Exhibit 10.1

Execution Version

 

 

 

 

SENIOR SECURED SUPER PRIORITY

DEBTOR-IN-POSSESSION CREDIT AGREEMENT

dated as of March 30, 2020

Among

CARBO CERAMICS INC.
as Borrower,

The Guarantors Party Hereto,

and

WILKS BROTHERS, LLC,

as Lender,

 

and

 

The Other Lenders Party Hereto

as Lenders

$15,000,000

 

 

 

 

 

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

 

 

Article 1 DEFINITIONS AND ACCOUNTING TERMS

2

Section 1.1

Terms Defined Above

2

Section 1.2

Certain Defined Terms

2

Section 1.3

Computation of Time Periods

22

Section 1.4

Accounting Terms; Changes in GAAP

22

Section 1.5

Miscellaneous

22

Section 1.6

Divisions

22

Article 2 CREDIT FACILITIES

23

Section 2.1

Loans

23

Section 2.2

Loans and Borrowings

23

Section 2.3

Requests for Borrowings

24

Section 2.4

Scheduled Termination of Commitments

24

Section 2.5

Prepayments

24

Section 2.6

Repayment

25

Section 2.7

Fees

25

Section 2.8

Interest.

26

Section 2.9

Reserved.

26

Section 2.10

Reserved.

26

Section 2.11

Increased Costs.

26

Section 2.12

Payments and Computations.

27

Section 2.13

Taxes.

28

Section 2.14

Replacement of Lenders

30

Article 3 CONDITIONS OF EFFECTIVENESS

31

Section 3.1

Conditions to Effectiveness

31

Section 3.2

Conditions to Each Borrowing

34

Section 3.3

Reserved.

35

Section 3.4

Post-Closing Requirements

35

Article 4 REPRESENTATIONS AND WARRANTIES

35

Section 4.1

Organization

35

Section 4.2

Authorization

36

 

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

 

Section 4.3

Enforceability

36

Section 4.4

Financial Condition

36

Section 4.5

Ownership and Liens; Real Property

37

Section 4.6

True and Complete Disclosure

37

Section 4.7

Litigation

37

Section 4.8

Compliance with Agreements

37

Section 4.9

Pension Plans

38

Section 4.10

Environmental Condition

38

Section 4.11

Subsidiaries

39

Section 4.12

Investment Company Act

39

Section 4.13

Taxes

39

Section 4.14

Permits, Licenses, etc

40

Section 4.15

Use of Proceeds

40

Section 4.16

Condition of Property; Casualties

40

Section 4.17

Insurance

40

Section 4.18

Compliance with Laws

40

Section 4.19

Security Interest

41

Section 4.20

FCPA; Sanctions

41

Section 4.21

Deposit Accounts

42

Section 4.22

EEA Financial Institutions

42

Section 4.23

Reorganization Matters

42

Article 5 AFFIRMATIVE COVENANTS

42

Section 5.1

Organization

42

Section 5.2

Reporting

43

Section 5.3

Insurance

47

Section 5.4

Compliance with Laws

48

Section 5.5

Reserved

48

Section 5.6

Material Domestic Subsidiaries

48

Section 5.7

Records; Inspection

49

Section 5.8

Maintenance of Property

49

Section 5.9

Security

49

Section 5.10

Further Assurances; Cure of Title Defects

50

 

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

 

Section 5.11

FCPA; Sanctions

51

Section 5.12

Reserved

51

Section 5.13

Payment of Obligations

51

Section 5.14

Performance of Obligations under Credit Documents

52

Section 5.15

Case Milestones

52

Section 5.16

Cash Management

52

Article 6 NEGATIVE COVENANTS

53

Section 6.1

DIP Budget

53

Section 6.2

Debt

53

Section 6.3

Liens

54

Section 6.4

Investments

55

Section 6.5

Acquisitions

56

Section 6.6

Agreements Restricting Liens

56

Section 6.7

Use of Proceeds

57

Section 6.8

Corporate Actions

57

Section 6.9

Dispositions

58

Section 6.10

Restricted Payments

58

Section 6.11

Affiliate Transactions

59

Section 6.12

Line of Business

59

Section 6.13

Hazardous Materials

59

Section 6.14

Compliance with ERISA

59

Section 6.15

Limitation on Hedging

60

Section 6.16

Chapter 11 Claims

60

Section 6.17

Other Financings

60

Section 6.18

Superpriority Claims

60

Section 6.19

Minimum Liquidity

61

Article 7 DEFAULT AND REMEDIES

61

Section 7.1

Events of Default

61

Section 7.2

Acceleration of Maturity

65

Section 7.3

Reserved

65

Section 7.4

Reserved

65

 

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

 

Section 7.5

Remedies Cumulative, No Waiver

65

Section 7.6

Application of Payments

65

Section 7.7

Lenders May File Proofs of Claim

66

Article 8 RESERVED

67

Article 9 MISCELLANEOUS

67

Section 9.1

Costs and Expenses

67

Section 9.2

Indemnification; Waiver of Damages

67

Section 9.3

Waivers and Amendments

68

Section 9.4

Severability

69

Section 9.5

Survival of Representations and Obligations

69

Section 9.6

Binding Effect

69

Section 9.7

Lender Assignments and Participations

70

Section 9.8

Confidentiality

71

Section 9.9

Notices, Etc

72

Section 9.10

Business Loans

72

Section 9.11

Usury Not Intended

72

Section 9.12

Usury Recapture

73

Section 9.13

Governing Law; Waiver of Jury Trial

73

Section 9.14

Reserved

75

Section 9.15

Reserved

75

Section 9.16

Submission to Jurisdiction

75

Section 9.17

Execution in Counterparts

75

Section 9.18

Reserved

75

Section 9.19

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

75

Section 9.20

USA Patriot Act

76

Section 9.21

No Oral Agreements

76

Section 9.22

Right of Setoff

76

Section 9.23

No Third Party Beneficiaries

77

Section 9.24

Credit Bidding

77

Section 9.25

Incorporation of DIP Orders by Reference

78

 

 

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

 

ANNEXES

 

Annex I

– Commitments

 

 

 

 

EXHIBITS:

 

Exhibit A

– Form of Assignment and Acceptance

 

Exhibit B

– Form of Compliance Certificate

 

Exhibit C

– Form of Guaranty

 

Exhibit D

– Form of Note

 

Exhibit E

– Reserved

 

Exhibit F

– DIP Budget

 

Exhibit G

– Form of Borrowing Request

 

 

 

 

SCHEDULES:

 

Schedule I

– Contact Information

 

Schedule 1.2

– Existing Letters of Credit

 

Schedule 4.1

– Organizational Information

 

Schedule 4.7

– Litigation

 

Schedule 4.8

– Compliance with Agreements

 

Schedule 4.10

– Environmental Conditions

 

Schedule 4.11

– Subsidiaries

 

Schedule 4.13

– Waivers of Tax Statute of Limitations

 

Schedule 4.20

– Sanctions

 

Schedule 4.21

– Deposit Accounts

 

Schedule 5.9(d)

– Real Property

 

Schedule 6.2(f)

– Purchase Money Debt and Capital Leases

 

Schedule 6.2(k)

– Outstanding Debt

 

Schedule 6.2(m)

– Existing Corporate Credit Card Services

 

Schedule 6.4(a)

– Investments

 

Schedule 6.9(a)(iii)

– Specified Dispositions

 

 

 

 

 

 

 

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

 

This SENIOR SECURED SUPER PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT dated
as of March 30, 2020 (this “Agreement”) is among (a) CARBO Ceramics Inc., a
Delaware corporation (the “Borrower”), (b) the Guarantors from time to time
party hereto, (c) Wilks Brothers, LLC, as a Lender (as defined below), and ()
the other Lenders from time to time party hereto.

RECITALS

A.The Borrower previously entered into that certain Amended and Restated Credit
Agreement dated as of March 2, 2017, among the Borrower, the lenders party
thereto (the “Prepetition Lenders”), and Wilks Brothers, LLC, as Administrative
Agent (the “Prepetition Administrative Agent”) (as amended, restated, amended
and restated, supplemented and/or modified from time to time through the date
hereof but before giving effect to this Agreement, the “Prepetition Credit
Agreement”).

B.In order to secure the full and punctual payment and performance of the
obligations under the Prepetition Credit Agreement, the Borrower and the
Guarantors (as defined in the Prepetition Credit Agreement) executed and
delivered mortgages, deeds of trust, collateral assignments, security
agreements, pledge agreements and financing statements in favor of the
Prepetition Administrative Agent (collectively, as amended, restated,
supplemented and/or modified from time to time immediately prior to giving
effect to this Agreement, and as amended, restated, amended and restated,
supplemented and/or modified from time to time after this Agreement becomes
effective and/or in connection with this Agreement becoming effective, the
“Prepetition Security Instruments”) granting a mortgage lien and continuing
security interest in and to the collateral described in such Prepetition
Security Instruments to secure the payment and performance of the obligations
and indebtedness of the Borrower and the Guarantors arising under the
Prepetition Credit Agreement and the Prepetition Security Instruments.

C.On March 29, 2020 (the “Petition Date”), the Borrower and the Guarantors each
commenced a voluntary case (collectively, the “Chapter 11 Cases”) under chapter
11 of title 11 of the United States Code (the “Bankruptcy Code”), and the
Chapter 11 Cases are being jointly administered in the United States Bankruptcy
Court for the Southern District of Texas, Houston Division (the “Bankruptcy
Court”).

D.From and after the Petition Date, the Borrower and the Guarantors continue to
operate their business and manage their property as debtors and debtors in
possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

E.The Borrower seeks to obtain post-petition debtor-in-possession credit
financing (the “DIP Facility”) consisting of a new money multiple draw term loan
facility in an aggregate amount not to exceed $15,000,000, in accordance with
the terms and conditions set forth in the Credit Documents (as defined below).

F.All of the claims and the liens granted under the DIP Orders (as defined
below) and the Credit Documents in respect of the DIP Facility shall be subject
and subordinate to the Carve-Out (as defined below).

 

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

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, the Credit Parties and the Lenders do hereby
further agree as follows:

ARTICLE 1

 

DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.1Terms Defined Above.  As used in this Agreement, each term defined
above has the meaning indicated above.

Section 1.2Certain Defined Terms.  The following terms shall have the following
meanings (unless otherwise indicated, such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

“Acceptable Plan” means a Chapter 11 Plan in form and substance satisfactory to
the Lenders and the Prepetition Administrative Agent that reflects the terms of
the Restructuring Support Agreement (as defined below) and (i) provides for the
termination of the unused commitments under the DIP Facility upon the effective
date of such plan, (ii) provides that the effective date of such plan shall
occur by a date that is within the applicable Case Milestones, and (iii)
contains customary releases and other exculpatory provisions for the benefit of
the Lenders, the Prepetition Administrative Agent and the Prepetition Lenders.

“Acceptable Security Interest” means a security interest which (a) exists in
favor of the Lenders and the other Secured Parties, (b) is superior to all other
security interests (other than certain of the Permitted Liens), (c) secures the
Obligations, and (d) is perfected and enforceable against the Credit Party which
created such security interest.

“Account Control Agreement” and “Control Agreement” each means, with respect to
any deposit account or securities account, an agreement, in form and substance
reasonably satisfactory to the Lenders, among the Lenders, the financial
institution or other Person at which such account is maintained and the Credit
Party maintaining such account or owning such entitlement, effective to grant
“control” (as defined in the UCC (as defined in the Security Agreement), as
applicable) over such account to the Lenders.

“Account Debtor” means an account debtor as defined in the Uniform Commercial
Code, as in effect in the State of Texas.

“Acquisition” means the purchase by any Credit Party of any business, including
the purchase of associated assets or operations or the Equity Interests of a
Person.

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person.  The
term “control” (including the terms “controlled by” or “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership, by contract, or otherwise.  For purposes of this Agreement, neither
Wilks Brothers, LLC nor any of its Affiliates shall be deemed to be an
“Affiliate” of any Credit Party or any of their respective Subsidiaries.

 

-2-

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

“Aggregate Commitments” at any time shall equal the sum of the Commitments.

“Agreement” is defined in the introductory paragraph hereof.

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the Borrower or any of its Subsidiaries  from time to
time concerning or relating to bribery or corruption.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Asset Guard” means Asset Guard Products Inc., a Delaware corporation, formerly
known as Falcon Technologies and Services, Inc.

“Assignment and Acceptance” means an assignment and acceptance executed by a
Lender and an Eligible Assignee and accepted by the Lenders, in substantially
the same form as Exhibit A.

“ASTM E 1527-13” means the American Society of Testing and Materials Practice E
1527-13 Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process (ASTM E 1527-13).

“Available Draw Commitments” means, as to any Lender, at any time, an amount
equal to the then available unfunded Commitment of such Lender.

“Avoidance Actions” has the meaning set forth in the DIP Orders.

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

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

“Borrower” means CARBO Ceramics Inc., a Delaware corporation.

“Borrowing” means Loans made on a Borrowing Date.

“Borrowing Date” means the date on which any Loan is made hereunder.

“Borrowing Request” means a written request by the Borrower for a Borrowing in
accordance with Section 2.3.

“Budgeted Expenses” means expenses permitted to be paid by the Credit Parties in
accordance with the DIP Budget, subject to the Permitted Variances and the
Permitted Carry.

“Building” has the meaning assigned to such term in the applicable Flood
Insurance Regulation.

 

-3-

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

“Business Day” means a day other than a Saturday, Sunday, or other day on which
the Lenders are authorized to close under the laws of, or is in fact closed in,
Houston, Texas.

“Capital Leases” means, for any Person, any lease of any Property by such Person
as lessee which would, in accordance with GAAP, be required to be classified and
accounted for as a capital lease on the balance sheet of such Person.

“Carve-Out” has the meaning set forth in the DIP Orders.

“Case Milestones” has the meaning given thereto in Section 5.15.

“Cash Management Order” means an order in form and substance approved by the
Lenders regarding the Credit Parties’ cash management system, bank accounts,
cash collections and disbursements, intercompany transactions, bank fees,
business forms, corporate cards and related matters, as such order may be
amended, supplemented or modified with the prior approval of the Lenders.

“Casualty Event” means the damage, destruction or condemnation, as the case may
be, of property of the Borrower or any Subsidiary, including by process of
eminent domain or any Disposition of property in lieu of condemnation.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.

“Change in Control” means the occurrence of any of the following events:

(a)the Borrower ceases to own, either directly or indirectly, 100% of the Equity
Interest in any Guarantor other than as a result of transaction permitted under
Section 6.8 or Section 6.9; and

(b)any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act, but excluding any employee benefit plan of such person or
its subsidiaries, any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan), becomes a “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire (such right, an
“option right”), whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of 50% or more of the Equity Interests
of the Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Borrower on a fully-diluted basis (and taking
into account all such securities that such person or group has the right to
acquire pursuant to any option right);

(c)substantially all of the Credit Parties’ property and assets are sold,
transferred and/or are Disposed of (in one sale, transfer or Disposition or a
series of sales, transfers and/or Dispositions);

(d)the merger or consolidation of the Borrower with or into any other Person or
group, to the extent that the Borrower is not the surviving entity; and

 

-4-

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

(e)adoption of a plan of liquidation or dissolution in regards to the Borrower.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

“Chapter 11 Plan” means a plan of reorganization or liquidation filed in any of
the Chapter 11 Cases under Section 1121 of the Bankruptcy Code.

“Closing Fee” has the meaning set forth in Section 2.7(b).

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means all property of the Credit Parties which is “Collateral” (as
defined in the Security Agreement) and other similar terms referred to in the
Security Documents (including without limitation, the Mortgages) and all of the
other property that is or is intended under the terms of the Security Documents
to be subject to Liens in favor of the Lenders for the benefit of the Secured
Parties.

“Collateral Access Agreement” means a landlord lien waiver or subordination
agreement, bailee letter or any other similar agreement, in any case, in form
and substance reasonably acceptable to the Lenders and executed by the parties
thereto.

“Collateral Assignment” means that certain Collateral Assignment of Bond and
Deed to Secure Debt dated as of the date hereof and granted by the Borrower in
favor of the Lenders.

“Commitments” means, with respect to each Lender, the commitment of such Lender
to make Loans pursuant to Section 2.1 in an aggregate principal amount not to
exceed the amount set forth opposite such Lender’s name on Annex I hereto, as
such commitment may be modified from time to time pursuant to assignments by or
to such Lender pursuant to Section 9.7, as such amount may be adjusted from time
to time in accordance with this Agreement.  

“Committee” means, collectively, if applicable, the official committee of
unsecured creditors and any other official committee formed, appointed or
approved in any Chapter 11 Case and each of such committees shall be referred to
herein as a “Committee”.

“Compliance Certificate” means a compliance certificate executed by a
Responsible Officer of the Borrower or such other Person as required by this
Agreement in substantially the same form as Exhibit B.

“Confirmation Order” has the meaning given thereto in Section 5.15(f).

“Consolidated Net Tangible Assets” means, as of any date of determination, an
amount equal to the aggregate book value of the tangible assets of the Borrower
and the other Credit Parties and, to the extent of the ownership interest of the
Borrower and the other Credit Parties therein, any Non-Guarantor Subsidiaries
and joint ventures at such time, minus the liabilities of the Borrower

 

-5-

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

and the other Credit Parties, all as determined on a consolidated basis in
accordance with GAAP based on the most recent quarterly or annual consolidated
financial statements of the Borrower referred to in Section 4.4 or delivered as
provided in Section 5.2, as the case may be (for the avoidance of doubt,
Consolidated Net Tangible Assets shall not include goodwill, trade names,
patents, unamortized debt discount and expense or any other like intangibles).  

“Consummation Date” means the date of the substantial consummation (as defined
in section 1101 of the Bankruptcy Code and which for purposes of this Agreement
shall be no later than the effective date) of a Reorganization Plan that is
confirmed pursuant to an order of the Bankruptcy Court.

“Controlled Group” means all members of a controlled group of corporations and
all businesses (whether or not incorporated) under common control which,
together with the Borrower, any Guarantor or any Subsidiary, are treated as a
single employer under Section 414 of the Code.

“Credit Documents” means this Agreement, the Notes, the Guaranties, the Security
Documents, and each other agreement, instrument, or document executed at any
time in connection with this Agreement.

“Credit Parties” means the Borrower and the Guarantors.

“Debt” means, for any Person, without duplication:  (a) indebtedness of such
Person for borrowed money, including the face amount of any letters of credit
supporting the repayment of indebtedness for borrowed money issued for the
account of such Person; (b) to the extent not covered under clause (a) above,
obligations under letters of credit and agreements relating to the issuance of
letters of credit or acceptance financing; (c) obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, or upon
which interest payments are customarily made; (d) obligations of such Person
under conditional sale or other title retention agreements relating to any
Properties purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business); (e) obligations of such Person to pay the deferred purchase
price of property, services, or Acquisitions (including, without limitation, any
earn-out obligations, contingent obligations, or other similar obligations
associated with such purchase, and including obligations that are non-recourse
to the credit of such Person but are secured by the assets of such Person);
(f) obligations of such Person as lessee under Capital Leases and obligations of
such Person in respect of synthetic leases; (g) obligations of such Person under
any Hedging Arrangement; (h) obligations of such Person owing in respect of
redeemable preferred stock or other preferred Equity Interest of such Person if
such redeemable preferred stock or other preferred Equity Interest is redeemable
at the option of the holders thereof, or mandatorily redeemable by the issuer,
in each case prior to the Maturity Date; (i) the Debt of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer, but only to the extent to which there is recourse to such Person
for the payment of such Debt; (j) obligations of such Person under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) of
such Person to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (a) through (i) above; (k) indebtedness or obligations of
others of the kinds referred to in clauses (a) through (j) secured by any Lien
on or

 

-6-

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

in respect of any Property of such Person, and (l) all liabilities of such
Person in respect of unfunded vested benefits under any Plan.

“Debt Incurrence” means any incurrence, issuance or sale by the Borrower or any
of its Subsidiaries of any Debt after the Effective Date other than Permitted
Debt.

“Debt Incurrence Proceeds” means, with respect to any Debt Incurrence, all cash
and Liquid Investments received by the Borrower or any of its Subsidiaries from
such Debt Incurrence after payment of, or provision for, all underwriter fees
and expenses, original issue discount, SEC and blue sky fees, printing costs,
fees and expenses of accountants, lawyers and other professional advisors,
brokerage commissions, Taxes paid or payable in connection with such Debt
Incurrence and other out-of-pocket fees and expenses actually incurred in
connection with such Debt Incurrence; provided that, an original issue discount
shall not reduce the amount of such Debt Incurrence Proceeds unless such
discount is due and payable at or immediately following the closing of such Debt
Incurrence and such discount has not already been taken into account to reduce
the amount of proceeds received by the Borrower or such Subsidiary from such
Debt Incurrence.

“Default” means (a) an Event of Default or (b) any event or condition which with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.

“Deposit Account” means any operating, administrative, cash management,
collection activity, demand, time, savings, passbook or other deposit account
maintained with a bank or other financial institution.

“DIP Budget” means a 13-week cash flow forecast detailing the Credit Parties’
anticipated cash receipts and expenditures (including Professional Fees and
expenses), as amended, supplemented, or replaced from time to time in accordance
with this Agreement, which budget (and any amendments thereto or replacements
thereof) shall be in form and substance acceptable to the Lenders and shall be
incorporated into the DIP Orders.

“DIP Cash Collateral” means cash collateral, as such term is defined in Section
363(a) of the Bankruptcy Code and as defined in the DIP Orders, arising from or
relating to Collateral granted to the Lenders.

“DIP Orders” means, together or individually, as applicable, the Interim DIP
Order and the Final DIP Order.

“Disclosure Statement” has the meaning given thereto in Section 5.15(c).

“Disposition” means any sale, lease, license, transfer, assignment, conveyance,
or other disposition of any Property; “Dispose” or similar terms shall have
correlative meanings.

“Dollars” and “$” means lawful money of the United States of America.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
the United States, any state thereof or the District of Columbia.

 

-7-

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

“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (a) or (b) of this definition
and is subject to consolidated supervision with its parent;

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

“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

“Effective Date” has the meaning given thereto in section 3.1.

“Eligible Assignee” means (a) a Lender, (b) any Affiliate of a Lender approved
by the Lenders, (c) any Approved Fund approved by the Lenders or (d) any other
Person (other than a natural Person) approved by Lenders and, unless an Event of
Default has occurred and is continuing at the time any assignment is effected in
accordance with Section 9.7, the Borrower.  

“Environment” or “Environmental” has the meanings set forth in 42 U.S.C. 9601(8)
(1988).

“Environmental Claim” means any third party (including governmental agencies and
employees) action, lawsuit, claim, demand, regulatory action or proceeding,
order, decree, consent agreement or notice of potential or actual responsibility
or violation (including claims or proceedings under the Occupational Safety and
Health Acts or similar laws or requirements relating to health or safety of
employees) which seeks to impose liability under any Environmental Law.

“Environmental Law” means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements,
including common law theories, now or hereafter in effect and relating to, or in
connection with the Environment, health, or safety, including without limitation
CERCLA, relating to (a) pollution, contamination, injury, destruction, loss,
protection, cleanup, reclamation or restoration of the air, surface water,
groundwater, land surface or subsurface strata, or other natural resources;
(b) solid, gaseous or liquid waste generation, treatment, processing, recycling,
reclamation, cleanup, storage, disposal or transportation; (c) exposure to
pollutants, contaminants, hazardous, medical infections, or toxic substances,
materials or wastes; (d) the safety or health of employees; or (e) the
manufacture, processing, handling, transportation, distribution in commerce,
use, storage or disposal of hazardous, medical infections, or toxic substances,
materials or wastes.

“Environmental Permit” means any permit, license, order, approval, registration
or other authorization under Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

-8-

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

“Equipment” of any Person means all equipment (as defined in the UCC) owned by
such Person, wherever located.

“Equity Interest” means with respect to any Person, any shares, interests,
participation, or other equivalents (however designated) of corporate stock,
membership interests or partnership interests (or any other ownership interests)
of such Person.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Federal Reserve Board as in effect from time to time.

“Event of Default” has the meaning specified in Section 7.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Account” means any deposit account or securities account in which
funds are maintained and used solely for (a) the payment of salaries, wages and
payroll tax, workers’ compensation, and 401K, health and welfare plans, (b)
petty cash with a balance less than $25,000 individually or in the aggregate for
all such petty cash accounts, at all times, (c) cash or securities on deposit
that are subject to a Lien permitted under Section 6.3(i) and that otherwise
constitute Prior Liens, (d) cash deposits for utilities pursuant to an order of
the Bankruptcy Court issued in the Chapter 11 Cases or (e) cash for payment of
any Professional Fees.

“Excluded Collateral” means:

(a)any contracts, instruments, licenses, license agreements or other documents
(or any rights thereunder), to the extent (and only to the extent) that the
grant of a security interest would (i) constitute a violation of a restriction
in favor of, or requires a consent not obtained prior to the Effective Date of,
a third party on such grant, (ii) give any other party to such contract,
instrument, license, license agreement or other document the right to terminate
its obligations thereunder, or (iii) violates any law or requires the consent
not obtained prior to the Effective Date of any Governmental Authority; provided
that the limitation set forth in this clause (a) above shall not affect, limit,
restrict or impair the grant by a Credit Party of a security interest pursuant
to the Security Agreement in any such right, to the extent that an otherwise
applicable prohibition or restriction on such grant is rendered ineffective by
any applicable law, including the UCC or the Bankruptcy Code;

(b)any application to register any trademark or service mark prior to the filing
under applicable law of a verified statement of use (or the equivalent) for such
trademark or service mark to the extent the creation of a security interest
therein or the grant of a mortgage thereon would void or invalidate such
trademark or service mark;

(c)any Excluded Accounts; and

(d)Avoidance Actions (and the proceeds thereof).

 

-9-

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

“Excluded Swap Obligation” means, with respect to any Guarantor, any Hedge
Obligation if, and to the extent that, all or a portion of the guaranty of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
such Hedge Obligation (or any guaranty thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure for any reason to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the guaranty of such Guarantor or the grant
of such security interest becomes effective with respect to such Hedge
Obligation.  If a Hedge Obligation arises under a master agreement governing
more than one swap, such exclusion shall apply only to the portion of such Hedge
Obligation that is attributable to swaps for which such guaranty or security
interest is or becomes illegal.

“Excluded Taxes” has the meaning specified in Section 2.13(a).

“Existing Letters of Credit” means those letters of credit set forth on Schedule
1.2.

“Extraordinary Receipts” means any proceeds resulting from a Casualty Event,
including any insurance proceeds, less any Taxes paid or payable in connection
with such Casualty Event.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future Treasury
Regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to any intergovernmental
agreement, treaty or convention among Governmental Authorities and implementing
such Sections of the Code.

“FCPA” has the meaning set forth in Section 4.20(a).

“Federal Flood Insurance” means federally backed Flood Insurance available under
the National Flood Insurance Program to owners of real property improvements
located in Special Flood Hazard Areas in a community participating in the
National Flood Insurance Program.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any of its successors.

“FEMA” means the Federal Emergency Management Agency, a component of the United
States Department of Homeland Security that administers the National Flood
Insurance Program, or any of its successors.

“Final DIP Order” means an order of the Bankruptcy Court in the Chapter 11 Cases
authorizing and approving on a final basis, among other things, (a) the DIP
Facility and the extensions of credit thereunder, including the incurrence by
the Credit Parties of secured indebtedness in accordance with this Agreement,
(b) the form of this Agreement and the other Credit Documents, (c) the granting
of Liens and claims by the Credit Parties in favor of the Lenders, (d) the
payment by the Credit Parties of the fees contemplated by this Agreement, (e)
the provision of adequate protection to the Prepetition Lenders in a manner
satisfactory to the Lenders and the Prepetition Majority Lenders, (f) the other
obligations of the Credit Parties under this Agreement and the other Credit

 

-10-

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

Documents, and (g) such other matters as are usual and customary for orders of
this kind, which order shall be in form and substance satisfactory to the
Lenders in all respects, which order shall not have been vacated, reversed,
modified or stayed, and as the same may be amended, supplemented or modified
from time to time after entry thereof in accordance with the terms hereof but
only with the written consent of the Lenders.

“First Day Orders” has the meaning given thereto in Section 3.1(p).

“Flood Insurance” means, for any owned real property located in a Special Flood
Hazard Area, Federal Flood Insurance or private insurance that meets or exceeds
the requirements set forth by FEMA in its Mandatory Purchase of Flood Insurance
Guidelines.

“Flood Insurance Regulations” means (a) the National Flood Insurance Act of 1968
as now or hereafter in effect or any successor statute thereto, (b) the Flood
Disaster Protection Act of 1973 as now or hereafter in effect or any successor
statute thereto, (c) the National Flood Insurance Reform Act of 1994 (amending
42 USC § 4001, et seq.), as the same may be amended or recodified from time to
time, and (d) the Flood Insurance Reform Act of 2004 and any regulations
promulgated thereunder.

“Foreign Subsidiary” means any Subsidiary of Borrower that is a “controlled
foreign corporation” as defined in Section 957 of the Code.

“FSHCO” means any Subsidiary substantially all of whose assets consist of Equity
Interests and/or indebtedness of one or more Foreign Subsidiaries.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities.

“GAAP” means United States of America generally accepted accounting principles
as in effect from time to time, applied on a basis consistent with the
requirements of Section 1.4.

“Governmental Authority” means, with respect to any Person, any foreign
governmental authority, the United States of America, any state of the United
States of America, the District of Columbia, and any subdivision of any of the
foregoing, and any agency, department, commission, board, authority or
instrumentality, bureau or court having jurisdiction over such Person.

“Guarantors” means any Person that now or hereafter executes a Guaranty,
including (a) Asset Guard, (b) Stratagen Inc., a Delaware corporation, and (c)
each Material Domestic Subsidiary or other Subsidiary that becomes a guarantor
of all or a portion of the Obligations and which has entered into either a
joinder agreement substantially in the form attached to the Guaranty or a new
Guaranty; provided, however, that the Guarantors shall not include any Foreign
Subsidiary, FSHCO or any Subsidiary of a Foreign Subsidiary or FSHCO.

“Guaranty” means the Guaranty Agreement executed in substantially the same form
as Exhibit C.

 

-11-

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

“Hazardous Substance” means any substance or material identified as such
pursuant to CERCLA and those regulated under any other Environmental Law,
including without limitation pollutants, contaminants, petroleum, petroleum
products, radionuclides, and radioactive materials.

“Hazardous Waste” means any substance or material regulated or designated as
such pursuant to any Environmental Law, including without limitation,
pollutants, contaminants, flammable substances and materials, explosives,
radioactive materials, oil, petroleum and petroleum products, chemical liquids
and solids, polychlorinated biphenyls, asbestos, toxic substances, and similar
substances and materials.

“Hedge Obligation” means, with respect to any Guarantor, any obligation to pay
or perform under any agreement, contract or transaction that constitutes a
“swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“Hedging Arrangement” means a hedge, call, swap, collar, floor, cap, option,
forward sale or purchase or other contract or similar arrangement (including any
obligations to purchase or sell any commodity or security at a future date for a
specific price) which is entered into to reduce or eliminate or otherwise
protect against the risk of fluctuations in prices or rates, including interest
rates, foreign exchange rates, commodity prices and securities prices.

“Inventory” of any Person means all Property of such Person which would, in
accordance with GAAP, be required to be classified and accounted for as
inventory on the balance sheet of such Person.

“Interim DIP Order” means an order of the Bankruptcy Court in the Chapter 11
Cases authorizing and approving on an interim basis, among other things, (a) the
DIP Facility and the extensions of credit thereunder, including the incurrence
by the Credit Parties of secured indebtedness in accordance with this Agreement,
(b) the form of this Agreement and the other Credit Documents, (c) the granting
of Liens and claims by the Credit Parties in favor of the Lenders, (d) the
payment by the Credit Parties of the fees contemplated by this Agreement, (e)
the provision of adequate protection to the Prepetition Lenders in a manner
satisfactory to the Lenders and the Prepetition Majority Lenders, (f) the other
obligations of the Credit Parties under this Agreement and the other Credit
Documents, and (g) such other matters as are usual and customary for orders of
this kind, which order shall be in form and substance satisfactory to the
Lenders in all respects, which order shall not have been vacated, reversed,
modified or stayed, and as the same may be amended, supplemented or modified
from time to time after entry thereof in accordance with the terms hereof but
only with the written consent of the Lenders.

“Legal Requirement” means any law, statute, ordinance, decree, requirement,
order, judgment, rule, regulation (or official interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, including, but not limited to, Regulations T, U and X.

“Lenders” means the Persons listed on the signature pages hereto as Lenders, any
other Person that shall have become a Lender hereto pursuant to Section 2.14,
and any other Person that shall have become a Lender hereto pursuant to an
Assignment and Acceptance, but in any event,

 

-12-

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

excluding any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.  

“Lending Office” means, as to any Lender, the office or offices of such Lender
described on Schedule I, or such other office or offices as a Lender may from
time to time notify the Borrower.

“Lien” means any mortgage, lien, pledge, charge, deed of trust, security
interest, or encumbrance to secure or provide for the payment of any obligation
of any Person, whether arising by contract, operation of law, or otherwise
(including the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease, or other title retention agreement).

“Liquid Investments” means (a) readily marketable direct full faith and credit
obligations of the United States of America or obligations unconditionally
guaranteed by the full faith and credit of the United States of America;
(b) commercial paper issued by (i) any Lender or any Affiliate of any Lender or
(ii) any commercial banking institutions or corporations rated at least P-2 by
Moody’s or A-2 by S&P; (c) certificates of deposit, time deposits, and bankers’
acceptances issued by (i) any of the Lenders or (ii) any other commercial
banking institution which is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than $250,000,000
and rated Aa by Moody’s or AA by S&P; (d) repurchase agreements which are
entered into with any of the Lenders or any major money center banks included in
the commercial banking institutions described in clause (c) and which are
secured by readily marketable direct full faith and credit obligations of the
government of the United States of America or any agency thereof;
(e) investments in any money market fund which holds investments substantially
of the type described in the foregoing clauses (a) through (d); (f) other
investments made through the Lenders or their Affiliates and approved by the
Lenders; and (g) deposit accounts and securities accounts (solely to the extent
that such securities accounts only hold the invests described in the foregoing
clauses (a) through (f)), subject to the terms and conditions of Section 5.9(c)
of this Agreement.  All the Liquid Investments described in clauses (a) through
(d) above shall have maturities of not more than 365 days from the date of
issue.

“Liquidity” means, at any time, the sum of (a) the positive remainder, if any,
of (i) the maximum aggregate amount of Commitments pursuant to Section 2.1 at
such time (but only to the extent Borrower is permitted to borrow such maximum
amount under the terms of this Agreement, including, without limitation, Section
3.2) minus (ii) the aggregate outstanding principal amount of the Loans at such
time, plus (b) the aggregate amount of all cash and cash equivalents on the
consolidated balance sheet of the Borrower and its Subsidiaries at such time
that is not “restricted” for purposes of GAAP or otherwise encumbered (other
than by a Lien granted under a Security Document).

“Loans” means any and all term loans made, or to be made, to the Borrower by the
Lenders pursuant to Section 2.1.

“Manufactured (Mobile) Home” has the meaning assigned to such term in the
applicable Flood Insurance Regulation.

“Material Adverse Change” means a material adverse change (a) in the business,
financial condition, properties or results of operations of the Borrower and its
Subsidiaries, taken as a whole;

 

-13-

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

(b) on the validity or enforceability of this Agreement or any of the other
Credit Documents; or (c) on any Credit Party’s ability to perform its
obligations under this Agreement, any Note, the Guaranties or any other Credit
Document; provided that none of the following shall be taken into account in
determining whether there has been a Material Adverse Change: (i) the
commencement or continuation of the Chapter 11 Cases, or any events resulting
therefrom, (ii) changes or conditions generally affecting the economy or the
financial markets in the United States or globally or (iii) changes or
conditions generally affecting the industries in which the Credit Parties
operate.  

“Material Domestic Subsidiary” means, (a) as of any fiscal quarter end, any
Domestic Subsidiary that (i) has operating income equal to or greater than 10%
of the Borrower’s consolidated operating income, in each case, for the
four-fiscal quarter period then ended, or (ii) has book value of total assets
equal to or greater than 10% of the Borrower’s consolidated book value of total
assets, in each case under clauses (i) and (ii) above, as established in
accordance with GAAP and as reflected in the financial statements covering such
fiscal quarter and delivered to the Lenders pursuant hereto, (b) Asset Guard and
(c) StrataGen, Inc., a Delaware corporation.

“Maturity Date” means the earliest of (a) the Scheduled Maturity Date; (b) the
date upon which the Interim DIP Order expires if the Final DIP Order has not
then been entered; (c) thirty (30) days after the Petition Date if the Final DIP
Order has not then been entered; (d) the Consummation Date; (e) the closing of
any sale of assets, which when taken together with all asset sales completed
since the Effective Date, constitutes a sale of all or substantially all of the
assets of the Borrower and the Guarantors; (f) the date of the failure to
achieve any of the Case Milestones in accordance with Section 5.15 hereof; and
(g) the date on which all Loans become due and payable and the Commitments are
terminated under the Credit Documents, whether by acceleration or otherwise.

“Maximum Rate” means the maximum nonusurious interest rate under applicable law.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto which
is a nationally recognized statistical rating organization.

“Mortgage” means each mortgage or deed of trust in form reasonably acceptable to
the Lenders executed by any Credit Party to secure all or a portion of the
Obligations.

“Mortgaged Property” means any real Property owned by any Loan Party that is
subject to a Mortgage.

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any member of the
Controlled Group is making or accruing an obligation to make contributions.

“National Flood Insurance Program” means the program created by any Governmental
Authority of the United States pursuant to the Flood Insurance Regulations, that
mandates the purchase of flood insurance to cover real property improvements
located in Special Flood Hazard Areas in participating communities and provides
protection to property owners through a federal insurance program.

“Net Cash Proceeds” means, with respect to any Disposition, all cash and Liquid
Investments received from such Disposition after (a) payment of, or provision
for, all reasonable brokerage and

 

-14-

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

transaction commissions, marketing costs, restoration and refurbishment
expenses, and other reasonable out of pocket fees and expenses actually incurred
in connection with such Disposition; (b) payment of any outstanding obligations
(permitted hereunder) secured by the Property that is being Disposed (other than
the Obligations); (c) all Taxes paid or payable by such Person, any Subsidiary
of such Person or any member of the Tax Group of such Person in connection with
such Disposition; and (d) the amount of reserves recorded in accordance with
GAAP for indemnity or similar obligations of the Person making such Disposition
and its Affiliates directly related to such Disposition.

“Non-Material Domestic Subsidiary” means any Domestic Subsidiary other than a
Material Domestic Subsidiary.

“Notes” has the meaning set forth in Section 2.2(b).

“Obligations” means all principal, interest (including post-petition interest),
fees, reimbursements, indemnifications, and other amounts now or hereafter owed
by any of the Credit Parties to the Lenders under this Agreement and the other
Credit Documents (but excluding, for the avoidance of doubt, any Prepetition
Secured Debt), and any increases, extensions, and rearrangements of those
obligations under any amendments, restatements, supplements, and other
modifications of the documents and agreements creating those obligations.

“OFAC” has the meaning set forth in Section 4.20(b).

“Other Taxes” has the meaning set forth in Section 2.13(b).

“Paid in Full” or “Payment in Full” means the Obligations hereunder has been
indefeasibly paid in full in cash (other than contingent indemnification
obligations for which no claim has been asserted) and the Commitments have been
terminated.

“Participant Register” has the meaning set forth in Section 9.7(d).

“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)).

“Payment Date” means (a) the last Business Day of each calendar month; provided,
however, that if any such day is not a Business Day, such Payment Date shall be
the next succeeding Business Day and (b) the Termination Date.

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

“Permitted Carry” has the meaning set forth in the DIP Orders.

“Permitted Debt” has the meaning set forth in Section 6.2.

“Permitted Investments” has the meaning set forth in Section 6.4.

“Permitted Liens” has the meaning set forth in Section 6.3.

 

-15-

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

“Permitted Variances” has the meaning set forth in the DIP Orders.

“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, trust, limited liability company, limited liability
partnership, unincorporated association, joint venture, or other entity, or a
government or any political subdivision or agency thereof, or any trustee,
receiver, custodian, or similar official.

“Petition Date” has the meaning set forth in the Recitals hereto.

“Plan” means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Borrower or any member of the Controlled Group
and covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code.

“Prepetition Administrative Agent” has the meaning set forth in the Recitals
hereto.

“Prepetition Credit Agreement” has the meaning set forth in the Recitals hereto.

“Prepetition Debt” means the Debt of the Credit Parties outstanding immediately
prior to the Petition Date.

“Prepetition Lenders” has the meaning set forth in the Recitals hereto.

“Prepetition Loan Documents” has the meaning assigned to the term “Credit
Documents” in the Prepetition Credit Agreement.

“Prepetition Majority Lenders” has the meaning assigned to the term “Majority
Lenders” in the Prepetition Credit Agreement.

“Prepetition Secured Debt” means the Debt of the Credit Parties outstanding
immediately prior to the Petition Date pursuant to the Prepetition Credit
Agreement.

“Prepetition Secured Loans” means the “Term Loans” (as defined in the
Prepetition Credit Agreement) made by the Prepetition Lenders to the Borrower
pursuant to the Prepetition Credit Agreement that are outstanding as of any date
of determination.

“Prepetition Security Instruments” has the meaning set forth in the Recitals
hereto.

“Previously Absent Covenant” means, at any time (x) any negative or financial
covenant that is not included in this Agreement at such time and (y) any
negative or financial covenant in any other Debt that is included in this
Agreement at such time but with covenant levels that are more restrictive to the
Borrower and its Subsidiaries than the covenant levels included in this
Agreement at such time.

“Prior Liens” has the meaning set forth in the DIP Orders.

“Professional Fees” has the meaning set forth in the DIP Orders.

“Property” of any Person means any property or assets (whether real, personal,
or mixed, tangible or intangible) of such Person.

 

-16-

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

“Pro Rata Share” means, at any time with respect to any Lender, (a) the ratio
(expressed as a percentage) of such Lender’s outstanding Loans at such time to
the aggregate Loans of all Lenders outstanding at such time.

“Qualified Equity Interests” means preferred Equity Interests issued by a Person
the terms of which are the same as those applicable to any class of units or
common Equity Interests issued by such Person other than that such preferred
Equity Interests (a) may be provided a preference over any class of units or the
common Equity Interests in liquidation or payment of dividends or distributions,
(b) may be convertible or exchangeable at the option of the holder but only into
any common Equity Interests, (c) may have customary class voting rights, and (d)
may have a fixed or variable dividend or distribution rate; provided that, in no
event shall such units or such other preferred Equity Interests have any
“debt”-like features such as (but not limited to) (i) a scheduled maturity, any
amortization, any scheduled prepayments or any other prepayment terms (except
that such preferred Equity Interests may have a scheduled maturity date that is
no earlier than 180 days after the scheduled Maturity Date), (ii) any required
cash interest payments, coupons, dividends or any other payments (other than
conversions or exchanges into common Equity Interests or PIK dividends in
additional Qualified Equity Interests or any principal payments at such
scheduled maturity date), or (iii) any financial or other type of covenants
other than covenants that are customary to common Equity Interests).  

“Receivables” of any Person means, at any date of determination thereof, all
Property of such Person which would, in accordance with GAAP, be required to be
classified and accounted for as accounts receivable on the balance sheet of such
Person.

“Redemption” means, with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt. “Redeem” has the correlative meaning thereto.

“Refinancing Debt” means, with respect to any Person, Debt issued, incurred or
otherwise obtained in exchange for, or to extend, renew, replace or refinance,
in whole or part, any Debt of such Person (solely for purposes of this
definition, “Refinanced Debt”); provided that (a) such Debt has a later maturity
than and a weighted average life to maturity equal to or greater than the
Refinanced Debt, (b) except as otherwise permitted hereunder (subject to
dollar-for-dollar reduction of any applicable basket) such Debt shall not have a
greater principal amount than the principal amount of the Refinanced Debt plus
accrued interest, fees and premiums (if any) thereon and reasonable fees and
expenses associated with the refinancing (provided that the principal amount of
such Debt shall not include any principal constituting interest paid in kind),
(c) such Refinanced Debt shall be repaid, defeased or satisfied and discharged
on a dollar-for-dollar basis, and all accrued interest, fees and premiums (if
any) in connection therewith shall be paid (by way of defeasance, discharge or
otherwise), substantially concurrently with the incurrence of such Refinancing
Debt, (d) such Debt shall not at any time be guaranteed by any Persons other
than Persons that are guarantors of the Refinanced Debt, and the terms of such
guarantee, taken as a whole, shall be no more favorable to the secured parties
in respect of such Debt than the terms of the guarantee of the Refinanced Debt,
taken as a whole, (e) if the Refinanced Debt is secured, the terms and
conditions relating to collateral for such Debt , taken as a whole, shall be no
more favorable to the secured parties in respect of such Debt than the terms and
conditions with respect to the collateral for the Refinanced Debt (and the Liens
on any Collateral securing such Debt shall

 

-17-

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

have the same (or lesser) priority as the Refinanced Debt relative to the Liens
on the Collateral securing the Obligations), (f) if the Refinanced Debt is
subordinated in right of payment to the Obligations, such Debt shall be
subordinated in right of payment to the Obligations on terms at least as
favorable to the Lenders as the subordination terms applicable to the Refinanced
Debt, (g) the terms and conditions of any such modified, refinanced, refunded,
renewed, replaced, exchanged or Debt (other than interest, fees, premiums,
funding discounts, optional prepayment/redemption provisions (including any
premiums related thereto), guarantees, collateral, and subordination  are,
either (i) substantially identical to or less favorable to the investors
providing such Refinancing Debt, taken as a whole, than the terms and conditions
of the Debt being modified, refinanced, refunded, renewed, replaced, exchanged
or extended or (ii) when taken as a whole, not more restrictive to the Borrower
and/or its Subsidiaries, as applicable, than those set forth in this Agreement
(after giving effect to the addition of the Previously Absent Covenant pursuant
to the immediately following proviso in this clause (g)) or are customary for
similar Debt in light of the then current market conditions; provided that to
the extent the documentation governing such Debt includes a Previously Absent
Covenant, the Lenders shall be given prompt written notice thereof and this
Agreement shall be amended to include such Previously Absent Covenant for the
benefit of this Agreement; provided further that a certificate of a Responsible
Officer of the Borrower shall be delivered to the Lenders in good faith at least
five Business Days prior to the incurrence of such Debt, together with a
reasonably detailed description of the material terms and conditions of such
Debt or drafts of the documentation relating thereto, stating that the Borrower
has determined in good faith that such terms and conditions satisfy the
requirement set out in this clause (g) and (h) at the time thereof, no Default
or Event of Default shall have occurred and be continuing.

“Register” has the meaning set forth in Section 9.7(b).

“Regulations T, U, and X” means Regulations T, U, and X of the Federal Reserve
Board, as each is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.

“Release” has the meaning set forth in CERCLA or under any other Environmental
Law.

“Reorganization Plan” means a chapter 11 plan of reorganization or liquidation
of any Credit Party in the Chapter 11 Cases.

“Response” has the meaning set forth in CERCLA or under any other Environmental
Law.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA
(other than any such event not subject to the provision for 30-day notice to the
PBGC under the regulations issued under such section).

“Responsible Officer” means (a) with respect to any Person that is a
corporation, such Person’s chief financial officer, treasurer or controller, (b)
with respect to any Person that is a limited liability company, if such Person
has officers, then such Person’s chief financial officer, treasurer or
controller, and if such Person is managed by members, then a chief financial
officer, treasurer or controller of such Person’s managing member, and if such
Person is managed by managers, then a manager (if such manager is an individual)
or a Responsible Officer of such manager (if such manager is an entity), and (c)
with respect to any Person that is a general partnership, limited

 

-18-

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

partnership or a limited liability partnership, the Responsible Officer of such
Person’s general partner or partners.

“Restricted Payment” means, with respect to any Person, (a) any direct or
indirect dividend or distribution (whether in cash, securities or other
Property) or any direct or indirect payment of any kind or character (whether in
cash, securities or other Property) in consideration for or otherwise in
connection with any Equity Interest of such Person, including in connection with
any retirement, purchase, redemption or other acquisition of such Equity
Interest, or any options, warrants or rights to purchase or acquire any such
Equity Interest or (b) principal or interest payments (in cash, Property or
otherwise) on, or redemption of, debt of such Person contractually subordinated
to the Obligations; provided that the term “Restricted Payment” shall not
include any dividend, distribution, repurchase or redemption payable solely in
common Equity Interests or Qualified Equity Interests or from the proceeds of
the contemporaneous issuance of additional common Equity Interests of such
Person or warrants, options or other rights to purchase such common Equity
Interests.  

“Restructuring Support Agreement” means that certain Restructuring Support
Agreement, dated as of March 28, 2020, by and among the Borrower, the Guarantors
and the Prepetition Lenders, as the same may from time to time be amended,
modified, supplemented or restated pursuant to the terms thereof.

“S&P” means Standard & Poor’s Rating Agency Group, a division of McGraw-Hill
Companies, Inc., or any successor thereof which is a national credit rating
organization.

“Sanctions” has the meaning set forth in Section 4.20(b).

“Scheduled Maturity Date” means the date that is one hundred fifty (150) days
after the Effective Date.

“SEC” means, the Securities and Exchange Commission.

“Section 363 Sale” means a sale of all or substantially all of the assets and
business of the Credit Parties conducted pursuant to Section 363 of the
Bankruptcy Code.

“Secured Parties” means the Lenders.

“Security Agreement” means the Pledge and Security Agreement of even date
herewith among the Credit Parties and the Lenders in such form acceptable to the
Lenders.

“Security Documents” means, collectively, the Security Agreement, the Collateral
Assignment, any other Prepetition Security Instrument, the DIP Orders, any
Account Control Agreement, to the extent requested, the Mortgages, and any and
all other instruments, documents or agreements, now or hereafter executed by any
Credit Party or any other Person as security for the payment or performance of
the Obligations, the Notes or this Agreement, as such agreements may be amended,
modified, supplemented or restated from time to time.

 

-19-

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

“Special Flood Hazard Area” means an area that FEMA’s current flood maps
indicate has at least a one percent (1%) chance of a flood equal to or exceeding
the base flood elevation (a 100-year flood) in any given year.

“Specified Dispositions” means the sale by any Credit Party of the assets or
Equity Interests set out on Schedule 6.9(a)(iii) hereto.

“Subject Lender” has the meaning set forth in Section 2.14.

“Subsidiary” means, with respect to any Person (the “holder”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the holder in the
holder’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity, a majority of whose outstanding Voting Securities shall at any time be
owned by the holder or one more Subsidiaries of the holder.  Unless expressly
provided otherwise, all references herein and in any other Credit Document to
any “Subsidiary” or “Subsidiaries” means a Subsidiary or Subsidiaries of the
Borrower or any other Credit Party.

“Superpriority Claim” means a claim against a Credit Party in any of the Chapter
11 Cases that is a superpriority administrative expense claim, subject and
subordinate to the Carve-Out, having priority over any or all administrative
expenses and other claims of the kind specified in, or otherwise arising or
ordered under, any sections of the Bankruptcy Code (including, without
limitation, sections 105, 326, 328, 330, 331, 503(b), 507(a), 507(b), 546, 726,
1113 and/or 1114 thereof), whether or not such claim or expenses may become
secured by a judgment Lien or other non-consensual Lien, levy or attachment.

 

“Survey” means a survey of the real Property listed on Schedule 5.9(d), prepared
by a land surveyor duly licensed and registered in the state in which such real
property is located, and in form, scope and substance sufficient to cause all
standard survey exceptions to be deleted from title policy and otherwise
reasonably satisfactory to the Lenders, and duly certified to the Borrower by a
form of certification customarily used by surveyors of similar property in
similar locations or as is otherwise reasonably acceptable to Lenders.

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

“Tax Group” has the meaning set forth in Section 4.13.

“Termination Date” means the earliest of (a) the Maturity Date, (b) the
effective date of any Acceptable Plan or any other Chapter 11 Plan, (c) the
entry of an order for the conversion of any of the Chapter 11 Cases to a case
under Chapter 7 of the Bankruptcy Code, (d) the entry of an order for the
dismissal of any of the Chapter 11 Cases, and (e) at the election of the
Lenders, the date on which any Event of Default is continuing.

 

-20-

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

“Termination Event” means (a) a Reportable Event with respect to a Plan, (b) the
withdrawal of the Borrower or any member of the Controlled Group from a Plan
during a plan year in which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section 4041(c)
of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or
(e) any other event or condition which constitutes grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.

“Third Party Locations” means any location which holds, stores or otherwise
maintains Collateral, including such locations that are leased locations,
trailer storage or self-storage facilities, distribution centers or warehouses,
and such locations that are the subject of any bailee arrangement.

“Treasury Rate” means, with respect to a prepayment date, the yield to maturity
at the time of computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two
Business Days prior to such prepayment date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the prepayment date to the date that is six
months after the Effective Date; provided, however, that if the period from such
prepayment date to the date that is six months after the Effective Date is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.

“Unused Commitment Fee” has the meaning set forth in Section 2.7(a).

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

“Voting Securities” means (a) with respect to any corporation, capital stock of
the corporation having general voting power under ordinary circumstances to
elect directors of such corporation (irrespective of whether at the time stock
of any other class or classes shall have or might have special voting power or
rights by reason of the happening of any contingency), (b) with respect to any
partnership, any partnership interest or other ownership interest having general
voting power to elect the general partner or other management of the partnership
or other Person, and (c) with respect to any limited liability company,
membership certificates or interests having general voting power under ordinary
circumstances to elect managers of such limited liability company.

“Wells Fargo” means Wells Fargo Bank, National Association.

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

 

-21-

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

Section 1.3Computation of Time Periods.  In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each means “to but
excluding”.

Section 1.4Accounting Terms; Changes in GAAP.

(a)All accounting terms not specifically defined in this Agreement shall be
construed in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the financial statements delivered to the Lenders
for the fiscal year ending December 31, 2019 as required under Section 5.2.

(b)Unless otherwise indicated, all financial statements of the Borrower, all
calculations for compliance with covenants in this Agreement, and all
calculations of any amounts to be calculated under the definitions in Section
1.2 shall be based upon the consolidated accounts of the Borrower and its
Subsidiaries in accordance with GAAP and consistent with the principles of
consolidation applied in preparing the Borrower’s financial statements referred
to in Section 4.4.

(c)If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Credit Document, and either the
Borrower or the Lenders shall so request, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of the Lenders); provided that, until so amended, (i) such ratio or requirement
shall continue to be computed in accordance with GAAP prior to such change
therein and (ii) the Borrower shall provide to the Lenders financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

Section 1.5Miscellaneous.  Article, Section, Schedule, and Exhibit references
are to this Agreement, unless otherwise specified.  All references to
instruments, documents, contracts, and agreements (including this Agreement) are
references to such instruments, documents, contracts, and agreements as the same
may be amended, supplemented, restated and otherwise modified from time to time,
unless otherwise specified and shall include all schedules and exhibits thereto
unless otherwise specified.  Any reference herein to any law shall be construed
as referring to such law as amended, modified, codified or reenacted, in whole
or in part, and in effect from time to time.  Any reference herein to any Person
shall be construed to include such Person’s successors and assigns (subject to
the restrictions contained herein).  The words “hereof”, “herein”, and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.  The term “including” means “including, without
limitation,”.  Paragraph headings have been inserted in this Agreement as a
matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.

Section 1.6Divisions.  For all purposes under the Credit Documents, in
connection with any division or plan of division under Delaware law (or any
comparable event under a different

 

-22-

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

jurisdiction’s laws): (a) if any asset, right, obligation or liability of any
Person becomes the asset, right, obligation or liability of a different Person,
then it shall be deemed to have been transferred from the original Person to the
subsequent Person, and (b) if any new Person comes into existence, such new
Person shall be deemed to have been organized on the first date of its existence
by the holders of its Equity Interests at such time.

ARTICLE 2

 

CREDIT FACILITIES

 

Section 2.1Loans.  Subject to the terms and conditions of this Agreement, each
Lender hereby agrees, severally and not jointly, to make term loans from time to
time to the Borrower in a principal amount not exceed such Lender’s Available
Draw Commitment.  The aggregate amount of the Loans shall not exceed $5,000,000
until such date that the Final DIP Order is entered. The aggregate principal
amount of all Loans advanced to the Borrower pursuant to this Section 2.1 shall
not exceed the Commitments of all Lenders.  Amounts paid or prepaid in respect
of Loans may not be reborrowed.  Upon disbursement of each Loan by a Lender, the
amount of the Available Draw Commitment of such Lender shall be reduced by the
amount of such Loan so disbursed.

Section 2.2Loans and Borrowings.

(a)Borrowings; Several Obligations.  Each Loan shall be made as part of a
Borrowing on each applicable Borrowing Date consisting of Loans made by the
Lenders ratably in accordance with their respective Commitments. The failure of
any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments are
several and no Lender shall be responsible for any other Lender’s failure to
make Loans as required.

(b)Notes.  If requested by a Lender, the Loans made by such Lender shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit D (each a “Note” and collectively referred to herein as the “Notes”),
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement or (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Acceptance, as of the effective date
of the Assignment and Acceptance, payable to such Lender in a principal amount
equal to its Commitment as in effect on such date, and otherwise duly completed.
In the event that any Lender’s Commitment increases or decreases for any reason
(whether pursuant to Section 9.7 or otherwise), the Borrower shall deliver or
cause to be delivered, to the extent such Lender is then holding a Note, on the
effective date of such increase or decrease, a new Note payable to such Lender
in a principal amount equal to its Commitment after giving effect to such
increase or decrease, and otherwise duly completed, and each Lender shall return
to the Borrower the Note so replaced. The date, amount and interest rate of each
Loan made by each Lender, and all payments made on account of the principal
thereof, shall be recorded by such Lender on its books for its Note. Failure to
make any such recordation shall not affect any Lender’s or the Borrower’s rights
or obligations in respect of such Loans or affect the validity of such transfer
by any Lender of its Note.

 

-23-

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

Section 2.3Requests for Borrowings.  To request a Borrowing, the Borrower shall
notify the Lenders of such request in writing by facsimile or e-mail to the
Lenders of a written Borrowing Request in substantially the form of Exhibit G
and signed by the Borrower not later than 12:00 noon, Houston, Texas time, three
(3) Business Days before the date of any requested Borrowing.  Each written
Borrowing Request shall specify the following information:

(a)the aggregate amount of the requested Borrowing;

(b)the date of such Borrowing, which shall be a Business Day;

(c)the location and number of the Borrower’s account to which funds are to be
disbursed;

(d)the amount of the current total outstanding principal amount of the Loans
(without regard to the requested Borrowing) and the pro forma total outstanding
principal amount of the Loans (giving effect to the requested Borrowing); and

(e)that the proposed use of the proceeds thereof is for Budgeted Expenses in
compliance with the DIP Budget.

The Lenders may condition the disbursement of Loans on receipt of such
documentation as it shall reasonably require to evidence that the proceeds of
such Loans shall be used in accordance with the DIP Budget both as to amount of
such Loans and as to the timing of such Loans.  Each Borrowing Request shall
constitute a representation by the Credit Parties that the amount of the
requested Borrowing shall not cause the total outstanding principal amount of
the Loans to exceed the total Commitments.

(f)Funding of Loans.  Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 1:00 p.m., Houston, Texas time, to an account of the Borrower
designated by the Borrower in the applicable Borrowing Request.  Nothing herein
shall be deemed to obligate any Lender to obtain the funds for its Loan in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for its Loan in any particular place or
manner.

Section 2.4Scheduled Termination of Commitments.  Unless previously terminated,
the Commitments shall terminate on the Termination Date.

Section 2.5Prepayments.

(a)Optional Prepayments.  The Borrower shall have the right at any time and from
time to time to prepay any Borrowing in whole or in part, subject to prior
notice in accordance with Section 2.5(b).

(b)Notice and Terms of Optional Prepayment.  The Borrower shall notify the
Administrative Agent by telephone (confirmed by facsimile) of any prepayment
hereunder not later than 12:00 noon, Houston, Texas time, 3 Business Days before
the date of prepayment. Each such notice shall be irrevocable and shall specify
the prepayment date and the principal amount of each Borrowing or portion
thereof to be prepaid. Promptly following receipt of any such notice

 

-24-

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

relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
aggregate amount not less than $1,000,000 and integral multiples of $100,000 in
excess thereof. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.8.

(c)Mandatory.

(i)If the Borrower or any Subsidiary receives Debt Incurrence Proceeds, then not
later than two Business Days following the receipt of such proceeds, the
Borrower shall prepay the Loans in an amount equal to 100% of such Debt
Incurrence Proceeds.

(ii)If any Credit Party completes a Disposition permitted under Section
6.9(a)(v), then the Borrower shall, no later than three Business Days following
the completion of such Disposition and in an amount equal to 100% of the Net
Cash Proceeds received from such Disposition, prepay the outstanding principal
amount of the Loans until such time as the Loans are repaid in full.

(iii)If the Borrower or any Subsidiary receives any Extraordinary Receipts
(whether from a single Casualty Event or related series of Casualty Events and
whether as one payment or a series of payments) in excess of $100,000 in the
aggregate since the Effective Date, then the Borrower shall, no later than five
Business Days following the receipt of such Extraordinary Receipts and in an
amount equal to 100% of the amount of such excess Extraordinary Receipts, prepay
the outstanding principal amount of the Loans until such time as the Loans are
repaid in full.

(d)Interest; Costs.  Each prepayment pursuant to this Section 2.5 shall be
accompanied by accrued interest on the amount prepaid to the date of such
prepayment.

Section 2.6Repayment.  The Borrower hereby unconditionally promises to pay to
each Lender the aggregate outstanding principal amount of all Loans of such
Lender on the Maturity Date.

Section 2.7Fees.

(a)Unused Commitment Fee.  The Borrower agrees to pay to each Lender an unused
commitment fee (the “Unused Commitment Fee”), which shall accrue at a rate of
0.50% per annum on the average daily amount of the unused amount of the
Commitment of such Lender during the period from and including the Effective
Date to but excluding the Termination Date. Accrued Unused Commitment Fees shall
be payable in arrears on the first Business Day of each calendar quarter and on
the Termination Date, commencing on the first such date to occur after the
Effective Date.  All Unused Commitment Fees shall be computed on the basis of a
year of 360 days, unless such computation would exceed the Maximum Rate, in
which case interest shall be computed on the basis of a year of 365 days (or 366
days in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

 

-25-

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

(b)Closing Fee.  On the Effective Date, the Borrower agrees to pay to each
Lender a fee (the “Closing Fee”) in an amount equal to 1.50% of such Lender’s
Commitment in immediately available funds.  Such Closing Fee is fully earned as
of the Effective Date and shall be payable on the initial funding of the Loans
under this Agreement.

(c)DIP Fee.  If any of the Borrower, Guarantors or any of their respective
Subsidiaries enters into a debtor-in-possession financing arrangement in lieu of
the DIP Facility or as a refinancing or replacement of, in whole or in part, the
DIP Facility (an “Alternative DIP”) and a financial institution other than the
DIP Lenders provides such Alternative DIP or other credit financing to the
Borrower, Guarantors or any of their respective Subsidiaries, or if any such
Alternative DIP is consummated, in whole or in part, with funds advanced by the
DIP Lenders, in lieu of some or all of the DIP Facility, then the Borrower and
Guarantors agree, on a joint and several basis, to pay (or cause to be paid) to
each Lender a prepayment premium (the “DIP Fee”) in an amount equal to 1.50% of
the aggregate outstanding principal amount of the Loans  and unused Commitments
of each Lender, immediately upon consummation of the Alternative DIP.

(d)Generally.  All such fees shall be paid on the dates due, in immediately
available Dollars to the Lenders. Once paid, absent manifest error, none of
these fees shall be refundable under any circumstances.

Section 2.8Interest.

(a)Except as otherwise set forth herein, each Loan shall bear interest on the
unpaid principal amount thereof from the date made through repayment (whether by
acceleration or otherwise) at a rate per annum equal to eight percent (8.00%).

(b)Interest shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), in each case for the actual number of days elapsed in the period
during which it accrues.  In computing interest on any Loan, the date of the
making of such Loan shall be included, and the date of payment of such Loan
shall be excluded.

(c)Except as otherwise set forth herein, interest on each Loan shall be due and
payable by Borrower on each Payment Date.  

(d)Notwithstanding the foregoing, if any Event of Default has occurred and is
continuing, all Loans outstanding shall automatically bear interest, after as
well as before judgment, at a rate per annum equal to two percent (2%) plus the
rate applicable to the Loans, but in no event to exceed the Maximum Rate.

Section 2.9Reserved.  

Section 2.10Reserved.  

Section 2.11Increased Costs.

(a)Capital Adequacy; Taxes.  If, after the Effective Date, any Lender shall have
determined that any Change in Law affecting such Lender or any lending office of
such Lender or such Lender’s holding company, if any, regarding capital
requirements has or would have the

 

-26-

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

effect of reducing the rate of return on the capital of financial institutions
generally, including such Lender or any corporation controlling such Lender, as
a consequence of such Lender’s obligations hereunder to a level below that which
such Lender or such corporation could have achieved but for such Change in Law
(taking into consideration its policies with respect to capital adequacy), then
from time to time within three Business Days after written demand by such
Lender, as the case may be, the Borrower shall pay to such Lender such
additional amount or amounts as such Lender determines in good faith to be
necessary to compensate such Lender for such reduction.  If, after the Effective
Date, any Lender shall have determined that (i) any Change in Law affecting such
Lender or any lending office of such Lender or such Lender’s holding company, if
any, shall subject such Lender to any additional Taxes (other than Indemnified
Taxes, Other Taxes and Excluded Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto, then from time to time within three
Business Days after written demand by such Lender, as the case may be, the
Borrower shall pay to such Lender such additional amount or amounts as such
Lender determines in good faith to be necessary to compensate such Lender for
such Taxes.

(b)Mitigation.  Each Lender shall promptly notify the Borrower of any event of
which it has knowledge, occurring after the Effective Date, which will entitle
such Lender to compensation pursuant to this Section 2.11 and will designate a
different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to it.  Any Lender claiming
compensation under this Section 2.11 shall furnish to the Borrower a statement
setting forth the additional amount or amounts to be paid to it hereunder which
shall be determined by such Lender in good faith and which shall be conclusive
in the absence of manifest error.  In determining such amount, such Lender may
use any reasonable averaging and attribution methods.

(c)Delay in Requests.  Failure or delay on the part of any Lender to demand
compensation pursuant to this Section 2.11 shall not constitute a waiver of such
Lender’s right to demand such compensation, provided that the Borrower shall not
be required to compensate a Lender pursuant to this Section 2.11 for any
increased costs incurred or reductions suffered more than one year prior to the
date that such Lender, as the case may be, notifies the Borrower of the Change
in Law giving rise to such increased costs or reductions and of such Lender’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
one-year period referred to above shall be extended to include the period of
retroactive effect thereof).

Section 2.12Payments and Computations.

(a)Payments.  All payments of principal, interest, and other amounts to be made
by the Borrower under this Agreement and other Credit Documents shall be made to
each Lender in Dollars and in immediately available funds, without setoff,
deduction, or counterclaim.

(b)Payment Procedures. The Borrower shall make each payment under this Agreement
and under the Notes not later than 11:00 a.m. (Houston, Texas time) on the day
when due in Dollars to each Lender at the location referred to in the Notes or
herein (or such other location as the Lenders shall designate in writing to the
Borrower) in same day funds in accordance with each Lender’s applicable Pro Rata
Share for the account of their respective applicable

 

-27-

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

Lending Offices, and like funds relating to the payment of any other amount
payable to any Lender to such Lender for the account of its applicable Lending
Office, in each case to be applied in accordance with the terms of this
Agreement.

(c)Non‑Business Day Payments.  Whenever any payment shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.

(d)Computations.  All computations of interest shall be made by the Lenders on
the basis of a year of 365/366 days, in each case for the actual number of days
(including the first day, but excluding the last day) occurring in the period
for which such interest or fees are payable.  Each determination by the Lenders
of an amount of interest or fees shall be conclusive and binding for all
purposes, absent manifest error.

(e)Sharing of Payments, Etc.  If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set‑off, or
otherwise) on account of the Loans made by it in excess of its Pro Rata Share of
payments on account of the Loans obtained by the Lenders, such Lender shall
notify the other Lenders and forthwith purchase from the other Lenders such
participations in the Loans made by it as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with the other Lenders;
provided that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from the other Lenders
shall be rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such Lender’s Pro Rata Share, but without
interest.  The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 2.12(e) may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set‑off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.  

Section 2.13Taxes.  

(a)No Deduction for Certain Taxes.  Any and all payments by any Credit Party
under any of the Credit Documents to a Lender shall be made, in accordance with
Section 2.12, free and clear of and without deduction for any Taxes, excluding,
in the case of a Lender, (i) Taxes imposed on or measured by its net income
(however denominated), franchise Taxes and branch profits Taxes, in each case
imposed as a result of such Lender being organized under the laws of, or having
its principal office or, in the case of any Lender, having its applicable
Lending Office located in the jurisdiction (or any political subdivision
thereof) imposing such Tax, (ii) in the case of a Lender, any United States
federal withholding Taxes imposed on amounts payable to or for the account of
such Lender with respect to an applicable interest in an Obligation, if and to
the extent such United States federal withholding Taxes are in effect on the
date a Lender becomes a Lender hereunder (other than pursuant to an assignment
request by the Borrower under Section 2.14), (iii) Taxes attributable to such
Lender’s failure to comply with Section 2.13(e), and (iv) any Taxes imposed
under FATCA (the Taxes described in clauses (i) through (iv) being hereinafter
referred to as “Excluded Taxes” and all such Taxes, other than Excluded Taxes,
imposed on or with respect to any payment by or on account of any obligation of
the Borrower under any Credit Document being hereinafter referred to as
“Indemnified Taxes”).  If any Credit Party shall be required by law to deduct
any Indemnified Taxes from or in respect of any sum payable to any

 

-28-

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

Lender, (i) the sum payable shall be increased as may be necessary so that,
after making all required deductions (including deductions of Indemnified Taxes
applicable to additional sums payable under this Section 2.13), such Lender
receives an amount equal to the sum it would have received had no such
deductions been made; (ii) such Credit Party shall make such deductions; and
(iii) such Credit Party shall pay the full amount deducted to the relevant
Governmental Authority or other authority in accordance with applicable law.

(b)Other Taxes.  In addition, the Borrower agrees to pay, or at the option of
the Lenders timely reimburse it for the payment of, any present or future stamp,
court or documentary, intangible, recording, filing or similar Taxes which arise
from any payment made under any Credit Document or from the execution, delivery,
performance, enforcement or registration of, from the receipt or perfection of a
security interest under, or otherwise with respect to, this Agreement, the
Notes, or the other Credit Documents, except any Taxes that are (i) Excluded
Taxes or (ii) imposed with respect to any assignment (other than an assignment
request by the Borrower under Section 2.14) (hereinafter referred to as “Other
Taxes”).

(c)Indemnification.  THE BORROWER AND EACH OTHER CREDIT PARTY SHALL INDEMNIFY
EACH LENDER FOR THE FULL AMOUNT OF INDEMNIFIED TAXES OR OTHER TAXES (INCLUDING,
WITHOUT LIMITATION, ANY INDEMNIFIED TAXES OR OTHER TAXES IMPOSED ON AMOUNTS
PAYABLE UNDER THIS SECTION 2.13) PAID BY SUCH LENDER AND ANY REASONABLE EXPENSES
ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER
TAXES WERE CORRECTLY OR LEGALLY ASSERTED.  A CERTIFICATE AS TO THE AMOUNT OF
SUCH PAYMENT OR EXPENSES DELIVERED TO THE BORROWER BY A LENDER SHALL BE
CONCLUSIVE ABSENT MANIFEST ERROR.

(d)Evidence of Tax Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by any Credit Party to a Governmental
Authority, the Borrower shall deliver to the Lenders the original or a certified
copy of any receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Lenders.

(e)Lender Withholding Exemption.  Each Lender that is a U.S. Person shall
deliver to the Borrower on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower), an executed copy of IRS Form W-9 certifying
that such Lender is exempt from U.S. federal backup withholding Tax. Each Lender
that is not a U.S. Person and that is entitled to an exemption from or reduction
of United States withholding Tax with respect to payments under this Agreement
under applicable law or any treaty to which the United States is a party shall
deliver to the Borrower on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower),  such properly completed and executed
documentation (including an applicable Internal Revenue Service Form W-8BEN or
W-8ECI) prescribed by applicable law or reasonably requested by the Borrower as
will permit such payments to be made without withholding or at a reduced rate of
withholding. Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Borrower in writing of
its legal inability to do so.

 

-29-

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

(f)Reserved.

(g)Mitigation.  Each Lender shall use reasonable efforts (consistent with its
internal policies and legal and regulatory restrictions) to select a
jurisdiction for its applicable Lending Office or change the jurisdiction of its
applicable Lending Office, as the case may be, so as to avoid the imposition of
any Indemnified Taxes or Other Taxes or to eliminate or reduce the payment of
any additional sums under this Section 2.13; provided, that no such selection or
change of jurisdiction for its applicable Lending Office shall be made if, in
the reasonable judgment of such Lender, such selection or change would be
disadvantageous to such Lender.  Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

(h)Tax Refunds.  If any Lender determines, in its sole discretion exercised in
good faith, that it has received a refund of any Indemnified Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section, it
shall pay to the Borrower an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by the Borrower under
this Section with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses (including Taxes) of such
Lender, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower,
upon the request of such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to such Lender in the event such Lender is required to
repay such refund to such Governmental Authority.  Notwithstanding anything to
the contrary in this paragraph (h), in no event will any Lender be required to
pay any amount to a Borrower pursuant to this paragraph (h) the payment of which
would place a Lender in a less favorable net after-Tax position than the
applicable Lender would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts with respect to such Tax
had never been paid.  This subsection shall not be construed to require any
Lender to make available its Tax returns (or any other information relating to
its Taxes that it deems confidential) to any Borrower or any other Person.

(i)Payment.  If any Lender becomes entitled to receive payment of Indemnified
Taxes, Other Taxes or additional sums pursuant to this Section 2.13, it shall
give notice and demand thereof to the Borrower, and the Borrower (unless such
Lender shall withdraw such notice and demand or the Borrower is not obligated to
pay such amounts) shall pay such Indemnified Taxes, Other Taxes or additional
sums within 10 days after the Borrower’s receipt of such notice and demand.

Section 2.14Replacement of Lenders.  If the Borrower is required pursuant to
Section 2.11 or 2.13 to make any additional payment to any Lender or to any
Governmental Authority for the account of any Lender pursuant to Section 2.13,
and, with respect to a payment pursuant to Section 2.13, such Lender has
declined or is unable to designate a different lending office in accordance with
Section 2.13(g) (any such Lender being a “Subject Lender”), the Borrower may,
upon notice to the Subject Lender and the Lenders and at the Borrower’s sole
cost and expense, require such Subject Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 9.7), all of its interests,

 

-30-

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

rights and obligations under this Agreement and the related Credit Documents to
an Eligible Assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment), provided that, in any
event:

(a)as to assignments requested by the Borrower, the Borrower shall have paid to
the Lenders the assignment fee specified in Section 9.7;

(b)such Subject Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Credit Documents
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts, if
applicable);

(c)in the case of any such assignment resulting from a claim for compensation
under Section 2.13, such assignment will result in a reduction in such
compensation or payments thereafter; and

(d)such assignment does not conflict with applicable Legal Requirements.

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.  

 

ARTICLE 3

 

CONDITIONS OF EFFECTIVENESS

 

Section 3.1 Conditions to Effectiveness.  This Agreement will become effective
and the obligations of Lenders to make the Loans will occur on the date (the
“Effective Date”) on which the following conditions precedent are satisfied or
waived:

(a)Payment of Fees.

(i)The Lenders shall have received all commitment, arrangement, upfront,
facility and agency fees and all other fees and amounts due and payable by the
Credit Parties on or prior to the Effective Date, including reimbursement or
payment of all reasonable and documented (in summary form) out-of-pocket fees
and expenses required to be reimbursed or paid by the Borrower under paragraph
32 of the DIP Orders (including the fees and expenses of Norton Rose Fulbright
US LLP, Stroock & Stroock & Lavan LLP, each as counsel to the Lenders, and
Ankura Consulting Group, LLC, financial advisor to the Lenders).

(ii)The Prepetition Administrative Agent and the Prepetition Lenders shall have
received all reasonable and documented (in summary form) out-of-pocket fees and
expenses due and payable by the Credit Parties on or prior to the Effective Date
pursuant to the Prepetition Loan Documents, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower thereunder.

 

-31-

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

(b)Documentation.  The Lenders shall have received the following, duly executed
by all the parties thereto, in form and substance reasonably satisfactory to the
Lenders:

(i)this Agreement (and all attached Exhibits and Schedules), the Security
Agreement, to the extent requested by any Lender, a Note payable to such Lender,
the Collateral Assignment and all other applicable Credit Documents.  In
connection with the execution and delivery of the Security Documents, the
Lenders shall:

(A)be satisfied that the Interim DIP Order and any other Security Documents
required to be executed on the Effective Date create (or will create, upon
proper filing, recording or registration thereof, or upon entry of, the Interim
DIP Order) perfected Liens having the priorities set forth in the Interim DIP
Order (subject only to Permitted Liens) on all of the tangible and intangible
Property of the Credit Parties other than the Excluded Collateral; and

(B)have received (or its bailee pursuant to the DIP Order has received)
certificates, if any, together with undated, blank stock powers for each such
certificate, representing all of the issued and outstanding Equity Interests of
each of the Guarantors.

(ii)certificates of insurance in compliance with Section 5.3(b) of this
Agreement;

(iii)a certificate from an authorized officer of each of the Credit Parties
dated as of the Effective Date stating that as of such date (A) all
representations and warranties of such Credit Party set forth in this Agreement
and the Credit Documents are true and correct in all material respects, (B) such
Credit Party shall have performed and complied with all covenants and conditions
required herein to be performed or complied with by it prior to the date hereof
and (C) no Default then exists;

(iv)a secretary’s certificate from each Credit Party certifying such Credit
Party’s (A) officers’ incumbency, (B) authorizing resolutions, (C)
organizational documents, and (D) governmental approvals, if any, with respect
to the Credit Documents to which the Borrower is a party;

(v)certificates of good standing for each Credit Party in the state in which
each such Person is incorporated or organized, which certificates shall be dated
a date not earlier than 30 days prior to the Effective Date;

(vi)a legal opinion of Vinson & Elkins LLP as special counsel to the Credit
Parties, in form and substance reasonably acceptable to the Lenders; and

(vii)such other documents, governmental certificates, agreements, and lien
searches as any Lender may reasonably request.

(c)Consents; Authorization; Conflicts.  The Borrower shall have received any
consents, licenses and approvals required in accordance with applicable law, or
in accordance with any document, agreement, instrument or arrangement to which
the Borrower, or any Subsidiary is a party, in connection with the execution,
delivery, performance, validity and enforceability of this

 

-32-

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

Agreement and the other Credit Documents.  In addition, the Credit Parties and
the Subsidiaries shall have all such material consents, licenses and approvals
required in connection with the continued operation of the Credit Parties and
the Subsidiaries, and such approvals shall be in full force and effect, and all
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or otherwise
impose adverse conditions on this Agreement and the actions contemplated hereby.

(d)Representations and Warranties.  The representations and warranties contained
in Article 4 and in each other Credit Document shall be true and correct on and
as of the Effective Date.

(e)Other Proceedings.  No action, suit, investigation or other proceeding
(including, without limitation, the enactment or promulgation of a statute or
rule) by or before any arbitrator or any Governmental Authority shall be pending
or, to the knowledge of Borrower, threatened and no preliminary or permanent
injunction or order by a state or federal court shall have been entered (i) in
connection with this Agreement, any other credit agreement or any transaction
contemplated hereby or thereby or (ii) which, in any case, in the judgment of
the Lenders, could reasonably be expected to result in a Material Adverse
Change.

(f)Other Reports.  Subject to Section 3.1(b), the Lenders shall have received,
in form and substance reasonably satisfactory to it, all environmental reports,
and such other reports, audits or certifications as it may reasonably request,
which reports the Lenders acknowledge they has received as of the date of this
Agreement.

(g)Reserved.

(h)No Default.  No Default then exists.

(i)Reserved.

(j)Delivery of Financial Statements.  The Lenders shall have received true and
correct copies of the unaudited consolidated income statement and balance sheet
of the Credit Parties for the fiscal quarter ended December 31, 2019; provided
that, notwithstanding the foregoing, such income statement and balance sheet do
not reflect expected material impairments and are otherwise not complete in all
respect as a result of the impact of the Chapter 11 Cases.

(k)Copies of Existing Certificates; Documents. The Lenders shall have received
true and correct copies of all of the following certificates and other documents
with respect to the real property listed on Schedule 5.9(d), if any, that have
been previously delivered to the Prepetition Administrative Agent during the
five year period ending on the Effective Date, pursuant to the Prepetition
Credit Agreement and the Prepetition Security Instruments:  (i) all flood
determination certificates and, if applicable, flood insurance policies, if
any,  covering such real property;  (ii) all Lien searches, if any, from the
counties in which such real property is located; (iii) all legal opinions, if
any, that have been delivered to the Prepetition Administrative Agent with
respect to the Prepetition Security Instruments covering such real property;
(iv) all existing mortgagee policies of title insurance in favor of the
Prepetition Administrative Agent, if any, with respect to such real Property;
(v) the most recent surveys, if any, with respect to such real property; and
(vi) the most recent Phase I Environmental Site Assessment Reports, if any,
completed by an independent environmental consultant with respect to such real
property;

 

-33-

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

(l)USA Patriot Act.  The Borrower has delivered to each Lender that is subject
to the Patriot Act such information requested by such Lender in order to comply
with the Patriot Act.

(m)DIP Budget.  The Lenders shall have received the DIP Budget, which DIP Budget
shall have been approved by the Lenders.

(n)Petition Date.  The Petition Date shall have occurred, and each Credit Party
shall be a debtor and a debtor-in-possession in the Chapter 11 Cases.

(o)Interim DIP Order.  The Bankruptcy Court shall have entered the Interim DIP
Order with such changes as may be acceptable to the Lenders, which Interim DIP
Order (i) shall have been entered on the docket of the Bankruptcy Court no later
than 10 days after the Petition Date and (ii) shall be in full force and effect
and shall not have been vacated, stayed, reversed, modified or amended in any
respect except as otherwise agreed to in writing by the Lenders in their sole
discretion.

(p)First Day Orders.  The “first day” orders (including, without limitation, any
motions related to the Credit Documents, cash management, cash collateral and
any critical vendor or supplier motions, but excluding retention applications),
in form, scope and substance reasonably satisfactory to the Lenders shall have
been entered in the Chapter 11 Cases, in each case in form and substance
reasonably satisfactory to the Lenders (the “First Day Orders”) and shall not
have been (i) stayed, vacated or reversed, or (ii) amended or modified except as
otherwise agreed to in writing by the Lenders in their reasonable discretion.

(q)Bankruptcy Trustee.  No trustee under chapter 7 or chapter 11 of the
Bankruptcy Code or examiner with enlarged powers beyond those set forth in
Sections 1106(a)(3) and (4) of the Bankruptcy Code shall have been appointed in
the Chapter 11 Cases.

(r)Additional Information.  The Lenders shall have received any other
information (financial or otherwise) reasonably requested by the Lenders, which
information shall be in form and substance reasonably satisfactory to the
Lenders.

Section 3.2 Conditions to Each Borrowing.  The obligation of each Lender to make
a Loan on the occasion of any Borrowing (including the initial funding) under
this Agreement shall be subject to the further conditions precedent that on the
date such Borrowing is made:

(a)No Event of Default.  As of the date of the making of such Borrowing, no
Default or Event of Default shall exist, and the making of such Borrowing would
not cause a Default or Event of Default to exist.  

(b)Reserved.

(c)Representations and Warranties.  The representations and warranties contained
in Article 4 and in each other Credit Document shall be true and correct in all
material respects on and as of any Borrowing Date before and after giving effect
to the making of such Borrowing and to the application of the proceeds
therefrom.

 

-34-

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

(d)Reserved.

(e)Borrowing Request.  The receipt by the Lenders of a Borrowing Request in
accordance with Section 2.3.

(f)No Alternative DIP Order.  No Bankruptcy Court order has been entered
authorizing the Credit Parties to obtain financing or credit pursuant to Section
364 of the Bankruptcy Code from any Person other than the Secured Parties
secured by a security interest or having the priority of an administrative claim
unless otherwise consented to by the Lenders in writing.

(g)DIP Orders.  For Loans made (i) on or before the date that is 30 days
following the Petition Date, the Interim DIP Order shall be in full force and
effect and shall not have been vacated, reversed, modified, or amended unless
otherwise consented to by the Lenders in writing and, in the event that such
order is the subject of any pending appeal, no performance of any obligation of
any party hereto shall have been stayed pending appeal, and (ii) after the date
that is 30 days following the Petition Date, the Final DIP Order shall be in
full force and effect and shall not have been vacated, reversed, modified, or
amended unless otherwise consented to by the Lenders in writing and, in the
event that such order is the subject of any pending appeal, no performance of
any obligation of any party hereto shall have been stayed pending appeal, and
(iii) each of the DIP Orders shall be reasonably satisfactory in form and
substance to the Lenders.

Section 3.3 Reserved.

Section 3.4 Post-Closing Requirements.

(a)Control Agreements.  Notwithstanding the generality of Section 5.9(a) below,
the Credit Parties shall deliver to the Lenders as soon as is practicable but in
no event later than 30 days after the Effective Date fully executed control
agreement(s) covering each of the deposit accounts of the Credit Parties listed
on Schedule 4.21 hereof.

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES

Each Credit Party hereto represents and warrants as follows:

Section 4.1 Organization.  Subject to any restriction arising on account of each
Credit Party’s status as a “debtor” under the Bankruptcy Code and any required
approvals of the Bankruptcy Court, each Credit Party is duly and validly
organized and existing and in good standing under the laws of its jurisdiction
of incorporation or formation and is authorized to do business and is in good
standing in all jurisdictions in which such qualifications or authorizations are
necessary except where the failure to be so qualified or authorized could not
reasonably be expected to result in a Material Adverse Change, and in each case,
not subject to the automatic stay under the Chapter 11 Cases or executed after
the Petition Date.  As of the Effective Date, each Credit Party’s type of
organization and jurisdiction of incorporation or formation are set forth on
Schedule 4.1.

 

-35-

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

Section 4.2 Authorization.  Subject to the entry of the DIP Orders, the
execution, delivery, and performance by each Credit Party of each Credit
Document to which such Credit Party is a party and the consummation of the
transactions contemplated thereby (a) are within such Credit Party’s powers,
(b) have been duly authorized by all necessary corporate, limited liability
company or partnership action, (c) do not contravene any articles or certificate
of incorporation or bylaws, partnership or limited liability company agreement
binding on or affecting such Credit Party, (d) do not contravene any law or any
contractual restriction binding on or affecting such Credit Party, (e) do not
result in or require the creation or imposition of any Lien prohibited by this
Agreement, and (f) do not require any authorization or approval or other action
by, or any notice or filing with, any Governmental Authority.  Subject to the
entry of the DIP Orders, the borrowing of the Loans and the use of the proceeds
thereof are within the Borrower’s corporate power, have been duly authorized by
all necessary action, do not contravene (i) the Borrower’s certificate or
articles of incorporation or bylaws, or (ii) any Legal Requirement or any
material contractual restriction binding on or affecting the Borrower, will not
result in or require the creation or imposition of any Lien prohibited by this
Agreement, and do not require any authorization or approval or other action by,
or any notice or filing with, any Governmental Authority.

Section 4.3 Enforceability.  Subject to entry of the Interim DIP Order or the
Final DIP Order, as the case may be, the Credit Documents have each been duly
executed and delivered by each Credit Party that is a party thereto and each
Credit Document constitutes the legal, valid, and binding obligation of each
Credit Party that is a party thereto enforceable against such Credit Party in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws at the time in effect
affecting the rights of creditors generally and by general principles of equity
whether applied by a court of law or equity.

Section 4.4 Financial Condition.

(a)The Borrower has delivered to the Lenders the income statement and balance
sheet for the Credit Parties and their Subsidiaries dated as of December 31,
2019 for the fiscal quarter ending thereon.  The income statement and balance
sheet referred to in the preceding sentence have been prepared in accordance
with GAAP and present fairly the consolidated financial condition of the
aforementioned Persons as of the respective dates thereof; provided that,
notwithstanding the foregoing, such income statement and balance sheet do not
reflect expected material impairments and are otherwise not complete in all
respects as a result of the impact of the Chapter 11 Cases.  As of the date of
the aforementioned income statement and balance sheet, there were no material
contingent obligations, liabilities for Taxes, unusual forward or long‑term
commitments, or unrealized or anticipated losses of the applicable Persons,
except as disclosed therein and adequate reserves for such items have been made
in accordance with GAAP.

(b)Since the Petition Date, no event or condition has occurred that could
reasonably be expected to result in Material Adverse Change.

(c)No Credit Party or any Subsidiary has on the date hereof any material Debt or
any material contingent liabilities, off-balance sheet liabilities or
liabilities for Taxes, except as referred to or reflected or provided for in the
DIP Budget, the First Day Orders or the financial statements previously
delivered to the Lenders.

 

-36-

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

Section 4.5 Ownership and Liens; Real Property.  Each Credit Party (a) has good
and defensible title to, or a valid and subsisting leasehold interest in, all
real property, and good title to all personal Property, used in its business,
and (b) none of the Property owned or leased by the Borrower or a Subsidiary of
the Borrower is subject to any Lien except Permitted Liens.

Section 4.6 True and Complete Disclosure.  All written factual information
(whether delivered before or after the date of this Agreement) prepared by or on
behalf of any Credit Party and its Subsidiaries and furnished to the Lenders for
purposes of or in connection with this Agreement, any other Credit Document or
any transaction contemplated hereby or thereby does not contain any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein not misleading.  There is no fact known to any officer of any
Credit Party on the date of this Agreement that has not been disclosed to the
Lenders that could reasonably be expected to result in a Material Adverse
Change.  All projections, estimates, budgets, and pro forma financial
information furnished by any Credit Party or any of its Subsidiaries (or on
behalf of any such Credit Party or any such Subsidiary), were prepared on the
basis of assumptions, data, information, tests, or conditions (including current
and reasonably foreseeable business conditions) believed to be reasonable at the
time such projections, estimates, and pro forma financial information were
furnished.

Section 4.7 Litigation.  Except as set forth in Schedule 4.7 and the Chapter 11
Cases, there are no actions, suits, or proceedings pending or, to any Credit
Party’s knowledge, threatened against any Credit Party or any Subsidiary, at
law, in equity, or in admiralty, or by or before any Governmental Authority,
which could reasonably be expected to result in a Material Adverse
Change.  Additionally, except as disclosed in writing to the Lenders and the
Chapter 11 Cases, there is no pending or, to the knowledge of any Credit Party,
threatened action or proceeding instituted against any Credit Party or any
Subsidiary which seeks to adjudicate the Borrower or any Subsidiary as bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part of its
Property.

Section 4.8 Compliance with Agreements.

(a)Except for the Chapter 11 Cases and as specified in the DIP Orders, no Credit
Party nor any Subsidiary is a party to any indenture, loan or credit agreement
or any lease or any other types of agreement or instrument or subject to any
charter or corporate restriction or provision of applicable law or governmental
regulation the performance of or compliance with which could reasonably be
expected to cause a Material Adverse Change.  Subject to the entry of the
Interim DIP Order or the Final DIP Order, as the case may be, and other than as
set forth on Schedule 4.8, no Credit Party or any Subsidiary is in default under
or with respect to any contract, agreement, lease or any other types of
agreement or instrument to which any Credit Party or such Subsidiary is a party
and which could reasonably be expected to cause a Material Adverse Change.  To
the best knowledge of the Credit Parties, except as set forth on Schedule 4.8,
no Credit Party or any Subsidiary is in default under, or has received a notice
of default under, any contract, agreement, lease or any other document or
instrument to which any Credit Party or its Subsidiaries is a party which is
continuing and which, if not cured, could reasonably be expected to cause a
Material Adverse Change.

 

-37-

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

(b)No Default has occurred and is continuing.

Section 4.9 Pension Plans.  (a) Except for matters that could not reasonably be
expected to result in a Material Adverse Change, all Plans are in compliance
with all applicable provisions of ERISA, (b) no Termination Event has occurred
with respect to any Plan that would result in an Event of Default under Section
7.1(i), and, except for matters that could not reasonably be expected to result
in a Material Adverse Change, each Plan has complied with and been administered
in accordance with applicable provisions of ERISA and the Code, (c) no
“accumulated funding deficiency” (as defined in Section 302 of ERISA) has
occurred, and for plan years after December 31, 2007, no unpaid minimum required
contribution exists, and there has been no excise Tax imposed under Section 4971
of the Code, (d) to the knowledge of Credit Parties, no Reportable Event has
occurred with respect to any Multiemployer Plan, and each Multiemployer Plan has
complied with and been administered in accordance with applicable provisions of
ERISA and the Code in all material respects, (e) the present value of all
benefits vested under each Plan (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested benefits in an
amount that could reasonably be expected to result in a Material Adverse Change,
(f) neither the Borrower nor any member of the Controlled Group has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any unsatisfied withdrawal liability that could reasonably be expected to result
in a Material Adverse Change or an Event of Default under Section 7.1(i), and
(g) except for matters that could not reasonably result in a Material Adverse
Change, as of the most recent valuation date applicable thereto, neither the
Borrower nor any member of the Controlled Group would become subject to any
liability under ERISA if the Borrower or any Subsidiary has received notice that
any Multiemployer Plan is insolvent or in reorganization.  Based upon GAAP
existing as of the date of this Agreement and current factual circumstances, no
Credit Party has any reason to believe that the annual cost during the term of
this Agreement to the Borrower or any Subsidiary for post-retirement benefits to
be provided to the current and former employees of the Borrower or any
Subsidiary under Plans that are welfare benefit plans (as defined in
Section 3(1) of ERISA) could, in the aggregate, reasonably be expected to cause
a Material Adverse Change.

Section 4.10 Environmental Condition.

(a)Permits, Etc.  Except as set forth on Schedule 4.10 hereto, each Credit Party
and its Subsidiaries (i) has obtained all material Environmental Permits
necessary for the ownership and operation of its Properties and the conduct of
its businesses; (ii)  is in material compliance with all terms and conditions of
such Permits and with all other material requirements of applicable
Environmental Laws; (iii) has not received written notice of any material
violation or alleged material violation of any Environmental Law or
Environmental Permit that has not been resolved; and (iv) is not subject to any
actual or contingent Environmental Claim which could reasonably be expected to
cause a Material Adverse Change.

(b)Certain Liabilities.  To the Credit Parties’ best knowledge, none of the
present or previously owned or operated Property of any Credit Party or of any
Subsidiary thereof, wherever located, (i) has been placed on or proposed to be
placed on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local analogs,
or have been otherwise investigated, designated, listed, or identified as

 

-38-

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

a potential site for removal, remediation, cleanup, closure, restoration,
reclamation, or other response activity under any Environmental Laws; (ii) is
subject to a Lien, arising under or in connection with any Environmental Laws,
that attaches to any revenues or to any Property owned or operated by any Credit
Party, wherever located, which could reasonably be expected to cause a Material
Adverse Change; or (iii) has been the site of any Release of Hazardous
Substances or Hazardous Wastes from present or past operations which has caused
at the site or at any third‑party site any condition that has resulted in or
could reasonably be expected to result in the need for Response that could cause
a Material Adverse Change.

(c)Certain Actions.  Without limiting the foregoing, (i) all necessary material
notices have been properly filed, and no further action is required under
current applicable Environmental Law as to each Response undertaken by the
Borrower, any of its Subsidiaries or any of the Borrower’s or such Subsidiary’s
former Subsidiaries on any of their presently or formerly owned or operated
Property and (ii) to the Credit Parties’ knowledge, the present and future
liability, if any, of the Borrower or of any Subsidiary which could reasonably
be expected to arise in connection with requirements under Environmental Laws
will not result in a Material Adverse Change.

Section 4.11 Subsidiaries.  As of the Effective Date, the Credit Parties have no
Subsidiaries other than those listed on Schedule 4.11.  Each Material Domestic
Subsidiary of the Borrower (including any such Material Domestic Subsidiary
formed or acquired subsequent to the Effective Date) has complied with the
requirements of Section 5.6.

Section 4.12 Investment Company Act.  No Credit Party nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.  Neither the
Borrower nor any Subsidiary is subject to regulation under any Federal or state
statute, regulation or other Legal Requirement which limits its ability to incur
Debt.

Section 4.13 Taxes.  To the extent that failure to do so could reasonably,
either individually or in the aggregate, be expected to result in a Material
Adverse Change, proper and accurate, federal, state, local and foreign Tax
returns, reports and statements required to be filed (after giving effect to any
extension granted in the time for filing) by any Credit Party and each
Subsidiary or any member of the affiliated group as determined under Section
1504 of the Code or similar combined, consolidated or unitary group (hereafter
collectively called the “Tax Group”) have been filed with the appropriate
Governmental Authorities, and all Taxes and other impositions due and payable
have been timely paid prior to the date on which any fine, penalty, interest,
late charge or loss may be added thereto for non-payment thereof except Taxes
for which payment is stayed or excused under the Bankruptcy Code or that are
being contested in good faith by appropriate proceeding and for which adequate
reserves have been established in compliance with GAAP.  Except as set forth in
Schedule 4.13, no Credit Party nor any member of the Tax Group has given, or
been requested to give, a waiver of the statute of limitations relating to the
payment of any federal, state, local or foreign Taxes or other
impositions.  Proper and accurate amounts have been withheld by the Credit
Parties and all other members of the Tax Group from their employees for all
periods to comply in all material respects with the Tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law.

 

-39-

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

Section 4.14 Permits, Licenses, etc.  Each Credit Party and its Subsidiaries
possesses all permits, licenses, patents, patent rights or licenses, trademarks,
trademark rights, trade names rights, and copyrights which are material to the
conduct of its business.  Each Credit Party and its Subsidiaries manages and
operates its business in accordance with all applicable Legal Requirements
except where the failure to so manage or operate could not reasonably be
expected to result in a Material Adverse Change; provided that this Section 4.14
does not apply with respect to Environmental Permits or Legal Requirements of
Environmental Law.

Section 4.15 Use of Proceeds.  The proceeds of the Loans shall be used in
accordance with the DIP Budget (subject to Permitted Variances and Permitted
Carry) and the DIP Orders.  Notwithstanding anything to the contrary herein or
elsewhere, neither this Agreement nor any other Credit Document shall restrict
the payment of Professional Fees benefitting from the Carve-Out.  No Credit
Party is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U).  No
proceeds of any Loan will be used to purchase or carry any margin stock in
violation of Regulation T, U or X.  No part of the proceeds of any Loan will be
used for any purpose which violates the provisions of Regulations T, U or X.

Section 4.16 Condition of Property; Casualties.  The material Properties used or
to be used in the continuing operations of each Credit Party and each
Subsidiary, are in good working order and condition, normal wear and tear
excepted.  Neither the business nor the material Properties of each Credit Party
or any Subsidiary has been affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by a Governmental Authority, riot, activities
of armed forces or acts of God or of any public enemy, which effect could
reasonably be expected to cause a Material Adverse Change.

Section 4.17 Insurance.  Each Credit Party and its Subsidiaries carry insurance
(which may be carried by each Credit Party on a consolidated basis) with
reputable insurers in respect of such of their respective Properties, in such
amounts and against such risks as is customarily maintained by other Persons of
similar size engaged in similar businesses, or self-insure to the extent
customary for persons of similar size engaged in similar businesses.  No Credit
Party owns any material Building or material Manufactured (Mobile) Home, in
either case subject to a Mortgage, for which such Credit Party has not delivered
to the Lenders evidence or confirmation reasonably satisfactory to the Lenders
that (i) such Credit Party maintains Flood Insurance for such Building or
Manufactured (Mobile) Home in accordance with Section 5.3 or (ii) such Building
or Manufactured (Mobile) Home is not located in a Special Flood Hazard Area.

Section 4.18 Compliance with Laws.  Each Credit Party and each of the
Subsidiaries is in compliance with all laws, rules, regulations and orders of
any Governmental Authority applicable to them or their Property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change, or where non-compliance
therewith is permitted by any applicable Governmental Authority (including any
order of the Bankruptcy Court) or as a result of the commencement of the Chapter
11 Cases; provided that, this Section 4.18 shall not apply with respect to any
requirement under Environmental Laws.

 

-40-

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

Section 4.19 Security Interest.

(a)This Agreement and the other Credit Documents, upon execution and delivery
thereof by the parties thereto and entry of the DIP Orders (and subject to the
terms therein), will create in favor of the Lenders a legal, valid and
enforceable security interest in the Collateral described therein and the
proceeds thereof, which security interest shall be deemed valid and perfected as
of the Effective Date by entry of the DIP Orders with respect to each Credit
Party and which shall constitute continuing Liens on the Collateral having
priority over all other Liens on the Collateral, securing all the Obligations,
other than the Carve-Out and as otherwise set forth in the DIP Orders. The
Lenders shall not be required to file or record (but shall have the option and
authority to file or record) any financing statements, mortgages, notices of
Lien or similar instruments, in any jurisdiction or filing office or to take any
other action in order to validate, perfect or establish the priority of the
Liens and security interest granted by or pursuant to this Agreement, any other
Credit Document or the DIP Orders.

(b)Pursuant to Section 364(c)(1) of the Bankruptcy Code, the Obligations of the
Credit Parties shall at all times constitute allowed senior administrative
expenses against each of the Credit Parties in the Chapter 11 Cases (without the
need to file any proof of claim or request for payment of administrative
expense), with priority over any and all other administrative expenses, adequate
protection claims, diminution claims and all other claims against the Credit
Parties, now existing or hereafter arising, of any kind or nature whatsoever,
including, without limitation, all administrative expenses of the kind specified
in sections 503(b) and 507(b) of the Bankruptcy Code, and over any and all other
administrative expense claims arising under Sections 105, 326, 328, 330, 331,
503(b), 506(c) (with any claims arising under Section 506(c) only subject to the
entry of the DIP Orders), 507(a), 507(b), 546, 726, 1113 and 1114 of the
Bankruptcy Code, whether or not such expenses or claims may become secured by a
judgment Lien or other nonconsensual Lien, levy or attachment, which allowed
claims shall for purposes of section 1129(a)(9)(A) of the Bankruptcy Code be
considered administrative expenses allowed under section 503(b) of the
Bankruptcy Code, and which shall be payable from and have recourse to all pre-
and post-petition property of the Credit Parties and their estates and all
proceeds thereof, subject, as to priority, only to the Carve-Out and as
otherwise set forth in the DIP Orders.

Section 4.20 FCPA; Sanctions.

(a)No Credit Party nor any Subsidiaries nor, to the knowledge of the Borrower,
any director, officer, agent, employee or other person acting on behalf of any
Credit Party or any Subsidiaries has taken any action, directly or indirectly,
that would result in a violation in any material respect by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”) or any other applicable Anti-Corruption Law; and the
Credit Parties have instituted and maintain policies and procedures designed to
promote and achieve continued compliance therewith.

(b)Except as set forth on Schedule 4.20, none of the Credit Parties, any of
their Subsidiaries or any director, officer, employee, or, to the knowledge of
Borrower, agent, or affiliate of the Credit Parties or any of their Subsidiaries
is an individual or entity that is, or is owned or controlled by Persons that
are: (i) the target of any sanctions administered or enforced by the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S.
Department

 

-41-

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

of State, the United Nations Security Council, the European Union,  or Her
Majesty’s Treasury  (collectively, “Sanctions”), or (ii) located, organized or
resident in a country or territory that is, or whose government is, the subject
of Sanctions, including, without limitation currently, Cuba, Iran, North Korea,
Sudan and Syria.

(c)No Loan, use of proceeds thereof or other transaction contemplated by this
Agreement will violate any Anti-Corruption Law or applicable Sanctions.

Section 4.21 Deposit Accounts.  Schedule 4.21 (as amended or supplemented from
time to time with the prior written consent of the Lenders) lists all Deposit
Accounts maintained by or for the benefit of the Credit Parties or any
Subsidiary.

Section 4.22 EEA Financial Institutions.  No Credit Party is an EEA Financial
Institution.

Section 4.23 Reorganization Matters.

(a)The Chapter 11 Cases were commenced on the Petition Date in accordance in all
material respects with applicable law and proper notice thereof and the proper
notice of the motion seeking approval of the Credit Documents and the DIP Orders
were given; provided that the Borrower shall give, on a timely basis as
specified in the DIP Orders, all notices required to be given to all parties
specified in the DIP Orders.

(b)The DIP Orders are, as applicable, in full force and effect have not been
reversed, stayed, modified or amended in an adverse manner without the Lenders’
consent.

(c)Each DIP Budget and all projected consolidated balance sheets, income
statements and cash flow statements of the Credit Parties delivered to the
Lenders were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were believed in good faith by the Borrower to be
fair in light of the conditions existing at the time of delivery of such report
or projection.

ARTICLE 5

 

AFFIRMATIVE COVENANTS

So long as any Obligation shall remain unpaid, each Credit Party agrees to
comply with the following covenants.

Section 5.1 Organization.  Each Credit Party shall, and shall cause each of its
respective Subsidiaries to, preserve and maintain its partnership, limited
liability company or corporate existence, rights, franchises and privileges in
the jurisdiction of its organization, and qualify and remain qualified as a
foreign business entity in each jurisdiction in which qualification is necessary
or desirable in view of its business and operations or the ownership of its
Properties and where failure to qualify could reasonably be expected to cause a
Material Adverse Change; provided, however, that nothing herein contained shall
prevent any transaction permitted by Section 6.8 or Section 6.9.

 

-42-

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

Section 5.2 Reporting.

(a)Annual Financial Reports.  The Borrower shall provide, or shall cause to be
provided, to the Lenders, as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower (commencing with the fiscal
year ending December 31, 2019), a consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries (excluding, in the case of Foreign
Subsidiaries, consolidating balance sheets) as at the end of such fiscal year,
and the related consolidated and consolidating statements of income or
operations for such fiscal year (excluding,  in the case of Foreign
Subsidiaries, consolidating statements of income or operations), setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and prepared in accordance with GAAP, such consolidated
statements to be certified by the chief executive officer, chief financial
officer, treasurer or controller of the Borrower as fairly presenting the
financial condition, results of operations, shareholders’ equity and cash flow
of each Credit Party and its Subsidiaries in accordance with GAAP; provided
that, notwithstanding the foregoing, any such income statement and balance sheet
may be subject to certain expected material impairments, including any
associated tax adjustments, and may otherwise be incomplete as a result of the
impact of the Chapter 11 Cases, including, but not limited to, any
inconsistencies in the accounting periods covered thereby as result of the
commencement of the Chapter 11 Cases on the Petition Date.

(b)Quarterly Financials.  The Borrower shall provide, or shall cause to be
provided, to the Lenders, as soon as available, but in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Borrower (commencing with the fiscal quarter ended March 31, 2020), a
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries (excluding, in the case of Foreign Subsidiaries, consolidating
balance sheets) as at the end of such fiscal quarter, and the related
consolidated and consolidating statements of income or operations for such
fiscal quarter and for the portion of the Borrower’s fiscal year then ended
(excluding, in the case of Foreign Subsidiaries, consolidating statements of
income or operations), setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail,
such consolidated statements to be certified by the chief executive officer,
chief financial officer, treasurer or controller of the Borrower as fairly
presenting the financial condition, results of operations, shareholders’ equity
and cash flow of each Credit Party and its Subsidiaries in accordance with GAAP;
provided that, notwithstanding the foregoing, any such income statement and
balance sheet may be subject to certain expected material impairments, including
any associated tax adjustments, and may otherwise be incomplete as a result of
the impact of the Chapter 11 Cases, including, but not limited to, any
inconsistencies in the accounting periods covered thereby as result of the
commencement of the Chapter 11 Cases on the Petition Date.

(c)Monthly Financials.  The Borrower shall provide, or shall cause to be
provided, to the Lenders, as soon as available, but in any event within 30 days
after the end of each month of each fiscal year of the Borrower (commencing with
the month ended March 31, 2020), a consolidated and consolidating balance sheet
of each Credit Party and its Subsidiaries (excluding, in the case of Foreign
Subsidiaries, consolidating balance sheets) as at the end of such month, and the
related consolidated and consolidating statements of income or operations for
such month and for the portion of the Borrower’s fiscal year then ended
(excluding, in the case of Foreign Subsidiaries, consolidating statements of
income or operations), setting forth in each case in

 

-43-

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

comparative form the figures for the corresponding month of the previous fiscal
year and the corresponding portion of the previous fiscal year, all in
reasonable detail, such consolidated statements to be certified by the chief
executive officer, chief financial officer, treasurer or controller of the
Borrower as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flow of each Credit Party and its Subsidiaries in
accordance with GAAP, provided that, notwithstanding the foregoing, any such
income statement and balance sheet may be subject to certain expected material
impairments, including any associated tax adjustments, and may otherwise be
incomplete as a result of the impact of the Chapter 11 Cases, including, but not
limited to, any inconsistencies in the accounting periods covered thereby as
result of the commencement of the Chapter 11 Cases on the Petition Date.

(d)Compliance Certificate.  Concurrently with the delivery of the financial
statements referred to in Section 5.2(a), (b) and (c) above, the Borrower shall
provide to the Lenders a duly completed Compliance Certificate signed by the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower.

(e)Reserved.

(f)Defaults.  The Credit Parties shall provide to the Lenders promptly, but in
any event within five (5) Business Days after the occurrence thereof, a notice
of each Default or Event of Default known to any Credit Party or to any
Subsidiary, together with a statement of an officer of the Borrower setting
forth the details of such Default or Event of Default and the actions which the
Credit Parties have taken and proposes to take with respect thereto.

(g)Other Creditors.  The Credit Parties shall provide to the Lenders promptly
after the giving or receipt thereof, copies of any default notices given or
received by any Credit Party or by any Subsidiary pursuant to the terms of any
indenture, loan agreement, credit agreement, notes, or similar agreement.

(h)Litigation.  To the extent the same is not otherwise notified to the Lenders
in connection with proper notices and filings with the Bankruptcy Court, the
Credit Parties shall provide to the Lenders promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any Governmental
Authority, affecting any Credit Party or any Subsidiary.

(i)Environmental Notices.  Promptly upon, and in any event no later than 3
Business Days after, the receipt thereof, or the acquisition of knowledge
thereof, by any Credit Party, to the extent the same is not otherwise notified
to the Lenders in connection with proper notices and filings with the Bankruptcy
Court, the Credit Parties shall provide the Lenders with a copy of any form of
request, claim, complaint, order, notice, summons or citation received from any
Governmental Authority or any other Person, (i) concerning violations or alleged
violations of Environmental Laws, (ii) concerning any action or omission on the
part of any of the Credit Parties or any of their former Subsidiaries in
connection with Hazardous Waste or Hazardous Substances or requiring that action
be taken to respond to or clean up a Release of Hazardous Substances or
Hazardous Waste into the environment, including without limitation any
information request related to, or notice of, potential responsibility under
CERCLA, or (iii) concerning the filing of a Lien arising under Environmental Law
upon, against or in connection with the Borrower, any Subsidiary, or any of
their respective former Subsidiaries, or any of their leased or owned Property,
wherever located.

 

-44-

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

(j)Material Changes.  To the extent the same is not otherwise notified to the
Lenders in connection with proper notices and filings with the Bankruptcy Court,
the Borrower will promptly furnish to the Lenders (and in any event within three
Business Days) written notice of the following:

(i)the occurrence of a Material Adverse Change;

(ii)a breach of or noncompliance with any material term, condition, or covenant
of any material contract to which any Credit Party or any Subsidiary is a party
or by which their Properties may be bound which breach or noncompliance could
reasonably be expected to result in a Material Adverse Change; and

(iii)the occurrence of any Default.

Each notice delivered under this Section 5.2(j) shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

(k)Termination Events.  As soon as possible and in any event (i) within 3
Business Days after the Borrower or any member of the Controlled Group knows or
has reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect to any Plan has occurred, and
(ii) within 10 days after the Borrower or any member of the Controlled Group
knows or has reason to know that any other Termination Event with respect to any
Plan has occurred, the Credit Parties shall provide to the Lenders a statement
of a Responsible Officer of the Borrower describing such Termination Event and
the action, if any, which the Borrower or any Affiliate of the Borrower proposes
to take with respect thereto;

(l)Termination of Plans.  Promptly and in any event within 3 Business Days after
receipt thereof by the Borrower or any member of the Controlled Group from the
PBGC, the Credit Parties shall provide to the Lenders copies of each notice
received by the Borrower or any such member of the Controlled Group of the
PBGC’s intention to terminate any Plan or to have a trustee appointed to
administer any Plan;

(m)Other ERISA Notices.  Promptly and in any event within 3 Business Days after
receipt thereof by the Borrower or any member of the Controlled Group from a
Multiemployer Plan sponsor, the Credit Parties shall provide to the Lenders a
copy of each notice received by the Borrower or any member of the Controlled
Group concerning the imposition or amount of withdrawal liability imposed on the
Borrower or any member of the Controlled Group pursuant to Section 4202 of
ERISA;

(n)Other Governmental Notices.  Promptly and in any event within 3 Business Days
after receipt thereof by any Credit Party or any Subsidiary, the Credit Parties
shall provide to the Lenders a copy of any notice, summons, citation, or
proceeding seeking to modify in any material respect, revoke, or suspend any
material contract, license, permit, or agreement with any Governmental
Authority;

 

-45-

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

(o)Disputes; etc.  To the extent the same is not otherwise notified to the
Lenders in connection with proper notices and filings with the Bankruptcy Court,
the Credit Parties shall provide to the Lenders prompt written notice of any
claims, legal or arbitration proceedings, proceedings before any Governmental
Authority, or disputes, or to the knowledge of any Credit Party, any such
actions threatened, or affecting any Credit Party or any Subsidiary, or any
material labor controversy of which the Borrower or any of its Subsidiaries has
knowledge resulting in or reasonably considered to be likely to result in a
strike against the Borrower or any Subsidiary;

(p)Securities Law Filings and other Public Information.  Promptly after the same
are available, the Credit Parties shall provide to the Lenders copies of each
annual report, proxy or financial statement or other report or communication
sent to the stockholders of the Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which the Borrower may
file or be required to file with the SEC under Section 13 or 15(d) of the
Exchange Act or any other securities Governmental Authority, and not otherwise
required to be delivered to the Lenders pursuant hereto (provided that a notice
and link posted to the Borrower’s main company website of any such document or
information shall be deemed a satisfaction of the covenant in this clause (p)).

(q)Other Information.  Subject to the confidentiality provisions of Section 9.8,
the Credit Parties shall provide to the Lenders such other information
respecting the business, operations, or Property of any Credit Party or any
Subsidiary, financial or otherwise, as any Lender may reasonably request.

(r)Accounting Changes.  No Credit Party shall make a change in the method of
accounting employed in the preparation of the financial statements referred to
in Section 4.4 or change the fiscal year end of the Borrower unless required to
conform to GAAP or approved in writing by the Lenders.

(s)DIP Budget and Variance Reports.  The Borrower shall deliver updated DIP
Budgets and reports of any variances thereto in accordance with and in the
manner set forth in paragraph 4(a) of the Interim DIP Order.

(t)Reserved.  

(u)Reports filed with the Bankruptcy Court.  As soon as practicable in advance
of filing with the Bankruptcy Court of any document, motion or pleading relating
to or impacting (i) any rights or remedies of any Lender, (ii) the DIP Facility,
the DIP Orders, the Cash Management Order, the Credit Documents, the Prepetition
Loan Documents (including the Credit Parties’ obligations thereunder), (iii) the
Collateral, any Liens thereon or any Superpriority Claims (including, without
limitation, any sale or other disposition of Collateral or the priority of any
such Liens or Superpriority Claims), (iv) use of cash collateral, (v)
debtor-in-possession financing, (vi) adequate protection or otherwise relating
to the Prepetition Debt, (vii) any Chapter 11 Plan, (viii) any Section 363 Sale,
or (ix) any transaction outside of the ordinary course of business with any
Credit Party, all such documents to be filed and provide the Lenders with a
reasonable opportunity to review and comment on all such documents.

 

-46-

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

(v)Acceptable Plan Reports.  Promptly following written notice from the Lenders,
telephonic weekly reports by the Credit Parties and their advisors regarding any
Acceptable Plan and any other information regarding the Chapter 11 Cases
reasonably requested by the Lenders.

(w)Sale Offers.  Subject to any confidentiality requirements, the Credit Parties
shall promptly deliver to the Lenders any and all material documentation
received after the Effective Date that constitutes a written, bona fide
solicitation, offer, or proposed sale or disposition of a material amount of
property of any of the Credit Parties’ estates actually received by a
Responsible Officer of a Credit Party or its counsel or financial advisor,
including, without limitation, letters of inquiry, solicitations, letters of
intent, or asset purchase agreements.

Section 5.3 Insurance.

(a)Each Credit Party shall, and shall cause each of its Subsidiaries to, carry
insurance in such amounts and against such risks as is customarily maintained by
other Persons of similar size engaged in similar businesses and with sound and
reputable insurers, or self-insure to the extent customary for persons of
similar size engaged in similar businesses and only to the extent the maximum
liability under such self- insurance is less than $5,000,000.

(b)Certificates of all insurance policies covering the property or business of
the Credit Parties, and the renewals thereof, shall be delivered by Borrower to
the Lenders. All certificates of insurance shall set forth the coverage, the
limits of liability, the name of the carrier, the policy number, and the period
of coverage.  All such policies shall contain a provision that notwithstanding
any contrary agreements between any such Credit Party, its Subsidiaries, and the
applicable insurance company, such policies will not be canceled or allowed to
lapse without renewal without at least 30 days’ (or 10 days’ with respect to
cancellation due to any failure to pay premiums or other amounts due under such
policies, or, in either case, such shorter period as may be accepted by the
Lenders) prior written notice to the Lenders.  All policies of property
insurance with respect to the Collateral either shall have attached thereto a
lender’s loss payable endorsement in favor of the Lenders for its benefit and
the ratable benefit of the Secured Parties or name the Lenders as loss payees
for its benefit and the ratable benefit of the Secured Parties, in either case,
in form reasonably satisfactory to the Lenders, and all policies of liability
insurance shall name the Lenders as additional insureds and shall provide for a
waiver of subrogation in favor of the Lenders.  All such policies shall contain
a provision that notwithstanding any contrary agreements between any such Credit
Party, its Subsidiaries, and the applicable insurance company, such policies
will not be canceled or allowed to lapse without renewal without at least 30
days’ (or 10 days’ with respect to cancellation due to any failure to pay
premiums or other amounts due under such policies, or, in either case, such
shorter period as may be accepted by the Lenders) prior written notice to the
Lenders.

(c)If at any time the area in which any real Property constituting Collateral
(to the extent any Building or Manufactured (Mobile) Home is situated on such
real Property) is located is designated a “flood hazard area” in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), the Borrower shall, and shall cause each other Credit Party
to, obtain Flood Insurance in such total amount and on such terms as the
applicable Flood Insurance Regulations may require and otherwise in form and
substance satisfactory to the Lenders, and otherwise comply with Flood Insurance
Regulations.

 

-47-

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

Section 5.4 Compliance with Laws.  Except as expressly permitted by any
applicable Governmental Authority (including any order of the Bankruptcy Court),
each Credit Party shall, and shall cause each of its Subsidiaries to, comply
with all federal, state, and local laws and regulations (including Environmental
Laws) which are applicable to the operations and Property of any Credit Party
and maintain all related permits necessary for the ownership and operation of
each Credit Party’s Property and business, except in any case where the failure
to so comply could not reasonably be expected to result in a Material Adverse
Change.

Section 5.5 Reserved.

Section 5.6 Material Domestic Subsidiaries.  The Borrower shall notify the
Lenders promptly after, and in any event no later than three (3) days after, the
formation or acquisition of any Subsidiary formed or acquired by the Borrower or
any Credit Party after the Effective Date.  Upon the request of a Lender, the
Borrower shall cause each Material Domestic Subsidiary, whether existing on the
Effective Date or created or acquired after the Effective Date, to, within 30
days of creation or acquisition (or such later date as the Lenders shall agree),
execute and deliver to the Lenders (A) a joinder to the Guaranty or otherwise
deliver a Guaranty (and a joinder to this Agreement), in each case, in any
event, in form and substance satisfactory to the Lenders and (B) a joinder to
the Security Agreement or otherwise deliver a security agreement, in any event,
in form and substance satisfactory to the Lenders and (C) take all actions
necessary to perfect each Lender’s lien in the Collateral of such Subsidiary,
consistent with the provisions of the Security Agreement. Furthermore, if, as of
any fiscal quarter end, the Non-Material Domestic Subsidiaries collectively (a)
have operating income equal to or greater than 10% of the Borrower’s
consolidated operating income for the four fiscal quarter period then ended, or
(b) have a total book value of total assets equal to or greater than 10% of the
Borrower’s consolidated book value of total assets, in either case under clause
(a) or (b), as established in accordance with GAAP and as reflected in the
financial statements covering such fiscal quarter and delivered to the Lenders
pursuant hereto, then, within 30 days of delivery of such financial statements
and the accompanying Compliance Certificate required under Section 5.2(d) above,
the Borrower shall cause such Non-Material Domestic Subsidiaries to execute and
deliver to the Lenders (x) a joinder to the Guaranty or otherwise deliver a
Guaranty (and a joinder to this Agreement), in each case, in any event, in form
and substance satisfactory to the Lenders and (y) a joinder to the Security
Agreement or otherwise deliver a security agreement, in any event, in form and
substance satisfactory to the Lenders, but only to the extent necessary in order
to result in (i) operating income of all Non-Material Domestic Subsidiaries that
are not Guarantors and Grantors under the Security Agreement to be less than 10%
of the Borrower’s consolidated operating income for the four fiscal quarter
period then ended, and (ii) total book value of total assets of all Non-Material
Domestic Subsidiaries that are not Guarantors and Grantors under the Security
Agreement to be less than 10% of the Borrower’s consolidated book value of total
assets, in either case under clause (i) or (ii), as established in accordance
with GAAP and as reflected in the financial statements covering such fiscal
quarter and delivered to the Lenders pursuant hereto. Furthermore, concurrently
with the delivery of each financial statement as required in Sections 5.2(a),
(b) and (c) and the accompanying Compliance Certificate required under Section
5.2(d), the Borrower may request that the Lenders release, and within 30 days of
such request, the Lenders shall release, any Domestic Subsidiary from its
Guaranty as requested by the Borrower, so long as no Default then exists and
after giving effect to such release, the Borrower is in compliance with this
Section 5.6. For the avoidance of doubt, no Foreign Subsidiary, FSCHO or any
Subsidiary of a Foreign Subsidiary or FSHCO shall be required to become a
Guarantor hereunder.

 

-48-

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

Section 5.7 Records; Inspection.  Each Credit Party shall, and shall cause each
of its Subsidiaries to maintain proper, complete and consistent, in all material
respects, books of record with respect to such Person’s operations, affairs, and
financial condition.  From time to time upon reasonable prior notice, each
Credit Party shall permit any Lender and shall cause each of its Subsidiaries to
permit any Lender, at such reasonable times and intervals and to a reasonable
extent and under the reasonable guidance of officers of or employees delegated
by officers of such Credit Party or such Subsidiary, to, subject to any
applicable confidentiality considerations, examine and copy the books and
records of such Credit Party or such Subsidiary, to visit and inspect the
Property of such Credit Party or such Subsidiary at the Borrower's sole cost and
expense, and to discuss the business operations and Property of such Credit
Party or such Subsidiary with the officers and directors thereof; provided that,
if no Event of Default has occurred and is continuing only two such inspections
shall be at the Borrower’s sole cost and expense.

Section 5.8 Maintenance of Property.  Each Credit Party shall, and shall cause
each of its Subsidiaries to (in accordance with and to the extent permitted by
the DIP Budget and any Permitted Variance), maintain its owned, leased, or
operated Property in good condition and repair, normal wear and tear excepted;
and shall abstain from, and cause each of its Subsidiaries to abstain from,
knowingly or willfully permitting the commission of waste or other injury,
destruction, or loss of natural resources, or the occurrence of pollution,
contamination, or any other condition in, on or about the owned or operated
Property involving the Environment that could reasonably be expected to result
in Response activities and that could reasonably be expected to cause a Material
Adverse Change.

Section 5.9 Security.  

(a)Each Credit Party agrees that at all times before the termination of this
Agreement and payment in full of the Obligations, the Lenders shall have an
Acceptable Security Interest in the Collateral to secure the performance and
payment of the Obligations.  Upon the request of the Lenders, each Credit Party
shall, and shall cause each of its Subsidiaries to, promptly grant to each
Lender a Lien in any Collateral of such Credit Party or such Subsidiary now
owned or hereafter acquired (other than leased real property) and to take such
actions as may be requested by the Lenders or otherwise required under the
Security Documents to ensure that each Lender has an Acceptable Security
Interest in such Collateral.

(b)Within 30 days after opening a deposit account or securities account (other
than an Excluded Account), or such greater period of time as may be approved by
the Lenders, the applicable Credit Party shall execute and deliver and shall
cause to be delivered to the Lenders an Account Control Agreement from the bank
maintaining such deposit account or securities account and take any steps which
may reasonably be requested by the Lenders to perfect their security interest in
such account.

(c)Except as expressly contemplated by Section 5.9(b), all deposit accounts and
securities accounts (in each case, other than Excluded Accounts) owned or held
by a Credit Party shall be subject to an Account Control Agreement at all times.

(d)Mortgages and Title Information.  Notwithstanding the generality of Section
5.9(a) above, with respect to the real Property set forth on Schedule 5.9(d),
upon the

 

-49-

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

request of the Lenders, the Credit Parties shall provide the following to the
Lenders as soon as is practicable but in no event later than 45 days of the date
of such request (or such later date as may be agreed by the Lenders in their
sole discretion):

(i)executed Mortgages covering the real Property listed on Schedule 5.9(d)
hereto;

(ii)such customary endorsements and affirmative assurances to each mortgagee
title insurance policy with respect to the Mortgaged Property as the Lenders
shall reasonably request and which are reasonably obtainable from the applicable
title company issuing such policy in the state where such real property interest
is located; and

(iii)legal opinions of local counsel to the Credit Parties in each relevant
jurisdiction in which the Mortgages described in the preceding clause (i) will
be filed with respect to the Mortgages described in the immediately preceding
clause (i) above, in form and substance reasonably acceptable to the Lenders.  

(e)Survey.  Upon the request of the Lenders, the Borrower shall promptly, and in
no event later than 45 days following date of such request, deliver or cause to
be delivered to the Lenders a Survey, with respect to the real Property listed
on Schedule 5.9(d).

(f)Environmental Report.  Upon the request of the Lenders, the Borrower shall
promptly, and in no event later than 60 days following date of such request,
deliver or cause to be delivered to the Lenders a Phase I Environmental Site
Assessment Report completed by an independent environmental consultant with
respect to the real Property listed on Schedule 5.9(d).  In the event that such
Phase I Environmental Site Assessment Report identify any “recognized
environmental conditions,” “controlled recognized environmental conditions,” or
“historical recognized environmental conditions” as defined in the ASTM E
1527-13, Borrower shall also provide to Lenders within a reasonable time
thereafter copies of any and all environmental activities and/or reports, as
applicable,  reasonably required to ensure that the applicable real Property is
in compliance with Environmental Laws in all material respects.

(g)Collateral Access Agreements.  Upon the request of the Lenders, the Borrower
shall (i) promptly, and in no event later than 45 days following the date of
such request, deliver or cause to be delivered to the Lenders a copy of each
Collateral Access Agreement in favor of Prepetition Administrative Agent
available, if any, with respect to each real property set forth on Schedule
5.9(d), and (ii) use commercially reasonable efforts to deliver an assignment of
such Collateral Access Agreements or new Collateral Access Agreements to the
Lenders for such real property locations described on Schedule 5.9(d) as the
Lenders require in their sole discretion.

Section 5.10 Further Assurances; Cure of Title Defects.

(a)Each Credit Party shall, and shall cause each Subsidiary to, cure promptly
any defects in the execution and delivery of the Credit Documents.  The Credit
Parties hereby authorize each Lender to file any (x) financing statements to the
extent permitted by applicable Legal Requirements in order to perfect or
maintain the perfection of any security interest granted under any of the Credit
Documents and/or (y) any amendments to the existing financing statements to
reflect the terms of the Credit Documents.  Each Credit Party at its expense
will, and will cause

 

-50-

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

each Subsidiary to, promptly execute and deliver to the Lenders upon reasonable
request by the Lenders all such other documents, agreements and instruments to
comply with or accomplish the covenants and agreements of any Credit Party or
Subsidiary, as the case may be, in the Credit Documents, or to further evidence
and more fully describe the collateral intended as security for the Obligations,
or to correct any omissions in the Security Documents, or to state more fully
the security obligations set out herein or in any of the Security Documents, or
to perfect, protect or preserve any Liens created pursuant to this Agreement,
the DIP Orders or any of the Security Documents or the priority thereof, or to
make any recordings, to file any notices or obtain any consents, all as may be
necessary or appropriate in connection therewith or to enable the Lenders to
exercise and enforce its rights and remedies with respect to any Collateral.

(b)Pursuant to the terms of the DIP Orders, no filings or other action
(including the taking of possession or control) will be necessary to perfect or
protect the Liens and security interests created pursuant to this Agreement, the
DIP Orders or any other Security Document. Upon entry by the Bankruptcy Court,
the Liens and security interests created by the DIP Orders shall automatically
constitute fully perfected first priority Liens on, and security interests in,
all right, title and interest of the Credit Parties in the Collateral covered
thereby (including after-acquired Collateral), in each case free of all Liens
other than Liens permitted under Section 6.3, and prior and superior to all
other Liens other than as provided in the DIP Orders. Notwithstanding the
foregoing, upon the reasonable request of the Lenders, the Borrower and each of
its Subsidiaries shall take any additional actions requested, with respect to
any Property of the Borrower or any other Credit Party, in each case
constituting Collateral, to cause such Property to be subject to a Lien pursuant
to the Security Documents or the DIP Orders or to evidence the Lien on such
Property, including to execute and deliver such Security Documents (in proper
form for filing, registration or recordation, as applicable) as are requested by
the Lenders, and take such actions necessary or advisable to subject such
Property to a Lien or evidence of the Lien on such Property pursuant to the
Security Documents.

Section 5.11 FCPA; Sanctions.  Each Credit Party will maintain in effect
policies and procedures designed to promote compliance by such Credit Party, its
Subsidiaries, and their respective directors, officers, employees, and agents
with the FCPA and any other applicable Anti-Corruption Laws and all applicable
Sanctions.

Section 5.12 Reserved.  

Section 5.13 Payment of Obligations.  In accordance with the Bankruptcy Code and
subject to any required approval by an applicable order of the Bankruptcy Court,
the Borrower will, and will cause each Subsidiary to, pay its material
obligations, including material Tax liabilities of the Borrower and all of its
Subsidiaries, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest would not reasonably be
expected to result in a Material Adverse Effect or result in the seizure or levy
of any Borrowing Base Property or any other material Property of the Borrower or
any Subsidiary, in each case, unless subject to the automatic stay under the
Chapter 11 Cases, and in each case subject to rejection of agreements in
accordance with the Bankruptcy Code.

 

-51-

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

Section 5.14 Performance of Obligations under Credit Documents.  The Borrower
will pay the Notes according to the reading, tenor and effect thereof, and the
Borrower will, and will cause each Subsidiary to, do and perform every act and
discharge all of the obligations to be performed and discharged by them under
the Credit Documents, including this Agreement, at the time or times and in the
manner specified subject to any required approvals of the Bankruptcy Court.

Section 5.15 Case Milestones.  Each Credit Party shall ensure that each of the
milestones set forth below (the “Case Milestones”) is achieved in accordance
with the applicable timing referred to below (or such later dates as approved in
writing by the Lenders); provided that when the performance of any covenant,
duty or obligation is stated to be due or performance required under this
Section 5.15 falls on a day which is not a Business Day, the date of such
performance shall extend to the immediately succeeding Business Day:

(a)On the Petition Date, the Credit Parties shall have filed a motion seeking
approval of the DIP Orders, in form and substance acceptable to the Lenders in
all respects.

(b)Not later than the date that is ten (10) days following the Petition Date,
the Bankruptcy Court shall have entered the Interim DIP Order and such Interim
DIP Order shall be in full force and effect and shall not have been (A) vacated,
reversed, or stayed, or (B) amended or modified except as otherwise agreed to in
writing by the Lenders.

(c)Not later than ten (10) days after the Petition Date, the Credit Parties
shall have filed in the Bankruptcy Court an Acceptable Plan, a corresponding
disclosure statement (the “Disclosure Statement”), and a motion seeking approval
of the Disclosure Statement, in each case, in form and substance acceptable to
the Lenders and the Prepetition Administrative Agent.

(d)Not later than the date that is thirty (30) days following the Petition Date,
the Bankruptcy Court shall have entered the Final DIP Order and such Final DIP
Order shall be in full force and effect and shall not have been (A) vacated,
reversed, or stayed, or (B) amended or modified except as otherwise agreed to in
writing by the Lenders.

(e)Not later than fifty (50) days after the Petition Date, the Credit Parties
shall have obtained entry of the order by the Bankruptcy Court approving the
Disclosure Statement in form and substance acceptable to the Lenders and the
Prepetition Administrative Agent.

(f)Not later than ninety (90) days after the Petition Date, the Credit Parties
shall have obtained entry by the Bankruptcy Court of the order confirming the
Acceptable Plan (the “Confirmation Order”), in form and substance acceptable to
the Lenders and the Prepetition Administrative Agent.

(g)Not later than sixteen (16) days after entry of the Confirmation Order, the
effective date of the Acceptable Plan shall have occurred and the Credit Parties
shall have discharged the Loans by (A) Payment in Full of the Obligations or (B)
such other treatment as acceptable to the Lenders and the Credit Parties.

Section 4.16 Cash Management.  The Credit Parties shall maintain the cash
management of the Credit Parties in accordance in all material respects with the
Cash Management Order.

 

-52-

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

ARTICLE 6

 

NEGATIVE COVENANTS

So long as any Obligation shall remain unpaid, the Credit Parties agree to
comply with the following covenants.

Section 6.1 DIP Budget.  The Credit Parties shall use all proceeds of the Loans
and any DIP Cash Collateral, and shall operate, strictly in accordance with the
DIP Budget, as the DIP Budget may be modified pursuant to Section 5.2(s), and
subject to any Permitted Variances and the Permitted Carry.

Section 6.2 Debt.  No Credit Party shall, nor shall it permit any of its
Subsidiaries to, create, assume, incur, suffer to exist, or in any manner become
liable, directly, indirectly, or contingently in respect of, any Debt other than
the following (collectively, the “Permitted Debt”):

(a)the Obligations;

(b)Prepetition Debt of the Borrower and its Subsidiaries existing on the date
hereof;

(c)Reserved;

(d)intercompany Debt incurred in the ordinary course of business owed by any
Credit Party to any other Credit Party provided that if such Debt constitutes an
investment, such investment is also permitted under Section 6.4;

(e)Debt in the form of accounts payable to trade creditors for goods or services
and current operating liabilities (other than for borrowed money) which in each
case are not more than 90 days past due, in each case incurred in the ordinary
course of business, as presently conducted, unless contested in good faith and
by appropriate proceedings;

(f)(i) purchase money indebtedness and Capital Leases in effect on the Effective
Date and set forth in Schedule 6.2(f) and (ii) such other purchase money
indebtedness or Capital Leases incurred after the Effective Date; provided that,
the aggregate outstanding principal amount of such purchase money indebtedness
and Capital Leases incurred after the Effective Date shall not exceed $5,000,000
at any time;

(g)Reserved;

(h)(i) the Existing Letters of Credit, in effect as of the Effective Date, so
long as the face amount of the Existing Letters of Credit is not increased after
the Effective Date, and (ii) other letters of credit issued by Wells Fargo or
other commercial banks reasonably satisfactory to the Borrower in the ordinary
course of business provided that no more than an aggregate of $15,000,000 of
letters of credit may be outstanding at any time pursuant to this Section
6.2(h);

(i)Debt incurred pursuant to one or more loan agreements between the Borrower
and CARBO International (Eurasia) LLC, a company duly organized and existing
under

 

-53-

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

the laws of Russia; provided that (i) such Debt is unsecured, (ii) the aggregate
principal amount of such Debt outstanding at any time shall not to exceed
$300,000.00, and (iii) such Debt is subordinated to the Debt under this
Agreement and the other Credit Documents on terms reasonably acceptable to the
Lenders;

(j)Debt in the form of insurance premium financings incurred in the ordinary
course of business;

(k)all Debt outstanding as of the Effective Date, which is described on
Schedule 6.2(k);

(l)all refinancings or replacements of any of the Debt permitted under the
foregoing clauses (a)-(k) provided that any such refinanced or replaced Debt in
excess of $5,000,000 on an individual basis and $10,000,000 in the aggregate
constitutes Refinancing Debt; and

(m)Debt incurred pursuant to the existing corporate credit card services
provided to Borrower by Wells Fargo and described on Schedule 6.2(m), provided
that the aggregate principal amount of such Debt outstanding pursuant to this
Section 6.2(m) shall not exceed $315,000.00 at any time.

Section 6.3 Liens.  No Credit Party shall, nor shall it permit any of its
Subsidiaries to, create, assume, incur, or suffer to exist any Lien on the
Property of any Credit Party or any Subsidiary, whether now owned or hereafter
acquired, or assign any right to receive any income, other than the following
(collectively, the “Permitted Liens”):

(a)Liens securing the Obligations pursuant to the Security Documents;

(b)Liens imposed by law, such as materialmen’s, mechanics’, carriers’,
workmen’s, landlords’ and repairmen’s liens, and other similar liens arising in
the ordinary course of business securing obligations which are not overdue for a
period of more than 30 days or are being contested in good faith by appropriate
procedures or proceedings and for which adequate reserves have been established;

(c)Liens arising in the ordinary course of business out of pledges or deposits
under workers compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar legislation to secure
public or statutory obligations;

(d)Liens for Taxes, assessment, or other governmental charges which are not yet
due and payable or which are being actively contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
compliance with GAAP;

(e)Liens securing purchase money debt or Capital Lease obligations permitted
under Section 6.2(f); provided that each such Lien encumbers only the Property
purchased in connection with the creation of any such purchase money debt or the
subject of any such Capital Lease and the amount secured thereby is not
increased;

 

-54-

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

(f)Liens arising from precautionary UCC financing statements regarding operating
leases to the extent such operating leases are permitted hereby;

(g)encumbrances consisting of minor easements, zoning restrictions, or other
restrictions on the use of real property that do not (individually or in the
aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of any Credit Party to use such assets in its
business, and none of which is violated in any material aspect by existing or
proposed structures or land use;

(h)Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies and
burdening only deposit accounts or other funds maintained with a depository
institution;

(i)subject to the Cash Management Order and to the extent permitted by the DIP
Budget, Liens on cash or securities pledged to secure (i) letters of credit
permitted under Section 6.2(h), (ii) reserved, (iii) performance of tenders,
surety and appeal bonds, government contracts, performance and return of money
bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations and other obligations of a like nature incurred in the ordinary
course of business, and (iv) corporate credit card services permitted under
Section 6.2(m), provided that the amount of such cash or securities pledges to
secure such corporate credit card services shall not exceed $525,000.00 at any
time;

(j)to the extent arising prior to the Petition Date, judgment and attachment
Liens not giving rise to an Event of Default, provided that (i) any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and (ii) no action to enforce
such Lien has been commenced;

(k)Liens granted pursuant to the DIP Orders or any other order of the Bankruptcy
Court;

(l)the Carve-Out;

(m)any Prior Liens; and

(n)Liens permitted under the Prepetition Credit Agreement that were granted
prior to the Effective Date (including, for the avoidance of doubt, Liens in
respect of the Prepetition Secured Debt).

Notwithstanding the foregoing, none of the Liens permitted pursuant to clause
(m) of this Section 6.3 (other than Liens securing the Prepetition Secured Debt)
may at any time attach to any portion of the Collateral or any of the Mortgaged
Properties.

Section 6.4 Investments.  No Credit Party shall, nor shall it permit any of its
Subsidiaries to, make or hold any direct or indirect investment in any Person,
including capital contributions to the Person, investments in or the acquisition
of the debt or equity securities of the Person, or any loans, guaranties, trade
credit, or other extensions of credit to any Person, other than the following
(collectively, the “Permitted Investments”):

 

-55-

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

(a)Investments made prior to the Effective Date which are disclosed to the
Lenders in Schedule 6.4(a) or reflected in the DIP Budget

(b)investments in the form of trade credit to customers of a Credit Party
arising in the ordinary course of business and represented by accounts from such
customers;

(c)Liquid Investments, provided that all such Liquid Investments shall be
subject to a first priority, perfected Lien and security interest in favor of
the Lenders;

(d)loans, advances, or capital contributions to, or investments in, or purchases
or commitments to purchase any stock or other securities or evidences of
indebtedness of or interests in any Subsidiary that is not a Credit Party,
including any travel advances or travel loans to officers and employees;
provided that on the date any such loans, advances, capital contributions,
investments, purchases and commitments are made, the aggregate amount of such
loans, advances, capital contributions, investments, purchases and commitments
together with any other loans, advances contributions, investments, purchases
and commitments (other than appreciation) then outstanding under this clause (c)
shall not exceed $5,000,000;

(e)loans and advances by a Credit Party to any other Credit Party;

(f)investments in the form of Acquisitions permitted by Section 6.5; provided
that, if such Acquisition is of an equity interest or other securities in a
Person (that is not a Credit Party and does not become a Credit Party), such
investments shall also be permitted under clause (c) above;

(g)creation of any additional Subsidiaries; provided that in connection with any
such creation of an additional Subsidiary the Borrower shall comply with the
terms and conditions in Section 5.6;

(h)Reserved;

(i)the Wilkinson Bonds; and

(j)other Investments to the extent included in the DIP Budget (subject to the
Permitted Variances).

Section 6.5 Acquisitions.  No Credit Party shall, nor shall it permit any of its
Subsidiaries to, make an Acquisition in a transaction or related series of
transactions for cash consideration unless (i) the assets, operations or
business purchased in connection with such transaction become Collateral and
subject to the first priority Lien in favor of each Lender, and (ii) the
transaction is otherwise acceptable to the Lenders.

Section 6.6 Agreements Restricting Liens.  No Credit Party shall, nor shall it
permit any of its Subsidiaries to, create, incur, assume or permit to exist any
contract, agreement or understanding (other than (i) this Agreement and the
other Credit Documents, (ii) the Prepetition Loan Documents, (iii) agreements in
respect of Prepetition Debt entered into in accordance with the terms of the
Prepetition Credit Agreement, (iv) documents creating Liens which are described
in clauses (c) and (g) of Section 6.3, but then only with respect to the
Property that is the subject

 

-56-

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

of the applicable lease or document described in such clause (c) or (g), (v) in
connection with any sale or other disposition of Property permitted under this
Agreement, restrictions on such Property during the pendency of such sale or
other disposition imposed under the agreements governing such sale or
disposition, and (vi) anti-assignment provisions in Excluded Contracts (as
defined in the Security Agreement)) which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of its Property,
whether now owned or hereafter acquired, to secure the Obligations or restricts
any Subsidiary from paying Restricted Payments to the Borrower, or which
requires the consent of or notice to other Persons in connection therewith.

Section 6.7 Use of Proceeds.  No Credit Party shall, nor shall it permit any of
its Subsidiaries to, use the proceeds of the Loans for any purposes other than
as permitted by Section 4.15 hereof.  No Credit Party shall, nor shall it permit
any of its Subsidiaries to, directly or indirectly, use any part of the proceeds
of Loans for any purpose which violates, or is inconsistent with, Regulations T,
U, or X.  No part of the proceeds of the Loans will be used, directly or
indirectly, in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else of value, to
any Person in violation of the FCPA or any other applicable anticorruption
law.  The Borrower will not, directly or indirectly, use the proceeds of the
Loans, or lend, contribute or otherwise make available such proceeds to any
subsidiary, or, to its knowledge, to any joint venture partner or other Person,
(i) to fund any activities or business of or with any Person, or in any country
or territory, that, at the time of such funding, is, or whose government is, the
subject of Sanctions only to the extent the funding of such proceeds would
violate such Sanctions, or (ii) in any other manner that would result in a
violation of Sanctions by the Borrower, any of its Subsidiaries or any Lender.

Section 6.8 Corporate Actions.

(a)No Credit Party shall, nor shall it permit any of its Subsidiaries to, merge
or consolidate with or into any other Person, except that (i) the Borrower may
merge with any of its wholly-owned Subsidiaries, (ii) any Credit Party may merge
or be consolidated with or into any other Credit Party, (iii) any Subsidiary of
the Borrower that is not a Credit Party may merge or consolidate with any Credit
Party or any other Subsidiary of the Borrower that is not a Credit Party, and
(iv) any entity may merge or be consolidated with or into any Credit Party;
provided that immediately after giving effect to any such proposed transaction
no Default would exist and, in the case of any such merger to which (x) the
Borrower is a party, the Borrower is the surviving entity, and (y) a Credit
Party (other than Borrower) is a party, a Credit Party is the surviving entity;
provided, further, that this section shall not prohibit a transaction required
or permitted to be entered into or pursued pursuant to a Case Milestone.

(b)No Credit Party shall, nor shall it permit any of its Subsidiaries to, change
its name, change its state of incorporation, formation or organization, change
its organizational identification number or reorganize in another jurisdiction,
or in any manner rearrange its business structure as it exists on the date of
this Agreement, provided that a Credit Party may change its name, change its
state of incorporation, formation or organization, and change its organizational
number provided that such Credit Party has given the Lenders at least ten (10)
days’ prior notice of such change.

 

-57-

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

(c)The Borrower shall not, nor shall it permit any of its Subsidiaries to,
modify or change its fiscal year or its method of accounting (other than as may
be required to conform to GAAP) without the prior written consent of the
Lenders.

Section 6.9 Dispositions.  

(a)No Credit Party shall, nor shall it permit any of its Subsidiaries to, sell,
convey, license or otherwise transfer any of its assets except that the Borrower
and its Subsidiaries may (i) sell Inventory in the ordinary course of business;
(ii) sell, convey, or otherwise transfer of Equipment that is (i) obsolete, worn
out, depleted or uneconomic and disposed of in the ordinary course of business,
or (ii) contemporaneously replaced by Equipment of at least comparable value and
use; provided that no Event of Default shall exist or shall result from such
sale, conveyance, or transfer; (iii) consummate the Specified Dispositions; (iv)
license or otherwise dispose of Intellectual Property (as such term is defined
in the Security Agreement) pursuant to the terms of the Security Agreement; and
(v) sell, convey or otherwise transfer assets so long as the Borrower makes any
prepayments of the Loans with the Net Cash Proceeds thereof to the extent
required under Section 2.5(c)(ii).

(b)No Credit Party shall, nor shall it permit any of its Subsidiaries to, sell
or otherwise dispose of any of its ownership interest in any of its
Subsidiaries, or in any manner rearrange its business structure as it exists on
the date of this Agreement except that the Borrower and its Subsidiaries may (i)
create or acquire new Subsidiaries if such new Subsidiaries comply with Section
5.6 and such transactions otherwise comply with the terms of this Agreement,
(ii) transfer, sell or otherwise dispose of such ownership interests in
connection with any merger or consolidation permitted under Section 6.8(a) or
any dissolution or liquidation of any Subsidiary of the Borrower to the extent
that the Borrower has reasonably determined that such Subsidiary is no longer
useful in its business so long as the Borrower makes any prepayments of the
Loans with the Net Cash Proceeds thereof to the extent required under Section
2.5(c)(ii), (iii) dispose of any of its ownership interests in any of its
Subsidiaries provided that no Event of Default shall exist or shall result from
such sale, conveyance, or transfer; (iv) consummate the Specified Dispositions;
and (v) sell, convey or otherwise transfer assets so long as the Borrower makes
any prepayments of the Loans with the Net Cash Proceeds thereof to the extent
required under Section 2.5(c)(ii).

Section 6.10 Restricted Payments.

(a)No Credit Party shall, nor shall it permit any of its Subsidiaries to make
any Restricted Payments other than (i) a Restricted Payment to a Credit Party
and (ii) a Restricted Payment from a Subsidiary that is not a Credit Party to a
Credit Party or another Subsidiary that is not a Credit Party.

(b)The Borrower will not, and will not permit any of its Subsidiaries to, prior
to the date that is ninety-one (91) days after the Maturity Date, make or offer
to make any optional or voluntary Redemption of or otherwise optionally or
voluntarily Redeem (whether in whole or in part) any principal in respect of any
Debt other than the Obligations, unless approved by the Lenders in writing or
authorized by the Bankruptcy Court after notice and hearing.

 

-58-

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

Section 6.11 Affiliate Transactions.  No Credit Party shall, nor shall it permit
any of its Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of transactions (including, but not limited to,
the purchase, sale, lease or exchange of Property, the making of any investment,
the giving of any guaranty, the assumption of any obligation or the rendering of
any service) with any of their Affiliates which are not Credit Parties unless
such transaction or series of transactions is on terms no less favorable to the
Borrower or any Subsidiary, as applicable, than those that could be obtained in
a comparable arm’s length transaction with a Person that is not an affiliate.

Section 6.12 Line of Business.  No Credit Party shall, and shall not permit any
of its Subsidiaries to, change the character of the Borrower’s and its
Subsidiaries collective business as conducted on or immediately prior to the
Effective Date, or engage in any type of business not reasonably related to the
Borrower’s and its Subsidiaries collective business as of or immediately prior
to the Effective Date subject to the Credit Parties rights to consummate
Acquisitions or other investments in accordance with the terms of this
Agreement.

Section 6.13 Hazardous Materials.  No Credit Party shall, nor shall it permit
any of its Subsidiaries to, (a) create, handle, transport, use, or dispose of
any Hazardous Substance or Hazardous Waste, except in the ordinary course of its
business and except in compliance with Environmental Law other than to the
extent that such non-compliance could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change, and (b) Release
any Hazardous Substance or Hazardous Waste into the environment or permit any
Credit Party’s or any Subsidiary’s Property to be subjected to any Release of
Hazardous Substance or Hazardous Waste, except in compliance with Environmental
Law other than to the extent that such non-compliance could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Change.

Section 6.14 Compliance with ERISA.  Except for matters that individually or in
the aggregate could not reasonably be expected to cause a Material Adverse
Change, no Credit Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly: (a) knowingly engage in any transaction in connection
with which the Borrower or any Subsidiary could be subjected to either a civil
penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a Tax
imposed by Chapter 43 of Subtitle D of the Code; (b) terminate, or permit any
member of the Controlled Group to terminate, any Plan in a manner, or take any
other action with respect to any Plan, which could result in any liability to
the Borrower, any Subsidiary or any member of the Controlled Group to the PBGC;
(c) fail to make, or permit any member of the Controlled Group to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, a Subsidiary or
member of the Controlled Group is required to pay as contributions thereto; (d)
permit to exist, or allow any Subsidiary or any member of the Controlled Group
to permit to exist, any accumulated funding deficiency (or unpaid minimum
required contribution for plan years after December 31, 2007) within the meaning
of Section 302 of ERISA or section 412 of the Code, whether or not waived, with
respect to any Plan; (e) permit, or allow any member of the Controlled Group to
permit, the actuarial present value of the benefit liabilities (as “actuarial
present value of the benefit liabilities” shall have the meaning specified in
section 4041 of ERISA) under any Plan that is regulated under Title IV of ERISA
to exceed the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such benefit
liabilities; (f) contribute to or assume an

 

-59-

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

obligation to contribute to, or permit any member of the Controlled Group to
contribute to or assume an obligation to contribute to, any Multiemployer Plan;
(g) acquire, or permit any member of the Controlled Group to acquire, an
interest in any Person that causes such Person to become a member of the
Controlled Group if such Person sponsors, maintains or contributes to, or at any
time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other Plan
that is subject to Title IV of ERISA under which the actuarial present value of
the benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities; (h) incur, or permit any member
of the Controlled Group to incur, a liability to or on account of a Plan under
sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; (i) contribute to or
assume an obligation to contribute to any employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of Borrower or any
Subsidiary, that may not be terminated by such entities in their sole discretion
at any time without any liability; or (j) amend or permit any member of the
Controlled Group to amend, a Plan resulting in a material increase in current
liability such that the Borrower, any Subsidiary or any member of the Controlled
Group is required to provide security to such Plan under section 401(a)(29) of
the Code.

Section 6.15 Limitation on Hedging.  No Credit Party shall, nor shall it permit
any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position
in any commodities market or futures market or enter into any Hedging
Arrangement for speculative purposes; or (b) be party to or otherwise enter into
any Hedging Arrangement which is entered into for reasons other than as a part
of its normal business operations as a risk management strategy and/or hedge
against changes resulting from market conditions related to the Borrower’s or
its Subsidiaries’ operations.

Section 6.16 Chapter 11 Claims.  Other than (i) any valid, perfected, and
non-avoidable senior liens in the Collateral in existence immediately prior to
the Petition Date and any such valid and non-avoidable liens in existence
immediately prior to the Petition Date that are perfected subsequent to the
Petition Date pursuant to section 546(b) of the Bankruptcy Code and (ii) the
Carve-Out, the Credit Parties shall not incur, create, assume, suffer to exist,
or permit any claim in the Chapter 11 Cases (including without limitation any
claim under Section 506(c) of the Bankruptcy Code and any deficiency claim
remaining after the satisfaction of a Lien that secures a claim) to be on a
parity with or senior to the claims of the Lenders against the Credit Parties
hereunder, or apply to the Bankruptcy Court for authority to do so unless such
relief, if granted, would cause the Obligations to be Paid in Full. The Credit
Parties shall not pay fees and expenses to any Professional Person (as defined
in the DIP Orders) until such Professional Person is authorized to be paid
pursuant to any fee procedure approved by the Bankruptcy Court.

Section 6.17 Other Financings.  The Credit Parties shall not obtain any
financing or credit pursuant to Section 364 of the Bankruptcy Code from any
Person other than the Lenders.

Section 6.18 Superpriority Claims.  The Credit Parties shall not create or
permit to exist any superpriority claim (including any superpriority
administrative claim and all other benefits and protections allowable under
Sections 507(b) and 503(b)(1) of the Bankruptcy Code) other than with respect to
the Prepetition Secured Debt or the Obligations or as expressly permitted in
writing by the Lenders.

 

-60-

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

Section 6.19 Minimum Liquidity.  The Borrower shall not permit the Liquidity to
be less than $2,500,000 as of the last day of any calendar month following the
Effective Date.

ARTICLE 7

 

DEFAULT AND REMEDIES

Section 7.1 Events of Default.  The occurrence of any of the following events
shall constitute an “Event of Default” under this Agreement and any other Credit
Document:

(a)Payment Failure.  Any Credit Party (i) fails to pay any principal when due
under this Agreement or (ii) fails to pay, within three Business Days of when
due, any other amount due under this Agreement or any other Credit Document,
including payments of interest, fees, reimbursements, and indemnifications;

(b)False Representation or Warranties.  Any representation or warranty made or
deemed to be made by any Credit Party or any officer thereof in this Agreement,
in any other Credit Document or in any certificate delivered in connection with
this Agreement or any other Credit Document is incorrect, false or otherwise
misleading in any material respect (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof)  at the time it was
made or deemed made;

(c)Breach of Covenant.  (i) Any breach by any Credit Party of any of the
covenants in Section 5.1, Section 5.2(f), Section 5.2(g), Section 5.2(j)(iii),
Section 5.2(s), Section 5.2(t), Section 5.3(a), Section 5.15, Section 5.16 or
Article 6 of this Agreement or the corresponding covenants in any Guaranty; or
(ii) any breach by any Credit Party of any other covenant contained in this
Agreement (other than those specified in Section 7.1(a), Section 7.1(b) or the
foregoing clause (i) of this Section 7.1(c)) or any other Credit Document and
such breach shall remain unremedied for a period of thirty (30) days after the
earlier of (A) the date on which any Credit Party has actual knowledge of such
breach and (B) the date written notice of such breach shall have been given to
the Borrower by any Lender (such grace period to be applicable only in the event
such Default can be remedied by corrective action of a Credit Party or any of
its Subsidiaries);

(d)Guaranties.  Any provisions in the Guaranties shall at any time (before its
expiration according to its terms) and for any reason cease to be in full force
and effect and valid and binding on the Guarantors party thereto or shall be
contested by any party thereto; any Guarantor shall deny it has any liability or
obligation under such Guaranties; or any Guarantor shall cease to exist other
than as expressly permitted by the terms of this Agreement;

(e)Reserved.

(f)Bankruptcy.

(i)the failure to meet or satisfy any of the Case Milestones;

 

-61-

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

(ii)any of the Chapter 11 Cases shall be dismissed or converted to a case under
chapter 7 of the Bankruptcy Code or any Credit Party shall file a motion or
other pleading or support a motion or other pleading filed by any other Person
seeking the dismissal or conversion of any of the Chapter 11 Cases under section
1112 of the Bankruptcy Code or otherwise, in each case, without the consent of
the Lenders;

(iii)a trustee under chapter 7 or chapter 11 of the Bankruptcy Code, a
responsible officer, or an examiner with enlarged powers relating to the
operation of the business (powers beyond those set forth in section 1106(a)(3)
and (4) of the Bankruptcy Code) under section 1106(b) of the Bankruptcy Code
shall be appointed in any of the Chapter 11 Cases or any Credit Party shall file
a motion or other pleading or shall consent to a motion or other pleading filed
by any other Person seeking any of the foregoing;

(iv)entry of an order by the Bankruptcy Court, without the consent of the
Lenders, granting any other Superpriority Claim or any Lien (other than the
Carve-Out and those approved by the DIP Orders) which is pari passu with or
senior to the claims of the Lenders and the other Secured Parties against any
other Credit Party hereunder, or there shall arise or be granted any such pari
passu or senior Superpriority Claim (other than the Carve-Out and those approved
by the DIP Orders) or any Credit Party shall file a motion or other pleading or
support a motion or other pleading filed by any other Person requesting any of
the foregoing (other than in connection with any financing pursuant to which the
Obligations would be Paid in Full);

(v)three (3) Business Days after entry of an order by the Bankruptcy Court,
without the consent of the Lenders, granting relief from the automatic stay
applicable under section 362 of the Bankruptcy Code (A) to the holder or holders
of any security interest to proceed against, including foreclosure (or the
granting of a deed in lieu of foreclosure or the like) on, any assets of any
Credit Party that have a value in excess of $250,000 in the aggregate (excluding
foreclosure or setoff of liens or security interests on cash or cash equivalents
pledged to secure or support letters of credit, reclamation obligations,
corporate credit card programs or other obligations of a like nature incurred in
the ordinary course of business) or (B) to any state or local environmental or
regulatory agency or authority to proceed against, including foreclose (or the
granting of a deed in lieu of foreclosure or the like) on, any assets of any
Credit Party that have a value in excess of $250,000;

(vi)an order of the Bankruptcy Court (or any other court of competent
jurisdiction) shall be entered, whether on appeal or otherwise, (A) without the
written consent of the Lenders, reversing, staying, modifying, or vacating the
DIP Orders that would otherwise be in effect, (B) without the written consent of
the Lenders, amending, supplementing or modifying the DIP Orders then in effect
or (C) denying or terminating the use of cash collateral by the Credit Parties
pursuant to the DIP Orders; or any Credit Party shall file a motion or other
pleading or shall support a motion or other pleading filed by any other Person
seeking any of the foregoing;

(vii)the failure of any Credit Party to comply in any respect with any provision
of the DIP Orders, the Restructuring Support Agreement, or any Credit Document
(in each case, subject to any applicable notice and cure periods set forth
therein);

 

-62-

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

(viii)subject to entry of the Final DIP Order, the Bankruptcy Court shall enter
an order imposing, surcharging or assessing against any Lender’s interest in the
Collateral any costs of expenses, whether pursuant to sections 506(c) or 552 of
the Bankruptcy Code or otherwise, or any Credit Party shall file a motion or
other pleading or support a motion or other pleading filed by any other Person
requesting the foregoing;

(ix)the Bankruptcy Court shall terminate or reduce the periods pursuant to
section 1121 of the Bankruptcy Code during which the Credit Parties have the
exclusive right to file a Reorganization Plan and solicit acceptances thereof;

(x)any of the Credit Parties shall seek court authorization to commence, or
shall commence, join in, assist or otherwise participate as an adverse party in
any suit or other proceeding against any of the Lenders, provided, however, that
the Credit Parties may comply with discovery requests in connection with any
such suit or other proceeding in accordance with applicable law;

(xi)an order of the Bankruptcy Court (or any other court of competent
jurisdiction) shall be entered approving any financing under Section 364 of the
Bankruptcy Code (other than under the Credit Documents) without the written
consent of the Lenders that does not result in Payment in Full of the
Obligations or any Credit Party shall file a motion or other pleading or shall
support a motion or other pleading filed by any other Person seeking any of the
foregoing;

(xii)any Credit Party contests the validity or enforceability of any provision
of any Credit Document or any Prepetition Loan Document or the validity, extent,
perfection or priority of a Lien granted in favor of the Prepetition
Administrative Agent, the Lenders or the Prepetition Lenders or shall support or
consent to any other Person concerning the foregoing, provided, however, that
the Credit Parties may comply with discovery requests in connection with any
suit or proceeding in accordance with applicable law;

(xiii)the filing by any Credit Party of any Reorganization Plan without the
consent of the Lenders that is not an Acceptable Plan;

(xiv)an order of the Bankruptcy Court shall be entered approving a sale of
substantially all of the Credit Parties’ assets that (i) does not propose for
all Obligations to be Paid in Full on the effective date of such sale or (ii) is
not consented to in writing by the Lenders in their sole discretion;

(xv)an order (other than the DIP Orders) of the Bankruptcy Court shall be
entered pursuant to section 363(k) of the Bankruptcy Code limiting the ability
of the Lenders, either individually or together with one or more Lenders, to
credit bid the full amount of their claims in the Chapter 11 Cases in connection
with any asset sale process or plan sponsorship process or any sale of assets
(in whole or part) by any Credit Party, including without limitation sales
occurring pursuant to section 363 of the Bankruptcy Code or included as part of
any restructuring plan subject to confirmation under section
1129(b)(2)(A)(ii)-(iii) of the Bankruptcy Code;

(xvi)an order shall have been entered by the Bankruptcy Court without the
consent of the Lenders providing for a change in venue with respect to the
Chapter 11 Cases;

 

-63-

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

(xvii)three (3) Business Days after the Borrower, any Guarantor or any of their
Subsidiaries shall be enjoined, restrained, or in any way prevented by order of
a court of competent jurisdiction from continuing to conduct all or any part of
the business affairs of the Borrower, any Guarantor or any of their
Subsidiaries, taken as a whole, which could reasonably be expected to have a
Material Adverse Effect; provided that the Borrower, any such Guarantor or such
Subsidiary shall have thirty (30) days after the entry of such an order to
obtain a court order vacating, staying or otherwise obtaining relief from the
Bankruptcy Court or another court to address any such court order;

(xviii)the occurrence of a Termination Event (as defined in the Restructuring
Support Agreement), or the Restructuring Support Agreement is otherwise
terminated pursuant to Section 5 thereof;

(xix)the Lenders shall have objected in writing to any supplemental or new
Approved Budget and the Borrower and Lenders are unable to resolve the objection
in accordance with the DIP Orders within three (3) Business Days of receipt of
the Lenders’ objection in writing to such supplemental or new Approved Budget;

(xx)a violation of any Permitted Variance that is not resolved and approved in
writing by the Lenders within three (3) Business Days after the delivery of the
applicable Permitted Variance report;

(xxi)any Credit Party shall file, support, or acquiesce in any motion or other
pleading with the intent of effectuating a merger, consolidation, disposition,
acquisition, investment, dividend, incurrence of indebtedness, or other similar
transaction outside of the ordinary course of business other than (i) the
commencement of the Chapter 11 Cases, (ii) as permitted under the DIP Orders or
the Restructuring Support Agreement, or (iii) with the prior consent of the
Lenders;

(xxii)three (3) Business Days after the date any Credit Party enters into any
non-ordinary course transaction or makes any payment that is materially
inconsistent with the Restructuring Support Agreement, a Reorganization Plan or
the Approved Budget without the prior written consent of the Lenders;

(g)Reserved;

(h)Termination Events.  Any Termination Event with respect to a Plan shall have
occurred, and, 30 days after notice thereof shall have been given to the
Borrower by the Lenders, such Termination Event shall not have been corrected
and shall have created and caused to be continuing a material risk of Plan
termination or liability for withdrawal from the Plan as a “substantial
employer” (as defined in Section 4001(a)(2) of ERISA), which termination could
reasonably be expect to result in a liability of, or liability for withdrawal
could reasonably be expected to be, greater than $5,000,000;

(i)Plan Withdrawals.  The Borrower or any member of the Controlled Group as
employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and such withdrawing employer shall have
incurred a withdrawal liability in an annual amount exceeding $5,000,000; or

 

-64-

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

(j)Change in Control.  The occurrence of a Change in Control.

(k)Security Documents.  The Security Agreement or any other material Security
Document shall at any time and for any reason cease to create an Acceptable
Security Interest in all material Property purported to be subject to such
agreement (and such Acceptable Security Interest) in accordance with the terms
of such agreement or any provisions thereof shall cease to be in full force and
effect and valid and binding on the Credit Party that is a party thereto or any
such Person shall so state in writing.

Section 7.2 Acceleration of Maturity.  If any Event of Default shall have
occurred and be continuing, then, and in any such event, but subject to the
terms and conditions of the DIP Orders,

(a)the Lenders may, by notice to the Borrower, (i) terminate the Commitments,
and thereupon the Commitments shall terminate immediately, (ii) declare the
Loans (including, all principal and interest thereon), and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Loans (including all such principal and interest), and all other amounts payable
under this Agreement shall become and be forthwith due and payable in full,
without presentment, demand, protest or further notice of any kind (including,
without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by each of the Credit
Parties immediately due and payable pursuant to the term of this Section
7.2(a)), and

(b)the Lenders may proceed to enforce its rights and remedies under the
Guaranties or any other Credit Document for the ratable benefit of the Secured
Parties by appropriate proceedings.

Section 7.3 Reserved.

Section 7.4 Reserved.

Section 7.5 Remedies Cumulative, No Waiver.  No right, power, or remedy
conferred to any Lender in this Agreement or the Credit Documents, or now or
hereafter existing at law, in equity, by statute, or otherwise shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right, power
or remedy.  No course of dealing and no delay in exercising any right, power, or
remedy conferred to any Lender in this Agreement and the Credit Documents or now
or hereafter existing at law, in equity, by statute, or otherwise shall operate
as a waiver of or otherwise prejudice any such right, power, or remedy.  No
notice to or demand upon the Borrower or any other Credit Party shall entitle
the Borrower or any other Credit Party to similar notices or demands in the
future.

Section 7.6 Application of Payments.  Prior to an Event of Default, all payments
made hereunder shall be applied by the Lenders as directed by the Borrower, but
subject to the terms of this Agreement, including the application of prepayments
according to Section 2.5 and Section 2.12.  During the existence of an Event of
Default, all payments and collections received by the Lenders shall be applied
to the Obligations in accordance with Section 2.12 and otherwise in such manner
as determined by the Lenders provided that in the event that the Obligations
have been accelerated pursuant to Section 7.2 or any Lender has exercised any
remedy set forth in this

 

-65-

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

Agreement or any other Credit Document, all payments received on account of the
Obligations and all net proceeds from the enforcement of the Obligations shall
be applied by the Lenders as follows:

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts, including attorney fees, payable to the
Lenders in their capacities as such;

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders under the Credit Documents, including attorney fees, ratably among the
Lenders in proportion to the respective amounts described in this clause Second
payable to them;

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;

Fourth, to payment of all other Obligations ratably among the Secured Parties in
proportion to the respective amounts described in this clause Fourth payable to
them; and

Last, the balance, if any, after all of the Obligations have been indefeasibly
Paid in Full, to the Borrower or as otherwise required by Legal Requirements.

Section 7.7 Lenders May File Proofs of Claim.  In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative
to any Credit Party, each Lender (irrespective of whether the principal of any
Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether any Lender shall have made any demand on
the Borrower) shall be entitled and empowered (but not obligated) by
intervention in such proceeding or otherwise:

(a)to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Lenders
and their respective agents and counsel and all other amounts due the Lenders)
allowed in such judicial proceeding; and

(b)to collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Lenders.

 

-66-

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

ARTICLE 8

 

RESERVED

 

ARTICLE 9

 

MISCELLANEOUS

Section 9.1 Costs and Expenses.  The Borrower agrees to pay in accordance with
the DIP Orders:

(a)all reasonable out-of-pocket costs and expenses of Lenders in connection with
the preparation, execution, delivery, administration, modification, and
amendment of this Agreement, the Notes, and the other Credit Documents and
waivers of the provisions hereunder and thereunder, in each case, whether or not
the transactions contemplated hereby or thereby shall be consummated and
including reasonable costs associated with field examinations, appraisals, and
the reasonable fees and out‑of‑pocket expenses of outside counsel for Lenders,
with respect to advising the Lenders as to its rights and responsibilities under
this Agreement, and

(b)all out‑of‑pocket costs and expenses, if any, of each Lender (including
outside counsel fees and expenses of each Lender) in connection with the
enforcement (whether through negotiations, workout, legal proceedings, or
otherwise) of this Agreement, the Notes, and the other Credit Documents.

Section 9.2 Indemnification; Waiver of Damages.

(a)INDEMNIFICATION.  EACH CREDIT PARTY HERETO AGREES TO, JOINTLY AND SEVERALLY,
INDEMNIFY AND HOLD HARMLESS EACH LENDER AND EACH OF THEIR AFFILIATES AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS (EACH, AN
“INDEMNITEE”) FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES,
COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES)
THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNITEE, IN EACH
CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT
LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR
PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE CREDIT DOCUMENTS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS
OF THE LOANS, INCLUDING SUCH INDEMNITEE’S OWN NEGLIGENCE, EXCEPT TO THE EXTENT
SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM SUCH INDEMNITEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  IN THE CASE OF
AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS
SECTION 9.2 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT SUCH
INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY ANY CREDIT PARTY, ITS
DIRECTORS, SHAREHOLDERS OR

 

-67-

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

CREDITORS OR AN INDEMNITEE OR ANY OTHER PERSON OR ANY INDEMNITEE IS OTHERWISE A
PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE
CONSUMMATED.  THIS SECTION 9.2 SHALL NOT APPLY WITH RESPECT TO ANY TAXES.

(b)Waiver of Consequential Damages, Etc.

(i)To the fullest extent permitted by applicable law, no Credit Party shall
assert, agrees not to assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Credit Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or the use of the proceeds thereof; provided that
nothing contained in this sentence shall limit any Credit Party’s
indemnification obligations to the extent set forth in clause (a) above to the
extent such special, indirect, consequential or punitive damages are included in
any third party claim in connection with which such indemnified person is
otherwise entitled to indemnification hereunder.  No Indemnitee referred to in
subsection (a) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed to such
unintended recipients by such Indemnitee through telecommunications, electronic
or other information transmission systems in connection with this Agreement or
the other Credit Documents or the transactions contemplated hereby or thereby
other than for direct or actual damages resulting from the gross negligence or
willful misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

(ii)To the fullest extent permitted by applicable law, no Indemnitee shall
assert, agrees not to assert, and hereby waives, any claim against any Credit
Party, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Credit Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or the use of the proceeds thereof other than for
such claims provided for in this Agreement provided that nothing contained in
this sentence shall limit any Credit Party’s indemnification obligations to the
extent set forth in clause (a) above to the extent such special, indirect,
consequential or punitive damages are included in any third party claim in
connection with which such indemnified person is otherwise entitled to
indemnification hereunder.

(c)Survival.  Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit Parties
contained in this Section 9.2 shall survive the termination of this Agreement
and the payment in full of the Loans and all other amounts payable under this
Agreement.

Section 9.3 Waivers and Amendments.  No amendment or waiver of any provision of
this Agreement, the Notes, or any other Credit Document, nor consent to any
departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Lenders and the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that:

 

-68-

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

(a)no amendment, waiver, or consent shall, unless in writing and signed by all
the Lenders and the Borrower, do any of the following: (i)  reduce the principal
of, or interest on, the Loans, (ii) postpone or extend any date fixed for any
payment of principal of, or interest on, the Loans, including, without
limitation, the Maturity Date, or (iii) change the number of Lenders which shall
be required for the Lenders to take any action hereunder or under any other
Credit Document;

(b)no amendment, waiver, or consent shall, unless in writing and signed by all
the Lenders and the Borrower, do any of the following:  (i) waive any of the
conditions specified in Article 3, (ii) reduce any fees or other amounts payable
hereunder or under any other Credit Document (other than those specifically
addressed above in this Section 9.3), (iii) increase the aggregate Commitments,
(iv) postpone or extend any date fixed for any payment of any fees or other
amounts payable hereunder (other than those otherwise specifically addressed in
this Section 9.3), (v) amend Section 2.12(e), Section 7.6, this Section 9.3 or
any other provision in any Credit Document which expressly requires the consent
of, or action or waiver by, all of the Lenders, (vi) release any Guarantor from
its obligation under any Guaranty or, except as specifically provided in the
Credit Documents and as a result of transactions permitted by the terms of this
Agreement, release all or a material portion of collateral, if any, securing the
Obligations; or (vii) amend the definitions of “Secured Parties”, “Obligations”
or “Collateral” in a manner materially adverse to any Secured Party;

(c)no Commitment of a Lender or any obligations of a Lender may be increased
without such Lender’s written consent; and

(d)no amendment, waiver, or consent shall, unless in writing and signed by the
Lenders required above to take such action, affect the rights or duties of the
Lenders under this Agreement or any other Credit Document.

Section 9.4 Severability.  In case one or more provisions of this Agreement or
the other Credit Documents shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality, and enforceability of
the remaining provisions contained herein or therein shall not be affected or
impaired thereby.

Section 9.5 Survival of Representations and Obligations.  All representations
and warranties contained in this Agreement or made in writing by or on behalf of
the Credit Parties in connection herewith shall survive the execution and
delivery of this Agreement and the other Credit Documents, the making of the
Loans and any investigation made by or on behalf of the Lenders, none of which
investigations shall diminish any Lender’s right to rely on such representations
and warranties.  All obligations of the Borrower or any other Credit Party
provided for in Sections 2.11, 2.13(c), 9.1 and 9.2 and all of the obligations
of the Lenders in Section 8.5 shall survive any termination of this Agreement
and repayment in full of the Obligations.

Section 9.6 Binding Effect.  This Agreement shall become effective upon the
satisfaction of the conditions set forth in Section 3.1 above, and thereafter
shall be binding upon and inure to the benefit of the Borrower and each Lender
and their respective successors and assigns, except that neither the Borrower
nor any other Credit Party shall have the right to assign its rights or delegate
its duties under this Agreement or any interest in this Agreement without the
prior written consent of each Lender.

 

-69-

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

Section 9.7 Lender Assignments and Participations.

(a)Each Lender may assign to one or more Eligible Assignees all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Loans); provided, however, that (i) each such assignment
shall be to an Eligible Assignee; (ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender’s rights and obligations
under this Agreement, any such partial assignment with respect to the Loans
shall be in an amount at least equal to $5,000,000; (iii) each assignment of a
Lender’s rights and obligations with respect to the Loans shall be of an
constant, and not varying percentage of all of its rights and obligations under
this Agreement as a Lender (other than rights of reimbursement and indemnity
arising before the effective date of such assignment) and shall be of an equal
pro rata share of the assignor’s interest in the Loans; and (iv) the parties to
such assignment shall execute and deliver to the Lenders for its acceptance an
Assignment and Acceptance, together with any Notes subject to such assignment
(if applicable) and the assignor or assignee Lender shall pay a processing fee
of $3,500.  Upon execution, delivery, and acceptance of such Assignment and
Acceptance and payment of the processing fee, the assignee thereunder shall be a
party hereto and, to the extent of such assignment, have the obligations,
rights, and benefits of a Lender hereunder and the assigning Lender shall, to
the extent of such assignment, relinquish its rights and be released from its
obligations under this Agreement.  Upon the consummation of any assignment
pursuant to this Section 9.7, the assignor, the Lenders and the Borrower shall
make appropriate arrangements so that, if required, new Notes are issued to the
assignor and the assignee.  If the assignee is not incorporated under the laws
of the United States of America or a state thereof, it shall deliver to the
Borrower and the Lenders certification as to exemption from or reduction of
withholding of Taxes in accordance with Section 2.13(e).

(b)The Lenders, acting as a nonfiduciary agent of the Credit Parties, shall
maintain at the addresses referred to in Section 9.9 a copy of each Assignment
and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and principal amount (and
stated interest) of the Loans owing to, each Lender from time to time (the
“Register”).  The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Credit Parties, the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement.

(c)Upon its receipt of an Assignment and Acceptance executed by the parties
thereto, together with any Notes subject to such assignment (if any) and payment
of the processing fee, the Lenders shall, if such Assignment and Acceptance has
been completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the parties thereto.

(d)Each Lender may sell participations to one or more Persons in all or a
portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Loans) provided, however, that (i)
such Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participant shall be entitled to the
benefit of the yield protection provisions including, but not limited to,
Section 2.11, (iv) so long as no Event of Default has occurred and is
continuing, such Person or Persons to whom any such participation is to be sold
must be approved by the Borrower, and (iv) the Borrower shall continue to deal
solely

 

-70-

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

and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Loans and its Note (if
any) and to approve any amendment, modification, or waiver of any provision of
this Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Loans,
or extending any scheduled principal payment date or date fixed for the payment
of interest on such Loans); provided further, however, that such Participant
(A) agrees to be subject to the provisions of Section 2.11(b), Section 2.13(e),
(f) and (g) and Section 2.14 as if it were an assignee under paragraph (a) of
this Section; and (B) shall not be entitled to receive any greater payment under
the yield protection provisions, with respect to any participation, than its
participating Lender would have been entitled to receive, except to the extent
such entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation.  Each Lender
that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
the Credit Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(including the identity of any Participant or any information relating to a
Participant's interest in any commitments, loans, letters of credit or its other
obligations under any Credit Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 5f.103-1(c) of
the Treasury Regulations.  The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.

(e)Notwithstanding any other provision set forth in this Agreement, any Lender
may at any time assign and pledge all or any portion of its Loans to any Federal
Reserve Bank as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank.  No such assignment shall release
the assigning Lender from its obligations hereunder.

(f)Any Lender may furnish any information concerning the Borrower or any of its
Subsidiaries in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants), subject,
however, to the provisions of the following paragraph Section 9.8.

Section 9.8 Confidentiality.  Each Lender (each a “Lending Party”) agree to keep
confidential any information furnished or made available to it by any Credit
Party pursuant to this Agreement and identified by such Credit Party in writing
as proprietary or confidential; provided that nothing herein shall prevent any
Lending Party from disclosing such information (a) to any other Lending Party or
any Affiliate of any Lending Party, or any officer, director, employee, agent,
or advisor of any Lending Party or Affiliate of any Lending Party for purposes
of administering, negotiating, considering, processing, implementing,
syndicating, assigning, or evaluating the credit facilities provided herein and
the transactions contemplated hereby, (b) to any other Person if directly
incidental to the administration of the credit facilities provided herein, (c)
as required by any Legal Requirement, (d) upon the order of any court or
administrative agency,

 

-71-

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

(e) upon the request or demand of any regulatory agency or authority, (f) that
is or becomes available to the public or that is or becomes available to any
Lending Party other than as a result of a disclosure by any other Lending Party
prohibited by this Agreement, (g) in connection with any litigation relating to
this Agreement or any other Credit Document to which such Lending Party or any
of its Affiliates may be a party, (h) to the extent necessary in connection with
the exercise of any right or remedy under this Agreement or any other Credit
Document, and (i) to any actual or proposed participant or assignee, in each
case, subject to provisions similar to those contained in this Section
9.8.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, nothing in this
Agreement shall (a) restrict any Lending Party from providing information to any
regulatory or governmental authorities, including the Federal Reserve Board and
its supervisory staff; (b) require or permit any Lending Party to disclose to
any Credit Party that any information will be or was provided to the Federal
Reserve Board or any of its supervisory staff; or (c) require or permit any
Lending Party to inform any Credit Party of a current or upcoming Federal
Reserve Board examination or any nonpublic Federal Reserve Board supervisory
initiative or action.

Section 9.9 Notices, Etc.  All notices and other communications shall be in
writing and hand delivered with written receipt, telecopied, sent by facsimile
(with a hard copy sent as otherwise permitted in this Section 9.9), sent by a
nationally recognized overnight courier, or sent by certified mail, return
receipt requested as follows: if to a Credit Party, as specified on Schedule I
and if to any Lender at its credit contact specified under its name on Schedule
I.  Each party may change its notice address by written notification to the
other parties.  All such notices and communications shall be effective when
delivered, except that notices and communications to any Lender pursuant to
Article 2 shall not be effective until received and, in the case of telecopy,
such receipt is confirmed by such Lender, as applicable, verbally or in
writing.  Nothing in this Agreement or in any other Credit Document shall be
construed to limit or affect the obligation of the Borrower or any other Person
to serve upon the Lenders in the manner prescribed by the Bankruptcy Code any
pleading or notice required to be given to the Lenders pursuant to the
Bankruptcy Code.

Section 9.10 Business Loans.  Each Credit Party warrants and represents that the
Obligations are and shall be for business, commercial, investment or other
similar purposes and not primarily for personal, family, household or
agricultural use, as such terms are used in Chapter One (“Chapter One”) of the
Texas Credit Code.  At all such times, if any, as Chapter One shall establish a
Maximum Rate, the Maximum Rate shall be the “indicated rate ceiling” (as such
term is defined in Chapter One) from time to time in effect.

Section 9.11 Usury Not Intended.  It is the intent of each Credit Party and each
Lender in the execution and performance of this Agreement and the other Credit
Documents to contract in strict compliance with applicable usury laws, including
conflicts of law concepts, governing the Loans of each Lender including such
applicable laws of the State of Texas, if any, and the United States of America
from time to time in effect.  In furtherance thereof, the Lenders and the Credit
Parties stipulate and agree that none of the terms and provisions contained in
this Agreement or the other Credit Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes of
this Agreement “interest” shall include the aggregate of all charges which
constitute interest under such laws that are contracted for, charged or received
under this

 

-72-

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

Agreement; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Loans, include amounts which by applicable law are deemed interest which
would exceed the Maximum Rate, then such excess shall be deemed to be a mistake
and each Lender receiving same shall credit the same on the principal (or if
Loans (and all other Obligations) owed to such Lender shall have been paid in
full, refund said excess to the Borrower).  In the event that the maturity of
the Loans are accelerated by reason of any election of the holder thereof
resulting from any Event of Default under this Agreement or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the Maximum Rate, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited to the Loans (or, if the Loans and all other
Obligations shall have been paid in full, refunded to the Borrower of such
interest).  In determining whether or not the interest paid or payable under any
specific contingencies exceeds the Maximum Rate, the Credit Parties and the
Lenders shall to the maximum extent permitted under applicable law amortize,
prorate, allocate and spread in equal parts during the period of the full stated
term of the Loans all amounts considered to be interest under applicable law at
any time contracted for, charged, received or reserved in connection with the
Obligations.  The provisions of this Section shall control over all other
provisions of this Agreement or the other Credit Documents which may be in
apparent conflict herewith.

Section 9.12 Usury Recapture.  In the event the rate of interest chargeable
under this Agreement at any time is greater than the Maximum Rate, the unpaid
principal amount of the Loans shall bear interest at the Maximum Rate until the
total amount of interest paid or accrued on the Loans equals the amount of
interest which would have been paid or accrued on the Loans if the stated rates
of interest set forth in this Agreement had at all times been in effect. In the
event, upon payment in full of the Loans, the total amount of interest paid or
accrued under the terms of this Agreement and the Loans is less than the total
amount of interest which would have been paid or accrued if the rates of
interest set forth in this Agreement had, at all times, been in effect, then the
Borrower shall, to the extent permitted by applicable law, pay ratably among the
Lenders an amount equal to the difference between (i) the lesser of (A) the
amount of interest which would have been charged on its Loans if the Maximum
Rate had, at all times, been in effect and (B) the amount of interest which
would have accrued on its Loans if the rates of interest set forth in this
Agreement had at all times been in effect and (ii) the amount of interest
actually paid under this Agreement on its Loans.  In the event the Lenders ever
receive, collect or apply as interest any sum in excess of the Maximum Rate,
such excess amount shall, to the extent permitted by law, be applied to the
reduction of the principal balance of the Loans, and if no such principal is
then outstanding, such excess or part thereof remaining shall be paid to the
Borrower.

Section 9.13 Governing Law; Waiver of Jury Trial.

(a)THIS AGREEMENT, THE NOTES AND THE OTHER CREDIT DOCUMENTS (UNLESS OTHERWISE
EXPRESSLY PROVIDED THEREIN) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ANY CHOICE OF LAW
PROVISIONS THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION
AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE, EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO

 

-73-

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

CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY
THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED.  WITHOUT LIMITING THE INTENT
OF THE PARTIES SET FORTH ABOVE, (i) CHAPTER 346 OF THE TEXAS FINANCE CODE, AS
AMENDED (RELATING TO REVOLVING LOANS AND REVOLVING TRI-PARTY ACCOUNTS (FORMERLY
TEX. REV. CIV. STAT. ANN. ART. 5069, CH. 15)), SHALL NOT APPLY TO THIS
AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY AND (ii) TO THE
EXTENT THAT ANY LENDER MAY BE SUBJECT TO TEXAS LAW LIMITING THE AMOUNT OF
INTEREST PAYABLE FOR ITS ACCOUNT, SUCH LENDER SHALL UTILIZE THE INDICATED
(WEEKLY) RATE CEILING FROM TIME TO TIME IN EFFECT.

(b)ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE CREDIT DOCUMENTS SHALL BE
BROUGHT IN THE BANKRUPTCY COURT AND IF THE BANKRUPTCY COURT DOES NOT HAVE (OR
ABSTAINS FROM) JURISDICTION, IN THE COURTS OF THE STATE OF TEXAS OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, IN EITHER CASE
LOCATED IN HARRIS COUNTY, TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY
LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES (TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW) ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND
DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY
COURT OTHERWISE HAVING JURISDICTION.

(c)EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
SPECIFIED IN SECTION 9.9 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO
SECTION 9.9 (OR ITS ASSIGNMENT AND ACCEPTANCE), SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A
PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY
IN ANY OTHER JURISDICTION.

(d)EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL

 

-74-

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

DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii)
CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR
ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE CREDIT DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 9.13.

Section 9.14 Reserved.

Section 9.15 Reserved.

Section 9.16 Submission to Jurisdiction.  Each Credit Party hereby irrevocably
submits to the jurisdiction of any Texas state or federal court sitting in
Houston, Texas in any action or proceeding arising out of or relating to this
Agreement or the other Credit Documents, and each Credit Party hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such court.  Each Credit Party hereby unconditionally
and irrevocably waives, to the fullest extent it may effectively do so, any
right it may have to the defense of an inconvenient forum to the maintenance of
such action or proceeding.  Each Credit Party hereby agrees that service of
copies of the summons and complaint and any other process which may be served in
any such action or proceeding may be made by mailing or delivering a copy of
such process to such Credit Party at its address set forth in this
Agreement.  Each Credit Party hereby agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Section shall affect the rights of any Lender to serve
legal process in any other manner permitted by the law or affect the right of
any Lender to bring any action or proceeding against any Credit Party or its
Property in the courts of any other jurisdiction.

Section 9.17 Execution in Counterparts.  This Agreement may be executed in any
number of counterparts and by different parties hereto in separate 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 agreement.

Section 9.18 Reserved.

Section 9.19 Acknowledgement and Consent to Bail-In of EEA Financial
Institutions.  Notwithstanding anything to the contrary in any Credit Document
or in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Credit Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

(a)the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and

 

-75-

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

(b)the effects of any Bail-in Action on any such liability, including, if
applicable:

(i)a reduction in full or in part or cancellation of any such liability;

(ii)a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Credit Document; or

(iii)the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

Section 9.20 USA Patriot Act.  Each Lender that is subject to the Patriot Act
hereby notifies each Credit Party that pursuant to the requirements of the
Patriot Act it is required to obtain, verify and record information that
identifies such Credit Party, which information includes the name and address of
such Credit Party and other information that will allow such Lender to identify
such Credit Party in accordance with the Patriot Act.

Section 9.21 No Oral Agreements.  PURSUANT TO SECTION 26.02 OF THE TEXAS
BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE
LOAN AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE LOAN
AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY’S
AUTHORIZED REPRESENTATIVE.

THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO THE LOAN AGREEMENT.  THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH
RESPECT TO THE SUBJECT MATTERS SET FORTH HEREIN AND THEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

Section 9.22 Right of Setoff.  If an Event of Default shall have occurred and be
continuing, subject to the DIP Orders and First Day Orders, each Lender and each
of its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations (of whatsoever kind, including, without limitations
obligations under Hedging Arrangements) at any time owing by such Lender or
Affiliate to or for the credit or the account of the Borrower or any Subsidiary
against any of and all the obligations of the Borrower or any Subsidiary owed to
such Lender now or hereafter existing under this Agreement

 

-76-

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

or any other Credit Document, irrespective of whether or not such Lender shall
have made any demand under this Agreement or any other Credit Document and
although such obligations may be unmatured. Subject to the DIP Orders and First
Day Orders, the rights of each Lender under this Section 9.22 are in addition to
other rights and remedies (including other rights of setoff) which such Lender
or its Affiliates may have. Each Lender agrees to notify the Borrower promptly
after any such setoff and application; provided that the failure to give such
notice shall not affect the validity of such setoff and application.

Section 9.23 No Third Party Beneficiaries.  This Agreement, the other Credit
Documents, and the agreement of the Lenders to make Loans hereunder are solely
for the benefit of the Borrower, and no other Person (including any Subsidiary
of the Borrower, any obligor, contractor, subcontractor, supplier or
materialman) shall have any rights, claims, remedies or privileges hereunder or
under any other Credit Document against any Lender for any reason whatsoever.
There are no third party beneficiaries.

Section 9.24 Credit Bidding.  Each Secured Party hereby irrevocably authorizes
the Lenders to credit bid all or any portion of the Obligations (including by
accepting some or all of the collateral securing the Obligations pursuant to the
Security Documents in satisfaction of some or all of the Obligations pursuant to
a deed in lieu of foreclosure or otherwise) and in such manner purchase (either
directly or through one or more acquisition vehicles) all or any portion of such
collateral (a) at any sale thereof conducted under the provisions of the
Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy
Code, or any similar laws in any other jurisdictions to which a Credit Party is
subject or (b) at any other sale, foreclosure or acceptance of collateral in
lieu of debt conducted by (or with the consent or at the direction of) the
Lenders (whether by judicial action or otherwise) in accordance with any
applicable law. In connection with any such credit bid and purchase, the
Obligations owed to the Secured Parties shall be credit bid by the Lenders on a
ratable basis (with Obligations with respect to contingent or unliquidated
claims receiving contingent interests in the acquired assets on a ratable basis
that shall vest upon the liquidation of such claims in an amount proportional to
the liquidated portion of the contingent claim amount used in allocating the
contingent interests) for the asset or assets so purchased (or for the equity
interest or debt instruments of the acquisition vehicle or vehicles that are
issued in connection with such purchase). In connection with any such bid (i)
each Lender shall be authorized to form one or more acquisition vehicles and to
assign any successful credit bid to such acquisition vehicle or vehicles, (ii)
each of the Secured Parties’ ratable interests in the Obligations which was
credit bid shall be deemed without any further action under this Agreement to be
assigned to such vehicle or vehicles for the purpose of closing such sale, (iii)
each Lender shall be authorized to adopt documents providing for the governance
of the acquisition vehicle or vehicles (provided that any actions by the Lenders
with respect to such acquisition vehicle or vehicles, including any disposition
of the assets or equity interests thereof, shall be governed, directly or
indirectly, by, and the governing documents shall provide for, control by the
vote of the Lenders or their permitted assignees under the terms of this
Agreement or the governing documents of the applicable acquisition vehicle or
vehicles, as the case may be, irrespective of the termination of this Agreement
and without giving effect to the limitations on actions by the Lenders contained
in Section 6.2; provided further that any disbursement or other disposition of
any proceeds of such collateral or proceeds of such proceeds shall be consistent
with this Agreement, including Section 7.6), (iv) the Lenders on behalf of such
acquisition vehicle or vehicles shall be authorized to issue to each of the
Secured Parties, ratably on account of the relevant Obligations which was credit
bid,

 

-77-

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

interests, whether as equity, partnership, limited partnership interests or
membership interests, in any such acquisition vehicle and/or debt instruments
issued by such acquisition vehicle, all without the need for any Secured Party
or acquisition vehicle to take any further action, and (v) to the extent that
Obligations that is assigned to an acquisition vehicle is not used to acquire
any collateral securing the Obligations for any reason, such Obligations shall
automatically be reassigned to the Lenders (or the applicable holder of the
Obligations so assigned) pro rata and the equity interests and/or debt
instruments issued by any acquisition vehicle on account of such Obligations
shall automatically be canceled, without the need for any Secured Party or any
acquisition vehicle to take any further action. Notwithstanding that the ratable
portion of the Obligations of each Secured Party is deemed assigned to the
acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured
Party shall execute such documents and provide such information regarding such
Secured Party (and/or any designee of the Secured Party which will receive
interests in or debt instruments issued by such acquisition vehicle) as the
Lenders may reasonably request in connection with the formation of any
acquisition vehicle, the formulation or submission of any credit bid or the
consummation of the transactions contemplated by such credit bid.

Section 9.25 Incorporation of DIP Orders by Reference.  Each of the Credit
Parties and the Lenders agrees that any reference contained herein to the DIP
Orders shall include all terms, conditions and provisions of such DIP Order and
that the DIP Orders are incorporated herein for all purposes. To the extent
there is any conflict or inconsistency between the terms of any of the Credit
Documents and the terms of the DIP Orders, the terms of the Interim DIP Order or
the Final DIP Order, as applicable, shall govern.

 

 

[Remainder of this page intentionally left blank.  Signature pages follow.]

 

 

-78-

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

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective authorized officers as of the date
first above written.

 

 

 

BORROWER:

 

CARBO CERAMICS INC.

 

 

 

 

 

 

By:

/s/ Ernesto Bautista III

 

 

Name:

Ernesto Bautista III

 

 

Title:

Vice President and Chief Financial Officer

 

 

 

GUARANTORS:

 

ASSET GUARD PRODUCTS INC.

 

 

 

 

 

 

By:

/s/ Ernesto Bautista III

 

 

Name:

Ernesto Bautista III

 

 

Title:

Vice President and Chief Financial Officer

 

 

 

STRATAGEN, INC.

 

 

 

 

 

 

By:

/s/ Ernesto Bautista III

 

 

Name:

Ernesto Bautista III

 

 

Title:

Vice President and Chief Financial Officer

 

 

 

LENDERS:

 

WILKS BROTHERS, LLC,

as a Lender

 

 

 

 

 

 

By:

/s/ Matthew Wilks

 

 

Name:

Matthew Wilks

 

 

Title:

Portfolio Manager and Vice President of Capital Investments

 

 

 

 

 

[Signature Page to Senior Secured Super Priority Debtor-In-Possession Credit
Agreement]

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

 

 

ANNEX I

Commitments1

Lender

Commitment

Outstanding Principal Amount of Loans

Wilks Brothers, LLC

$15,000,000.00

$0.00

Total:

$15,000,000.00

$0.00

 

 

 

 

 

1 

As of the Effective Date of this Agreement.

 

Annex I
-1-

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

 

 

SCHEDULE I

Contact Information

LENDERS

Wilks Brothers, LLC

 

 

 

Address for Notices:

 

Wilks Brothers, LLC

17010 IH-20

Cisco, TX 76437

Attention:Philip Pecora

Matthew Wilks

Facsimile:(817) 850-3698

Email:philip.pecora@wilksbrothers.com

matt.wilks@profac.com

 

CREDIT PARTIES

Borrower/Guarantors

 

Address for Notices:

 

Carbo Ceramics Inc.

Asset Guard Products Inc.

StrataGen, Inc.

Carbo International, Inc.

Energy Center II
575 N. Dairy Ashford Rd., Suite 300
Houston, TX 77079

Attn:               Ernesto Bautista III

                        Chief Financial Officer

Telephone:     (281) 931-8884

Facsimile:      (281) 931-8302

 

 

Schedule I
-1-

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

EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE

 

This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each]2 Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each]3 Assignee identified in item 2 below ([the][each, an]
“Assignee”).  [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees]4 hereunder are several and not
joint.]5  Capitalized terms used but not defined herein shall have the meanings
given to them in the Senior Secured Super Priority Debtor-In-Possession Credit
Agreement identified below (as amended, restated, amended and restated,
supplemented and/or modified from time to time, the “Credit Agreement”), receipt
of a copy of which is hereby acknowledged by [the][each] Assignee.  The Standard
Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to
and incorporated herein by reference and made a part of this Assignment and
Acceptance as if set forth herein in full.

 

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the Lenders as
contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights
and obligations in [its capacity as a Lender][their respective capacities as
Lenders] under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
[the Assignor][the respective Assignors] under the respective facilities
identified below (including without limitation any letters of credit and
guarantees included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of [the Assignor (in its capacity as a Lender)][the respective Assignors
(in their respective capacities as Lenders)] against any Person, whether known
or unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned by [the][any] Assignor to [the][any] Assignee
pursuant to clauses (i) and (ii) above being referred to herein collectively as
[the][an] “Assigned Interest”). Each such sale and assignment is without
recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Acceptance, without representation or warranty by [the][any]
Assignor.

 

 

2 

For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language. If the assignment is from multiple Assignors, choose the
second bracketed language.

3 

For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language.  If the assignment is to multiple Assignees, choose the
second bracketed language.

4 

Select as appropriate.

5 

Include bracketed language if there are either multiple Assignors or multiple
Assignees.

 

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

 

 

1.

Assignor[s]:

 

2.

Assignee[s]:

 

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]

 

 

3.

Borrower:                      CARBO CERAMICS INC.

 

4.

Lenders:                        Wilks Brothers, LLC, as Lender

 

5.

Credit Agreement:        Senior Secured Super Priority Debtor-In-Possession
Credit Agreement, dated as of March 30, 2020, among Borrower, the Lenders party
thereto from time to time, the Guarantors party thereto from time to time, and
Wilks Brothers, LLC, as Lender.

 

6.

Assigned Interest[s]:

 

Assignor[s]

Assignee[s]

Facility Assigned

Aggregate Amount of Commitments

/Advances for all Lenders

Amount of Commitment / Advances Assigned6

Percentage Assigned of Commitment / Advances7

CUSIP

Number

 

 

 

$

$

%

 

 

 

 

$

$

%

 

 

 

 

$

$

%

 

 

7.

Trade Date:       _________________8

 

Effective Date:                  , 20             [TO BE INSERTED BY THE LENDERS
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

 

 

6 

Amount to be adjusted by the counterparties to take into account any payments or
prepayments made between the Trade Date and the Effective Date.

7 

Set forth, to at least 9 decimals, as a percentage of the Commitment / Advances
of all Lenders thereunder.

8 

To be completed if the Assignor(s) and the Assignee(s) intend that the minimum
assignment amount is to be determined as of the Trade Date.

 

Exhibit A – Form of Assignment and Acceptance

Page 2 of 6

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

 

 

The terms set forth in this Assignment and Acceptance are hereby agreed to:

 

 

 

 

ASSIGNOR[S]9

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

ASSIGNOR[S]

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

9 

Add additional signature blocks as needed.

 

Exhibit A – Form of Assignment and Acceptance

Page 3 of 6

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

 

 

[Consented to and]10 Accepted:

 

Wilks Brothers, LLC,

as Lender

 

By:

 

Name:

 

Title:

 

 

[Consented to:]11

 

CARBO CERAMICS INC.

 

By:

 

Name:

 

Title:

 

 

 

 

 

10 

To be added only if the consent of the Lenders is required by the terms of the
Credit Agreement.

11 

To be added only if the consents of the Borrower is required by the terms of the
Credit Agreement.

 

Exhibit A – Form of Assignment and Acceptance

Page 4 of 6

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

 

 

Annex 1 To

Exhibit A – Assignment and Acceptance

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

 

1.Representations and Warranties.

 

1.1Assignor[s].  [The][Each] Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii)
[the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Credit Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Documents or any collateral thereunder, (iii) the
financial condition of the Borrower, its Subsidiaries or Affiliates or any other
Person obligated in respect of any Credit Document or (iv) the performance or
observance by the Borrower, its Subsidiaries or Affiliates or any other Person
of any of its obligations under any Credit Document.

 

1.2.Assignee[s].  [The][Each] Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Acceptance and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements to be an assignee under Section 9.7 of the Credit
Agreement (subject to such consents, if any, as may be required under Section
9.7 of the Credit Agreement), (iii) from and after the Effective Date, it shall
be bound by the provisions of the Credit Agreement as a Lender thereunder and,
to the extent of [the][the relevant] Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it is sophisticated with respect to
decisions to acquire assets of the type represented by the Assigned Interest and
either it, or the person exercising discretion in making its decision to acquire
the Assigned Interest, is experienced in acquiring assets of such type, (v) it
has received a copy of the Credit Agreement, and has received or has been
accorded the opportunity to receive copies of the most recent financial
statements delivered pursuant to Section 5.2 thereof, as applicable, and such
other documents and information as it deems appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance and to
purchase [the][such] Assigned Interest, (vi) it has, independently and without
reliance upon any Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Assignment and Acceptance and to purchase [the][such] Assigned Interest, and
(vii) if it is not incorporated under the laws of the United States of America
or a state thereof, attached to the Assignment and Acceptance is any
documentation required to be delivered by it pursuant to the terms of the Credit
Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Lenders, [the][any]
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Credit Documents are required to be performed by it as a Lender.

 

Exhibit A – Form of Assignment and Acceptance

Page 5 of 6

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

 

 

 

2.

Payments.  From and after the Effective Date, the Lenders shall make all
payments in respect of [the][each] Assigned Interest (including payments of
principal, interest, fees and other amounts) to [the][the relevant] Assignee
whether such amounts have accrued prior to, on or after the Effective Date. The
Assignor[s] and the Assignee[s] shall make all appropriate adjustments in
payments by the Lenders for periods prior to the Effective Date or with respect
to the making of this assignment directly between themselves.

 

3.

General Provisions.  This Assignment and Acceptance shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Acceptance may be executed in any number of
counterparts, which together shall constitute one instrument.  Delivery of an
executed counterpart of a signature page of this Assignment and Acceptance by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.  This Assignment and Acceptance shall be
governed by, and construed in accordance with, the law of the State of Texas.

 

 

 

Exhibit A – Form of Assignment and Acceptance

Page 6 of 6

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

 

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

 

FOR THE PERIOD FROM ________, 20__ TO ________, 20__

 

This certificate dated as of ________________, 20__ is prepared pursuant to that
certain Senior Secured Super Priority Debtor-In-Possession Credit Agreement,
dated as of March [__], 2020 (as amended, restated, amended and restated,
supplemented and/or modified from time, the “Credit Agreement”) among CARBO
Ceramics Inc., a Delaware corporation (“Borrower”), the guarantors party thereto
from time to time, the lenders party thereto from time to time (the “Lenders”),
and Wilks Brothers, LLC, as Lender. Unless otherwise defined in this
certificate, capitalized terms that are defined in the Credit Agreement shall
have the meanings assigned to them by the Credit Agreement.

 

A.General

 

The undersigned certifies that:

 

(a)the Borrower has delivered the consolidated and consolidating balance sheet
and the related consolidated and consolidating statements of income or
operations required by Section 5.2[(a) / (b) / (c)] of the Credit Agreement for
the [fiscal year / fiscal quarter / month] of the Borrower ended as of the
financial statement date of __________, _____. Such consolidated and
consolidating balance sheet and statements of income or operations (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and (ii) fairly
present the financial condition of the Borrower and its Subsidiaries as of the
date thereof and their results of operations, changes in shareholders’ equity
and cash flows for the period covered thereby; provided that, notwithstanding
the foregoing, such income statement and balance sheet may be subject to certain
expected material impairments, including any associated tax adjustments, and may
otherwise be incomplete as a result of the impact of the Chapter 11 Cases,
including, but not limited to, any inconsistencies in the accounting periods
covered thereby as a result of the commencement of the Chapter 11 Cases on the
Petition Date;

 

(b)except as otherwise set forth in this certificate, the Borrower and each
Credit Party has complied with all the terms, covenants and conditions to be
performed or observed by the Borrower contained in the Credit Agreement and any
other Credit Document; and

 

[(c)that no Default or Event of Default has occurred or is continuing as of the
date hereof.]

 

[(c)the following Default[s] or Event[s] of Default exist[s] as of the date
hereof, if any, and the actions set forth below are being taken to remedy such
circumstances:

 

         .]

 

B.Covenants

 

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

 

 

 

Section 5.6 – Material Domestic Subsidiaries.

 

 

(a)

Non-Material Domestic Subsidiaries' collective operating income12      $_______

 

 

(b)

Borrower's consolidated operating income             $________

 

Operating income test = (a) divided by (b)     __________%

 

 

(c)

Non-Material Domestic Subsidiaries collective book value of

total assets                    $___________

 

(d)Borrower's consolidated book value of total
assets                   $___________

 

Total book value test = (c) divided by (d)  ___________%

 

Is either (a) divided by (b), or (c) divided by (d) equal to or greater than
10%:YesNo

 

If the answer to the above question is yes, attached hereto in Annex A is a list
of Non-Material Domestic Subsidiaries that will need to execute and deliver to
the Lenders a joinder to the Guaranty or otherwise deliver a Guaranty, in any
event, in form and substance satisfactory to the Lenders, in order to comply
with Section 5.6 of the Credit Agreement.

 

If the answer to the above question is no, the Borrower may attach hereto as
Annex B, a list of Non-Material Domestic Subsidiaries that the Borrower requests
to be released from their respective guaranty obligations and a detailed
calculation of compliance with the requirements of Section 5.6 of the Credit
Agreement after giving effect to each such release.

 

[Remainder of this page intentionally left blank.]

 

 

12 

Calculated as of each fiscal quarter end, for the four-fiscal quarter period
then ended.

Exhibit B – Form of Compliance Certificate

Page 2

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

 

IN WITNESS THEREOF, I have hereto signed my name to this Compliance Certificate
as of the date and year first above written.

 

 

 

 

CARBO CERAMICS INC.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Exhibit B – Form of Compliance Certificate

Page 3

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

 

Annex A to

Exhibit B – Compliance Certificate

 

Non-Material Domestic Subsidiaries to Join Guaranty

 

[As appropriate.]

 

 

Exhibit B – Form of Compliance Certificate

Page 4

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

 

Annex B to

Exhibit B – Compliance Certificate

 

Non-Material Domestic Subsidiaries to be Released from Guaranty

 

[As appropriate.]

 

Article 9

 

Exhibit B – Form of Compliance Certificate

Page 5

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

 

EXHIBIT C

FORM OF GUARANTY AGREEMENT

 

This Guaranty Agreement dated as of March [__], 2020 (as amended, restated,
amended and restated, supplemented and/or modified from time to time, this
“Guaranty”) is executed by each of CARBO CERAMICS INC., a Delaware corporation
(the “Borrower”), and each Material Domestic Subsidiary of the Borrower party
hereto from time to time (collectively with the Borrower, the “Guarantors” and
individually, a “Guarantor”), in favor of WILKS BROTHERS, LLC, as Secured Party
(as defined the Credit Agreement), and the other Secured Parties from time to
time.

INTRODUCTION

A.Reference is made to that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement, dated as of the date hereof, among the
Borrower, the Guarantors (as defined therein), the Lenders (as defined therein)
from time to time party thereto and the Secured Parties, as Lenders (as amended,
restated, amended and restated, supplemented and/or modified from time, the
“Credit Agreement”).

B.That certain Amended and Restated Credit Agreement dated as of March 2, 2017,
was entered into among the Borrower, the lenders party thereto (the “Prepetition
Lenders”), and Wilks Brothers, LLC, as Administrative Agent (the “Prepetition
Administrative Agent”) (as amended, restated, amended and restated, supplemented
and/or modified from time to time, the “Prepetition Credit Agreement”).

C.In order to secure the full and punctual payment and performance of the
obligations under the Prepetition Credit Agreement, the Borrower and the
Guarantors (as defined in the Prepetition Credit Agreement) executed and
delivered, among other things, that certain Guaranty Agreement dated as of March
2, 2017 (as amended, restated, supplemented and/or modified from time to time
immediately prior to giving effect to this Guaranty, and as amended, restated,
amended and restated, supplemented and/or modified from time to time after this
Guaranty becomes effective and/or in connection with this Guaranty becoming
effective, the “Prepetition Guaranty”).

D.On [March __], 2020 (the “Petition Date”), the Borrower and the Guarantors
each commenced a voluntary case (the “Chapter 11 Cases”) under chapter 11 of
title 11 of the United States Code (the “Bankruptcy Code”), and the Chapter 11
Cases are being jointly administered in the United States Bankruptcy Court for
the Southern District of Texas, Houston Division (the “Bankruptcy Court”).

E.From and after the Petition Date, the Guarantors continue to operate their
business and manage their property as debtors and debtors in possession pursuant
to sections 1107(a) and 1108 of the Bankruptcy Code.

F.The Borrower seeks to obtain post-petition debtor-in-possession credit
financing (the “DIP Facility”) consisting of a new money multiple draw term loan
facility in an aggregate amount not to exceed $15,000,000, in accordance with
the terms and conditions set forth in the Credit Documents (as defined in the
Credit Agreement).

 

Exhibit C – Form of Guaranty
-6-

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

 

G.Each Guarantor, other than the Borrower, is a Material Domestic Subsidiary (as
defined in the Credit Agreement) of the Borrower and the transactions
contemplated by the Credit Agreement and the other Credit Documents, are (i) in
furtherance of such Guarantor’s corporate purposes, (ii) necessary or convenient
to the conduct, promotion or attainment of such Guarantor’s business, and (iii)
for such Guarantor’s direct or indirect benefit.

H.As a condition precedent to the effectiveness of the Credit Agreement, the
Borrower and each additional Guarantor are required to execute and deliver this
Guaranty.

I.Each Guarantor is executing and delivering this Guaranty (i) to induce the
Lenders to provide extensions of credit under the Credit Agreement, and (ii)
intending it to be a legal, valid, binding, enforceable and continuing
obligation of such Guarantor.

J.It is in the best interests of each Guarantor to execute this Guaranty
inasmuch as each Guarantor will derive substantial direct and indirect benefits
from the transactions contemplated by the Credit Agreement and the other Credit
Documents, and each Guarantor is willing to execute, deliver and perform its
obligations under this Guaranty to secure the Obligations (as defined in the
Credit Agreement).

NOW, THEREFORE, in consideration of the premises, each Guarantor hereby agrees
as follows:

Section 1.

Definitions.  All capitalized terms not otherwise defined in this Guaranty that
are defined in the Credit Agreement shall have the meanings assigned to such
terms by the Credit Agreement.

Section 2.

Guaranty.  

(a)

Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees the
punctual payment and performance, when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations (as defined in the Credit
Agreement), whether absolute or contingent and whether for principal, interest
(including, without limitation, interest that but for the existence of a
bankruptcy, reorganization or similar proceeding would accrue), fees, amounts
required to be provided as collateral, indemnities, expenses or otherwise
(collectively, the “Guaranteed Obligations”).  Without limiting the generality
of the foregoing, each Guarantor’s liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by the Borrower
or any Material Domestic Subsidiary of the Borrower to the Secured Parties or
any Lender under the Credit Documents but for the fact that they are
unenforceable or not allowable due to insolvency or the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower or any
Material Domestic Subsidiary of the Borrower.

(b)

In order to provide for just and equitable contribution among the Guarantors,
the Guarantors agree that in the event a payment shall be made on any date under
this Guaranty by any Guarantor (the “Funding Guarantor”), each other Guarantor
(each a “Contributing Guarantor”) shall indemnify the Funding Guarantor in an
amount equal to the amount of such payment, in each case multiplied by a
fraction the numerator of which shall be the net worth of the Contributing
Guarantor as of such date and the denominator of which shall be the aggregate
net

 

Exhibit C – Form of Guaranty
-7-

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

 

worth of all the Contributing Guarantors together with the net worth of the
Funding Guarantor as of such date.  Any Contributing Guarantor making any
payment to a Funding Guarantor pursuant to this Section 2(b) shall be subrogated
to the rights of such Funding Guarantor to the extent of such payment.

(c)

Reserved.

(d)

Anything contained in this Guaranty to the contrary notwithstanding, the
obligations of each Guarantor under this Guaranty on any date shall be limited
to a maximum aggregate amount equal to the largest amount that would not, on
such date, render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of the United States Bankruptcy Code
(11 U.S.C. §§ 101 et seq) or any applicable provisions of comparable laws
relating to bankruptcy, insolvency, or reorganization, or relief of debtors
(collectively, the “Fraudulent Transfer Laws”), but only to the extent that any
Fraudulent Transfer Law has been found in a final non-appealable judgment of a
court of competent jurisdiction to be applicable to such obligations as of such
date, in each case:

 

(i)

after giving effect to all liabilities of such Guarantor, contingent or
otherwise, that are relevant under the Fraudulent Transfer Laws, but
specifically excluding:

(A)any liabilities of such Guarantor in respect of intercompany indebtedness to
the Borrower or other affiliates of the Borrower to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by such
Guarantor hereunder;

(B)any liabilities of such Guarantor under this Guaranty; and

(C)any liabilities of such Guarantor under each of its other guarantees of and
joint and several co-borrowings of Debt, in each case entered into on the date
this Guaranty becomes effective, which contain a limitation as to maximum amount
substantially similar to that set forth in this Section 2(d) (each such other
guarantee and joint and several co-borrowing entered into on the date this
Guaranty becomes effective, a “Competing Guaranty”) to the extent such
Guarantor’s liabilities under such Competing Guaranty exceed an amount equal to
(1) the aggregate principal amount of such Guarantor’s obligations under such
Competing Guaranty (notwithstanding the operation of that limitation contained
in such Competing Guaranty that is substantially similar to this Section 2(d)),
multiplied by (2) a fraction (i) the numerator of which is the aggregate
principal amount of such Guarantor’s obligations under such Competing Guaranty
(notwithstanding the operation of that limitation contained in such Competing
Guaranty that is substantially similar to this Section 2(d)), and (ii) the
denominator of which is the sum of (x) the aggregate principal amount of the
obligations of such Guarantor under all other Competing Guaranties
(notwithstanding the operation of those limitations contained in such other
Competing Guaranties that are substantially similar to this Section 2(d)), (y)
the aggregate principal amount of the obligations of such Guarantor under this
Guaranty (notwithstanding the operation of this

 

Exhibit C – Form of Guaranty
-8-

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

 

Section 2(d)), and (z) the aggregate principal amount of the obligations of such
Guarantor under such Competing Guaranty (notwithstanding the operation of that
limitation contained in such Competing Guaranty that is substantially similar to
this Section 2(d)); and

(ii)after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, reimbursement, indemnification or contribution of such Guarantor
pursuant to applicable law or pursuant to the terms of any agreement (including
any such right of contribution under Section 2(b)).

Section 3.

Guaranty Absolute.  Each Guarantor guarantees that the Guaranteed Obligations
will be paid strictly in accordance with the terms of the Credit Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Secured Parties
and any Lender with respect thereto but subject to Section 2(d) above.  The
obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against a Guarantor to enforce this Guaranty, irrespective of whether
any action is brought against the Borrower, any other Guarantor or any other
Person or whether the Borrower, any other Guarantor or any other Person is
joined in any such action or actions.  The liability of each Guarantor under
this Guaranty shall be irrevocable, absolute and unconditional irrespective of,
and each Guarantor hereby irrevocably waives any defenses it may now or
hereafter have in any way relating to, any or all of the following:

(a)

any lack of validity or enforceability of any Credit Document or any agreement
or instrument relating thereto or any part of the Guaranteed Obligations being
irrecoverable;

(b)

any change in the time, manner or place of payment of, or in any other term of,
all or any of the Guaranteed Obligations or any other obligations of any Person
under the Credit Documents, or any other amendment or waiver of or any consent
to departure from any Credit Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to the Borrower or otherwise;

(c)

any taking, exchange, release or non-perfection of any Collateral, or any
taking, release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Guaranteed Obligations;

(d)

any manner of application of Collateral, or proceeds thereof, to all or any of
the Guaranteed Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Guaranteed Obligations or any other obligations
of any other Person under the Credit Documents or any other assets of the
Borrower or any Guarantor;

(e)

any change, restructuring or termination of the corporate structure or existence
of the Borrower or any Guarantor;

 

Exhibit C – Form of Guaranty
-9-

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

 

(f)

any failure of any Lender or any other Secured Party to disclose to the Borrower
or any Guarantor any information relating to the business, condition (financial
or otherwise), operations, properties or prospects of any Person now or in the
future known to any Lender or any other Secured Party (and each Guarantor hereby
irrevocably waives any duty on the part of any Secured Party to disclose such
information);

(g)

any signature of any officer of the Borrower or any Guarantor being mechanically
reproduced in facsimile or otherwise; or

(h)

any other circumstance or any existence of or reliance on any representation by
any Secured Party that might otherwise constitute a defense available to, or a
discharge of, the Borrower, any Guarantor or any other guarantor, surety or
other Person.

Section 4.

Continuation and Reinstatement, Etc.  Each Guarantor agrees that, to the extent
that payments of any of the Guaranteed Obligations are made, or any Secured
Party receives any proceeds of Collateral, and such payments or proceeds or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or otherwise required to be repaid, then to the extent
of such repayment the Guaranteed Obligations shall be reinstated and continued
in full force and effect as of the date such initial payment or collection of
proceeds occurred.  EACH GUARANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED PARTY
FROM AND AGAINST ANY claim, damage, loss, liability, cost, or expense UNDER THIS
SECTION 4 (INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) IN THE DEFENSE OF
ANY SUCH ACTION OR SUIT, INCLUDING such claim, damage, loss, liability, cost, or
expense arising as a result of the INDEMNIFIED Secured party'S OWN NEGLIGENCE
but excluding such claim, damage, loss, liability, cost, or expense that is
found in a final, non-appealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified sECURED PARTY'S gross negligence OR
willful misconduct; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES
HERETO THAT EACH INDEMNIFIED SECURED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN
NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE
IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL.

Section 5.

Waivers and Acknowledgments.

(a)

Each Guarantor hereby waives promptness, diligence, presentment, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that any Secured Party
protect, secure, perfect or insure any Lien or any property or exhaust any right
or take any action against the Borrower or any other Person or any Collateral.

(b)

Each Guarantor hereby irrevocably waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

 

Exhibit C – Form of Guaranty
-10-

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

 

(c)

Each Guarantor acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements involving the Borrower or any Guarantor
contemplated by the Credit Documents.

(d)

Each Guarantor acknowledges that the Secured Parties may, to the extent
permitted by applicable law and subject to any order of the Bankruptcy Court
(including the DIP Orders) and after the occurrence and during the continuance
of an Event of Default, without notice to or demand upon such Guarantor and
without affecting the liability of such Guarantor under this Guaranty, foreclose
under any Credit Document by non-judicial sale, and each Guarantor hereby waives
(to the extent permitted by applicable law) any defense to the recovery by the
Secured Parties against such Guarantor of any deficiency after such non-judicial
sale and any defense or benefits that may be afforded by applicable law.

(e)

Each Guarantor hereby unconditionally and irrevocably waives (to the extent
permitted by applicable law) (i) any defense arising by reason of any claim or
defense based upon an election of remedies by any Secured Party that in any
manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights
of such Guarantor or other rights of such Guarantor to proceed against any of
the other Credit Parties, any other guarantor or any other Person or any
Collateral and (ii) any defense based on any right of set-off or counterclaim
against or in respect of the Guaranteed Obligations of such Guarantor hereunder.

(f)

Each Guarantor hereby unconditionally and irrevocably waives any duty on the
part of any Secured Party to disclose to such Guarantor any matter, fact or
thing relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Credit Party or any of its
Subsidiaries now or hereafter known by such Secured Party, as the case may be.

Section 6.

Subrogation and Subordination.

(a)

No Guarantor will exercise any rights that it may now have or hereafter acquire
against the Borrower or any other Person to the extent that such rights arise
from the existence, payment, performance or enforcement of such Guarantor's
obligations under this Guaranty or any other Credit Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Secured Party against the Borrower or any other Person, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Borrower or any other Person, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security on account of such
claim, remedy or right, unless and until the Termination Date (as defined in the
Security Agreement).  If any amount shall be paid to a Guarantor in violation of
the preceding sentence at any time prior to or on the Termination Date, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Secured Parties to be credited and applied to the
Guaranteed Obligations and any and all other amounts payable by the Guarantors
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Credit Documents.

 

Exhibit C – Form of Guaranty
-11-

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

 

(b)

Each Guarantor agrees that, until after the Termination Date, all Subordinated
Guarantor Obligations (as hereinafter defined) are and shall be subordinate and
inferior in rank, preference and priority to all obligations of such Guarantor
in respect of the Guaranteed Obligations hereunder, and such Guarantor shall, if
requested by the Secured Parties, execute a subordination agreement reasonably
satisfactory to the Secured Parties to more fully set out the terms of such
subordination.  Each Guarantor agrees that none of the Subordinated Guarantor
Obligations shall be secured by a lien or security interest on any assets of
such Guarantor or any ownership interests in any Subsidiary of such
Guarantor.  “Subordinated Guarantor Obligations” means any and all obligations
and liabilities of a Guarantor owing to the Borrower or any other Guarantor,
direct or contingent, due or to become due, now existing or hereafter arising,
including, without limitation, all future advances, with interest, attorneys’
fees, expenses of collection and costs.

Section 7.

Representations and Warranties.  Each Guarantor hereby represents and warrants
as follows:

(a)

There are no conditions precedent to the effectiveness of this Guaranty.   Such
Guarantor benefits from executing this Guaranty.

(b)

Such Guarantor has, independently and without reliance upon the Secured Parties
or any Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty, and such Guarantor has established adequate means of obtaining from
the Borrower and each other relevant Person on a continuing basis information
pertaining to, and is now and on a continuing basis will be completely familiar
with, the business, financial condition, operations and properties of the
Borrower and each other relevant Person.

(c)

The obligations of such Guarantor under this Guaranty are the valid, binding and
legally enforceable obligations of such Guarantor (except as limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
at the time in effect affecting the rights of creditors generally and (ii)
general principles of equity whether applied by a court of law or equity) and
the execution and delivery of this Guaranty by such Guarantor has been duly and
validly authorized in all respects by all requisite corporate, limited liability
company or partnership actions on the part of such Guarantor, and the Person who
is executing and delivering this Guaranty on behalf of such Guarantor has full
power, authority and legal right to so do, and to observe and perform all of the
terms and conditions of this Guaranty on such Guarantor’s part to be observed or
performed.

Section 8.

Right of Set‑Off.  Upon the occurrence and during the continuance of any Event
of Default, subject to the terms of any order by the Bankruptcy Court (including
the DIP Orders), any Lender or any other Secured Party is hereby authorized at
any time, to the fullest extent permitted by law, to set-off and apply any
deposits (general or special, time or demand, provisional or final) and other
indebtedness owing by such Secured Party to the account of each Guarantor
against any and all of the obligations of the Guarantors under this Guaranty,
irrespective of whether or not such Secured Party shall have made any demand
under this Guaranty and although such obligations may be contingent and
unmatured.  Such Secured Party shall promptly notify the affected Guarantor
after any such set‑off and application is made, provided that the

 

Exhibit C – Form of Guaranty
-12-

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

 

failure to give such notice shall not affect the validity of such set‑off and
application.  The rights of the Secured Parties under this Section 8 are in
addition to other rights and remedies (including, without limitation, other
rights of set‑off) which any Secured Party may have.

Section 9.

Amendments, Etc.  No amendment or waiver of any provision of this Guaranty and
no consent to any departure by any Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the affected
Guarantor and the Secured Parties, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

Section 10.

Notices, Etc. All notices and other communications provided for hereunder shall
be sent in the manner provided for in Section 9.9 of the Credit Agreement, in
writing and hand delivered with written receipt, telecopied, sent by facsimile,
sent by a nationally recognized overnight courier, or sent by certified mail,
return receipt requested, if to a Guarantor, at its address for notices
specified in Schedule II to the Security Agreement, and if to the Secured
Parties or any Lender, at its address specified in or pursuant to the Credit
Agreement.  All such notices and communications shall be effective when
delivered.  

Section 11.

No Waiver: Remedies.  No failure on the part of any Secured Party to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.  The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

Section 12.

Continuing Guaranty: Assignments under the Credit Agreement.  This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until the
Termination Date, (b) be binding upon each Guarantor and its successors and
assigns, and (c) inure to the benefit of and be enforceable by each Secured
Party, each other Lender and their respective successors, and, in the case of
transfers and assignments made in accordance with the Credit Agreement,
transferees and assigns.  Without limiting the generality of the foregoing
clause (c), subject to Section 9.7 of the Credit Agreement, any Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, subject, however, in all respects to the provisions
of the Credit Agreement.  Each Guarantor acknowledges that upon any Person
becoming a Lender or a Secured Party in accordance with the Credit Agreement,
such Person shall be entitled to the benefits hereof.

Section 13.

Governing Law; Venue; Waiver of Jury Trial.  This Guaranty shall be governed by,
and construed and enforced in accordance with, the laws of the State of
Texas.  The other provisions of Section 9.13 of the Credit Agreement are
incorporated herein, mutatis mutandis, as if a part hereof.

Section 14.

INDEMNIFICATION.  each Guarantor hereby indemnifies and holds harmless each
Secured Party and each of their respective officers, directors, employees and
agents (the "Indemnitees") from and against any and all claims, damages, losses,
liabilities, costs, and expenses of ANY KIND OR NATURE

 

Exhibit C – Form of Guaranty
-13-

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

 

WHATSOEVER TO WHICH ANY OF THEM MAY BECOME SUBJECT RELATING TO OR ARISING OUT OF
THIS GUARANTY, including such Indemnitee's own negligence, except to the extent
such claims, losses or liabilities are found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnitee's
gross negligence or willful misconduct.  

Section 15.

Reserved.

Section 16.

Additional Guarantors.  Pursuant to Section 5.6 of the Credit Agreement, certain
Material Domestic Subsidiaries that were not in existence on the Effective Date
may be required to enter into this Guaranty as a Guarantor upon becoming a
Material Domestic Subsidiary.  Upon execution and delivery after the date hereof
by such Material Domestic Subsidiary of an instrument in the form of Annex 1,
such Material Domestic Subsidiary shall become a Guarantor hereunder with the
same force and effect as if originally named as a Guarantor herein.  The
execution and delivery of any instrument adding an additional Guarantor as a
party to this Guaranty shall not require the consent of any other Guarantor
hereunder.  The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Guaranty.

Section 17.

USA Patriot Act.  Each Secured Party that is subject to the Act (as hereinafter
defined) and each Secured Party hereby notifies each Guarantor that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001))(the “Act”), it is required to obtain, verify and
record information that identifies such Guarantor, which information includes
the name and address of such Guarantor and other information that will allow
such Secured Party to identify such Guarantor in accordance with the
Act.  Following a request by any Secured Party, each Guarantor shall promptly
furnish all documentation and other information that such Secured Party
reasonably requests in order to comply with its ongoing obligations under the
applicable "know your customer" and anti-money laundering rules and regulations,
including the Act.

Section 18.

ORAL AGREEMENTS.  PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE
CODE, AN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN AGREEMENT EXCEEDS $50,000 IN
VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY THE
PARTY TO BE BOUND OR THAT PARTY'S AUTHORIZED REPRESENTATIVE.

THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN AGREEMENT, AND
ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO
THIS GUARANTY.  THIS GUARANTY AND THE CREDIT DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Remainder of this page intentionally left blank.]

 

 

 

Exhibit C – Form of Guaranty
-14-

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

 

 

Each Guarantor has caused this Guaranty to be duly executed as of the date first
above written.

 

 

 

GUARANTORS:

 

CARBO CERAMICS INC.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Asset guard Products inc.

 

CARBO CERAMICS INC.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

stratagen, inc.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Exhibit C – Form of Guaranty
-15-

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

 

Annex 1 to the Guaranty Agreement

 

SUPPLEMENT dated as of ______________(the “Supplement”), to the Guaranty
Agreement dated as of March [__], 2020 (as amended, restated, amended and
restated, supplemented and/or modified from time to time, the “Guaranty
Agreement”), among CARBO Ceramics Inc. (the “Borrower”), each Material Domestic
Subsidiary of Borrower party thereto from time to time (collectively with the
Borrower, the “Guarantors” and individually, a “Guarantor”), in favor of WILKS
BROTHERS, LLC, as Secured Party (as defined in the Credit Agreement), and the
other Secured Parties from time to time.

A.Reference is made to that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement, dated as of March [__], 2020 (as amended,
restated, amended and restated, supplemented and/or modified from time to time,
the “Credit Agreement”), among the Borrower, the lenders from time to time party
thereto (the “Lenders”), and Wilks Brothers, LLC, as Lender.

B.Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Guaranty Agreement and the Credit
Agreement.

C.The Guarantors have entered into the Guaranty Agreement in order to induce the
Lenders to make extensions of credit.  Section 16 of the Guaranty Agreement
provides that additional Material Domestic Subsidiaries of the Borrower shall
become Guarantors under the Guaranty Agreement by execution and delivery of an
instrument in the form of this Supplement.  The undersigned Material Domestic
Subsidiary of the Borrower (the “New Guarantor”) is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Guarantor
under the Guaranty Agreement as consideration for the extensions of credit
previously made by the Lenders.

Accordingly, the New Guarantor agrees as follows:

SECTION 1.In accordance with Section 16 of the Guaranty Agreement, the New
Guarantor by its signature below becomes a Guarantor under the Guaranty
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Guaranty Agreement applicable to it as a Guarantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Guarantor thereunder are true and correct in all material respects on
and as of the date hereof.  Each reference to a "Guarantor" in the Guaranty
Agreement shall be deemed to include the New Guarantor.  The Guaranty Agreement
is hereby incorporated herein by reference.

SECTION 2.The New Guarantor represents and warrants to each Secured Party that
this Supplement has been duly authorized, executed and delivered by it by all
requisite corporate limited liability company or partnership action and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or at
law)).

 

Exhibit C – Form of Guaranty
-16-

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

 

SECTION 3.This Supplement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.  This Supplement shall become effective when the Secured
Parties shall have received counterparts of this Supplement that, when taken
together,bear the signatures of the New Guarantor.  Delivery of an executed
signature page to this Supplement by fax transmission or by e-mail “PDF” copy
shall be as effective as delivery of a manually executed counterpart of this
Supplement.

SECTION 4.Except as expressly supplemented hereby, the Guaranty Agreement shall
remain in full force and effect.

SECTION 5.This supplement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.  The New Guarantor hereby
irrevocably submits to the jurisdiction of any Texas state or federal court
sitting in Houston, Texas in any action or proceeding arising out of or relating
to this Supplement or the Guaranty Agreement and the other Credit Documents, and
the New Guarantor hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such court.  The New
Guarantor hereby irrevocably waives, to the fullest extent it may effectively do
so, any right it may have to the defense of an inconvenient forum to the
maintenance of such action or proceeding.  The New Guarantor hereby agrees that
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding may be made by mailing or delivering
a copy of such process to such Guarantor at its address set forth on the
signature page hereof.  The New Guarantor agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Section 5 shall affect the rights of any Secured Party to
serve legal process in any other manner permitted by the law or affect the right
of any Secured Party to bring any action or proceeding against the New Guarantor
or its Property in the courts of any other jurisdiction.

SECTION 6.THE NEW GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, EACH CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY SECURED PARTY OR
ANY OBLIGOR IN CONNECTION THEREWITH.  THE NEW GUARANTOR ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH LENDER ENTERING INTO THE
CREDIT DOCUMENTS.

SECTION 7.In case any one or more of the provisions contained in this Supplement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and in
the Guaranty Agreement shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision hereof in a
particular jurisdiction shall not in and of itself affect the validity of

 

Exhibit C – Form of Guaranty
-17-

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

 

such provision in any other jurisdiction).  The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8.All communications and notices hereunder shall be in writing and given
as provided in Section 10 of the Guaranty Agreement.

THIS SUPPLEMENT, THE GUARANTY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS
DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS SUPPLEMENT, REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

IN WITNESS WHEREOF, the New Guarantor has duly executed this Supplement to the
Guaranty Agreement as of the day and year first above written.

 

 

 

[Name of New Guarantor]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Exhibit C – Form of Guaranty
-18-

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

 

EXHIBIT D

 

FORM OF DIP TERM NOTE

 

THE FOLLOWING INFORMATION IS SUPPLIED SOLELY FOR U.S. FEDERAL INCOME TAX
PURPOSES.  THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) WITHIN THE
MEANING OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”), AND THIS LEGEND IS REQUIRED BY SECTION 1275(c) OF THE CODE.  HOLDERS
MAY OBTAIN INFORMATION REGARDING THE AMOUNT OF OID, THE ISSUE PRICE, THE ISSUE
DATE AND THE YIELD TO MATURITY RELATING TO THE NOTES BY CONTACTING THE BORROWER
AT: CARBO CERAMICS INC., ATTN: ERNESTO BAUTISTA III, CHIEF FINANCIAL OFFICER,
ENERGY CENTER II, 575 N. DAIRY ASHFORD RD., STE 300, HOUSTON, TX 77079.

 

cARBO CERAMICS INC.

 

secured DIP TERM NOTE

 

$______      __________, 20__

 

For value received, the undersigned CARBO CERAMICS Inc., a Delaware corporation
(“Borrower”), hereby promises to pay to the order of WILKS BROTHERS, LLC
(“Payee”) the principal amount of ______________ No/100 DOLLARS ($___________)
or, if less, the aggregate outstanding principal amount of the Payee’s DIP Term
Loans (as defined in the Credit Agreement referred to below) made by the Payee
(or predecessor in interest) to the Borrower, together with interest on the
unpaid principal amount of the DIP Term Loans until such principal amount is
paid in full, at such interest rates, and at such times, as are specified in the
Credit Agreement.  The Borrower may make prepayments on this Term Note in
accordance with the terms of the Credit Agreement.

 

This Note is one of the Notes referred to in, and is entitled to the benefits
of, and is subject to the terms of, that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement dated as of March [__], 2020 (as the same
may be amended, restated, amended and restated, supplement and/or modified from
time to time, the “Credit Agreement”), among the Borrower, the lenders party
thereto (the “Lenders”), the guarantors party thereto, and Wilks Brothers, LLC,
as Lender.  Capitalized terms used in this Note that are defined in the Credit
Agreement and not otherwise defined in this Note have the meanings assigned to
such terms in the Credit Agreement.  The Credit Agreement contains, among other
things, provisions for acceleration of the maturity of the unpaid principal
amount of this Note upon the happening of certain events stated in the Credit
Agreement and for prepayments of principal prior to the maturity of this Note
upon the terms and conditions specified in the Credit Agreement.

 

Both principal and interest are payable in lawful money of the United States of
America to the Payee at the location or address specified by the Payee to the
Borrower in same day funds.  The

 

Exhibit D – Form of DIP Term Note

Page 1

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

 

Payee shall record payments of principal made under this Note, but no failure of
the Payee to make such recordings shall affect the Borrower's repayment
obligations under this Note.

 

This Note is guaranteed pursuant to the terms of the Guaranties.

 

This Note is made expressly subject to the terms of Section 9.11 and Section
9.12 of the Credit Agreement.

 

Except as specifically provided in the Credit Agreement, the Borrower hereby
waives presentment, demand, protest, notice of intent to accelerate, notice of
acceleration, and any other notice of any kind.  No failure to exercise, and no
delay in exercising, any rights hereunder on the part of the holder of this Note
shall operate as a waiver of such rights.

 

This Note shall be governed by, and construed and enforced in accordance with,
the laws of the state of Texas.  THE PROVISIONS OF SECTION 9.13 OF THE CREDIT
AGREEMENT ARE INCORPORATED HEREIN, MUTATIS MUTANDIS, AS IF A PART HEREOF.

 

This Note and the other CREDIT Documents represent the final agreement among the
parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties.

 

There are no unwritten oral agreements among the parties.

 

 

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

 

Exhibit D – Form of DIP Term Note

Page 2

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

 

IN WITNESS WHEREOF, the Borrower has caused this Secured DIP Term Note to be
executed as of the date first above written.

 

 

 

[CARBO CERAMICS INC., a Delaware corporation

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

Exhibit D – Form of DIP Term Note

Page 3

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

 

EXHIBIT E

[RESERVED]

 

 

Exhibit E – Reserved

Page 1

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

 

EXHIBIT F

DIP BUDGET

CARBO CERAMICS INC., et al.

Dip Order - Exhibit 1

 

 

 

 

4/3/20

4/10/20

4/17/20

4/24/20

 

($000s)

Wk 1

POST

Wk 2

POST

Wk 3

POST

Wk 4

POST

Cash Receipts

 

 

 

 

Customer Collections

$1,382

$1,273

$1,739

$1,674

Total Cash Receipts

$1,382

$1,273

$1,739

$1,674

Operating Disbursements

 

 

 

 

Operating Expenses

($1,107)

($1,129)

($996)

($996)

Wages & Benefits

(500)

(184)

(1,375)

(184)

Taxes

-

(20)

-

(2)

G&A / Other

(310)

(223)

(223)

(223)

Total Operating Disbursements

($1,917)

($1,556)

($2,595)

($1,405)

Total Operating Cash Flow

($535)

($283)

($856)

$269

Other Disbursements

 

 

 

 

Professional Fees

$0

$0

$0

$0

Adequate Assurance / CV Payments

(361)

-

(450)

(450)

Notes & Interest Payments

(1,491)

-

-

-

DIP Interest & Fees

(225)

-

-

-

Total Other Disbursements

($2,077)

$0

($450)

($450)

Total Disbursements

($3,994)

($1,556)

($3,045)

($1,855)

Net Cash Flow

($2,611)

($283)

($1,306)

($181)

Beginning Cash Balance

$18,096

$20,485

$20,202

$18,897

(+/-) Weekly Cash Flow

 

(2,611)

(283)

(1,306)

(181)

(+/-) Change in Float

 

-

-

-

-

(+/-) DIP Draw / Paydown

 

5,000

-

-

-

Ending Cash Balance

$20,485

$20,202

$18,897

$18,716

Less: Restricted Cash

(9,732)

(9,732)

(9,732)

(9,732)

Less: Foreign Cash

(781)

(781)

(781)

(781)

Ending Available Liquidity

$9,972

$9,689

$8,384

$8,203

 

 

 

Exhibit F – DIP Budget

Page 1

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

 

EXHIBIT G

FORM OF BORROWING REQUEST

 

 

__________, 20____

Wilks Brothers, LLC

17010 IH-20

Cisco, TX 76437

Attention:  Philip Pecora and Matthew Wilks

Facsimile:  (817) 850-3698

Email:  philip.pecora@wilksbrothers.com and matt.wilks@profrac.com

 

Reference is made to that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement, dated as of March [__], 2020, among Carbo
Ceramics Inc., a Delaware corporation (the “Borrower”), the Guarantors (as
defined therein) from time to time party thereto, the Lenders (as defined
therein) from time to time party thereto and Wilks Brothers, LLC, as Lender (as
amended, restated, amended and restated, supplemented and/or modified from time,
the “Credit Agreement”).  Unless defined herein or the context otherwise
requires, all capitalized terms have the meanings given to such terms in the
Credit Agreement.  The undersigned hereby gives you notice pursuant to Section
2.3 of the Credit Agreement that it requests a Borrowing on the following terms:

(A)The aggregate principal amount of the Borrowing requested is $___________;

(B)the Borrowing Date (a Business Day) is _________, ____;

(C)the location and number of the Borrower’s account to which funds are to be
disbursed:

Bank:

ABA Routing Number:

Account Name:

Account Number:

Reference:

 

(D)the amount of the current total outstanding principal amount of the Loans
(without regard to the requested Borrowing) is $___________; and

(E)the pro forma total outstanding principal amount of the Loans (giving effect
to the requested Borrowing) is $___________.

Borrower hereby certifies that the following statements are true and correct on
the date hereof, and will be true and correct on the Borrowing Date specified
above after giving effect to such Borrowing:  (a) all of the representations and
warranties in the Credit Documents are true and correct in all respects (or in
all material respects if such representation or warranty is not by its terms
already qualified by materiality) as of said time, except to the extent the same
expressly

 

Exhibit G – Borrowing Request

Page 1

 

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

 

relate to an earlier date, in which case such representations and warranties
shall be and remain true and correct in all respects (or in all material
respects if such representation and warranty is not by its terms already
qualified as to materiality) as of such earlier date; (b) no Material Adverse
Change exists or has occurred since the Petition Date; (c) no Default or Event
of Default exists; and (d) the proposed use of the proceeds of the requested
Borrowing is for Budgeted Expenses in compliance with the DIP Budget.

[Signatures appear on Following Page]

 

 

Exhibit G – Borrowing Request

Page 2

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

 

 

 

 

Very truly yours,

 

CARBO CERAMICS INC.,

a Delaware corporation

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Exhibit G – Borrowing Request

Page 3

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

 

SCHEDULE 1.2

Existing Letters of Credit

 

[gfylfucjdif2000001.jpg]

 

 

Schedule 1.2
-1-

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

 

SCHEDULE 4.1

Organizational Information

CARBO Ceramics Inc.

 

 

Principal Office:

575 N. Dairy Ashford, Ste. 300

Houston, TX 77079

 

Local Office:

 

Same as Principal

 

Date of Incorporation:

 

Delaware - June 23, 1987

 

Type of Organization:

 

Corporation

 

Asset Guard Products Inc. (d/b/a Falcon Technologies and Services, Inc.)

f/k/a/ Falcon Technologies and Services, Inc.(2)

f/k/a Falcon Technology Services, Inc.(1)

 

Principal Office:

 

575 N. Dairy Ashford, Ste. 300,

Houston, Texas 77079

 

Local Offices:

 

2242 East Hwy 380

Decatur, Texas 76234

 

Date of Incorporation

 

Delaware — September 15, 2009

 

and Name Change Dates:

Name Change — September 29, 2009(1)

 

Name Change — December 12, 2016(2)

 

Type of Organization:

 

Corporation

 

StrataGen, Inc.13

 

 

Principal Office:

 

575 N. Dairy Ashford

Ste. 300

Houston, TX 77079

Sales and Operations Local Office:

 

575 N. Dairy Ashford

Ste. 300

Houston, TX 77079

Date of Incorporation and

Delaware — July 2, 2012

Name Change Dates:

 

Type of Organization:

Corporation

 

 

13 

Previously incorporated in California — September 11, 1992. In California, name
changed to: (i) StrataGen Engineering, Inc. on February 26, 2009, and (ii)
StrataGen, Inc. on March 24, 2009.

 

Schedule 4.1
-1-

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

 

SCHEDULE 4.7

Litigation

Well Site Supply, Inc. vs. CARBO Ceramics Inc., Cause # 01-19-0004-6529,
American Arbitration Association.  Breach of Contract claim.  Alleged damages
$2.42M.

 

 

 

Schedule 4.7
-1-

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

 

SCHEDULE 4.8

Defaults

 

1.

Failure to meet railcar rent obligations due under the Lease Agreement (the
“Master Lease”) dated effective October 1, 2011 between MUL Railcars, Inc. (as
successor-interest to MUL Railcars Leasing, LLC)(as assignee of Greenbrier
Leasing company LLC) and CARBO Ceramics Inc., and that certain Schedule No. 8 to
the Master Lease dated April 15, 2014 and effective as of February 1, 2014, as
amended and modified from time to time.

 

2.

Failure to meet railcar rent obligations due under the Lease Agreement (the
"Master Lease") dated effective October 1, 2011 between Bridge Funding Group (as
successor-interest to Bridge Capital Leasing, Inc.)(as assignee of Greenbrier
Leasing company LLC) and CARBO Ceramics Inc., and those certain Schedule Nos. 9
and 10 to the Master Lease dated June 30, 2014 and September 15, 2014,
respectively, as amended and modified from time to time.

 

3.

Failure to meet railcar rent obligations due under the Lease Agreement (the
"Master Railcar Lease") dated effective April 17, 2006 between The CIT
Group/Equipment Financing, Inc. and CARBO Ceramics Inc., and those certain
Schedule Nos. 1-7 and 9-14 to the Master Railcar Lease dated, April 17, 2006,
March 9, 2007, March 13, 2008, March 14, 2008, April 7, 2008, April 7, 2008,
February 18, 2010, April 6, 2011, May 10, 2011, May 10, 2011, February 28, 2017,
February 28, 2017, and February 28, 2017, respectively, as amended and modified
from time to time.

 

4.

Failure to meet railcar rent obligations due under the Lease Agreement (the
"Master Lease") dated effective October 1, 2011 between Greenbrier Leasing
company LLC) and CARBO Ceramics Inc., and its Schedule Nos. 1-11, of which
Schedule No. 1 is assigned to CFG Community Bank, Schedule No. 2 is assigned to
Fifth Third Equipment Finance Company, Schedule Nos. 1B, 3, 5, and 6 are
assigned to Capital One Equipment Finance Corp., Schedule Nos. 7 and 11 are
assigned to Green Union IV Trust, Schedule No. 8 is assigned to MUL as described
in item #1 above, and Schedule Nos. 9 and 10 are assigned to Bridge Funding
Group as described in item #2 above.

 

5.

Failure to meet railcar rent obligations due under the Lease Agreements dated
August 21, 1984, November 2, 1993, October 25, 1999, and July 31, 2006, between
Chicago Freight Car Leasing Co. (“Car Company”) (“Lessor”) and Carbo Ceramics
Inc. (“Lessee”) and that certain Third Supplement to lease effective August 1,
2014, and terminates July 31, 2021.

 

6.

Failure to meet railcar rent obligations due under the JAIX/SMBC Master Railcar
Lease Agreement (“Agreement”) between Jaix Leasing Company (“Lessor”) and Carbo
Ceramics Inc. (“Lessee”) executed and accepted on the 29th day of July 2014 and
Equipment Riders, each constituting a lease, to be entered into from to time.

 

7.

Failure to meet railcar rent obligations due under the Wells Fargo Railroad
Corporation (as successor to General Electric Railcar Services Corporation)
(“Lessor”) Car Leasing

 

Schedule 4.8
-1-

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

 

 

Agreement No. 2183-97-00 with CARBO Ceramics Inc. (“Lessee”) dated March 5,
2002, to lease railroad cars subject to this agreement and subsequent riders.

 

8.

Failure to meet rent obligations due under the Lease Agreement dated December
31, 2014, as amended by First Amendment to Lease dated February 3, 2015 and by
that Second Amendment to Lease dated November 30, 2015 (collectively, the
“Lease”) by and between CARBO Ceramics Inc. and KTJ 251, LLC.

 

9.

Failure to meet payment obligations due under the Wildcat Minerals LLC
(“Operator”) Material Handling and Storage Agreement Dated October 11, 2013,
with CARBO Ceramics Inc.  Operator to perform the necessary transloading,
handling and inventory storage services of proppant for CARBO. The term of the
agreement began on the agreement date and ends on December 31, 2023.

 

10.

Failure to meet rent obligations due under the Lease Agreement dated November
20, 2014, as amended by First Amendment dated January 21, 2015, by that Second
Amendment dated February 3, 2015, and by that Third Amendment dated August 20,
2015 (collectively, the “Lease”) by and between CARBO Ceramics Inc. and KTJ 250,
LLC.

 

11.

Failure to meet payment obligations due under the Wildcat Minerals LLC
(“Wildcat”) Storage Facility Agreement dated October 11, 2013, with Carbo
Ceramics Inc. (“Company”) for construction of a silo and storage in that silo
aggregating 10,000 tons of storage space.  The term of the agreement began on
the agreement date and ends on December 31, 2023.

 

 

Schedule 4.8
-2-

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

 

SCHEDULE 4.10

 

Environmental Conditions

 

1.

A claim from The Port of Shreveport-Bossier for $68,208.92*.

 

 

*CARBO has received an invoice from The Port of Shreveport-Bossier for
environmental remediation work in an amount of $68,408.92.  We have sent a
letter to the Port of Shreveport-Bossier disputing the necessity of such
remediation and are seeking at least a mutually-agreeable reduction in the
amount of this invoice.

 

 

 

Schedule 4.10
-1-

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

 

SCHEDULE 4.11

Subsidiaries

 

NAME OF ENTITY

JURISDICTION OF ORGANIZATION

OWNER

OWNERSHIP INTEREST

1.   CARBO Ceramics (Mauritius) Inc.

Mauritius

CARBO Ceramics Inc.

100%

2.   CARBO Ceramics (China) Company Ltd.

China

CARBO Ceramics (Mauritius) Inc.

100%

3.   LLC CARBO International Eurasia

Russia

CARBO International, Inc.

100%

4.   CARBO International, Inc.

Delaware, USA

CARBO Ceramics Inc.

100%

5.   Asset Guard Products Inc. (formerly known as Falcon Technologies and
Services, Inc.)

Delaware, USA

CARBO Ceramics Inc.

100%

6.   StrataGen, Inc.

Delaware, USA

CARBO Ceramics Inc.

100%

7.   CARBO Ceramics (Canada) Inc.

BC, Canada

CARBO International, Inc.

100%

 

 

 

Schedule 4.11
-1-

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

 

SCHEDULE 4.13

Waivers of Tax Statute of Limitations

 

1.

Asset Guard Products Inc. has entered into a waiver of the statute of
limitations with respect to an audit relating to the payment of state sales tax
in the State of Texas during the period from May 2016 through May 2019.

 

 

2.

CARBO Ceramics Inc. has entered into a waiver of the statute of limitations with
respect to an audit relating to the payment of federal income tax during the
period from 2012 through 2015.

 

 

3.

CARBO Ceramics Inc. has entered into a waiver of the statute of limitations with
respect to an audit relating to the payment of state sales tax in the State of
Texas during the period from January 2014 through June 2017.

 

 

4.

CARBO Ceramics Inc. has entered into a waiver of the statute of limitations with
respect to an audit relating to a refund of state sales tax paid in the State of
Georgia during the period from December 2013 through December 2015.

 

 

 

Schedule 4.13
-1-

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

 

SCHEDULE 4.20

Sanctions

The Borrower’s indirect, wholly-owned subsidiary, LLC CARBO International
Eurasia, is organized in the Russian Federation and conducts sales operations in
that country.  From time to time, the Borrower or its other Subsidiaries may
enter into business transactions with that entity or with customers located in
the Russian Federation.

 

 

 

 

 

 

 

 

 

Schedule 4.20
-1-

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

 

SCHEDULE 4.21

Deposit Accounts

 

 

Name of Grantor

Name of Depositary Institution

Account Number

Description of Account

1.

Carbo Ceramics Inc.

JPMorgan Chase Bank, N.A.

3705590132

Premium Commercial Money Market

2.

Carbo Ceramics Inc.

JPMorgan Chase Bank, N.A.

Lockbox

Lockbox

3.

Carbo Ceramics Inc.

JPMorgan Chase Bank, N.A.

298287613

Accounts Payable

4.

Carbo Ceramics Inc.

JPMorgan Chase Bank, N.A.

298279693

Payroll

5.

Carbo Ceramics Inc.

JPMorgan Chase Bank, N.A.

298278315

Operating

6.

Carbo Ceramics Inc.

JPMorgan Chase Bank, N.A.

359236061

Ecommerce

7.

Asset Guard Products Inc.

JPMorgan Chase Bank, N.A.

Lockbox

Lockbox

8.

Asset Guard Products Inc.

JPMorgan Chase Bank, N.A.

298316651

Accounts Payable - ZBA

9.

Asset Guard Products Inc.

JPMorgan Chase Bank, N.A.

298316537

Operating

10.

StrataGen Inc.

JPMorgan Chase Bank, N.A.

Lockbox

Lockbox

11.

StrataGen Inc.

JPMorgan Chase Bank, N.A.

298317121

Operating

12.

StrataGen Inc.

JPMorgan Chase Bank, N.A.

298317071

Accounts Payable - ZBA

13.

Carbo Ceramics Inc.

Wells Fargo Bank, National Association

Lockbox

Legacy Lockbox

14.

Carbo Ceramics Inc.

Wells Fargo Bank, National Association

4950031153

Legacy Receipts Account

15.

Asset Guard Products Inc. f/k/a Falcon Technologies and Services Inc.

Wells Fargo Bank, National Association

Lockbox

Legacy Lockbox

 

Schedule 4.21
-1-

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

 

 

16.

Asset Guard Products Inc. f/k/a Falcon Technologies and Services Inc.

Wells Fargo Bank, National Association

4122000599

Operating

17.

StrataGen Inc.

Wells Fargo Bank, National Association

4121685424

Operating

18.

StrataGen Inc.

Wells Fargo Bank, National Association

Lockbox

Legacy Lockbox

19.

Carbo Ceramics Inc.

Wells Fargo Bank, National Association

9600031814

Legacy Outstanding Chks AP

20..

Carbo Ceramics Inc.

Wells Fargo Bank, National Association

4945077261

Outstanding Chks PR – Proposed Utility Adequate Assurance Escrow Account

21.

Asset Guard Products Inc, f/k/a Falcon Technologies and Services Inc.

Wells Fargo Bank, National Association

9600134246

Legacy Accounts Payable

22.

Carbo Ceramics Inc.

Wells Fargo Bank, National Association

4121233100

Legacy FSA Disbursement

23.

Carbo Ceramics Inc.

Wells Fargo Bank, National Association

4067470724

Amazon Disbursement – Proposed Professional Fee Escrow Account

24.

Carbo Ceramics Inc., Mauritius, CIE, Dubai

Foreign bank accounts

 

Various operating

25.

Century Bank & Trust

Certificates of Deposit

Accounts ending 3253,3260,2429

Collateral for reclamation bonds

26.

Carbo Ceramics Inc.

Wells Fargo Bank, National Association

Accounts ending 3458,3466,3474

Collateral for Credit Cards

 

 

 

 

 

Schedule 4.21
-2-

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

 

SCHEDULE 5.9(d)

Real Property

 

Type

Address

City

State

Zip

Plant

1800 Dent Rd

Toomsboro

GA

31090

Plant

2301 East 4th Street

Marshfield

WI

54449

Plant

2295 Wrigley Road

McIntyre

GA

31054

Plant

36 Arch Drive

Eufaula

AL

36027

Plant

4801 Industrial Drive

New Iberia

LA

70560

Office/Manufacturing Facility

2242 East Hwy 380

Decatur

TX

76234

Minerals Sand – Helgerson

9240 County Road V

Marshfield

WI

54449

Minerals Sand - Hansen

11575 MacArthur Drive

Marshfield

WI

54449

Minerals Sublease - Kaolin Allen North

 

Wilkinson County

GA

 

Minerals owned Kaolin Brannan

 

Wilkinson County

GA

 

Minerals owned Kaolin Kellam

 

Wilkinson County

GA

 

Minerals owned Kaolin CE Dent

 

Wilkinson County

GA

 

Minerals owned Kaolin CBrick

 

Wilkinson County

GA

 

Minerals Sublease Kaolin F Wall

 

Wilkinson County

GA

 

Minerals Sublease Kaolin CM Shepherd 1

 

Wilkinson County

GA

 

Minerals Sublease Kaolin CM Shepherd 2

 

Wilkinson County

GA

 

Minerals Sublease CD Dent

 

Wilkinson County

GA

 

Minerals Sublease - Kaolin CM Shepherd 2N

 

Wilkinson County

GA

 

Minerals stockpile Kaolin Roland

 

Henry County

AL

 

Minerals stockpile kaolin Sellers

 

Henry County

AL

 

Minerals stockpile kaolin Bell

 

Henry County

AL

 

Minerals stockpile kaolin Espy 4

 

Barbour County

AL

 

Distribution Center

4810 Industrial Drive

New Iberia

LA

70560

Distribution Center

1975 W Blairtown Rd.

Rock Springs

WY

82901

Distribution Center

2600 10180 101 St

Edmonton, AB

CA

T5J 3Y2

Distribution Center

8715 Park Road

Grand Prairie, AB

CA

T6R 2W9

Distribution Center

2346 CR 115

Alice

TX

78332

Distribution Center

51 Main Street

Douglas

ND

58735

 

 

 

 

Schedule 5.9(d)
-1-

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

 

SCHEDULE 6.2(f)

Purchase Money Debt and Capital Leases

 

1.

Development Authority of Wilkinson County (as “Lessor”) and CARBO Ceramics Inc.
(as “Lessee”) dated November 1, 2008, as amended, pertaining to each of the
Toomsboro Facility and McIntyre Facility, respectfully.

 

 

 

 

Schedule 6.2(f)
-1-

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

 

SCHEDULE 6.2(k)

Outstanding Debt

 

1.

Amended and Restated Credit Agreement, dated as of March 2, 2017 (as amended by
that certain First Amendment to Amended and Restated Credit Agreement, dated as
of June 7, 2018, and as further amended by that certain Second Amendment to
Amended and Restated Credit Agreement and Joinder, dated as of June 20, 2019, as
so amended), among Carbo Ceramics Inc., as Borrower, Wilks Brothers, LLC, as
Administrative Agent, and the lenders named therein, namely, Wilks Brothers, LLC
and Equify Financial LLC.

 

 

 

 

 

 

Schedule 6.2(k)
-1-

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

 

SCHEDULE 6.2(m)

Existing Corporate Credit Card Services

As part of the Cash Management System, and in the ordinary course of business,
the Debtors maintain various Company-paid credit cards (collectively, the
“Credit Cards”) and various corporate purchasing cards and corporate fuel cards
(collectively, the “P-Cards,” and together with the Credit Cards, the “Corporate
Cards”) that are utilized to pay for certain work related expenses, such as
work-related travel, fuel charges, and other small, non-recurring purchases made
on behalf of the Debtors (collectively, the “Corporate Card Programs”).  The
Corporate Cards are issued by four credit card providers, Wells Fargo, The
Universal Air Travel Plan, Inc. (“UATP”), Universal Advantage Fleet Card
(“Universal”), and Wright Express Fleet Card (“WEX,” and together with Wells
Fargo, UATP, and Universal, the “Credit Card Providers”).

 

 

 

Schedule 6.2(m)
-1-

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

 

SCHEDULE 6.4(a)

Investments

NONE

 

 

 

Schedule 6.4(a)
-1-

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

 

SCHEDULE 6.9(a)(iii)

Specified Dispositions

NONE

 

 

 

Schedule 6.9(a)(iii)
-1-