Section 5. Commitments of the Consenting Stakeholders.

5.01. Affirmative Commitments. During the Agreement Effective Period, each
Consenting Stakeholder severally, and not jointly, agrees in respect of all of
its Company Claims/Interests (for the avoidance of doubt, the Consenting Term
Lenders do not make any affirmative covenants with respect to any Equity
Interests they may hold) pursuant to this Agreement, to:

(a) do all things reasonably necessary and proper to support the Restructuring
Transactions within the timeframes outlined herein and in the Definitive
Documents;

(b) negotiate in good faith and use commercially reasonable efforts to execute
and implement the Definitive Documents that are consistent with this Agreement
to which it is required to be a party;

(c) consent to the releases set forth in the Plan and not make an election to
opt out of such releases; and

(d) in the case of the Consenting Term Lenders, direct the Agents under the Term
Loan Agreement, as defined therein, to take all actions consistent with this
Agreement and abstain from all actions inconsistent with this Agreement.

 

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5.02. Chapter 11 Voting. In addition to the obligations set forth in
Section 5.01, during the Agreement Effective Period, each Consenting Stakeholder
that is entitled to vote to accept or reject the Plan pursuant to its terms,
severally, and not jointly, agrees that it shall, subject to receipt by such
Consenting Stakeholder, whether before or after the commencement of the Chapter
11 Cases, of the Solicitation Materials:

(a) vote each of its Company Claims/Interests (for the avoidance of doubt, the
Consenting Term Lenders have no obligation under this Agreement to vote any
Equity Interest) to accept the Plan by delivering its duly executed and
completed ballot accepting the Plan on a timely basis following the commencement
of the solicitation of the Plan and its actual receipt of the Solicitation
Materials and the ballot;

(b) to the extent it is permitted to elect whether to opt out of the releases
set forth in the Plan, elect not to opt out of the releases set forth in the
Plan by timely delivering its duly executed and completed ballot(s) indicating
such election; and

(c) not change, withdraw, amend, or revoke (or cause to be changed, withdrawn,
amended, or revoked) any vote or election referred to in clauses (a) and (b)
above.

5.03. Releases; D&O Claims. Subject to the occurrence of the Plan Effective Date
and only if no Consenting Noteholder Termination Event has occurred, each
Consenting Stakeholder hereby (i) grants the releases by the Consenting
Stakeholder set forth in the Term Sheet in favor of the Released Parties (as
defined in the Term Sheet), and (ii) agrees not to pursue any claims that such
Consenting Stakeholder may currently have against the current and former
directors and officers of the Company Parties and each of their respective
subsidiaries.

5.04. Negative Covenants. During the Agreement Effective Period, each Consenting
Stakeholder severally, and not jointly, agrees in respect of all of its Company
Claims/Interests (for the avoidance of doubt, the Consenting Term Lenders do not
undertake any negative covenants with respect to any Equity Interests they may
hold) pursuant to this Agreement that it shall not, directly or indirectly, and
shall not direct any other person to:

(a) object to, delay, impede, or take any other action to interfere with
acceptance, implementation, or consummation of the Restructuring Transactions;

(b) propose, file, knowingly support, or vote for any Alternative Restructuring
Proposal;

(c) file any motion, pleading, or other document with the Bankruptcy Court or
any other court (including any modifications or amendments thereof) that, in
whole or in part, is not consistent with this Agreement or the Plan;

(d) exercise any right or remedy for the enforcement, collection, or recovery of
any of the Company Claims/Interests against the Company Parties, including
rights or remedies arising from or asserting or bringing any claims under or
with respect to the ABL Claims, Term Loan Claims or Notes Claims (as
applicable), other than as otherwise permitted under this Agreement;

(e) initiate, or have initiated on its behalf, any litigation proceeding of any
kind with respect to the Chapter 11 Cases, this Agreement or the other
Restructuring Transactions contemplated in this Agreement against the Company
Parties or the other Parties, other than to enforce this Agreement or any
Definitive Document or as otherwise permitted under this Agreement;

 

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(f) object to, delay, impede, or take any other action to interfere with the
Company Parties’ ownership and possession of their assets, wherever located, or
interfere with the automatic stay arising under section 362 of the Bankruptcy
Code; or

(g) object to, delay, impede, or take any other action that would reasonably be
expected to interfere with the Restructuring Transactions consistent with this
Agreement.

5.05. No Liabilities. Nothing in this Agreement shall require any Consenting
Stakeholder to incur any expenses, liabilities or other obligations, or agree to
any commitments, undertakings, concessions, indemnities or other arrangements
that would reasonably be expected to result in expenses, liabilities or other
obligations to any Consenting Stakeholder. Notwithstanding the immediately
preceding sentence, nothing in this Section 5.05 shall serve to limit, alter or
modify any Consenting Stakeholder’s express obligations under the terms of this
Agreement.

Section 6. Additional Provisions Regarding the Consenting Stakeholders’
Commitments. Notwithstanding anything contained in this Agreement, nothing in
this Agreement shall: (a) impair or waive the rights of any Consenting
Stakeholder to appear as a party in interest in any matter to be adjudicated in
order to be heard concerning any matter arising under the Chapter 11 Cases so
long as the exercise of any such right is not in violation of or inconsistent
with this Agreement, the Term Sheet, or such Consenting Stakeholder’s
obligations hereunder or thereunder, or (b) prevent any Consenting Stakeholder
from enforcing this Agreement or contesting whether any matter, fact, or thing
is a breach of, or is inconsistent with, this Agreement.

Section 7. Commitments of the Company Parties.

7.01. Affirmative Commitments. Except as set forth in Section 8, during the
Agreement Effective Period, the Company Parties agree to:

(a) do all things reasonably necessary and proper to (i) support and consummate
the Restructuring Transactions in accordance with this Agreement, (ii) prosecute
and defend any appeals relating to the Confirmation Order and (iii) comply with
each Milestone set forth in this Agreement;

(b) to the extent any legal or structural impediment arises that would prevent,
hinder, or delay the consummation of the Restructuring Transactions contemplated
in this Agreement, support and take all steps reasonably necessary and desirable
to address any such impediment;

(c) use commercially reasonable efforts to obtain any and all required
governmental, regulatory and/or third-party approvals necessary or required for
implementation or consummation of the Restructuring Transactions or approval by
the Bankruptcy Court of the Definitive Documents;

(d) negotiate in good faith and use commercially reasonable efforts to execute
and deliver the Definitive Documents and any other required agreements to
effectuate and consummate the Restructuring Transactions as contemplated by this
Agreement;

 

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(e) not seek to amend or modify, or file a pleading seeking authority to amend
or modify, the Definitive Documents in a manner that is inconsistent with this
Agreement;

(f) not file or seek authority to file any pleading materially inconsistent with
the Restructuring Transactions or the terms of this Agreement;

(g) not conduct any transaction not in the ordinary course of business (no
matter whether the Company Parties have received Bankruptcy Court’s
authorization to conduct such transaction), unless the Company Parties have
received prior written consent from the Required Consenting Noteholders;
provided that any transaction (or a series of related transactions) in an amount
exceeding $10 million is deemed to be not in the ordinary course of business for
the purposes of this clause (g);

(h) timely file a formal written response in opposition to any objection filed
with the bankruptcy court by any person with respect to the Definitive
Documents;

(i) timely file a formal objection to any motion filed with the Bankruptcy Court
by any person seeking the entry of an order (i) directing the appointment of a
trustee or examiner (with expanded powers beyond those set forth in sections
1106(a)(3) and (4) of the Bankruptcy Code), (ii) converting the Chapter 11 Cases
to cases under chapter 7 of the Bankruptcy Code, (iii) dismissing the Chapter 11
Cases or (v) for relief that (y) is inconsistent with this Agreement in any
material respect or (z) would reasonably be expected to frustrate the purposes
of this Agreement, including by preventing consummation of the Restructuring
Transactions;

(j) timely file a formal objection to any motion filed with the Bankruptcy Court
by any person seeking the entry of an order modifying or terminating the Company
Parties’ exclusive right to file and/or solicit acceptances of a plan of
reorganization, as applicable; and

(k) promptly pay the reasonable fees and expenses of the Ad Hoc Group of
Noteholders in accordance with this Agreement and the applicable fee letters on
a monthly basis and within ten (10) Business Days of receipt of invoices thereof
and pay the Consenting Term Lender Fees and Expenses.

7.02. Negative Commitments. Except as set forth in Section 8, during the
Agreement Effective Period, each of the Company Parties shall not, directly or
indirectly, and shall not direct any other person to:

(a) object to, delay, impede, or take any other action to interfere with
acceptance, implementation, or consummation of the Restructuring Transactions;

(b) take any action that is inconsistent with, or is intended to frustrate or
impede approval, implementation and consummation of, the Restructuring
Transactions;

(c) file any motion, pleading, or Definitive Documents with the Bankruptcy Court
or any other court (including any modifications or amendments thereof) that, in
whole or in part, is not materially consistent with this Agreement or the Term
Sheet; or

(d) seek, solicit, or propose any Alternative Restructuring Proposal.

 

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Section 8. Additional Provisions Regarding Company Parties’ Commitments.

8.01. Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement shall require a Company Party or the board of directors, board of
managers, or similar governing body of a Company Party, in such person’s
capacity as a director, officer, or member of the Company Party, to take any
action or to refrain from taking any action to the extent such Company Party,
board of directors, board of managers, or similar governing body believes in
good faith, based on advice of counsel, that the taking or failing to take such
action would be inconsistent with applicable Law or its fiduciary obligations
under applicable Law, and any such action or inaction pursuant to this
Section 8.01 shall not be deemed to constitute a breach of this Agreement;
provided, however, that nothing in this Section 8.01 shall be deemed to amend,
supplement, or otherwise modify, or constitute a waiver of, any Consenting Term
Lender Termination Event that may arise as a result of any such action or
omission; provided further, it is agreed that any such action that results in a
termination of this Agreement in accordance with the terms hereof shall be
subject to the provisions set forth in Section 13.06 hereof.

8.02. Notwithstanding anything to the contrary in this Agreement, but subject to
the terms of Sections 7.02 and 8.01, each Company Party and their respective
directors, officers, employees, investment bankers, attorneys, accountants,
consultants, and other advisors or representatives shall have the rights to:
(a) consider, respond to, facilitate, and negotiate in connection with any
Alternative Restructuring Proposal received by any Company Party that is a
Superior Proposal and (b) enter into or continue discussions or negotiations
with holders of Company Claims/Interests (including any Consenting Stakeholder),
any other party in interest in the Chapter 11 Cases (including any official
committee and the United States Trustee), or any other Entity regarding the
Restructuring Transactions. If any Company Party receives a written or oral
proposal or expression of interest regarding any Alternative Restructuring
Proposal, within two (2) Business Days, the Company Party shall notify (with
email being sufficient) counsel to the Ad Hoc Group of Noteholders and
Consenting Term Lenders of any such proposal or expression of interest, with
such notice to include a copy of such proposal, if it is in writing, or
otherwise a summary of the material terms thereof. If the board of directors of
the Company Parties decides, in the exercise of its fiduciary duties, to pursue
a Superior Proposal, the Company Parties shall notify counsel to the Ad Hoc
Group of Noteholders and Consenting Term Lenders within two (2) Business Days of
such determination.

8.03. Nothing in this Agreement shall: (a) impair or waive the rights of any
Company Party to assert or raise any objection permitted under this Agreement in
connection with the Restructuring Transactions; or (b) prevent any Company Party
from enforcing this Agreement or contesting whether any matter, fact, or thing
is a breach of, or is inconsistent with, this Agreement.

8.04. The Company Parties, to the extent enforceable, waive any right to assert
that the exercise of termination rights under this Agreement is subject to the
automatic stay provisions of the Bankruptcy Code and expressly stipulate and
consent hereunder to the prospective modification of the automatic stay
provisions of the Bankruptcy Code for purposes of exercising termination rights
under this Agreement, to the extent the Bankruptcy Court determines that such
relief is required.

 

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8.05. The Company Parties, severally, and not jointly, represents, warrants, and
covenants to each Consenting Stakeholder, as of the date such Consenting
Stakeholder executes and delivers this Agreement and as of immediately prior to
the Plan Effective Date, that Reorganized Pioneer is not a “covered fund” as
such term is defined in the final regulations promulgated under Section 13 of
the U.S. Bank Holding Company Act of 1956, as amended, 12 C.F.R. section
248.10(b)(1) (the “Volcker Rule”).

Section 9. Transfer of Interests and Securities.

9.01. During the Agreement Effective Period, no Consenting Stakeholder shall
Transfer any ownership (including any beneficial ownership as defined in the
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) in any Company
Claims/Interests to any affiliated or unaffiliated party, including any party in
which it may hold a direct or indirect beneficial interest, unless:

(a) in the case of any Company Claims/Interests, the authorized transferee is
either (1) a qualified institutional buyer as defined in Rule 144A under the
Securities Act, (2) a non-U.S. person in an offshore transaction as defined in
Regulation S under the Securities Act, (3) an institutional accredited investor
(as defined in the Rules), or (4) a Consenting Stakeholder;

(b) either (i) the transferee executes and delivers to counsel to the Company
Parties, at or before the time of the proposed Transfer, a Transfer Agreement or
(ii) the transferee is a Consenting Stakeholder or an affiliate thereof and the
transferee provides notice of such Transfer (including the amount and type of
Company Claim/Interest Transferred) to counsel to the Company Parties by the
close of business five (5) Business Days following such Transfer; and

(c) with respect to the Transfer of any Equity Interests only, such Transfer
shall not (i) violate the terms of any order entered by the Bankruptcy Court
with respect to preservation of net operating losses or (ii) in the reasonable
business judgment of the Company Parties and their legal and tax advisors,
adversely affect the Company Parties’ ability to maintain the value of and
utilize the Company Parties’ net operating loss carryforwards or other tax
attributes.

9.02. Upon compliance with the requirements of Section 9.01, the transferor
shall be deemed to relinquish its rights (and be released from its obligations)
under this Agreement to the extent of the rights and obligations in respect of
such transferred Company Claims/Interests. Any Transfer in violation of
Section 9.01 shall be void ab initio.

9.03. This Agreement shall in no way be construed to preclude the Consenting
Stakeholders from acquiring additional Company Claims/Interests. Notwithstanding
the foregoing, (a) such additional Company Claims/Interests shall automatically
and immediately upon acquisition by a Consenting Stakeholder be deemed subject
to the terms of this Agreement (regardless of when or whether notice of such
acquisition is given to counsel to the Company Parties or counsel to the
Consenting Stakeholders) and (b) such Consenting Stakeholder must provide notice
of such acquisition (including the amount and type of Company Claim/Interest
acquired) to counsel to the Company Parties within three (3) Business Days of
such acquisition.

 

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9.04. This Section 9 shall not impose any obligation on any Company Party to
issue any “cleansing letter” or otherwise publicly disclose information for the
purpose of enabling a Consenting Stakeholder to Transfer any of its Company
Claims/Interests. Notwithstanding anything to the contrary in this Agreement, to
the extent a Company Party and another Party have entered into a Confidentiality
Agreement, the terms of such Confidentiality Agreement shall continue to apply
and remain in full force and effect according to its terms, and this Agreement
does not supersede any rights or obligations otherwise arising under such
Confidentiality Agreements.

9.05. Notwithstanding anything herein to the contrary, a Qualified Marketmaker
that acquires any Company Claims/Interests with the purpose and intent of acting
as a Qualified Marketmaker for such Company Claims/Interests shall not be
required to execute and deliver a Transfer Agreement in respect of such Company
Claims/Interests; provided, however, that (a) such Qualified Marketmaker must
Transfer such right, title, or interest by within ten (10) Business Days
following its receipt thereof to a transferee that is an entity that is not an
affiliate, affiliated fund, or affiliated entity with a common investment
advisor; and (b) any subsequent Transfer by such Qualified Marketmaker of the
right, title, or interest in such Claims is to a transferee that is or becomes a
Consenting Stakeholder at the time of such transfer, and (c) such Consenting
Stakeholder shall be solely responsible for the Qualified Marketmaker’s failure
to comply with the requirements of this Section 9. To the extent that a
Consenting Stakeholder is acting in its capacity as a Qualified Marketmaker, it
may Transfer (by purchase, sale, assignment, participation, or otherwise) any
right, title, or interests in Company Claims/Interests that the Qualified
Marketmaker acquires from a holder of the Company Claims/Interests who is not a
Consenting Stakeholder without the requirement that the transferee be a
Permitted Transferee.

9.06. Notwithstanding anything to the contrary in this Section 9.06, the
restrictions on Transfer set forth in this Section 9.06 shall not apply to the
grant of any liens or encumbrances on any claims and interests in favor of a
bank or broker-dealer holding custody of such claims and interests in the
ordinary course of business and which lien or encumbrance is released upon the
Transfer of such claims and interests.

Section 10. Representations and Warranties of Consenting Stakeholders. Each
Consenting Stakeholder severally, and not jointly, represents and warrants that,
as of the date such Consenting Stakeholder executes and delivers this Agreement:

(a) it is the beneficial or record owner of the face amount of the Company
Claims/Interests or is the nominee, investment manager, or advisor for
beneficial holders of the Company Claims/Interests reflected in, and having made
reasonable inquiry, is not the beneficial or record owner of any Company
Claims/Interests other than those reflected in such Consenting Stakeholder’s
signature page to this Agreement or a Transfer Agreement, as applicable (as may
be updated pursuant to Section 9);

(b) it has the full power and authority to act on behalf of, vote and consent to
matters concerning, such Company Claims/Interests;

(c) such Company Claims/Interests are free and clear of any pledge, lien,
security interest, charge, claim, equity, option, proxy, voting restriction,
right of first refusal, or other limitation on disposition, transfer, or
encumbrances of any kind, that would materially and adversely affect in any way
such Consenting Stakeholder’s ability to perform any of its obligations under
this Agreement at the time such obligations are required to be performed;

 

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(d) it has the full power to vote, approve changes to, and transfer all of its
Company Claims/Interests referable to it as contemplated by this Agreement
subject to applicable Law; and

(e) (i) it is either (A) a qualified institutional buyer as defined in Rule 144A
under the Securities Act, (B) not a U.S. person (as defined in Regulation S
under the Securities Act), or (C) an institutional accredited investor
(as defined in the Rules), and (ii) any securities acquired by the Consenting
Stakeholder in connection with the Restructuring Transactions will have been
acquired for investment and not with a view to distribution or resale in
violation of the Securities Act.

Section 11. New Secured Bonds Commitment. Subject to Section 14(e), each
Consenting Noteholder party hereto as of the date hereof whose name is listed on
Schedule 1 hereto (such Consenting Noteholder, a “New Secured Bonds Commitment
Party”) hereby commits, severally and not jointly, to purchase the portion of
the New Secured Bonds set forth opposite such New Secured Bonds Commitment
Party’s name on Schedule 1 hereto, on the Plan Effective Date, on the terms and
subject only to the conditions set forth in the New Secured Bonds Term Sheet
attached to the Term Sheet (such commitment, the “New Secured Bonds
Commitment”). Subject to Section 14(e), each of the Parties agrees that this
Section 11 is a valid, binding and enforceable agreement with respect to the
purchase of such New Secured Bonds and an agreement by each of the New Secured
Bonds Commitment Parties and the Company Parties to negotiate in good faith the
New Secured Bonds Documents and the other Definitive Documents in a manner
consistent with this Agreement and the Term Sheet (including the New Secured
Bonds Term Sheet and the other exhibits to the Term Sheet), it being
acknowledged and agreed that the commitment provided hereunder is subject only
to the express conditions precedent set forth under “Conditions Precedent to the
Restructuring” in the Term Sheet and that there are no other implied or express
conditions to such purchase and that upon the satisfaction (or waiver) of such
express conditions, the purchase of the New Secured Bonds will be consummated.
Notwithstanding the foregoing, upon a termination of this Agreement as to the
Consenting Noteholders in accordance with the provisions hereof prior to the
Plan Effective Date, the New Secured Bonds Commitments of the New Secured Bonds
Commitment Parties as set forth in this Section 11 shall also terminate.

Section 12. Mutual Representations, Warranties, and Covenants. Each of the
Parties, severally, and not jointly, represents, warrants, and covenants to each
other Party, as of the date such Party executes and delivers this Agreement and
as of immediately prior to the Plan Effective Date:

(a) it is validly existing and in good standing under the Laws of the state of
its organization, and this Agreement is a legal, valid, and binding obligation
of such Party, enforceable against it in accordance with its terms, except as
enforcement may be limited by applicable Laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability;

 

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(b) except (i) as expressly provided in this Agreement, the Plan, and the
Bankruptcy Code or (ii) as may be necessary and/or required by the SEC or other
securities regulatory authorities under applicable securities laws, no material
registration or filing with, consent or approval of, or notice to, or other
action, with or by, any federal, state or governmental authority or regulatory
body is required in order for it to effectuate the Restructuring Transactions
contemplated by, and perform its respective obligations under, this Agreement;

(c) the entry into this Agreement and performance by it of the transactions
contemplated thereby do not, and will not, conflict in any material respect with
any Law or regulation applicable to it or with any of its articles of
association, memorandum of association, or other constitutional documents;

(d) except as expressly provided in this Agreement, it has (or will have, at the
relevant time) all requisite corporate or other power and authority to enter
into, execute, and deliver this Agreement and to effectuate the Restructuring
Transactions contemplated by, and perform its respective obligations under, this
Agreement; and

(e) except as expressly provided by this Agreement, it is not party to any
restructuring or similar agreements or arrangements with the other Parties to
this Agreement that have not been disclosed to all Parties to this Agreement.

Section 13. Termination Events.

13.01. Consenting Noteholder Termination Event. This Agreement may be terminated
by the Required Consenting Noteholders, and, in each case by the delivery to the
other Parties of a written notice in accordance with Section 15.10 (with such
termination being effective three (3) Business Days following delivery of such
written notice, except as otherwise set forth below) upon the occurrence of the
following events, each, a “Consenting Noteholder Termination Event”:

(a) the breach in any material respect by a Company Party of any of the
representations, warranties, undertakings, commitments or covenants of the
Company Parties set forth in this Agreement that remains uncured (to the extent
curable) for five (5) Business Days after the terminating Required Consenting
Noteholders transmit a written notice in accordance with Section 15.10 detailing
any such breach;

(b) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling or order that (i) would reasonably be expected to prevent the
consummation of a material portion of the Restructuring Transactions and
(ii) remains in effect for ten (10) Business Days after such terminating
Required Consenting Noteholders transmit a written notice in accordance with
Section 15.10 detailing any such issuance; notwithstanding the foregoing, this
termination right may not be exercised by any Party that sought or requested
such ruling or order in contravention of any obligation set out in this
Agreement;

(c) the occurrence of any event that allows the Required Commitment Parties (as
defined in the Backstop Commitment Agreement) to terminate the Backstop
Commitment Agreement pursuant to Section 14(c) of the Backstop Commitment
Agreement;

 

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(d) the entry of an order by the Bankruptcy Court, or the filing of a motion or
application by any Company Party seeking an order (without the prior written
consent of the Required Consenting Noteholders), (i) converting one or more of
the Chapter 11 Cases of a Company Party to a case under chapter 7 of the
Bankruptcy Code, (ii) appointing an examiner with expanded powers beyond those
set forth in sections 1106(a)(3) and (4) of the Bankruptcy Code or a trustee in
one or more of the Chapter 11 Cases of a Company Party, or (iii) rejecting this
Agreement;

(e) the failure to meet a Milestone, which has not been waived or extended in a
manner consistent with this Agreement, unless such failure is the result of any
act, omission, or delay on the part of the terminating Required Consenting
Noteholders in violation of its obligations under this Agreement;

(f) the Bankruptcy Court grants relief that is inconsistent in any material
respect with this Agreement, the Definitive Documents or the Restructuring
Transactions, and such inconsistent relief is not dismissed, vacated or modified
to be consistent with this Agreement and the Restructuring Transactions within
five (5) business days following written notice thereof to the Company Parties
by the Required Consenting Noteholders;

(g) the occurrence of an “Event of Default” under the DIP Credit Agreement or
Backstop Commitment Agreement that has not been waived or timely cured in
accordance therewith;

(h) on or after the Agreement Effective Date, any of the Company Parties
consummates or enters into a definitive agreement evidencing any merger,
consolidation, disposition of material assets, acquisition of material assets,
or similar transaction, pays any dividend, or incurs any indebtedness for
borrowed money, in each case outside the ordinary course of business, in each
case other than: (i) the Restructuring Transactions or (ii) with the prior
consent of the Required Consenting Noteholders;

(i) if the Company Parties (i) notify counsel to the Ad Hoc Group of Noteholders
pursuant to Section 8.02 and/or make a public announcement that they intend to
pursue a Superior Proposal or (ii) enter into a definitive agreement with
respect to a Superior Proposal;

(j) the filing by the Company of any Definitive Document, amendments,
modifications or supplements thereto, motion or pleading with the Bankruptcy
Court that is not consistent in all material respects with this Agreement and
the Term Sheet, and such filing is not withdrawn (or, in the case of a motion
that has already been approved by an order of the Bankruptcy Court at the time
the Company Parties are provided with such notice, such order is not stayed,
reversed or vacated) within five (5) business days following written notice
thereof to the Company Parties by the Required Consenting Noteholders;

(k) any of the following shall have occurred: (i) the Company Parties or any
affiliate of the Company Parties shall have filed any motion, application,
adversary proceeding or Cause of Action (A) challenging the validity,
enforceability, or priority of, or seek avoidance or subordination of the Notes
Claims or (B) otherwise seeking to impose liability upon or enjoin the
Consenting Noteholders (in each case, other than with respect to a breach of
this Agreement) or

 

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(ii) the Company Parties or any affiliate of the Company Parties shall have
supported any application, adversary proceeding or Cause of Action referred to
in this clause (k) filed by another person, or consents (without the consent of
the Required Consenting Noteholders) to the standing of any such person to bring
such application, adversary proceeding or Cause of Action;

(l) the Bankruptcy Court grants relief terminating, annulling or modifying the
automatic stay (as set forth in Section 362 of the Bankruptcy Code) with regard
to any assets of the Company Parties having an aggregate fair market value in
excess of $5 million without the consent of the Required Consenting Noteholders;

(m) the Company Parties lose the exclusive right to file and solicit acceptances
of a chapter 11 plan;

(n) the failure of the Company Parties to promptly pay the reasonable fees and
expenses of the Ad Hoc Group of Noteholders in accordance with this Agreement;

(o) any Company Party withdraws or revokes the Plan or files, proposes or
otherwise supports any (i) Alternative Restructuring Proposal or (ii) amendment
or modification to the Restructuring Transactions containing any terms that are
materially inconsistent with the implementation of, and the terms set forth it,
the Term Sheet, without the prior written consent of the Required Consenting
Noteholders which remains uncured (to the extent curable) for five (5) Business
Days after such terminating Consenting Stakeholders transmit a written notice in
accordance with Section 15.10 detailing any such breach

(p) any Company Party enters into a definitive agreement with respect to an
Alternative Restructuring Proposal; or

(q) the Required Consenting Term Lenders’ termination of this Agreement with
respect to the Consenting Term Lenders pursuant to Section 13.02.

13.02. Consenting Term Lenders Termination Event. This Agreement may be
terminated by the Required Consenting Term Lenders, solely with respect to the
Consenting Term Lenders, by the delivery to the other Parties of a written
notice in accordance with Section 15.10 (with such termination being effective
three (3) Business Days following delivery of such written notice, except as
otherwise set forth below) if:

(a) the Plan Effective Date has not occurred by 90 days after the Petition Date
(the “Consenting Term Lenders Termination Event” and together with the
Consenting Noteholders Termination Event, the “Consenting Stakeholder
Termination Events”);

(b) the filing by the Company of any plan of reorganization with the Bankruptcy
Court that provides that the Term Loan Claims held by the Consenting Term
Lenders shall receive a treatment other than as set forth in the Term Sheet,
which has not been consented to by the Required Consenting Term Lenders pursuant
to Section 3.02, and such filing is not withdrawn (or, in the case of a motion
that has already been approved by an order of the Bankruptcy Court at the time
the Company Parties are provided with such notice, such order is not stayed,
reversed or vacated) within five (5) business days following written notice
thereof to the Company Parties by the Required Consenting Term Lenders;

 

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(c) the failure of the Company Parties to pay the Consenting Term Lender Fees
and Expenses in accordance with this Agreement; or

(d) the Required Consenting Noteholders’ termination of this Agreement with
respect to the Consenting Noteholders pursuant to Section 13.01.

13.03. Company Party Termination Events. Any Company Party may terminate this
Agreement as to all Parties by the delivery to the other Parties of a written
notice in accordance with Section 15.10 (with such termination being effective
three (3) Business Days following delivery of such written notice, except as
otherwise set forth below) upon the occurrence of the following events:

(a) the breach of this Agreement in any material respect by Consenting
Noteholders holding an amount of Notes Claims that would result in non-breaching
Consenting Noteholders holding less than two-thirds (2/3) of the aggregate
outstanding principal amount of the Notes that remains uncured (to the extent
curable) for five (5) Business Days after the terminating Company Parties
transmit a written notice in accordance with Section 15.10 detailing any such
breach;

(b) the board of directors, board of managers, or such similar governing body of
any Company Party determines in good faith, based on advice of counsel, that
proceeding with any of the Restructuring Transactions would be inconsistent with
the exercise of its fiduciary duties; or

(c) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling or order that would reasonably be expected to prevent the consummation of
a material portion of the Restructuring Transactions; provided, that
notwithstanding the foregoing, this termination right shall not apply to or be
exercised by any Company Party that sought or requested such ruling or order or
in contravention of any obligation or restriction set out in this Agreement;
provided further, that a ruling by the Bankruptcy Court that the Plan is not
confirmable as a result of the terms included therein and contemplated by one or
more provisions of the Term Sheet shall not, by itself, constitute a termination
event pursuant to this Section 13.03(e); or

(d) the Bankruptcy Court enters an order denying confirmation of the Plan.

13.04. Mutual Termination. This Agreement, and the obligations of all Parties
hereunder, may be terminated by mutual written agreement among all of the
following: (a) the Required Consenting Stakeholders; and (b) each Company Party.

13.05. Automatic Termination. This Agreement shall terminate automatically
without any further required action or notice simultaneously with the Plan
Effective Date.

13.06. Effect of Termination. After the occurrence of a Termination Date as to a
Party, this Agreement shall be of no further force and effect as to such Party
and each Party subject to such termination shall be immediately released from
its or their respective liabilities, obligations, commitments, undertakings, and
agreements under or related to this Agreement, shall have no further rights,
benefits or privileges hereunder and shall have all the rights and remedies that
it would have had, had it not entered into this Agreement, and no such rights or
remedies shall be

 

23

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deemed waived pursuant to a claim of laches or estoppel, and shall be entitled
to take all actions, whether with respect to the Restructuring Transactions or
otherwise, that it would have been entitled to take had it not entered into this
Agreement, including with respect to any and all Claims or Causes of Action;
provided, that in no event shall any such termination relieve a Party from
liability for its breach or non-performance of its obligations hereunder before
the Termination Date. Upon the occurrence of a Termination Date prior to the
Confirmation Order being entered by a Bankruptcy Court, any and all consents or
ballots tendered by the Parties subject to such termination before a Termination
Date shall be deemed, for all purposes, to be null and void from the first
instance and shall not be considered or otherwise used in any manner by the
Parties in connection with the Restructuring Transactions and this Agreement or
otherwise. Notwithstanding the foregoing, any Consenting Stakeholder withdrawing
or changing its vote pursuant to this Section 13.06 shall promptly provide
written notice of such withdrawal or change to each other Party to this
Agreement and, if such withdrawal or change occurs on or after the Petition
Date, file notice of such withdrawal or change with the Bankruptcy Court.
Nothing in this Agreement shall be construed as prohibiting a Company Party or
any of the Consenting Stakeholders from contesting whether any such termination
is in accordance with its terms or to seek enforcement of any rights under this
Agreement that arose or existed before a Termination Date. Except as expressly
provided in this Agreement, nothing in this Agreement is intended to, or does,
in any manner waive, limit, impair, or restrict (a) any right of any Company
Party or the ability of any Company Party to protect and reserve its rights
(including rights under this Agreement), remedies, and interests, including its
claims against any Consenting Stakeholder, and (b) any right of any Consenting
Stakeholder, or the ability of any Consenting Stakeholder, to protect and
preserve its rights (including rights under this Agreement), remedies, and
interests, including its claims against any Company Party or any other
Consenting Stakeholder. Notwithstanding any provision to the contrary in this
Section 13, no Party may exercise any of its respective termination rights as
set forth herein if such Party has failed to perform or comply in all material
respects with the terms and conditions of this Agreement (unless such failure to
perform or comply arises as a result of another Party’s actions or inactions),
with such failure to perform or comply causing, or resulting in, the occurrence
of the applicable termination event giving rise to such termination right.
Nothing in this Section 13.06 shall restrict any Company Party’s right to
terminate this Agreement in accordance with Section 13.03(d).

Section 14. Amendments and Waivers.

(a) Subject to Section 4, this Agreement may not be modified, amended, or
supplemented, and no condition or requirement of this Agreement may be waived,
in any manner except in accordance with this Section 14 and Section 15.18.

(b) This Agreement may be modified, amended, or supplemented in a writing signed
by each Company Party and the Required Consenting Noteholders; provided, that
amendments to this Section 14 shall require the consent of each Consenting
Noteholder. Notwithstanding the foregoing, (i) if the proposed modification,
amendment, waiver, or supplement has an adverse effect on the rights or
obligations hereunder or treatment under the Plan of any of the Company
Claims/Interests held by a Consenting Stakeholder, then the consent of each such
affected Consenting Stakeholder shall also be required to effectuate such
modification, amendment, waiver, or supplement. In the event that the Required
Consenting Noteholders and the Company

 

24

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Parties have agreed to any modification, amendment, waiver, or supplement to
which any Consenting Stakeholder has refused to consent pursuant to the
immediately preceding sentence, then the Company and the Required Consenting
Noteholders may elect to terminate this Agreement as to each such Consenting
Stakeholder, and this Agreement shall continue in full force and effect with
respect to all other Consenting Stakeholders from time to time party hereto.

(c) Any proposed modification, amendment, waiver, or supplement that does not
comply with this Section 14 shall be ineffective and void ab initio.

(d) The waiver by any Party of a breach of any provision of this Agreement shall
not operate or be construed as a further or continuing waiver of such breach or
as a waiver of any other or subsequent breach. No failure on the part of any
Party to exercise, and no delay in exercising, any right, power, or remedy under
this Agreement shall operate as a waiver of, any such right, power, or remedy or
any provision of this Agreement, nor shall any single or partial exercise of
such right, power, or remedy by such Party preclude any other or further
exercise of such right, power, or remedy or the exercise of any other right,
power, or remedy. All remedies under this Agreement are cumulative and are not
exclusive of any other remedies provided by Law.

(e) Any waiver, change, modification or amendment to this Agreement and the Term
Sheet (including the New Secured Bonds Term Sheet attached thereto) that
adversely affects the rights or obligations hereunder of the New Secured Bonds
Commitment Parties in their capacity as such shall require the consent of the
Required New Secured Bonds Commitment Parties. Prior to the Plan Effective Date,
(a) any change, modification, or amendment to Schedule 1 hereto that affects the
commitment of any New Secured Bonds Commitment Party shall require the consent
of such New Secured Bonds Commitment Party, and (b) any change, modification, or
amendment reducing the interest rate or fees set forth in the New Secured Bonds
Term Sheet shall require the consent of each affected New Secured Bonds
Commitment Party.

Section 15. Miscellaneous.

15.01. Acknowledgement. Notwithstanding any other provision of this Agreement,
this Agreement is not and shall not be deemed to be an offer with respect to any
securities or solicitation of votes for the acceptance of a plan of
reorganization for purposes of sections 1125 and 1126 of the Bankruptcy Code or
otherwise. Any such offer or solicitation will be made only in compliance with
all applicable securities Laws, provisions of the Bankruptcy Code, and/or other
applicable Law. Each Consenting Stakeholder acknowledges and agrees that if it
is to acquire any securities, as defined in the Securities Act, pursuant to the
Restructuring Transactions, such securities have not been registered under the
Securities Act and that such securities are, to the extent not offered,
solicited or acquired pursuant to section 1145 of the Bankruptcy Code, being
offered and sold pursuant to an exemption from registration contained in the
Securities Act, based in part upon such Consenting Stakeholder’s representations
contained in this Agreement, and cannot be sold unless subsequently registered
under the Securities Act or an exemption from registration is available.

15.02. Exhibits Incorporated by Reference; Conflicts. Each of the exhibits,
annexes, signatures pages, and schedules attached to this Agreement is expressly
incorporated and made a part of this Agreement, and all references to this
Agreement shall include such exhibits, annexes, and schedules. In the event of
any inconsistency between this Agreement (without reference to the exhibits,
annexes, and schedules attached to this Agreement) and the exhibits, annexes,
and schedules attached to this Agreement, this Agreement (without reference to
the exhibits, annexes, and schedules thereto) shall govern.

 

25

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15.03. Further Assurances. Subject to the other terms of this Agreement, the
Parties agree to use their commercially reasonable efforts to execute and
deliver such other instruments and perform such acts, in addition to the matters
specified in this Agreement, as may be reasonably appropriate or necessary, or
as may be required by order of the Bankruptcy Court, from time to time, to
effectuate the Restructuring Transactions, as applicable.

15.04. Complete Agreement. Except as otherwise explicitly provided in this
Agreement, this Agreement constitutes the entire agreement among the Parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, oral or written, among the Parties with respect thereto, other than
any Confidentiality Agreement. The Parties acknowledge and agree that they are
not relying on any representations or warranties other than as set forth in this
Agreement.

15.05. GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM. THIS
AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE CHOSEN
STATE, WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES. Each Party to
this Agreement agrees that it shall bring any action or proceeding in respect of
any claim arising out of or related to this Agreement, to the extent possible,
in the Bankruptcy Court, and solely in connection with claims arising under this
Agreement: (a) irrevocably submits to the exclusive jurisdiction of the
Bankruptcy Court; (b) waives any objection to laying venue in any such action or
proceeding in the Bankruptcy Court; and (c) waives any objection that the
Bankruptcy Court is an inconvenient forum or does not have jurisdiction over any
Party to this Agreement.

15.06. TRIAL BY JURY WAIVER. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

15.07. Execution of Agreement. This Agreement may be executed and delivered in
any number of counterparts and by way of electronic signature and delivery, each
such counterpart, when executed and delivered, shall be deemed an original, and
all of which together shall constitute the same agreement. Except as expressly
provided in this Agreement, each individual executing this Agreement on behalf
of a Party has been duly authorized and empowered to execute and deliver this
Agreement on behalf of said Party.

15.08. Rules of Construction. This Agreement is the product of negotiations
among the Company Parties and the Consenting Stakeholders, and in the
enforcement or interpretation of this Agreement, is to be interpreted in a
neutral manner, and any presumption with regard to interpretation for or against
any Party by reason of that Party having drafted or caused to be drafted this
Agreement, or any portion of this Agreement, shall not be effective in regard to
the interpretation of this Agreement. The Company Parties and the Consenting
Stakeholders were each represented by counsel during the negotiations and
drafting of this Agreement and continue to be represented by counsel.

 

26

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15.09. Successors and Assigns; Third Parties. This Agreement is intended to bind
and inure to the benefit of the Parties and their respective successors and
permitted assigns, as applicable. There are no third-party beneficiaries under
this Agreement, and, except as set forth in Section 9, the rights or obligations
of any Party under this Agreement may not be assigned, delegated, or transferred
to any other person or entity.

15.10. Notices. All notices hereunder shall be deemed given if in writing and
delivered, by electronic mail, courier, or registered or certified mail (return
receipt requested), to the following addresses (or at such other addresses as
shall be specified by like notice):

 

  (a)

if to a Company Party, to:

Pioneer Energy Services Corp.

1250 N.E. Loop 410, Suite 1000

San Antonio, Texas 78209

Attention: Bryce Seki, VP - General Counsel

E-mail:     BSeki@pioneeres.com

with copies to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attention:   Brian S. Hermann,

Elizabeth R. McColm,

Brian Bolin

Eugene Y. Park

E-mail:       bhermann@paulweiss.com

emccolm@paulweiss.com

bbolin@paulweiss.com

epark@paulweiss.com

 

  (b)

if to a Consenting Term Lender, to:

Vinson & Elkins LLP

The Grace Building

1114 Avenue of the Americas, 32nd Floor

New York, New York 10036

Attention:   David S. Meyer

Paul E. Heath

Kevin Heverin

Steven Zundell

 

27

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E-mail:       dmeyer@velaw.com

pheath@velaw.com

kheverin@velaw.com

szundell@velaw.com

 

  (c)

if to a Consenting Noteholder, to:

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Attention:   Damian S. Schaible

Natasha Tsiouris

Erik Jerrard

E-mail:       damian.schaible@davispolk.com,

natasha.tsiouris@davispolk.com

erik.jerrard@davispolk.com

Any notice given by delivery, mail, or courier shall be effective when received.

15.11. Independent Due Diligence and Decision Making. Each Consenting
Stakeholder confirms that its decision to execute this Agreement has been based
upon its independent investigation of the operations, businesses, financial and
other conditions, and prospects of the Company Parties. Each Consenting
Stakeholder acknowledges and agrees that it is not relying on any
representations or warranties other than as set forth in this Agreement.

15.12. Enforceability of Agreement. Each of the Parties to the extent
enforceable waives any right to assert that the exercise of termination rights
under this Agreement is subject to the automatic stay provisions of the
Bankruptcy Code, and expressly stipulates and consents hereunder to the
prospective modification of the automatic stay provisions of the Bankruptcy Code
for purposes of exercising termination rights under this Agreement, to the
extent the Bankruptcy Court determines that such relief is required.

15.13. Waiver. If the Restructuring Transactions are not consummated, or if this
Agreement is terminated for any reason, the Parties fully reserve any and all of
their rights and nothing herein shall constitute or be deemed to constitute such
Party’s consent or approval of any chapter 11 plan of reorganization for the
Company Parties or any waiver of any rights such Party may have under any
subordination agreement. Pursuant to Federal Rule of Evidence 408 and any other
applicable rules of evidence, this Agreement and all negotiations relating to
this Agreement shall not be admissible into evidence in any proceeding other
than a proceeding to enforce its terms or the payment of damages to which a
Party may be entitled under this Agreement.

15.14. Specific Performance. It is understood and agreed by the Parties that
money damages would be an insufficient remedy for any breach of this Agreement
by any Party, and each non-breaching Party shall be entitled to specific
performance and injunctive or other equitable relief (without the posting of any
bond and without proof of actual damages) as a remedy of any such breach,
including an order of the Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder.

 

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15.15. Several, Not Joint, Claims. Except where otherwise specified, the
agreements, representations, warranties, and obligations of the Parties under
this Agreement are, in all respects, several and not joint.

15.16. Severability and Construction. If any provision of this Agreement shall
be held by a court of competent jurisdiction to be illegal, invalid, or
unenforceable, the remaining provisions shall remain in full force and effect if
essential terms and conditions of this Agreement for each Party remain valid,
binding, and enforceable.

15.17. Relationship Among Consenting Stakeholders.

(a) None of the Consenting Stakeholders shall have any fiduciary duty, any duty
of trust or confidence in any form, or other duties or responsibilities to each
other, the Company Parties or their affiliates, or any of the Company Parties’
or their affiliates’ creditors or other stakeholders, including, without
limitation, any holders of ABL Claims, Term Loan Claims, Notes Claims or Company
Claims/Interests, and, other than as expressly set forth in this Agreement,
there are no commitments among or between the Consenting Stakeholders. It is
understood and agreed that any Consenting Stakeholder may trade in any debt or
equity securities of the Company Parties without the consent of the Company
Parties or any other Consenting Stakeholder, subject to applicable securities
laws and this Agreement (including Section 9 of this Agreement). No prior
history, pattern or practice of sharing confidences among or between any of the
Consenting Stakeholders and/or the Company Parties shall in any way affect or
negate this understanding and agreement.

(b) The obligations of each Consenting Stakeholder are several and not joint
with the obligations of any other Consenting Stakeholder. Nothing contained
herein and no action taken by any Consenting Stakeholder shall be deemed to
constitute the Consenting Stakeholders as a partnership, an association, a joint
venture, or any other kind of group or entity, or create a presumption that the
Consenting Stakeholder are in any way acting in concert. The decision of each
Consenting Stakeholder to enter into this Agreement has been made by such
Consenting Stakeholder independently of any other Consenting Stakeholder.

(c) The Consenting Stakeholders are not part of a “group” (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended 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 Securities Exchange Act of 1934, as amended), with any
other Party. For the avoidance of doubt, neither the existence of this
Agreement, nor any action that may be taken by a Consenting Stakeholder pursuant
to this Agreement, shall be deemed to constitute or to create a presumption by
any of the Parties that the Consenting Stakeholders are in any way acting in
concert or as such a “group” within the meaning of Rule 13d-5(b)(1).

 

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(d) The Company Parties understand that the Consenting Stakeholders are engaged
in a wide range of financial services and businesses, and, in furtherance of the
foregoing, the Company Parties acknowledge and agree that the obligations set
forth in this Agreement shall only apply to the trading desk(s) and/or business
group(s) of the Consenting Stakeholders that principally manage and/or supervise
the Consenting Stakeholder’s investment in the Company Parties, and shall not
apply to any other trading desk or business group of the Consenting Stakeholder
so long as they are not acting at the direction or for the benefit of such
Consenting Stakeholder.

15.18. Email Consents. Where a written consent, acceptance, approval, or waiver
is required pursuant to or contemplated by this Agreement, pursuant to
Section 3.02, Section 14, or otherwise, including a written approval by the
Company Parties or the Required Consenting Stakeholders, such written consent,
acceptance, approval, or waiver shall be deemed to have occurred if, by
agreement between counsel to the Parties submitting and receiving such consent,
acceptance, approval, or waiver, it is conveyed in writing (including electronic
mail) between each such counsel without representations or warranties of any
kind on behalf of such counsel.

15.19. Settlement Discussions. This Agreement is part of a proposed settlement
of matters that could otherwise be the subject of litigation among the Parties.
Nothing in this Agreement shall be deemed an admission of any kind. Pursuant to
Federal Rule of Evidence 408, any applicable state rules of evidence and any
other applicable law, foreign or domestic, this Agreement, and all negotiations
relating thereto shall not be admissible into evidence in any proceeding other
than to prove the existence of this Agreement or in a proceeding to enforce the
terms of this Agreement.

15.20. Good Faith Cooperation; Further Assurances. The Parties shall cooperate
with each other in good faith and shall coordinate their activities (to the
extent reasonably practicable) in respect of all matters concerning the
implementation and consummation of the Restructuring Transactions. Further, each
of the Parties shall take such action (including executing and delivering any
other agreements and making and filing any required regulatory filings) as may
be reasonably necessary to carry out the purposes and intent of this Agreement.

15.21. Acknowledgment. This Agreement is not and shall not be deemed to be a
solicitation for consents to the Plan or an offer of any securities of any of
the Company Parties. The acceptance of the Plan by each of the Consenting
Stakeholders will not be solicited until such Consenting Stakeholders have
received the Disclosure Statement and related ballots in accordance with
applicable non-bankruptcy law (as provided under sections 1125(g) and 1126(b) of
the Bankruptcy Code), and will be subject to proper solicitation pursuant to
sections 1125, 1126, and 1127 of the Bankruptcy Code.

15.22. Survival of Agreement. Notwithstanding the termination of this Agreement
pursuant to Section 13 hereof, the provisions of Sections 5.03, 13.06, and 15
shall survive such termination and shall continue in full force and effect in
accordance with the terms hereof; provided, however, that any liability of a
Party for failure to comply with the terms of this Agreement shall survive such
termination.

15.23. Consenting Term Lenders. Each Consenting Term Lender is executing this
Agreement in its capacity as a lender under the Term Loan Agreement and shall be
bound by its terms solely in relation to its Term Loan Claims. Nothing contained
herein shall in any way bind any Equity Interests that may be held by any
Consenting Term Lender and/or its affiliates.

[Signature Pages Follow.]

 

30

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.

PIONEER ENERGY SERVICES CORP.

PIONEER COILED TUBING SERVICES, LLC

PIONEER DRILLING SERVICES, LTD.

PIONEER FISHING & RENTAL SERVICES, LLC

PIONEER GLOBAL HOLDINGS, INC.

PIONEER PRODUCTION SERVICES, INC.

PIONEER SERVICES HOLDINGS, LLC

PIONEER WELL SERVICES, LLC

PIONEER WIRELINE SERVICES HOLDINGS, INC.

PIONEER WIRELINE SERVICES, LLC

 

By:  

/s/ Bryce Seki

Name:   Bryce Seki Title:   General Counsel

[Company Parties’ Signature Page to Restructuring Support Agreement]

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[CONSENTING STAKEHOLDER]

 

Name: Title:

Address:

E-mail address(es):

 

Aggregate Principal Amounts Beneficially Owned or Managed on Account of: Notes
Claims Term Loan Claims Aggregate Amounts Beneficially Owned or Managed on
Account of: Shares of Existing Common Stock

[Signature Page to Restructuring Support Agreement]

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SCHEDULE 1

New Secured Bonds Commitments

 

New Secured Bonds Commitment Party

 

Commitment

--------------------------------------------------------------------------------

EXHIBIT A

Company Parties

 

PIONEER COILED TUBING SERVICES, LLC

PIONEER DRILLING SERVICES, LTD.

PIONEER FISHING & RENTAL SERVICES, LLC

PIONEER GLOBAL HOLDINGS, INC.

PIONEER PRODUCTION SERVICES, INC.

PIONEER SERVICES HOLDINGS, LLC

PIONEER WELL SERVICES, LLC

PIONEER WIRELINE SERVICES HOLDINGS, INC.

PIONEER WIRELINE SERVICES, LLC

--------------------------------------------------------------------------------

EXHIBIT B

Term Sheet

--------------------------------------------------------------------------------

PIONEER ENERGY SERVICES CORP.

RESTRUCTURING TERM SHEET

February 28, 2020

 

This term sheet (the “Term Sheet”) summarizes the material terms and conditions
of restructuring and recapitalization transactions (the “Restructuring
Transactions”) regarding certain indebtedness of Pioneer Energy Services Corp.
(“Pioneer”) and the other Company Parties. The Restructuring Transactions will
be consummated through the prepackaged Plan filed in the Chapter 11 Cases on the
terms, and subject to the conditions, set forth in the Restructuring Support
Agreement, including this Term Sheet. The regulatory, corporate, tax,
accounting, and other legal and financial matters related to the Restructuring
Transactions have not been fully evaluated, and any such evaluation may affect
the terms and structure of any Restructuring Transactions.

 

This Term Sheet does not constitute (nor shall it be construed as) an offer with
respect to any securities or a solicitation of acceptances or rejections as to
any chapter 11 plan, it being understood that such a solicitation, if any, only
will be made in compliance with applicable provisions of securities, bankruptcy,
and/or other applicable laws. This Term Sheet does not address all terms that
would be required in connection with any potential restructuring and is subject
to the negotiation, execution, and delivery of definitive documentation in
accordance with the Restructuring Support Agreement.

 

Capitalized terms used but not initially defined in this Term Sheet shall have
the meaning hereinafter ascribed to such terms, or if not defined in this Term
Sheet, such terms shall have the meaning ascribed to such terms in the
Restructuring Support Agreement.

 

Restructuring Summary Overview   

The Company Parties will implement the Restructuring Transactions in accordance
with the restructuring support agreement to which this Term Sheet is attached
(together with the exhibits and schedules attached to such agreement, each as
may be amended, restated, supplemented, or otherwise modified from time to time
in accordance with the terms thereof, the “Restructuring Support Agreement”),
which shall be entered into by the Company Parties and the Consenting
Stakeholders. This Term Sheet is attached to and made a part of the
Restructuring Support Agreement.

 

Transaction Summary   

The Restructuring Transactions shall include the following transactions, among
others, as set forth in further detail in this Term Sheet:

 

•  Pioneer will conduct a rights offering (the “Rights Offering”) pursuant to
the Rights Offering Documents (as defined below) to issue (a) New Convertible
Bonds up to the aggregate principal amount of $123,205,000.00 (the “Rights
Offering Convertible Bonds”) (which, for the avoidance of doubt, is exclusive of
both the Premium Convertible Bonds (as defined below), on terms consistent in
all material respects with those set forth in the term sheet attached as
Exhibit A (the “Convertible Bonds Term Sheet”), and the $1,795,000.00 New
Convertible Bonds to be purchased separately by

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the Management Commitment Parties (as defined below) (the “Management Commitment
Convertible Bonds”) issued pursuant to the Backstop Commitment Agreement) and
(b) up to 9,240,375 shares of Stapled Special Voting Stock1 (the “Rights
Offering Stapled Special Voting Stock”) (which, for the avoidance of doubt, is
exclusive of both the Premium Stapled Special Voting Stock (as defined below)
and the 134,625 shares of Stapled Special Voting Stock to be issued separately
to the Management Commitment Parties (the “Management Commitment Stapled Special
Voting Stock”) pursuant to which (i) each eligible holder of Notes Claims will
be offered the right to purchase up to its pro rata share of Rights Offering
Convertible Bonds (together with the corresponding Rights Offering Stapled
Special Voting Stock) for aggregate consideration of $116,121,000.00 in cash;
and (ii) each eligible holder of the issued and outstanding common stock of
Pioneer (or any option, warrant, or right, contractual or otherwise, to acquire,
sell or subscribe for such common stock, including any restricted stock unit),
that has vested or will vest on or prior to the Plan Effective Date (“Existing
Equity Interests”), will be offered the right to purchase up to its pro rata
share of Rights Offering Convertible Bonds (together with the corresponding
Rights Offering Stapled Special Voting Stock) for aggregate consideration of
$7,084,000.00 in cash. The proceeds of the Rights Offering will be used by
Pioneer (i) to pay the Restructuring Expenses (as defined below), (ii) to fund
Plan distributions, case administration expenses, and exit costs (including,
without limitation, a portion of the payment in full in cash of the Term Loan
Claims), and (iii) for general corporate purposes. The terms of the Rights
Offering will be in accordance with the Rights Offering Documents and otherwise
acceptable to the Company Parties and the Backstop Parties (as defined in the
Backstop Commitment Agreement), and reasonably acceptable to the Required
Consenting Noteholders.

 

•  The Q419 payment under the Company Incentive Plan (the “Q4 CIP Payment”) will
be paid in cash prior to the Petition Date. The top 4 recipients shall commit to
invest the after-tax amounts of such payment in Management Commitment
Convertible Bonds pursuant to the Backstop Commitment Agreement. Each of the
remaining recipients of the Q4 CIP Payment will have the option to reinvest up
to the amount of such recipient’s portion of the Q4 CIP Payment in the
Management Commitment Convertible Bonds by becoming parties to the Backstop
Commitment Agreement. For the avoidance of doubt, the Q4 CIP Payment recipients
who invest their after-tax amounts of such payment will become Management
Commitment Parties and the New Convertible Bonds to be purchased thereby are
part of the Management Commitment Convertible Bonds.

 

1 

“Stapled Special Voting Stock” means the special voting stock in the aggregate
amount of up to 10,093,800 shares to be issued by Reorganized Pioneer on the
Plan Effective Date (inclusive of the Management Commitment Stapled Special
Voting Stock, the Rights Offering Stapled Special Voting Stock and the Premium
Stapled Special Voting Stock), which shall be stapled to the New Convertible
Bonds issued pursuant to the Rights Offering Procedures and the Backstop
Commitment Agreement, such that the number of shares of Stapled Special Voting
Stock each person receives is equal to the number of shares of New Equity
Interests the New Convertible Bonds such person receives in the Rights Offering
are initially convertible into under the New Convertible Bond Indenture.

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•  The ABL Credit Agreement will be repaid in full with the proceeds of the DIP
Facility (as defined below). On the Plan Effective Date, the Company Parties
will obtain a $75 million first lien exit asset-based revolving credit facility
(the “Exit ABL Facility”) on terms consistent in all material respects with
those set forth in the commitment letter and related exhibits attached to this
Term Sheet as Exhibit B (the “DIP-to-Exit Commitment Letter”) and otherwise
reasonably acceptable to the Company Parties and the Required Consenting
Noteholders, and solely with respect to provisions applicable to the Consenting
Term Lenders, the Required Consenting Term Lenders, the proceeds of which will
be used to repay in full all amounts outstanding under the DIP Facility and for
general corporate purposes.

 

  

•  Each holder of Term Loan Claims will receive payment in full in cash from
(a) proceeds of (i) the Rights Offering and (ii) new secured bonds (the “New
Secured Bonds”) and (b) other cash on hand of the Company Parties. The New
Secured Bonds shall be in an aggregate principal amount equal to $78,125,000.00,
with a maturity of 5 years and other terms and conditions consistent in all
material respects with those set forth in the term sheet attached as Exhibit C
to this Term Sheet (the “New Secured Bonds Term Sheet”) and otherwise acceptable
to the Company Parties, the Required New Secured Bondholders (as defined in the
New Secured Bonds Term Sheet) and the Required Consenting Noteholders.

 

•  The Notes Claims shall be cancelled and each holder of Notes Claims will
receive its pro rata share of 94.25% of the equity interests in Reorganized
Pioneer (“New Equity Interests”), subject to dilution on account of the Employee
Incentive Plan and the New Convertible Bonds (inclusive of the Management
Commitment Convertible Bonds, the Rights Offering Convertible Bonds and the
Premium Convertible Bonds). Each eligible holder of a Notes Claim will also
receive the right to participate in the Rights Offering as described above.

 

•  The Existing Equity Interests will be cancelled, and each holder of Existing
Equity Interests will receive its pro rata share of 5.75% of the New Equity
Interests, subject to dilution on account of the Employee Incentive Plan and the
New Convertible Bonds (inclusive of the Management Commitment Convertible Bonds,
the Rights Offering Convertible Bonds and the Premium Convertible Bonds). Each
eligible holder of Existing Equity Interests will also receive the right to
participate in the Rights Offering as described above.

 

•  The Restructuring Transactions will be effectuated and structured in a
tax-efficient and cost-efficient manner for the Company Parties, in each case as
reasonably agreed by the Company Parties and the Required Consenting
Noteholders.

--------------------------------------------------------------------------------

   The Restructuring Transactions will be consummated on the Plan Effective Date
(or as soon as reasonably practicable thereafter). DIP Facility   

The DIP Lenders shall provide a senior secured superpriority asset-based
revolving credit facility (the “DIP Facility”) in an aggregate principal amount
of up to $75 million with terms and conditions consistent in all material
respects with the DIP-to-Exit Commitment Letter and otherwise reasonably
acceptable to the Company Parties, the Required Consenting Term Lenders and the
Required Consenting Noteholders, and shall commit to provide the Exit ABL
Facility upon emergence. The DIP Facility will convert dollar for dollar into
the Exit ABL Facility upon emergence.

 

Proposed Treatment of Claims and Interests Administrative Expense Claims and
Priority Tax Claims   

Except to the extent that a holder of an allowed Administrative Expense Claim or
an allowed Priority Tax Claim (each as defined herein) agrees to a less
favorable treatment, each holder of an allowed Administrative Expense Claim or
an allowed Priority Tax Claim will receive, in full and final satisfaction of
such Claim, cash in an amount equal to such allowed Claim on the Plan Effective
Date or as soon as practicable thereafter or such other treatment consistent
with the provisions of section 1129(a)(9) of the Bankruptcy Code.

 

As used in this Term Sheet, “Administrative Expense Claim” means any right to
payment constituting a cost or expense of administration incurred during the
Chapter 11 Cases of a kind specified under section 503(b) of the Bankruptcy Code
and entitled to priority under sections 507(a)(2), 507(b), or 1114(e)(2) of the
Bankruptcy Code, including (i) the actual and necessary costs and expenses
incurred after the Petition Date and through the Plan Effective Date of
preserving the estates and operating the businesses of the Company Parties (such
as wages, salaries, or commissions for services and payments for goods and other
services and leased premises), and (ii) Restructuring Expenses (as defined
below).

 

As used in this Term Sheet, “Priority Tax Claim” means any secured Claim or
unsecured Claim of a governmental unit of the kind entitled to priority of
payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

 

DIP Claims    On the Plan Effective Date, to the extent the DIP Facility is not
otherwise repaid in full, each holder of an allowed DIP Claim will, pursuant to
and in accordance with the DIP-to-Exit Commitment Letter and the other DIP
Documents, receive its pro rata share of revolving loans and letter of credit
participations under the Exit ABL Facility. Other Secured Claims    Except to
the extent that a holder of an allowed Other Secured Claim (as defined herein)
agrees to a less favorable treatment, in full and final satisfaction of such
allowed Other Secured Claim, at the option of the Company Parties or Reorganized
Debtors, but with the consent of the Required Consenting Noteholders, (i) such
holder will receive payment in full in cash, payable on the later of the Plan
Effective Date and the date that is ten (10) Business Days after the date on
which such Other Secured Claim becomes an allowed Other Secured Claim, in each
case, or as soon as reasonably practicable thereafter or (ii) such holder will
receive such other treatment so as to render such holder’s allowed Other Secured
Claim Unimpaired.

--------------------------------------------------------------------------------

  

As used in this Term Sheet, “Other Secured Claims” means a Claim (i) secured by
a lien on collateral to the extent of the value of such collateral as (a) set
forth in the Plan, (b) agreed to by the holder of such Claim and the Company
Parties, or (c) determined by a final order in accordance with section 506(a) of
the Bankruptcy Code, or (ii) secured by the amount of any right of setoff of the
holder thereof in accordance with section 553 of the Bankruptcy Code, other than
a Priority Tax Claim, an ABL Claim and a Term Loan Claim.

 

Unimpaired – Presumed to Accept.

Other Priority Claims   

Except to the extent that a holder of an allowed Other Priority Claim (as
defined herein) agrees to a less favorable treatment, in full and final
satisfaction of such allowed Other Priority Claim, each holder of an allowed
Other Priority Claim will, at the option of the Company Parties or the
Reorganized Debtors, but with the consent of the Required Consenting
Noteholders, (i) be paid in full in cash or (ii) otherwise receive treatment
consistent with the provisions of section 1129(a)(9) of the Bankruptcy Code,
payable on the later of the Plan Effective Date and the date that is ten
(10) Business Days after the date on which such Other Priority Claim becomes an
allowed Other Priority Claim, in each case, or as soon as reasonably practicable
thereafter.

 

As used in this Term Sheet, “Other Priority Claim” means any Claim other than an
Administrative Expense Claim or a Priority Tax Claim that is entitled to
priority of payment as specified in section 507(a) of the Bankruptcy Code.

 

Unimpaired – Presumed to Accept.

ABL Claims   

To the extent any portion of the allowed ABL Claims is not refinanced by the DIP
Facility, each holder of an allowed ABL Claim will receive, in full and final
satisfaction of such ABL Claim, (i) payment in full in cash, or (ii) at the
option of the Company Parties (with the consent of the Required Consenting
Noteholders) treatment consistent with the provisions of section 1129(a)(9) of
the Bankruptcy Code.

 

Unimpaired – Presumed to Accept.

Term Loan Claims   

Each holder of an allowed Term Loan Claim will receive in full and final
satisfaction of such Term Loan Claim, payment in full in cash of each such Term
Loan Claim on the Plan Effective Date, in the aggregate principal amount of
$175 million (including any applicable prepayment premium) and any unpaid
interest accrued at the default rate thereon, fees and expenses that are payable
or reimbursable pursuant to the terms of the Term Loan Agreement.

 

Unimpaired – Presumed to Accept.

--------------------------------------------------------------------------------

Notes Claims   

On the Plan Effective Date, all Notes Claims shall be cancelled and each holder
of a Notes Claim will receive, in full and final satisfaction of such Notes
Claim, its pro rata share of 94.25% of the New Equity Interests, subject to
dilution on account of the Employee Incentive Plan and the New Convertible Bonds
(inclusive of the Management Commitment Convertible Bonds, the Rights Offering
Convertible Bonds and the Premium Convertible Bonds).

 

Each eligible holder of a Notes Claim will also receive the right to participate
in the Rights Offering as set forth above.

 

Impaired – Entitled to Vote.

General Unsecured Claims   

Each holder of an allowed prepetition Claim against any Company Party that is
not an ABL Claim, a Term Loan Claim, a Notes Claim, or a Claim that is secured,
subordinated, or entitled to priority under the Bankruptcy Code (each, a
“General Unsecured Claim”) will be paid in the ordinary course of business
without regard to the automatic stay or other restrictions on the payment of
prepetition Claims under the Bankruptcy Code, but subject to all defenses and
disputes the Company Parties, Reorganized Pioneer, or the Reorganized Debtors
may assert as to the validity or amount of such Claims, or will receive such
other treatment as may be required to deem such General Unsecured Claim
Unimpaired.

 

Unimpaired – Presumed to Accept.

Intercompany Claims   

All Claims against a Company Party held by another Company Party (the
“Intercompany Claims”) will be adjusted, reinstated, or discharged in the
Company Parties’ discretion, subject to the reasonable consent of the Required
Consenting Noteholders.

 

Unimpaired – Presumed to Accept.

Subordinated Claims   

All Claims subject to subordination in accordance with sections 510(b)-(c) of
the Bankruptcy Code or otherwise (the “Subordinated Claims”), if any, shall be
discharged, cancelled, released, and extinguished as of the Plan Effective Date,
and will be of no further force or effect, and holders of allowed Subordinated
Claims will not receive any distribution on account of such allowed Subordinated
Claims.

 

Impaired – Deemed to Reject.

Existing Equity Interests   

On the Plan Effective Date, all Existing Equity Interests shall be cancelled and
each holder of Existing Equity Interests will receive:

 

(a)   if holders of Existing Equity Interests vote to accept the Plan, its pro
rata share of 5.75% of the New Equity Interests, subject to dilution on account
of the Employee Incentive Plan and the New Convertible Bonds (inclusive of the
Management Commitment Convertible Bonds, the Rights Offering Convertible Bonds
and the Premium Convertible Bonds). Each eligible holder of Existing Equity
Interests will also receive the right to participate in the Rights Offering as
set forth above.

 

(b)   if holders of Existing Equity Interests do not vote to accept the Plan, no
distribution under the Plan.

 

Impaired – Entitled to Vote.

--------------------------------------------------------------------------------

Intercompany Interests   

All equity interests in Pioneer’s subsidiaries shall be reinstated and otherwise
unaffected by the Plan or otherwise canceled at the option of the Company
Parties (with the consent of the Required Consenting Noteholders).

 

Unimpaired – Presumed to Accept.

 

Other Material Provisions

 

Exit ABL Facility    On the Plan Effective Date, the DIP Facility will be
replaced with the Exit ABL Facility. New Secured Bonds    On the Plan Effective
Date, the Company Parties will issue the New Secured Bonds on terms consistent
in all material respects with those set forth in the New Secured Bonds Term
Sheet and otherwise consistent with, and subject to the consent rights set forth
in, the Restructuring Support Agreement. Rights Offering   

Pioneer will conduct the Rights Offering as set forth in the Restructuring
Support Agreement.

 

New Convertible Bonds: The New Convertible Bonds (inclusive of the Management
Commitment Convertible Bonds, the Rights Offering Convertible Bonds and the
Premium Convertible Bonds) will be convertible into 90.00%-93.61% of Reorganized
Pioneer’s common stock, on a post-conversion basis, subject to dilution on
account of the Employee Incentive Plan; provided, that the low end of the range
assumes that the Rights Offering Convertible Bonds are issued only with respect
to the Backstop Amount (as defined below) and the high end of the range assumes
that the Rights Offering is fully subscribed.

 

The Rights Offering shall be conducted pursuant to procedures (the “Rights
Offering Procedures”) consistent in all material respects with this Term Sheet,
the Backstop Commitment Agreement, the Convertible Bond Term Sheet and otherwise
in form and substance acceptable to the Company Parties and the Required
Backstop Parties, and reasonably acceptable to the Required Consenting
Noteholders.

 

Certain members of Pioneer’s management (the “Management Commitment Parties”),
severally but not jointly, will commit to purchase the Management Commitment
Convertible Bonds in the aggregate principal amount of $1,795,000.00 from
Reorganized Pioneer and the corresponding 134,625 shares of Management
Commitment Stapled Special Voting Stock pursuant to the backstop commitment
agreement (the “Backstop Commitment Agreement” and, together with the Rights
Offering Procedures, the “Rights Offering Documents”) entered into
simultaneously with the Restructuring Support Agreement and attached to this
Term Sheet as Exhibit D. For the avoidance of doubt, the Management Commitment
Convertible Bonds are not included in the Rights Offering Convertible Bonds to
be offered for subscription in the Rights Offering and the Management Commitment
Stapled Special Voting Stock is not included in the Rights Offering Stapled
Special Voting Stock to be issued in connection with the Rights Offering.

 

--------------------------------------------------------------------------------

  

Part of the Rights Offering will be backstopped, severally but not jointly, by
certain Consenting Noteholders (the “Backstop Parties”). Pursuant to the
Backstop Commitment Agreement, the Backstop Parties will backstop on a pro rata
basis, severally but not jointly, $118,013,000 of the Rights Offering
Convertible Bonds (“Backstop Amount”). The commitments of the Backstop Parties
are required to be funded pro rata in accordance with their respective
commitments.

 

Upon the earlier of (i) the Plan Effective Date, and (ii) the termination of the
Backstop Commitment Agreement under certain circumstances set forth therein,
each Management Commitment Party will receive, pursuant to the terms and
conditions of the Backstop Commitment Agreement, a commitment premium equal to
8% of its commitment under the Backstop Commitment Agreement (the “Management
Commitment Premium”) and each Backstop Party will receive a commitment premium
equal to 8% of its commitment under the Backstop Commitment Agreement (the
“Backstop Commitment Premium”), both of which premiums shall be fully earned
upon entry of an order approving the Backstop Commitment Agreement (which order
may be the Confirmation Order) and shall be payable (x) in the case of a
termination of the Backstop Commitment Agreement under the circumstances set
forth therein, in cash, or (y) in the case of the Plan Effective Date, in New
Convertible Bonds (collectively, the “Premium Convertible Bonds”) and
corresponding Stapled Special Voting Stock (collectively, the “Premium Stapled
Special Voting Stock”).

 

Proceeds: The proceeds of the Rights Offering will be used by Pioneer and
Reorganized Pioneer, as applicable, to (i) pay the Restructuring Expenses,
(ii) fund Plan distributions, case administration expenses, and exit costs
(including, without limitation, a portion of the payment in full in cash of the
Term Loan Claims), and (iii) for general corporate purposes.

Corporate Governance Documents of Reorganized Pioneer2   

The Corporate Governance Documents of Reorganized Pioneer shall be on the terms
set forth in the term sheet attached to this Term Sheet as Exhibit E and
otherwise acceptable to the Required Consenting Noteholders and the Company
Parties and will become effective as of the Plan Effective Date.

 

New Equity Interests to be DTC-eligible and traded in the over-the-counter
market acceptable to the Required Consenting Noteholders upon emergence.

 

Registration rights agreement to provide that a majority of holders of shares of
Voting Stock subject to the registration rights agreement can require the
Company to use reasonable best efforts to cause the common stock to be listed on
Nasdaq or NYSE in accordance with the applicable Nasdaq or NYSE listing
requirements as promptly as practicable following delivery of notice.

 

 

2 

The listing terms can be revised by the Required Consenting Noteholders in
consultation with the Company Parties.

--------------------------------------------------------------------------------

  

New Convertible Bonds and Stapled Special Voting Stock to be DTC eligible, or,
if not reasonably practicable, held in book-entry form through a transfer agent
acceptable to the Required Consenting Noteholders, and to be made DTC eligible
as soon as reasonably practicable following emergence using reasonable best
efforts by the Company.

 

Board of Directors   

On the Plan Effective Date, the board of directors of Reorganized Pioneer
(the “New Board”) shall consist of: (i) the chief executive officer of
Reorganized Pioneer, and (ii) such other directors, in a number to be determined
by the Required Consenting Noteholders, as designated by the Required Consenting
Noteholders. The chief executive officer shall at all times be a member of the
New Board.

 

Conditions Precedent to the Restructuring   

It shall be a condition to the Plan Effective Date that the following conditions
precedent are satisfied or waived by the Company and the Required Consenting
Noteholders, and the Plan Effective Date shall occur on the date upon which the
last of such conditions are so satisfied and/or waived:

 

(i)  the Bankruptcy Court shall have entered the Confirmation Order and the
Confirmation Order shall be a Final Order;

 

(ii)  the Restructuring Support Agreement shall continue to be in full force and
effect contemporaneously with the Plan Effective Date;

 

(iii)   [reserved];

 

(iv) to the extent invoiced at least two (2) Business Days before the Plan
Effective Date by the Consenting Noteholders, the Company Parties shall have
paid or reimbursed all Consenting Noteholder Fees and Expenses (as defined
below), whether incurred before or after the Petition Date;

 

(v)   each of the Definitive Documents shall be in form and substance acceptable
or reasonably acceptable (as applicable in accordance with Section 3.02 of the
Restructuring Support Agreement) to the Company Parties and the Required
Consenting Noteholders;

 

(vi) all material governmental approvals and consents that are legally required
for the consummation of the Restructuring Transactions shall have been obtained,
not be subject to unfulfilled conditions and be in full force and effect;

 

(vii)  the Backstop Commitment Agreement shall remain in full force and effect
and shall not have been terminated, and the parties thereto shall be in
compliance therewith;

 

(viii)  the Bankruptcy Court shall have entered an order, in form and substance
satisfactory to the Required Consenting Noteholders, approving the Company
Parties’ entry into and performance under the Backstop Commitment Agreement,
which order may be the Confirmation Order (the “Backstop Order”), and the
Backstop Order shall be a Final Order; and

 

(ix) the Rights Offering shall have been conducted, in all material respects, in
accordance with the Backstop Order, the Backstop Commitment Agreement, the
rights offering procedures in form and substance acceptable to the Required
Consenting Noteholders, and any other relevant transaction documents.

--------------------------------------------------------------------------------

Releases and Exculpation    To the fullest extent permitted by applicable law,
the Plan shall provide for comprehensive mutual release and exculpation
provisions from and for the benefit of the Company Parties, their subsidiaries,
the Consenting Stakeholders, the DIP Lenders, the DIP Agent and each of their
respective affiliates, predecessors, successors, assigns, current and former
officers and directors, principals, equity holders, members, partners, managers,
employees, agents, financial advisors, attorneys, accountants, investment
bankers, consultants, representatives, and other professionals, and such
Persons’ respective heirs, executors, estates, and nominees (collectively, the
“Released Parties”), in each case in their capacity as such, from any claims,
causes of action and liabilities, known or unknown, other than those arising
from fraud, gross negligence or willful misconduct, as determined by final order
of a court of competent jurisdiction, by or on behalf of any Released Party, in
connection with acts or omissions based on or related to or in any manner
arising from the Company Parties, the Restructuring Transactions, the
Restructuring Support Agreement, the Chapter 11 Cases, the Plan, the
solicitation of votes with respect to the Plan, the subject matter of, or
transactions or events giving rise to, any Claim or Interest that is treated in
the Plan, the business or contractual arrangements or interactions between any
Company Party and any Released Party, or the purchase, sale, or rescission of
the purchase or sale of any security of any Company Party, Reorganized Pioneer,
or any Reorganized Debtor, in each case based on any act or omission,
transaction, agreement, event, or other occurrence taking place on or before the
Plan Effective Date, other than any obligation arising under or pursuant to this
Term Sheet or any other Definitive Document. Survival of Company Indemnity
Obligations and D&O Insurance    Notwithstanding anything to the contrary
contained in the Restructuring Support Agreement, the obligations of each of the
Company Parties pursuant to its certificate of incorporation, bylaws, or other
agreements to indemnify the current and former officers, directors, agents,
and/or employees with respect to all present and future actions, suits, and
proceedings against the Company Parties, or such directors, officers, agents,
and/or employees, based upon any act or omission relating to the Company Parties
(collectively, the “Company Indemnity Obligations”), will not be released,
waived discharged, or impaired by the consummation of the Restructuring
Transactions; provided, that the Reorganized Debtors shall not indemnify
officers, directors, members, or managers, as applicable, of the Company Parties
for any claims or Causes of Action arising out of or relating to any act or
omission that is a criminal act or constitutes intentional fraud, gross
negligence, or willful misconduct as determined by final order of a court of
competent jurisdiction. All Company Indemnity Obligations will be assumed by the
Company Parties on the Plan Effective Date, and all such obligations will
continue as obligations of Reorganized Pioneer and the Reorganized Debtors. The
organizational documents of the Company shall contain indemnification provisions
and limitation on liability provisions applicable to directors and officers of
the Company to the fullest extent permitted under Delaware law.

--------------------------------------------------------------------------------

   The Company Parties shall not terminate or otherwise reduce the coverage
under any directors’ and officers’ insurance policies in effect prior to the
Plan Effective Date, and any directors and officers of the Company Parties who
served in such capacity at any time before or after the Plan Effective Date
shall be entitled to the full benefits of any such policy (including any “tail
policy”) for the full term of such policy regardless of whether such directors
and/or officers remain in such positions after the Plan Effective Date. All
directors’ and officers’ insurance policies shall be assumed by the Company
Parties (including any tail policy). Employee Incentive Plan    See Exhibit F to
this Term Sheet (the “MIP Term Sheet”) Severance Plans    See Appendix A to the
MIP Term Sheet (the “Severance Term Sheet”) Consenting Term Lender Fees and
Expenses    On the Plan Effective Date, to the extent the Consenting Term
Lenders are then party to the Restructuring Support Agreement, the Company
Parties shall pay (i) all reasonable and documented fees and expenses of
Vinson & Elkins, LLP, counsel to the Consenting Term Lenders, (ii) all
reasonable and documented fees and expenses of Covington & Burling LLP, as
counsel, and one local counsel to Wilmington Trust, National Association, as
administrative agent (in such capacity, the “Existing Term Loan Agent”) under
the Term Loan Agreement and (iii) all reasonable and documented out-of-pocket
expenses incurred by the Existing Term Loan Agent, in each case of the foregoing
clauses (i)-(iii), incurred through the Plan Effective Date in connection with
the Restructuring Transactions in accordance with the terms of their applicable
engagement letters and/or fee letters with the Company Parties, the
Restructuring Support Agreement, and the Plan (collectively, the “Consenting
Term Lender Fees and Expenses”). Consenting Noteholder Fees and Expenses    The
Company Parties shall pay (i) all pre- and post-petition reasonable and
documented fees and expenses of Davis Polk & Wardwell, LLP, Haynes and Boone,
LLP and Houlihan Lokey, Inc., counsel, local counsel and financial advisor,
respectively, to the Consenting Noteholders, in connection with the
Restructuring Transactions, in each case in accordance with the terms of their
applicable engagement letters and/or fee letters with the Company Parties, the
Restructuring Support Agreement, and the Plan and (ii) all reasonable and
documented out-of-pocket expenses incurred by the Consenting Noteholders (the
“Consenting Noteholder Fees and Expenses”, and together with the Consenting Term
Lender Fees and Expenses, the “Restructuring Expenses”).

--------------------------------------------------------------------------------

Specific Considerations Executory Contracts and Unexpired Leases    Each
executory contract and unexpired lease shall be assumed by the Company Parties,
unless determined to be rejected by the Company Parties with the consent of the
Required Consenting Noteholders (not to be unreasonably withheld). Tax Matters
   The parties shall use commercially reasonable efforts to structure the
Restructuring Transactions in a manner determined by the Required Consenting
Noteholders and Pioneer to be tax efficient. Notwithstanding anything else
herein, the Required Consenting Noteholders may, after taking into account any
expected tax consequences, require that the definition of the form of the
Conversion Consideration (as defined in the New Convertible Bond Indenture) be
either in reference to New Equity Interests or the cash value of New Equity
Interests and not reference any combination thereof.

--------------------------------------------------------------------------------

EXHIBIT A

Convertible Bonds Term Sheet

--------------------------------------------------------------------------------

NEW CONVERTIBLE BONDS

PIONEER ENERGY SERVICES CORP.

SUMMARY OF TERMS AND CONDITIONS

 

 

This Summary of Terms and Conditions (this “Term Sheet”) is not a complete list
of all material terms and conditions of the potential transaction described
herein. This Term Sheet shall not constitute (nor shall it be construed as) an
offer or a legally binding obligation to buy or sell, or a solicitation of an
offer to buy or sell, any of the securities referred to herein, it being
understood that such an offer or solicitation, if any, only will be made in
compliance with applicable provisions of securities and/or other applicable
laws. The proposal below has been provided for illustrative purposes.

Capitalized terms used in this Term Sheet but not defined herein shall have the
meanings set forth in the Restructuring Support Agreement.

 

General Terms Issuer:    Pioneer Energy Services Corp. Security:    5%
Convertible Senior Unsecured Bonds (the “New Convertible Bonds”) Amount:    Up
to $134,584,000.00 in aggregate principal amount, consisting of up to
$125,000,000.00 in initial principal amount (the “Initial Principal Amount”),
including up to $123,205,000.00 aggregate principal amount of Rights Offering
Convertible Bonds, $1,795,000.00 aggregate principal amount of Management
Commitment Convertible Bonds, and up to $9,584,000.00 aggregate principal amount
of Premium Convertible Bonds. Interest:    The New Convertible Bonds will bear
interest at a fixed rate of 5% per annum, which will be payable semi-annually
in-kind in the form of an increase to the principal amount (“PIK”). Initial
Principal Amount:    $1,000 per New Convertible Bond. Trustee:    To be agreed
by the Company Parties, the Required Commitment Parties (as defined in the
Backstop Commitment Agreement) and the Required Consenting Noteholders. Use of
Proceeds    The proceeds of the New Convertible Bonds shall be used to (i) pay
the Restructuring Expenses, (ii) fund Plan distributions (including the cash
distribution to holders of Term Loan Claims pursuant to the Plan), case
administration expenses, and exit costs, and (iii) for general corporate
purposes. Maturity, Conversion and Redemption Maturity Date:    Five years and
six months from issuance.

--------------------------------------------------------------------------------

Conversion:   

The New Convertible Bonds will be convertible at any time in whole or in part at
the option of the holder thereof, and mandatorily on the Maturity Date, into,
per $1,000 principal amount of New Convertible Bonds, at the Issuer’s option, a
number of shares of the Issuer’s common stock, $0.10 par value per share (the
“Common Stock”), equal to the then-current Conversion Rate or the cash value of
such number of shares of Common Stock (the “Conversion Consideration”). The New
Convertible Bonds will also be convertible in the same manner, at the option of
the Issuer, as set forth under “Issuer Conversion Right.”

 

Notwithstanding the above, if the value of the Conversion Consideration
otherwise deliverable in connection with a mandatory conversion of a New
Convertible Bond on the Maturity Date would be less than the principal amount of
such New Convertible Bond, plus accrued and unpaid interest, then the New
Convertible Bond will instead convert into an amount of cash equal to principal
plus accrued and unpaid interest.

Conversion Rate:    751 shares of Common Stock per $1,000 principal amount of
New Convertible Bonds (approximately equal to $1,000 divided by the Conversion
Price), subject to adjustment as described below under “Antidilution
Protection”. Conversion Price:    $13.33 per share of Common Stock. Antidilution
Protection:   

The Conversion Rate will be subject to customary adjustments for convertible
debt securities, but with no adjustment for any dividends. There will be an
adjustment to the Conversion Rate for any issuance of Common Stock (or rights,
options, warrants or convertible or exchangeable securities) at effective prices
below the Conversion Price.

 

With respect to any dividends on the Common Stock (including distributions in
liquidation), each holder of a New Convertible Bond will receive, for each
$1,000 principal amount of New Convertible Bonds, at the same time and on the
same terms as holders of the Common Stock, the amount of cash or other property
that such holder would have received if such holder held a number of shares of
Common Stock equal to the Conversion Rate.

 

 

1 

The Conversion Price and Conversion Rate will be determined by the Company
Parties and the Required Commitment Parties prior to the Plan Effective Date so
that as of the Plan Effective Date the New Convertible Bonds in the aggregate
will be convertible into 90.00%-93.61% of the Issuer’s common stock, on a
post-conversion basis, subject to dilution on account of the Employee Incentive
Plan; provided, that the low end of the range assumes that the Rights Offering
Convertible Bonds are issued only with respect to the $118,013,000.00
backstopped by the Backstop Parties (the “Backstop Amount”) and the high end of
the range assumes that the Rights Offering is fully subscribed.

 

2

--------------------------------------------------------------------------------

Fundamental Change:    If the Issuer undergoes certain customary “fundamental
changes,” subject to certain conditions, holders may, subject to the Issuer
Conversion Right, require the Issuer to repurchase for cash all or part of their
New Convertible Bonds for a purchase price equal to 100% of principal plus
accrued and unpaid interest. Issuer Conversion Right:    The Issuer, at its
option, may cause the conversion of all or part of the New Convertible Bonds
into, per $1,000 principal amount of New Convertible Bonds, a number of shares
of Common Stock equal to the then-current Conversion Rate (as adjusted as
described above under “Conversion Rate”) or the cash value of such number of
shares of Common Stock, upon the consummation of any Merger Event. Merger Event:
   Customary for convertible debt securities of companies of a similar size, and
to include in any event (i) acquisitions of beneficial ownership of more than
50% of the voting power of the outstanding Common Stock, any sales or
dispositions of all or substantially all of the assets of the Issuer on a
consolidated basis, or any merger, consolidation, recapitalization or similar
transaction where the Common Stock is converted into, or exchanged for, any
other consideration (“Reference Property”), (ii) any one or more (A) bona fide
consolidations, amalgamations, mergers or binding share exchanges of the Issuer
or any of its subsidiaries with or into another entity in which the Issuer is
the continuing entity and which does not result in a reclassification or change
of all of the Common Stock outstanding, and (B) acquisitions by the Issuer or
any of its subsidiaries of substantially all assets, or a business, division, or
line of business, of any entity, for which, in the case of this clause (ii),
either (x) the equity value of the person or persons being acquired is, in the
aggregate for all such transactions, greater than $100 million, or (y) such
transactions have been approved by holders of a majority of the outstanding
principal amount of the New Convertible Bonds. Other Terms    Call Features:   
Only as described above under “Issuer Conversion Right.” Put Features:    Only
as described above under “Fundamental Change.” Covenants:    The New Convertible
Bonds will contain affirmative and negative covenants that are acceptable to the
Required Commitment Parties, the Required Consenting Noteholders and the Issuer
(including with respect to levels, amounts and baskets).

 

3

--------------------------------------------------------------------------------

Premium Convertible Bonds:    The Commitment Parties (as defined in the Backstop
Commitment Agreement) will receive, pursuant to the terms and conditions of the
Backstop Commitment Agreement, Premium Convertible Bonds in an aggregate
principal amount equal to $9,584,000.00 (i.e., 8% of the Management Commitment
Convertible Bonds and the Backstop Amount). Events of Default:    Customary for
debt securities of companies of a similar size, accelerating for cash equal to
the principal amount of the New Convertible Bonds plus accrued and unpaid
interest. Preemptive / Registration / Voting Rights:    As set forth in the
Governance Term Sheet. Transferability:    To the extent permitted by applicable
law and DTC policies and procedures, the New Convertible Bonds, and any Common
Stock issued upon conversion thereof, will be freely transferable together with
the underlying Notes Claims and Existing Equity Interests and in DTC format.
Subscription rights with respect to the New Convertible Bonds will be freely
transferable in accordance with the Rights Offering Procedures. Tax Treatment   
The Issuer and each holder of New Convertible Bonds shall (i) treat the New
Convertible Bonds as equity of the Issuer for all U.S. federal income tax
purposes and (ii) file all of its tax returns consistently therewith.

 

4

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EXHIBIT B

DIP-to-Exit Commitment Letter

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LOGO [g871821dsp55.jpg]

February 28, 2020

Pioneer Energy Services Corp.

Pioneer Drilling Services, Ltd.

Pioneer Global Holdings, Inc.

Pioneer Production Services, Inc.

Pioneer Wireline Services Holdings, Inc.

Pioneer Wireline Services, LLC

Pioneer Wells Services, LLC

Pioneer Fishing & Rental Services, LLC

Pioneer Coiled Tubing Services, LLC

1250 NE Loop 410, Suite 1000

San Antonio, Texas 78209

Dear Ladies & Gentlemen:

In connection with the anticipated filing under Chapter 11 of the US Bankruptcy
Code (11 U.S.C. §§101 et seq.) (the “Chapter 11 Case”) in the United States
Bankruptcy Court (the “Bankruptcy Court”) commenced by Pioneer Energy Services
Corp. (“Pioneer”) and certain of its affiliates organized under the laws of
jurisdictions located in the United States (all such United States affiliates
that are the debtors under the Chapter 11 Case together with Pioneer,
collectively, the “Pioneer Debtors” or “Borrowers”), you have requested that PNC
Bank, National Association (“PNC”) commit to provide the Borrowers with the
Facilities (as defined below).

PNC is pleased to present a commitment to provide a secured debtor-in-possession
revolving credit facility in an aggregate amount of $75,000,000 (the “DIP Credit
Facility”; and the credit agreement evidencing the DIP Credit Facility, the “DIP
Loan Agreement”) on substantially the terms described, and subject only to the
conditions set forth, in the DIP Credit Facility Memorandum of Terms and
Conditions attached hereto as Exhibit A (the “DIP Credit Facility Term Sheet”),
the proceeds of which DIP Credit Facility would be used to refinance and replace
the Pioneer Debtors’ existing pre-petition revolving credit facility (the
“Existing ABL Facility”) and to provide financing and working capital to the
Pioneer Debtors during the Chapter 11 Case and which DIP Credit Facility shall
be automatically convertible to a secured revolving exit credit facility in an
aggregate amount of $75,000,000 (the “Exit Credit Facility” and, together with
the DIP Credit Facility, the “Facilities”; and the credit agreement evidencing
the Exit Credit Facility, the “Exit Loan Agreement”) on substantially the terms
described, and subject only to the conditions set forth, in the Exit Credit
Facility Memorandum of Terms and Conditions attached hereto as Exhibit B (the
“Exit Credit Facility Term Sheet”, and together with the DIP Credit Facility
Term Sheet, the “Term Sheets”), the proceeds of which Exit Credit Facility would
be used as part of a confirmed plan of reorganization to provide financing and
working capital to the Pioneer Debtors following the Chapter 11 Case (the
foregoing transactions and the other transactions contemplated hereby or
referenced herein, the “Transactions”). Capitalized terms used herein and
defined in the Term Sheets referenced below shall have the respective meanings
given thereto in the applicable Term Sheet (such Term Sheets, together with this
letter, the “Commitment Letter”).

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Pioneer

February 28, 2020

Page 2

        Privileged and Confidential

 

PNC reserves the right, in consultation with you, to syndicate (x) the DIP
Credit Facility (either before or after execution of the DIP Loan Agreement and
the other definitive documentation for the DIP Credit Facility (the “DIP Credit
Documents”)) and (y) the Exit Credit Facility (either before or after execution
of the Exit Loan Agreement and the other definitive documentation for the Exit
Credit Facility (the “Exit Credit Documents”, and together with the DIP Credit
Documents, the “Credit Documents”)), with a financial institution or group of
financial institutions satisfactory to PNC and acceptable to you (subject, in
the case of any syndication of a Facility after execution of the applicable
Credit Documents, to certain conditions to be set forth in the applicable Credit
Documents).

Accordingly, Pioneer hereby represents, warrants and covenants that all written
information and data concerning the Credit Parties, the Facilities (other than
forward looking information, information of a general economic and industry
nature and projections of future financial performance), including without
limitation the Approved Budget and any proposed updated, modified or
supplemented budget(s)) prepared by or on behalf of the Credit Parties in
connection with the Transactions (the “Information”) which has been or is made
available in writing to PNC by or on behalf of the Credit Parties or by any
authorized representative of the Credit Parties in connection with the
Transactions (as subsequently updated or corrected), is and will be, taken as a
whole, complete and correct in all material respects and does not and will not
contain any untrue statement of a material fact or omit to state a material
fact, in each case, necessary to make the statements contained therein, taken as
a whole and in light of the circumstances under which such statements were made,
not misleading in any material respect. All projections, and any Approved Budget
and/or proposed updated, modified or supplemented budget(s), that have been or
are hereafter made available by or on behalf of the Credit Parties are, or when
delivered shall be, prepared in good faith on the basis of information and
assumptions that are believed by you to be reasonable at the time such
projections, Approved Budget or updated, modified or supplemented budget(s) were
prepared; it being recognized by PNC that projections of future results and
forecasted budgets are not to be viewed as facts and actual results may vary
significantly from projected results. In arranging and syndicating the
Facilities, PNC will be using and relying on the Information without independent
verification thereof.

Each Borrower, jointly and severally, hereby agrees to indemnify and hold
harmless PNC, its affiliates, and its and their respective directors, officers,
employees, attorneys, advisors and agents (each, an “Indemnified Person”), from
and against any and all losses, claims, damages, expenses and liabilities
incurred by any Indemnified Person that arise out of or relate to any
investigation or other proceeding (including any threatened investigation or
litigation or other proceedings and whether or not such Indemnified Person is a
party thereto) relating to this Commitment Letter, the Term Sheets or the
Transactions, including without limitation the reasonable and documented fees
and disbursements of outside counsel; provided, that the

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Pioneer

February 28, 2020

Page 3

        Privileged and Confidential

 

foregoing indemnity will not, as to any Indemnified Person, apply to losses,
claims, damages, expenses and liabilities to the extent they arise from (i) the
gross negligence, bad faith or willful misconduct of such Indemnified Person (or
any such Indemnified Person’s controlled affiliates or controlling persons or
the respective directors, officers, employees, partners, advisors, trustees,
agents or other representatives of each of the foregoing) as determined by a
final nonappealable judgment of a court of competent jurisdiction, (ii) the
material breach of the Commitment Letter or the Fee Letter (as defined below) by
any Indemnified Person (or any such Indemnified Person’s controlled affiliates
or controlling persons or the respective directors, officers, employees,
partners, advisors, trustees, agents or other representatives of each of the
foregoing) as determined in a final, non-appealable judgment of a court of
competent jurisdiction or (iii) any disputes solely among Indemnified Persons
and not arising out of any act or omission of the Borrowers or any of your
respective affiliates; provided, further, that Borrowers shall not be required
to reimburse the legal fees and expenses of more than one outside counsel (in
addition to any reasonably necessary local counsel in each applicable local
jurisdiction and any necessary bankruptcy “conflicts counsel(s)”) for all
Indemnified Persons. PNC shall not be responsible or liable to any Credit Party
or any other person for consequential damages which may be alleged as a result
of this Commitment Letter, the Term Sheets or any of the Transactions. The
obligations of Borrowers under this paragraph shall survive any termination of
this Commitment Letter, except that upon the execution of the DIP Credit
Documents (and then the Exit Credit Documents) the terms thereof shall supersede
these provisions.

The Borrowers shall not be liable for any settlement of any proceeding effected
without your consent (which consent shall not be unreasonably withheld or
delayed), but if settled with your written consent, or if there is a final
judgment against an Indemnified Person in any such proceeding, Borrowers agree
to indemnify and hold harmless each Indemnified Person to the extent and in the
manner set forth above.

Neither this Commitment Letter, the Term Sheets, the separate fee letter with
PNC, dated as of the date hereof (the “Fee Letter”) or PNC’s involvement with
the Facilities shall be disclosed by you to any third party (including, without
limitation, any financial institution or intermediary) without PNC’s prior
written consent other than (a) to you and your directors, officers, employees,
accountants, affiliates, equityholders, co-investors, attorneys or advisors, or
your lenders and noteholders in connection with Facilities and the Transactions,
(b) this Commitment Letter and the existence and contents hereof (but not the
Fee Letter or the contents thereof other than the existence thereof and the
contents thereof as part of projections, pro forma information and generic
disclosure of aggregate sources and uses) (i) in connection with the syndication
or marketing of the Facilities, or in connection with, and as may be required
for, any public filing, and (ii) to the parties to the Restructuring Support
Agreement (the “RSA”) entered into by the Borrowers and certain of their
creditors on or about the date hereof and their advisors and to any other party
required by the Bankruptcy Court, (c) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law, (d) in connection
with the exercise of any remedy or enforcement of any right under this
Commitment Letter, the Credit Documents, or the Fee Letter or any action or
proceeding related to this Commitment Letter, the Credit Documents or the Fee
Letter, (e) pursuant to a proxy statement or other public filing related to the
Transactions to the

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Pioneer

February 28, 2020

Page 4

        Privileged and Confidential

 

extent reasonably necessary to be so disclosed therein (as determined by you) or
in connection with any public disclosure requirement and (f) to the extent that
such terms become publicly available other than by reason of improper disclosure
by you in violation of any confidentiality obligations hereunder.
Notwithstanding the foregoing, you shall be permitted to file the Fee Letter
with the Bankruptcy Court under seal or in a redacted manner in form and
substance reasonably satisfactory to PNC and provide an unredacted copy of the
Fee Letter to the Bankruptcy Court, the Office of the United States Trustee for
the Southern District of Texas and any other party required by the Bankruptcy
Court and (x) advisors to any official committee appointed in the Chapter 11
Case on a confidential, “professional eyes only” basis, and (y) the parties to
the RSA. Except in connection with a filing with the Bankruptcy Court or other
public filing as provided above, or in the case of clause (e) above, you agree
to inform all such persons who receive information concerning this Commitment
Letter or the Term Sheets that such information is confidential and may not be
used for any purpose other than in connection with the Facilities and the
Transactions and may not be disclosed to any other person. PNC reserves the
right to review and approve, in advance, all materials and disclosures that
contain PNC’s name or any affiliate’s name or describes this Commitment Letter.

PNC shall, until one (1) year from the date hereof, treat confidentially in
accordance with its customary procedures for handling confidential information,
all non-public information received by it from you or your affiliates and
representatives in connection with the Facilities; provided, however, upon the
execution and delivery of the definitive credit documentation, the provisions of
the credit documentation shall govern the confidentiality matters described in
this paragraph to the extent provided therein. Nothing herein shall prevent PNC
from disclosing any such information (i) with your consent, (ii) in any legal,
judicial or administrative, proceeding where, in their reasonable judgment,
disclosure is required by law or regulations (in which case such person shall
promptly notify you, in advance, to the extent permitted by law), (iii) upon the
request or demand of any regulatory authority having jurisdiction over PNC or
its affiliates or managed funds, (iv) in connection with the proposed Facilities
and on a confidential basis to any of its affiliates or managed funds or the
shareholders, employees, directors, officers, legal counsel, independent
auditors, professionals, advisors and other experts or agents of PNC or their
respective affiliates or managed funds who, in each case are informed of the
confidential nature of such information and are or have been advised of their
obligation to keep information of this type confidential, (v) to industry trade
organizations information with respect to the Facilities that is customary for
inclusion in league table measurements, (vi) to the extent any such information
(w) becomes publicly available other than by reason of a breach of the
confidentiality obligations set forth in this paragraph, (x) becomes available
to PNC on a nonconfidential basis from a source other than you or on your behalf
and, to PNC’s knowledge, not in violation of any confidentiality agreement or
obligation owed to you, (y) was available to PNC on a non-confidential basis
prior to its disclosure to PNC by you or on your behalf or (z) was independently
developed by PNC without reliance on confidential information, (vii) as
otherwise required by any applicable law, rule, regulation or compulsory legal
process (in which case such person shall promptly notify you, in advance, of
such disclosure to the extent permitted by law), (viii) for purposes of
establishing any defense available under securities laws, including, without
limitation, establishing a “due diligence” defense, or (ix) in enforcing PNC’s
rights with respect to this Commitment Letter.

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Pioneer

February 28, 2020

Page 5

        Privileged and Confidential

 

This Commitment Letter is for Borrowers’ benefit only, and no other person may
obtain any rights under this Commitment Letter or be entitled to rely or claim
reliance on this Commitment Letter’s terms and conditions. This Commitment
Letter may not be assigned by Borrowers, and none of Borrowers’ rights under
this Commitment Letter may be transferred, without PNC’s prior written consent.
This Commitment Letter may not be assigned by PNC, and none of PNC’s rights or
obligations under this Commitment Letter may be transferred, without Borrowers’
prior written consent; provided, that (x) PNC may assign its rights and
obligations under this Commitment Letter in connection with the syndication of
the Facilities as set forth above, and (y) PNC reserves the right to employ the
services of its affiliates in providing services contemplated hereby, and to
satisfy its obligations hereunder through, or assign their rights and
obligations hereunder to, one or more of its affiliates, separate accounts
within their control or investment funds under their or their respective
affiliates’ management (collectively, “PNC Affiliates”); and to allocate, in
whole or in part, to their respective affiliates certain fees payable to PNC in
such manner as the PNC and its affiliates may agree in their sole discretion;
provided, further, that, no delegation or assignment to a PNC Affiliate shall
relieve PNC from its obligations hereunder to the extent that any PNC Affiliate
or other assignee fails to satisfy its commitments as a “Lender” hereunder at
the time required.

This Commitment Letter shall be governed by, and construed in accordance with,
the law of the State of New York. This Commitment Letter sets forth the entire
agreement between the parties with respect to the matters addressed herein and
supersedes all prior communications, written or oral, with respect hereto. This
Commitment Letter may be executed in any number of counterparts, each of which,
when so executed, shall be deemed to be an original and all of which, taken
together, shall constitute one and the same Commitment Letter. Delivery of an
executed counterpart of a signature page to this Commitment Letter by telecopier
shall be as effective as delivery of an original, executed counterpart of this
Commitment Letter.

PNC and Borrowers hereby waive any right to trial by jury on any claim, demand,
action, or cause of action arising under this Commitment Letter, the Term
Sheets, any of the Transactions, or any other instrument, document or agreement
executed or delivered in connection herewith, whether sounding in contract, tort
or otherwise.

To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each customer, including organizations
and businesses that opens an account. What this means for you: When you open an
account, we will ask for your name, address, taxpayer identifying number and
other information that will allow us to identify you, such as articles in
incorporation. For some businesses and organizations, we may also need to ask
for identifying information and documentation relating to certain individuals
associated with the business or organization.

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Pioneer

February 28, 2020

Page 6

        Privileged and Confidential

 

If the offer evidenced by this letter and Term Sheets is acceptable, please
indicate Borrowers’ acceptance by (w) signing and returning this letter,
(x) delivering immediately available funds in the amount of the Commitment Fee
to PNC, (y) delivering a legal deposit to PNC in the amount of $200,000
(together with the $150,000 previously received by PNC, the “Legal Deposit”),
that shall be in addition to the Deposit Fee (as defined in the Proposal Letter
dated January 23, 2020 between PNC and the Borrowers (the “Proposal Letter”))
and shall (i) in the event that the closing of the DIP Credit Facility does not
occur and the commitment hereunder is terminated in accordance with the terms of
this Commitment Letter, be refunded to the Borrowers to the extent in excess of
any unreimbursed reasonable and documented out-of-pocket costs and expenses
incurred by outside counsel to PNC or (ii) in the event that the closing of the
DIP Credit Facility occurs, be credited to the Closing Fee (as defined in the
Fee Letter) on the closing of the DIP Credit Facility to the extent in excess of
any reasonable and documented out-of-pocket costs and expenses incurred by
outside counsel to PNC, and (z) delivering to PNC the Fee Letter executed by the
Borrowers party thereto.

Borrowers, jointly and severally, hereby agree to pay all reasonable and
documented out-of-pocket costs and expenses incurred by PNC, including
reasonable and documented fees and expenses of Blank Rome LLP as counsel to PNC,
incurred in documenting and negotiating the Facilities. Because PNC will incur
these expenses even if the Facilities are not consummated for any reason, the
expense reimbursement agreement set forth in this paragraph is unconditional;
provided, that upon execution of the DIP Credit Documents, the provisions of the
DIP Credit Documents shall supersede this paragraph.

We look forward to working with you on successfully completing this transaction.

This offer will expire at 11:59 p.m. on February 28, 2020 unless previously
accepted in the manner specified above.

In the event that the entry of the Interim Order (as defined in the DIP Credit
Facility Term Sheet) and the closing of the DIP Credit Facility does not occur
on or before the Expiration Date (as defined below), then this Commitment Letter
and the commitments hereunder (including, for the avoidance of doubt, the
commitments with respect to the Exit Credit Facility) shall automatically
terminate unless PNC shall, in its discretion, agree to an extension. Following
the closing of the DIP Credit Facility, in the event that the closing of the
Exit Credit Facility does not occur on or before the Exit Facility Expiration
Date (as defined below), then the commitments with respect to the Exit Credit
Facility shall automatically terminate unless PNC shall, in its discretion,
agree to an extension.

For purposes of this Commitment Letter (a) “Expiration Date” means 5:00 p.m.,
New York City time on the date that is thirty (30) (or such later date as
determined by PNC in its sole discretion) days after the Petition Date, and (b)
“Exit Facility Expiration Date” means the Maturity Date (as defined in the DIP
Loan Agreement).

[remainder of page intentionally blank]

--------------------------------------------------------------------------------

LOGO [g871821dsp55.jpg]

 

Sincerely, PNC BANK, NATIONAL ASSOCIATION By:  

/s/ Anita Pulgandla

  Name: Anita Puligandla   Title:   Senior Vice President Agreed and accepted
with the intent to be legally bound: PIONEER ENERGY SERVICES CORP. By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips  
Title:   Executive Vice President and Chief Financial  

    Officer

PIONEER DRILLING SERVICES, LTD. By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips   Title:   Executive Vice President and Chief
Financial  

    Officer

PIONEER GLOBAL HOLDINGS, INC. By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips   Title:   Executive Vice President and Chief
Financial  

    Officer

PIONEER PRODUCTION SERVICES, INC. By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips   Title:   Executive Vice President and Chief
Financial  

    Officer

PIONEER WIRELINE SERVICES HOLDINGS, INC. By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips   Title:   Executive Vice President and Chief
Financial  

    Officer

--------------------------------------------------------------------------------

PIONEER WIRELINE SERVICES, LLC By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips   Title:  
Executive Vice President and Chief Financial  

    Officer

PIONEER WELLS SERVICES, LLC By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips   Title:   Executive Vice President and Chief
Financial  

    Officer

PIONEER FISHING & RENTAL SERVICES, LLC By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips   Title:   Executive Vice President and Chief
Financial  

    Officer

PIONEER COILED TUBING SERVICES, LLC By:  

/s/ Lorne E. Phillips

  Name: Lorne E. Phillips   Title:   Executive Vice President and Chief
Financial  

    Officer

--------------------------------------------------------------------------------

EXHIBIT A

DIP Credit Facility Term Sheet

(See attached)

--------------------------------------------------------------------------------

DIP CREDIT FACILITY MEMORANDUM OF TERMS AND CONDITIONS

DATED FEBRUARY 28, 2020 FOR

PIONEER ENERGY SERVICES CORP. (“PIONEER”)

Initially capitalized terms used herein without definition shall have the
meanings given in the Commitment Letter to which this DIP Credit Facility
Memorandum of Terms and Conditions is attached.

 

Borrower(s):    Pioneer and its existing domestic operating subsidiaries subject
to the Chapter 11 Case (as defined below) (collectively, the “DIP Borrowers” or
“Debtors”). Guarantor(s):    Same as under the Existing ABL Facility (as defined
below) (collectively, “Guarantors” and together with the DIP Borrowers, each a
“Credit Party” and collectively the “Credit Parties”). Agent:    PNC Bank,
National Association (in such capacity, “Agent” or “PNC”). Lenders:    PNC Bank,
National Association and such other financial institutions and other entities
that may from time to time become a lender under the definitive documentation
for the DIP Credit Facility (the “DIP Loan Agreement”) (in such capacity,
collectively, the “Lenders”, and each a “Lender”). Swingline Lender:    PNC
Bank, National Association (in such capacity, “Swingline Lender”) L/C Issuer(s):
   PNC Bank, National Association, and any other Person accepted by Agent from
time to time as an issuer of letters of credit (in such capacity, each an “L/C
Issuer”) Purpose:      

(i) To provide (in part) the funds necessary to refinance and replace the Credit
Agreement dated as of November 8, 2017 by and among Pioneer, the other borrowers
party thereto and Wells Fargo Bank, National Association, as administrative
agent (as amended, restated, modified or supplemented from time to time, the
“Existing ABL Facility”).

  

(ii)  To pay fees and expenses related to the anticipated filing under Chapter
11 of the US Bankruptcy Code (11 U.S.C. §§101 et seq.) (the “Chapter 11 Case”)
in the United States Bankruptcy Court (the “Bankruptcy Court”) commenced by the
Debtors (the “Transactions”).

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Pioneer

February 28, 2020

Page 2

        Privileged and Confidential

 

  

(ii)  To provide financing and working capital to the Debtors during the Chapter
11 Case.

DIP Credit Facility:    A $75,000,000 committed senior secured
debtor-in-possession revolving credit facility pursuant to which the Lenders
will make revolving credit loans denominated in Dollars (the “DIP Credit
Facility”), subject to the Borrowing Base set forth below, will be made
available to the DIP Borrowers, which shall include a subfacility in an amount
of $30,000,000 for the issuance of letters of credit denominated in Dollars by
the L/C Issuers. Revolving Credit Availability:   

Usage under the DIP Credit Facility (i.e., the aggregate outstanding amount at
any time of all revolving credit loans, swingline loans and letter of credit
obligations) shall not exceed the lesser of (i) $75,000,000, or (ii) the sum of
the following (the “Borrowing Base”) (such lesser amount, the “Revolving Credit
Availability”):

  

(a)   Up to 90% of eligible investment grade accounts aged less than 60 days
past due (not to exceed 90 days from invoice date), cross aged on the basis of
50% or more past due (with concentration limits for certain account debtors of
40% for account debtors rated BBB- or higher from S&P or Baa3 or higher from
Moody’s and 25% for all other account debtors), plus;

  

(b)   Up to 85% of eligible non-investment grade accounts aged less than 60 days
past due (not to exceed 90 days from invoice date), cross aged on the basis of
50% or more past due (with concentration limits for certain account debtors of
40% for account debtors rated BBB- or higher from S&P or Baa3 or higher from
Moody’s and 25% for all other account debtors), plus;

  

(c)   Up to 85% of eligible unbilled accounts (not to remain unbilled more than
30 days), plus;

  

(d)   Up to the lesser of (i) 70% of the costs of eligible inventory or (ii) 85%
of the net orderly liquidation value percentage (based on an appraisal
satisfactory to Agent) of eligible inventory, less;

  

(e)   The maximum undrawn face amount of all Letters of Credit, less

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Pioneer

February 28, 2020

Page 3

        Privileged and Confidential

 

  

(f)   Applicable reserves.

Sub Limits:   

1)  Letters of Credit denominated in Dollars limited to $30,000,000.

  

2)  Eligible Inventory sublimit of $3,750,000.

  

3)  Eligible unbilled accounts receivable limited to $10,000,000.

   All criteria for (a) eligible assets, including without limitation the
definitions of eligible accounts and eligible inventory shall be determined by
Agent and DIP Borrowers, and (b) advance rates and (c) applicable reserves and
sublimits shall be determined by Agent in its Permitted Discretion. “Permitted
Discretion” means a determination made in good faith in the exercise of
reasonable (from the perspective of a secured asset-based lender) credit
judgment in accordance with customary business practices of the Agent for
asset-based lending transactions. Amortization:    None. Available for borrowing
and re-borrowing until the DIP Maturity Date, subject to the Borrowing Base.
Maturity:    The DIP Credit Facility will mature, and the commitments thereunder
will terminate, on the date (the “DIP Maturity Date”) that is the earliest of:
  

(a)   5 months from date on which the Chapter 11 Case is filed (the “Petition
Date”);

  

(b)  45 days after the Petition Date (or such later date as the Agent may
approve in writing in its sole discretion) if the Final Order (as defined below)
has not been approved by the Bankruptcy Court by the expiration of such period;

  

(c)   The earlier of the “effective date” or the date of the substantial
consummation of any confirmed plan (the “Plan Effective Date”);

  

(d)  the closing of a sale of all or substantially all of the DIP Collateral (as
defined below); and

  

(e)   the acceleration of the DIP Credit Facility in accordance with its terms.

Interest Rates:    Revolving loans under the DIP Credit Facility shall bear
interest, at the DIP Borrowers’ option, at a per annum rate based on 1, 2, or 3
month fully absorbed PNC LIBOR Rate or the Base Rate plus, in each case, the DIP
Applicable Margin (as defined below); all swingline loans under the DIP Credit
Facility shall bear interest at the Base Rate plus the DIP Applicable Margin.
“DIP Applicable Margin” means (x) as to Base Rate Loans (including all swingline
loans), 1.00 percentage point (the “DIP Base Rate Margin”), and (y) as to LIBOR
Rate Loans, 2.00 percentage points (the “DIP LIBOR Rate Margin”).

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   Interest will be calculated on the daily outstandings on a 360 day year for
the actual number of days elapsed and will be due monthly in arrears on the
first business day of each month for Base Rate borrowings and on the last day of
each interest period for LIBOR Rate borrowings.    The “Base Rate” shall mean,
for any day, a fluctuating per annum rate of interest equal to the highest of
(i) the interest rate per annum announced from time to time by the Agent at its
principal office as its then prime rate, which rate may not be the lowest rate
then being charged commercial borrowers by the Agent, (ii) the Federal Funds
Open Rate plus 1⁄2 of 1%, and (iii) the one month LIBOR rate plus 100 basis
points (1%).    LIBOR Rate pricing will be subject to customary adjustments for
statutory reserves. Facility Fee:    0.50% per annum on the unused portion of
the DIP Credit Facility. This fee shall be calculated on the basis of a 360 day
year for the actual number of days elapsed and will be payable quarterly in
arrears. Interest Rate Protection:    The DIP Borrowers may, at their option,
enter into and maintain an interest rate swap agreement (the “Hedge Agreement”),
which conforms to ISDA standards and has terms and is with the Agent, a lender
under the DIP Credit Facility, or a counterparty satisfactory to the Agent,
enabling the DIP Borrowers to protect themselves against fluctuations in
interest rates with respect to a mutually agreed amount of initial and projected
outstanding advances under DIP Credit Facility with a final termination date no
later than the DIP Maturity Date. The DIP Borrowers’ obligations under any Hedge
Agreement entered into with Agent, Lender or any affiliate of either in
accordance with the preceding sentence will be secured by the DIP Collateral,
and benefit from the guarantees of the Guarantors, in each case on a pari passu
basis with the DIP Borrowers’ obligations under the DIP Credit Facility. Letter
of Credit Fees:    The DIP Borrowers shall pay Letter of Credit fees at a per
annum rate equal to the DIP LIBOR Rate Margin on the aggregate face amount of
the Letters of Credit issued under the DIP Credit Facility. In addition, the DIP
Borrowers shall pay a Letter of Credit fronting fee of 0.25% per annum to PNC as
the fronting bank, payable quarterly in arrears. Default Rate:    2.00% over the
applicable rate.

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Priority and Security:    The DIP Credit Facility, any Hedge Agreements, and any
cash management products and services provided by the Agent or any Lender or any
direct or indirect Subsidiary or affiliate of Agent or any Lender will be
secured by:   

(i) continuing, valid, binding, enforceable, non-avoidable, and automatically
and properly perfected postpetition security interests in and liens in all of
the “DIP Collateral”, which “DIP Collateral” includes all real and personal
property of the Debtors and their bankruptcy estates, whether now existing or
hereafter arising, tangible or intangible, of each of the Debtors, specifically
including all commercial tort claims that may be brought by the Debtors and the
proceeds of any actions brought under chapter 5 of the Bankruptcy Code (such
security interests and liens, the “DIP Liens”), which liens shall be senior in
priority and superior to any security, mortgage, collateral interest, lien,
claim or interest of any other person, subject only to the professional fee
carve-out to be agreed (the “Carve-Out”), the liens (whether pre-petition liens
or adequate protection liens) on the Term Priority Collateral (as defined in the
Intercreditor Agreement dated as of November 8, 2017 (the “Existing
Intercreditor Agreement”), by and among Pioneer, the lenders party thereto, and
Wilmington Trust, National Association, as administrative agent) in favor of the
secured parties under the existing term loan facility evidenced by that certain
Term Loan Agreement dated as of November 8, 2017 (such facility, the “Existing
Term Loan Facility”), by and among Pioneer, the lenders party thereto, and
Wilmington Trust, National Association, as administrative agent (such liens, the
“Term Priority Liens”), and such other exceptions/liens as shall be acceptable
to Agent in its discretion; provided, that for the avoidance of doubt, the DIP
Liens on the Term Priority Collateral shall be junior to the Term Priority Liens
on the Term Priority Collateral;

  

(ii)  the Agent and Lenders will be entitled to an allowed, senior secured,
superpriority (subject only to the Carve-Out) administrative expense claim,
granted and confirmed pursuant to the Interim Order and the Final Order, as the
case may be, for all obligations and liabilities under the DIP Credit Facility
in each of the Chapter 11 Cases and any successor case; provided, however, that
such superpriority claim shall not have recourse to the Term Priority Collateral
unless and until the Existing Term Loan Facility has been paid in full in cash.

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Collections and Remittances:    All customers of any Credit Party shall be
directed to make remittances to a lockbox or blocked account of a Credit Party
subject to control agreements in favor of the Agent and (i) maintained with
Agent and/or (ii) maintained with any of the bank or financial institutions with
which the Credit Parties maintain accounts as of the date hereof. Such Credit
Party shall retain dominion over such accounts other than during a Cash Dominion
Period. Amounts received in such lockbox or blocked account(s) (save and except
for any Term Priority Collateral or any proceeds thereof) shall be applied to
pay all outstanding obligations under the DIP Credit Facility, during a Cash
Dominion Period. For the purpose of crediting the DIP Borrowers’ loan account
and calculating interest, all items of payment shall be deemed applied by Agent
two (2) business days following the business day of Agent’s receipt thereof. To
facilitate such cash dominion, the DIP Borrowers shall establish at least one
concentration blocked account with Agent into which all remittances and other
proceeds of the DIP Collateral (save and except for any Term Priority Collateral
or any proceeds thereof) deposited into or made to any other lockbox or blocked
accounts maintained with a bank or other financial institution other than Agent
shall be swept on a daily basis and, during a Cash Dominion Period, following
receipt of such funds into such concentration blocked account, applied by Agent
to pay the outstanding obligations under the DIP Credit Facility in accordance
with the terms of the DIP Loan Agreement.    A “Cash Dominion Period” shall mean
the period commencing on any date on which either (i) an event of default has
occurred and is continuing or (ii) Borrower’s excess availability under the DIP
Credit Facility at any time is less than the greater of (x) 15% of DIP Credit
Facility commitment and (y) $9,375,000 (each a “Cash Dominion Event”), and
continuing until the date on which no Cash Dominion Event has occurred for 45
consecutive days. Expenses:    All reasonable and documented out-of-pocket
expenses incurred by Agent or the Lenders, including, without limitation,
reasonable and documented fees and disbursements of outside counsel (provided
that Credit Parties shall not be required to reimburse the legal fees and
expenses of more than one counsel to the Agent and the Lenders (in addition to
any reasonably necessary local counsel in each applicable local jurisdiction and
any reasonably necessary bankruptcy “conflicts counsel(s)”)), accounting,
appraisal, audit, search and lien filing, title insurance (if applicable) and
other reasonable and documented out-of-pocket costs and expenses in connection
with monitoring, administering or enforcing the DIP Credit Documents (as defined
below) and the DIP Credit Facility shall be for the account of the Credit
Parties and payable on demand.

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Documentation Principles:    The DIP Credit Documents shall contain the terms
set forth herein, and except to the extent otherwise set forth herein, be based
generally on the Prepetition ABL Facility (including, without limitation, the
Existing Intercreditor Agreement with respect to lien priority and collateral
matters as between the DIP Credit Facility and the Existing Term Loan Facility
as set forth in “Priority and Security” above), and shall be (a) modified to
give due regard to (i) changes in law and banking regulations, and (ii) any
changes or modifications to correct mistakes or defects, (b) modified to make
changes to the representations and warranties, affirmative covenants, and
negative covenants as may be acceptable to Agent, the DIP Lenders, and the
Credit Parties and (c) modified to reflect customary LIBOR replacement language,
AML provisions and other administrative procedures of Agent. Conditions
Precedent:    The occurrence of the closing date of the DIP Credit Facility (the
“Closing Date”) will be subject only to the following conditions:   

1)  No Material Adverse Change since the Petition Date. “Material Adverse
Change” means a material adverse change in the business, operations, condition
(financial or otherwise) or results of operations of the Credit Parties and
their subsidiaries, taken as a whole, other than as a result of the
commencement, the continuation, or events leading up to the commencement of the
Chapter 11 Case;

  

2)  Other than the Chapter 11 Case, or as stayed pursuant to the Chapter 11
Case, there shall exist no action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator or governmental
instrumentality that, if adversely determined, would reasonably be expected to
result in a Material Adverse Change;

  

3)  execution and delivery by the Credit Parties and/or other applicable parties
of the DIP Credit Documents in customary form but in all cases subject to the
Documentation Principles;

  

4)  customary legal opinions with respect to due authorization and due
execution;

  

5)  All documents and instruments under the DIP Credit Documents required to
create and perfect the Agent’s liens in the DIP Collateral shall have been
executed and delivered by the applicable Credit Parties and be in proper form
for filing in the appropriate jurisdiction;

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6)  after giving effect to all advances to be made at closing and the payment of
all fees and expenses relating to the Transactions with respect to the DIP
Credit Facility, the DIP Borrowers will have minimum Excess Availability (as
defined below) of $35,000,000. “Excess Availability” means, as of any date of
determination, (x) the Revolving Credit Availability, minus (y) the aggregate
outstanding amount of all revolving credit loans, swingline loans and letter of
credit obligations, minus (z) the aggregate amount of all unpaid post-petition
trade payables 30 days or more past due. Such Excess Availability shall be
evidenced by a Borrowing Base Certificate in a form to be agreed;

 

7)  receipt by Agent of a 13-week projected budget, which shall include a weekly
cash budget, including information on a line item basis for each week as to
(w) projected cash receipts, (x) projected disbursements (including ordinary
course operating expenses, bankruptcy-related expenses (including professional
fees), capital expenditures, asset sales and fees and expenses of Agents and
Lenders (including counsel therefor) and any other fees and expenses relating to
the DIP Credit Documents), (y) net cash flow, and (z) the Borrowing Base and
Excess Availability, to be in form and substance acceptable to the Agent (as
updated from time to time by Debtors, so long as such amendments are mutually
agreed by the Debtors and the Agent (which agreement by Agent shall be
determined in its sole discretion), the “Approved Budget”) (it being understood
that the draft Approved Budget provided to PNC on February 28, 2020 is in form
and substance acceptable to the Agent);

 

8)  receipt of an executed payoff letter with respect to the Existing ABL
Facility, evidencing termination of the commitments and repayment in full of the
Existing ABL Facility on the Closing Date, and termination of all security
interests and liens securing the Existing ABL Facility on the Closing Date and
any administrative claims with respect thereto;

 

9)  delivery of evidence of insurance coverage satisfactory to Agent, and within
30 days after the closing date of the DIP Credit Facility, a lender’s loss payee
endorsement, naming the Agent as a loss payee or an additional insured, as
applicable;

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10)  to the extent requested 10 business days prior to the Closing Date, Agent
shall have received at least 3 business days prior to the Closing Date all
documentation and other information required by regulatory authorities with
respect to the Credit Parties under applicable “know your customer” and
anti-money laundering rules and regulations, the results of which shall be
satisfactory to Agent (it being understood that as of the date hereof Agent has
received all such documentation and other information that it requires or
believes it will require and that such documentation and other information is
satisfactory to Agent);

 

11)  entry by the Bankruptcy Court of an Interim Order acceptable to Agent (the
Agent agrees Blank Rome LLC’s February 28, 2020 draft Interim Order is
acceptable to the Agent) (the “Interim Order”) approving the DIP Credit Facility
and the Transactions consistent with the terms of this Commitment Letter
(including this Term Sheet) and the DIP Credit Documents;

 

12)  all other “first day” orders filed by the Debtors upon the commencement of
the Chapter 11 Case shall be reasonably satisfactory in form and substance to
the Agent;

 

13)  DIP Borrowers have established with PNC primary depository accounts
consistent with the terms of this DIP Credit Facility Memorandum Terms and
Conditions;

 

14)  Agent has received the financial model (including annuals for the
immediately following 3 years and monthly statements for the immediately
following 12 months), which shall be in form and substance reasonably acceptable
to Agent; and

 

15)  The Agent and Lenders shall have received all fees and other amounts due
and payable on or prior the Closing Date.

Covenants:   Usual and customary covenants for financings of this type and
consistent with the Documentation Principles, including but not limited to
maintenance of corporate existence, payment on indebtedness and taxes when due,
financial reporting requirements (to include monthly internal and annual audited
financial statements of the DIP Borrowers, quarterly financial statements,
monthly accounts receivable and accounts payable agings, monthly inventory
listings, and Borrowing Base certificates monthly (reverting to weekly during a
Cash Dominion Period), rig utilization reports in a format to be determined),
delivery of certificate of non-default, limitation on dividends and stock
repurchases, restriction and quality standards with respect to investments,
limitation on other debt, limitation on other liens or guarantees, no change in
nature of business,

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   limitations on mergers or acquisitions, no change in fiscal year, no
additional subsidiaries, limitation on sale of assets. In connection with any
material asset sale, a pro forma Borrowing Base certificate giving effect to
such sale shall be delivered to the Agent at least 5 business days prior to the
closing of such sale. Exceptions to the above shall include, without limitation,
permitted investments to the Columbia Group in an amount not to exceed
$5,000,000 in the aggregate. Financial Covenants:    Financial and performances
covenants as follows:   

(i) Compliance with Approved Budget—the DIP Borrowers shall not permit
(x) actual cash receipts for any cumulative four week period to be less than 80%
of budgeted cash receipts for any such cumulative four week period, or (y) the
actual disbursement amount for any cumulative four week period to exceed 120% of
the budgeted disbursement amount for any such cumulative four week period, in
each case, to be tested at the end of the 4th week after the closing date of the
DIP Credit Facility and every 4 weeks thereafter.

  

(ii)  Fixed Charge Coverage Ratio of at least 1.0 to 1.0 during a Cash Dominion
Period.

  

(iii)  Capital Expenditures of the DIP Borrowers shall not exceed an amount
equal to 125% of the Approved Budget delivered on the Closing Date for such
capital expenditures of the DIP Borrowers in any fiscal year, subject to a 50%
carryover; provided, that if the DIP Borrowers submit to PNC a revised Approved
Budget, and PNC consents to such revised Approved Budget in its sole discretion,
the amount of capital expenditures permitted for purpose of this covenant will
be reset to 125% of such revised Approved Budget. Notwithstanding the foregoing,
if as of the end of any fiscal quarter of the DIP Borrowers, the DIP Borrowers
have maintained Liquidity (defined as excess availability under the DIP Credit
Facility, plus the lesser of $10,000,000 and the aggregate domestic unrestricted
cash balance in the DIP Borrowers’ accounts that are either maintained with the
Agent or subject to a control agreement in favor of the Agent) of at least
$35,000,000 on each day of such fiscal quarter, the DIP Borrowers shall not be
subject to such limitation of capital expenditures during such fiscal quarter.

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Milestones:    The DIP Borrowers shall comply with the following milestones (the
“Milestones”):   

•  Not later than the Petition Date, the Debtors must file with the Bankruptcy
Court a motion seeking approval of the DIP Credit Facility, and all fees,
expenses, indemnification, and other obligations contemplated thereunder.

  

•  Within 45 days after the Petition Date, the Bankruptcy Court shall have
entered the Final Order.

  

•  Within 50 days after the Petition Date, entry of an order, in form and
substance reasonably satisfactory to the Agent, confirming an Approved Plan (the
“Confirmation Order”). “Approved Plan” means a chapter 11 plan for the Credit
Parties and, at Pioneer’s option, any other affiliated debtors and debtors in
possession, which shall (a) be consistent in all material respects with the form
of plan of reorganization provided to the Agent on the date hereof, or (b)
otherwise be in form and substance reasonably satisfactory to the Agent (it
being understood that any amendment or modification of such plan of
reorganization that does not adversely affect the rights of the Lenders shall be
deemed to be reasonably satisfactory to the Agent).

  

•  Within 14 days after entry of the Confirmation Order, the Plan Effective Date
shall have occurred.

Representations and Warranties:    DIP Borrowers will make such representations
and warranties as are usual and customary for financings of this type and
consistent with the Documentation Principles. Events of Default:    Events of
Default customary for the proposed transaction and subject to the Documentation
Principles, and including without limitation the following (subject to customary
grace periods to be agreed consistent with the Documentation Principles):   

1)  any non-payment when due of interest and/or principal of any advance, loan
or drawing under the DIP Credit Facility or any fee thereunder. Payment defaults
to include violation of the Borrowing Base;

  

2)  any breach in any material respect of any representation or warranty when
made;

  

3)  any violation in any respect of any affirmative or negative covenant;

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4)  any of the security interest or liens granted to secure the DIP Credit
Facility cease to be valid, binding and enforceable first priority security
interests (subject to, for the avoidance of doubt, the Carve- Out, the Term
Priority Liens with respect to the Term Priority Collateral, and such other
agreed exceptions and liens as described in “Priority and Security” above);

  

5)  any default related to any material (defined by a threshold amount to be
agreed) indebtedness (other than any prepetition indebtedness) by the DIP
Borrowers which has continued beyond the grace period or for a period of time
sufficient to permit the acceleration of such indebtedness;

  

6)  the occurrence of a change of control;

  

7)  the entry of an order dismissing any Case or converting any Case to a case
under Chapter 7 of the Bankruptcy Code, either voluntarily or involuntarily;

  

8)  the entry of an order appointing a trustee in the Chapter 11 Case without
the consent of the Agent;

  

9)  the entry of an order granting any claim (other than as set forth in the
applicable DIP Order or permitted under the DIP Credit Documents, including the
Carve-Out) super-priority administrative expense claim status pari passu with or
senior to the DIP Credit Facility, or granting any lien (other than as set forth
in the applicable DIP Order or permitted under the DIP Credit Documents,
including the Carve-Out and the Term Priority Liens) priority equal or superior
to that the liens granted to Agent, for the benefit of Lenders under the DIP
Credit Facility;

  

10)  the entry of an order granting relief from the automatic stay so as to
allow a third party to proceed against any asset or assets of any Debtor having
a value in excess of $500,000;

  

11)  A final order approving the DIP Credit Facility (the “Final Order”, and
together with the Interim Order, the “DIP Orders”) in a form that is
substantially consistent with the Interim Order is not entered within 45 days
after the Petition Date approving the DIP Credit Facility. As used in this
paragraph 11, “final order” means an order or judgment of the Bankruptcy Court,
or other court of competent jurisdiction, as entered on the docket of such
Bankruptcy Court, the operation or effect of which has not been stayed,
reversed, vacated or amended;

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12)  the entry of an order staying, reversing, vacating or otherwise modifying
the DIP Credit Facility, the Interim Order or the Final Order;

  

13)  the entry of an order appointing an examiner or similar insolvency official
or administrator, in each case having enlarged powers (beyond those set forth
under Bankruptcy Code §1106(a)(3) and (4)) or any other fiduciary or
representative of the estate with decision-making or other management authority;

  

14)  a material portion of the collateral shall be seized, subject to
garnishment or taken by any government or regulatory authority;

  

15)  a proposal by any Debtor for confirmation of a plan of reorganization
unless such plan as proposed or confirmed provides for payment in full in cash
of all Obligations owing under the DIP Credit Facility on or before the Plan
Effective Date;

  

16)  except as otherwise permitted under the asset sale covenant, any order
providing for the sale of any assets of any Debtor shall be entered by the
Bankruptcy Court unless (A) upon the consummation of such transaction, the
obligations under the DIP Credit Facility are permanently and indefeasibly paid
in full, in cash, or (B) Agent has consented to such sale;

  

17)  any motion by the Debtors to approve bidding procedures for the sale of any
assets of any Debtor that constitutes Collateral fails to provide, pursuant to
Section 363(k) of the Bankruptcy Code, that the Agent and Lenders shall have the
right to credit bid;

  

18)  except as otherwise permitted under the debt covenant, the entry of an
order for the obtaining of credit or incurring of debt other than pursuant to
the DIP Credit Facility;

  

19)  the filing of any pleading by any Debtor seeking, or otherwise consenting
to the occurrence of any of the matters set forth above in paragraphs (10),
(12), (13), (16) or (18);

  

20)  any violation of the Milestones;

  

21)  any unstayed judgment (to the extent not paid or covered by insurance
pursuant to which the insurer has not denied coverage) is entered against any
Debtor in an amount in excess of $2,500,000;

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22)  the entry of an order terminating any Debtor’s exclusive right to file a
chapter 11 plan or the expiration of any Debtor’s exclusive right to file a
chapter 11 plan; or

  

23)  the making of any payments in respect of prepetition obligations other than
(i) as permitted by the DIP Orders, (ii) as permitted by any administrative
“first day order” or other administrative order entered by the Bankruptcy Court,
all of which shall be in form and substance satisfactory to the Agent, or
(iii) as otherwise agreed to in writing by the Agent.

Governing Law:    New York – submission by the Credit Parties to New York
jurisdiction.

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EXHIBIT B

Exit Credit Facility Term Sheet

(See attached)

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EXIT CREDIT FACILITY MEMORANDUM OF TERMS AND CONDITIONS

DATED FEBRUARY 28, 2020 FOR

PIONEER ENERGY SERVICES CORP. (“PIONEER”)

Initially capitalized terms used herein without definition shall have the
meanings given in the Commitment Letter to which this Exit Credit Facility
Memorandum of Terms and Conditions is attached.

 

Borrower(s):    Pioneer and its existing domestic operating subsidiaries subject
to the Chapter 11 Case (as defined below) (collectively, the “Exit Borrowers” or
“Debtors”). Guarantor(s):    Same as under the Existing ABL Facility (as defined
below) (collectively, “Guarantors” and together with the Exit Borrowers, each a
“Credit Party” and collectively the “Credit Parties”). Agent:    PNC Bank,
National Association (in such capacity, “Agent” or “PNC”). Lenders:    PNC Bank,
National Association and such other financial institutions and other entities
that may from time to time become a lender under the definitive documentation
for the Exit Credit Facility (the “Exit Loan Agreement”) (in such capacity,
collectively, the “Lenders”, and each a “Lender”). Swingline Lender:    PNC
Bank, National Association (in such capacity, “Swingline Lender”) L/C Issuer(s):
   PNC Bank, National Association, and any other Person accepted by Agent from
time to time as an issuer of letters of credit (in such capacity, each an “L/C
Issuer”) Purpose:      

(i) As part of a confirmed plan of reorganization acceptable to Agent, to
provide the funds necessary to refinance and replace the DIP Credit Facility.

  

(ii)  To pay fees and expenses related to the Debtors’ emergence from the
Chapter 11 Case and the Transactions.

  

(iii)  To provide on-going financing and working capital to the Exit Borrowers
following the exit of the Chapter 11 Case (as defined in the DIP Credit Facility
Term Sheet).

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Exit Credit Facility:    A $75,000,000 committed senior secured revolving credit
facility pursuant to which the Lenders will make revolving credit loans
denominated in Dollars (the “Exit Credit Facility”), subject to the Borrowing
Base set forth below, will be made available to the Exit Borrowers, which shall
include a subfacility in an amount of $30,000,000 for the issuance of letters of
credit denominated in Dollars by the L/C Issuers. Revolving Credit Availability:
  

Usage under the Exit Credit Facility (i.e., the aggregate outstanding amount at
any time of all revolving credit loans, swingline loans and letter of credit
obligations) shall not exceed the lesser of (i) $75,000,000, or (ii) the sum of
the following (the “Borrowing Base”) (such lesser amount, the “Revolving Credit
Availability”):

  

(a)   Up to 90% of eligible investment grade accounts aged less than 60 days
past due (not to exceed 90 days from invoice date), cross aged on the basis of
50% or more past due (with concentration limits for certain account debtors of
40% for account debtors rated BBB- or higher from S&P or Baa3 or higher from
Moody’s and 25% for all other account debtors), plus;

  

(b)   Up to 85% of eligible non-investment grade accounts aged less than 60 days
past due (not to exceed 90 days from invoice date), cross aged on the basis of
50% or more past due (with concentration limits for certain account debtors of
40% for account debtors rated BBB- or higher from S&P or Baa3 or higher from
Moody’s and 25% for all other account debtors), plus;

  

(c)   Up to 85% of eligible unbilled accounts (not to remain unbilled more than
30 days), plus;

  

(d)   Up to the lesser of (i) 70% of the costs of eligible inventory or (ii) 85%
of the net orderly liquidation value percentage (based on an appraisal
satisfactory to Agent) of eligible inventory, less;

  

(e)   The maximum undrawn face amount of all Letters of Credit, less

  

(f)   Applicable reserves.

Sub Limits:   

1)  Letters of Credit denominated in Dollars limited to $30,000,000.

  

2)  Eligible Inventory sublimit of $3,750,000.

  

3)  Eligible unbilled accounts receivable limited to $10,000,000.

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   All criteria for (a) eligible assets, including without limitation the
definitions of eligible accounts and eligible inventory shall be determined by
Agent and Exit Borrowers, and (b) advance rates and (c) applicable reserves and
sublimits shall be determined by Agent in its Permitted Discretion. “Permitted
Discretion” means a determination made in good faith in the exercise of
reasonable (from the perspective of a secured asset- based lender) credit
judgment in accordance with customary business practices of the Agent for
asset-based lending transactions. Amortization:    None. Available for borrowing
and re-borrowing until the Exit Maturity Date, subject to the Borrowing Base.
Maturity:    The earlier of (x) 90 days from the maturity of (i) the convertible
notes issued at exit of the Chapter 11 Case (the “Convertible Notes”) or
(ii) the senior secured term loan to be entered into at exit of the Chapter 11
Case (the “Exit Term Loan”) and (y) 5 years from closing date simultaneously
with the Debtors’ emergence from the Chapter 11 Case (the “Exit Maturity Date”).
Interest Rates:    Revolving loans under the Exit Credit Facility shall bear
interest, at the Exit Borrower’s option, at a per annum rate based on 1, 2, or 3
month fully absorbed PNC LIBOR Rate or the Base Rate plus, in each case, the
Exit Applicable Margin (as defined below); all swingline loans under the Exit
Credit Facility shall bear interest at the Base Rate plus the Exit Applicable
Margin. “Exit Applicable Margin” means, as of any date of determination, the
following margin based upon the average excess availability for the most recent
fiscal quarter; provided, however, that for the first two fiscal quarters
following the closing date simultaneously with the Debtors’ emergence from the
Chapter 11 Case, the Exit Applicable Margin would be at no less than Level II:

 

Level

  

Average Excess Availability

   Exit Applicable
Margin for Base
Rate Loans     Exit Applicable
Margin for LIBOR
Rate Loans  

I

   Greater than or equal to 66.67% of commitment      0.75 %      1.75 % 

II

   Less than 66.67% but greater than 33.33% of commitment      1.00 %      2.00
% 

III

  

Less than or equal to 33.33% of commitment

     1.25 %      2.25 % 

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Pioneer

February 28, 2020

Page 4

        Privileged and Confidential

 

   Interest will be calculated on the daily outstandings on a 360 day year for
the actual number of days elapsed and will be due monthly in arrears on the
first business day of each month for Base Rate borrowings and on the last day of
each interest period for LIBOR Rate borrowings.    The “Base Rate” shall mean,
for any day, a fluctuating per annum rate of interest equal to the highest of
(i) the interest rate per annum announced from time to time by the Agent at its
principal office as its then prime rate, which rate may not be the lowest rate
then being charged commercial borrowers by the Agent, (ii) the Federal Funds
Open Rate plus 1⁄2 of 1%, and (iii) the one month LIBOR rate plus 100 basis
points (1%).    LIBOR Rate pricing will be subject to customary adjustments for
statutory reserves. Facility Fee:    0.50% per annum on the unused portion of
the Exit Credit Facility. This fee shall be calculated on the basis of a 360 day
year for the actual number of days elapsed and will be payable quarterly in
arrears. Interest Rate Protection:    The Exit Borrowers may, at their option,
enter into and maintain an interest rate swap agreement (the “Hedge Agreement”),
which conforms to ISDA standards, enabling the Exit Borrowers to protect
themselves against fluctuations in interest rates with respect to a mutually
agreed amount of initial and projected outstanding advances under Exit Credit
Facility with a final termination date no later than the Exit Maturity Date. The
Exit Borrowers’ obligations under any Hedge Agreement entered into with Agent, a
lender, or any of their affiliates in accordance with the preceding sentence
will be secured by the Exit Collateral, and benefit from the guarantees of the
Guarantors, in each case on a pari passu basis with the Exit Borrowers’
obligations under the Exit Credit Facility. Letter of Credit Fees:    The Exit
Borrowers shall pay Letter of Credit fees at a per annum rate equal to the Exit
LIBOR Rate Margin on the aggregate face amount of the Letters of Credit issued
under the Exit Credit Facility. In addition, the Exit Borrowers shall pay a
Letter of Credit fronting fee of 0.25% per annum to

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Pioneer

February 28, 2020

Page 5

        Privileged and Confidential

 

   PNC as the fronting bank, payable quarterly in arrears. Default Rate:   
2.00% over the applicable rate. Priority and Security:    The Exit Credit
Facility, any Hedge Agreement, and any cash management products and services
provided by the Agent or any Lender or any direct or indirect Subsidiary or
affiliate of Agent or any Lender will be secured by a (x) first priority
perfected security interest in each Credit Party’s working capital assets,
whether now existing or hereafter arising, including, all accounts, general
intangibles, contract rights, all rights to the payment of money, deposit
accounts, instruments, documents, chattel paper and inventory and (y) a second
priority perfected security interest in all other assets, whether now existing
or hereafter arising of the Credit Parties, in each case, subject to customary
exceptions to be agreed (collectively, the “Collateral”). Collections and
Remittances:    All customers of any Credit Party shall be directed to make
remittances to a lockbox or blocked account of a Credit Party subject to control
agreements in favor of the Agent and (i) maintained with Agent and/or
(ii) maintained with any of the bank or financial institutions with which the
Credit Parties maintain accounts as of the date hereof. Such Credit Party shall
retain dominion over such accounts other than during a Cash Dominion Period.
Amounts received in such lockbox or blocked account(s) shall be applied to pay
all outstanding obligations under the Exit Credit Facility during a Cash
Dominion Period. For the purpose of crediting the Exit Borrowers’ loan account
and calculating interest, all items of payment shall be deemed applied by Agent
two (2) business days following the business day of Agent’s receipt thereof.   
A “Cash Dominion Period” shall mean the period commencing on any date on which
either (i) an event of default has occurred and is continuing or (ii) the Exit
Borrowers’ excess availability under the Exit Credit Facility at any time is
less than the greater of (x) 15% of the Exit Credit Facility commitment and (y)
$9,375,000 (each a “Cash Dominion Event”), and continuing until the date on
which no Cash Dominion Event has occurred for 45 consecutive days. Expenses:   
All reasonable and documented out-of-pocket expenses incurred by Agent or the
Lenders, including, without limitation, reasonable and documented fees and
disbursements of outside counsel (provided that Credit Parties shall not be
required to reimburse the legal fees and expenses of more than one

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Pioneer

February 28, 2020

Page 6

        Privileged and Confidential

 

   counsel to the Agents and the Lenders (in addition to any reasonably
necessary local counsel in each applicable local jurisdiction and any reasonably
necessary bankruptcy “conflicts counsel(s)”)), accounting, appraisal, audit,
search and lien filing, title insurance (if applicable) and other reasonable and
documented out-of-pocket costs and expenses in connection with monitoring,
administering or enforcing the Exit Credit Documents (as defined below) and the
Exit Credit Facility shall be for the account of the Credit Parties and payable
on demand. Documentation Principles:    The Exit Credit Documents shall contain
the terms set forth herein, and except to the extent otherwise set forth herein,
be based generally on the DIP Credit Facility, and shall be (a) modified to give
due regard to (i) changes in law and banking regulations, and (ii) any changes
or modifications to correct mistakes or defects, (b) modified to make changes to
the representations and warranties, affirmative covenants, and negative
covenants as may be acceptable to Agent, the Lenders, and the Credit Parties and
(c) modified to reflect customary LIBOR replacement language, AML provisions and
other administrative procedures of Agent. Conditions Precedent:    The
occurrence of the closing date of the Exit Credit Facility (the “Closing Date”)
will be subject only to the following conditions:   

1)  no Material Adverse Change (as defined in the DIP Term Sheet), since
December 31, 2018;

  

2)  other than the Chapter 11 Case, or as stayed pursuant to the Chapter 11
Case, there shall exist no action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator or governmental
instrumentality that, if adversely determined, would reasonably be expected to
result in a Material Adverse Change;

  

3)  execution and delivery by the Credit Parties and/or other applicable parties
of (i) the Exit Credit Documents in customary form but subject to the
Documentation Principles and (ii) a customary intercreditor agreement with
respect to the Exit Term Loan providing for the relative lien priorities set
forth in this Term Sheet and otherwise in form and substance reasonably
satisfactory to the Agent;

  

4)  customary legal opinions;

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Pioneer

February 28, 2020

Page 7

        Privileged and Confidential

 

  

5)  all documents and instruments under the Exit Credit Documents required to
create and perfect the Agent’s liens in the Exit Collateral shall have been
executed and delivered by the applicable Credit Parties and be in proper form
for filing in the appropriate jurisdiction; provided, that the provision or
perfection of any Exit Collateral that is not or cannot be provided on the
Closing Date after the use of commercially reasonable efforts to provide or
perfect the Agent’s security interest in such Exit Collateral (other than Exit
Collateral of a type that can be perfected by the filing UCC financing
statements or the delivery of stock certificates (together with undated powers
endorsed in blank) of the Exit Borrowers and their subsidiaries) shall not
constitute a condition to the Closing Date but instead shall be delivered on a
post-closing basis within a period reasonably agreed by the Credit Parties and
the Agent;

  

6)  after giving effect to all advances to be made at closing and the payment of
all fees and expenses relating to the Transactions, the Exit Borrowers will have
minimum Excess Availability (as defined below) of $25,000,000. “Excess
Availability” means, as of any date of determination, (x) the Revolving Credit
Availability, minus (y) the aggregate outstanding amount of all revolving credit
loans, swingline loans and letter of credit obligations, minus (z) the aggregate
amount of all unpaid post-petition trade payables 30 days or more past due. Such
Excess Availability shall be evidenced by a Borrowing Base Certificate in a form
to be agreed;

  

7)  receipt of the documents evidencing the Convertible Notes and Exit Term
Loan, each in form and substance reasonably satisfactory to Agent;

  

8)  The Bankruptcy Court shall have entered an order, in form and substance
satisfactory to the Agent, confirming the Approved Plan including approval of
the Exit Credit Facility (the “Confirmation Order”) and the Confirmation Order
shall not have been reversed, vacated, stayed, amended, supplemented or
otherwise modified in any manner that would reasonably be expected to adversely
affect the interests of the Agent or the Lenders and authorizing Pioneer and its
restricted subsidiaries to execute, deliver and perform under the Exit Credit
Documents. “Approved Plan” means a chapter 11 plan for the Credit Parties (as
defined below) and, at Pioneer’s option, any other affiliated debtors and
debtors in possession, which shall (a) be consistent in all material respects
with the form of plan of reorganization provided to the Agent on the date
hereof, or (b) otherwise be in form and substance reasonably satisfactory to the
Agent (as defined below), including releases in favor of PNC Bank,

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Pioneer

February 28, 2020

Page 8

        Privileged and Confidential

 

   N.A., as the lender and agent under the DIP Credit Facility (it being
understood that any amendment or modification of such plan of reorganization
provided to the Agent on the date hereof that does not adversely affect the
rights of the Lenders shall be deemed to be reasonably satisfactory to the
Agent).   

9)  Exit Borrowers have established with PNC primary depository accounts
consistent with the terms of this Exit Credit Facility Memorandum Terms and
Conditions;

  

10)  The Agent and Lenders shall have received all fees and other amounts due
and payable on or prior the Closing Date; and

  

11)  The satisfaction of all conditions precedent to the “effective date” of the
Approved Plan, unless otherwise waived in writing by the Agent.

Covenants:    Usual and customary covenants for financings of this type and
consistent with the Documentation Principles, including but not limited to
maintenance of corporate existence, payment on indebtedness and taxes when due,
financial reporting requirements (to include monthly internal and annual audited
financial statements of the Exit Borrowers, quarterly financial statements,
monthly accounts receivable and accounts payable agings, monthly inventory
listings, and Borrowing Base certificates monthly (reverting to weekly during a
Cash Dominion Period), rig utilization reports in a format to be determined),
delivery of certificate of non-default, limitation on dividends and stock
repurchases, restriction and quality standards with respect to investments,
limitation on other debt, limitation on other liens or guarantees, no change in
nature of business, limitations on mergers or acquisitions, no change in fiscal
year, no additional subsidiaries, limitation on sale of assets. Financial
Covenants:   

Financial and performances covenants as follows:

  

(a)   Fixed Charge Coverage Ratio of at least 1.0 to 1.0 during a Cash Dominion
Period.

  

(b)   Capital Expenditures of Exit Borrowers shall not exceed an amount equal to
125% of the Approved Budget delivered on the Closing Date for such capital
expenditures of Exit Borrowers in any fiscal year, subject to a 50% carryover;
provided, that if Exit Borrowers submit to PNC a revised Approved Budget, and
PNC consents to such revised Approved Budget in its sole discretion, the amount
of capital expenditures permitted for purpose of this covenant will be reset to
125% of such revised Approved

--------------------------------------------------------------------------------

Pioneer

February 28, 2020

Page 9

        Privileged and Confidential

 

  

       Budget. Notwithstanding the foregoing, if as of the end of any fiscal
quarter of Exit Borrowers, Exit Borrowers have maintained Liquidity (defined as
excess availability under the Exit Credit Facility, plus the lesser of
$10,000,000 or the aggregate domestic unrestricted cash balance in the Exit
Borrowers’ domestic accounts that are either maintained with the Agent or
subject to a control agreement in favor of the Agent) of at least $35,000,000 on
each day of such fiscal quarter, the Exit Borrowers shall not be subject to such
limitation of capital expenditures for such fiscal quarter.

Representations and Warranties:    Exit Borrowers will make such representations
and warranties as are usual and customary for financings of this type and
consistent with the Documentation Principles. Events of Default:    Events of
Default customary for the proposed transaction and subject to the Documentation
Principles, and including without limitation the following (subject to customary
grace periods to be agreed consistent with the Documentation Principles):   

1)  any non-payment when due of interest and/or principal of any advance, loan
or drawing under the Exit Credit Facility, as applicable, or any fee thereunder.
Payment defaults to include violation of the Borrowing Base;

  

2)  any breach in any material respect of any representation or warranty when
made;

  

3)  any violation in any respect of any affirmative or negative covenant;

  

4)  any of the security interest or liens granted to secure the Exit Credit
Facility, as applicable, cease to be valid, binding and enforceable first
priority security interests;

  

5)  any default related to any indebtedness (other than any prepetition
indebtedness) in excess of $15,000,000 by the Exit Borrowers which has continued
beyond the grace period or for a period of time sufficient to permit the
acceleration of such indebtedness;

  

6)  the occurrence of a change of control; or

  

7)  a material portion of the collateral shall be seized, subject to garnishment
or taken by any government or regulatory authority.

Governing Law:    New York – submission by the Credit Parties to New York
jurisdiction.

--------------------------------------------------------------------------------

EXHIBIT C

New Secured Bonds Term Sheet

--------------------------------------------------------------------------------

PIONEER ENERGY SERVICES CORP.

NEW SECURED BONDS TERM SHEET

 

 

This term sheet (this “Term Sheet”) describes the material new secured bonds
provisions in connection with restructuring and recapitalization transactions
(the “Restructuring Transactions”) regarding certain indebtedness of Pioneer
Energy Services Corp. (“Pioneer”) and the other Company Parties.

This Term Sheet is intended merely as an outline and does not include
descriptions of all of the terms, conditions, or other provisions of the
proposed financing and related agreements. This term sheet should not be
construed in any way as an extension of credit or an agreement to provide or
arrange financing or a refinancing or extension of the Existing Term Loan
Agreement (as defined below). This Term Sheet shall not constitute (nor shall it
be construed as) an offer or a legally binding obligation to buy or sell, or a
solicitation of an offer to buy or sell, any of the securities referred to
herein, it being understood that such an offer or solicitation, if any, only
will be made in compliance with applicable provisions of securities and/or other
applicable laws. This Term Sheet is also subject also to financial due
diligence, including analysis of updated financial projections.

Capitalized terms used in this Term Sheet but not defined herein shall have the
meanings set forth in the Restructuring Support Agreement or the Existing Term
Loan Agreement.

 

Topic

  

Proposal

Existing Term Loan:    Term Loan Agreement, dated as of November 8, 2017 (the
“Existing Term Loan Agreement”), by and among Pioneer Energy Services Corp., as
Borrower, Wilmington Trust, National Association, as Administrative Agent, and
the Lenders party thereto from time to time. Issuer / Guarantors:    Pioneer
Energy Services Corp., as issuer, and the guarantors under the Existing Term
Loan Agreement. New Secured Bonds:    $78,125,000 senior secured bonds (the “New
Secured Bonds”; the bondholders thereunder, the “New Secured Bondholders”).
Upfront Fee/OID:    4.00% Maturity:    The New Secured Bonds will mature on the
earlier of (a) five years from Closing; provided, that if the date that is five
years from Closing is not a business day, the New Secured Bonds shall mature on
the first business day prior to such date. and (b) the date on the bonds become
due and payable, whether by voluntary or mandatory acceleration or otherwise.
Interest Rate:   

L + 9.50%, plus a 100 bps step up if outstanding in year five.

 

LIBOR Floor: 1.50%

Call Protection:    No call for 12 months, then ratable step down from 104 to
par.

--------------------------------------------------------------------------------

Merger Event:    The New Secured Bonds will be callable at a price of 103, but
at no time more than would be possible at the then applicable call protection.
Reporting Requirements and Affirmative Covenants:    Customary for similar
secured bonds, with any modifications to be agreed. Mandatory Prepayments:   
Customary for similar secured bonds, with any modifications to be agreed.
Negative Covenants:    Customary for similar secured bonds, including
restrictions on debt incurrence, liens and restricted payments. Financial
Covenants:    To be agreed. Guarantees and Collateral Generally:   
Substantially the same as the Existing Term Loan Agreement; provided that, for
the avoidance of doubt, such guarantees and collateral shall reflect and assets
pledged shall include second liens on any assets securing the Exit ABL Facility
on a first lien basis.

--------------------------------------------------------------------------------

EXHIBIT D

Backstop Commitment Agreement

--------------------------------------------------------------------------------

Execution Version

BACKSTOP COMMITMENT AGREEMENT

AMONG

PIONEER ENERGY SERVICES CORP.

AND

THE COMMITMENT PARTIES PARTY HERETO

Dated as of February 28, 2020

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

 

 

          PAGE  

Section 1.

   THE RIGHTS OFFERING      3  

Section 2.

   THE COMMITMENTS      6  

Section 3.

   TRANSFER OF COMMITMENT      8  

Section 4.

   COMMITMENT PARTY DEFAULT      8  

Section 5.

   REPRESENTATIONS AND WARRANTIES OF THE COMPANY      9  

Section 6.

   REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTIES      18  

Section 7.

   ADDITIONAL COVENANTS OF THE COMPANY      20  

Section 8.

   ADDITIONAL COVENANTS OF THE COMMITMENT PARTIES      27  

Section 9.

   ADDITIONAL COVENANTS OF THE COMPANY AND THE COMMITMENT PARTIES      27  

Section 10.

   TAX TREATMENT      28  

Section 11.

   CONDITIONS TO THE OBLIGATIONS OF THE COMMITMENT PARTIES      28  

Section 12.

   CONDITIONS TO THE OBLIGATIONS OF THE COMPANY      29  

Section 13.

   SURVIVAL OF REPRESENTATIONS AND WARRANTIES      30  

Section 14.

   TERMINATION      31  

Section 15.

   INDEMNIFICATION OBLIGATIONS      36  

Section 16.

   NOTICES      39  

Section 17.

   SURVIVAL      40  

Section 18.

   ASSIGNMENT; THIRD PARTY BENEFICIARIES      40  

Section 19.

   COMPLETE AGREEMENT      40  

Section 20.

   GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM; WAIVER OF
TRIAL BY JURY      40  

Section 21.

   COUNTERPARTS      40  

Section 22.

   ACTION BY, OR CONSENT OR APPROVAL OF, THE COMMITMENT PARTIES      41  

Section 23.

   AMENDMENTS AND WAIVERS      41  

Section 24.

   SPECIFIC PERFORMANCE      41  

Section 25.

   RULES OF CONSTRUCTION      41  

 

i

--------------------------------------------------------------------------------

INDEX OF DEFINED TERMS

 

Term    Section

Affiliate

   3

Affiliate Agreement

   5(q)

Agreement

   Preamble

Antitrust Laws

   7(g)

Backstop Cap

   Recitals

Backstop Commitment

   2(a)(i)

Backstop Commitment Percentage

   Recitals

Backstop Commitment Premium

   Recitals

Backstop Party

   Preamble

Backstop Securities

   1(g)(iii)

Bankruptcy Code

   Recitals

Bankruptcy Court

   Recitals

BCA Approval Order

   14(c)(xvi)

Business Day

   1(d)

Chapter 11 Cases

   Recitals

Commitment Party

   Preamble

Commitment Party Securities

   6(d)

Commitments

   2(a)(ii)

Company

   Preamble

Company Disclosure Letter

   5

Confirmation Order

   Recitals

Control

   3

Davis Polk

   2(e)

Debtors

   Recitals

Defaulting Commitment Party

   4

Eligible Claims

   1(a)

Eligible Equity Holder

   1(a)

Eligible Equity Holder Initial Principal Amount

   Recitals

Eligible Holder

   1(a)

Eligible Noteholder

   1(a)

Eligible Noteholder Initial Principal Amount

   Recitals

Environmental Law

   5(n)

Subscription Agent Account

   2(c)

Financial Statements

   5(i)

Funding Amount

   1(g)(iii)

Funding Notice

   1(g)

GAAP

   5(f)

Governmental Entity

   5(l)

Hazardous Materials

   5(n)

HSR Act

   7(g)

Indemnified Claim

   15(b)

Indemnifying Parties

   15(a)

Indemnified Person

   15(a)

Indenture

   Recitals

 

ii

--------------------------------------------------------------------------------

Term    Section

Intellectual Property Rights

   5(p)(i)

Issuer

   Recitals

Legend

   7(e)

Losses

   15(a)

Management Commitment Party

   Preamble

Management Commitment Percentage

   14(e)

Management Commitment Premium

   Recitals

Management Commitment Securities

   Recitals

Management Funding Amount

   2(c)

Management Funding Deadline

   2(c)

Management Funding Notice

   2(c)

Material Adverse Effect

   5(f)

Material Contract

   5(y)

Notes Claim

   Recitals

Outside Date

   14(a)(ii)

Parties

   Preamble

Party

   Preamble

Person

   5(l)

Permitted Transferee

   3

Petition Date

   Recitals

Plan

   Recitals

Plan Effective Date

   Recitals

Reference Date

   5(h)(ii)

Related Fund

   3

Required Commitment Parties

   Recitals

Rights Exercise Period

   Recitals

Rights Offering Procedures

   1

Rights Offering Subscription Form

   1(d)(1)

Rights Offering Securities

   Recitals

RSA

   Recitals

Securities Act

   6(d)

Special Voting Stock

   Recitals

Subscription Agent

   1(d)(1)

Subscription Commencement Date

   Recitals

Subscription Instruction Deadline

   1(d)

Subscription Rights

   1(a)

Taxes

   5(u)(v)

Termination Date

   14(d)

Transaction Expenses

   2(e)

Unsubscribed Securities

   Recitals

 

iii

--------------------------------------------------------------------------------

BACKSTOP COMMITMENT AGREEMENT

This BACKSTOP COMMITMENT AGREEMENT (including exhibits and schedules attached
hereto and incorporated herein, this “Agreement”), dated as of February 28, 2020
is made by and among Pioneer Energy Services Corp., a Texas corporation (the
“Company”) and the ultimate parent of each of the other Debtors (as defined
below), on behalf of itself and the other Debtors, on the one hand, and the
Management Commitment Parties set forth on Schedule 1 (each, a “Management
Commitment Party”) and the Backstop Parties set forth on Schedule 2 hereto
(each, a “Backstop Party” and, collectively with the Management Commitment
Parties, the “Commitment Parties”), on the other hand. The Company and each
Commitment Party is referred to herein, individually, as a “Party” and,
collectively, as the “Parties”. Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Plan (as defined below).

WHEREAS, the Debtors, the Commitment Parties and certain of the Debtors’ other
creditors and interest holders have entered into a Restructuring Support
Agreement, dated as of February 28, 2020 (such agreement, as may be amended,
restated, supplemented or otherwise modified from time to time, including all
the exhibits thereto, the “RSA”), which provides for the restructuring of the
Company’s capital structure and financial obligations pursuant to a
“prepackaged” plan of reorganization (as it may be amended, modified or
supplemented from time to time as provided in the RSA, the “Plan”). The Company
and certain of its subsidiaries as set forth on Schedule 3 (collectively, the
“Debtors”) will file voluntary petitions for relief (the “Chapter 11 Cases”)
under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101, et
seq. (the “Bankruptcy Code”), in the United States Bankruptcy Court for the
Southern District of Texas (Houston Division) (the “Bankruptcy Court”) (the date
of such filings being referred to herein as the “Petition Date”) and will seek
confirmation of the Plan;

WHEREAS, subject to the Bankruptcy Court’s entry of an order confirming the Plan
(the “Confirmation Order”), consummation of the Plan, and the other conditions
specified in Section 11 and Section 12 hereof, prior to or on the effective date
of the Plan (the “Plan Effective Date”), Company, as reorganized pursuant to and
under the Plan, or any successor or assign thereto, by merger, amalgamation,
consolidation, or otherwise, on or after the Plan Effective Date (the “Issuer”)
will offer and sell, pursuant to this Agreement and the other Rights Offering
Documents (as defined in the RSA), (x) $125,000,000 aggregate principal amount
(for the avoidance of doubt, excluding $9,584,000 aggregate principal amount of
Convertible Bonds issued as the Backstop Commitment Premium and the Management
Commitment Premium (each as defined below)) of the Convertible Bonds (as defined
in Exhibit A to the Term Sheet (as defined in the RSA)) to be issued pursuant to
the New Convertible Bond Indenture (as defined in the RSA), and (y) 9,375,000
shares of special voting stock (the “Special Voting Stock”) (for the avoidance
of doubt, excluding 718,800 shares of Special Voting Stock issued in connection
with the Backstop Commitment Premium and the Management Commitment Premium),
which shall be stapled to the Convertible Bonds such that at all times each
holder of Convertible Bonds shall also hold 75 shares of Special Voting Stock
per $1,000 principal amount of Convertible Bonds;

--------------------------------------------------------------------------------

WHEREAS, (1) $1,795,000 aggregate principal amount of Convertible Bonds and
134,625 shares of Special Voting Stock (collectively, the “Management Commitment
Securities”) will be sold to the Management Commitment Parties pursuant to this
Agreement in accordance with their respective commitments set forth on Schedule
1, and (2) $123,205,000 aggregate principal amount of Convertible Bonds and
9,240,375 shares of Special Voting Stock (collectively, the “Rights Offering
Securities”) will be offered pro rata to (A) all holders of claims under the
Indenture, dated March 18, 2014 (as may be amended, supplemented, or otherwise
modified from time to time, the “Indenture”, and each claim under such
agreement, a “Notes Claim”), and may be subscribed for by all Eligible
Noteholders (as defined below) of Eligible Claims (as defined below) for an
aggregate purchase price of $116,121,000 (the “Eligible Noteholder Initial
Principal Amount”) in cash and (B) all holders of Existing Equity Interests (as
defined in the Term Sheet) of the Company, and may be subscribed for by all
Eligible Equity Holders (as defined below) for an aggregate purchase price of
$7,084,000 (the “Eligible Equity Holder Initial Principal Amount”) in cash, in
each case of (A) and (B), during the period (the “Rights Exercise Period”)
beginning on the date the Rights Offering (as defined in the Term Sheet) is
commenced (the “Subscription Commencement Date”) and ending on the Subscription
Instruction Deadline (as defined below) pursuant to the Rights Offering;

WHEREAS, in order to facilitate the Plan and the Rights Offering, pursuant to
this Agreement, and subject to the terms, conditions and limitations set forth
herein, (A) the Management Commitment Parties, severally and not jointly, have
agreed to purchase from the Issuer, on the Plan Effective Date, the Management
Commitment Securities for a purchase price of $1,795,000 and (B) each Backstop
Party, severally and not jointly, has agreed to purchase from the Issuer, on the
Plan Effective Date, (i) all Rights Offering Securities allocated to such
Backstop Party based on its ownership of Eligible Claims (as defined below),
subject to the Backstop Cap (as defined below), and (ii) such Backstop Party’s
percentage (its “Backstop Commitment Percentage”), as set forth on Schedule 2
opposite such Backstop Party’s name, of a number of the Rights Offering
Securities (the “Unsubscribed Securities”) equal to (a) the difference between
$123,205,000 and the aggregate cash consideration to be paid for Rights Offering
Securities duly purchased in the Rights Offering in accordance with the Rights
Offering Documents (other than any such Rights Offering Securities purchased by
any Backstop Parties in the Rights Offering), divided by (b) $1,000; provided,
that in no event shall a Backstop Party be required to purchase Rights Offering
Securities (whether exercised in the Rights Offering or any Unsubscribed
Securities purchased pursuant to this Agreement) in an amount in excess of such
Backstop Party’s Backstop Commitment Percentage multiplied by $118,013,000 (such
Backstop Party’s “Backstop Cap”) pursuant to this Agreement;

WHEREAS, as consideration for their respective Commitments (as defined below),
the Backstop Parties will receive, upon the earlier of the Plan Effective Date
and three (3) Business Days after the termination of this Agreement under the
circumstances set forth in Section 14(e), a nonrefundable commitment premium of
$9,440,000 (the “Backstop Commitment Premium”), payable (i) in $9,440,000
principal amount of Convertible Bonds issued at par and 708,000 shares of
Special Voting Stock, in the case of such payment on the Plan Effective Date, or
(ii) in cash, in the case of an earlier

 

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termination of this Agreement under the circumstances set forth in
Section 14(e); and the Management Commitment Parties will receive, upon the
earlier of the Plan Effective Date and three (3) Business Days after the
termination of this Agreement under the circumstances set forth in
Section 14(e), a nonrefundable commitment premium of $144,000 (the “Management
Commitment Premium”), payable (i) in $144,000 principal amount of Convertible
Bonds issued at par and 10,800 shares of Special Voting Stock, in the case of
such payment on the Plan Effective Date, or (ii) in cash, in the case of an
earlier termination of this Agreement under the circumstances set forth in
Section 14(e); and

WHEREAS, for purposes of this Agreement, “Required Commitment Parties” shall
mean those Commitment Parties whose allocated amount of the Backstop Cap and
Management Commitments (as defined below) collectively is more than 66.67% of
the sum of the aggregate Backstop Cap and aggregate Management Commitments held
by all of the Commitment Parties (excluding any Defaulting Commitment Parties
(as defined below)).

NOW, THEREFORE, in consideration of the foregoing, and the representations,
warranties and covenants set forth herein, and other good and valuable
consideration, the Company and the Commitment Parties agree as follows:

Section 1. THE RIGHTS OFFERING. The Rights Offering will be conducted in
accordance with the Rights Offering procedures to be consistent with the
provisions of this Agreement or otherwise acceptable to the Required Commitment
Parties and the Company (the “Rights Offering Procedures”) and as follows:

(a) Pursuant to the RSA and the Plan, each holder of a Notes Claim that is
either (i) an “accredited investor” as defined in Rule 501(a) under the
Securities Act (as defined below) or (ii) a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act and makes certain other customary
representations and warranties (each such holder, an “Eligible Noteholder”)
during the Rights Exercise Period will receive the rights (the “Subscription
Rights”) with respect to the Notes Claims held by such Eligible Holder as of
such time (such claims being “Eligible Claims”) to subscribe for its pro rata
share (measured as the amount of Eligible Claims held by such Eligible
Noteholder (for the avoidance of doubt, after taking into account transfers of
such Eligible Claims after the Subscription Commencement Date) as compared to
the aggregate amount of Notes Claims held by all holders of Notes Claims) of the
Eligible Noteholder Initial Principal Amount of Rights Offering Securities.
Pursuant to the RSA and the Plan, each holder of Existing Equity Interests (as
defined in the Term Sheet) that is either (i) an “accredited investor” as
defined in Rule 501(a) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act and makes
certain other customary representations and warranties (each such holder, an
“Eligible Equity Holder”, and together with an Eligible Noteholder, “Eligible
Holders”) during the Rights Exercise Period will receive Subscription Rights to
subscribe for its pro rata share (measured as the number of shares represented
by the Existing Equity Interests held by such Eligible Equity Holder (for the
avoidance of doubt, after taking into account transfers of such Existing Equity
Interests after the Subscription Commencement Date) as compared to the aggregate
number of shares represented by the Existing Equity Interests held by all
holders of Existing Equity Interests) of the Eligible Equity Holder Initial
Principal Amount of Rights Offering Securities.

 

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(b) Subject to the terms and conditions of this Agreement, the Company hereby
undertakes to cause the Issuer to offer Rights Offering Securities for
subscription by Eligible Holders of Eligible Claims pursuant to the RSA and the
Plan as set forth in this Agreement.

(c) The Company will cause the Issuer to issue Subscription Rights to purchase
the Rights Offering Securities. Each Eligible Noteholder holding Eligible Claims
during the Rights Exercise Period will receive a Subscription Right to subscribe
for its pro rata share of the Eligible Noteholder Initial Principal Amount of
Rights Offering Securities. Each Eligible Equity Holder holding Existing Equity
Interests during the Rights Exercise Period will receive a Subscription Right to
subscribe for its pro rata share of the Eligible Equity Holder Initial Principal
Amount of Rights Offering Securities.

(d) (1) Following the Petition Date, the Company will provide, or cause to be
provided, to each Eligible Holder of Eligible Claims or Existing Equity
Interests a subscription form (the “Rights Offering Subscription Form”), whereby
each Eligible Holder of Eligible Claims or Existing Equity Interests may
exercise its Subscription Rights in whole or in part, provided that such
Eligible Holder of Eligible Claims or Existing Equity Interests (i) timely and
properly executes and delivers its Rights Offering Subscription Form (with
accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable), and for
transferees only, a transfer notice included as an exhibit to the Rights
Offering Subscription Form, to the subscription agent for the Rights Offering
selected by the Company (the “Subscription Agent”) in advance of the
Subscription Instruction Deadline and (ii) delivers the securities underlying
its Eligible Claims or Existing Equity Interests through The Depository Trust
Company Automated Tender Offer Program in advance of the Subscription
Instruction Deadline and (A) if such Eligible Holder is not a Backstop Party,
the aggregate purchase price of the Rights Offering Securities elected to be
purchased by the Eligible Holder of Eligible Claims shall be paid in accordance
with the Rights Offering Procedures or (B) if such Eligible Holder is a Backstop
Party, such Backstop Party pays the aggregate purchase price of its Rights
Offering Securities in accordance with Section 1(g).

(2) In advance of the Subscription Instruction Deadline, each Backstop Party
shall timely and properly exercise its rights to purchase its allocated portion
of the Rights Offering Securities (subject to its Backstop Cap), pursuant to the
procedures set forth in the preceding clause (1) and the Rights Offering
Procedures, subject to payment in accordance with Section 1(g). For the
avoidance of doubt, each Backstop Party shall fully exercise all Subscription
Rights allotted to it for the purchase of the Rights Offering Securities,
subject to its Backstop Cap.

 

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(3) For purposes of this Agreement, the “Subscription Instruction Deadline”
means 5:00 p.m. New York City time on such date that is specified in the Rights
Offering Procedures or such other date as the Company, subject to the approval
of the Required Commitment Parties, may specify in a notice provided to the
Eligible Holders of Eligible Claims before 9:00 a.m. New York City time on the
Business Day before the then-effective Subscription Instruction Deadline. For
purposes of this Agreement, “Business Day” means any day of the year on which
national banking institutions in New York City are open to the public for
conducting business and are not required or authorized to close.

(e) The Company will cause the Issuer to issue the Rights Offering Securities to
the Eligible Holders of Eligible Claims or Existing Equity Interests with
respect to which Subscription Rights were validly exercised by such Eligible
Holders of Eligible Claims or Existing Equity Interests upon the Plan Effective
Date. The portion of Rights Offering Securities issued to an Eligible Holder who
elects to acquire such Rights Offering Securities shall be rounded down to the
nearest security.

(f) If the Subscription Agent for any reason does not receive from an Eligible
Holder of Eligible Claims or Existing Equity Interests each of (i) a timely and
duly completed Rights Offering Subscription Form, (ii) timely tender of the
securities underlying its Eligible Claims or Existing Equity Interests and
(iii) timely payment for the Rights Offering Securities being purchased by such
Eligible Holder of Eligible Claims or Existing Equity Interests, the Rights
Offering Procedures shall provide that, unless otherwise approved by the Company
and the Required Commitment Parties, such Eligible Holder of Eligible Claims or
Existing Equity Interests shall be deemed to have relinquished and waived its
right to participate in the Rights Offering.

(g) No later than five (5) Business Days following the Subscription Instruction
Deadline, the Company hereby agrees and undertakes to deliver to each Backstop
Party by email delivery a written notice (the “Funding Notice”) of (i) the
number of Rights Offering Securities that such Backstop Party has subscribed to
purchase pursuant to such Backstop Party’s Rights Offering Subscription Form, if
any, and the aggregate purchase price therefor; (ii) the aggregate number of
Unsubscribed Securities, if any, and the aggregate purchase price; (iii) the
number of Unsubscribed Securities to be issued and sold by the Issuer to such
Backstop Party (based upon each Backstop Party’s Backstop Commitment Percentage)
and the aggregate purchase price therefor (together with the amounts referenced
in (i), such Backstop Party’s “Funding Amount”, and such number of Unsubscribed
Securities, the “Backstop Securities”); (iv) wire instructions for a segregated
bank account of the Subscription Agent to which such Backstop Party shall
deliver an amount equal to its Funding Amount; and (v) the estimated deadline
for delivery of the Funding Amount, which shall be the Plan Effective Date for
each Backstop Party (the “Backstop Funding Deadline”). No later than the
Backstop Funding Deadline, each Backstop Party shall deliver and pay its
applicable Funding Amount by wire transfer in immediately available funds in
U.S. dollars to the segregated bank account of the Subscription Agent designated
by the Subscription Agent in the Funding Notice, or make other arrangements that
are acceptable to the applicable Backstop Party and the Company. If this
Agreement is terminated pursuant to Section 14 after such delivery, such funds
shall be released, without any interest accrued thereon, promptly following such
termination.

 

5

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Section 2. THE COMMITMENTS.

(a) On the basis of the representations and warranties contained herein, but
subject to the conditions set forth in Section 11, each of the Commitment
Parties, severally and not jointly, agrees to:

(i) in the case of each Backstop Party, subscribe for, in accordance with
Section 1(d), and purchase, in accordance with Section 1(g), the Rights Offering
Securities and Backstop Securities allocated to such Backstop Party (the
“Backstop Commitments”); and

(ii) in the case of each Management Commitment Party, purchase, in accordance
with Section 2(c), at the aggregate purchase price therefor, the Management
Commitment Securities allocated to such Management Commitment Party (the
“Management Commitments”, and together with the Backstop Commitments, the
“Commitments”).

(b) Each Backstop Party’s Backstop Commitment Percentage and Backstop Cap are
set forth on Schedule 2 opposite such Backstop Party’s name.

(c) No later than five (5) Business Days following the Subscription Instruction
Deadline, the Company hereby agrees and undertakes to deliver to each Management
Commitment Party by email delivery a written notice (the “Management Funding
Notice”) of (i) the aggregate principal amount of Management Commitment
Securities to be issued and sold by the Issuer to such Management Commitment
Party, as set forth on Schedule 1 opposite such Management Commitment Party’s
name), and the aggregate purchase price therefor (such Management Commitment
Party’s “Management Funding Amount”); (ii) wire instructions for a segregated
bank account of the Subscription Agent designated by the Subscription Agent (the
“Subscription Agent Account”) in the Management Funding Notice to which such
Management Commitment Party shall deliver an amount equal to its Management
Funding Amount; and (iii) the estimated deadline for delivery of the Management
Funding Amount, which shall be no earlier than five (5) Business Days prior to,
and no later than, three (3) Business Days before the expected Plan Effective
Date (the “Management Funding Deadline”). The Company shall cause an additional
notice of the Management Funding Deadline to be provided after the Confirmation
Order has been entered by the Bankruptcy Court; provided that the Management
Funding Deadline shall be a minimum of five (5) Business Days after date of such
notice. Each Management Commitment Party shall deliver and pay its applicable
Management Funding Amount by wire transfer in immediately available funds in
U.S. dollars into the Subscription Agent Account. If this Agreement is
terminated pursuant to Section 14 after such delivery, such funds shall be
released, without any interest accrued thereon, promptly following such
termination.

(d) On the basis of the representations and warranties herein contained, as
consideration for the Commitments, and the other undertakings of the Commitment
Parties herein, the Company will cause the Issuer to pay, on the Plan Effective
Date, to (i) the Backstop Parties, in the aggregate, the Backstop Commitment
Premium and (ii) the

 

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Management Commitment Parties, the Management Commitment Premium; which shall be
deemed fully earned by the Backstop Parties or the Management Commitment
Parties, as applicable, upon execution of this Agreement. The Backstop
Commitment Premium shall be payable (i) in $9,440,000 principal amount of
Convertible Bonds issued at par and 708,000 shares of Special Voting Stock, in
the case of such payment on the Plan Effective Date, or (ii) in cash, in the
case of an earlier termination of this Agreement under the circumstances
provided in Section 14(e), and allocated pro rata based on such Backstop Party’s
Backstop Commitment Percentage. The Management Commitment Premium shall be
payable (i) in $144,000 principal amount of Convertible Bonds issued at par and
10,800 shares of Special Voting Stock, in the case of such payment on the Plan
Effective Date, or (ii) in cash, in the case of an earlier termination of this
Agreement under the circumstances provided in Section 14(e), and allocated as
set forth on Schedule 1.

(e) Subject to the entry of the Confirmation Order, which order shall approve
this Section 2(e), on the Plan Effective Date, the Company or the Issuer, as
applicable, will reimburse or pay, as the case may be, the reasonable and
documented out-of-pocket expenses incurred by the Backstop Parties, whether
prior to or after the date hereof (the “Transaction Expenses”), and including,
but not limited to, all reasonable and documented out-of-pocket fees and
expenses of Davis Polk & Wardwell LLP (“Davis Polk”), Haynes and Boone LLP,
Houlihan Lokey, Inc., as counsel, local counsel, and financial advisor,
respectively, to the Backstop Parties, in connection with the transactions and
agreements contemplated hereby, in each case in accordance with the terms of
their applicable engagement letters and/or fee letters with the Company.

(f) On the Plan Effective Date, the Commitment Parties will purchase, and the
Issuer will sell, only such amount of Rights Offering Securities and
Unsubscribed Securities or Management Commitment Securities, as applicable, as
is listed in the Funding Notice or Management Funding Notice, without prejudice
to the rights of the Issuer or the Commitment Parties to seek later an upward or
downward adjustment if the amount of Rights Offering Securities and Unsubscribed
Securities or Management Commitment Securities in such Funding Notice or
Management Funding Notice is inaccurate or there is a Defaulting Commitment
Party.

(g) Delivery of the Rights Offering Securities and Unsubscribed Securities will
be made by the Issuer to the respective Backstop Parties on the Plan Effective
Date upon the receipt by the Subscription Agent of the Funding Amount of each
Backstop Party, upon which time such funds shall be delivered to the Issuer by
wire transfer of immediately available funds to the account specified by the
Issuer to the Commitment Parties at least twenty four (24) hours in advance.

(h) Delivery of the Management Commitment Securities will be made by the Issuer
to the respective Management Commitment Parties on the Plan Effective Date upon
the release of the Management Funding Amount of each Management Commitment Party
by the Subscription Agent, upon which time such funds shall be delivered to the
Issuer by wire transfer of immediately available funds to the account specified
by the Issuer to the Commitment Parties at least twenty four (24) hours in
advance

 

7

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(i) Delivery of the Convertible Bonds and Special Voting Stock in satisfaction
of (i) the Backstop Commitment Premium will be made by the Issuer to the
respective Backstop Parties; and (ii) the Management Commitment Premium will be
made by the Issuer to the respective Management Commitment Parties, in each case
on the Plan Effective Date.

Section 3. TRANSFER OF COMMITMENT. Each Commitment Party’s Commitment shall be
non-transferable without the consent of the Company and the Required Commitment
Parties. Notwithstanding the foregoing, a Backstop Party may assign its
Commitment to (1) any other Backstop Party or (ii) any fund, account or
investment vehicle that is controlled, managed, advised or sub-advised by such
Backstop Party, an Affiliate thereof or the same investment manager, advisor or
subadvisor as the Backstop Party or an Affiliate of such investment manager,
advisor or subadvisor (each, a “Related Fund”, and together with (1), “Permitted
Transferees”), in which case such Permitted Transferee shall agree in writing to
be bound by the obligations of such transferring Backstop Party under this
Agreement and the RSA and shall, as a condition of such transfer, provide the
Company and the non-transferring Backstop Parties with evidence reasonably
satisfactory to them that such transferee is reasonably capable of fulfilling
such obligations. For purposes of this Agreement, (i) “Affiliate” shall mean
with respect to any specified Person, any other Person that, at the time of
determination, directly or indirectly through one or more intermediaries,
Controls (as defined below), is Controlled by or is under common Control with
such specified Person and (ii) “Control” shall mean, as to any Person, the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
The terms “Controlled by,” “Controlled” and “under common Control with” shall
have correlative meanings.

Section 4. COMMITMENT PARTY DEFAULT. Any Backstop Party or Management Commitment
Party that fails to timely fund its Commitment or, in the case of a Backstop
Party, fully exercise all Subscription Rights held by it in the Rights Offering,
(a “Defaulting Commitment Party”) will be liable for its breach and the Company
and the Commitment Parties may enforce all of their respective rights and
remedies hereunder and under applicable law, including the right to seek money
damages (including setoff of any Plan recovery) and/or specific performance upon
the failure to timely fund by the Defaulting Commitment Party. Each of the
non-defaulting Backstop Parties shall have the right, but not the obligation, to
assume its pro rata share of such Defaulting Commitment Party’s Commitment based
on the proportion of its Backstop Commitment to the aggregate amount of Backstop
Commitments of all non-defaulting Backstop Parties assuming such Defaulting
Commitment Party’s Commitment. If a Defaulting Commitment Party does not cure
its failure to fund its Commitment within two (2) days after receiving notice of
such failure from the Company, such Commitment Party shall not be entitled to
any portion of the Backstop Commitment Premium or Management Commitment Premium,
as applicable.

 

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Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in
the disclosure letter delivered to the Backstop Parties on the date hereof (the
“Company Disclosure Letter”), the Company represents and warrants to the
Backstop Parties as set forth below. Except for representations, warranties and
agreements that are expressly limited as to their date, each representation,
warranty and agreement is made as of the date hereof.

(a) Organization and Qualification. Each of the Company and its subsidiaries is
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization and has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as now conducted, in each case except, in the case of the Company’s
subsidiaries, as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (as defined below). Each of the
Company and its subsidiaries is duly qualified or authorized to do business and
is in good standing under the laws of each jurisdiction in which it owns or
leases real property or in which the conduct of its business or the ownership of
its properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing in each non-Texas
jurisdiction would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

(b) Power and Authority.

(i) The Company has the requisite corporate power and authority to enter into,
execute and deliver this Agreement and any other agreements contemplated herein
or in the Plan and, subject to entry of the Confirmation Order and consummation
of the Plan, to perform its obligations hereunder, including to cause the Issuer
to issue the Subscription Rights and the Rights Offering Securities. The Company
has taken all necessary corporate action required for the due authorization,
execution, delivery and performance by it of this Agreement and any other
agreements contemplated herein or in the Plan, and following the entry of the
Confirmation Order will have taken all necessary corporate action required for
the issuance of the Subscription Rights and the Rights Offering Securities.

(ii) The Company has the requisite corporate power and authority to file the
Plan with the Bankruptcy Court and, subject to entry of the Confirmation Order
and consummation of the Plan, to perform its obligations thereunder, and will
have taken all necessary corporate action required for the due authorization,
execution, delivery and performance by it of the Plan.

(c) Execution and Delivery; Enforceability.

(i) This Agreement and the other applicable Definitive Documents (as defined in
the RSA) have been and will be duly and validly executed and delivered by the
Company, and, subject to entry of the Confirmation Order and consummation of the
Plan, constitute or will constitute the valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.

 

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(ii) Upon entry of the Confirmation Order and consummation of the Plan, the Plan
will constitute the valid and binding obligation of the Company, enforceable
against it in accordance with its terms.

(d) Authorized Capital. Upon the Plan Effective Date, the authorized capital of
the Issuer shall be consistent with the terms of the Plan and Disclosure
Statement (as defined below), and the issued and outstanding Rights Offering
Securities of the Issuer shall be consistent with the terms of the Plan and
Disclosure Statement.

(e) Issuance. The distribution of the Subscription Rights and, subject to entry
of the Confirmation Order and consummation of the Plan, the issuance of the
Rights Offering Securities, including the Convertible Bonds subscribed for by
the Backstop Parties in the Rights Offering, the Management Commitment
Securities, the Unsubscribed Securities and the securities issued pursuant to
the Backstop Commitment Premium and the Management Commitment Premium, will have
been duly and validly authorized and, when the Rights Offering Securities are
issued and delivered against payment therefor in the Rights Offering or to the
Backstop Parties hereunder, will be duly and validly issued and outstanding,
fully paid, non-assessable and free and clear of all Taxes (as defined below),
Liens (as defined below), preemptive rights, rights of first refusal,
subscription and similar rights, except as set forth herein.

(f) No Conflict. The distribution of the Subscription Rights, and, subject to
entry of the Confirmation Order and consummation of the Plan, the sale, issuance
and delivery of the Rights Offering Securities upon exercise of the Subscription
Rights, the consummation of the Rights Offering by the Issuer, the sale,
issuance and delivery of the Unsubscribed Securities pursuant to the terms
hereof, and the execution and delivery (or, with respect to the Plan, the filing
with the Bankruptcy Court) by the Company of this Agreement and the Plan and
compliance by it with all of the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby (i) will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under (with or without notice or lapse of
time, or both), or result, except to the extent expressly provided in or
contemplated by the Plan, in the acceleration of, or the creation of any Lien
under, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of their
properties or assets is subject; (ii) will not result in any violation of the
provisions of the organizational documents of the Company or any of its
subsidiaries; and (iii) assuming the accuracy of the Backstop Parties’
representations and warranties in Section 6, will not result in any violation
of, or any termination or material impairment of any rights under, any statute
or any license, authorization, injunction, judgment, order, decree, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties,
except in any such case described in clauses (i) and (iii), as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. “Material Adverse Effect” means any fact, event, change, effect,
development, circumstance, or occurrence that, individually or in the aggregate,
has had or would reasonably be expected to have a material adverse effect on,
and/or material adverse

 

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developments that would reasonably be expected to result in a material adverse
effect with respect to: (i) the business, operations, properties, assets,
prospects or financial condition of the Company and its subsidiaries, in each
case, taken as a whole; or (ii) the ability of the Company or any of its
subsidiaries, in each case taken as a whole, to perform their obligations under
this Agreement, the Plan and the RSA; provided, that, for the purposes of clause
(i), none of the following, either alone or in combination, will constitute a
Material Adverse Effect: (A) any changes in applicable Laws (as defined in the
RSA) or United States generally accepted accounting principles (“GAAP”); (B) any
change resulting from the filing or pendency of or emergence from the Chapter 11
Cases, actions taken in connection with the Chapter 11 Cases, or from any action
approved by the Bankruptcy Court; (C) any change resulting from the public
announcement of the Chapter 11 Cases or the entry into this Agreement,
compliance with terms of this Agreement or the consummation of the transactions
contemplated hereby; (D) any change resulting from the taking of any action
taken by the Company and its subsidiaries after the date hereof with the prior
consent of the Required Commitment Parties; (E) any effects or changes arising
from or related to the breach of this Agreement by any Backstop Parties; or
(F) any fact, event, change, effect, development, circumstance, or occurrence
publicly disclosed by the Company in any filing with the SEC prior to the date
hereof.

(g) Consents and Approvals. Assuming the accuracy of the Backstop Parties’
representations and warranties in Section 6, no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties is required for the
distribution of the Subscription Rights, the sale, issuance and delivery of the
Rights Offering Securities upon exercise of the Subscription Rights, the
issuance, sale and delivery of Unsubscribed Securities to the Backstop Parties
and Management Commitment Securities to the Management Commitment Parties
hereunder, the consummation of the Rights Offering by the Issuer and the
execution and delivery by the Company of this Agreement or the Plan and
performance of and compliance by them with all of the provisions hereof and
thereof (including payment of the Backstop Commitment Premium and the Management
Commitment Premium and Transaction Expenses of the Backstop Parties as required
in Section 2(e) herein) and the consummation of the transactions contemplated
hereby and thereby, except (i) the entry of the Confirmation Order,
(ii) filings, if any, pursuant to the HSR Act (as defined below) and the
expiration or termination of all applicable waiting periods thereunder or any
applicable notification, authorization, approval or consent under any other
Antitrust Laws (as defined below) in connection with the transactions
contemplated by this Agreement, (iii) the filing of any other corporate
documents in connection with the transactions contemplated by this Agreement
with applicable state filing agencies, (iv) such consents, approvals,
authorizations, registrations or qualifications as may be required under foreign
securities laws, federal securities laws or state securities or “blue sky” Laws
in connection with the offer and sale of the Rights Offering Securities,
Unsubscribed Securities, the Backstop Commitment Premium and the Management
Commitment Premium and (v) such consents, approvals, authorizations,
registrations or qualifications the absence of which would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

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(h) No Undisclosed Material Liabilities. There are no debts, liabilities or
obligations of the Company or any of its subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined or determinable, and there is
no existing condition, situation or set of circumstances that would reasonably
be expected to result in such a liability or obligation other than
(i) liabilities or obligations disclosed and provided for in the Financial
Statements (as defined below) and (ii) liabilities or obligations incurred in
the ordinary course of business consistent with past practices since the date of
the most recent balance sheet presented in the Financial Statements (as defined
below) (the “Reference Date”).

(i) Financial Statements. The audited consolidated balance sheets of the Company
as at December 31, 2018 and the related consolidated statements of operations
and of cash flows for the fiscal year then ended, accompanied by a report
thereon by KPMG LLP, in each case included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2018 filed with the SEC, and the
unaudited consolidated balance sheets of the Company as at September 30, 2019
and the related consolidated statements of operations and of cash flows for the
fiscal quarter then ended, in each case included in the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2019 (collectively, the
“Financial Statements”), present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of the
dates indicated and the results of their operations and their cash flows for the
periods specified. The Financial Statements have been prepared in conformity
with GAAP throughout the periods covered thereby.

(j) No Violation. The Company and each of its subsidiaries are not, except as a
result of the Chapter 11 Cases, in violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except for any such default or violation that would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.

(k) Legal Proceedings. Other than the Chapter 11 Cases and any adversary
proceedings or contested motions commenced in connection therewith, and other
than as set forth in Section 5(k) of the Company Disclosure Letter, there are no
legal, governmental or regulatory investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened, in each case, to which
the Company and its subsidiaries is or may be a party or to which any property
of the Company and its subsidiaries is or may be the subject that, individually
or in the aggregate would reasonably be expected to result in a Material Adverse
Effect. For the purposes of this Agreement, “knowledge of the Company” shall
mean the actual knowledge after reasonable inquiry of the chief executive
officer, chief financial officer, or general counsel of the Company.

(l) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party
to any contract, agreement or understanding with any other individual, firm,
corporation (including any non-profit corporation), partnership, limited
liability company, joint venture, association, trust, Governmental Entity or
other entity or organization (each a “Person”) (other than this Agreement) that
would give rise to a valid claim against it or

 

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the Commitment Parties for a brokerage commission, finder’s fee or like payment
(in the case of the Company, excluding, for the avoidance of doubt, any success
or financing fee) in connection with the transactions contemplated hereunder.
For purposes of this Agreement, “Governmental Entity” means any U.S. or
non-U.S. international, regional, federal, state, municipal or local
governmental, judicial, administrative, legislative or regulatory authority,
entity, instrumentality, agency, department, commission, court, or tribunal of
competent jurisdiction (including any branch, department or official thereof);
excluding, however, any Person engaged in the oil and gas extraction or services
business that is owned in whole or in part by any such U.S. or non-U.S.
international, regional, federal, state, municipal or local governmental,
judicial, administrative, legislative or regulatory authority, entity,
instrumentality, agency, department, commission, court, or tribunal of competent
jurisdiction (including any branch, department or official thereof).

(m) Absence of Certain Changes. As of the date hereof, since the Reference Date,
no change, event, circumstance, effect, development, occurrence or state of
facts has occurred or exists that has or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

(n) Environmental. Except as to matters that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, (i) no
written notice, claim, demand, request for information, order, complaint or
penalty has been received by the Company or any of its subsidiaries, and there
are no judicial, administrative or other actions, suits or proceedings pending
or, to the knowledge of the Company, threatened which allege a violation of or
liability under any Environmental Laws, in each case relating to the Company or
any of its subsidiaries, (ii) the Company and each of its subsidiaries is in
compliance with Environmental Law and has obtained, maintains in full force and
effect, and is in compliance with all permits, licenses and other approvals
currently required under any Environmental Law for conduct of its business as
presently conducted by the Company and each of its subsidiaries and (iii) no
Hazardous Materials have been released by the Company or any of its subsidiaries
at any location in a manner that would reasonably be expected to give rise to
any cost, liability or obligation of the Company or any of its subsidiaries
under any Environmental Laws. For purposes of this Agreement, “Environmental
Law” means all applicable foreign, federal, state and local conventions,
treaties, protocols, laws, statutes, rules, regulations, ordinances, orders and
decrees relating in any manner to contamination, pollution or protection of the
environment or exposure to hazardous or toxic substances, materials or wastes,
and “Hazardous Materials” means all materials, substances, chemicals or wastes
(or combination thereof) that are listed, defined, designated, regulated or
classified as hazardous, toxic, radioactive, dangerous, a pollutant, a
contaminant, petroleum, oil or words of similar meaning or effect under any
Environmental Law.

(o) Insurance. The Company and each of its subsidiaries, as applicable, has
insured its respective properties and assets against such risks and in such
amounts as are customary for companies engaged in similar businesses. All
premiums due and payable in respect of material insurance policies maintained by
the Company and its subsidiaries have been paid. As of the date hereof, to the
knowledge of the Company and its subsidiaries, neither the Company nor any of
its subsidiaries has received notice from any insurer or agent of such insurer
with respect to any material insurance policies of the Company or any of its
subsidiaries of cancellation or termination of such policies, other than such
notices which are received in the ordinary course of business or for policies
that have expired in accordance with their terms.

 

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(p) Intellectual Property. (i) The Company and its subsidiaries own, or possess
the right to use, all of the patents, patent rights, trademarks, service marks,
trade names, copyrights, licenses, domain names, and any and all applications or
registrations for any of the foregoing (collectively, “Intellectual Property
Rights”) that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other person, (ii) to the
knowledge of the Company, neither the Company and its subsidiaries nor any
Intellectual Property Right, proprietary right, product, process, method,
substance, part, or other material now employed, sold or offered by the Company
and its subsidiaries, is infringing upon, misappropriating or otherwise
violating any valid Intellectual Property Rights of any person and (iii) no
claim or litigation regarding any of the foregoing is pending or, to the
knowledge of the Company, threatened.

(q) No Undisclosed Relationship. Except for employment relationships and
compensation, benefits and travel advances in the ordinary course of business or
as disclosed in Section 5(q) of the Company Disclosure Letter, neither the
Company nor any of its subsidiaries is a party to any agreement with, or
involving the making of any payment or transfer of assets to any stockholder
beneficially owning greater than 5% of the Company or any officer or director of
the Company or any of its subsidiaries (each, an “Affiliate Agreement”).

(r) Money Laundering Laws. The operations of the Company and its subsidiaries
are, and have been at all times, conducted in compliance in all material
respects with applicable financial recordkeeping and reporting requirements of
the U.S. Currency and Foreign Transactions Reporting Act of 1970, the money
laundering statutes of all jurisdictions in which the Company and its
subsidiaries operate (and the rules and regulations promulgated thereunder) and
any related or similar laws and there has been no material legal proceeding by
or before any Governmental Entity or any arbitrator involving the Company or any
of its subsidiaries with respect to such laws is pending or, to the knowledge of
the Company, threatened.

(s) Sanctions Laws. Neither the Company and its subsidiaries nor, to the
knowledge of the Company, any of its respective directors, officers, employees
or other Persons acting on its behalf with express authority to so act are
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department. The Company and its subsidiaries
will not directly or indirectly use the proceeds of the Rights Offering, or
lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other Person, for the purpose of financing the
activities of any Person that, to the knowledge of the Company, is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department.

 

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(t) Foreign Corrupt Practices Act. There have been no actual or alleged material
violations of the Foreign Corrupt Practices Act of 1977, as amended, nor any
applicable anti-corruption or anti-bribery laws in any jurisdiction other than
the United States, by the Company and its subsidiaries or any of their
respective officers, directors, agents, distributors, employees or any other
Person acting on behalf of the Company or any of its subsidiaries.

(u) Taxes. Except in each case as to matters that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,

(i) the Company, and each of its subsidiaries, has paid, or caused to be paid,
all Taxes (as defined below) imposed on it or its assets, business, or
properties or, to the extent such Taxes are not yet due, has made adequate
provision (to the extent required in accordance with generally accepted
accounting principles) for the payment of such Taxes;

(ii) the Company and each of its subsidiaries has timely filed, or caused to be
filed, all income and other returns, information statements, or reports required
to be filed with any governmental authority with respect to Taxes;

(iii) as of the date hereof, with respect to the Company and its subsidiaries,
other than in connection with (A) the Chapter 11 Cases, or (B) Taxes being
contested in good faith by appropriate proceedings for which adequate provisions
has been made (to the extent required in accordance with generally accepted
accounting principles): (I) there is no outstanding audit, assessment, dispute
or claim concerning any Tax liability of the Company or its subsidiaries,
(II) neither the Company nor its subsidiaries have received from any
governmental authority any written notice regarding any contemplated or pending
audit, examination or other administrative proceeding or court proceeding
concerning any material amount of Taxes imposed thereon, and (III) there are no
Liens for Taxes on any asset of the Company or its subsidiaries (other than
Liens for Taxes not yet delinquent);

(iv) none of the Company or any of its subsidiaries has been either a
“distributing corporation” or a “controlled corporation” in a distribution
occurring during the last five years in which the parties to such distribution
treated the distribution as one to which Section 355 of the Internal Revenue
Code of 1986, as amended, is applicable; and

(v) none of the Company and any of its subsidiaries has received a written claim
to pay any liability for Taxes of any Person (other than the Company or its
subsidiaries) arising from the application of Treasury Regulation
Section 1.1502-6 or any analogous provision of state, local or foreign law, by
contract or as a transferee or successor;

 

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For purposes of this Agreement, “Taxes” shall mean all income, gross receipts,
license, payroll, employment, excise, severance, occupation, premium, windfall
profits, customs, duties, capital stock, franchise, profits, withholding,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, and
estimated taxes levied by a governmental authority, including any interest and
penalties thereon, and “Lien” shall mean any lien (statutory, judicial or
other), adverse claim, charge, option, right of first refusal, servitude,
security interest, mortgage, pledge, hypothecation, assignment, deposit
arrangement, deed of trust, easement, right of way, encumbrance, charge,
restriction on transfer, conditional sale or other title retention agreement,
defect in title, other security interest or preferential arrangement in the
nature of a security interest of any kind or nature whatsoever, any financing
lease having substantially the same economic effect as any of the foregoing or
other restrictions of a similar kind.

(v) Title to Property.

(i) Personal Property. Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (A) the Company and
its subsidiaries have good title to, free and clear of any and all Liens, or a
valid leasehold interest in, all personal properties, machinery, equipment and
other tangible assets of the business necessary for the conduct of the business
as presently conducted by the Company and its subsidiaries and (B) such
properties (x) are in the possession or control of the Company or its
subsidiaries and (y) are in good and operable condition and repair, reasonable
wear and tear excepted.

(ii) Leased Real Property. The Company and its subsidiaries have complied with
all obligations under all leases to which they are parties that have not been
rejected in the Chapter 11 Cases, except where the failure to comply would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and all such leases are in full force and effect, except leases
in respect of which the failure to be in full force and effect would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The Company and its subsidiaries enjoy peaceful and undisturbed
possession under all such leases, other than leases in respect of which the
failure to enjoy peaceful and undisturbed possession would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

(w) Labor Relations. There is no labor or employment-related legal proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries, by or on behalf of any of their respective employees or
such employees’ labor organization, works council, workers’ committee, union
representatives or any other type of employees’ representatives appointed for
collective bargaining purposes, or by any Governmental Entity, that has had or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

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(x) Licenses and Permits. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all
declarations and filings with, the appropriate Governmental Entities that are
necessary for the ownership or lease of their respective properties and the
conduct of the business as presently conducted by the Company and its
subsidiaries after the Plan Effective Date, in each case, except as would not
have and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as would not have and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, the Company and its subsidiaries (i) have not received notice of
any revocation or modification of any such license, certificate, permit or
authorization or (ii) have no reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary course.

(y) Material Contracts.

(i) All Material Contracts are valid, binding and enforceable by and against the
Company and its subsidiaries, as applicable, except where the failure to be
valid, binding or enforceable would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and no notice to
terminate, in whole or part, any Material Contract has been delivered to the
Company and its subsidiaries except where such termination would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. Other than as a result of the filing of the Chapter 11 proceedings,
neither the Company and its subsidiaries nor, to the knowledge of the Company,
any other party to any Material Contract, is in default or breach under the
terms thereof except, in each case, for such instances of default or breach that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. For purposes of this Agreement, “Material Contract”
means any contract necessary for the operation of the business of the Company
and its subsidiaries after the Plan Effective Date that is a “material contract”
(as such term is defined in Item 601(b)(10) of Regulation S-K or required to be
disclosed on a current report on Form 8-K).

(ii) Except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, neither the Company
nor any of its subsidiaries are a party to any contract, agreement, arrangement
or understanding containing any provision or covenant limiting in any material
respect the ability of the Company or any of its subsidiaries to (1) sell any
products or services of or to any other Person or in any geographic region,
(2) engage in any line of business or (3) compete with or to obtain products or
services from any Person or limiting the ability of any Person to provide
products or services to the Company or any of its subsidiaries.

(z) Exemption from Registration. Assuming the accuracy of the Commitment
Parties’ representations set forth in Section 6 hereof, the issuance of
Commitment Securities (as defined below) under this Agreement (including as part
of the Backstop Commitment Fee and Management Commitment Fee) will be exempt
from the registration and prospectus delivery requirements of the Securities
Act.

 

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(aa) No General Solicitation; Solicitation. None of the Company or any of its
Affiliates or any other Person acting on its or their behalf has solicited
offers for or offered to sell any Convertible Bonds or Special Voting Stock by
means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D promulgated under the Securities Act or
in any manner involving a public offering within the meaning of Section 4(a)(2)
of the Securities Act. None of the Company or any of its Affiliates have any
contract, arrangement, or understanding relating to, and will not, directly or
indirectly, pay any commission or other remuneration to any broker, dealer,
salesperson, agent, or any other person for soliciting votes to accept or reject
the Plan.

(bb) Volcker Rule. Neither the Company nor the Issuer is a “covered fund” as
such term is defined in the final regulations promulgated under Section 13 of
the U.S. Bank Holding Company Act of 1956, as amended, 12 C.F.R. section
248.10(b)(1) (the “Volcker Rule”).

Section 6. REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTIES. Each of the
Commitment Parties severally and not jointly represents and warrants to the
Company as set forth below. Each representation, warranty and agreement is made
as of the date hereof.

(a) Formation. Such Commitment Party that is not an individual has been duly
organized or formed, as applicable, and is validly existing as a corporation or
other entity in good standing under the applicable laws of its jurisdiction of
organization or formation.

(b) Power and Authority. Such Commitment Party has the requisite power and
authority to enter into, execute and deliver this Agreement and to perform its
obligations hereunder and has taken all necessary action required for the due
authorization, execution, delivery and performance by it of this Agreement.

(c) Execution and Delivery. This Agreement has been duly and validly executed
and delivered by such Commitment Party and constitutes its valid and binding
obligation, enforceable against such Commitment Party in accordance with its
terms.

(d) Securities Laws Compliance. The Rights Offering Securities subscribed for by
the Backstop Parties in the Rights Offering, the Management Commitment
Securities subscribed for by the Management Commitment Parties, the Unsubscribed
Securities to be purchased by the Backstop Parties, and any securities issued
pursuant to the Backstop Commitment Premium and the Management Commitment
Premium (collectively, the “Commitment Party Securities”) that have not been
registered under the Securities Act will not be offered for sale, sold or
otherwise transferred by such Commitment Party except pursuant to an effective
registration statement under the Securities Act of 1933 and the rules and
regulations of the SEC thereunder (the “Securities Act”) or in a transaction
exempt from or not subject to registration under the Securities Act and any
applicable state securities laws.

 

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(e) Purchase Intent. Such Commitment Party is acquiring the Commitment Party
Securities for its own account or for the accounts for which it is acting as
investment advisors or manager, and not with a view to distributing or reselling
such Commitment Party Securities or any part thereof. Such Commitment Party
understands that such Commitment Party must bear the economic risk of this
investment indefinitely, unless the Commitment Party Securities are registered
pursuant to the Securities Act and any applicable state securities or “blue sky”
Laws or an exemption from such registration is available, and further
understands that it is not currently contemplated that any Commitment Party
Securities will be registered at the time of issuance.

(f) Investor Status. Such Commitment Party is either (i) an “accredited
investor” as defined in Rule 501(a) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A under the Securities
Act.

(g) Independent Investigation. Such Commitment Party has such knowledge and
experience in financial and business matters such that it is capable of
evaluating the merits and risks of its investment in the applicable Commitment
Party Securities. Such Commitment Party understands and accepts that its
investment in the Commitment Party Securities involves risks. Such Commitment
Party has received such documentation as it has deemed necessary to make an
informed investment decision in connection with its investment in the Commitment
Party Securities, has had adequate time to review such documents prior to making
its decision to invest, has had a full opportunity to ask questions of and
receive answers from the Issuer or any person or persons acting on behalf of the
Issuer concerning the terms and conditions of an investment in the Issuer and
has made an independent decision to invest in the Commitment Party Securities
based upon the foregoing and other information available to it, which it has
deemed adequate for this purpose. With the assistance of each Commitment Party’s
own professional advisors, to the extent that such Commitment Party has deemed
appropriate, such Commitment Party has made its own legal, tax, accounting and
financial evaluation of the merits and risks of an investment in the Commitment
Party Securities. Such Commitment Party understands and is able to bear any
economic risks associated with such investment (including the necessity of
holding such securities for an indefinite period of time). Except for the
representations and warranties expressly set forth in this Agreement or any
other transaction agreement, such Commitment Party has independently evaluated
the merits and risks of its decision to enter into this Agreement and disclaims
reliance on any representations or warranties, either express or implied, by or
on behalf of the Company or the Issuer. Notwithstanding the foregoing or any
other provision of this Agreement, nothing in this Section 6(g) shall constitute
a waiver of claims of fraud.

(h) Consents and Approvals. Assuming the accuracy of the Company’s
representations and warranties in Section 5, no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body having jurisdiction over such Commitment Party or
any of its properties is required for the purchase of the Commitment Party
Securities by the Commitment Parties hereunder and the execution and delivery by
such Commitment Party of this Agreement and performance of and compliance by it
with all of the provisions hereof and thereof (and the consummation of the
transactions contemplated hereby and thereby), except (i) the entry

 

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of the Confirmation Order, (ii) filings, if any, pursuant to the HSR Act and the
expiration or termination of all applicable waiting periods thereunder or any
applicable notification, authorization, approval or consent under any other
Antitrust Laws in connection with the transactions contemplated by this
Agreement, (iii) the filing of any other corporate documents in connection with
the transactions contemplated by this Agreement with applicable state filing
agencies, (iv) such consents, approvals, authorizations, registrations or
qualifications as may be required under foreign securities laws, federal
securities laws or state securities or “blue sky” Laws in connection with the
offer and sale of the Rights Offering Securities, Unsubscribed Securities and
the Backstop Commitment Premium and (v) such consents, approvals,
authorizations, registrations or qualifications the absence of which would not,
individually or in the aggregate, reasonably be expected to result in a material
adverse effect on the ability of such Commitment Party to perform its
obligations under this Agreement.

(i) Sufficiency of Funds. Such Commitment Party will have sufficient immediately
available funds to make and complete the payment of the aggregate purchase price
for its applicable Commitment on the Plan Effective Date or the Management
Funding Deadline, as applicable.

(j) No Brokers Fee. Such Commitment Party is not a party to any contract with
any Person that would give rise to a valid claim against any of the Debtors for
a brokerage commission, finder’s fee or like payment in connection with the
Rights Offering or the sale of the Rights Offering Securities, the Unsubscribed
Securities or the Management Commitment Securities.

Section 7. ADDITIONAL COVENANTS OF THE COMPANY. The Company agrees with the
Commitment Parties as follows:

(a) Plan and Disclosure Statement. The Company shall file, no later than one
(1) calendar day after the Petition Date, the Plan and the Disclosure Statement
(as defined in the RSA), each in form and substance acceptable to the Required
Commitment Parties and the Company, it being understood that the Plan and
Disclosure Statement distributed to creditors on February 28, 2020 are
acceptable to the Required Commitment Parties. The Company will provide advance
initial draft copies of all Definitive Documents (as defined in the RSA) to
counsel to the Backstop Parties at least three (3) Business Days prior to the
date when the Company intends to file the applicable Definitive Documents with
the Bankruptcy Court; provided, that if three (3) Business Days in advance is
not reasonably practicable, such initial draft Definitive Document shall be
provided as soon as reasonably practicable prior to filing, but in no event
later than twenty-four (24) hours in advance of any filing thereof.

(b) Support of the Plan. The Company shall do all things reasonably necessary
and proper to (i) support and consummate the Restructuring Transactions (as
defined in the RSA) in accordance with the RSA, and (ii) prosecute and defend
any appeals relating to the Confirmation Order and the BCA Approval Order (as
defined below) and (iii) comply with each Milestone (as defined in the RSA) set
forth in the RSA. None of the Company or any of its Affiliates have any
contract, arrangement, or understanding relating to, and will not, directly or
indirectly, pay any commission or other remuneration to any broker, dealer,
salesperson, agent, or any other Person for soliciting votes to accept or reject
the Plan.

 

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(c) Rights Offering. Subject to the terms and conditions of this Agreement and
the RSA, the Company shall, and shall cause the Issuer to, effectuate the Rights
Offering in accordance with the Plan and the Rights Offering Procedures.

(d) Form D and Blue Sky. The Company shall cause the Issuer to timely file a
Form D with the SEC with respect to the Commitment Party Securities, to the
extent required under Regulation D of the Securities Act and shall provide, upon
request, a copy thereof to each Commitment Party. The Company shall, or shall
cause the Issuer to, on or before the Plan Effective Date, take such action as
the Company or the Issuer shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify for sale or issuance to the Commitment
Parties, the Commitment Party Securities under applicable securities and “blue
sky” Laws of the states of the United States (or to obtain an exemption from
such qualification) and any applicable foreign jurisdictions, and shall provide
evidence of any such action so taken to the Commitment Parties on or prior to
the Plan Effective Date. The Company shall, or shall cause the Issuer to, timely
make all filings and reports relating to the offer and sale of the Commitment
Party Securities required under applicable securities and “blue sky” Laws of the
states of the United States following the Plan Effective Date. The Company
shall, or shall cause the Issuer to, pay all fees and expenses in connection
with satisfying its obligations under this Section 7(d).

(e) Security Legend. Each certificate evidencing Convertible Bonds and/or
Special Voting Stock issued hereunder, including any Convertible Bonds and/or
shares of Special Voting Stock that may be issued in satisfaction of the
Backstop Commitment Premium or Management Commitment Premium, and each
certificate issued in exchange for or upon the transfer of any such securities,
shall be stamped or otherwise imprinted with a legend (the “Legend”) in
substantially the following form:

“THIS SECURITY [AND THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE] [HAS] NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:

(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED
INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT)
AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH
ACCOUNT, AND

(2) AGREES FOR THE BENEFIT OF [PIONEER ENERGY SERVICES CORP.] (THE “COMPANY”)
THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY
BENEFICIAL INTEREST HEREIN PRIOR TO THE APPLICABLE RESALE RESTRICTION
TERMINATION DATE, EXCEPT:

 

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(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR

(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR

(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR

(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D)
ABOVE, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF
SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE
REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN
COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”

In the event that any such securities are uncertificated, such securities shall
be subject to a restrictive notation substantially similar to the Legend in the
stock ledger or other appropriate records maintained by the Issuer or agent, and
the term “Legend” shall include such restrictive notation. The Issuer shall
remove the Legend (or restrictive notation, as applicable) set forth above from
the certificates evidencing any such securities (or the share register or other
appropriate Issuer records, in the case of uncertified securities), upon
request, at any time after the restrictions described in such Legend cease to be
applicable, including, as applicable, when such securities may be sold under
Rule 144 of the Securities Act without conditions. The Issuer may reasonably
request such opinions, certificates or other evidence that such restrictions no
longer apply as a condition to removing the Legend.

(f) Unsubscribed Securities. The Company, in consultation with counsel for the
Backstop Parties, shall determine the amount of Unsubscribed Securities, if any,
and, in good faith, provide a Funding Notice that accurately reflects the amount
of Unsubscribed Securities as so determined and to provide to the Backstop
Parties a certification by the Subscription Agent of the Unsubscribed Securities
or, if such certification is not available, such written backup to the
determination of the Unsubscribed Securities as the Backstop Parties may
reasonably request.

 

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(g) Approvals. Except as set forth in this Agreement or with the prior written
consent of the Required Commitment Parties, during the period from the date of
this Agreement to the earlier of the Plan Effective Date and the date on which
this Agreement is terminated in accordance with its terms, the Company shall
use, and shall cause its subsidiaries to use, commercially reasonable efforts to
reasonably promptly take all actions and prepare and file all necessary
documentation (including by reasonably cooperating with the Backstop Parties as
to the appropriate time of filing such documentation and its content) and to
effect all applications that are reasonably necessary or advisable in connection
with seeking any governmental approval, exemption or authorization from any
governmental authority, including under any Antitrust Laws, that are reasonably
necessary to consummate and make effective the transactions contemplated by this
Agreement. To the extent permitted by applicable law, the Company and each of
its subsidiaries shall reasonably promptly notify the Backstop Parties (and
furnish to them copies of, if requested) of any communications from any
antitrust or other regulatory authority and shall not participate in any meeting
with any such antitrust or regulatory authority unless they consult with the
Backstop Parties in advance to the extent permitted by applicable law and give
the Backstop Parties a reasonable opportunity to attend and participate thereat.
The Company and each of its subsidiaries shall not take any action that is
intended or would reasonably be expected to materially impede or delay the
ability of the parties hereto to obtain any necessary approvals required for the
transactions contemplated by this Agreement. For purposes of this Agreement,
“Antitrust Laws” means the Hart Scott Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder (the “HSR Act”)
and any similar law enforced by any governmental antitrust entity of any
jurisdiction regarding pre-acquisition notifications for the purpose of
competition reviews of mergers and acquisitions, the Sherman Act, as amended,
the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and
all other applicable laws that are designed or intended to prohibit, restrict or
regulate actions or transactions having the purpose or effect of monopolization
or restraint of trade or lessening of competition through merger or acquisition
or effectuating foreign investment.

(h) Conduct of Business. Before and through the Plan Effective Date, except as
set forth in the Plan, the RSA, herein or with the express written consent of
the Required Commitment Parties, the Company shall, and shall cause its
subsidiaries to, (A) except to the extent inconsistent with the Bankruptcy Code
or the DIP Credit Agreement (as defined in the RSA), operate its business in the
ordinary course of business in a manner consistent with past practices, (B) use
commercially reasonably efforts to preserve intact their material business
organization, (C) use commercially reasonably efforts to keep available the
services of their officers and employees and (D) use commercially reasonably
efforts to preserve their material relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with the
Company or its subsidiaries in connection with its business. Before and through
the Plan Effective Date, except (1) as set forth in Section 7(h) of the Company
Disclosure Letter, (2) with the prior written approval of the Required
Commitment Parties or (3) as expressly provided in the Plan, the RSA or herein,
the Company shall not, and shall cause its subsidiaries not to:

 

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(i) enter into any acquisition, merger with or other change of control of
another business not permitted under the DIP Facility (as defined in the RSA) as
set forth in the DIP-to-Exit Commitment Letter (as defined in the RSA) or the
Term Loan Agreement as in effect on the date hereof, without giving effect to
any amendments or waivers thereto and regardless of whether or not such DIP
Facility is in effect;

(ii) dispose of any material asset not permitted under the DIP Facility as set
forth in the DIP-to-Exit Commitment Letter or the Term Loan Agreement as in
effect on the date hereof, without giving effect to any amendments or waivers
thereto and regardless of whether or not such DIP Facility is in effect;

(iii) [reserved];

(iv) [reserved];

(v) [reserved];

(vi) enter into any agreement for new employee compensation, new deferred
compensation or severance arrangements unless required by contract or for
non-executives in the ordinary course of business, other than as contemplated by
or agreed in connection with the RSA;

(vii) make any material capital expenditure contracted for following the date
hereof in an amount greater than $1 million (for any individual transaction)
that is not expressly contemplated in the business plan included in the
Disclosure Statement or is not permitted under the DIP Facility as set forth in
the DIP-to-Exit Commitment Letter or the Term Loan Agreement as in effect on the
date hereof, without giving effect to any amendments or waivers thereto and
whether or not such DIP Facility or the Term Loan Agreement is in effect;

(viii) enter into any Affiliate Agreements, except as permitted by the DIP
Facility as set forth in the DIP-to-Exit Commitment Letter and the Term Loan
Agreement as in effect on the date hereof, whether or not such DIP Facility is
in effect;

(ix) declare, set aside or pay any dividends or purchase, redeem, or otherwise
acquire, except in connection with the Plan, any securities of its capital
stock, except as permitted by the DIP Facility as set forth in the DIP-to-Exit
Commitment Letter and the Term Loan Agreement as in effect on the date hereof,
without giving effect to any amendments or waivers thereto and whether or not
such DIP Facility is in effect;

(x) issue, deliver, grant, sell, pledge or otherwise encumber any of its capital
stock or any convertible securities into its capital stock or any of its assets,
except as permitted by the DIP Facility as set forth in the DIP-to-Exit
Commitment Letter and the Term Loan Agreement as in effect on the date hereof,
without giving effect to any amendments or waivers thereto and whether or not
such DIP Facility is in effect;

 

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(xi) make, change or rescind any material election relating to Taxes, except any
elections as are consistent with past practice or as otherwise specifically
permitted or required under the Plan, the Rights Offering, or in connection with
the DIP Facility as set forth in the DIP-to-Exit Commitment Letter and the Term
Loan Agreement as in effect on the date hereof, without giving effect to any
amendments or waivers thereto and whether or not such DIP Facility is in effect;

(xii) become a party to, establish, adopt, amend or terminate any collective
bargaining agreement or other agreement with a labor union, works council or
similar organization;

(xiii) amend its or any of its subsidiaries’ articles of incorporation, bylaws
or other similar organizational documents (whether by merger, consolidation or
otherwise), other than as contemplated by this Agreement, the Plan, the RSA or
the other transactions contemplated thereby;

(xiv) make any loans, advances or capital contributions to, or investments in,
any other Person, other than in the ordinary course of business, except as
permitted by the DIP Facility as set forth in the DIP-to-Exit Commitment Letter
and the Term Loan Agreement as in effect on the date hereof, without giving
effect to any amendments or waivers thereto and whether or not such DIP Facility
is in effect;

(xv) settle, or offer or propose to settle, any material litigation,
investigation, arbitration, proceeding or other claim involving or against the
Company or any of its subsidiaries, except as permitted by the DIP Facility as
set forth in the DIP-to-Exit Commitment Letter and the Term Loan Agreement as in
effect on the date hereof, without giving effect to any amendments or waivers
thereto and whether or not such DIP Facility is in effect; or

(xvi) agree, resolve, commit or enter into any binding agreement to do any of
the foregoing.

(i) Access to Information. Subject in each case to confidentiality agreements
reasonably acceptable to the Company, the Company shall, and shall cause each of
its subsidiaries to, (i) afford the Backstop Parties and their respective
representatives upon request and reasonable notice, from the period commencing
on the date hereof and through the Plan Effective Date, reasonable access,
during normal business hours and without unreasonable disruption or interference
with the Company and its subsidiaries’ business or operations, to the Company
and its subsidiaries’ employees, properties, books, contracts and records and
(ii) during such period, furnish promptly to such parties all reasonable
information concerning the Company and its subsidiaries’ business, properties
and personnel as may reasonably be requested by any such party, provided that
the

 

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foregoing shall not require the Company to permit any inspection, or to disclose
any information, that in the good-faith judgment of the Company (which may be
based on the advice of counsel) would be reasonably likely to (x) cause the
Company to violate any of its obligations with respect to confidentiality to a
third party, (y) disclose any legally privileged information of the Company or
(z) violate any applicable laws or orders. Nothing in this clause (i) shall
require the Company or any of its subsidiaries to issue any “cleansing letter”
or otherwise publicly disclose information for the purpose of enabling a
Backstop Party to transfer any security of, or claim or interest in, the Company
or any of its subsidiaries.

(j) DTC Eligibility. To the extent permitted by The Depository Trust Company,
the Company shall use commercially reasonable efforts to promptly make all
Rights Offering Securities, Unsubscribed Securities and Management Commitment
Securities deliverable to the Commitment Parties eligible for deposit with The
Depository Trust Company, except to the extent the Required Commitment Parties
request such Rights Offering Securities, Unsubscribed Securities or Management
Commitment Securities not be made eligible.

(k) [Reserved].

(l) Further Assurances. Without in any way limiting any other obligation of the
Company and its subsidiaries in this Agreement, the Company and its subsidiaries
shall use commercially reasonable efforts to take or cause to be taken all
actions, and do or cause to be done all things, reasonably necessary, and as any
Backstop Party may reasonably request, in order to consummate and make effective
the transactions contemplated by this Agreement, subject to the terms and
conditions of the RSA and this Agreement.

(m) Alternate Transactions.

(1) From the date of this Agreement until the earlier of the termination of this
Agreement in accordance with its terms and the Plan Effective Date, the Company
and its subsidiaries agree not to seek, solicit, or propose any Alternative
Restructuring Proposal (as defined in the RSA).

(2) Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement shall require the Company, any of its subsidiaries, or the board of
directors, board of managers, or similar governing body of any of them, in such
person’s capacity as a director, officer, or member of the Company or any of its
subsidiaries, to take any action or to refrain from taking any action to the
extent the Company, such subsidiary, or such board of directors, board of
managers, or similar governing body believes in good faith, based on advice of
counsel, that the taking or failing to take such action would be inconsistent
with applicable law or its fiduciary obligations under applicable law, and any
such action or inaction pursuant to this Section 7(m)(2) shall not be deemed to
constitute a breach of this Agreement; provided, however, that nothing in this
Section 7(m)(2) shall be deemed to amend, supplement, or otherwise modify, or
constitute a waiver of, any termination right that may arise as a result of any
such action or omission; provided further, it is agreed that any such action
that results in a termination of this Agreement in accordance with the terms
hereof shall be subject to the provisions set forth in Section 14(d) hereof.

 

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(3) Notwithstanding anything to the contrary in this Agreement, but subject to
the terms of Section 7(m)(1) and Section 7(m)(2), the Company, each of its
subsidiaries, and each of their respective directors, officers, employees,
investment bankers, attorneys, accountants, consultants, and other advisors or
representatives shall have the rights to: (a) consider, respond to, facilitate,
and negotiate in connection with any Alternative Restructuring Proposal received
by the Company or any of its subsidiaries that is a Superior Proposal (as
defined in the RSA) and (b) enter into or continue discussions or negotiations
with holders of Company Claims/Interests (as defined in the RSA) (including any
Backstop Party), any other party in interest in the Chapter 11 Cases (including
any official committee and the United States Trustee), or any other Person
regarding the Restructuring Transactions (as defined in the RSA). If the Company
or any of its subsidiaries receives a written or oral proposal or expression of
interest regarding any Alternative Restructuring Proposal, within two
(2) Business Days, the Company or such subsidiary shall notify (with email being
sufficient) Davis Polk, counsel to the Backstop Parties of any such proposal or
expression of interest, with such notice to include a copy of such proposal, if
it is in writing, or otherwise a summary of the material terms thereof. If the
board of directors of the Company or any of its subsidiaries decides, in the
exercise of its fiduciary duties, to pursue a Superior Proposal, the Company and
its subsidiaries shall notify Davis Polk within two (2) Business Days of such
determination.

(n) Volcker Rule. Neither the Company nor the Issuer will become a “covered
fund” as such term is defined in the Volcker Rule.

Section 8. ADDITIONAL COVENANTS OF THE COMMITMENT PARTIES. Each of the
Commitment Parties agrees, severally and not jointly, with the Company: Except
as set forth in this Agreement or with the prior written consent of the Company,
during the period from the date of this Agreement to the earlier of the Plan
Effective Date and the date on which this Agreement is terminated in accordance
with its terms, the Required Commitment Parties shall use commercially
reasonable efforts to promptly take all actions and prepare and file all
necessary documentation (including by reasonably cooperating with the Company as
to the appropriate time of filing such documentation and its content) and to
effect all applications that are necessary or advisable in connection with
seeking any governmental approval, exemption or authorization from any
governmental authority, including under any Antitrust Laws that are necessary to
consummate and make effective the transactions contemplated by this Agreement.

Section 9. ADDITIONAL COVENANTS OF THE COMPANY AND THE COMMITMENT PARTIES. If
the Parties determine that it would be necessary or desirable, for legal, tax
structuring or other reasons, for the Issuer to be (x) formed in a certain
jurisdiction, (y) formed by an entity other than the Company, or (z) be the
ultimate parent of some, but not all, of the Reorganized Debtors, and such
jurisdiction of formation or change in ownership of the Issuer would require
this Agreement to be amended for legal, tax structuring or other reasons, the
Parties shall cooperate in good faith to amend this Agreement to reflect any
changes reasonably necessary to allow for Issuer to be formed in such
jurisdiction or for Issuer to be formed by such other entity, in each case while
preserving to the maximum extent possible all other provisions of this
Agreement.

 

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Section 10. TAX TREATMENT. The Parties agree that for U.S. federal, and
applicable state and local, income tax purposes each of the Backstop Commitment
Premium and the Management Commitment Premium is intended to be treated as a
payment by the Company to the respective Commitment Parties of the premium for a
put option sold by the Commitment Parties to the Company hereunder, except as
otherwise required by a final “determination” (within the meaning of
Section 1313 of the Code).

Section 11. CONDITIONS TO THE OBLIGATIONS OF THE COMMITMENT PARTIES. The
obligations of the Commitment Parties to purchase Rights Offering Securities,
Unsubscribed Securities and Management Commitment Securities, as applicable,
pursuant to their respective Commitments on the Plan Effective Date are subject
to the satisfaction of the following conditions (unless waived by the Required
Commitment Parties), except where the failure to satisfy any such condition
results solely from the failure by any Commitment Party to comply with this
Agreement:

(a) Plan and Confirmation Order. The Plan, as approved, and the Confirmation
Order, as entered by the Bankruptcy Court (and which shall have become a Final
Order), shall be in form and substance consistent with the RSA or otherwise be
acceptable to the Required Commitment Parties and the Company.

(b) Conditions to the Plan. The conditions to the occurrence of the Plan
Effective Date set forth in the Plan and the Confirmation Order shall have been
satisfied or waived in accordance with the terms of the Plan and consistent with
the RSA, and the Plan Effective Date shall have occurred.

(c) Rights Offering. The Issuer shall have commenced the Rights Offering, the
Rights Offering shall have been conducted in all material respects in accordance
with this Agreement and the Rights Offering Procedures, and the Subscription
Instruction Deadline shall have occurred.

(d) Approvals. All terminations or expirations of waiting periods imposed by any
Governmental Entity necessary for the consummation of the transactions
contemplated by this Agreement, including under the HSR Act or any other
Antitrust Laws, shall have occurred, and all other notifications, consents,
authorizations and approvals required to be made or obtained from any
Governmental Entity, including under any Antitrust Law, shall have been made or
obtained for the transactions contemplated by this Agreement.

(e) Funding Notice. The Backstop Parties shall have received a Funding Notice in
accordance with Section 1(g).

(f) Registration Rights Agreement. The Registration Rights Agreement shall have
been executed and delivered by the Company, shall otherwise have become
effective with respect to the Backstop Parties and the other parties thereto,
and shall be in full force and effect.

 

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(g) Valid Issuance. The Convertible Bonds and Special Voting Stock to be issued
pursuant to the Rights Offering and this Agreement shall be, upon (i) payment of
the aggregate purchase price as provided herein and (ii) the Plan Effective
Date, validly issued and outstanding, and free and clear of all Taxes, Liens,
pre-emptive rights, rights of first refusal, subscription and similar rights.

(h) No Restraint. No judgment, injunction, decree or other legal restraint shall
prohibit the consummation of the Plan, the Rights Offering or the transactions
contemplated hereby.

(i) Representations and Warranties. The representations and warranties of the
Company set forth in this Agreement qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in all
material respects, in each case, on and as of the Plan Effective Date as if made
on and as of the Plan Effective Date (or, to the extent given as of a specified
date, as of such date).

(j) Covenants. The Company shall have performed and complied in all material
respects with all obligations and agreements required in this Agreement to be
performed or complied with by it prior to the Plan Effective Date.

(k) Backstop Commitment Premium. All fees and other amounts, including the
Backstop Commitment Premium and the Management Commitment Premium, required to
be paid or reimbursed by the Company or the Issuer, as applicable, to the
Commitment Parties pursuant to this Agreement as of or on the Plan Effective
Date shall have been so paid or reimbursed, or shall be paid substantially
concurrently upon the fulfilment of the obligations of the applicable Commitment
Party.

(l) Material Adverse Effect. Since the date hereof, there shall not have
occurred, and there shall not exist, any change, event, circumstance, effect,
development, occurrence or state of facts that constitutes, individually or in
the aggregate, a Material Adverse Effect.

(m) Officer’s Certificate. The Backstop Parties shall have received on and as of
the Plan Effective Date a certificate of the chief executive officer or chief
financial officer of the Company, in his or her capacity as such and not in his
or her individual capacity, confirming that the conditions set forth in
Section 11(i), Section 11(j) and Section 11(l) have been satisfied.

Section 12. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company pursuant to this Agreement are subject to satisfaction of the following
conditions (unless waived by the Company), except where the failure to satisfy
any such condition is the result of a failure by the Company to comply with this
Agreement:

 

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(a) Plan and Confirmation Order. The Plan, as approved, and the Confirmation
Order, as entered by the Bankruptcy Court and which shall have become a Final
Order, shall be in form and substance consistent with the RSA and be otherwise
reasonably acceptable to the Required Commitment Parties and the Company.

(b) Conditions to the Plan. The conditions to the occurrence of the Plan
Effective Date set forth in the Plan and the Confirmation Order shall have been
satisfied or waived in accordance with the terms of the Plan, and the Plan
Effective Date shall have occurred or be deemed to have occurred.

(c) Rights Offering. The Issuer shall have commenced the Rights Offering, the
Rights Offering shall have been conducted in all material respects in accordance
with this Agreement and the Rights Offering Procedures, and the Subscription
Instruction Deadline shall have occurred.

(d) Funding Amount. Subject to Section 3 and Section 4, each Backstop Party
shall have delivered and paid its Funding Amount in accordance with
Section 1(g).

(e) Approvals. All terminations or expirations of waiting periods imposed by any
Governmental Entity necessary for the consummation of the transactions
contemplated by this Agreement under the HSR Act or any other Antitrust Laws,
shall have occurred and all other notifications, consents, authorizations and
approvals required to be made or obtained from any Governmental Entity under any
Antitrust Law, shall have been made or obtained for the transactions
contemplated by this Agreement.

(f) No Restraint. No judgment, injunction, decree or other legal restraint shall
prohibit the consummation of the Plan, the Rights Offering or the transactions
contemplated hereby.

(g) Representations and Warranties. The representations and warranties of the
Backstop Parties set forth in this Agreement qualified as to materiality shall
be true and correct, and those not so qualified shall be true and correct in all
material respects, in each case, on and as of the Plan Effective Date as if made
on and as of the Plan Effective Date (or, to the extent given as of a specified
date, as of such date).

(h) Covenants. The Backstop Parties shall have performed and complied in all
material respects with all obligations and agreements required by this Agreement
to be performed or complied with by the Backstop Parties on or prior to the Plan
Effective Date.

Section 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in this Agreement will not survive the Plan Effective Date.
Covenants and agreements that by their terms are to be satisfied after the Plan
Effective Date shall survive until satisfied in accordance with their terms,
subject to termination pursuant to Section 14.

 

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Section 14. TERMINATION.

(a) Termination. This Agreement may be terminated by (i) the mutual written
consent of the Company and the Required Commitment Parties; (ii) the Required
Commitment Parties, if the Plan Effective Date has not occurred on or prior to
the date that is 59 days after the Petition Date (the “Outside Date”), subject
to the extension of such Outside Date by the agreement of the Company and the
Required Commitment Parties; (iii) the Company, if the Plan Effective Date has
not occurred on or prior to the Outside Date, subject to the extension of such
Outside Date by the agreement of the Company and the Required Commitment
Parties; or (iv) the Company if (x) the Outside Date is extended pursuant to
subclause (ii), (y) one or more Backstop Party objects to such extension in
writing to the Company and the Required Commitment Parties within 5 Business
Days of the extension and (z) the non-objecting Backstop Parties fail to assume
the objecting Backstop Party’s Commitment within 10 Business Days of receipt of
the written objection.

(b) Termination by the Company. The Company may terminate this Agreement by
written notice in accordance with Section 16 (with such termination being
effective three (3) Business Days following delivery of such written notice,
except as otherwise set forth below) to each Commitment Party upon the
occurrence of any of the following:

(i) any Backstop Party shall have breached any representation, warranty,
covenant or other agreement made by such Backstop Party in this Agreement, and
such breach or inaccuracy would, individually or in the aggregate, result in a
failure of a condition set forth in Section 12(g) or Section 12(h), if
continuing on the Plan Effective Date, being satisfied and such breach or
inaccuracy is not cured by such Backstop Party by the earlier of (1) the seventh
(7th) Business Day after the giving of notice thereof to such Backstop Party by
the Company and (2) the third (3rd) Business Day prior to the Outside Date;
provided that the Company shall not have the right to terminate this Agreement
pursuant to this clause (i) based upon a breach arising out of the actions or
omissions of the Company in breach of this Agreement; and provided further that
such termination under this Section shall not be effective if, prior to the
expiration of such cure period, one or more non-breaching Backstop Parties
assume such breaching Backstop Party’s Commitment;

(ii) the board of directors, board of managers, or such similar governing body
of the Company or any of its subsidiaries determines in good faith, based on
advice of counsel, that proceeding with any of the Restructuring Transactions
would be inconsistent with the exercise of its fiduciary duties;

(iii) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling or order that would reasonably be expected to prevent the consummation of
a material portion of the Restructuring Transactions; provided, that
notwithstanding the foregoing, this termination right shall not apply to or be
exercised by the Company or any of its subsidiaries that sought or requested
such ruling or order or in contravention of any obligation or restriction set
out in this Agreement or the RSA; provided further, that a ruling by the
Bankruptcy Court that the Plan is not confirmable as a result of the terms
included therein and contemplated by one or more provisions of the Term Sheet
shall not, by itself, constitute a termination event pursuant to this
Section 14(b)(iii); or

 

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(iv) the Bankruptcy Court enters an order denying confirmation of the Plan.

(c) Termination by the Required Commitment Parties. The Required Commitment
Parties may terminate this Agreement by written notice in accordance with
Section 16 (with such termination being effective three (3) Business Days
following delivery of such written notice, except as otherwise set forth below)
upon the occurrence of any of the following:

(i) the breach in any material respect by the Company of any of the
representations, warranties, undertakings, commitments or covenants of the
Company set forth in this Agreement that remains uncured (to the extent curable)
by the earlier of (1) the fifth (5th) Business Day after the giving of notice
thereof to the Company or any of its subsidiaries (as applicable) by any
Backstop Party and (2) the third (3rd) Business Day prior to the Outside Date;
provided, that the Required Commitment Parties shall not have the right to
terminate this Agreement pursuant to this clause (i) based upon a breach arising
out of the actions or omissions of any Backstop Party in breach of this
Agreement;

(ii) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling or order that (i) would reasonably be expected to prevent the
consummation of a material portion of the Restructuring Transactions and
(ii) remains in effect for ten (10) Business Days after such terminating
Backstop Parties transmit a written notice in accordance with Section 16
detailing any such issuance; notwithstanding the foregoing, this termination
right may not be exercised by any Party that sought or requested such ruling or
order in contravention of any obligation set out in this Agreement;

(iii) the entry of an order by the Bankruptcy Court, or the filing of a motion
or application by the Company or any other Debtor seeking an order (without the
prior written consent of the Required Commitment Parties), (i) converting one or
more of the Chapter 11 Cases of the Company or any other Debtor to a case under
chapter 7 of the Bankruptcy Code, (ii) appointing an examiner with expanded
powers beyond those set forth in sections 1106(a)(3) and (4) of the Bankruptcy
Code or a trustee in one or more of the Chapter 11 Cases of the Company or any
other Debtor, or (iii) rejecting this Agreement;

(iv) the failure to meet a Milestone, which has not been waived or extended in a
manner consistent with the RSA, unless such failure is the result of any act,
omission, or delay on the part of the terminating Backstop Parties in violation
of its obligations under the RSA or this Agreement;

 

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(v) the Bankruptcy Court grants relief that is inconsistent in any material
respect with the RSA, the Definitive Documents or the Restructuring Transactions
and such inconsistent relief is not dismissed, vacated or modified to be
consistent with the RSA and the Restructuring Transactions within five
(5) Business Days following written notice thereof to the Company and its
subsidiaries by the Required Commitment Parties;

(vi) the occurrence of an “Event of Default” under the DIP Credit Agreement (as
defined in the RSA) that has not been waived or timely cured in accordance
therewith;

(vii) on or after the date hereof, the Company or any of its subsidiaries
consummates or enters into a definitive agreement evidencing any merger,
consolidation, disposition of material assets, acquisition of material assets,
or similar transaction, pays any dividend, or incurs any indebtedness for
borrowed money, in each case outside the ordinary course of business, in each
case other than: (i) the Restructuring Transactions or (ii) with the prior
consent of the Required Commitment Parties;

(viii) if the Company and its subsidiaries (i) notify Backstop Parties pursuant
to Section 7(m) and/or make a public announcement that they intend to pursue a
Superior Proposal or (ii) enter into a definitive agreement with respect to a
Superior Proposal;

(ix) the filing by the Company of any Definitive Document (as defined in the
RSA), amendments, modifications or supplements thereto, motion or pleading with
the Bankruptcy Court that is not consistent in all material respects with the
RSA and the Term Sheet, and such filing is not withdrawn (or, in the case of a
motion that has already been approved by an order of the Bankruptcy Court at the
time the Company and its subsidiaries are provided with such notice, such order
is not stayed, reversed or vacated) within five (5) Business Days following
written notice thereof to the Company and its subsidiaries by the Required
Commitment Parties;

(x) any of the following shall have occurred: (i) the Company and its
subsidiaries or any affiliate thereof shall have filed any motion, application,
adversary proceeding or Cause of Action (as defined in the RSA) (A) challenging
the validity, enforceability, or priority of, or seek avoidance or subordination
of the Notes Claims or (B) otherwise seeking to impose liability upon or enjoin
the Backstop Parties (in each case, other than with respect to a breach of the
RSA) or (ii) the Company and its subsidiaries or any affiliate thereof shall
have supported any application, adversary proceeding or Cause of Action referred
to in this clause (x) filed by another person, or consents (without the consent
of the Required Commitment Parties) to the standing of any such person to bring
such application, adversary proceeding or Cause of Action;

 

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(xi) the Bankruptcy Court grants relief terminating, annulling or modifying the
automatic stay (as set forth in Section 362 of the Bankruptcy Code) with regard
to any assets of the Company and its subsidiaries having an aggregate fair
market value in excess of $5 million without the consent of the Required
Commitment Parties;

(xii) the Company and its subsidiaries lose the exclusive right to file and
solicit acceptances of a chapter 11 plan;

(xiii) the failure of the Company to pay the reasonable fees and expenses of the
Backstop Parties in accordance with Section 2(e) of this Agreement;

(xiv) the Company or any other Debtor withdraws or revokes the Plan or files,
proposes or otherwise supports any (i) Alternative Restructuring Proposal or
(ii) amendment or modification to the Restructuring Transactions containing any
terms that are materially inconsistent with the implementation of, and the terms
set forth in, the Term Sheet, without the prior written consent of the Required
Commitment Parties, which remains uncured (to the extent curable) for five
(5) Business Days after such terminating Backstop Parties transmit a written
notice in accordance with Section 16 detailing any such breach;

(xv) the Company or any of its subsidiaries enters into a definitive agreement
with respect to an Alternative Restructuring Proposal;

(xvi) the entry of an order by the Bankruptcy Court approving this Agreement
(the “BCA Approval Order”) shall not have occurred prior to the date that is 45
days after the Petition Date or if such order shall be reversed, stayed,
dismissed, vacated, reconsidered, modified or amended without the acquiescence
or written consent (not to be unreasonably withheld, conditioned or delayed) of
the Required Commitment Parties;

(xvii) the Petition Date shall not have occurred on or prior to March 3, 2020;
or

(xviii) the RSA has been terminated in accordance with its terms.

(d) Effect of Termination. Subject to Section 17, upon the effective date of the
termination of this Agreement as to a Party (the “Termination Date”), this
Agreement shall be of no further force and effect as to such Party and each
Party subject to such termination shall be immediately released from its or
their respective liabilities, obligations, commitments, undertakings, and
agreements under or related to this Agreement, shall have no further rights,
benefits or privileges hereunder and shall have all the rights and remedies that
it would have had, had it not entered into this Agreement, and no such rights or
remedies shall be deemed waived pursuant to a claim of laches or estoppel, and
shall be entitled to take all actions, whether with respect to the Restructuring
Transactions or otherwise, that it would have been entitled to take had it not
entered into this Agreement, including with respect to any and all Claims (as
defined in the RSA) or Causes of Action (as defined in the RSA); provided, that
in no event shall

 

34

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any such termination relieve a Party from liability for its breach or
non-performance of its obligations hereunder before the Termination Date.
Nothing in this Agreement shall be construed as prohibiting the Company, any of
its subsidiaries or any of the Backstop Parties from contesting whether any such
termination is in accordance with its terms or to seek enforcement of any rights
under this Agreement that arose or existed before a Termination Date. Except as
expressly provided in this Agreement, nothing in this Agreement is intended to,
or does, in any manner waive, limit, impair, or restrict (a) any right of the
Company or the ability of the Company to protect and reserve its rights
(including rights under this Agreement), remedies, and interests, including its
claims against any Backstop Party, and (b) any right of any Backstop Party, or
the ability of any Backstop Party, to protect and preserve its rights (including
rights under this Agreement), remedies, and interests, including its claims
against the Company or any other Backstop Party. Notwithstanding any provision
to the contrary in this Section 14, no Party may exercise any of its respective
termination rights as set forth herein if such Party has failed to perform or
comply in all material respects with the terms and conditions of this Agreement
(unless such failure to perform or comply arises as a result of another Party’s
actions or inactions), with such failure to perform or comply causing, or
resulting in, the occurrence of the applicable termination event giving rise to
such termination right. Nothing in this Section 14(d) shall restrict the right
of the Company or any of its subsidiaries to terminate this Agreement in
accordance with Section 14(b)(ii).

(e) Termination Fee. To the extent this Agreement is validly terminated in
accordance with this Section 14 (other than Section 14(b)(i) or
Section 14(c)(iv)), the Company shall, within three (3) Business Days of such
termination, pay or cause to be paid to the Commitment Parties that are not
Defaulting Commitment Parties a non-refundable cash payment in an aggregate
amount equal to (x) $9,440,000 payable to the Backstop Parties that are not
Defaulting Commitment Parties, allocated pro rata based on each such Backstop
Party’s Backstop Commitment Percentage (excluding the Backstop Commitment
Percentage of any Defaulting Commitment Party), plus (y) $143,000 payable to the
Management Commitment Parties that are not Defaulting Commitment Parties,
allocated pro rata based on each such Management Commitment Party’s percentage
(its “Management Commitment Percentage”), as set forth on Schedule 1 opposite
such Management Commitment Party’s name (excluding the Management Commitment
Percentage of any Defaulting Commitment Party); provided that in the event that
(1) this Agreement is validly terminated in accordance with Section 14(c)(xviii)
because the RSA was validly terminated in accordance with Section 13.03(a) of
the RSA or (2) this Agreement is validly terminated in accordance with
Section 14(a)(ii) or Section 14(a)(iii) due to a failure of a condition to
closing set forth in Section 11 of this Agreement to be satisfied by the Outside
Date and (w) such failure is a result of the breach of the RSA by a Consenting
Noteholder(s) (as defined in the RSA), (x) the Company has given notice of such
breach to such Consenting Noteholder(s), (y) within ten (10) Business Days
following the giving of such notice, either such Consenting Noteholder(s) have
failed to cure such breach or this Agreement has been terminated in accordance
with Section 14(a)(ii), and (z) such ten (10) Business Day period has elapsed
prior to such termination pursuant to Section 14(c)(xviii) or
Section 14(a)(iii), then any such breaching Consenting Noteholder who is also a
Commitment Party hereunder shall not be entitled to their pro rata share of any
payment to be paid to the Commitment

 

35

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Parties pursuant to this Section. To the extent that all amounts due pursuant to
this Section 14(e) shall have been paid by the Company or the applicable
Commitment Parties in connection with a termination of this Agreement, the
Commitment Parties shall not have any additional recourse against the Company
for any obligations or liabilities relating to or arising from this
Agreement. Absent a change in Law, the Company does not expect to have an
obligation to withhold any Taxes on any required payment of the termination fee.

Section 15. INDEMNIFICATION OBLIGATIONS.

(a) Company Indemnity. The Company and the Issuer (the “Indemnifying Parties”)
shall indemnify and hold harmless each Backstop Party and its Affiliates, equity
holders, members, partners, general partners, managers and its and their
respective representatives and controlling persons (each, an “Indemnified
Person”) from and against any and all losses, claims, damages, liabilities and
costs and expenses (other than Taxes of the Backstop Parties except to the
extent otherwise provided for in this Agreement) (collectively, “Losses”) that
any such Indemnified Person may incur or to which any such Indemnified Person
may become subject arising out of or in connection with this Agreement, the Plan
and the transactions contemplated hereby and thereby, including the Commitments,
the Rights Offering, the payment of the Backstop Commitment Premium or the use
of the proceeds of the Rights Offering, the Transaction Expenses or any claim,
challenge, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether any Indemnified Person is a party thereto,
whether or not such proceedings are brought by the Company, the Issuer, their
equity holders, Affiliates, creditors or any other Person, and reimburse each
Indemnified Person upon demand for reasonable documented (with such
documentation subject to redaction to preserve attorney-client and work product
privileges) out-of-pocket legal or other third party expenses incurred in
connection with investigating, preparing to defend or defending, or providing
evidence in or preparing to serve or serving as a witness with respect to, any
lawsuit, investigation, claim or other proceeding relating to any of the
foregoing (including in connection with the enforcement of the indemnification
obligations set forth herein), irrespective of whether or not the transactions
contemplated by this Agreement or the Plan are consummated or whether or not
this Agreement is terminated; provided that the foregoing indemnity will not, as
to any Indemnified Person, apply to Losses (i) as to any Defaulting Commitment
Party or any Indemnified Person related thereto, caused by such default by such
Commitment Party or (ii) to the extent they are found by a final, non-appealable
judgment of a court of competent jurisdiction to arise from the bad faith,
willful misconduct or gross negligence of such Indemnified Person or any of its
Affiliates, equity holders, members, partners, general partners, managers, or
their respective representatives and controlling persons.

(b) Indemnification Procedure. Promptly after receipt by an Indemnified Person
of notice of the commencement of any claim, challenge, litigation, investigation
or proceeding (an “Indemnified Claim”), such Indemnified Person will, if a claim
is to be made hereunder against the Indemnified Person in respect thereof,
notify the Indemnifying Party in writing of the commencement thereof; provided
that (A) the omission to so notify the Indemnifying Party will not relieve the
Indemnifying Party from

 

36

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any liability that it may have hereunder except to the extent it has been
materially prejudiced by such failure and (B) the omission to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability
that it may have to such Indemnified Person otherwise than on account of this
Section 15. In case any such Indemnified Claims are brought against any
Indemnified Person and it notifies the Indemnifying Party of the commencement
thereof, the Indemnifying Party will be entitled to participate therein, and, at
its election by providing written notice to such Indemnified Person, the
Indemnifying Party will be entitled to assume the defense thereof, with counsel
reasonably acceptable to such Indemnified Person; provided, (X) that the
Indemnifying Party shall not be entitled to assume or maintain control of the
defense of any Indemnified Claim and shall pay the fees and expenses of counsel
retained by the Indemnified Person to the extent provided in Section 15(a) if
the Indemnifying Party has failed or is failing to prosecute or defend
vigorously the Indemnified Claim, and such failure is not reasonably cured
within ten (10) Business Days of receipt of written notice from the applicable
Indemnified Person, and (Y) if the parties (including any impleaded parties) to
any such Indemnified Claims include both such Indemnified Person and the
Indemnifying Party and based on advice of such Indemnified Person’s counsel,
there are legal defenses available to such Indemnified Person that are different
from or additional to those available to the Indemnifying Party, such
Indemnified Person shall have the right to select separate counsel to assert
such legal defenses and to otherwise participate in the defense of such
Indemnified Claims (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel
representing the Indemnified Persons who are parties to such Indemnified Claims
(in addition to one local counsel in each jurisdiction in which local counsel is
required)). Upon receipt of notice from the Indemnifying Party to such
Indemnified Person of its election to so assume the defense of such Indemnified
Claims with counsel reasonably acceptable to the Indemnified Person, the
Indemnifying Party shall not be liable to such Indemnified Person for expenses
incurred by such Indemnified Person in connection with the defense thereof or
participation therein (other than reasonable and documented out-of-pocket costs
of investigation) unless (i) such Indemnified Person shall have employed
separate counsel (in addition to any local counsel) in connection with the
assertion of legal defenses in accordance with the proviso to the immediately
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel
representing the Indemnified Persons who are parties to such Indemnified Claims
(in addition to one local counsel in each jurisdiction in which local counsel is
required)), (ii) the Indemnifying Party shall not have employed counsel
reasonably acceptable to such Indemnified Person to represent such Indemnified
Person within a reasonable time after the Indemnifying Party has received notice
of commencement of the Indemnified Claims from, or delivered on behalf of, the
Indemnified Person, (iii) after the Indemnifying Party assumes the defense of
the Indemnified Claims, the Indemnified Person determines in good faith that the
Indemnifying Party has failed or is failing to defend such claim and provides
written notice of such determination, and such failure is not reasonably cured
within ten (10) Business Days of receipt of such notice, or (iv) the
Indemnifying Party shall have authorized in writing the employment of counsel
for such Indemnified Person.

 

37

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(c) Settlement of Indemnified Claims. The Indemnifying Party shall not be liable
for any settlement of any Indemnified Claims effected by such Indemnified Person
without the written consent of the Indemnifying Party (which consent shall not
be unreasonably withheld, conditioned or delayed). If any settlement of any
Indemnified Claims is consummated with the written consent of the Indemnifying
Party or if there is a final judgment for the plaintiff in any such Indemnified
Claims, the Indemnifying Party agrees to indemnify and hold harmless each
Indemnified Person from and against any and all Losses by reason of such
settlement or judgment to the extent such Losses are otherwise subject to
indemnification by the Indemnifying Party hereunder in accordance with, and
subject to the limitations of, this Section 15. The Indemnifying Party shall
not, without the prior written consent of an Indemnified Person (which consent
shall be granted or withheld, conditioned or delayed in the Indemnified Person’s
sole discretion), effect any settlement of any pending or threatened Indemnified
Claims in respect of which indemnity or contribution has been sought hereunder
by such Indemnified Person unless (i) such settlement includes an unconditional
release of such Indemnified Person in form and substance satisfactory to such
Indemnified Person from all liability on the claims that are the subject matter
of such Indemnified Claims and (ii) such settlement does not include any
statement as to or any admission of fault, culpability or a failure to act by or
on behalf of any Indemnified Person.

(d) Contribution. If for any reason the foregoing indemnification is unavailable
to any Indemnified Person or insufficient to hold it harmless from Losses that
are subject to indemnification pursuant to Section 15(a), then the Indemnifying
Party shall contribute to the amount paid or payable by such Indemnified Person
as a result of such Loss in such proportion as is appropriate to reflect not
only the relative benefits received by the Indemnifying Party, on the one hand,
and such Indemnified Person, on the other hand, but also the relative fault of
the Indemnifying Party, on the one hand, and such Indemnified Person, on the
other hand, as well as any relevant equitable considerations. It is hereby
agreed that the relative benefits to the Indemnifying Party, on the one hand,
and all Indemnified Persons, on the other hand, shall be deemed to be in the
same proportion as (i) the total value received or proposed to be received by
the Company pursuant to the issuance and sale of the Convertible Bonds in the
Rights Offering contemplated by this Agreement and the Plan bears to (ii) the
Backstop Commitment Premium paid or proposed to be paid to the Backstop Parties.
The Indemnifying Parties also agree that no Indemnified Person shall have any
liability based on their comparative or contributory negligence to the
Indemnifying Parties, any Person asserting claims on behalf of or in right of
any of the Indemnifying Parties, or any other Person in connection with an
Indemnified Claim.

(e) Treatment of Indemnification Payments. All amounts paid by an Indemnifying
Party to an Indemnified Person under this Section 15 shall, to the extent
permitted by applicable law, be treated for all Tax purposes as adjustments to
the purchase price for the Convertible Bonds subscribed for or purchased by such
Indemnified Person. The provisions of this Section 15 are an integral part of
the transactions contemplated by this Agreement, and without these provisions,
the Backstop Parties would not have entered into this Agreement, and subject to
entry of the BCA Approval Order, the obligations of the Company under this
Section 15 shall constitute allowed administrative expenses of the Debtors’
estate under Sections 503(b) and 507 of the Bankruptcy Code and shall be payable
without further order of the Bankruptcy Court, and the Company may comply with
the requirements of this Section 15 without further order of the Bankruptcy
Court.

 

38

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Section 16. NOTICES. All notices hereunder shall be deemed given if in writing
and delivered, by electronic mail, courier, or registered or certified mail
(return receipt requested), to the following addresses (or at such other
addresses as shall be specified by like notice):

 

  (i)

if to the Company or a Management Commitment Party, to:

Pioneer Energy Services Corp.

1250 N.E. Loop 410, Suite 1000

San Antonio, Texas 78209

Attention:     Bryce Seki, VP - General Counsel

E-mail:         BSeki@pioneeres.com

with copies to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attention:     Brian S. Hermann,

                      Elizabeth R. McColm,

                      Brian Bolin

                      Eugene Y. Park

E-mail:         bhermann@paulweiss.com

                      emccolm@paulweiss.com

                      bbolin@paulweiss.com

                      epark@paulweiss.com

 

  (ii)

if to a Backstop Party, to:

each Backstop Party at the addresses or e-mail addresses set forth below the
Backstop Party’s signature in its signature page to this Agreement

with copies (which shall not constitute notice) to:

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Attention:     Damian S. Schaible

                      Natasha Tsiouris

                      Erik Jerrard

E-mail:         damian.schaible@davispolk.com,

                      natasha.tsiouris@davispolk.com

                      erik.jerrard@davispolk.com

 

39

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Any notice given by delivery, mail, or courier shall be effective when received.

Section 17. SURVIVAL. Notwithstanding the termination of this Agreement, the
agreements and obligations of the parties hereto in Section 14(d) and Sections
15 through 23 shall survive such termination and shall continue in full force
and effect for the benefit of the parties hereto in accordance with the terms
hereof.

Section 18. ASSIGNMENT; THIRD PARTY BENEFICIARIES. This Agreement is intended to
bind and inure to the benefit of the Parties and their respective successors and
permitted assigns, as applicable. There are no third-party beneficiaries under
this Agreement, and, except as set forth in Section 3, the rights or obligations
of any Party under this Agreement may not be assigned, delegated, or transferred
to any other Person or entity.

Section 19. COMPLETE AGREEMENT. Except as otherwise explicitly provided in this
Agreement, this Agreement constitutes the entire agreement among the Parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, oral or written, among the Parties with respect thereto, other than
any Confidentiality Agreement (as defined in the RSA). The Parties acknowledge
and agree that they are not relying on any representations or warranties other
than as set forth in this Agreement.

Section 20. GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM;
WAIVER OF TRIAL BY JURY. THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THE CHOSEN STATE, WITHOUT GIVING EFFECT TO ITS CONFLICT
OF LAWS PRINCIPLES. Each Party to this Agreement agrees that it shall bring any
action or proceeding in respect of any claim arising out of or related to this
Agreement, to the extent possible, in the Bankruptcy Court, and solely in
connection with claims arising under this Agreement: (a) irrevocably submits to
the exclusive jurisdiction of the Bankruptcy Court; (b) waives any objection to
laying venue in any such action or proceeding in the Bankruptcy Court; and
(c) waives any objection that the Bankruptcy Court is an inconvenient forum or
does not have jurisdiction over any Party to this Agreement. EACH PARTY TO THIS
AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

Section 21. COUNTERPARTS. This Agreement may be executed and delivered in any
number of counterparts and by way of electronic signature and delivery, each
such counterpart, when executed and delivered, shall be deemed an original, and
all of which together shall constitute the same agreement. Except as expressly
provided in this Agreement, each individual executing this Agreement on behalf
of a Party has been duly authorized and empowered to execute and deliver this
Agreement on behalf of said Party.

 

40

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Section 22. ACTION BY, OR CONSENT OR APPROVAL OF, THE COMMITMENT PARTIES.
Whenever this Agreement refers to any action to be taken by, or any consent or
approval to be given by, the Commitment Parties, unless otherwise expressly
provided in any particular instance, such reference shall be deemed to require
the action, consent or approval of the Required Commitment Parties.

Section 23. AMENDMENTS AND WAIVERS.

(a) This Agreement may not be modified, amended or supplemented, and no
condition or requirement of this Agreement may be waived, in any manner except
in accordance with this Section 23.

(b) This Agreement may be modified, amended or supplemented in a writing signed
by the Company and the Required Commitment Parties; provided that amendments to
this Section 23 shall require the consent of each Backstop Party.
Notwithstanding the foregoing, if the proposed modification, amendment, waiver,
or supplement has a (1) disproportionate and adverse effect on any of the rights
or obligations under this Agreement of any Backstop Party or
(2) disproportionate and material adverse effect on any of the rights or
obligations under this Agreement of any Management Commitment Party, then the
consent of each such affected Commitment Party shall also be required to
effectuate such modification, amendment, waiver or supplement.

(c) Any proposed modification, amendment, waiver or supplement that does not
comply with this Section 23 shall be ineffective and void ab initio.

(d) The waiver by any Party of a breach of any provision of this Agreement shall
not operate or be construed as a further or continuing waiver of such breach or
as a waiver of any other or subsequent breach. No failure on the part of any
Party to exercise, and no delay in exercising, any right, power, or remedy under
this Agreement shall operate as a waiver of, any such right, power, or remedy or
any provision of this Agreement, nor shall any single or partial exercise of
such right, power, or remedy by such Party preclude any other or further
exercise of such right, power, or remedy or the exercise of any other right,
power, or remedy. All remedies under this Agreement are cumulative and are not
exclusive of any other remedies provided by Law.

Section 24. SPECIFIC PERFORMANCE. It is understood and agreed by the Parties
that money damages would be an insufficient remedy for any breach of this
Agreement by any Party, and each non-breaching Party shall be entitled to
specific performance and injunctive or other equitable relief (without the
posting of any bond and without proof of actual damages) as a remedy of any such
breach, including an order of the Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder.

Section 25. RULES OF CONSTRUCTION. This Agreement is the product of negotiations
among the Company and the Commitment Parties, and in the enforcement or
interpretation of this Agreement, is to be interpreted in a neutral manner, and
any presumption with regard to interpretation for or against any Party by reason
of that Party having drafted or caused to be drafted this Agreement, or any
portion of this Agreement, shall not be effective in regard to the
interpretation of this Agreement. The Company and its subsidiaries and the
Commitment Parties were each represented by counsel during the negotiations and
drafting of this Agreement and continue to be represented by counsel.

[Signature Page Follows]

 

41

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

PIONEER ENERGY SERVICES CORP. By:  

/s/ Bryce Seki

  Name: Bryce Seki   Title:   General Counsel

[Signature Page to Commitment Agreement]

--------------------------------------------------------------------------------

[BACKSTOP SIGNATORIES] By:  

 

  Name:   Title:

[Signature Page to Commitment Agreement]

--------------------------------------------------------------------------------

Schedule 1

Management Commitment Parties

 

Management Commitment Party

   Principal
Amount of
Management
Commitment
Securities    Management
Commitment
Premium

--------------------------------------------------------------------------------

Schedule 2

Backstop Parties

 

Backstop Party

   Backstop
Commitment
Percentage    Backstop Cap

--------------------------------------------------------------------------------

Schedule 3

Debtors

 

Name of Entity

  

Jurisdiction

Pioneer Energy Services Corp.

   Texas

Pioneer Coiled Tubing Services, LLC

   Delaware

Pioneer Drilling Services, Ltd.

   Texas

Pioneer Fishing & Rental Services, LLC

   Delaware

Pioneer Global Holdings, Inc.

   Delaware

Pioneer Production Services, Inc.

   Delaware

Pioneer Services Holdings, LLC

   Delaware

Pioneer Well Services, LLC

   Delaware

Pioneer Wireline Services Holdings, Inc.

   Delaware

Pioneer Wireline Services, LLC

   Delaware

--------------------------------------------------------------------------------

EXHIBIT E

Governance Term Sheet

--------------------------------------------------------------------------------

PIONEER ENERGY SERVICES CORP.

CORPORATE GOVERNANCE TERM SHEET

 

This term sheet (this “Term Sheet”) describes the material corporate governance
provisions to be in effect after the restructuring and recapitalization
transactions (the “Restructuring Transactions”) regarding certain indebtedness
of Pioneer Energy Services Corp. (“Pioneer”) and the other Company Parties. This
Term Sheet shall not constitute (nor shall it be construed as) an offer or a
legally binding obligation to buy or sell, or a solicitation of an offer to buy
or sell, any of the securities referred to herein, it being understood that such
an offer or solicitation, if any, only will be made in compliance with
applicable provisions of securities and/or other applicable laws.

Capitalized terms used in this Term Sheet but not defined herein shall have the
meanings set forth in the Restructuring Support Agreement.

 

Topic

  

Proposal

Reorganized Issuer    Either (i) Pioneer, as reorganized pursuant to and under
the Plan, or any successor or assign thereto, by merger, amalgamation,
consolidation, or otherwise, on or after the Plan Effective Date or (ii) a newly
formed Delaware corporation (the “Company”). Classes of Voting Securities   

Two classes of stock.

 

Voting common stock into which the convertible notes convert on conversion,
having one vote per share.

 

A class of special voting stock stapled to the convertible bonds that will be
issued in the rights offers in such an amount that the number of shares of such
special voting stock that each noteholder receives is equal to the number of
shares of common stock that the bonds are convertible into (i.e. such number of
shares of special voting stock will always equal the number of shares of common
stock into which the bonds will convert at a given time). The special voting
stock shall vote on all matters with the common stock on a 1:1 basis, but shall
have no separate economic interest (i.e. no rights to dividends, no redemption
or liquidation rights) and will only be transferrable with the convertible notes
with which such shares are stapled. The special voting stock shall automatically
be redeemed for no or nominal consideration on the conversion, redemption or
payment in full of the stapled convertible bonds (such common stock and special
voting stock, collectively, “Voting Stock”, and the holders of Voting Stock, the
“Holders”).

--------------------------------------------------------------------------------

Topic

  

Proposal

Board of Directors   

Initial Board: Initial Board of Directors (the “Board”) to consist of: (i) the
chief executive officer (the “CEO”) (who shall not be the chairman of the
Board), and (ii) four additional directors, or such other number to be
determined by the Required Consenting Noteholders, to be selected by the Ad Hoc
Group of Noteholders. Each Board member other than the CEO shall satisfy the
independence requirements of the Nasdaq and NYSE.

 

Vote Standard: Board members to be elected by a majority of the outstanding
shares of the Voting Stock. Board members will serve for one-year periods. A
Nominating and Governance committee of the Board shall nominate directors to the
board. Any director (except the CEO) shall satisfy the independence requirements
of the Nasdaq and NYSE.

 

Vacancies: The Board can fill any vacancies on the Board, until such seat is
filled at the next election of directors.

 

Board Observation Rights: Any Holder (and its affiliates) that individually owns
more than 5% of the outstanding shares of the Voting Stock shall have the right
to designate one Board observer.

Board Actions   

A majority of the total number of directors then in office shall constitute a
quorum, and the affirmative vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board.

 

The Board or any committee thereof may act by written consent executed by all of
the directors then in office or all members of such committee, as applicable, in
lieu of a meeting.

Shareholder Approvals   

The approval by the holders of 60% of the outstanding Voting Stock is required
for a Deemed Liquidation Event.

 

“Deemed Liquidation Event” shall mean acquisitions of beneficial ownership of
more than 50% of the voting power of the outstanding Voting Stock, any sales or
dispositions of all or substantially all of the assets of the Company on a
consolidated basis, or any merger, consolidation, recapitalization or similar
transaction where the Voting Stock is converted into, or exchanged for, any
other consideration.

 

A special meeting may be called by stockholders of the Company in the same
manner and upon the same thresholds as set forth in the Company’s current
Certificate of Incorporation and Bylaws.

Related Party Transactions    The Company shall not, and shall not permit any of
its subsidiaries to, enter into, amend or renew an agreement, arrangement or
transaction with (a) any affiliate of the Company (including any of the
Company’s directors or officers or any entity in which any of the Company’s
directors or officers has a financial interest) or (b) any owner of 5% or more
of the Voting Stock, or an affiliate of such owner (each, a “Related Party”)
unless such action is approved by (i) the Board by a majority/supermajority of
the disinterested directors and (ii) the Holders of a majority/supermajority of
the Voting Stock, other than any Voting Stock held by the Related Party, except
for (A) customary compensation or benefits arrangements with a director, officer
or other employee of the Company or any of its subsidiaries in the ordinary
course of business and (B) intercompany agreements in the ordinary course of
business.

 

2

--------------------------------------------------------------------------------

Topic

  

Proposal

Preemptive Rights    All Holders will have preemptive rights to maintain their
respective percentage of fully diluted equity with respect to any issuance of
equity securities by the Company, subject to customary exceptions (including a
merger event); provided that such preemptive rights shall terminate at such time
as the Company is listed on Nasdaq or NYSE. Transfer Restrictions   

Common stock will be transferrable without Company consent, subject to
compliance with applicable securities laws.

 

No ROFRs, tag-alongs or other restrictions on transferability of common stock.

Indemnification and Limitation on Liability    The organizational documents of
the Company shall contain indemnification provisions and limitation on liability
provisions applicable to directors and officers of the Company to the fullest
extent permitted under Delaware law. Listing/DTC1   

Common stock to be DTC-eligible and traded in the over-the-counter market
acceptable to the Required Consenting Noteholders upon emergence.

 

Registration rights agreement to provide that a majority of holders of shares of
Voting Stock subject to the registration rights agreement can require the
Company to use reasonable best efforts to cause the common stock to be listed on
Nasdaq or NYSE in accordance with the applicable Nasdaq or NYSE listing
requirements as promptly as practicable following delivery of notice.

 

Convertible notes/special voting stock to be DTC eligible, or, if not reasonably
practicable, held in book-entry form through a transfer agent acceptable to the
Required Consenting Noteholders, and to be made DTC eligible as soon as
reasonably practicable following emergence using reasonable best efforts by the
Company.

Information Rights    At any time the Company is not required to file public
reports with the SEC, the Company will continue to provide such public reports
on EDGAR as a voluntary filer. Registration Rights    Customary registration
rights for common stock and convertible notes. Exclusive Forum    Delaware will
be the exclusive forum for shareholder litigation.

 

 

1 

The listing terms can be revised by the Required Consenting Noteholders in
consultation with the Company.

 

3

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EXHIBIT F

MIP Term Sheet

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TERM SHEET

PIONEER ENERGY SERVICES CORP.

EMPLOYEE INCENTIVE PLAN

This term sheet (this “MIP Term Sheet”) summarizes the principal terms of an
Employee Incentive Plan (the “MIP”) referenced in the Restructuring Support
Agreement, dated as of February 28, 2020, (the “RSA”) including the term sheet
attached thereto as Exhibit B (the “Restructuring Term Sheet”) to which this
this MIP Term Sheet is attached. For purposes of this MIP Term Sheet,
capitalized terms not defined in this MIP Term Sheet shall have the meanings
ascribed to them in the RSA (including the Restructuring Term Sheet). The MIP
shall be entered into among Reorganized Pioneer (the “Company”) and its
affiliates (the “Pioneer Companies”) and the participants in the MIP, which
definitive documents shall contain terms consistent with those described below,
except as may be otherwise agreed in accordance with the RSA. This term sheet
does not afford any legally binding right to compensation or awards under the
MIP and no person shall have a right to such compensation or awards in respect
of the MIP until such person executes, and becomes bound by such MIP
documentation.

 

Overview:  

•  Incentive Equity Pool. There will be reserved, exclusively for the Company’s
employees, a pool of equity equal to 10% of the shares of the Company’s common
stock outstanding on the Plan Effective Date on a fully diluted and fully
distributed basis (including, for the avoidance of doubt, after giving effect to
the conversion of the Convertible Bonds) (such reserve, the “MIP Pool”). The
precise amount of equity and number of shares to be reserved will be determined
in a manner consistent with the intended effect of this MIP Term Sheet.

 

•  Emergence Grants.

 

•  Except as specifically set forth in the third succeeding bullet below, 50% of
the shares of the Company’s common stock subject to the MIP Pool (the “Emergence
Grant Pool”) will be allocated on or as soon as practicable following (but in no
event more than 15 days following) the Plan Effective Date in accordance with an
allocation schedule to be reasonably determined by the new Board of Directors of
the Company (the “New Board”), after good faith consultation with the Company’s
Chief Executive Officer (the “Emergence Grants”) in accordance with this MIP
Term Sheet.

 

•  Each Emergence Grant will be 100% in the form of restricted shares.

 

•  The grant of an Emergence Grant to an employee will be subject to and
conditioned upon the employee agreeing to be bound by the restrictive covenants
(the “Restrictive Covenants”) referenced in the Post-Filing Severance Plan Term
Sheet attached hereto as Appendix A (the “New Severance Plan Term Sheet”).

 

•  To the extent an employee who is designated to receive an Emergence Grant
does not agree to be bound by the Restrictive Covenants, the shares not
allocated to such employee shall be transferred from the Emergence Grant Pool to
the Other Award Pool.

 

•  Other Awards. The remaining balance of the MIP Pool not allocated as part of
the Emergence Grants (the “Other Award Pool”) may be granted to the Company’s
employees after the Plan Effective Date as determined by the New Board in its
sole discretion, in such form and on such terms and conditions as determined by
the New Board.

Emergence Grant Vesting:  

•  Time Vesting. 60% of the shares of the Company’s common stock that are
subject to the Emergence Grant Pool will vest in equal installments on each of
the first three anniversaries of the Plan Effective Date, subject to the
participant’s continued employment through each applicable vesting date (the
“Service Condition”).

 

•  Performance Vesting. 40% of the shares of the Company’s common stock that are
subject to the Emergence Grant Pool will vest subject to the achievement of
specified performance measures over a period not to exceed three years, subject
to the participant’s continued employment through the applicable vesting date
(the “Performance Condition”). The performance targets applicable to the
Performance Condition will be reasonably determined by the New Board in its sole
discretion after good faith consultation with the Company’s Chief Executive
Officer.

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•  The allocation of vesting requirements for each participant’s Emergence Grant
between the Service Condition and the Performance Condition will be reasonably
determined by the New Board after good faith consultation with the Company’s
Chief Executive Officer.

Treatment of Emergence Grants upon Termination of Employment:  

•  Without Cause or for Good Reason. If a participant is terminated without
Cause or resigns for Good Reason (as such terms are defined in the New Severance
Plan Term Sheet), 100% of the participant’s unvested Emergence Grants will
immediately vest, including the Emergence Grants subject to the Performance
Condition at target.

 

•  Death or Disability. If a participant’s employment is terminated due to the
participant’s death or disability, the participant will receive one additional
year of vesting of the participant’s Emergence Grant; provided that the portion
of the Emergence Grant that is subject to the Performance Condition will be
pro-rated and subject to actual performance of the Performance Condition through
the end of the performance period.

 

•  Voluntary Termination without Good Reason. If a participant voluntarily
terminates employment without Good Reason, the unvested portion of the
participant’s Emergence Grant will be immediately forfeited.

 

•  Termination for Cause. If a participant’s employment is terminated by the
Company for Cause, the unvested portion of the participant’s Emergence Grant
will be immediately forfeited.

Voting Rights:  

•  Subject to the Company’s governance documents, all outstanding unvested
restricted shares granted under the Emergence Grants shall be entitled to voting
rights to the extent that the Convertible Bonds have voting rights on an
as-converted basis.

Anti-Dilution:  

•  The MIP Pool and outstanding awards under the MIP will be subject to dilution
for future equity issuances (other than with respect to issuances (x) from the
unallocated portions of the MIP or (y) resulting from the conversion of the
Convertible Bonds), on a ratable basis with the common equity of the Company.

Severance:  

•  As a condition to participating in the MIP, each recipient of an Emergence
Grant shall agree to be a participant in the Post-Filing Severance Plan
described in the New Severance Plan Term Sheet and shall acknowledge and agree
that the participant will have no further rights under the Amended and Restated
Pioneer Drilling Services, Ltd. Key Executive Severance Plan.

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APPENDIX A

New Severance Plan Term Sheet

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Term Sheet

Pioneer Energy Services Corp.

Post-Filing Severance Plan

This term sheet summarizes the principal terms of the severance plan of Pioneer
Energy Services Corp. (the “Company”) to be effective upon the Company’s
emergence from bankruptcy (the “Post-Filing Severance Plan”). The Company’s
Amended and Restated Pioneer Drilling Services, Ltd. Key Executive Severance
Plan (the “KESP”) will be rejected in connection with the Company’s emergence
from bankruptcy. All references to the KESP herein shall refer to the KESP prior
to such rejection.

 

  •  

Participants:

 

  •  

All current participants in the KESP listed on Exhibit A, who remain employed
following the Company’s bankruptcy filing will be eligible to participate in the
Post-Filing Severance Plan.

 

  •  

Participation will be subject to the participant agreeing to be bound by
customary restrictive covenants, including a non-compete and non-solicit/hire of
employees while employed and for the Restriction Period reflected next to the
participant’s name on Exhibit A following a termination of employment for any
reason, and provisions relating to confidentiality. The periods set forth on
Exhibit A shall supersede the duration of any non-compete/non-solicit/non-hire
that otherwise would apply to the participant under the September 2019 retention
award letter agreement between the participant and the Company, which letter
agreement shall otherwise remain in full force and effect.

 

  •  

Cash Severance. The amount set forth next to the participant’s name on Exhibit
A.

 

  •  

Other Benefits:

 

  •  

In addition to cash severance described above, a participant will be eligible to
receive:

 

  •  

Company paid COBRA benefits for continued coverage under the Company’s medical
benefits plans for up to the number of months equal to the Coverage Period set
forth next to the participant’s name on Exhibit A (or, if earlier, through the
date the participant becomes employed by another employer and eligible for
similar health insurance coverage at such employer)

 

  •  

continued life insurance coverage under the Company’s policies for a period of
12 months.

 

  •  

For the avoidance of doubt, all other severance benefits previously available
under the KESP shall no longer be of any force and effect, including gross-up
payments for taxes imposed under Section 4999 of the Code and acceleration of
vesting of equity.

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  •  

Certain Standstill Limitations on Terminations/Resignations:

 

  •  

The Company will agree that it will not terminate any participant’s employment
other than for Cause (as defined below) prior to the Company’s emergence from
bankruptcy (the “Plan Effective Date”) (or prior to the receipt by a participant
of an Emergence Grant (as defined in the Term Sheet for the Company Employee
Incentive Plan to which this Post-Filing Severance Plan Term Sheet is attached
(the “MIP Term Sheet)), if such participant is designated to receive an
Emergence Grant in accordance with the MIP Term Sheet); and

 

  •  

Each participant in the KESP will agree that the participant may not voluntarily
resign for Good Reason (as defined in the KESP) prior to the Plan Effective
Date.

 

  •  

Severance Triggers:

 

  •  

A participant’s termination without Cause (as defined below) following the Plan
Effective Date, or

 

  •  

A participant’s resignation for Good Reason (as defined below) following the
Plan Effective Date.

 

  •  

The following terms shall have the meaning set forth below for purposes of the
Post-Filing Severance Plan:

 

  •  

“Cause” shall mean the participant’s (a) commission of any act or omission
constituting fraud under any law of the State of Texas or other law applicable
to the participant, (b) conviction of, or a plea of nolo contendere to, a
felony, (c) embezzlement or theft of property or funds of the Company or any of
its affiliates or (d) refusal to perform his or her duties with the Company;
(e) failure to follow the instructions of the board of directors of the Company
or the participant’s supervisor or a senior executive officer that, in each
case, are lawful, reasonable and commensurate with the participant’s title and
duties, (f) conduct in connection with the participant’s duties, performance or
responsibilities that is fraudulent, unlawful, grossly negligent; or (g) willful
misconduct with respect to the participant’s duties; provided that the conduct
described in clauses (d), (e) and (g) shall not constitute Cause unless the
Company has provided the participant with written notice of such conduct and, to
the extent curable, the participant fails to cure such conduct within 10 days of
receiving such notice.

 

  •  

“Good Reason” shall mean a voluntary termination by the participant due to the
occurrence (without the participant’s consent) of any of the following:
(a) material diminution of the participant’s title, authority or
responsibilities as in effect on the Plan Effective Date that is not remedied by
the Company within 5 business days after the participant’s written notice to the
Company of such diminution, (b) a reduction in the participant’s base salary as
in effect on the Plan

 

2

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Effective Date, other than as a result of a reduction (reasonably determined in
good faith by the board of directors of the Company to be necessary and in the
best interests of the Company in response to (or to reasonably forestall) a
deterioration the Company’s financial condition) of not more than 5% that
applies generally to similarly situated employees, or (c) relocation of the
participant’s principal place of business by more than 45 miles.

For the avoidance of doubt, the foregoing definitions shall supersede and
replace the definitions of Cause and Good Reason set forth in the KESP.

 

  •  

A participant will not be entitled to any severance benefits under the
Post-Filing Severance Plan on a termination for any reason other than as
specifically described above.

 

  •  

Conditions to Severance Benefits: As a condition to the receipt of any severance
benefits under the Post-Filing Severance Plan, a participant will be required to
execute, and not revoke, a waiver and release in substantially the form attached
to the KESP, as appropriately updated to reflect the Post-Filing Severance Plan
and applicable legal requirements.

 

3

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Exhibit A

Severance

 

Name

  

Position

  

Severance Amount ($)

  

Coverage Period

  

Restriction Period

Stacy Locke

   President CEO         

Lorne Phillips

   EVP CFO         

Carlos Pena

   EVP CSO         

Brian Tucker

   EVP COO         

Bryce Seki

   VP and General Counsel         

Christopher Price

   SVP Engineering and Performance Solutions         

Scott Keenen

   SVP of Human Resources         

Skip Locken

   VP Drilling Operations         

Holly Johnston

   VP Corporate Sales         

Kurt Forkheim

   SVP Controller         

Kevin Howie

   VP Wireline Services         

Bill Schneider

   VP Information Technology         

John Martinez

   Division Manager         

Wyatt Halliday

   VP Sales and Marketing Drilling Services         

Dan Petro

   VP Treasury and IR         

Daniel Hindes

   VP Well Services            

TOTAL:

        

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EXHIBIT C

Form of Joinder

 

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Form of Joinder

The undersigned (“Joinder Party”) hereby acknowledges that it has read and
understands the Restructuring Support Agreement, dated as of __________ (the
“Agreement”),1 by and among Pioneer and its affiliates bound thereto and the
Consenting Stakeholders and agrees to be bound by the terms and conditions
thereof to the extent the other Parties are thereby bound, and shall be deemed a
“Consenting Stakeholder” and “Consenting Noteholder” or “Consenting Term Lender”
under the terms of the Agreement.

The Joinder Party specifically agrees to be bound by the terms and conditions of
the Agreement and makes all representations and warranties contained therein as
of the date of this joinder and any further date specified in the Agreement.

Date Executed:

 

[CONSENTING STAKEHOLDER]

 

Name: Title:

Address:

E-mail address(es):

 

Aggregate Principal Amounts Beneficially Owned or Managed on Account of:

 

Notes Claims

 

Term Loan Claims

 

Aggregate Amounts Beneficially Owned or Managed on Account of:

 

Shares of Existing Common Stock

 

 

1 

Capitalized terms not used but not otherwise defined in this joinder shall have
the meanings ascribed to such terms in the Agreement.

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EXHIBIT D

Form Transfer Agreement

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Form Transfer Agreement

The undersigned (“Transferee”) hereby acknowledges that it has read and
understands the Restructuring Support Agreement, dated as of __________ (the
“Agreement”),1 by and among Pioneer and its affiliates bound thereto and the
Consenting Stakeholders, including the transferor to the Transferee of any
Company Claims/Interests (each such transferor, a “Transferor”), and agrees to
be bound by the terms and conditions thereof (x) to the extent the Transferor
was thereby bound and (y) with respect to any and all Company Claims/Interests
the Transferee may hold prior to the consummation of the Transfer contemplated
hereby and shall be deemed a “Consenting Stakeholder” and a “Consenting
Noteholder” or “Consenting Term Lender” under the terms of the Agreement.

The Transferee specifically agrees to be bound by the terms and conditions of
the Agreement and makes all representations and warranties contained therein as
of the date of the Transfer, including the agreement to be bound by the vote of
the Transferor if such vote was cast before the effectiveness of the Transfer
discussed in this transfer agreement.

Date Executed:

 

[CONSENTING STAKEHOLDER]

 

Name:

Title:

Address:

E-mail address(es):

 

Aggregate Principal Amounts Beneficially Owned or Managed on Account of:

 

Notes Claims

 

Term Loan Claims

 

Aggregate Amounts Beneficially Owned or Managed on Account of:

 

Shares of Existing Common Stock

 

 

1 

Capitalized terms not used but not otherwise defined in this transfer agreement
shall have the meanings ascribed to such terms in the Agreement.