Exhibit 10.1

COMMITMENT INCREASE AGREEMENT AND SECOND AMENDMENT

This Commitment Increase Agreement and Second Amendment (“Amendment”) dated as
of May 9, 2013 is by and among Hi-Crush Partners LP, a Delaware limited
partnership (the “Borrower”), the Lenders party hereto, and Amegy Bank National
Association, as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”).

WHEREAS, the Borrower, the lenders from time to time party thereto (the
“Lenders”), and Amegy Bank National Association, as Administrative Agent, as
issuing lender (in such capacity, the “Issuing Lender”), and as swing line
lender (in such capacity, the “Swing Line Lender”), are parties to the Credit
Agreement dated as of August 21, 2012, as amended by the Consent and First
Amendment thereto dated as of January 31, 2013 (as amended, the “Credit
Agreement”);

WHEREAS, pursuant to Section 2.15 of the Credit Agreement, the Borrower has the
right, subject to the terms and conditions thereof, to increase the aggregate
Commitments by allowing one or more Increasing Lenders (as defined below) to
increase their respective Commitments or by allowing one or more Additional
Lenders (as defined below) to become Lenders under the Credit Agreement;

WHEREAS, the Borrower has given notice to the Administrative Agent and the
Lenders of its intention, pursuant to such Section 2.15 of the Credit Agreement
to increase the aggregate Commitments by $100,000,000;

WHEREAS, each of IBERIABANK, Bank of America, N.A., Regions Bank and Whitney
Bank (each an “Additional Lender” and collectively, the “Additional Lenders”)
desires to become a Lender under the Credit Agreement with a Commitment as set
forth on Schedule II hereto; and

WHEREAS, the parties hereto have agreed to provide certain consents and make
certain amendments to the Credit Agreement as provided for herein, subject to
the conditions herein;

NOW THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

AGREEMENT

Section 1. Defined Terms. Unless otherwise defined in this Amendment, each
capitalized term used in this Amendment has the meaning given such term in the
Credit Agreement, as amended by this Amendment.

Section 2.Increase of Commitments. Pursuant to Section 2.15 of the Credit
Agreement and upon the effectiveness of this Amendment pursuant to Section 5
below, the aggregate Commitments are hereby increased from $100,000,000 to
$200,000,000. The Commitments of (a) the existing Lenders who have severally
agreed to increase their respective Commitments (each, an “Increasing Lender”
and collectively, the “Increasing Lenders”) and (b) each Additional Lender are
set forth on Schedule II hereto, in each case after giving effect to this
Amendment and the increase of the Commitments pursuant to this Amendment.

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Section 3. Additional Lenders. By its execution and delivery of this Amendment,
each Additional Lender hereby agrees to become a Lender under the Credit
Agreement with a Commitment as set forth on Schedule II hereto. Each Additional
Lender (a) represents and warrants that (i) it has full power and authority, and
has taken all action necessary, to execute and deliver this Amendment and to
consummate the transactions contemplated hereby, (ii) it meets all the
requirements to be an Eligible Assignee under the Credit Agreement (subject to
such consents, if any, as may be required under the Credit Agreement), (iii) it
is sophisticated with respect to decisions to acquire assets of the type
represented by its Commitment set forth on Schedule II and either it, or the
person exercising discretion in making its decision to acquire such Commitment,
is experienced in acquiring assets of such type, (iv) it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Amendment, and (v) if it is not
incorporated under the laws of the United States of America or a state thereof,
it has delivered to the Borrower any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed by
such Additional Lender; and (b) agrees that it will, independently and without
reliance on the Administrative Agent 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.

Section 4. Amendments to the Credit Agreement.

(a) The Credit Agreement is hereby amended by incorporating the blacklined
changes shown on the marked copy of the Credit Agreement attached hereto as
Annex A.

(b) The Credit Agreement is hereby amended by replacing Exhibit B (Form of
Compliance Certificate) in its entirety with Exhibit B attached hereto.

(c) The Credit Agreement is hereby amended by replacing Exhibit E (Form of
Continuation or Conversion) in its entirety with Exhibit E attached hereto.

(d) The Credit Agreement is hereby amended by adding Exhibit G-3 (Form of Term
Note) attached hereto as new Exhibit G-3 to the Credit Agreement.

(e) The Credit Agreement is hereby amended by replacing Schedule I (Pricing
Schedule) in its entirety with Schedule I attached hereto.

(f) The Credit Agreement is hereby amended by replacing Schedule II
(Commitments, Contact Information) in its entirety with Schedule II attached
hereto.

Section 5. Conditions to Effectiveness. This Amendment shall become effective on
the date (the “Amendment Effective Date”) on which the following conditions
precedent shall have been satisfied:

 

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(a) Documentation. The Administrative Agent shall have received the following,
each in form and substance satisfactory to the Administrative Agent:

(i) this Amendment duly executed by the Borrower, the Administrative Agent, the
Issuing Lender, the Swing Line Lender, each Increasing Lender, each Additional
Lender and the Majority Lenders (calculated in accordance with the Commitments
set forth on Schedule II attached hereto), and the Acknowledgement and
Reaffirmation attached hereto duly executed by each of the Guarantors;

(ii) a Revolving Note payable to each Increasing Lender and each Additional
Lender in the amount of such Lender’s Commitment, as amended hereby;

(iii) a Swing Line Note payable to the Swing Line Lender in the amount of the
Swing Line Sublimit Amount, as amended hereby;

(iv) a secretary’s certificate of each Credit Party dated the Amendment
Effective Date and certifying (A) that that there have been no changes to the
organizational documents of each such Person since the Effective Date or
attaching such amendments and (B) that attached thereto is a true and complete
copy of resolutions, if applicable, authorizing the execution and delivery of
this Amendment and the Credit Documents executed in connection herewith and the
performance of the Credit Agreement as amended hereby and the other Credit
Documents, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect;

(v) certificates of good standing for each Credit Party in each state in which
each such Person is organized or qualified to do business;

(vi) a certificate of an authorized officer of the Borrower dated the Amendment
Effective Date and certifying (A) both before and after giving effect to the
increase in the Commitments contemplated by Section 2, no Default has occurred
and is continuing, (B) all representations and warranties made by the Borrower
in the Credit Agreement are true and correct in all material respects, unless
such representation or warranty relates to an earlier date which remains true
and correct in all material respects as of such earlier date, and (C) the pro
forma compliance with the covenants in Sections 6.16 and 6.17 of the Credit
Agreement, after giving effect to such increase in the Commitments;

(vii) a legal opinion of Fulbright & Jaworski L.L.P., as counsel to the Credit
Parties; and

(viii) such other documents, governmental certificates and agreements as the
Administrative Agent or any Lender may reasonably request.

(b) Prepayment of Revolving Advances. On the Amendment Effective Date, the
Borrower shall have made the prepayment of the Revolving Advances required by
Section 2.4(c)(iii) of the Credit Agreement.

(c) Payment of Fees. On the Amendment Effective Date, the Borrower shall have
paid the fees set forth in the fee letter dated as of May 9, 2013 between the
Borrower and the Administrative Agent and all reasonable and documented
out-of-pocket costs and expenses which have been invoiced and are payable
pursuant to Section 9.1 of the Credit Agreement.

 

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Section 6. Representations and Warranties. The Borrower hereby represents and
warrants that after giving effect hereto:

(a) the representations and warranties of the Credit Parties contained in the
Credit Documents are true and correct in all material respects on and as of the
date hereof, other than those representations and warranties that expressly
relate solely to a specific earlier date, which shall remain true and correct in
all material respects as of such earlier date; and

(b) no Default or Event of Default has occurred and is continuing.

Section 7. Effect of Amendment.

(a) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender, the Issuing Lender, the Swing Line Lender or the
Administrative Agent under any of the Credit Documents, nor, except as expressly
provided herein, constitute a waiver or amendment of any provision of any of the
Credit Documents.

(b) Upon and after the execution of this Amendment by each of the parties
hereto, each reference in the Credit Agreement to “this Agreement”, “hereunder”,
“hereof” or words of like import referring to the Credit Agreement, and each
reference in the other Credit Documents to “the Credit Agreement”, “thereunder”,
“thereof” or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as modified hereby.

(c) This Amendment is a Credit Document executed pursuant to the Credit
Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions thereof.

(d) Except as specifically modified above, the Credit Agreement and the other
Credit Documents are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed.

Section 8. Governing Law. THIS AMENDMENT SHALL BE DEEMED A CONTRACT UNDER, AND
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

Section 9. Counterparts. This Amendment 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. Transmission by facsimile
or other electronic means of an executed counterpart of this Amendment shall be
deemed to constitute due and sufficient delivery of such counterpart.

 

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THIS AMENDMENT AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT
AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND SUPERSEDE ALL
PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE
TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN. ADDITIONALLY, THIS AMENDMENT AND
THE OTHER CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES.

[Remainder of Page Intentionally Left Blank]

 

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

 

BORROWER: HI-CRUSH PARTNERS LP

By: Hi-Crush GP LLC, its general partner

By:

  /s/ James M. Whipkey

Name:

  James M. Whipkey

Title:

  Co-Chief Executive Officer and President

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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ADMINISTRATIVE AGENT:

AMEGY BANK NATIONAL ASSOCIATION,

in its capacity as Administrative Agent, Issuing Lender, Swing Line Lender, and
an Increasing Lender

By:   /s/ Brad Ellis Name:   Brad Ellis Title:   Senior Vice President

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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IBERIABANK as an Additional Lender By:   /s/ Robert S. Martin Name:   Robert S.
Martin Title:   Vice President

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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BANK OF AMERICA, N.A. as an Additional Lender By:   /s/ David A. Batson Name:  
David A. Batson Title:   Senior Vice President

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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REGIONS BANK as an Additional Lender By:   /s/ Larry Stephens Name:   Larry
Stephens Title:   Senior Vice President

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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BARCLAYS BANK PLC, as a Lender By:   /s/ Sreedhar Kona Name:   Sreedhar Kona
Title:   Vice President

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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MORGAN STANLEY BANK, N.A., as a Lender By:   /s/ Dmitriy Barskiy Name:   Dmitriy
Barskiy Title:   Authorized Signatory

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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UBS LOAN FINANCE LLC, as a Lender By:   /s/ Lana Gifas Name:   Lana Gifas Title:
  Director By:   /s/ Kenneth Chin Name:   Kenneth Chin Title:   Director

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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WHITNEY BANK as an Additional Lender By:   /s/ Randy Gartz Name:   Randy Gartz
Title:   President

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender By:   /s/ Vipul Dhadda
Name:   Vipul Dhadda Title:   Authorized Signatory By:   /s/ Alex Verdone Name:
  Alex Verdone Title:   Authorized Signatory

 

Signature Page to Commitment Increase Agreement and Second Amendment to Credit
Agreement

Hi-Crush Partners LP

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ACKNOWLEDGMENT AND REAFFIRMATION

Each of the undersigned (each a “Guarantor” and collectively the “Guarantors”)
hereby (a) acknowledges receipt of a copy of the foregoing Commitment Increase
Agreement and Second Amendment dated as of May __, 2013 (the “Amendment”) among
Hi-Crush Partners, a Delaware limited partnership (the “Borrower”), the lenders
party thereto, and Amegy Bank National Association, as administrative agent (in
such capacity, the “Administrative Agent”) and (b) ratifies, confirms, and
acknowledges that its obligations under the Guaranty Agreement dated as of
August 21, 2012 (as amended, restated, supplemented or otherwise modified from
time to time, the “Guaranty”) are in full force and effect and that each
Guarantor continues to unconditionally and irrevocably, jointly and severally,
guarantee the full and punctual payment, when due, whether at stated maturity or
earlier by acceleration or otherwise, of all of the Guaranteed Obligations (as
defined in the Guaranty), as such Guaranteed Obligations may have been amended
by the Amendment. Each Guarantor hereby acknowledges that its execution and
delivery of this Acknowledgment and Reaffirmation do not indicate or establish
an approval or consent requirement by the Guarantors in connection with the
execution and delivery of amendments to the Credit Agreement (as defined in the
Guaranty) or any of the other Credit Documents (as defined in the Credit
Agreement referred to in the Guaranty).

 

HI-CRUSH WYEVILLE LLC

HI-CRUSH CHAMBERS LLC

HI-CRUSH OPERATING LLC

HI-CRUSH RAILROAD LLC Each By:   /s/ James M. Whipkey Name:   James M. Whipkey
Title:   Co-Chief Executive Officer and President

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EXHIBIT B

Form of Compliance Certificate

See attached.

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EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

FOR THE PERIOD FROM         , 201     TO , 201    

This certificate dated as of             ,             is prepared pursuant to
the Credit Agreement dated as of August 21, 2012 (as amended, restated, amended
and restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Hi-Crush Partners LP, a Delaware limited partnership
(“Borrower”), the lenders party thereto from time to time (the “Lenders”), and
Amegy Bank National Association, as administrative agent for such Lenders (in
such capacity, the “Administrative Agent”), as Issuing Lender and as Swing Line
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.

The undersigned, on behalf of the Borrower, and not individually, certifies:

(a) that as of the date hereof, the attached Schedule A reflects the covenant
calculations, for the periods covered by this certificate, the Borrower’s
(i) Leverage Ratio and (ii) Interest Coverage Ratio;

[(b) that no Default or Event of Default has occurred or is continuing as of the
date hereof; and]

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

                                                             ; and]

(c) that as of the date hereof, the following amounts and calculations included
herein and in Schedule A, are true and correct in all material respects for the
period set forth above:

 

Exhibit B – Form of Compliance Certificate

Page 1 of 5

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SCHEDULE A

I. Section 6.16 Leverage Ratio1.

 

(a)       The consolidated Funded Debt of the Borrower as of the last day of
such fiscal quarter

   $            

(b)      Borrower’s consolidated EBITDA2

 

            (i) + [(ii) + (iii) + (iv) + (v) + (vi) + (vii) + (viii) + (ix) +
(x) + (xi) + (xii) + (xiii)] – (xiv)3 =

   $            

(i)       consolidated Net Income

   $            

(ii)      depletion, depreciation and amortization

   $            

(iii)     Interest Expense

   $            

(iv)     Income Tax Expense

   $            

(v)      letter of credit fees

   $            

(vi)     non-cash expenses4

   $            

(vii)    customary non-capitalized expenses5

   $            

(viii)   customary non-capitalized expenses6

   $            

(ix)     any losses (or minus any gains) realized upon any disposition of
property permitted under Section 6.8 outside the ordinary course of business

   $            

(x)      non-recurring charges7

   $            

(xi)     exploration expenses8

   $            

 

1  Calculated as of each fiscal quarter end, commencing with the quarter ending
September 30, 2012.

2  (a) for the fiscal quarter period ending September 30, 2012, use consolidated
EBITDA for such fiscal quarter period then ended times 4; (b) for the fiscal
quarter period ending December 31, 2012, use consolidated EBITDA for such
two-fiscal quarter period then ended times 2; (c) for the fiscal quarter period
ending March 31, 2013, use consolidated EBITDA for such three-fiscal quarter
period then ended times 4/3; and (d) for any fiscal quarter period ending on or
after June 30, 2013, use consolidated EBITDA for such four-fiscal quarter period
then ended. In accordance with the Credit Agreement, EBITDA shall be subject to
pro forma adjustments for acquisitions and asset sales (including, without
limitation, the Wyeville Drop Down and each other Drop Down Acquisition)
assuming that such transactions had occurred on the first day of the
determination period.

3  Items (ii) – (xii) shall be included to the extent deducted in determining
consolidated Net Income.

4  Non-cash expenses shall only include non-cash expenses resulting from any
employee benefit or management compensation plan or the grant of Equity
Interests to employees of the Borrower or any of its Subsidiaries pursuant to a
written plan or agreement.

5  Customary non-capitalized expenses shall only include non-capitalized
expenses incurred in connection with the transactions contemplated by the Credit
Agreement to occur on the Effective Date and in connection with the transactions
contemplated by the Second Amendment to occur on the Second Amendment Effective
Date.

6  Customary non-capitalized expenses shall only include customary
non-capitalized expenses incurred in connection with any Investment permitted
under Sections 6.3(j), 6.3(k) or 6.3(l), any Acquisition permitted by
Section 6.4, any incurrence of Debt permitted by Section 6.1 or any Equity
Issuance (in each case, whether or not consummated) in an aggregate amount not
to exceed $2,000,000 in any fiscal year.

7  Non-recurring charges shall only include non-recurring charges with respect
to relocation or severance arrangements between the Borrower or its Subsidiaries
and their respective officers and employees in an aggregate amount not to exceed
$1,000,000 in any fiscal year.

8  Not to exceed $500,000 in the aggregate in any fiscal year.

 

Exhibit B – Form of Compliance Certificate

Page 2 of 5

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(xii)    non-cash charges9

   $            

(xiii)   cash dividends or distributions10

   $            

(xiv)   non-cash income11

   $            

LeverageRatio = (a) divided by (b)

     

 

MaximumLeverage Ratio

   3.00 to 1.00

Compliance

   Yes         No

 

9  Non-cash charges shall only include non-cash charges resulting from
extraordinary, non-recurring events or circumstances for such period.

10  Cash dividends and distributions shall only include dividends or
distributions received by the Credit Parties that are Permitted Investments
pursuant to Section 6.3(k) or (l).

11  Non-cash income shall include (a) non-cash income resulting from
extraordinary, non-recurring events or circumstances for such period and (b) all
other non-cash items of income which were included in determining consolidated
Net Income.

 

Exhibit B – Form of Compliance Certificate

Page 3 of 5

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II. Section 6.17(a) Interest Coverage Ratio12.

 

(a)    Borrower’s consolidated EBITDA (see I.(b) above) =

   $            

(b)    Borrower’s consolidated Net Interest Expense13

  

(i) – (ii) =

   $            

(i)     Interest Expense

   $            

(ii)    interest income

   $            

Interest Coverage Ratio = (a) divided by (b) =

                        

Minimum Interest Coverage Ratio

   2.50 to 1.00

Compliance

   Yes        No

III. Section 6.17(b) Debt Service Coverage Ratio14.

 

(a)    Borrower’s consolidated EBITDA (see I.(b) above) =

   $            

(b)    Borrower’s consolidated Net Interest Expense

  

(see II.(b) above) =

   $            

(c)    Borrower’s scheduled principal payments of Funded Debt15 =

   $            

Debt Service Coverage Ratio = (a) divided by [(b) + (c)] =

                        

Minimum Debt Service Coverage Ratio

   1.50 to 1.00

Compliance

   Yes        No

 

12

Calculated as of each fiscal quarter end occurring on or prior to the Term Out
Trigger Date.

13 

(a) for the fiscal quarter period ending September 30, 2012, use consolidated
Net Interest Expense for such fiscal quarter period then ended times 4; (b) for
the fiscal quarter period ending December 31, 2012, use consolidated Net
Interest Expense for such two-fiscal quarter period then ended times 2; (c) for
the fiscal quarter period ending March 31, 2013, use consolidated Net Interest
Expense for such three-fiscal quarter period then ended times 4/3; and (d) for
any fiscal quarter period ending on or after June 30, 2013, use consolidated Net
Interest Expense for such four-fiscal quarter period then ended.

14 

Calculated as of each fiscal quarter end occurring after the Term Out Trigger
Date.

15

As required during such period, including scheduled principal payments of
Advances.

 

Exhibit B – Form of Compliance Certificate

Page 4 of 5

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IN WITNESS THEREOF, I have hereto signed my name to this Compliance Certificate
as of                     ,         .            

 

HI-CRUSH PARTNERS LP

By: Hi-Crush GP LLC, its general partner

By:

   

Name:

   

Title:

   

 

Exhibit B – Form of Compliance Certificate

Page 5 of 5

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EXHIBIT E

Form of Continuation or Conversion

See attached.

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EXHIBIT E

FORM OF NOTICE OF CONTINUATION OR CONVERSION

[Date]

Amegy Bank National Association, as Administrative Agent

4400 Post Oak Parkway

Houston, Texas 77027

Attn: Brad Ellis

Telephone (713) 232-1212

Facsimile: (713) 693-7467

Ladies and Gentlemen:

The undersigned, Hi-Crush Partners LP, a Delaware limited partnership
(“Borrower”), refers to the Credit Agreement dated as of August 21, 2012 (as the
same may be amended, restated, amended and restated, supplement or otherwise
modified from time to time, the “Credit Agreement,” the defined terms of which
are used in this Notice of Continuation or Conversion as defined therein unless
otherwise defined in this Notice of Continuation or Conversion) among the
Borrower, the lenders party thereto (the “Lenders”), and Amegy Bank National
Association, as Administrative Agent, as Issuing Lender and as Swing Line
Lender, and hereby gives you irrevocable notice pursuant to Section 2.3(b) of
the Credit Agreement that the undersigned hereby requests a
[Conversion][continuation] of outstanding [Revolving][Term] Advances, and in
connection with that request sets forth below the information relating to such
[Conversion][continuation] (the “Requested [Conversion][Continuation]”) as
required by Section 2.3(b) of the Credit Agreement:

1. The Business Day of the Requested [Conversion][Continuation] is
                    ,             .

2. The aggregate amount of the existing [Revolving][Term] Advances to be
[Converted][continued] is $             and is comprised of [Base Rate
Advances][Eurodollar Advances] (“Existing Advances”).

3. The Requested [Conversion][Continuation] consists of [a Conversion of the
Existing Advances to [Base Rate Advances] [Eurodollar Advances]] [a continuation
of the Existing Advances].

[(4) The duration of the Interest Period for the Eurodollar Advances included in
the Requested [Conversion][Continuation] is [[one][two][three][six] month[s]].

The Borrower hereby certifies that no Event of Default has occurred and is
continuing or would result from the Requested [Conversion][Continuation].

 

Exhibit E – Notice of Continuation or Conversion

Page 1 of 2

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Very truly yours,

 

HI-CRUSH PARTNERS LP

By: Hi-Crush GP LLC, its general partner

By:

   

Name:

   

Title:

   

 

Exhibit E – Notice of Continuation or Conversion

Page 2 of 2

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EXHIBIT G-3

Form of Term Note

See attached.

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EXHIBIT G-3

FORM OF TERM NOTE

 

$                                            ,     

For value received, the undersigned HI-CRUSH PARTNERS LP, a Delaware limited
partnership (“Borrower”), hereby promises to pay to             (“Payee”) the
principal amount of             No/100 Dollars ($            ) or, if less, the
aggregate outstanding principal amount of the Term Advances (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 Term Advances from the date of such Term Advances until such principal
amount is paid in full, at such interest rates, and at such times, as are
specified in the Credit Agreement (as hereunder defined). The Borrower may make
prepayments on this Term Note in accordance with the terms of the Credit
Agreement.

This Term Note is one of the Term Notes referred to in, and is entitled to the
benefits of, and is subject to the terms of, the Credit Agreement dated as of
August 21, 2012 (as the same may be amended, restated, amended and restated,
supplement or otherwise modified from time to time, the “Credit Agreement”),
among the Borrower, the lenders party thereto (the “Lenders”), and Amegy Bank
National Association, as administrative agent (the “Administrative Agent”) for
the Lenders, as Issuing Lender and as Swing Line Lender. Capitalized terms used
in this Term Note that are defined in the Credit Agreement and not otherwise
defined in this Term Note have the meanings assigned to such terms in the Credit
Agreement. The Credit Agreement, among other things, (a) provides for the making
of the Term Advances by the Payee to the Borrower in an aggregate amount not to
exceed at any time outstanding the Dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Term Advance being
evidenced by this Term Note, and (b) contains provisions for acceleration of the
maturity of this Term Note upon the happening of certain events stated in the
Credit Agreement.

Both principal and interest are payable in lawful money of the United States of
America to the Administrative Agent at the location or address specified by the
Administrative Agent to the Borrower in same day funds. The Payee shall record
payments of principal made under this Term Note, but no failure of the Payee to
make such recordings shall affect the Borrower’s repayment obligations under
this Term Note.

This Term Note is secured by the Security Documents and guaranteed pursuant to
the terms of the Guaranty.

This Term Note is made expressly subject to the terms of Section 9.10 and
Section 9.11 of the Credit Agreement.

Except as specifically provided in the Credit Agreement and the other Credit
Documents, 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 Term Note shall operate as a waiver of such rights.

This Term Note may not be assigned except in compliance with the Credit
Agreement.

THIS TERM NOTE SHALL BE DEEMED A CONTRACT UNDER, AND SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(EXCEPT THAT CHAPTER 346 OF THE TEXAS FINANCE CODE SHALL NOT APPLY TO THIS TERM
NOTE).

 

Exhibit G-3 – Form of Term Note

Page 1 of 2

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THIS TERM NOTE AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN 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 BETWEEN THE PARTIES.

 

HI-CRUSH PARTNERS LP

By: Hi-Crush GP LLC, its general partner

By:

   

Name:

   

Title:

   

 

Exhibit G-3 – Form of Term Note

Page 2 of 2

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SCHEDULE I

Pricing Schedule

See attached.

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

SCHEDULE I

Pricing Schedule

The Applicable Margin with respect to Commitment Fee, Revolving Advances, Swing
Line Advances (if applicable), and Term Advances shall be determined in
accordance with the following Table based on the Borrower’s Leverage Ratio as
reflected in the Compliance Certificate delivered in connection with the
Financial Statements most recently delivered pursuant to Section 5.2.
Adjustments, if any, to such Applicable Margin shall be effective on the date
the Administrative Agent receives the applicable Financial Statements and
corresponding Compliance Certificate as required by the terms of this Agreement.
If the Borrower fails to deliver the Financial Statements and corresponding
Compliance Certificate to the Administrative Agent at the time required pursuant
to Section 5.2, then effective as of the date such Financial Statements and
Compliance Certificate were required to the delivered pursuant to Section 5.2,
the Applicable Margin with respect to Commitment Fee, Revolving Advances, Swing
Line Advances (if applicable), and Term Advances shall be determined at Level
III and shall remain at such level until the date such Financial Statements and
corresponding Compliance Certificate are so delivered by the Borrower.
Notwithstanding the foregoing, the Borrower shall be deemed to be at Level I
until delivery of its unaudited Financial Statements and corresponding
Compliance Certificate for the fiscal quarter ending September 30, 2012.
Notwithstanding anything to the contrary contained herein, the determination of
the Applicable Margin for any period shall be subject to the provisions of
Section 2.7(c). For the avoidance of doubt, the levels on the pricing grid set
forth below are set forth from highest (Level III) to the lowest (Level I).

 

Applicable
Margin

  

Leverage Ratio

   Eurodollar
Advances     Base Rate
Advances     Commitment
Fee  

Level III

  

Is equal to or greater than 2.00

     3.50 %      2.50 %      0.500 % 

Level II

  

Is equal to or greater than 1.00 but less than 2.00

     3.00 %      2.00 %      0.500 % 

Level I

  

Is less than 1.00

     2.50 %      1.50 %      0.375 % 

Schedule I

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

SCHEDULE II

Commitments, Contact Information

See attached.

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

SCHEDULE II

Commitments, Contact Information

 

ADMINISTRATIVE AGENT/ISSUING LENDER/SWING LINE LENDER Amegy Bank National
Association    Address for Notices:   

4400 Post Oak Parkway

Houston, Texas 77027

  

Attn:

Telephone:

Facsimile:

Email:

  

Special Processing: Dana Chargois

(713) 232-6395

(713) 693-7467

special.processing@amegybank.com

   With a copy to:   

4400 Post Oak Parkway

Houston, Texas 77027

  

Attn:

Telephone:

Facsimile:

Email:

  

Wendy Schneider

(713) 232-1564

(713) 693-7467

wendy.schneider@amegybank.com

   With a copy to:   

4400 Post Oak Parkway

Houston, Texas 77027

  

Attn:

Telephone:

Facsimile:

Email:

  

Brad Ellis

(713) 232-1212

(713) 693-7467

Brad.Ellis@amegybank.com

CREDIT PARTIES Borrower/Guarantors    Address for Notices:   

Three Riverway, Suite 1550

Houston, TX 77056

  

Attn:

Telephone:

Facsimile:

  

James Whipkey

(713) 963-0099

(713) 963-0088

 

Lender

   Commitment  

Amegy Bank National Association

   $ 35,000,000.00   

IBERIABANK

   $ 25,000,000.00   

Bank of America, N.A.

   $ 25,000,000.00   

Regions Bank

   $ 25,000,000.00   

Barclays Bank PLC

   $ 20,625,000.00   

Morgan Stanley Bank, N.A.

   $ 20,625,000.00   

UBS Loan Finance LLC

   $ 20,000,000.00   

Whitney Bank

   $ 15,000,000.00   

Credit Suisse AG, Cayman Islands Branch

   $ 13,750,000.00   

Total:

   $ 200,000,000.00   

Schedule II

Page 1 of 1

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Annex A

Amended Credit Agreement

See attached.

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

CONFORMED COPY OF CREDIT AGREEMENT

(To reflect proposed amendments pursuant to the Commitment Increase Agreement
and Second Amendment dated as of May 9, 2013.)

 

 

 

CREDIT AGREEMENT

dated as of August 21, 2012

Among

HI-CRUSH PARTNERS LP

as Borrower,

AMEGY BANK NATIONAL ASSOCIATION

as Administrative Agent, Issuing Lender and Swing Line Lender,

IBERIABANK

as Syndication Agent,

BANK OF AMERICA, N.A. and REGIONS BANK,

as Co-Documentation Agents,

and

THE LENDERS NAMED HEREIN

as Lenders

$100,000,000200,000,000

 

 

 

AMEGY BANK NATIONAL ASSOCIATION,

AS LEAD ARRANGER AND SOLE BOOKRUNNER

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

ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS

     1   

Section 1.1.

 

Certain Defined Terms

     1   

Section 1.2.

 

Computation of Time Periods

     2123   

Section 1.3.

 

Accounting Terms; Changes in GAAP

     2123   

Section 1.4.

 

Classes and Types of Advances

     2123   

Section 1.5.

 

Miscellaneous

     2224   

ARTICLE 2 CREDIT FACILITIES

     2224   

Section 2.1.

 

Commitments

     2224   

Section 2.2.

 

Letters of Credit

     2326   

Section 2.3.

 

Advances

     2831   

Section 2.4.

 

Prepayments

     3336   

Section 2.5.

 

Repayment

     3538   

Section 2.6.

 

Fees

     3538   

Section 2.7.

 

Interest

     3639   

Section 2.8.

 

Illegality

     3740   

Section 2.9.

 

Breakage Costs

     3740   

Section 2.10.

 

Increased Costs

     3841   

Section 2.11.

 

Payments and Computations

     3942   

Section 2.12.

 

Taxes

     4043   

Section 2.13.

 

Replacement of Lenders

     4447   

Section 2.14.

 

Payments and Deductions to a Defaulting Lender

     4548   

Section 2.15.

 

Increase in Commitments

     4649   

ARTICLE 3 CONDITIONS OF LENDING

     4750   

Section 3.1.

 

Conditions Precedent to Initial Borrowings and the Initial Letter of Credit

     4750   

Section 3.2.

 

Conditions Precedent to Each Borrowing and to Each Issuance, Extension or
Renewal of a Letter of Credit

     5154   

Section 3.3.

 

Determinations Under Sections 3.1 and 3.2

     5154   

ARTICLE 4 REPRESENTATIONS AND WARRANTIES

     5155   

Section 4.1.

 

Organization

     5155   

Section 4.2.

 

Authorization

     5255   

Section 4.3.

 

Enforceability

     5255   

Section 4.4.

 

Financial Condition

     5255   

Section 4.5.

 

Ownership and Liens; Real Property

     5255   

Section 4.6.

 

True and Complete Disclosure

     5356   

 

-i-

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

Section 4.7.

 

Litigation

     5356   

Section 4.8.

 

Compliance with Agreements

     5356   

Section 4.9.

 

Pension Plans

     5357   

Section 4.10.

 

Environmental Condition

     5457   

Section 4.11.

 

Subsidiaries

     5558   

Section 4.12.

 

Investment Company Act

     5558   

Section 4.13.

 

Taxes

     5558   

Section 4.14.

 

Permits, Licenses, etc.

     5558   

Section 4.15.

 

Use of Proceeds

     5558   

Section 4.16.

 

Condition of Property; Casualties

     5558   

Section 4.17.

 

Insurance

     5559   

Section 4.18.

 

Security Interest

     5659   

Section 4.19.

 

OFAC; Anti-Terrorism

     5659   

Section 4.20.

 

Solvency

     5659   

ARTICLE 5 AFFIRMATIVE COVENANTS

     5659   

Section 5.1.

 

Organization

     5659   

Section 5.2.

 

Reporting

     5659   

Section 5.3.

 

Insurance

     6063   

Section 5.4.

 

Compliance with Laws

     6164   

Section 5.5.

 

Taxes

     6164   

Section 5.6.

 

New Subsidiaries

     6164   

Section 5.7.

 

Security

     6164   

Section 5.8.

 

Deposit Accounts

     6265   

Section 5.9.

 

Records; Inspection

     6265   

Section 5.10.

 

Maintenance of Property

     6265   

Section 5.11.

 

Royalty Agreements

     6266   

Section 5.12.

 

Appraisal Reports; Sand Reserve Reports

     6266   

Section 5.13.

 

Legal Separateness

     6366   

ARTICLE 6 NEGATIVE COVENANTS

     6366   

Section 6.1.

 

Debt

     6367   

Section 6.2.

 

Liens

     6468   

Section 6.3.

 

Investments

     6669   

Section 6.4.

 

Acquisitions

     6771   

Section 6.5.

 

Agreements Restricting Liens

     6771   

Section 6.6.

 

Use of Proceeds; Use of Letters of Credit

     6871   

 

-ii-

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

Section 6.7.

 

Corporate Actions; Accounting Changes

     6871   

Section 6.8.

 

Sale of Assets

     6872   

Section 6.9.

 

Restricted Payments

     6972   

Section 6.10.

 

Affiliate Transactions

     6973   

Section 6.11.

 

Line of Business

     6973   

Section 6.12.

 

Hazardous Materials

     7073   

Section 6.13.

 

Compliance with ERISA

     7074   

Section 6.14.

 

Sale and Leaseback Transactions

     7074   

Section 6.15.

 

Limitation on Hedging

     7174   

Section 6.16.

 

Leverage Ratio

     7175   

Section 6.17.

 

Interest Coverage Ratio 71; Debt Service Coverage Ratio

     75   

Section 6.18.

 

Capital Expenditures

     7175   

Section 6.19.

 

Landlord Agreements

     7175   

Section 6.20.

 

Operating Leases

     7276   

Section 6.21.

 

Prepayment of Certain Debt

     7276   

Section 6.22.

 

Amendment of the Subordinated Notes and Material Contracts

     7276   

ARTICLE 7 DEFAULT AND REMEDIES

     7276   

Section 7.1.

 

Events of Default

     7276   

Section 7.2.

 

Optional Acceleration of Maturity

     7478   

Section 7.3.

 

Automatic Acceleration of Maturity

     7579   

Section 7.4.

 

Set-off

     7579   

Section 7.5.

 

Remedies Cumulative, No Waiver

     7579   

Section 7.6.

 

Application of Payments

     7680   

ARTICLE 8 THE ADMINISTRATIVE AGENT

     7680   

Section 8.1.

 

Appointment, Powers, and Immunities

     7680   

Section 8.2.

 

Reliance by Administrative Agent

     7781   

Section 8.3.

 

Defaults

     7781   

Section 8.4.

 

Rights as Lender

     7781   

Section 8.5.

 

Indemnification

     7882   

Section 8.6.

 

Non-Reliance on Administrative Agent and Other Lenders

     7882   

Section 8.7.

 

Resignation of Administrative Agent and Issuing Lender

     7983   

Section 8.8.

 

Collateral Matters

     8084   

Section 8.9.

 

No Other Duties, etc.

     8084   

Section 8.10.

 

Flood Laws

     8084   

 

-iii-

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

ARTICLE 9 MISCELLANEOUS

     8185   

Section 9.1.

 

Costs and Expenses

     8185   

Section 9.2.

 

Indemnification; Waiver of Damages

     8185   

Section 9.3.

 

Waivers and Amendments

     8286   

Section 9.4.

 

Severability

     8387   

Section 9.5.

 

Survival of Representations and Obligations

     8387   

Section 9.6.

 

Binding Effect

     8387   

Section 9.7.

 

Lender Assignments and Participations

     8387   

Section 9.8.

 

Confidentiality

     8589   

Section 9.9.

 

Notices, Etc.

     8690   

Section 9.10.

 

Usury Not Intended

     8791   

Section 9.11.

 

Usury Recapture

     8791   

Section 9.12.

 

Governing Law; Service of Process

     8791   

Section 9.13.

 

Submission to Jurisdiction

     8892   

Section 9.14.

 

Execution in Counterparts

     8892   

Section 9.15.

 

Dispute Resolution

     8892   

Section 9.16.

 

Subordination Agreements

     9094   

Section 9.17.

 

USA Patriot Act

     9094   

Section 9.18.

 

Business Loans

     9094   

Section 9.19.

 

No Fiduciary or Agency Relationship

     9094   

Section 9.20.

 

Integration

     9094   

 

-iv-

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

EXHIBITS:

 

Exhibit A    – Form of Assignment and Acceptance Exhibit B    – Form of
Compliance Certificate Exhibit C    – Form of Guaranty Exhibit D    – Form of
Notice of Borrowing Exhibit E    – Form of Notice of Continuation or Conversion
Exhibit F    – Form of Pledge and Security Agreement Exhibit G-1    – Form of
Revolving Note Exhibit G-2    – Form of Swing Line Note Exhibit G-3    – Form of
Term Note

SCHEDULES:

 

Schedule I    – Pricing Schedule Schedule II    – Commitments, Contact
Information Schedule III    – Additional Conditions and Requirements for New
Subsidiaries Schedule 1.1(a)    – Existing Letters of Credit Schedule 1.1(b)   
– Material Contracts Schedule 4.1    – Organizational Information Schedule 4.4
   – Financial Condition Schedule 4.5    – Owned and Leased Real Properties
Schedule 4.7    – Litigation Schedule 4.10    – Environmental Condition Schedule
4.11    – Subsidiaries Schedule 6.1    – Existing Permitted Debt Schedule 6.2   
– Existing Permitted Liens Schedule 6.3    – Existing Permitted Investments
Schedule 6.10    – Affiliate Transactions

 

-v-

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

CREDIT AGREEMENT

This CREDIT AGREEMENT dated as of August 21, 2012 (the “Agreement”) is among
Hi-Crush Partners LP, a Delaware limited partnership (the “Borrower”), the
Lenders (as defined below) and Amegy Bank National Association, as
Administrative Agent (as defined below) for the Lenders, as Issuing Lender (as
defined below) and as Swing Line Lender (as defined below).

In consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:

ARTICLE 1

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1. Certain 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 Security Interest” means a security interest which (a) exists in
favor of the Administrative Agent for its benefit and the ratable benefit of the
Secured Parties, (b) is superior to all other security interests (other than the
Permitted Liens), (c) secures the Secured Obligations, (d) is enforceable
against the Credit Party which created such security interest and (e) is
perfected.

“Account Control Agreement” shall mean, as to any deposit account of any Credit
Party held with a bank, an agreement or agreements in form and substance
reasonably acceptable to the Administrative Agent, among the Credit Party owning
such deposit account, the Administrative Agent and such other bank governing
such deposit account.

“Acquisition” means the purchase by any Credit Party of (a) any business,
division or enterprise or all or substantially all of any Person through the
purchase of assets (but, for the avoidance of doubt, excluding purchases of
equipment only with no other tangible or intangible property associated with
such equipment purchase unless such purchase of equipment involves all or
substantially all the assets of the seller) or (b) Equity Interests of any
Person sufficient to cause such Person to become a Subsidiary of a Credit Party.

“Acquisition Adjustment Period” means the period of two consecutive fiscal
quarters commencing on the first day of the fiscal quarter during which the
Borrower or any of its Subsidiaries consummates any Acquisition in which the
total consideration (including the adjustment of purchase price or similar
adjustments) therefor exceeds $20,000,000 (whether such total consideration is
paid in cash, by the assumption of Debt of the Person or assets so acquired, or
otherwise) and ending on the last day of the second fiscal quarter following
such date.

“Additional Lender” has the meaning set forth in Section 2.15(a).

“Adjusted Base Rate” means, for any day, the fluctuating rate per annum of
interest equal to the greatest of (a) the Wall Street Journal Rate in effect on
such day, (b) the Federal Funds Rate in effect on such day plus 0.50%, and
(c) the Daily One-Month LIBOR plus 1.00%. Any change in the Adjusted Base Rate
due to a change in the Wall Street Journal Rate, Daily One-Month LIBOR or the
Federal Funds Rate shall be effective on the effective date of such change in
the Wall Street Journal Rate, Daily One-Month LIBOR or the Federal Funds Rate.

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

“Administrative Agent” means Amegy in its capacity as agent for the Lenders
pursuant to Article 8 and any successor agent pursuant to Section 8.7.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Advance” means any advance by a Lender or the Swing Line Lender to the Borrower
as a part of a Borrowing, including, without limitation, Term Advances converted
from Revolving Advances pursuant to Section 2.1(d).

“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. Notwithstanding anything to the contrary
contained herein, in no event shall any portfolio company or other investment of
the Sponsor (other than the Hi-Crush Proppants Entities) be deemed to be an
Affiliate of the Borrower or its Subsidiaries solely as a result of the direct
or indirect control by the Sponsor of such portfolio company or investment.

“Agreement” means this Credit Agreement among the Borrower, the Lenders, the
Issuing Lenders, the Swing Line Lender and the Administrative Agent.

“Amegy” means Amegy Bank National Association.

“Applicable Margin” means, at any time with respect to each Type of Advance, the
Letters of Credit and the Commitment Fee, the percentage rate per annum which is
applicable at such time with respect to such Advance, Letter of Credit or
Commitment Fee as set forth in Schedule I and subject to further adjustments as
set forth in Section 2.7(c).

“Asset Sale” means any sale, transfer, or other disposition of any Property by
any Credit Party; provided that, any sale, transfer or other disposition of
Property permitted under Sections 6.8(a) through (i), shall not constitute an
“Asset Sale” for purposes of this Agreement.

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

“Augusta” means Hi-Crush Augusta LLC, a Delaware limited liability company.

“Augusta Drop Down” means the acquisition by one or more Credit Parties of the
preferred units of Augusta substantially on the terms described in that certain
Indicative Summary Term Sheet for Preferred Equity Interest delivered to the
Lenders on December 18, 2012 for total consideration not exceeding
(a) $37,500,000 in cash and (b) 3,750,000 Convertible Class B Units of the
Borrower.

“AutoBorrow Agreement” means any agreement providing for automatic borrowing
services between the Borrower and the Swing Line Lender.

“Banking Services” means each and any of the following bank services provided to
any Credit Party by any Lender (other than a Defaulting Lender) or any Affiliate
of a Lender (other than a Defaulting Lender): (a) commercial credit cards,
(b) stored value cards and (c) treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
return items, overdrafts and interstate depository network services).

 

-2-

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

“Banking Services Obligations” means any and all obligations of the Borrower or
any other Credit Party, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor) in connection
with Banking Services.

“Banking Services Provider” means any Lender (other than a Defaulting Lender) or
Affiliate of a Lender (other than a Defaulting Lender) that provides Banking
Services to the Borrower or any Subsidiary.

“Base Rate Advance” means an Advance which bears interest based upon the
Adjusted Base Rate.

“Borrower” means Hi-Crush Partners LP, a Delaware limited partnership.

“Borrowing” means a Revolving Borrowing or, a Swing Line Borrowing or a Term
Borrowing.

“Business Day” means a day (a) other than a Saturday, Sunday, or other day on
which banks are required or permitted to be closed under the laws of, or are in
fact closed in, Texas or New York, and (b) if the applicable Business Day
relates to any Eurodollar Advances, on which dealings are carried on by
commercial banks in the London interbank market.

“Capital Expenditures” for any Person and period of its determination means,
without duplication, the aggregate of all expenditures and costs (whether paid
in cash or accrued as liabilities during that period and including that portion
of payments under Capital Leases that are capitalized on the balance sheet of
such Person) of such Person during such period that, in conformity with GAAP,
are required to be included in or reflected by the property, plant, or equipment
or similar fixed asset accounts reflected in the balance sheet of such Person.

“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.

“Cash Collateral Account” means a cash collateral account pledged to the
Administrative Agent containing cash deposited pursuant to the terms hereof to
be maintained with the Administrative Agent in accordance with Section 2.2(h).

“Casualty Event” means the damage, destruction or condemnation, including by
process of eminent domain or any transfer or disposition of property in lieu of
condemnation, as the case may be, of property of any Person or any of its
Subsidiaries.

“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.

“Certificated Equipment” means any equipment the ownership of which is evidenced
by, or under applicable Legal Requirement, is required to be evidenced by, a
certificate of title.

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

 

-3-

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

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

(a) the Sponsor shall fail to, directly or indirectly, own the greater of 50.1%
and a Controlling Percentage of the Equity Interests (including the Voting
Securities) of Hi-Crush Proppants;

(b) Hi-Crush Proppants shall fail to, directly or indirectly, own 100% of the
Equity Interests of the General Partner;

(c) a majority of the members of the board of directors or other equivalent
governing body of the General Partner ceases to be composed of individuals that
were elected by Hi-Crush Proppants; or

(d) the General Partner shall cease for any reason to be the sole general
partner of the Borrower.

“Change in Law” means the occurrence, after the date of this Agreement (or with
respect to any Lender, if later, the date on which such Lender becomes a
Lender), 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, implementation or application
thereof by any Governmental Authority or (c) the making or issuance of any
request, rule, guideline or directive (whether or not having the force of law)
by any Governmental Authority; provided that notwithstanding anything herein to
the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines or directives thereunder or issued in
connection therewith and (y) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.

“Class” has the meaning set forth in Section 1.4.

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
and published interpretations thereof.

“Collateral” means all property of the Credit Parties which is “Collateral” or
“Mortgaged Property” (as defined in each of the Mortgages or the Security
Agreement, as applicable) or similar terms used in the Security Documents.

“Commitment” means, for each Lender, the obligation of each Lender to advance to
Borrower the amount set opposite such Lender’s name on Schedule II as its
Commitment, or if such Lender has entered into any Assignment and Acceptance,
set forth for such Lender as its Commitment in the Register, as such amount may
be reduced pursuant to Section 2.1(b) or increased pursuant to Section 2.15;
provided that, after the Revolving Maturity Date, the Commitment for each Lender
shall be zero. The initial aggregate Commitment on the Second Amendment
Effective Date is $100,000,000.200,000,000.

“Commitment Fees” means the fees required under Section 2.6(a).

“Commitment Increase” has the meaning set forth in Section 2.15(a).

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

 

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“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.

“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 or any Subsidiary, are treated as a single employer
under Section 414 of the Code.

“Controlling Percentage” means, with respect to any Person, the percentage of
the outstanding Voting Securities (including any options, warrants or similar
rights to purchase such Equity Interest) of such Person having ordinary voting
power which gives the direct or indirect holder of such Equity Interest the
power to elect a majority of the board of directors (or other applicable
governing body), or directors holding a majority of the votes of the board of
directors (or other applicable governing body) of such Person.

“Convert,” “Conversion,” and “Converted” each refers to a conversion of Advances
of one Type into Advances of another Type pursuant to Section 2.3(b).

“Credit Documents” means this Agreement, the Subordination Agreements, the
Notes, the Letters of Credit, the Letter of Credit Applications, the Guaranty,
the Notices of Borrowing, the Notices of Continuation or Conversion, the
Security Documents, any AutoBorrow Agreement, the Fee Letter, and each other
agreement, instrument, or document executed at any time in connection with this
Agreement.

“Credit Parties” means the Borrower and the Guarantors.

“Daily One-Month LIBOR” means, for any day, the rate of interest equal to the
Eurodollar Rate then in effect for delivery of funds for a one (1) month period.

“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, including Letters of Credit;
(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 or services (including, without
limitation, any 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 (except that such obligations shall not constitute Debt
for purposes of the calculations for compliance under Sections 6.16 and 6.17);
(h) all obligations of such Person to mandatorily purchase, redeem, retire,
defease or otherwise make any payment in respect of any Equity Interest in such
Person or any other Person on a date certain or upon the occurrence of certain
events or conditions; (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 in respect of
any Property of such Person, and (l) all liabilities of such Person in respect
of unfunded vested benefits under any Plan.

 

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“Debt Incurrence” means any 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 cash equivalent 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 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.

“Debt Service Coverage Ratio” means, as of the end of each fiscal quarter, the
ratio of (a) the Borrower’s consolidated EBITDA for the four-fiscal quarter
period then ended to (b) the sum of (i) the Borrower’s consolidated Net Interest
Expense for the four-fiscal quarter period then ended plus (ii) scheduled
principal payments of Funded Debt required during such period, including
scheduled principal payments of Advances.

“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.

“Default Rate” means a per annum rate equal to (a) in the case of principal of
any Advance, 2.00% plus the rate otherwise applicable to such Advance as
provided in Sections 2.7(a), (b), or (c), and (b) in the case of any other
Obligation, 2.00% plus the non-default rate applicable to Base Rate Advances as
provided in Section 2.7(a) or (c).

“Defaulting Lender” means any Lender that (a) (except, with regards to the
funding of Swing Line Advances, the Swing Line Lender) has failed to fund any
portion of the Revolving Advances or participations in Letter of Credit
Obligations or Swing Line Advances required to be funded by it hereunder within
two Business Days of the date required to be funded by it hereunder unless
(i) with respect to the failure to fund any such Revolving Advances, such Lender
notifies the Administrative Agent and the Borrower in writing that such failure
is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any
applicable default, shall be specifically identified in such writing) has not
been satisfied or (ii) with the consent of the Administrative Agent and the
Borrower (which consent may be withheld at the sole discretion of the
Administrative Agent and the Borrower), such failure has been cured, (b) has
indicated to the Administrative Agent, or has stated publicly, that such Lender
will not fund any portion of the Revolving Advances or participations in Letter
of Credit Obligations or Swing Line Advances required to be funded by it
hereunder, unless (i) with respect to the failure to fund any such Revolving
Advances, such Lender notifies the Administrative Agent and the Borrower in
writing that such failure is the result of such Lender’s determination that one
or more conditions precedent to funding (each of which conditions precedent,
together with any applicable default, shall be specifically identified in such
writing) has not been satisfied or (ii) with the consent of the Administrative
Agent and the Borrower (which consent may be withheld at the sole discretion of
the Administrative Agent and the Borrower), such Lender actually funds such
Advances or participations, (c) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within two Business Days of the date when due, unless the subject
of a good faith dispute, or unless, with the

 

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consent of the Administrative Agent (which consent may be withheld at the sole
discretion of the Administrative Agent), such failure has been cured, (d) as to
which a Lender Insolvency Event has occurred and is continuing with respect to
such Lender, or (e) has failed to confirm in writing to the Administrative
Agent, for at least three Business Days, in response to a written request of the
Administrative Agent, that it will comply with its funding obligations hereunder
(provided that such Lender shall cease to be a Defaulting Lender pursuant to
this clause (e) upon receipt of such written confirmation by the Administrative
Agent). Any determination that a Lender is a Defaulting Lender will be made by
the Administrative Agent in its sole discretion acting in good faith. Any
determination by the Administrative Agent that a Lender is a Defaulting Lender
under any one or more of clauses (a) through (e) above shall be conclusive and
binding absent manifest error.

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

“Domestic Subsidiary” means, with respect to any Person, any of its Subsidiaries
that (a) is incorporated or organized under the laws of the United States, any
State thereof or the District of Columbia or (b) could provide a guarantee of
the Obligations without any material adverse federal income tax consequences to
the Borrower (including by constituting an investment of earnings in United
States property under Section 956 (or any successor provision) of the Code and,
therefore, triggering an increase in the gross income of the Borrower pursuant
to Section 951 (or a successor provision) of the Code).

“Drop Down Acquisition” means the acquisition by one or more Credit Parties, in
a single transaction or in a series of related transactions, of property or
assets (including Equity Interests) from any Hi-Crush Proppants Entity, so long
as the property or assets being acquired is engaged or used (or intended to be
used), as applicable, primarily in the frac sand excavation, processing and
transportation business, including, without limitation, the Augusta Drop Down.

“EBITDA” means for the Borrower, on a consolidated basis for any period (it
being understood that no amounts of any Net Income of any entity constituting an
Investment pursuant to Section 6.3(k) or (l) shall be taken into account in
calculating EBITDA other than to the extent provided in clause (c) below), the
sum of (a) Net Income for such period, plus (b) without duplication and to the
extent deducted in determining such Net Income (i) depletion, depreciation and
amortization for such period, plus (ii) Interest Expense for such period, plus
(iii) Income Tax Expense for such period, plus (iv) letter of credit fees, plus
(v) non-cash expenses resulting from any employee benefit or management
compensation plan or the grant of Equity Interests to employees of the Borrower
or any of its Subsidiaries pursuant to a written plan or agreement, plus
(vi) customary non-capitalized expenses incurred in connection with the
transactions contemplated by this Agreement to occur on the Effective Date and
in connection with the transactions contemplated by the Second Amendment to
occur on the Second Amendment Effective Date, plus (vii) customary
non-capitalized expenses incurred in connection with any Investment permitted
under Section 6.3(j), (k) or (l), any Acquisition permitted by Section 6.4, any
incurrence of Debt permitted by Section 6.1 or any Equity Issuance (in each
case, whether or not consummated) in an aggregate amount not to exceed
$1,000,0002,000,000 in any fiscal year, plus (viii) any losses (or minus any
gains) realized upon any disposition of property permitted under Section 6.8
outside of the ordinary course of business, plus (ix) non-recurring charges with
respect to relocation or severance arrangements between the Borrower or its
Subsidiaries and their respective officers and employees in an aggregate amount
not to exceed $350,0001,000,000 in any fiscal year, plus (x) exploration
expenses in an aggregate amount not to exceed $500,000 in any fiscal year, plus
(xi) non-cash charges resulting from extraordinary, non-recurring events or
circumstances for such period, plus (c) cash dividends or distributions received
(or, in the case of the preferred units of Augusta, declared so long as such
cash is received prior to delivery of the Financial Statements for such period
in accordance with Section 5.2) by the Credit Parties from any Permitted
Investments pursuant to Section 6.3(k) or (l), minus (d) to the extent included
in

 

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determining Net Income, non-cash income resulting from extraordinary,
non-recurring events or circumstances for such period and all other non-cash
items of income which were included in determining such Net Income; provided
that such EBITDA shall be subject to pro forma adjustments for acquisitions and
asset sales (including, without limitation, the Wyeville Drop Down and each
other Drop Down Acquisition) assuming that such transactions had occurred on the
first day of the determination period, which adjustments shall be made in a
manner, and subject to supporting documentation, acceptable to the
Administrative Agent.

“Effective Date” means the date on which the conditions precedent set forth in
Section 3.1 shall have been satisfied, which date shall not be later than
September 30, 2012.

“Eligible Assignee” means (a) a Lender (other than a Defaulting Lender), (b) any
Affiliate of a Lender approved by the Administrative Agent, or (c) any other
Person (other than a natural Person) reasonably acceptable to the Administrative
Agent 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, such
approval not to be unreasonably withheld or delayed by the Borrower and such
approval to be deemed given by the Borrower if no objection is received by the
Administrative Agent from the Borrower within five Business Days after notice of
such proposed assignment has been provided to the Borrower; provided, however,
that neither the Borrower nor any Affiliate of the Borrower shall qualify as an
Eligible Assignee.

“Environment” shall have 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, human 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.

“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.

“Equity Investors” means Hi-Crush Proppants and/or the General Partner, as
applicable.

 

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“Equity Issuance” means any issuance of equity securities or any other Equity
Interests (including any preferred equity securities) by the Borrower or any of
its Subsidiaries.

“Equity Issuance Proceeds” means, with respect to any Equity Issuance, all cash
and cash equivalent investments received by the Borrower or any of its
Subsidiaries from such Equity Issuance (other than from any other Credit Party)
after payment of, or provision for, all underwriter fees and expenses, SEC and
blue sky fees, printing costs, fees and expenses of accountants, lawyers and
other professional advisors, brokerage commissions and other out-of-pocket fees
and expenses actually incurred in connection with such Equity Issuance.

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

“Eurodollar Advance” means an Advance that bears interest based upon the
Eurodollar Rate (other than Advances that bear interest based upon the Daily One
Month LIBOR).

“Eurodollar Base Rate” means (a) in determining Eurodollar Rate for purposes of
the “Daily One Month LIBOR”, the rate per annum for Dollar deposits quoted by
the Administrative Agent for the purpose of calculating effective rates of
interest for loans making reference to the “Daily One-Month LIBOR”, as the
inter-bank offered rate in effect from time to time for delivery of funds for
one (1) month in amounts approximately equal to the principal amount of the
applicable Advances; provided that, the Administrative Agent may base its
quotation of the inter-bank offered rate upon such offers or other market
indicators of the inter-bank market as the Administrative Agent in its
discretion deems appropriate including, but not limited to, the rate determined
under the following clause (b), and (b) in determining Eurodollar Rate for all
other purposes, the rate per annum (rounded upward to the nearest whole multiple
of 1/100 of 1%) equal to the interest rate per annum set forth on the Reuters
Reference LIBOR1 page as the London Interbank Offered Rate, for deposits in
Dollars at 11:00 a.m. (London, England time) two Business Days before the first
day of the applicable Interest Period and for a period equal to such Interest
Period; provided that, if such quotation is not available for any reason, then
for purposes of this clause (b), Eurodollar Base Rate shall then be the rate
determined by the Administrative Agent to be the rate at which deposits in
Dollars for delivery on the first day of such Interest Period in immediately
available funds in the approximate amount of the Advances being made, continued
or Converted by the Lenders and with a term equivalent to such Interest Period
would be offered by the Administrative Agent’s London Branch (or other branch or
Affiliate of the Administrative Agent, or in the event that the Administrative
Agent does not have a London branch, the London branch of a Lender chosen by the
Administrative Agent) to major banks in the London or other offshore inter-bank
market for Dollars at their request at approximately 11:00 a.m. (London time)
two Business Days prior to the commencement of such Interest Period).

“Eurodollar Rate” means a rate per annum determined by the Administrative Agent
pursuant to the following formula:

 

Eurodollar Rate =           

Eurodollar Base Rate                                        

    1.00 – Eurodollar Reserve Percentage

Where,

 

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“Eurodollar Reserve Percentage” means, as of any day, the reserve percentage
(expressed as a decimal, carried out to five decimal places) in effect on such
day, whether or not applicable to any Lender, under regulations issued from time
to time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities. The Eurodollar Rate for each outstanding Advance shall
be adjusted automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.

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

“Excluded Equity Issuance” means (a) an Equity Issuance to management, employees
or consultants of a Credit Party under any employee stock option or stock
purchase plan or other employee benefits plan or other similar agreements in
existence from time to time, (b) an Equity Issuance by a Credit Party to another
Credit Party and (c) any Equity Issuance the proceeds of which are utilized to
make Capital Expenditures permitted by Section 6.18, Investments permitted by
Sections 6.3(k)(ii) or (l), or Acquisitions permitted by Section 6.4 and, in
each case, consummated within 90 days after such Equity Issuance.

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the guarantee of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
such Swap Obligation (or any guarantee 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 guarantee of such Guarantor or the grant
of such security interest becomes effective with respect to such Swap
Obligation. If a Swap Obligation arises under a master agreement governing more
than one swap, such exclusion shall apply only to the portion of such Swap
Obligation that is attributable to swaps for which such guarantee or security
interest is or becomes illegal.

“Existing Letters of Credit” means the letters of credit issued by Amegy and set
forth on the attached Schedule 1.1(a).

“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
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§
78dd-1, et seq.

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the preceding Business Day as so published on the succeeding Business Day and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate charged to the
Administrative Agent (in its individual capacity) on such day on such
transactions as determined by the Administrative Agent.

 

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

“Fee Letter” means that certain Mandate and Fee Letter dated as of July 30, 2012
between the Borrower and Amegy.

“Financial Statements” means, for any period, the consolidated financial
statements of the Borrower and its Subsidiaries, including statements of
operations, partners’ equity and cash flow for such period as well as a balance
sheet as of the end of such period, all prepared in accordance with GAAP.

“First-Tier Foreign Subsidiary” means any Foreign Subsidiary that is a CFC and
the Equity Interests of which are held directly by the Borrower or a Domestic
Subsidiary.

“Foreign Lender” means any Lender that is not a “United States person” as
defined in Section 7701(a)(30) of the Code.

“Foreign Subsidiary” means any Subsidiary of a Person that is not a Domestic
Subsidiary.

“Funded Debt” of any Person means, at any time, without duplication, Debt of
such Person (a) of the type described in clauses (a), (b), (c), (f), and (h) of
the definition of “Debt”; provided that Debt with respect to letters of credit
referred to in clause (b) of such definition shall be considered “Funded Debt”
regardless of whether such letters of credit are drawn or funded, (b) of the
type described in clause (i) of the definition of “Debt”; provided that such
Debt would otherwise qualify as “Funded Debt” under this definition, or (c) of
the type described in clauses (j) or (k) of the definition of “Debt” to the
extent that such guaranty covers, or such Lien secures, Debt of the type
described in clause (a) or clause (b) of this definition of “Funded Debt”. For
the avoidance of doubt, all Debt outstanding under this Agreement shall
constitute “Funded Debt”. Notwithstanding the foregoing, Permitted Subordinated
Debt shall not constitute “Funded Debt” so long as each Subordination Agreement
is in full force and effect.

“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 1.3.

“General Partner” means Hi-Crush GP LLC, a Delaware limited liability company.

“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) each Wyeville Drop Down Entity, (b) each other Subsidiary of the
Borrower listed on Schedule 4.11, and (c) each Subsidiary of the Borrower 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, notwithstanding anything
contained in this Agreement or any other Credit Document to the contrary, no
Foreign Subsidiary of the Borrower shall be required to execute a Guaranty.

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

“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.

 

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“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.

“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.

“Hi-Crush Proppants” means Hi-Crush Proppants LLC, a Delaware limited liability
company.

“Hi-Crush Proppants Credit Agreement” means that certain Credit Agreement dated
as of April 6, 2012 among Hi-Crush Proppants, as borrower, the lenders party
thereto from time to time, and Amegy, as administrative agent, issuing lender
and swing line lender.

“Hi-Crush Proppants Entities” means Hi-Crush Proppants and its Subsidiaries
(other than the General Partner, the Borrower and its Subsidiaries).

“Income Tax Expense” means for Borrower and its Subsidiaries, on a consolidated
basis for any period, all state and federal income taxes (including without
limitation Texas franchise taxes) paid or due to be paid during such period.

“Increase Date” has the meaning set forth in Section 2.15(b).

“Increasing Lender” has the meaning set forth in Section 2.15(a).

“Independent Engineering Report” means a report, in form and substance
consistent with the report dated January 2012 in respect of Credit Parties’
facility in Wyeville, Wisconsin or otherwise reasonably satisfactory to the
Administrative Agent, prepared by an independent engineer, with respect to the
Sand Reserves owned by the Borrower or its Subsidiaries which report shall
specify the location, quantity, and type of the estimated Sand Reserves.

“Initial Financial Statements” means the unaudited consolidated financial
statements of Hi-Crush Proppants and its Subsidiaries for the fiscal quarter
ending June 30, 2012, including statements of income, retained earnings, changes
in equity and cash flow for such fiscal quarter as well as a balance sheet as of
the end of such fiscal quarter, all prepared in accordance with GAAP.

“Interest Coverage Ratio” means, as of the end of each fiscal quarter, the ratio
of (a) (i) for the fiscal quarter period ending September 30, 2012, the
Borrower’s consolidated EBITDA for such fiscal quarter multiplied by 4, (ii) for
the fiscal quarter period ending December 31, 2012, the Borrower’s consolidated
EBITDA for the two fiscal quarter period then ended multiplied by 2, (iii) for
the fiscal quarter period ending March 31, 2013, the Borrower’s consolidated
EBITDA for the three fiscal quarter period then ended multiplied by 4/3, and
(iv) for each fiscal quarter period ending thereafter, the Borrower’s
consolidated EBITDA for the four-fiscal quarter period then ended to (b) (i) for
the fiscal quarter period ending September 30, 2012, the Borrower’s consolidated
Net Interest Expense for such fiscal quarter multiplied by 4, (ii) for the
fiscal quarter period ending December 31, 2012, the Borrower’s consolidated Net
Interest Expense for the two fiscal quarter period then ended multiplied by 2,
(iii) for the fiscal quarter period ending March 31, 2013, the Borrower’s
consolidated Net Interest Expense for the three fiscal quarter period then ended
multiplied by 4/3, and (iv) for each fiscal quarter period ending thereafter,
the Borrower’s consolidated Net Interest Expense for the four-fiscal quarter
period then ended.

 

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“Interest Expense” means, for any period and with respect to any Person, total
interest expense (including, without limitation, the amortization of debt
discount and premium and the interest component under Capital Leases and the
arrangement and upfront fees paid pursuant to the Fee Letter and the
Subordinated Notes) as determined in accordance with GAAP.

“Interest Period” means for each Eurodollar Advance comprising part of the same
Borrowing, the period commencing on the date of such Eurodollar Advance is made
or deemed made and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and Section 2.3, and thereafter, each
subsequent period commencing on the day following the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and Section 2.3. The
duration of each such Interest Period shall be one, two, three, or six months,
in each case as the Borrower may select, provided that:

(a) the Borrower shall select Interest Periods so that it is not necessary to
repay any portion of any Term Advance prior to the last day of the applicable
Interest Period in order to make a mandatory scheduled repayment required
pursuant to Section 2.5(c);

(b) (a) Interest Periods commencing on the same date for Advances comprising
part of the same Borrowing shall be of the same duration;

(c) (b) whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;

(d) (c) any Interest Period which begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month; and

(e) (d) the Borrower may not select any Interest Period for any Advance which
ends after the Revolving Maturity Date or the Term Maturity Date, as applicable.

“Investment” has the meaning set forth in Section 6.3.

“IPO” means the initial public offering of the Borrower’s common units
representing limited partner interests.

“Issuing Lender” means Amegy in its capacity as a Lender that issues Letters of
Credit for the account of any Credit Party pursuant to the terms of this
Agreement.

“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.

 

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“Lender Insolvency Event” means that (a) a Lender or its Lender Parent Company
is insolvent, or is generally unable to pay its debts as they become due, or
admits in writing its inability to pay its debts as they become due, or makes a
general assignment for the benefit of its creditors, or (b) such Lender or its
Lender Parent Company is the subject of a bankruptcy, insolvency,
reorganization, liquidation or similar proceeding, or a receiver, trustee,
conservator, intervenor or sequestrator or the like has been appointed for such
Lender or its Lender Parent Company, or such Lender or its Lender Parent Company
has taken any action in furtherance of or indicating its consent to or
acquiescence in any such proceeding or appointment; provided, that a Lender
Insolvency Event shall not be triggered solely by virtue of the ownership or
acquisition of any equity interest in a Lender or its Lender Parent Company
thereof by a Governmental Authority so long as such ownership interest does not
result in or provide such Lender with immunity from the jurisdiction of courts
within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Lender (or such Governmental Authority)
to reject, repudiate, disavow or disaffirm any contracts or agreements made with
such Lender.

“Lender Parent Company” means, with respect to a Lender, the bank holding
company (as defined in Federal Reserve Board Regulation Y), if any, of such
Lender, and/or any Person owning, beneficially or of record, directly or
indirectly, a majority of the shares of such Lender.

“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 2.13,
and any other Person that shall have become a Lender hereto pursuant to an
Assignment and Acceptance, but in any event, excluding any such Person that
ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless the
context otherwise requires, the term “Lenders” also references the Swing Line
Lender.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

“Letter of Credit” means any standby or commercial letter of credit issued by an
Issuing Lender for the account of a Credit Party pursuant to the terms of this
Agreement, in such form as may be agreed by the Borrower and the Issuing Lender.

“Letter of Credit Application” means the Issuing Lender’s standard form letter
of credit application for standby or commercial letters of credit which has been
executed by the Borrower and accepted by such Issuing Lender in connection with
the issuance of a Letter of Credit.

“Letter of Credit Documents” means all Letters of Credit, Letter of Credit
Applications and amendments thereof, and agreements, documents, and instruments
entered into in connection therewith or relating thereto.

“Letter of Credit Exposure” means, at the date of its determination by the
Administrative Agent, the aggregate outstanding undrawn amount of Letters of
Credit plus the aggregate unpaid amount of all of the Borrower’s payment
obligations under drawn Letters of Credit.

“Letter of Credit Maximum Amount” means $15,000,00025,000,000; provided that, on
and after the Revolving Maturity Date, the Letter of Credit Maximum Amount shall
be zero.

“Letter of Credit Obligations” means any obligations of the Borrower under this
Agreement in connection with the Letters of Credit.

“Leverage Ratio” means, as of the end of each fiscal quarter, the ratio of
(a) the consolidated Funded Debt of the Borrower as of the last day of such
fiscal quarter to (b) (i) for the fiscal quarter period ending September 30,
2012, the Borrower’s consolidated EBITDA such fiscal quarter multiplied by 4,
(ii)

 

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for the fiscal quarter period ending December 31, 2012, the Borrower’s
consolidated EBITDA for the two fiscal quarter period then ended multiplied by
2, (iii) for the fiscal quarter period ending March 31, 2013, the Borrower’s
consolidated EBITDA for the three fiscal quarter period then ended multiplied by
4/3, and (iv) for each fiscal quarter period ending thereafter, the Borrower’s
consolidated EBITDA for the four-fiscal quarter period then ended.

“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-1 by
Moody’s or A-1 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) readily and
immediately available cash held in any money market account maintained with any
Lender; provided that, such money market accounts and the funds therein shall be
unencumbered and free and clear of all Liens and other third party rights other
than a Lien in favor of the Administrative Agent pursuant to the Security
Documents; and (g) other investments made through the Administrative Agent or
its Affiliates and approved by the Administrative Agent. 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, as of a date of determination, the sum of (a) the excess, if
any, of the Commitments over the sum of the aggregate outstanding amount of all
Revolving Advances and all Swing Line Advances plus the Letter of Credit
Exposure plus (b) readily and immediately available cash held in deposit
accounts of any Credit Party (other than the Cash Collateral Account); provided
that, such deposit accounts and the funds therein shall be unencumbered and free
and clear of all Liens and other third party rights other than a Lien in favor
of the Administrative Agent pursuant to the Security Documents and Liens
permitted by Section 6.2(j).

“Maintenance Capital Expenditures” means Capital Expenditures made by any Credit
Party to maintain the operations of any Credit Party.

“Majority Lenders” means Lenders holding greater than 50% of the sum of (a) the
aggregate unfunded Commitments at such time plus (b) the aggregate unpaid
principal amount of the Revolving Notes (with the aggregate amount of each
Lender’s risk participation and funded participation in the Letter of Credit
Exposure (including any such Letter of Credit Exposure that has been reallocated
to such Lender pursuant to Section 2.14) and Swing Line Advances being deemed as
unpaid principal under such Lender’s Revolving Note); provided that, the
Commitment of, and the portion of the Revolving Advances and Letter of Credit
Exposure held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Majority Lenders unless all Lenders are
Defaulting Lenders.

 

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“Material Adverse Change” means a material adverse change (a) in the business,
operations, Property or financial condition of the Borrower and its
Subsidiaries, taken as a whole; (b) on the validity or enforceability of this
Agreement or any of the other Credit Documents; (c) on any Credit Party’s
ability to perform its obligations under this Agreement, any Note, the Guaranty
or any other Credit Document; or (d) in any right or remedy of any Secured Party
under any Credit Document.

“Material Contract” means each contract listed on Schedule 1.1(b), as amended,
restated, supplemented or otherwise modified from time to time.

“Maturity Date” means the earliest of (a) August 21, 2016, (b) the termination
in whole of the Commitments pursuant to Section 2.1(b) and (c) the termination
in whole of the Commitments and acceleration of the Revolving Advances pursuant
to Article 7.Revolving Maturity Date or the Term Maturity Date, as applicable.

“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 acceptable to the
Administrative Agent executed by any Credit Party to secure all or a portion of
the Obligations.

“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.

“Net Cash Proceeds” means with respect to any Asset Sale or Casualty Event, all
cash and Liquid Investments received in respect of such Asset Sale or Casualty
Event after (a) payment of, or provision for, all brokerage commissions and
other reasonable out of pocket fees and expenses actually incurred (including
attorneys’, accountants’, investment bankers’, consultants’ or other customary
fees and expenses); (b) payment of any outstanding obligations relating to such
Property paid in connection with any such Asset Sale or Casualty Event; and
(c) taxes paid or reasonably estimated to be payable within one year after such
Asset Sale or Casualty Event as a result thereof and as a result of any gain
recognized in connection therewith.

“Net Income” means, for any period and with respect to any Person, the net
income for such period for such Person after taxes as determined in accordance
with GAAP, including any cash net gain but excluding, however, (a) extraordinary
items, including (i) any net non-cash gain or loss during such period arising
from the sale, exchange, retirement or other disposition of capital assets (such
term to include all fixed assets and all securities) other than in the ordinary
course of business, and (ii) any write up or write down of assets and (b) the
cumulative effect of any change in GAAP.

“Net Interest Expense” means, for any period and with respect to any Person,
Interest Expense minus interest income of such Person for such period.

“Non-Defaulting Lender” means any Lender that is not then a Defaulting Lender.

“Notes” means the Revolving Notes and, the Swing Line Note and the Term Notes.

“Notice of Borrowing” means a notice of borrowing signed by the Borrower in
substantially the same form as Exhibit D.

 

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“Notice of Continuation or Conversion” means a notice of continuation or
conversion signed by the Borrower in substantially the same form as Exhibit E.

“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, the Swing Line Lender, the Issuing
Lender, or the Administrative Agent under this Agreement and the Credit
Documents, including, the Letter of Credit Obligations, and any increases,
extensions, and rearrangements of those obligations under any amendments,
supplements, and other modifications of the documents and agreements creating
those obligations.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

“Organization Documents” means (a) for any corporation, the certificate or
articles of incorporation and the bylaws, (b) for any partnership, the
partnership agreement and, if applicable, certificate of limited partnership or
(c) for any limited liability company, the operating agreement and articles or
certificates of formation of incorporation.

“Other Taxes” has the meaning set forth in Section 2.12(b).

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

“Partnership Agreement” means the Second Amended and Restated Agreement of
Limited Partnership of Hi-Crush Partners LP.

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

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

“Permitted Debt” has the meaning set forth in Section 6.1.

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

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

“Permitted Refinancing” means Debt issued or incurred (including by means of the
extension or renewal of existing Debt) to refinance, refund, extend, renew or
replace existing Debt (the “Refinanced Debt”); provided that (a) the principal
amount of such Permitted Refinancing is not greater than the outstanding
principal amount of such Refinanced Debt plus the amount of any premiums or
penalties and accrued and unpaid interest paid thereon, reasonable fees and
expenses and existing commitments unutilized thereunder, (b) such Permitted
Refinancing has a final maturity that is no sooner than such Refinanced Debt,
(c) the documentation evidencing such Permitted Refinancing contains
representations, warranties, covenants and events of default, taken as a whole,
no less favorable to the Borrower in any material respect than this Agreement
and (d) if such Refinanced Debt or any guarantees in respect thereof are
subordinated to the Obligations, such Permitted Refinancing remains so
subordinated on terms no less favorable to the Administrative Agent and the
Lenders.

“Permitted Subordinated Debt” means Debt permitted under Section 6.1(h).

 

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“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.

“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.

“Pro Forma Financial Statements” means the unaudited pro forma consolidated
balance sheet of the Borrower and its Subsidiaries as of June 30, 2012, prepared
giving pro forma effect to the IPO and the Wyeville Drop Down as if such
transactions had occurred on such date.

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

“Pro Rata Share” means, at any time with respect to any Lender, (a) the ratio
(expressed as a percentage) of such Lender’s Commitment at such time to the
aggregate Commitments at such time, or (b) if all of the Commitments have been
terminated, the ratio (expressed as a percentage) of such Lender’s aggregate
outstanding Revolving Advances at such time to the total aggregate outstanding
Revolving Advances at such time.

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

“Prospectus” means the latest prospectus included in the Registration Statement
or filed with the SEC pursuant to Rule 424(b) under the Securities Act prior to
the Effective Date.

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

“Registration Statement” means that Registration Statement on Form S-1 (File
No. 333-182574) filed by the Borrower with the SEC, amended as of the date
hereof.

“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. Each of Regulations T, U, or X may be
referred to individually as Regulation T, Regulation U, or Regulation X herein.

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

“Response” shall have 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 Executive Officer, President, or Chief
Financial Officer, (b) with respect to any Person that is a limited liability
company, if such Person has officers, then such Person’s Chief Executive
Officer, President, or Chief Financial Officer, and if such Person is managed by
members, then a Responsible Officer of such Person’s managing member, and if
such Person is managed by managers, then a manager

 

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(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 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) made in connection with the Equity Interest
of such Person, including those dividends, distributions and payments made in
consideration for or otherwise in connection with any retirement, purchase,
redemption or other acquisition of any Equity Interest of such Person, or any
options, warrants or rights to purchase or acquire any such Equity Interest of
such Person or (b) principal or interest payments (in cash, Property or
otherwise) on, or redemptions of, subordinated debt of such Person; provided
that the term “Restricted Payment” shall not include any dividend or
distribution payable solely in common or subordinated Equity Interests of such
Person or warrants, options or other rights to purchase such Equity Interests.

“Revolving Advance” means any advance by a Lender to the Borrower as part of a
Revolving Borrowing.

“Revolving Borrowing” means a Borrowing consisting of simultaneous Revolving
Advances of the same Type made by the Lenders pursuant to Section 2.1(a) or
Converted by each Lender to Revolving Advances of a different Type pursuant to
Section 2.3(b).

“Revolving Loan” means the aggregate principal from a Lender which represents
such Lender’s ratable share of a Revolving Borrowing.

“Revolving Maturity Date” means the earliest of (a) August 21, 2016, (b) the
termination in whole of the Commitments pursuant to Section 2.1(b) and (c) the
termination in whole of the Commitments and acceleration of the Revolving
Advances pursuant to Article 7.

“Revolving Note” means a promissory note of the Borrower payable to the order of
a Lender in the amount of such Lender’s Commitment, in substantially the same
form as Exhibit G-1, evidencing indebtedness of the Borrower to such Lender
resulting from Revolving Advances owing to such Lender.

“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.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in a
country, in each case, that is subject to a country sanctions program
administered and enforced by OFAC.

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

“Sand Reserves” means (a) at any particular time, the estimated quantities of
sand which geological and engineering data demonstrate with reasonable certainty
to be recoverable in future years under then existing economic and operating
conditions (i.e., prices and costs as of the date the estimate is made) and
(b) any fee mineral interests, term mineral interests, leases, subleases,
farm-outs, royalties, overriding royalties, net profit interests, carried
interests, production payments and similar mineral interests, and all unsevered
and unextracted sand in, under, or attributable to the properties described in
the foregoing clause (a).

 

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“SEC” means, the Securities and Exchange Commission.

“Second Amendment” means that certain Commitment Increase Agreement and Second
Amendment to Credit Agreement dated as of the Second Amendment Effective Date,
among the Borrower, the Administrative Agent, the Issuing Lender, the Swing Line
Lender and the Lenders.

“Second Amendment Effective Date” means May 9, 2013.

“Secured Obligations” means (a) the Obligations, (b) the Banking Services
Obligations, and (c) all obligations of any of the Credit Parties owing to Swap
Counterparties under any Hedging Arrangements; provided that the “Secured
Obligations” shall not include any Excluded Swap Obligations.

“Secured Parties” means the Administrative Agent, the Issuing Lender, the
Lenders, the Swap Counterparties and Banking Services Providers.

“Security Agreement” means the Pledge and Security Agreement among the Credit
Parties and the Administrative Agent in substantially the same form as Exhibit
F.

“Security Documents” means, collectively, the Mortgages, Security Agreement, and
any and all other instruments, documents or agreements, including Account
Control Agreements, now or hereafter executed by any Credit Party or any other
Person to secure the Secured Obligations.

“Solvent” means, as to any Person, on the date of any determination (a) the fair
value of the Property of such Person is greater than the total amount of debts
and other liabilities (including without limitation, contingent liabilities) of
such Person, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts and other liabilities (including, without limitation,
contingent liabilities) as they become absolute and matured, (c) such Person is
able to realize upon its assets and pay its debts and other liabilities
(including, without limitation, contingent liabilities) as they mature in the
normal course of business, (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities (including, without limitation,
contingent liabilities) beyond such Person’s ability to pay as such debts and
liabilities mature, (e) such Person is not engaged in, and is not about to
engage in, business or a transaction for which such Person’s Property would
constitute unreasonably small capital, and (f) such Person has not transferred,
concealed or removed any Property with intent to hinder, delay or defraud any
creditor of such Person.

“Sponsor” means Avista Capital Holdings, L.P. or any entities that are used to
form, organize or establish funds on behalf of Avista Capital Holdings, L.P. and
its affiliates.

“Subject Lender” has the meaning set forth in Section 2.13.

“Subordination Agreement” means a subordination agreement in form and substance
satisfactory to the Majority Lenders by and among each applicable Credit Party,
the holder(s) of each Subordinated Note, and the Administrative Agent.

“Subordinated Notes” means each subordinated promissory note by the Borrower
with representations, warranties, covenants and events of default, taken as a
whole, no less favorable to the Borrower in any material respect than this
Agreement and otherwise in form and substance reasonably satisfactory to the
Majority Lenders.

 

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“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.

“Swap Counterparty” means a Lender or an Affiliate of a Lender that has entered
into a Hedging Arrangement with a Credit Party as permitted by the terms of this
Agreement.

“Swap 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.

“Swing Line Advance” means an advance by the Swing Line Lender to the Borrower
as part of a Swing Line Borrowing.

“Swing Line Borrowing” means the Borrowing consisting of a Swing Line Advance
made by the Swing Line Lender pursuant to Section 2.3(f) or, if an AutoBorrow
Agreement is in effect, any transfer of funds pursuant to such AutoBorrow
Agreement.

“Swing Line Lender” means Amegy.

“Swing Line Note” means the promissory note made by the Borrower payable to the
order of the Swing Line Lender evidencing the indebtedness of the Borrower to
the Swing Line Lender resulting from Swing Line Advances in substantially the
same form as Exhibit G-2.

“Swing Line Payment Date” means (a) if an AutoBorrow Agreement is in effect, the
earliest to occur of (i) the date required by such AutoBorrow Agreement,
(ii) demand is made by the Swing Line Lender and, (iii) the Revolving Maturity
Date and (iv) the Term Out Trigger Date, or (b) if an AutoBorrow Agreement is
not in effect, the earlierearliest to occur of (i) three (3) Business Days after
demand is made by the Swing Line Lender if no Event of Default exists, and
otherwise upon demand by the Swing Line Lender and, (ii) the Revolving Maturity
Date and (iii) the Term Out Trigger Date.

“Swing Line Sublimit Amount” means $5,000,00010,000,000; provided that, on and
after the Revolving Maturity Date, the Swing Line Sublimit Amount shall be zero.

“Tax Group” has the meaning assigned to it in Section 4.13.

“Taxes” has the meaning set forth in Section 2.12(a).

“Term Advance” means a term advance converted from Revolving Advances pursuant
to Section 2.1(d).

“Term Borrowing” means the Borrowing consisting of Term Advances of the same
Type converted from Revolving Advances pursuant to Section 2.1(d) or Converted
by each Lender to Term Advances of a different Type pursuant to Section 2.3(b).

 

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“Term Maturity Date” means the earlier of (a) August 21, 2016 and (b) the
acceleration of the Term Advances pursuant to Article 7.

“Term Loan” means the loans evidenced by Term Notes converted from Revolving
Advances pursuant to Section 2.1(d).

“Term Note” means a promissory note of the Borrower payable to the order of a
Lender in the amount of such Lender’s Term Loan, in substantially the same form
as Exhibit G-3, evidencing indebtedness of the Borrower to such Lender resulting
from the Term Advances converted from Revolving Advances pursuant to Section
2.1(d).

“Term Out Trigger Date” means the first fiscal quarter end occurring after the
Second Amendment Effective Date when the following shall have occurred: the sum
of the aggregate outstanding amount of all Revolving Advances and all Swing Line
Advances plus the Letter of Credit Exposure has exceeded $125,000,000 as of the
last day of each of four consecutive fiscal quarters.

“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.

“Type” has the meaning set forth in Section 1.4.

“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.

“Wall Street Journal Rate” means a rate of interest per annum equal to the
“prime rate” as published from time to time in the Eastern Edition of the Wall
Street Journal as the average prime lending rate for seventy-five percent
(75%) of the United States’ thirty (30) largest commercial banks, or if the Wall
Street Journal shall cease publication or cease publishing the “prime rate” on a
regular basis, such other regularly published average prime rate applicable to
such commercial banks as is acceptable to the Administrative Agent in its
reasonable discretion.

“Wyeville Drop Down” means the contribution of all of the Equity Interests of
the Wyeville Drop Down Entities by Hi-Crush Proppants to the Borrower pursuant
to the Wyeville Drop Down Documents in exchange for (a) common units of the
Borrower, (b) subordinated units of the Borrower and (c) incentive distribution
rights.

“Wyeville Drop Down Documents” means that certain Contribution, Assignment and
Assumption Agreement among Hi-Crush Proppants, the Borrower, and the General
Partner in substantially the same form as the applicable exhibit attached to the
Registration Statement, together with each other agreement, instrument, or
document executed in connection with the Wyeville Drop Down.

 

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“Wyeville Drop Down Entities” means Hi-Crush Operating LLC, a Delaware limited
liability company, Hi-Crush Chambers LLC, a Delaware limited liability company,
Hi-Crush Railroad LLC, a Delaware limited liability company, and Hi-Crush
Wyeville LLC, a Delaware limited liability company.

Section 1.2. Computation 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 1.3. Accounting 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 Initial Financial Statements.

(b) Unless otherwise indicated, all financial statements of the Borrower, all
calculations for compliance with covenants in this Agreement, all determinations
of the Applicable Margin, and all calculations of any amounts to be calculated
under the definitions in Section 1.1 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 Initial
Financial Statements.

(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 Majority Lenders shall so request, the Administrative Agent, 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 Majority 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 Administrative Agent and 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.

(d) Notwithstanding any other provision contained herein, all terms of an
accounting or financial nature used herein shall be construed, and all
computations of amounts and ratios referred to herein shall be made (i) without
giving effect to any election under Accounting Standards Codification 825-10-25
(or any other Accounting Standards Codification or Financial Accounting Standard
having a similar result or effect) to value any Debt or other liabilities of the
Borrower or any Subsidiary at “fair value”, as defined therein, (ii) without
giving effect to any treatment of Debt in respect of convertible debt
instruments under Accounting Standards Codification 470-20 (or any other
Accounting Standards Codification or Financial Accounting Standard having a
similar result or effect) to value any such Debt in a reduced or bifurcated
manner as described therein, and such Debt shall at all times be valued at the
full stated principal amount thereof and (iii) in a manner such that any
obligations relating to a lease that was accounted for by a Person as an
operating lease as of the Effective Date and any similar lease entered into
after the Effective Date by such Person shall be accounted for as obligations
relating to an operating lease and not as a Capital Lease.

Section 1.4. Classes and Types of Advances. Advances are distinguished by
“Class” and “Type”. The “Class” of an Advance refers to the determination of
whether such Advance is a Revolving Advance, a Term Advance or a Swing Line
Advance. The “Type” of an Advance refers to the determination of whether such
Advance is a Base Rate Advance or a Eurodollar Advance.

 

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Section 1.5. Miscellaneous. 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, 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.

ARTICLE 2

CREDIT FACILITIES

Section 2.1. Commitments.

(a) Commitment. Each Lender severally agrees, on the terms and conditions set
forth in this Agreement, to make Revolving Advances in Dollars to the Borrower
from time to time on any Business Day during the period from the Effective Date
until the Revolving Maturity Date in an aggregate amount not to exceed such
Lender’s Commitment; provided that after giving effect to such Revolving
Advances, the sum of the aggregate outstanding amount of all Revolving Advances
and all Swing Line Advances plus the Letter of Credit Exposure, shall not exceed
the aggregate Commitments in effect at such time. Each Revolving Borrowing shall
(A) if comprised of Base Rate Advances be in an aggregate amount not less than
$500,000 and in integral multiples of $50,000 in excess thereof, (B) if
comprised of Eurodollar Advances be in an aggregate amount not less than
$1,000,000 and in integral multiples of $500,000 in excess thereof, and
(C) consist of Revolving Advances of the same Type made on the same day by the
Lenders ratably according to their respective Commitments. Within the limits of
each Lender’s Commitment, the Borrower may from time to time borrow, prepay
pursuant to Section 2.4, and reborrow under this Section 2.1(a).

(b) Reduction of the Commitments.

(i) Commitments. The Borrower shall have the right, upon at least three Business
Days’ irrevocable notice to the Administrative Agent, to terminate in whole or
reduce in part the unused portion of the Commitments; provided that each partial
reduction shall be in a minimum amount of $5,000,000 and in integral multiples
of $1,000,000 in excess thereof. Any reduction or termination of the Commitments
pursuant to this Section 2.1(b)(i) shall be applied ratably to each Lender’s
Commitment and shall be permanent, with no obligation of the Lenders to
reinstate such Commitments, and the applicable Commitment Fees shall thereafter
be computed on the basis of the Commitments, as so reduced. Notwithstanding the
foregoing, the Borrower may (subject to payment to the Lenders of any applicable
amounts under Section 2.9 hereof) rescind or postpone any notice to terminate in
whole the Commitments if such termination would have resulted from a refinancing
of this Agreement, which refinancing shall not be consummated or shall otherwise
be delayed.

 

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(ii) Defaulting Lender. At any time when a Lender is then a Defaulting Lender,
the Borrower, at the Borrower’s election, may elect to terminate such Defaulting
Lender’s Commitment hereunder; provided that (A) such termination must be of the
Defaulting Lender’s entire Commitment, (B) the Borrower shall pay all amounts
owed by the Borrower to such Defaulting Lender in such Defaulting Lender’s
capacity as a Lender under this Agreement and under the other Credit Documents
(including principal of and interest on the Revolving Advances owed to such
Defaulting Lender, accrued Commitment Fees (subject to Section 2.6(a)), and
letter of credit fees but specifically excluding any amounts owing under
Section 2.9 as result of such payment of such Advances) and shall deposit with
the Administrative Agent into the Cash Collateral Account cash collateral in the
amount equal to such Defaulting Lender’s ratable share of the Letter of Credit
Exposure (excluding any such Letter of Credit Exposure that has been reallocated
pursuant to Section 2.14), (C) a Defaulting Lender’s Commitment may be
terminated by the Borrower under this Section 2.1(b)(ii) if and only if at such
time, the Borrower has elected, or is then electing, to terminate the
Commitments of all then existing Defaulting Lenders. Upon written notice to the
Defaulting Lender and Administrative Agent of the Borrower’s election to
terminate a Defaulting Lender’s Commitment pursuant to this clause (ii) and the
payment and deposit of amounts required to be made by the Borrower under clause
(B) above, (1) such Defaulting Lender shall cease to be a “Lender” hereunder for
all purposes except that such Lender’s rights and obligations as a Lender under
Sections 2.10, 2.12, 8.5 and 9.2 shall continue with respect to events and
occurrences occurring before or concurrently with its ceasing to be a “Lender”
hereunder, (2) such Defaulting Lender’s Commitment shall be deemed terminated,
and (3) such Defaulting Lender shall be relieved of its obligations hereunder as
a “Lender”, except as to its obligations under Section 8.5 shall continue with
respect to events and occurrences occurring before or concurrently with its
ceasing to be a “Lender” hereunder, provided that, any such termination will not
be deemed to be a waiver or release of any claim that Borrower, the
Administrative Agent, the Swing Line Lender, any Issuing Lender or any Lender
may have against such Defaulting Lender.

(iii) Term Out Trigger Date. On the Term Out Trigger Date, the aggregate
Commitments shall automatically reduce by an amount equal to $50,000,000. Such
reduction shall be applied ratably to each Lender’s Commitment and shall be
permanent, with no obligation of the Lenders to reinstate such Commitments, and
the applicable Commitment Fees shall thereafter be computed on the basis of the
Commitments, as so reduced.

(c) Notes. The indebtedness of the Borrower to each Lender resulting (i) from
Revolving Advances owing to such Lender shall be evidenced by a Revolving Note
and (ii, (ii) from Term Advances owing to such Lender shall be evidenced by a
Term Note, and (iii) from Swing Line Advances owing to the Swing Line Lender, as
set forth in Section 2.3(f) below, shall be evidenced by a Swing Line Note.

(d) Term Out Feature. On the Term Out Trigger Date, outstanding Revolving
Advances in an amount equal to $50,000,000 shall automatically convert into Term
Advances. Such conversion shall apply ratably to the outstanding Revolving
Advances of each Lender, shall be permanent, and shall occur regardless of
whether (i) the conditions in Section 3.2 have been met or (ii) a Default
exists. Such Revolving Advances so converted shall thereafter be Term Advances
for all purposes under this Agreement and the other Credit Documents; provided
that, solely for purposes of calculating the “Majority Lenders”, such Term
Advances shall be deemed to be unpaid principal under the Revolving Notes. The
Borrower may not reborrow any Term Advances that have been repaid. Promptly
after the Term Out Trigger Date, the Borrower shall deliver Term Notes to the
Administrative Agent payable to each Lender in an amount equal to the initial
outstanding principal amount of Term Advances owing to each such Lender.

 

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Section 2.2. Letters of Credit

(a) Commitment for Letters of Credit. Subject to the terms and conditions set
forth in this Agreement, the Issuing Lender agrees, in reliance upon the
agreements of the other Lenders set forth in this Section 2.2, from time to time
on any Business Day during the period from the Effective Date until the fifth
Business Day prior to the Revolving Maturity Date, to issue, increase or extend
the expiration date of, Letters of Credit for the account of any Credit Party,
provided that no Letter of Credit will be issued, increased, or extended:

(i) if such issuance, increase, or extension would cause the Letter of Credit
Exposure to exceed the lesser of (A) the Letter of Credit Maximum Amount and
(B) an amount equal to (1) the aggregate Commitments in effect at such time
minus (2) the sum of the aggregate outstanding amount of all Revolving Advances
and all Swing Line Advances;

(ii) unless such Letter of Credit has an expiration date not later than the
earlier of (A) one year after its issuance or extension and (B) five
(5) Business Days prior to the Revolving Maturity Date; provided that, (1) if
the Commitments are terminated in whole pursuant to Section 2.1(b), the Borrower
shall either (A) deposit into the Cash Collateral Account cash in an amount
equal to 105% of the Letter of Credit Exposure for the Letters of Credit which
have an expiry date beyond the date the Commitments are terminated or
(B) provide a replacement letter of credit (or other security) reasonably
acceptable to the Administrative Agent and the Issuing Lender in an amount equal
to 105% of the Letter of Credit Exposure, and (2) any such Letter of Credit with
a one-year tenor may expressly provide for an automatic extension of one
additional year so long as such Letter of Credit expressly allows the Issuing
Lender, at its sole discretion, to elect not to provide such extension; provided
that, in any event, such automatic extension may not result in an expiration
date that occurs after the fifth Business Day prior to the Revolving Maturity
Date;

(iii) unless such Letter of Credit is (A) a standby letter of credit not
supporting the repayment of indebtedness for borrowed money of any Person, or
(B) with the consent of the Issuing Lender and so long as the Borrower has
agreed to such additional fees which may apply, a commercial letter of credit;

(iv) unless such Letter of Credit is in form and substance acceptable to the
Issuing Lender in its reasonable discretion;

(v) unless the Borrower has delivered to the Issuing Lender a completed and
executed Letter of Credit Application; provided that, if the terms of any Letter
of Credit Application conflicts with the terms of this Agreement, the terms of
this Agreement shall control;

(vi) unless such Letter of Credit is governed by (A) the Uniform Customs and
Practice for Documentary Credits (2007 Revision), International Chamber of
Commerce Publication No. 600, or (B) the International Standby Practices
(ISP98), International Chamber of Commerce Publication No. 590, in either case,
including any subsequent revisions thereof approved by a Congress of the
International Chamber of Commerce and adhered to by the Issuing Lender;

(vii) if any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender
from issuing, increasing or extending such Letter of Credit, or any Legal
Requirement applicable to the Issuing Lender or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing
Lender refrain from, the issuance, increase or extension of letters of credit
generally or such

 

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Letter of Credit in particular or shall impose upon the Issuing Lender with
respect to such Letter of Credit any restriction, reserve or capital requirement
(for which the Issuing Lender is not otherwise compensated hereunder) not in
effect on the date hereof, or shall impose upon the Issuing Lender any
unreimbursed loss, cost or expense which was not applicable on the date hereof
and which the Issuing Lender in good faith deems material to it;

(viii) if the issuance, increase or extension of such Letter of Credit would
violate one or more policies of the Issuing Lender applicable to letters of
credit generally;

(ix) if Letter of Credit is to be denominated in a currency other than Dollars;

(x) if any Lender is at such time a Defaulting Lender hereunder, unless the
Issuing Lender has entered into satisfactory arrangements with the Borrower or
such Lender to eliminate the Issuing Lender’s risk with respect to such Lender;
or

(xi) if such Letter of Credit supports the obligations of any Person in respect
of (x) a lease of real property, or (y) an employment contract, in each case, if
the Issuing Lender reasonably determines that the Borrower’s obligation to
reimburse any draws under such Letter of Credit may be limited.

Each Existing Letter of Credit, as of the Effective Date, shall be a Letter of
Credit deemed to have been issued pursuant to the Commitments and shall
constitute a portion of the Letter of Credit Exposure.

(b) Requesting Letters of Credit. Each Letter of Credit shall be issued pursuant
to a Letter of Credit Application given by the Borrower to the Administrative
Agent and the Issuing Lender by facsimile or other writing not later than 11:00
a.m. (Houston, Texas, time) on the third Business Day before the proposed date
of issuance for the Letter of Credit. Each Letter of Credit Application shall be
fully completed and shall specify the information required therein. Each Letter
of Credit Application shall be irrevocable and binding on the Borrower. Subject
to the terms and conditions hereof, the Issuing Lender shall before 2:00 p.m.
(Houston, Texas, time) on the date of such Letter of Credit Application issue
such Letter of Credit to the beneficiary of such Letter of Credit.

(c) Reimbursements for Letters of Credit; Funding of Participations.

(i) With respect to any Letter of Credit, in accordance with the related Letter
of Credit Application, the Borrower agrees to pay on demand to the
Administrative Agent on behalf of the Issuing Lender an amount equal to any
amount paid by the Issuing Lender under such Letter of Credit. Upon the Issuing
Lender’s demand for payment under the terms of a Letter of Credit Application,
the Borrower may, with a written notice, request that the Borrower’s obligations
to the Issuing Lender thereunder be satisfied with the proceeds of a Revolving
Advance in the same amount (notwithstanding any minimum size or increment
limitations on individual Revolving Advances). If the Borrower does not make
such request and does not otherwise make the payments demanded by the Issuing
Lender as required under this Agreement or the Letter of Credit Application,
then the Borrower shall be deemed for all purposes of this Agreement to have
requested such a Revolving Advance in the same amount and the transfer of the
proceeds thereof to satisfy the Borrower’s obligations to the Issuing Lender,
and the Borrower hereby unconditionally and irrevocably authorizes, empowers,
and directs the Lenders to make such Revolving Advance, to transfer the proceeds
thereof to the Issuing Lender in satisfaction of such obligations, and to record
and otherwise treat such payments as a Revolving Advance to the Borrower. The
Administrative Agent and each Lender may record and otherwise treat the making
of such Revolving Borrowings as the making of a Revolving Borrowing to the
Borrower

 

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under this Agreement as if requested by the Borrower. Nothing herein is intended
to release any of the Borrower’s obligations under any Letter of Credit
Application, but only to provide an additional method of payment therefor. The
making of any Revolving Borrowing under this Section 2.2(c) shall not constitute
a cure or waiver of any Default, other than the payment Default which is
satisfied by the application of the amounts deemed advanced hereunder, caused by
the Borrower’s failure to comply with the provisions of this Agreement or the
Letter of Credit Application.

(ii) Each Lender (including the Lender acting as Issuing Lender) shall, upon
notice from the Administrative Agent that the Borrower has requested or is
deemed to have requested a Revolving Advance pursuant to Section 2.2 and
regardless of whether (A) the conditions in Section 3.2 have been met, (B) such
notice complies with Section 2.3, or (C) a Default exists, make funds available
to the Administrative Agent for the account of the Issuing Lender in an amount
equal to such Lender’s Pro Rata Share of the amount of such Revolving Advance
not later than 12:00 noon on the Business Day specified in such notice by the
Administrative Agent, whereupon each Lender that so makes funds available shall
be deemed to have made a Revolving Advance to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the Issuing Lender.

(iii) If any such Lender shall not have so made its Revolving Advance available
to the Administrative Agent pursuant to this Section 2.2, such Lender agrees to
pay interest thereon for each day from such date until the date such amount is
paid at the lesser of (A) the Federal Funds Rate for such day for the first
three days and thereafter the interest rate applicable to the Revolving Advance
and (B) the Maximum Rate. Whenever, at any time after the Administrative Agent
has received from any Lender such Lender’s Revolving Advance, the Administrative
Agent receives any payment on account thereof, the Administrative Agent will pay
to such Lender its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender’s Revolving Advance was outstanding and funded), which payment
shall be subject to repayment by such Lender if such payment received by the
Administrative Agent is required to be returned. Each Lender’s obligation to
make the Revolving Advance pursuant to this Section 2.2 shall be absolute and
unconditional and shall not be affected by any circumstance, including (1) any
set-off, counterclaim, recoupment, defense or other right which such Lender or
any other Person may have against the Issuing Lender, the Administrative Agent
or any other Person for any reason whatsoever; (2) the occurrence or continuance
of a Default or the termination of the Commitments; (3) any breach of this
Agreement by any Credit Party or any other Lender; or (4) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.

(d) Participations. Upon the date of the issuance or increase of a Letter of
Credit (including in the case of each Existing Letter of Credit, the deemed
issuance with respect thereto on the Effective Date), the Issuing Lender shall
be deemed to have sold to each other Lender and each other Lender shall have
been deemed to have purchased from the Issuing Lender a participation in the
related Letter of Credit Obligations equal to such Lender’s Pro Rata Share at
such date and such sale and purchase shall otherwise be in accordance with the
terms of this Agreement. The Issuing Lender shall promptly notify each such
participant Lender by telex, telephone, or telecopy of each Letter of Credit
issued or increased and the actual dollar amount of such Lender’s participation
in such Letter of Credit.

(e) Obligations Unconditional. The obligations of the Borrower under this
Agreement in respect of each Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, notwithstanding the following circumstances:

 

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(i) any lack of validity or enforceability of any Letter of Credit Documents;

(ii) any amendment or waiver of or any consent to departure from any Letter of
Credit Documents;

(iii) the existence of any claim, set-off, defense or other right which any
Credit Party may have at any time against any beneficiary or transferee of such
Letter of Credit (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Issuing Lender, any Lender or any other person or
entity, whether in connection with this Agreement, the transactions contemplated
in this Agreement or in any Letter of Credit Documents or any unrelated
transaction;

(iv) any statement or any other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect to the extent the
Issuing Lender would not be liable therefor pursuant to the following paragraph
(g);

(v) payment by the Issuing Lender under such Letter of Credit against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit; or

(vi) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing;

provided, however, that nothing contained in this paragraph (e) shall be deemed
to constitute a waiver of any remedies of the Borrower in connection with the
Letters of Credit.

(f) Prepayments of Letters of Credit. In the event that any Letter of Credit
shall be outstanding or shall be drawn and not reimbursed on or prior to the
fifth Business Day prior to the Revolving Maturity Date, the Borrower shall pay
to the Administrative Agent an amount equal to 105% of the Letter of Credit
Exposure allocable to such Letter of Credit, such amount to be due and payable
on the fifth Business Day prior to the Revolving Maturity Date, and to be held
in the Cash Collateral Account and applied in accordance with paragraph
(h) below.

(g) Liability of Issuing Lender. The Borrower assumes all risks of the acts or
omissions of any beneficiary or transferee of any Letter of Credit with respect
to its use of such Letter of Credit. Neither the Issuing Lender nor any of its
officers or directors shall be liable or responsible for:

(i) the use which may be made of any Letter of Credit or any acts or omissions
of any beneficiary or transferee in connection therewith;

(ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged;

(iii) payment by the Issuing Lender against presentation of documents which do
not comply with the terms of a Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the relevant Letter of
Credit; or

 

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(iv) any other circumstances whatsoever in making or failing to make payment
under any Letter of Credit (INCLUDING THE ISSUING LENDER’S OWN NEGLIGENCE),

except that the Borrower shall have a claim against the Issuing Lender, and the
Issuing Lender shall be liable to, and shall promptly pay to, the Borrower, to
the extent of any direct, as opposed to consequential, damages suffered by the
Borrower which the Borrower proves were caused by (A) the Issuing Lender’s
willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (B) the Issuing Lender’s willful failure to make lawful payment under
any Letter of Credit after the presentation to it of a draft and certificate
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Lender may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.

(h) Cash Collateral Account.

(i) If the Borrower is required to deposit funds in the Cash Collateral Account
pursuant to Sections 2.2(a), 2.2(f), 2.4(c), 2.14, 7.2(b) or 7.3(b) or any other
provision under this Agreement, then the Borrower and the Administrative Agent
shall establish the Cash Collateral Account and the Borrower shall execute any
documents and agreements, including the Administrative Agent’s standard form
assignment of deposit accounts, that the Administrative Agent requests in
connection therewith to establish the Cash Collateral Account and grant the
Administrative Agent an Acceptable Security Interest in such account and the
funds therein. The Borrower hereby pledges to the Administrative Agent and
grants the Administrative Agent a security interest in the Cash Collateral
Account, whenever established, all funds held in the Cash Collateral Account
from time to time, and all proceeds thereof as security for the payment of the
Secured Obligations.

(ii) Funds held in the Cash Collateral Account shall be held as cash collateral
for obligations with respect to Letters of Credit and promptly applied by the
Administrative Agent at the request of the Issuing Lender to any reimbursement
or other obligations under Letters of Credit that exist or occur. To the extent
that any surplus funds are held in the Cash Collateral Account above the Letter
of Credit Exposure during the existence of an Event of Default the
Administrative Agent may (A) hold such surplus funds in the Cash Collateral
Account as cash collateral for the Secured Obligations or (B) apply such surplus
funds to any Secured Obligations in any manner directed by the Majority Lenders.
If no Default exists, the Administrative Agent shall release any surplus funds
held in the Cash Collateral Account above the Letter of Credit Exposure to the
Borrower at the Borrower’s written request.

(iii) Funds held in the Cash Collateral Account may be invested in Liquid
Investments maintained with, and under the sole dominion and control of, the
Administrative Agent or in another investment if mutually agreed upon by the
Borrower and the Administrative Agent, but the Administrative Agent shall have
no obligation to make any investment of the funds therein. The Administrative
Agent shall exercise reasonable care in the custody and preservation of any
funds held in the Cash Collateral Account and shall be deemed to have exercised
such care if such funds are accorded treatment substantially equivalent to that
which the Administrative Agent accords its own property, it being understood
that the Administrative Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with respect to any such
funds.

(i) Defaulting Lender. If, at any time, a Defaulting Lender exists hereunder,
then, at the request of the Issuing Lender subject to Section 2.14(c), the
Borrower shall deposit funds with Administrative Agent into the Cash Collateral
Account an amount equal to such Defaulting Lender’s Pro Rata Share of the Letter
of Credit Exposure.

 

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(j) Letters of Credit Issued for Guarantors or any Subsidiary. Notwithstanding
that a Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Guarantor or any Subsidiary, the
Borrower shall be obligated to reimburse the Issuing Lender hereunder for any
and all drawings under such Letter of Credit issued hereunder by the Issuing
Lender. The Borrower hereby acknowledges that the issuance of Letters of Credit
for the account of any Guarantor, the Borrower or any Subsidiary inures to the
benefit of the Borrower, and that the Borrower’s business (indirectly or
directly) derives substantial benefits from the businesses of such other
Persons.

Section 2.3. Advances.

(a) Notice. Each Borrowing (other than the Borrowings to be made on the
Effective Date), shall be made pursuant to the applicable Notice of Borrowing
given by the Borrower to the Administrative Agent not later than (i) 11:00 a.m.
(Houston, Texas time) on the third Business Day before the date of the proposed
Borrowing, in the case of a Eurodollar Advance or (ii) 11:00 a.m. (Houston,
Texas time) on the Business Day before the date of the proposed Borrowing, in
the case of a Base Rate Advance, by the Borrower to the Administrative Agent,
which shall give to each Lender prompt notice of such proposed Borrowing, by
facsimile or telex. The Borrowings to be made on the Effective Date shall be
made pursuant to the applicable Notices of Borrowing given not later than 11:00
a.m. (Houston, Texas time) on the Effective Date by the Borrower to the
Administrative Agent, which shall give to each Lender prompt notice of such
proposed Borrowing, by facsimile or telex. Each Notice of Borrowing shall be by
facsimile or telex, confirmed promptly by the Borrower with a hard copy (other
than with respect to notice sent by facsimile), specifying (i) the requested
date of such Borrowing, (ii) the requested Type and Class of Advances comprising
such Borrowing, (iii) the aggregate amount of such Borrowing, and (iv) if such
Borrowing is to be comprised of Eurodollar Advances, the requested Interest
Period for each such Advance; provided that, and all Borrowings to be made on
the Effective Date shall consist only of Base Rate Advance which may, subject to
the terms of this Agreement, be thereafter Converted into Eurodollar Advances.
In the case of a proposed Borrowing comprised of Eurodollar Advances, the
Administrative Agent shall promptly notify each Lender of the applicable
interest rate under Section 2.7(b). Each Lender shall, before 12:00 noon
(Houston, Texas time) on the date of such Borrowing (or, in the case of
Borrowings on the Effective Date, 2:00 p.m. (Houston, Texas time)), make
available for the account of its applicable Lending Office to the Administrative
Agent at its address referred to in Section 9.9, or such other location as the
Administrative Agent may specify by notice to the Lenders, in same day funds,
such Lender’s Pro Rata Share of such Borrowing. After the Administrative Agent’s
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article 3, the Administrative Agent will make such funds available to
the Borrower at its account with the Administrative Agent or as otherwise
directed by the Borrower with written notice to the Administrative Agent.

(b) Conversions and Continuations. In order to elect to Convert or continue a
Revolving Advance or a Term Advance under this paragraph, the Borrower shall
deliver an irrevocable Notice of Continuation or Conversion to the
Administrative Agent at the Administrative Agent’s office no later than 11:00
a.m. (Houston, Texas time) (i) on the Business Day before the date of the
proposed conversion date in the case of a Conversion to a Base Rate Advance and
(ii) at least three Business Days in advance of the proposed Conversion or
continuation date in the case of a Conversion to, or a continuation of, a
Eurodollar Advance. Each such Notice of Continuation or Conversion shall be in
writing or by telex or facsimile confirmed promptly by the Borrower with a hard
copy (other than with respect to notice sent by facsimile), specifying (i) the
requested Conversion or continuation date (which shall be a Business Day),
(ii) the amount, Type, and Class of the Advance to be Converted or continued,
(iii) whether a Conversion or continuation is requested and, if a Conversion,
into what Type of Advance, and (iv) in the case of a

 

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Conversion to, or a continuation of, a Eurodollar Advance, the requested
Interest Period. Promptly after receipt of a Notice of Conversion or
Continuation under this paragraph, the Administrative Agent shall provide each
Lender with a copy thereof and, in the case of a Conversion to or a Continuation
of a Eurodollar Advance, notify each Lender of the applicable interest rate
under Section 2.7(b). The portion of Advances comprising part of the same
Borrowing that are Converted to Advances of another Type shall constitute a new
Borrowing.

(c) Certain Limitations. Notwithstanding anything in paragraphs (a) and
(b) above:

(i) at no time shall there be more than seven Interest Periods applicable to
outstanding Eurodollar Advances;

(ii) the Borrower may not select Eurodollar Advances for any Borrowing at any
time when an Event of Default has occurred and is continuing;

(iii) if any Lender shall, at least one Business Day before the date of any
requested Borrowing, notify the Administrative Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or that any central bank or other Governmental Authority asserts that
it is unlawful, for such Lender or its applicable Lending Office to perform its
obligations under this Agreement to make Eurodollar Advances or to fund or
maintain Eurodollar Advances, (A) the obligation of such Lender to make such
Eurodollar Advance as part of the requested Borrowing or for any subsequent
Borrowing shall be suspended until such Lender shall notify the Borrower that
the circumstances causing such suspension no longer exist and such Lender’s
portion of such requested Borrowing or any subsequent Borrowing of Eurodollar
Advances shall be made in the form of a Base Rate Advance, and (B) such Lender
agrees to use commercially reasonable efforts (consistent with its internal
policies and legal and regulatory restrictions) to designate a different Lending
Office if the making of such designation would avoid the effect of this
paragraph and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender;

(iv) if the Administrative Agent is unable to determine the Eurodollar Rate for
Eurodollar Advances comprising any requested Borrowing, the right of the
Borrower to select Eurodollar Advances for such Borrowing or for any subsequent
Borrowing shall be suspended until the Administrative Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist, and each Advance comprising such Borrowing shall be a Base Rate
Advance;

(v) if the Majority Lenders shall, at least one Business Day before the date of
any requested Borrowing, notify the Administrative Agent that the Eurodollar
Rate for Eurodollar Advances comprising such Borrowing will not adequately
reflect the cost to such Lenders of making or funding their respective
Eurodollar Advances, as the case may be, for such Borrowing, the right of the
Borrower to select Eurodollar Advances for such Borrowing or for any subsequent
Borrowing shall be suspended until the Administrative Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist, and each Advance comprising such Borrowing shall be a Base Rate
Advance; and

(vi) if the Borrower shall fail to select the duration or continuation of any
Interest Period for any Eurodollar Advances in accordance with the provisions
contained in the definition of Interest Period in Section 1.1 and paragraph
(b) above, the Administrative Agent will forthwith so notify the Borrower and
the Lenders and such Advances will be made available to the Borrower on the date
of such Borrowing as Eurodollar Advances with an interest period duration of one
month or, in the case of continuation of an existing Advance, Convert into Base
Rate Advances.

 

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(d) Notices Irrevocable. Each Notice of Borrowing and Notice of Continuation or
Conversion delivered by the Borrower hereunder, including its deemed request for
borrowing made under Section 2.2(c), shall be irrevocable and binding on the
Borrower.

(e) Administrative Agent Reliance. Unless the Administrative Agent shall have
received notice from a Lender before the date of any Revolving Borrowing that
such Lender will not make available to the Administrative Agent such Lender’s
Pro Rata Share of any Borrowing, the Administrative Agent may assume that such
Lender has made its Pro Rata Share of such Borrowing available to the
Administrative Agent on the date of such Borrowing in accordance with
Section 2.3(a), and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made its Pro Rata Share
of such Borrowing available to the Administrative Agent, such Lender and the
Borrower severally agree to immediately repay to the Administrative Agent on
demand such corresponding amount, together with interest on such amount, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid to the Administrative Agent, at (i) in the case of
the Borrower, the interest rate applicable on such day to Advances comprising
such Borrowing and (ii) in the case of such Lender, the lesser of (A) the
Federal Funds Rate for such day for the first three days and thereafter the
interest rate applicable to the Advance and (B) the Maximum Rate. If such Lender
shall repay to the Administrative Agent such corresponding amount and interest
as provided above, such corresponding amount so repaid shall constitute such
Lender’s Advance as part of such Borrowing for purposes of this Agreement even
though not made on the same day as the other Advances comprising such Borrowing.

(f) Swing Line Advances.

(i) Facility. On the terms and conditions set forth in this Agreement, and if an
AutoBorrow Agreement is in effect, subject to the terms and conditions of such
AutoBorrow Agreement, the Swing Line Lender may, in its sole discretion, from
time-to-time on any Business Day during the period from the date of this
Agreement until the last Business Day occurring before the Revolving Maturity
Date, make Swing Line Advances under the Swing Line Note to the Borrower which
shall be due and payable on the Swing Line Payment Date (except that no Swing
Line Advance may mature after the Revolving Maturity Date), and in an aggregate
outstanding principal amount not to exceed the Swing Line Sublimit Amount at any
time; provided that (A) after giving effect to such Swing Line Advance, the sum
of the aggregate amount of all Revolving Advances plus the Letter of Credit
Exposure plus the aggregate outstanding amount of all Swing Line Advances, shall
not exceed the aggregate Commitments in effect at such time; (B) no Swing Line
Advance shall be made by the Swing Line Lender if the conditions set forth in
Section 3.2 have not been met as of the date of such Swing Line Advance, it
being agreed by the Borrower that the giving of the applicable Notice of
Revolving Borrowing and the acceptance by the Borrower of the proceeds of such
Swing Line Advance shall constitute a representation and warranty by the
Borrower that on the date of such Swing Line Advance such conditions have been
met; (C) only if an AutoBorrow Agreement is not in effect, each Swing Line
Advance shall be in an aggregate amount not less than $100,000 and in integral
multiples of $50,000 in excess thereof; and (D) if an AutoBorrow Agreement is in
effect, such additional terms and conditions of such AutoBorrow Agreement shall
have been satisfied, and in the event that any of the terms of this
Section 2.3(f)(i) conflict with such AutoBorrow Agreement, the terms of the
AutoBorrow Agreement shall govern and control. The indebtedness of the Borrower
to the Swing Line Lender resulting from Swing Line Advances shall be evidenced
by the Swing Line Note. No Lender shall have any rights or obligations under any
AutoBorrow Agreement, but each Lender shall have the obligation to purchase and
fund risk participations in the Swing Line Advances and to refinance Swing Line
Advances as provided below.

 

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(ii) Prepayment. Within the limits expressed in this Agreement, amounts advanced
pursuant to Section 2.3(f)(i) may from time to time be borrowed, prepaid without
penalty, and reborrowed. If the aggregate outstanding principal amount of the
Swing Line Advances ever exceeds the Swing Line Sublimit Amount, the Borrower
shall prepay to the Swing Line Lender outstanding principal of the Swing Line
Advances such that such excess is eliminated. If an AutoBorrow Agreement is in
effect, each prepayment of a Swing Line Borrowing shall be made as provided in
such AutoBorrow Agreement.

(iii) Reimbursements for Swing Line Obligations.

(A) With respect to the Swing Line Advances and the interest, premium, fees, and
other amounts owed by the Borrower to the Swing Line Lender in connection with
the Swing Line Advances, the Borrower agrees to pay to the Swing Line Lender
such amounts when due and payable to the Swing Line Lender under the terms of
this Agreement and, if an AutoBorrow Agreement is in effect, in accordance with
the terms of such AutoBorrow Agreement. The Borrower may, with a written notice
request that such obligations to the Swing Line Lender be satisfied with the
proceeds of a Revolving Advance in the same amount (notwithstanding any minimum
size or increment limitations on individual Revolving Advances). If the Borrower
does not pay to the Swing Line Lender any such amounts when due and payable to
the Swing Line Lender, the Swing Line Lender may upon notice to the
Administrative Agent request the satisfaction of such obligation by the making
of a Revolving Borrowing in the amount of any such amounts not paid when due and
payable. Upon such request, the Borrower shall be deemed to have requested the
making of a Revolving Borrowing in the amount of such obligation and the
transfer of the proceeds thereof to the Swing Line Lender. The Administrative
Agent shall promptly forward notice of such Revolving Borrowing to the Borrower
and the Lenders, and each Lender shall, regardless of whether (A) the conditions
in Section 3.2 have been met, (B) such notice complies with Section 2.3(a), or
(C) a Default exists, make available such Lender’s Pro Rata Share of such
Revolving Borrowing to the Administrative Agent, and the Administrative Agent
shall promptly deliver the proceeds thereof to the Swing Line Lender for
application to such amounts owed to the Swing Line Lender. The Borrower hereby
unconditionally and irrevocably authorizes, empowers, and directs the Swing Line
Lender to make such requests for Revolving Borrowings on behalf of the Borrower,
and for the Lenders to make Revolving Advances to the Administrative Agent for
the benefit of the Swing Line Lender in satisfaction of such obligations. The
Administrative Agent and each Lender may record and otherwise treat the making
of such Revolving Borrowings as the making of a Revolving Borrowing to the
Borrower under this Agreement as if requested by the Borrower. Nothing herein is
intended to release the Borrower’s obligations under the Swing Line Note, but
only to provide an additional method of payment therefor. The making of any
Revolving Borrowing under this Section 2.3(f)(iii)(A) shall not constitute a
cure or waiver of any Default, other than the payment Default which is satisfied
by the application of the amounts deemed advanced hereunder, caused by the
Borrower’s failure to comply with the provisions of this Agreement or the Swing
Line Note.

(B) If at any time, the Commitments shall have expired or be terminated while
any Swing Line Advance is outstanding, each Lender, at the sole option of the
Swing Line Lender, shall either (A) notwithstanding the expiration or
termination of the

 

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Commitments, make a Revolving Advance as a Base Rate Advance, or (B) be deemed,
without further action by any Person, to have purchased from the Swing Line
Lender a participation in such Swing Line Advance, in either case in an amount
equal to the product of such Lender’s Pro Rata Share times the outstanding
aggregate principal balance of the Swing Line Advances. The Administrative Agent
shall notify each such Lender of the amount of such Revolving Advance or
participation, and such Lender will transfer to the Administrative Agent for the
account of the Swing Line Lender on the next Business Day following such notice,
in immediately available funds, the amount of such Revolving Advance or
participation.

(C) If any such Lender shall not have so made its Revolving Advance or its
percentage participation available to the Administrative Agent pursuant to this
Section 2.3(f), such Lender agrees to pay interest thereon for each day from
such date until the date such amount is paid at the lesser of (A) the Federal
Funds Rate for such day for the first three days and thereafter the interest
rate applicable to the Revolving Advance and (B) the Maximum Rate. Whenever, at
any time after the Administrative Agent has received from any Lender such
Lender’s Revolving Advance or participating interest in a Swing Line Advance,
the Administrative Agent receives any payment on account thereof, the
Administrative Agent will pay to such Lender its participating interest in such
amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s Revolving Advance or participating
interest was outstanding and funded), which payment shall be subject to
repayment by such Lender if such payment received by the Administrative Agent is
required to be returned. Each Lender’s obligation to make the Revolving Advance
or purchase such participating interests pursuant to this Section 2.3(f) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (1) any set-off, counterclaim, recoupment, defense or other right
which such Lender or any other Person may have against the Swing Line Lender,
the Administrative Agent or any other Person for any reason whatsoever; (2) the
occurrence or continuance of a Default or the termination of the Commitments;
(3) any breach of this Agreement by the Borrower or any other Lender; or (4) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing. Each Swing Line Advance, once so participated by any Lender,
shall cease to be a Swing Line Advance with respect to that amount for purposes
of this Agreement, but shall continue to be a Revolving Loan.

(iv) Method of Borrowing. If an AutoBorrow Agreement is in effect, each Swing
Line Borrowing shall be made as provided in such AutoBorrow Agreement.
Otherwise, and except as provided in the clause (c) above, each request for a
Swing Line Advance shall be made pursuant to telephone notice to the Swing Line
Lender given no later than 1:00 p.m. (Houston, Texas time) on the date of the
proposed Swing Line Advance, promptly confirmed by a completed and executed
Notice of Revolving Borrowing telecopied or facsimiled to the Administrative
Agent and the Swing Line Lender. The Swing Line Lender will promptly make the
Swing Line Advance available to the Borrower at the Borrower’s account with the
Swing Line Lender.

(v) Interest for Account of Swing Line Lender. Swing Line Lender shall be
responsible for invoicing the Borrower for interest on the Swing Line Advances
(provided that any failure of the Swing Line Lender to provide such invoice
shall not release the Borrower from its obligation to pay such interest). Until
each Lender funds its Revolving Advance or risk participation pursuant to clause
(iii) above, interest in respect of Lender’s Pro Rata Share of the Swing Line
Advances shall be solely for the account of the Swing Line Lender.

 

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(vi) Payments Directly to Swing Line Lender. The Borrower shall make all
payments of principal and interest in respect of the Swing Line Advances
directly to the Swing Line Lender.

(vii) Discretionary Nature of the Swing Line Facility. Notwithstanding any terms
to the contrary contained herein or in any AutoBorrow Agreement, the swing line
facility provided herein or in any AutoBorrow Agreement (i) is an uncommitted
facility and the Swing Line Lender may, but shall not be obligated to, make
Swing Line Advances, and (ii) may be terminated at any time by the Swing Line
Lender upon written notice to the Borrower.

Section 2.4. Prepayments.

(a) Right to Prepay; Ratable Prepayment. The Borrower shall have no right to
prepay any principal amount of any Advance except as provided in this
Section 2.4 and all notices given pursuant to this Section 2.4 shall be
irrevocable and binding upon the Borrower. Each payment of any Advance pursuant
to this Section 2.4 shall be made in a manner such that all Advances comprising
part of the same Borrowing are paid in whole or ratably in part other than
Advances owing to a Defaulting Lender as provided in Section 2.14.

(b) Optional. The Borrower may elect to prepay any of the Advances without
penalty or premium except as set forth in Section 2.9 and after giving by 11:00
a.m. (Houston, Texas time) (i) in the case of Eurodollar Advances, at least
three Business Days’ or (ii) in case of Base Rate Advances, one Business Day’s
prior written notice to the Administrative Agent stating the proposed date and
aggregate principal amount of such prepayment. If any such notice is given, the
Borrower shall prepay Advances comprising part of the same Borrowing in whole or
ratably in part in an aggregate principal amount equal to the amount specified
in such notice, together with accrued interest to the date of such prepayment on
the principal amount prepaid and amounts, if any, required to be paid pursuant
to Section 2.9 as a result of such prepayment being made on such date; provided
that (A) each optional prepayment of Eurodollar Advances shall be in a minimum
amount not less than $500,000 and in multiple integrals of $100,000 in excess
thereof, (B) each optional prepayment of Base Rate Advances shall be in a
minimum amount not less than $500,000 and in multiple integrals of $50,000 in
excess thereof, and (C) only if an AutoBorrow Agreement is not in effect, each
optional prepayment of Swing Line Advances shall be in a minimum amount not less
than $250,000 and in multiple integrals of $50,000 in excess thereof. If an
AutoBorrow Agreement is in effect, each prepayment of Swing Line Advances shall
be made as provided in such AutoBorrow Agreement. Notwithstanding the foregoing,
the Borrower may (subject to payment to the Lenders of any applicable amounts
under Section 2.9 hereof) rescind or postpone any notice of prepayment under
this Section 2.4(b) if such prepayment would have resulted from a refinancing of
this Agreement, which refinancing shall not be consummated or shall otherwise be
delayed.

(c) Mandatory.

(i) On any date that (a) the sum of the outstanding principal amount of all
Swing Line Advances and all Revolving Advances plus the Letter of Credit
Exposure exceeds (b) the aggregate amount of Commitments, as notified to the
Borrower by the Administrative Agent (with such calculation set forth in
reasonable detail which shall be conclusive absent manifest error), the Borrower
shall, within one Business Day, to the extent of such excess, first prepay to
the Swing Line Lender the outstanding principal amount of the Swing Line
Advances, second prepay to the Lenders on a pro rata basis the outstanding
principal amount of the Revolving Advances, and third make deposits into the
Cash Collateral Account to provide cash collateral in the amount of such excess
for the Letter of Credit Exposure.

 

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(ii) If the Borrower or any Subsidiary completes an Asset Sale or is subject to
a Casualty Event, in each case which results in Net Cash Proceeds in excess of
$1,000,000 in any fiscal year, then the Borrower shall, no later than three
Business Days following the receipt thereof, apply an amount equal to 100% of
such Net Cash Proceeds first to prepay to the Lenders on a pro rata basis the
outstanding principal amount of the Term Advances, second to prepay to the Swing
Line Lender the outstanding principal amount of the Swing Line Advances,
secondthird to prepay to the Lenders on a pro rata basis the outstanding
principal amount of the Revolving Advances, and thirdfourth to make deposits
into the Cash Collateral Account to provide cash collateral for the Letter of
Credit Exposure; provided that, (A) if no Event of Default exists or would arise
therefrom, then such proceeds shall not be required to be so applied on such
date to the extent that Borrower shall have delivered a certificate by a
Responsible Officer of the Borrower to the Administrative Agent on or prior to
such date stating that such Net Cash Proceeds are reasonably expected to be
reinvested in fixed or capital assets of any Credit Party within 180 days
following the date of such Asset Sale or Casualty Event (which officers’
certificate shall set forth the estimates of the proceeds to be so expended);
and (B) if all or any portion of such Net Cash Proceeds are not reinvested
within such 180-day period as provided in clause (A) above, then 100% of such
unused portion shall be applied on the last day of such period first to prepay
to the Lenders on a pro rata basis the outstanding principal amount of the Term
Advances, second to prepay to the Swing Line Lender the outstanding principal
amount of the Swing Line Advances, secondthird to prepay to the Lenders on a pro
rata basis the outstanding principal amount of the Revolving Advances, and
thirdfourth to make deposits into the Cash Collateral Account to provide cash
collateral for the Letter of Credit Exposure.

(iii) If an increase in the aggregate Commitments is effected as permitted under
Section 2.15, the Borrower shall prepay any Revolving Advances outstanding on
the date such increase is effected to the extent necessary to keep the
outstanding Revolving Advances ratable to reflect the revised Pro Rata Shares of
the Lenders arising from such increase. Any prepayment made by Borrower in
accordance with this clause (iii) may be made with the proceeds of Revolving
Advances made by all the Lenders in connection such increase occurring
simultaneously with the prepayment.

(iv) If the Borrower or any Subsidiary receives Debt Incurrence Proceeds other
than those resulting from Permitted Debt, then not later than three Business
Days following the receipt of such proceeds, the Borrower shall prepay the Term
Advances in an amount equal to 100% of such Debt Incurrence Proceeds.

(v) If the Borrower or any Subsidiary receives Equity Issuance Proceeds (other
than Equity Issuance Proceeds from an Excluded Equity Issuance) or receives cash
capital contributions on account of then existing Equity Interests of the
Borrower, then not later than three Business Days following the receipt of such
proceeds, the Borrower shall prepay the Term Advances in an amount equal to 100%
of such Equity Issuance Proceeds.

(d) Interest; Costs. Each prepayment pursuant to this Section 2.4 shall be
accompanied by accrued interest on the amount prepaid to the date of such
prepayment and amounts, if any, required to be paid pursuant to Section 2.9 as a
result of such prepayment being made on such date.

(e) Application of Payments.

(i) Each voluntary prepayment shall be applied to such Advances and in such
order as the Borrower may direct.

 

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(ii) Each mandatory prepayment of the Term Advances required by
Section 2.4(c)(ii), (iv) and (v) shall be applied to the scheduled principal
installments of the Term Advances on a pro-rata basis until such time as the
Term Advances are repaid in full.

Section 2.5. Repayment.

(a) Revolving Advances. The Borrower shall pay to the Administrative Agent for
the ratable benefit of each Lender the aggregate outstanding principal amount of
the Revolving Advances on the Revolving Maturity Date.

(b) Swing Line Advances. Each Swing Line Advance shall be paid in full on each
Swing Line Payment Date.

(c) Term Advances. The Borrower shall pay to the Administrative Agent for the
ratable benefit of each Lender the aggregate outstanding principal amount of the
Term Advances in quarterly installments each equal to $2,500,000. Such quarterly
installments shall be due and payable on each March 31, June 30, September 30,
and December 31, commencing with the first such date to occur after the Term Out
Trigger Date, and a final installment of the remaining, unpaid principal balance
of the Term Advances payable on the Term Maturity Date.

Section 2.6. Fees.

(a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee on the average daily amount by which
(A) such Lender’s Commitment exceeds (B) the sum of such Lender’s outstanding
Revolving Advances plus such Lender’s Pro Rata Share of the Letter of Credit
Exposure, at the rate equal to the Applicable Margin for Commitment Fees for
such period; provided that, no such commitment fee shall accrue on the
Commitment of a Defaulting Lender during the period such Lender remains a
Defaulting Lender. Such Commitment Fee is due quarterly in arrears on
March 31, June 30, September 30, and December 31 of each year commencing on
September 30, 2012 and on the Revolving Maturity Date. For the avoidance of
doubt and for purposes of this Section 2.6(a) only, outstanding Swing Line
Advances shall not reduce the amount of unused Commitment.

(b) Fees for Letters of Credit. The Borrower agrees to pay the following:

(i) Subject to Section 2.14, to the Administrative Agent for the pro rata
benefit of the Lenders a per annum letter of credit fee for each Letter of
Credit issued hereunder, for the period such Letter of Credit is to be
outstanding, in an amount equal to the greater of (A) the Applicable Margin for
Eurodollar Advances per annum on the face amount of such Letter of Credit, and
(B) $600 per Letter of Credit. Such fee shall be due and payable quarterly in
arrears on March 31, June 30, September 30, and December 31 of each year, and on
the Revolving Maturity Date.

(ii) To the Issuing Lender, a fronting fee for each Letter of Credit equal to
the greater of (A) 0.125% per annum on the face amount of such Letter of Credit
and (B) $600. Such fee shall be due and payable in advance on the date of the
issuance of the Letter of Credit, and, in the case of an increase or extension
only, on the date of such increase or such extension.

(iii) Subject to Section 2.14, to the Administrative Agent for the pro rata
benefit of the Lenders such additional per annum letter of credit fee for each
commercial Letter of Credit issued hereunder, for the period such Letter of
Credit is to be outstanding, in an amount agreed to between the Borrower and the
Issuing Lender in writing. Such fee shall be due and payable quarterly in
arrears on March 31, June 30, September 30, and December 31 of each year, and on
the Revolving Maturity Date.

 

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(iv) To the Issuing Lender, an additional fronting fee for each commercial
Letter of Credit equal an amount agreed to between the Borrower and the Issuing
Lender. Such fee shall be due and payable in advance on the date of the issuance
of the Letter of Credit in writing, and, in the case of an increase or extension
only, on the date of such increase or such extension.

(v) To the Issuing Lender such other usual and customary fees associated with
any transfers, amendments, drawings, negotiations or reissuances of any Letters
of Credit. Such fees shall be due and payable as requested by the Issuing Lender
in accordance with the Issuing Lender’s then current fee policy.

The Borrower shall have no right to any refund of letter of credit fees
previously paid by the Borrower, including any refund claimed because any Letter
of Credit is canceled prior to its expiration date.

(c) Fee Letter. The Borrower agrees to pay the fees to Amegy as set forth in the
Fee Letter.

Section 2.7. Interest.

(a) Base Rate Advances. Each Base Rate Advance shall bear interest at the
Adjusted Base Rate in effect from time to time plus the Applicable Margin for
Base Rate Advances for such period. The Borrower shall pay to Administrative
Agent for the ratable account of each Lender all accrued but unpaid interest on
such Lender’s Revolving Advances and Term Advances which are Base Rate Advances
on each March 31, June 30, September 30, and December 31 commencing on
September 30, 2012, and on the Revolving Maturity Date or the Term Maturity
Date, as applicable. The Swing Line Advances shall bear interest at the Adjusted
Base Rate plus the Applicable Margin for Base Rate Advances or such other per
annum rate to be agreed to between the Borrower and the Swing Line Lender. The
Borrower shall pay to the Swing Line Lender all accrued but unpaid interest on
such Swing Line Advances on each March 31, June 30, September 30, and
December 31 commencing on September 30, 2012, and on the Revolving Maturity Date
or the Term Maturity Date, as applicable.

(b) Eurodollar Advances. Each Eurodollar Advance shall bear interest during its
Interest Period equal to at all times the Eurodollar Rate for such Interest
Period plus the Applicable Margin for Eurodollar Advances for such period. The
Borrower shall pay to the Administrative Agent for the ratable account of each
Lender all accrued but unpaid interest on each of such Lender’s Eurodollar
Advances on the last day of the Interest Period therefor (provided that for
Eurodollar Advances with Interest Periods in excess of three months, accrued but
unpaid interest shall also be due on the day three months from the first day of
such Interest Period), on the date any Eurodollar Advance is repaid, and on the
Revolving Maturity Date or the Term Maturity Date, as applicable.

(c) Retroactive Adjustments of Applicable Margin. In the event that any
financial statement or Compliance Certificate delivered pursuant to Section 5.2
is shown to be inaccurate, and such inaccuracy, if corrected, would have led to
the application of a higher Applicable Margin for any period (an “Applicable
Period”) than the Applicable Margin applied for such Applicable Period, then
(i) the Borrower shall immediately deliver to the Administrative Agent a
corrected Compliance Certificate for such Applicable Period, (ii) the Applicable
Margin shall be determined as if the higher Applicable Margin that would have
applied were applicable for such Applicable Period, and (iii) the Borrower shall
immediately, without further action by the Administrative Agent, any Lender or
any Issuing Lender, pay to the Administrative Agent for the account of the
applicable Lenders, the accrued additional interest owing as a result of such
increased Applicable Margin for such Applicable Period. This Section 2.7(c)
shall not limit the rights of the Administrative Agent and Lenders with respect
to the Default Rate as set forth in Section 2.7(d).

 

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(d) Default Rate. Notwithstanding the foregoing, (i) upon the occurrence and
during the continuance of an Event of Default under Section 7.1(a) or
Section 7.1(g), all overdue amounts shall bear interest, after as well as before
judgment, at the Default Rate and (ii) upon the occurrence and during the
continuance of any Event of Default (including under Section 7.1(a) and
Section 7.1(g)), upon the request of the Majority Lenders, all Obligations shall
bear interest, after as well as before judgment, at the Default Rate. Interest
accrued pursuant to this Section 2.7(d) and all interest accrued but unpaid on
or after the Revolving Maturity Date or the Term Maturity Date shall be due and
payable on demand.

Section 2.8. Illegality. If any Lender shall notify the Borrower that any Change
in Law makes it unlawful, or that any central bank or other Governmental
Authority asserts that it is unlawful, for such Lender or its applicable Lending
Office to perform its obligations under this Agreement to make, maintain, or
fund any Eurodollar Advances of such Lender then outstanding hereunder, (a) the
Borrower shall, no later than 11:00 a.m. (Houston, Texas, time) (i) if not
prohibited by law, on the last day of the Interest Period for each outstanding
Eurodollar Advance or (ii) if required by such notice, on the second Business
Day following its receipt of such notice, prepay all of the Eurodollar Advances
of such Lender then outstanding, together with accrued interest on the principal
amount prepaid to the date of such prepayment and amounts, if any, required to
be paid pursuant to Section 2.9 as a result of such prepayment being made on
such date, (b) such Lender shall simultaneously make a Base Rate Advance to the
Borrower on such date in an amount equal to the aggregate principal amount of
the Eurodollar Advances prepaid to such Lender, and (c) the right of the
Borrower to select Eurodollar Advances from such Lender for any subsequent
Borrowing shall be suspended until such Lender shall notify the Borrower that
the circumstances causing such suspension no longer exist. Each Lender agrees to
use commercially reasonable efforts (consistent with its internal policies and
legal and regulatory restrictions) to designate a different Lending Office if
the making of such designation would avoid the effect of this paragraph and
would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.

Section 2.9. Breakage Costs. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment (including any deemed
payment or repayment and any reallocated repayment to Non-Defaulting Lenders
provided for in Section 2.11(a) or Section 2.14) of any Advance other than a
Base Rate Advance on a day other than the last day of the Interest Period for
such Advance (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);

(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make an Advance) to prepay, borrow, continue or Convert any Advance
other than a Base Rate Advance on the date or in the amount notified by the
Borrower; or

(c) any assignment of an Eurodollar Advance on a day other than the last day of
the Interest Period therefor as a result of a request by the Borrower pursuant
to Section 2.13;

including any loss of anticipated profits, any foreign exchange losses and any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Advance, from fees payable to terminate the deposits from
which such funds were obtained or from the performance of any foreign

 

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exchange contract. The Borrower shall also pay any customary administrative fees
charged by such Lender in connection with the foregoing. For purposes of
calculating amounts payable by the Borrower to the Lenders under this
Section 2.9, the requesting Lender shall be deemed to have funded the Eurodollar
Advances made by it at the Eurodollar Base Rate used in determining the
Eurodollar Rate for such Advance by a matching deposit or other borrowing in the
offshore interbank market for Dollars for a comparable amount and for a
comparable period, whether or not such Eurodollar Advance was in fact so funded.

Section 2.10. Increased Costs.

(a) Eurodollar Advances. If any Change in Law shall:

(i) impose, modify, or deem applicable any reserve, special deposit, compulsory
loan, insurance charge, assessment, or similar requirement (other than by way of
imposition or increase of reserve requirements included in the Eurodollar Rate
Reserve Percentage) relating to any extensions of credit or other assets of, or
any deposits with or other liabilities or commitments of, financial institutions
generally, including any Lender (or its applicable Lending Office), including
the Commitments of such Lender hereunder; or

(ii) impose on financial institutions generally, including such Lender (or its
applicable Lending Office), or on the London interbank market any other
condition affecting this Agreement or its Notes or any of such extensions of
credit or liabilities or commitments;

and the result of any of the foregoing is to increase the cost to such Lender
(or its applicable Lending Office) of making, Converting into, continuing, or
maintaining any Eurodollar Advances or to reduce any sum received or receivable
by such Lender (or its applicable Lending Office) under this Agreement or its
Notes with respect to any Eurodollar Advances, then the Borrower shall pay to
such Lender within three Business Days after written demand made by such Lender
such amount or amounts as such Lender determines in good faith to be necessary
to compensate such Lender for such increased cost or reduction.

(b) Capital Adequacy. If, after the date hereof, any Lender or the Issuing
Lender shall have determined that any Change in Law affecting such Lender or
Issuing Lender or any Lending Office of such Lender or such Lender’s or Issuing
Lender’s holding company, if any, regarding capital or liquidity requirements
has or would have the effect of reducing the rate of return on the capital of
financial institutions generally, including such Lender or the Issuing Lender or
any corporation controlling such Lender or the Issuing Lender, as a consequence
of such Lender’s or the Issuing Lender’s obligations hereunder to a level below
that which such Lender or the Issuing 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 or the Issuing Lender, as the case may be,
the Borrower shall pay to such Lender or the Issuing Lender such additional
amount or amounts as such Lender determines in good faith to be necessary to
compensate such Lender or the Issuing Lender for such reduction.

(c) Mitigation. Each Lender shall promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
Section 2.10 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 2.10 shall furnish to
the Borrower and the Administrative Agent 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.

 

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(d) Delay in Requests. Failure or delay on the part of any Lender or Issuing
Lender to demand compensation pursuant to this Section 2.10 shall not constitute
a waiver of such Lender’s or such Issuing Lender’s right to demand such
compensation, provided that the Borrower shall not be required to compensate a
Lender or Issuing Lender pursuant to this Section 2.10 for any increased costs
incurred or reductions suffered more than 180 days prior to the date that such
Lender or Issuing Lender, as the case may be, notifies the Borrower and the
Administrative Agent of the Change in Law giving rise to such increased costs or
reductions and of such Lender’s or Issuing 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 180-day period referred
to above shall be extended to include the period of retroactive effect thereof).

Section 2.11. Payments 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
the Administrative Agent in Dollars and in immediately available funds, without
setoff, deduction, or counterclaim; provided that, the Borrower may setoff
amounts owing to any Lender that is at such time a Defaulting Lender against
Advances that such Defaulting Lender failed to fund to the Borrower under this
Agreement (the “Unfunded Advances”) so long as (i) the Borrower shall have
delivered prior written notice of such setoff to the Administrative Agent and
such Defaulting Lender, (ii) the Advances made by the Non-Defaulting Lenders as
part of the original Borrowing to which the Unfunded Advances applied shall
still be outstanding, (iii) if such Defaulting Lender failed to fund Advances
under more than one Borrowing, such setoff shall be applied in a manner
satisfactory to the Administrative Agent, and (iv) upon the application of such
setoff, the Unfunded Advances shall be deemed to have been made by such
Defaulting Lender on the effective date of such setoff.

(b) Payment Procedures. The Borrower shall make each payment under this
Agreement and under the Notes not later than 1:00 p.m. (Houston, Texas time) on
the day when due in Dollars to the Administrative Agent at the location referred
to in the Notes (or such other location as the Administrative Agent shall
designate in writing to the Borrower) in same day funds. The Administrative
Agent will promptly thereafter, and in any event prior to the close of business
on the day any timely payment is made, cause to be distributed like funds
relating to the payment of principal, interest or fees ratably (other than
amounts payable solely to the Administrative Agent or a specific Lender pursuant
to Sections 2.8, 2.9, 2.10, 2.12, 2.13, and 9.2 and such other provisions herein
which expressly provide for payments to a specific Lender, but after taking into
account payments effected pursuant to Section 9.1) in accordance with each
Lender’s Pro Rata Shareapplicable pro rata share to the Lenders for the account
of their respective applicable 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. Upon receipt of other amounts due solely to the
Administrative Agent, the Issuing Lender, the Swing Line Lender or a specific
Lender, the Administrative Agent shall distribute such amounts to the
appropriate party 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;
provided that if such extension would cause payment of interest on or principal
of Eurodollar Advances to be made in the next following calendar month, such
payment shall be made on the next preceding Business Day.

 

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(d) Computations. All computations of interest for Base Rate Advances shall be
made by the Administrative Agent on the basis of a year of 365/366 days and all
computations of all other interest and fees shall be made by the Administrative
Agent on the basis of a year of 360 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
Administrative Agent 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 Advances made by it in excess of its ratable share
of payments on account of the Advances or Letter of Credit Obligations obtained
by the Lenders (other than as a result of a termination of a Defaulting Lender’s
Commitment under Section 2.1(b)(ii), the setoff right of the Borrower under
clause (a) above, or the non-pro rata application of payments provided in the
last sentence of this clause (e)), such Lender shall notify the other Lenders
and forthwith purchase from the other Lenders such participations in the
Advances made by it or the Letter of Credit Obligations held 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 ratable
share, but without interest. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.11(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. If a Lender fails to fund a Revolving Advance with respect to a
Borrowing as and when required hereunder and the Borrower subsequently makes a
repayment of any Revolving Advances, then, after taking into account any setoffs
made pursuant to Section 2.11(a) above, such payment shall be applied among the
Non-Defaulting Lenders ratably in accordance with their respective Commitment
percentages until each Lender (including any Lender that is at such time a
Defaulting Lender) has its percentage of all of the outstanding Revolving
Advances and the balance of such repayment shall be applied among the Lenders in
accordance with their Pro Rata Share. The provisions of this Section 2.11(e)
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Advances or participations in Letter of Credit
Exposure to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this
Section 2.11(e) shall apply).

Section 2.12. Taxes.

(a) No Deduction for Certain Taxes. Any and all payments by any Credit Party
under any of the Credit Documents to the Administrative Agent, the Issuing
Lender, or a Lender shall be made, in accordance with Section 2.11, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges, or withholdings, and all liabilities with respect
thereto, excluding, in the case of the Administrative Agent, the Issuing Lender,
or a Lender, (i) taxes imposed on or measured by its net income or profits
(however denominated) and franchise (or margin) taxes imposed on it by the
jurisdiction (or any political subdivision thereof) (A) under the laws of which
(or under the laws of a political subdivision of which) it is organized or in
which its principal executive office is located or, in the case of a Lender, the
laws of which (or under the laws of a political subdivision of which) such
Lender’s applicable Lending Office is located, or (B) as a result of a present
or former connection between it and the jurisdiction (or any political
subdivision thereof) imposing such tax (other than any

 

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such connection arising solely from it having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
other Credit Document); (ii) branch profits taxes imposed by the United States
of America or any similar taxes imposed by any jurisdiction described in (i);
(iii) in the case of a Lender other than a Lender that becomes a party to this
Agreement or any other Credit Document pursuant to an Assignment and Acceptance,
any taxes imposed by the United States of America by means of withholding at the
source, if and to the extent such United States withholding taxes are in effect
on the date a Lender becomes a Lender hereunder; (iv) in the case of any Lender
that becomes a party to this Agreement or any other Credit Document pursuant to
an Assignment and Acceptance, any taxes imposed by the United States of America
by means of withholding at the source, except to the extent that, pursuant to
this Section 2.12, amounts with respect to such taxes were payable to such
Lender’s assignor immediately before such Lender became a party to this
Agreement or such Credit Document with respect to its applicable ownership
interest in the Commitments; and (v) any U.S. federal withholding taxes imposed
under FATCA (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as “Taxes”). Except
as provided in Section 2.12(f), if the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable to the Administrative
Agent, the Issuing Lender, or any Lender, (i) the sum payable shall be increased
as may be necessary so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.12), such
Lender receives an amount equal to the sum it would have received had no such
deductions been made; (ii) the Borrower or the Administrative Agent, as
applicable, shall make such deductions; and (iii) the Borrower or the
Administrative Agent, as applicable, shall pay the full amount deducted to the
relevant Governmental Authority or other authority in accordance with applicable
law.

(b) Other Taxes. In addition, except as provided in Section 2.12(f), the
Borrower agrees to pay any present or future stamp or documentary taxes or any
other excise or property taxes, charges, or similar levies which arise from any
payment made under any Credit Document or from the execution, delivery, or
registration of, or otherwise with respect to, this Agreement, the Notes, or the
other Credit Documents (hereinafter referred to as “Other Taxes”).

(c) Indemnification. Except as provided in Section 2.12(f), the Borrower will
indemnify each Lender, the Issuing Lender, and the Administrative Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed on amounts payable under this Section 2.12) paid by such
Lender, the Issuing Lender, or the Administrative Agent (as the case may be) and
any interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.

(d) Evidence of Tax Payments. As soon as practicable after any payment of Taxes
or Other Taxes by any Credit Party to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent 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 Administrative Agent.

(e) Withholding Reduction or Exemption. (i) Each Foreign Lender that is entitled
to an exemption from, or a reduction of, withholding tax with respect to
payments under this Agreement or under any other Credit Document shall, to the
extent that it is legally entitled to do so, deliver to the Borrower (with a
copy to the Administrative Agent), on or before the date it becomes a party to
this Agreement and from time to time thereafter at the time or times prescribed
by applicable law or reasonably requested by the Borrower or the Administrative
Agent, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative
Agent as will permit such payments to be made without, or at a reduced rate of,
withholding. In addition, any Lender shall, to the extent that it is legally
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Borrower (with a copy to the Administrative Agent), on or before the date it
becomes a party to this Agreement and from time to time thereafter at the time
or times prescribed by applicable law or reasonably requested by the Borrower or
the Administrative Agent as will enable the Borrower or the Administrative Agent
to determine that such Lender is not subject to United States backup withholding
and whether or not such Lender is subject to United States information reporting
requirements. Notwithstanding anything to the contrary in the preceding two
sentences, the completion, execution and submission of such documentation (other
than such documentation set forth in Section 2.12(e)(ii)(A), (B) and (C) below)
shall not be required if in the Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.

(ii) Without limiting the generality of the foregoing, each Lender shall deliver
to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient), on or before the date on which such Lender
becomes a party to this Agreement and from time to time thereafter at the time
or times prescribed by applicable law or reasonably requested by the Borrower or
Administrative Agent, whichever of the following is applicable:

(A) In the case of any Lender that is not a Foreign Lender, duly completed and
executed originals of IRS Form W-9 (or any successor form) certifying that such
Lender is exempt from United States backup withholding;

(B) In the case of any Foreign Lender, to the extent that it is legally entitled
to do so:

(1) duly completed and executed originals of IRS Form W-8BEN (or any successor
form) claiming eligibility for benefits of an income tax treaty to which the
United States is a party;

(2) duly completed and executed originals of IRS Form W-8ECI (or any successor
form);

(3) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (1) a certificate to the
effect that such Foreign Lender is not (a) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (c) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code, and (2) duly
completed and executed originals of IRS Form W-8BEN (or any successor form); or

(4) any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit the Borrower and the Administrative Agent to determine
the withholding or deduction required to be made.

(C) Without limiting any of the foregoing, if a payment made to a Lender
hereunder or under any other Credit Document would be subject to United States
federal withholding taxes imposed pursuant to FATCA if such Lender were to fail
to comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent, at the time or times
prescribed by applicable law and at such time or times reasonably requested by
the Borrower and the Administrative Agent, such documentation prescribed by
applicable law

 

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(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower or the Administrative
Agent to comply with its obligations under FATCA, to determine that such Lender
has complied with its obligations under FATCA, or to determine the amount to
deduct and withhold from such payment; provided, that solely for purposes of
this paragraph, the term “FATCA” shall include any amendments made to FATCA
after the date of this Agreement.

(D) Each Lender further agrees that it shall (i) promptly notify the Borrower
and the Administrative Agent of any change in circumstances which would modify
or render invalid any claimed exemption or reduction in withholding taxes, and
(ii) in the event any previous form delivered by such Lender pursuant to this
Section 2.12(e) expires or becomes obsolete or inaccurate, update any such form
or certification or promptly deliver any such other properly completed and
executed form, certification or documentation as may be required in order to
confirm or establish the entitlement of such Lender to an exemption from or a
reduction in withholding taxes with respect to payments hereunder or under any
other Credit Document if such Lender continues to be so entitled.

(f) Failure to Provide Forms. For any period with respect to which a Lender has
failed to provide the Borrower or the Administrative Agent with the appropriate
forms referred to in this Section 2.12, such Lender shall not be entitled to
indemnification or the payment of additional amounts under Section 2.12(a), (b),
or (c) with respect to Taxes imposed; provided that if a Lender, that is
otherwise exempt from or subject to a reduced rate of withholding tax, becomes
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Lender shall reasonably request, and
at the expense of such Lender, to assist such Lender to recover such Taxes.

(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 Taxes or Other Taxes or to eliminate or reduce the payment of any additional
sums under this Section 2.12; 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.

(h) Tax Credits and Refunds. If the Administrative Agent, any Lender or the
Issuing Lender determines, in its sole discretion exercised in good faith, that
it has received a refund of any 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 2.12, 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 2.12 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent, such Lender or the Issuing
Lender, as the case may be, 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 the Administrative Agent, such Lender or
the Issuing 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 the Administrative Agent, such Lender or the Issuing Lender in the
event the Administrative Agent, such Lender or the Issuing Lender is required to
repay such refund to such Governmental Authority. Notwithstanding anything to
the contrary in this paragraph (h), in no event will the Administrative Agent,
the Issuing Lender or any Lender be required to pay any amount to the Borrower
pursuant to this paragraph (h) the payment of which would place the
Administrative Agent, the Issuing Lender or such Lender in a less favorable net
after-Tax position than the Administrative Agent, the Issuing Lender or such
Lender would have been in

 

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if the indemnification payments or additional amounts giving rise to such refund
had never been paid. This subsection shall not be construed to require the
Administrative Agent, any Lender or the Issuing 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 the Administrative Agent or any Lender becomes entitled to
receive payment of Taxes, Other Taxes or additional sums pursuant to this
Section 2.12, it shall give notice and demand thereof to the Borrower, and the
Borrower (unless the Administrative Agent or Lender shall withdraw such notice
and demand or the Borrower is not obligated to pay such amounts) shall pay such
Taxes, Other Taxes or additional sums within 30 days after the Borrower’s
receipt of such notice and demand. Notwithstanding anything herein to the
contrary, neither any Lender, the Issuing Bank, nor the Administrative Agent
shall be indemnified for any Taxes or Other Taxes under this Section 2.12 unless
such Lender, the Issuing Bank, or the Administrative Agent shall make written
demand on Borrower for such reimbursement no later than 6 months after the
earlier of (i) the date on which the relevant Governmental Authority makes
written demand upon such Lender, the Issuing Bank, or the Administrative Agent
for such Taxes or Other Taxes, and (ii) the date on which such Lender, the
Issuing Bank, or the Administrative Agent has made payment of such Taxes or
Other Taxes to the relevant Governmental Authority; provided that if the Taxes
or Other Taxes imposed or asserted giving rise to such claims are retroactive,
then the 6-month period referred to above shall be extended to include the
retroactive effect thereof.

Section 2.13. Replacement of Lenders. If (a) the Borrower is required pursuant
to Section 2.10 or 2.12 to make any additional payment to any Lender, (b) any
Lender’s obligation to make or continue, or to Convert Base Rate Advances into,
Eurodollar Advances shall be suspended pursuant to Section 2.3(c)(iii) or 2.8,
or (c) any Lender is a Defaulting Lender (any such Lender described in any of
the preceding clauses (a) – (c), being a “Subject Lender”), then (i) in the case
of a Defaulting Lender, the Administrative Agent may, upon notice to the Subject
Lender and the Borrower, require such Defaulting 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, rights and
obligations under this Agreement and the related Credit Documents as a Lender to
an Eligible Assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment) and (ii) in the case of any
Subject Lender, the Borrower may, upon notice to the Subject Lender and the
Administrative Agent 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, rights and obligations under this Agreement
and the related Credit Documents to an Eligible Assignee that shall assume such
obligations (which Eligible Assignee may be another Lender, if a Lender accepts
such assignment), provided that, in any event

(A) as to assignments required by the Borrower, the Borrower shall have paid to
the Administrative Agent 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 applicable Advances and participations in
outstanding Letter of Credit Obligations, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Credit
Documents (including any amounts under Section 2.9) 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);

(C) in the case of any such assignment resulting from a claim for compensation
under Section 2.12, such assignment will result in a reduction in such
compensation or payments thereafter; and

 

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(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 or the Administrative Agent to require such
assignment and delegation cease to apply. Solely for purposes of effecting any
assignment involving a Defaulting Lender under this Section 2.13 and to the
extent permitted under applicable Legal Requirements, each Lender hereby
designates and appoints the Administrative Agent as true and lawful agent and
attorney-in-fact, with full power and authority, for and on behalf of and in the
name of such Lender to execute, acknowledge and deliver the Assignment and
Acceptance required hereunder if such Lender is a Defaulting Lender and such
Lender shall be bound thereby as fully and effectively as if such Lender had
personally executed, acknowledged and delivered the same. In lieu of the
Borrower or the Administrative Agent replacing a Defaulting Lender as provided
in this Section 2.13, the Borrower may terminate such Defaulting Lender’s
Commitment as provided in Section 2.1(b)(ii).

Section 2.14. Payments and Deductions to a Defaulting Lender.

(a) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.1(a), Section 2.2, or Section 2.11 then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid in cash.

(b) If a Defaulting Lender as a result of the exercise of a set-off shall have
received a payment in respect of its outstanding applicable Advances or Pro Rata
Share of Letter of Credit Exposure which results in its outstanding applicable
Advances and Pro Rata Share of Letter of Credit Exposure being less than its pro
rata share of the aggregate outstanding applicable Advances and Letter of Credit
Exposure, then no payments will be made to such Defaulting Lender until such
time as all amounts due and owing to the Lenders have been equalized in
accordance with each Lender’s respective pro rata share of the aggregate
outstanding applicable Advances and Letter of Credit Exposure. Further, if at
any time prior to the acceleration or maturity of the Advances, the
Administrative Agent shall receive any payment in respect of principal
attributable to an applicable Advance or Letter of Credit Obligations while one
or more Defaulting Lenders shall be party to this Agreement, the Administrative
Agent shall apply such payment first to the Borrowings for which such Defaulting
Lender(s) shall have failed to fund its pro rata share until such time as such
Borrowing(s) are paid in full or each Lender (including each Defaulting Lender)
is owed its pro rata share of all Advances then outstanding. After acceleration
or maturity of the Advances, subject to the first sentence of this
Section 2.14(b), all principal will be paid ratably as provided in
Section 2.11(e).

(c) If any Letter of Credit Exposure exists at the time a Lender becomes a
Defaulting Lender then:

(i) such Letter of Credit Exposure shall be automatically reallocated among the
Non-Defaulting Lenders in accordance with their respective Pro Rata Share of
such Defaulting Lender’s Pro Rata Share of the Letter of Credit Exposure (and
each Lender is deemed to have purchased and assigned such participation interest
in such reallocated portion of the Letter of Credit Exposure) but only to the
extent that (A) the sum of each Non-Defaulting Lender’s outstanding Revolving
Advances plus its share of the Letter of Credit Exposure, after giving effect to
the reallocation provided herein, does not exceed such Non-Defaulting Lender’s
Commitment, and (B) the conditions set forth in Section 3.2 are satisfied at
such time; provided that, such reallocation shall not constitute a waiver or
release of any claim the Borrower, the Administrative Agent, the Issuing Lender
or any other Lender may have against such Defaulting Lender or cause such
Defaulting Lender to be a Non-Defaulting Lender;

 

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(ii) if the reallocation described in clause (i) above cannot, or can only
partially, be effected, then the Borrower shall, within one Business Day
following notice by the Administrative Agent, cash collateralize such Defaulting
Lender’s share of the Letter of Credit Exposure (after giving effect to any
partial reallocation pursuant to clause (i) above) in accordance with the
procedures set forth in Section 2.2(h) for so long as such Letter of Credit
Exposure is outstanding;

(iii) if the Borrower cash collateralizes any portion of such Defaulting
Lender’s Letter of Credit Exposure pursuant to this Section 2.14 then the
Borrower shall not be required to pay any fees to such Defaulting Lender
pursuant to Section 2.6(b)(i) or (iii) with respect to such Defaulting Lender’s
Letter of Credit Exposure during the period such Defaulting Lender’s Letter of
Credit Exposure is cash collateralized;

(iv) if the Letter of Credit Exposure of the Non-Defaulting Lenders is
reallocated pursuant to clause (i) above, then the fees payable to the Lenders
pursuant to Section 2.6(b)(i) and (iii) shall be adjusted in accordance with
such Non-Defaulting Lenders’ Pro Rata Share;

(v) if any Defaulting Lender’s share of the Letter of Credit Exposure is neither
cash collateralized nor reallocated pursuant to the preceding provisions, then,
without prejudice to any rights or remedies of the Issuing Lender or any Lender
hereunder, all letter of credit fees payable under Section 2.6(b)(i) and
(iii) with respect to such Defaulting Lender’s share of the Letter of Credit
Exposure shall be payable to the Issuing Lender until such Letter of Credit
Exposure is cash collateralized and/or reallocated.

In the event that the Administrative Agent, the Borrower and the Issuing Lender
each agrees that a Defaulting Lender has adequately remedied all matters that
caused such Lender to be a Defaulting Lender, then (i) the Letter of Credit
Exposure of the Lenders shall be readjusted to reflect the inclusion of such
Lender’s Commitment and on such date such Lender shall be deemed to have
purchased at par such of the Revolving Advances or participations in Letters of
Credit of the other Lenders as the Administrative Agent shall determine may be
necessary in order for such Lender to hold such Revolving Advances and Letter of
Credit Exposure in accordance with its Pro Rata Share, and (ii) if no Default
exists, then any cash collateral posted by the Borrower pursuant to clause
(c)(ii) above with respect to such Lender shall be returned to the Borrower.

Section 2.15. Increase in Commitments.

(a) At any time prior to the Business Day immediately preceding the Revolving
Maturity Date, the Borrower may effectuate one or more increases in the
aggregate Commitments (each such increase being a “Commitment Increase”), by
designating either one or more of the existing Lenders (each of which, in its
sole discretion, may determine whether and to what degree to participate in such
Commitment Increase) or one or more other Eligible Assignees that at the time
agree, in the case of any existing Lender, to increase its Commitment as such
Lender shall so select (an “Increasing Lender”) and, in the case of any Eligible
Assignee that is not an existing Lender (an “Additional Lender”), to become a
party to this Agreement as a Lender; provided, however, that (i) each such
Commitment Increase shall be equal to at least $5,000,000, (ii) all Commitments
and Advances provided pursuant to a Commitment Increase shall be available on
the same terms as those applicable to the existing Commitments and Advances
except as to upfront fees which may be as agreed to between the Borrower and
such Increasing Lender or Additional Lender, as the case may be, (iii) the
aggregate of all such Commitment Increases

 

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shall not exceed an amount equal to the sum of $100,000,000, and (iv) such
Commitment Increase shall not effect an increase in the aggregate Commitments if
the Revolving Maturity Date has occurred. The Borrower shall provide prompt
notice of such proposed Commitment Increase pursuant to this Section 2.15 to the
Administrative Agent and the Lenders. This Section 2.15 shall not be construed
to create any obligation on the Administrative Agent or any of the Lenders to
advance or to commit to advance any credit to the Borrower or to arrange for any
other Person to advance or to commit to advance any credit to the Borrower. For
the avoidance of doubt, the increase of the aggregate Commitments to
$200,000,000 pursuant to the Second Amendment constitutes a Commitment Increase
pursuant to this Section 2.15 and no further increases of the aggregate
Commitments shall be permitted pursuant to this Section 2.15 after the Second
Amendment Effective Date.

(b) The Commitment Increase shall become effective on the date (the “Increase
Date”) on or prior to which each of following conditions shall have been
satisfied: (i) the receipt by the Administrative Agent of (A) an agreement in
form and substance reasonably satisfactory to the Administrative Agent signed by
the Borrower, each Increasing Lender and/or each Additional Lender, setting
forth the Commitments, if any, of each such Increasing Lender and/or Additional
Lender and, if applicable, setting forth the agreement of each Additional Lender
to become a party to this Agreement and to be bound by all the terms and
provisions hereof binding upon each Lender and (B) such evidence of appropriate
authorization on the part of the Borrower and the Guarantors with respect to
such Commitment Increase and such legal opinions as the Administrative Agent may
reasonably request, (ii) the funding by each Increasing Lender and Additional
Lender of the Revolving Advances to be made by each such Lender to effect the
prepayment requirement set forth in Section 2.4(c)(iii), (iii) receipt by the
Administrative Agent of a certificate of an authorized officer of the Borrower
certifying (A) both before and after giving effect to such Commitment Increase,
no Default has occurred and is continuing, (B) all representations and
warranties made by the Borrower in this Agreement are true and correct in all
material respects, unless such representation or warranty relates to an earlier
date which remains true and correct in all material respects as of such earlier
date, and (C) the pro forma compliance with the covenants in Sections 6.16 and
6.17, after giving effect to such Commitment Increase, and (iv) receipt by the
Increasing Lender or Additional Lender, as applicable, of all such fees as
agreed to between such Increasing Lender and /or Additional Lender and the
Borrower.

(c) On such Increase Date, each Lender’s share of the Letter of Credit Exposure
and participations in respect of Swing Line Advances on such date shall
automatically be deemed to equal such Lender’s Pro Rata Share of such Letter of
Credit Obligations and participations in respect of Swing Line Advances (such
Pro Rata Share for such Lender to be determined as of the Increase Date in
accordance with its Commitment on such date as a percentage of the aggregate
Commitments on such date) without further action by any party.

ARTICLE 3

CONDITIONS OF LENDING

Section 3.1. Conditions Precedent to Initial Borrowings and the Initial Letter
of Credit. The obligations of each Lender to make the initial Advances and the
Issuing Lender to issue an initial Letter of Credit, shall be subject to the
conditions precedent that:

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

(i) this Agreement and all attached Exhibits and Schedules and the Notes payable
to the order of each applicable Lender;

 

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(ii) the Guaranty executed by each Wyeville Drop Down Entity and each other
Subsidiary of the Borrower existing on the Effective Date;

(iii) the Security Agreement executed by each Credit Party, together with
appropriate UCC-1 financing statements, if any, necessary or desirable for
filing with the appropriate authorities and any other documents, agreements, or
instruments necessary to create, perfect or maintain an Acceptable Security
Interest in the Collateral described in the Security Agreement;

(iv) fully executed Mortgages covering all fee owned real property of any Credit
Party, together with (A) a copy of an existing owner’s policy of title insurance
reflecting no Liens on such real property other than Permitted Liens, (B) a
flood determination certificate issued by the appropriate Governmental Authority
or third party indicating whether such property is designated as a “flood hazard
area” and (C) if such property is designated to be in a “flood hazard area”,
evidence of flood insurance on such property obtained by the applicable Credit
Party in such total amount as required by Regulation H of the Federal Reserve
Board, and all official rulings and interpretations thereunder or thereof, and
otherwise in compliance with the National Flood Insurance Program as set forth
in the Flood Disaster Protection Act of 1973;

(v) certificates of insurance naming the Administrative Agent as loss payee with
respect to property insurance, or additional insured with respect to liability
insurance, and covering the Borrower’s or its Subsidiaries’ Properties with such
insurance carriers, for such amounts and covering such risks that are acceptable
to the Administrative Agent together with copies of endorsements of the Credit
Parties’ insurance policies maintained pursuant to Section 5.3 as reasonably
requested by the Administrative Agent;

(vi) a certificate from an authorized officer of the Borrower dated as of the
Effective Date stating that as of such date (A) all representations and
warranties of the Borrower set forth in this Agreement are true and correct,
(B) no Default has occurred and is continuing; and (C) the conditions precedent
set forth in Section 3.1(b), (e), (m)(i) and (ii), and (n) have been met;

(vii) a secretary’s certificate from each Credit Party certifying such Person’s
(A) officers’ incumbency, (B) authorizing resolutions, and (C) Organization
Documents;

(viii) certificates of good standing for each Credit Party in each state in
which each such Person is organized or qualified to do business, which
certificate shall be (A) dated a date not earlier than 30 days prior to
Effective Date or (B) otherwise effective on the Effective Date;

(ix) legal opinions of (A) Fulbright & Jaworski L.L.P. as Texas counsel to the
Credit Parties and (B) Reinhart Boerner Van Deuren s.c., as Wisconsin counsel to
the Credit Parties, each in form and substance reasonably acceptable to the
Administrative Agent;

(x) a copy of a registration rights agreement, omnibus agreement, and
underwriting agreement in substantially the same form as the applicable exhibits
attached to the Registration Statement, certified as of the Effective Date by an
authorized officer of the Borrower (x) as being true and correct copies of such
documents and (y) as being in full force and effect;

(xi) copies of the Wyeville Drop Down Documents, certified as of the Effective
Date by an authorized officer of the Borrower (x) as being true and correct
copies of such documents, (y) as being in full force and effect and (z) that no
material term or condition thereof shall have been amended, modified or waived
after the execution thereof without the prior written consent of the
Administrative Agent;

 

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(xii) letter of credit applications or amendments to the Existing Letters of
Credit, as applicable, and such other documents and instruments of transfer as
the Administrative Agent and the Issuing Lender deem necessary to effectuate the
deemed issuance of the Existing Letters of Credit hereunder; and

(xiii) such other documents, governmental certificates, agreements, and lien
searches as the Administrative Agent or any Lender may reasonably request.

(b) 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 Agreement and the
other Credit Documents and the consummation of the IPO and the Wyeville Drop
Down. In addition, the Borrower and the Subsidiaries shall have all such
material consents, licenses and approvals required in connection with the
continued operation of the Borrower 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.

(c) 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 before and after giving effect to the initial
Borrowings or issuance (or deemed issuance) of Letters of Credit and to the
application of the proceeds from such Borrowing, as though made on and as of
such date.

(d) Fee Letter; Payment of Fees. The Borrower shall have paid the fees and
expenses required to be paid as of the Effective Date by Sections 2.6(c) and 9.1
or any other provision of a Credit Document.

(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 Borrower’s knowledge, 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 Document or any transaction
contemplated hereby or thereby, including the consummation of the IPO and the
Wyeville Drop Down or (ii) which in the judgment of the Administrative Agent
could reasonably be expected to result in a Material Adverse Change.

(f) Other Reports. The Administrative Agent shall have received, in form and
substance reasonably satisfactory to it, all existing environmental reports
(including all available Phase I Environmental Site Assessment reports and Phase
II Environmental Site Assessment reports), and such other reports, audits or
certifications in the possession of the Credit Parties as it may reasonably
request.

(g) Material Adverse Change. Since May 8, 2012, there shall not have occurred
any event, development or circumstance that has or could reasonably be expected
to result in a Material Adverse Change.

(h) Solvency. The Administrative Agent shall have received a certificate in form
and substance reasonably satisfactory to the Administrative Agent from a senior
financial officer or such other officer acceptable to the Administrative Agent
of the Borrower and each Guarantor certifying that, before and after giving
effect to the initial Borrowings made hereunder on the Effective Date, the
Borrower and each such other Guarantor is Solvent (assuming with respect to each
Guarantor, that the fraudulent conveyance savings language contained in the
Guaranty applicable to such Guarantor will be given full effect).

 

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(i) Delivery of Initial Financial Statements; Projections. The Administrative
Agent shall have received true and correct copies of (i) the Initial Financial
Statements, (ii) the Pro Forma Financial Statements and (iii) the projections
prepared by management of balance sheets, income statements and cashflow
statements of the Borrower and its Subsidiaries, after giving effect to the IPO
and the Wyeville Drop Down, covering the first four full years after the
Effective Date.

(j) Notices of Borrowing. The Administrative Agent shall have received a Notice
of Borrowing from the Borrower, with appropriate insertions and executed by a
duly appointed Responsible Officer of the Borrower.

(k) USA Patriot Act. The Administrative Agent shall have received all
documentation and other information that is required by regulatory authorities
under applicable “know your customer” and anti-money-laundering rules and
regulations, including, without limitation, the Patriot Act.

(l) Calculation of Run Rate EBITDA. The Administrative Agent shall have received
a certificate in form acceptable to the Administrative Agent and executed by the
chief executive officer or chief financial officer of the Borrower and
reflecting run-rate EBITDA for the Borrower and its consolidated Subsidiaries,
after giving effect to the IPO and the Wyeville Drop Down, calculated based on
annualized EBITDA for the fiscal quarter ending June 30, 2012, of no less than
$45,000,000.

(m) Capital Structure; Consummation of IPO and Wyeville Drop Down. The capital
and ownership structure and the equityholder arrangements of the Borrower and
its Subsidiaries (and all agreements relating thereto) will be reasonably
satisfactory to the Administrative Agent. The Administrative Agent shall have
received evidence, in form and substance satisfactory to the Administrative
Agent, of (i) the consummation of the IPO in accordance with the Prospectus and
(ii) the consummation of the Wyeville Drop Down in accordance with the Wyeville
Drop Down Documents.

(n) Amendment of Hi-Crush Proppants Credit Agreement. The Administrative Agent
shall have received evidence, in form and substance satisfactory to the
Administrative Agent, that (i) the Hi-Crush Proppants Credit Agreement has been
amended to permit the IPO, the Wyeville Drop Down and the transactions
contemplated hereby and (ii) all obligations, liabilities and Liens of the
General Partner, the Borrower, and each Wyeville Drop Down Entity relating to
the Hi-Crush Proppants Credit Agreement and the other Credit Documents (as
defined in the Hi-Crush Proppants Credit Agreement) have been released and
terminated.

(o) Landlord Agreements; Account Control Agreements. The Administrative Agent
shall have received lien waivers or subordination agreements in form and
substance satisfactory to the Administrative Agent and executed by the landlords
or lessors identified in, and covering each of the leased real properties listed
on, Schedule 4.5. The Administrative Agent shall have received Account Control
Agreements in accordance with Section 5.8 and the Security Documents.

(p) Sand Reserve Report. The Administrative Agent shall have received the
Independent Engineering Report dated January 2012 in respect of the Credit
Parties’ facility in Wyeville, Wisconsin, together with a letter from John T.
Boyd Company permitting the Administrative Agent and the Lenders to rely on such
Independent Engineering Report.

(q) Certificates of Title. For each piece of Certificated Equipment of any
Credit Party, if any, to the extent required by Section 4.10 of the Security
Agreement, the Administrative Agent shall have received the original certificate
of title to such equipment and such other documents, agreements or instruments
required in order to evidence the Administrative Agent’s first priority lien on
the certificate of title for such Certificated Equipment.

 

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(r) Liens. The Administrative Agent shall have received evidence satisfactory to
it that there are no Liens encumbering any of the Credit Parties’ respective
Property other than Permitted Liens.

NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, NO LENDER SHALL BE OBLIGATED TO
MAKE ADVANCES HEREUNDER AND THE ISSUING LENDER SHALL NOT BE OBLIGATED TO ISSUE
ANY LETTER OF CREDIT HEREUNDER UNLESS EACH OF THE FOREGOING CONDITIONS PRECEDENT
IS SATISFIED ON OR PRIOR TO SEPTEMBER 30, 2012.

Section 3.2. Conditions Precedent to Each Borrowing and to Each Issuance,
Extension or Renewal of a Letter of Credit. The obligation of each Lender to
make an Advance on the occasion of each Borrowing (including the initial
Borrowing), the obligation of each Issuing Lender to issue, increase, renew or
extend a Letter of Credit (including the deemed issuance of Letters of Credit)
and of any reallocation of Letter of Credit Exposure provided in Section 2.14,
shall be subject to the further conditions precedent that on the date of such
Borrowing or such issuance, increase, renewal or extension:

(a) Representations and Warranties. The representations and warranties made by
any Credit Party or any officer or employee of any Credit Party contained in the
Credit Documents shall be true and correct in all material respects on such
date, except that any representation and warranty which by its terms is made as
of a specified date shall be required to be true and correct only as of such
specified date and each request for the making of any Advance or issuance,
increase, renewal or extension of any Letter of Credit and the making of such
Advance or the issuance, increase, renewal or extension of such Letter of Credit
shall be deemed to be a reaffirmation of such representations and warranties.

(b) Event of Default. No Default shall exist, and the making of such Advance or
issuance, increase, renewal or extension of such Letter of Credit, or the
relocation of the Letter of Credit Exposure would not cause a Default.

Each of the giving of the applicable Notice of Borrowing or Letter of Credit
Application, the acceptance by the Borrower of the proceeds of such Borrowing,
the issuance, increase, or extension of such Letter of Credit, and the
reallocation of the Letter of Credit Exposure, shall constitute a representation
and warranty by the Borrower that on the date of such Borrowing, such issuance,
increase, or extension of such Letter of Credit or such reallocation, as
applicable, the foregoing conditions have been met.

Section 3.3. Determinations Under Sections 3.1 and 3.2. For purposes of
determining compliance with the conditions specified in Sections 3.1 and 3.2
each Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Administrative Agent responsible for the transactions contemplated by the
Credit Documents shall have received written notice from such Lender prior to
the Borrowings hereunder specifying its objection thereto and such Lender shall
not have made available to the Administrative Agent such Lender’s ratable
portion of such Borrowings.

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES

Each Credit Party hereto represents and warrants as follows:

Section 4.1. Organization. Each Credit Party is duly and validly organized and
existing and in good standing under the laws of its jurisdiction of
incorporation or formation. Each Credit Party 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. 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.

Section 4.2. Authorization. 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, including the IPO and
the Wyeville Drop Down (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 except, in the case
of clauses (d) and (f), to the extent such contravention or the failure to
obtain authorization, approval or notice or take other action could not
reasonably be expected to have a Material Adverse Change.

Section 4.3. Enforceability. 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 Initial Financial Statements have been prepared in accordance with GAAP
and present fairly, in all material respects, the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as of the respective
dates thereof, except as otherwise expressly noted therein, subject only to
normal year-end audit adjustments and the absence of footnotes. As of the date
of the aforementioned financial statements, there were no material contingent
obligations, material unaccrued liabilities for taxes, material unusual forward
or long-term commitments, or material unrealized or anticipated losses of the
applicable Persons, except as disclosed therein or as set forth on Schedule 4.4
and adequate reserves for such items have been made in accordance with GAAP.

(b) The Pro Forma Financial Statements have been prepared in good faith by the
Borrower, based on assumptions believed by the Borrower on the Effective Date to
be reasonable, are based on the best information available to the Borrower as of
the date of delivery thereof, accurately reflect all adjustments required to be
made to give effect to the IPO and the Wyeville Drop Down and present fairly, in
all material respects, on a pro forma basis the estimated consolidated financial
position of the Borrower and its consolidated Subsidiaries as of such date and
for such period.

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

Section 4.5. Ownership and Liens; Real Property. Each Credit Party (a) has good
and marketable title to, or a valid and subsisting leasehold interest in, all
real property, and good title to all personal Property, in each case necessary
for its business, and (b) none of the Property owned by the Borrower or a
Subsidiary of the Borrower is subject to any Lien except for minor defects in
title that do

 

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not materially interfere with its ability to conduct its business or to utilize
such assets for their intended purpose and Permitted Liens. As of the Effective
Date, the Borrower and its Subsidiaries own no real property other than that
listed on Schedule 4.5 and all equipment (other than office equipment and
equipment located on jobsites, in transit or off location for servicing, repairs
or modifications) owned by the Borrower and its Subsidiaries are located at the
fee owned or leased real property listed on Schedule 4.5.

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 the Borrower and its Subsidiaries and furnished to the Administrative
Agent or 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 Responsible Officer of any Credit Party on the date of this Agreement
that has not been disclosed to the Administrative Agent that could reasonably be
expected to result in a Material Adverse Change. All projections, estimates,
budgets, and pro forma financial information furnished by the Borrower or any of
its Subsidiaries (or on behalf of the Borrower 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, budgets and pro forma
financial information were furnished; it being understood that actual results
may vary and such variances may be material.

Section 4.7. Litigation. Except as otherwise provided in Schedule 4.7, there are
no actions, suits, or proceedings pending or, to any Credit Party’s knowledge,
threatened against the Borrower 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 Administrative Agent and the Lenders, there is no
pending or, to the Borrower’s knowledge, threatened action or proceeding
instituted against the Borrower 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; provided that this Section 4.7
does not apply with respect to environmental claims.

Section 4.8. Compliance with Agreements.

(a) Neither the Borrower nor any of its Subsidiaries 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. Neither
the Borrower nor any of its Subsidiaries is in default under or with respect to
any contract, agreement, lease or any other types of agreement or instrument to
which the Borrower or such Subsidiary is a party and which could reasonably be
expected to cause a Material Adverse Change. To the knowledge of the Credit
Parties, neither the Borrower nor any of its Subsidiaries is in default under,
or has received a notice of default under, any contract, agreement, lease or any
other document or instrument to which the Borrower or its Subsidiaries is a
party which is continuing and which, if not cured, could reasonably be expected
to cause a Material Adverse Change.

(b) No Default has occurred and is continuing.

 

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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, (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(j), 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. Each Credit Party (i) has obtained all material Environmental
Permits necessary for the ownership and operation of its Properties and the
conduct of its businesses; (ii) has at all times since the date six months prior
to the Effective Date been and is currently in material compliance with all
terms and conditions of such Environmental 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; 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. Except as disclosed on Schedule 4.10, to such Credit
Parties’ knowledge, none of the present or previously owned or operated Property
of any such 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 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.

 

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(c) Certain Actions. Without limiting the foregoing and except as disclosed on
Schedule 4.10, (i) all necessary material notices have been properly filed, and
no further action is required under current applicable Environmental Law as to
each Response or other restoration or remedial project 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) the present and, to the Credit Parties’ knowledge, 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 reasonably be expected to result in a Material Adverse Change.

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

Section 4.12. Investment Company Act. Neither the Borrower 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. Proper and accurate (in all material respects), 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
the Borrower and each Subsidiary (hereafter collectively called the “Tax Group”)
have been filed with the appropriate Governmental Authorities, and all taxes and
other impositions due and payable, in each case, which are material in amount,
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 where
contested in good faith by appropriate proceeding and for which adequate
reserves have been established in compliance with GAAP. Neither the Borrower 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 Borrower 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.

Section 4.14. Permits, Licenses, etc. Each of the Borrower 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 of the Borrower 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.

Section 4.15. Use of Proceeds. The proceeds of the Advances will be used by the
Borrower for the purposes described in Section 6.6. 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 Advance
will be used to purchase or carry any margin stock in violation of Regulation T,
U or X.

Section 4.16. Condition of Property; Casualties. The material Properties used or
to be used in the continuing operations of the Borrower and each Subsidiary, are
in good working order and condition, normal wear and tear and casualty and
condemnation (excluding casualty and condemnation which could, individually or
in the aggregate, reasonably be expected to cause a Material Adverse Change)
excepted. Neither the business nor the material Properties of the Borrower 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.

 

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Section 4.17. Insurance. Each of the Borrower and its Subsidiaries carry
insurance (which may be carried by the Borrower 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.

Section 4.18. Security Interest. Each Credit Party has authorized the filing of
financing statements sufficient when filed to perfect the Lien created by the
Security Documents. When such financing statements are filed in the offices
noted therein, the Administrative Agent will have a valid and perfected security
interest in all Collateral that is capable of being perfected by filing
financing statements.

Section 4.19. OFAC; Anti-Terrorism. Neither the Borrower nor any Subsidiary of
the Borrower is in violation of any of the country or list based economic and
trade sanctions administered and enforced by OFAC. Neither the Borrower nor any
Subsidiary of the Borrower (a) is a Sanctioned Person or a Sanctioned Entity,
(b) has its assets located in Sanctioned Entities, or (c) derives revenues from
investments in, or transactions with Sanctioned Persons or Sanctioned Entities.
No proceeds of any Advance will be used to fund any operations in, finance any
investments or activities in, or make any payments to, a Sanctioned Person or a
Sanctioned Entity.

Section 4.20. Solvency. Before and after giving effect to the making of each
Advance and the issuance, increase, or amendment of each Letter of Credit, the
Credit Parties are, when taken as a whole, Solvent.

ARTICLE 5

AFFIRMATIVE COVENANTS

So long as any Obligation (other than (a) Letter of Credit Obligations which are
not yet due and payable in connection with Letters of Credit which have been
cash collateralized in accordance with this Agreement and (b) contingent
indemnification obligations which are not due and payable and which by their
terms survive the termination or expiration of this Agreement and the other
Credit Documents) shall remain unpaid, any Lender shall have any Commitment
hereunder, or there shall exist any Letter of Credit Exposure (other than Letter
of Credit exposure which has been cash collateralized in accordance with this
Agreement), 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, (a) preserve and maintain its partnership, limited
liability company or corporate existence, rights, franchises and privileges in
the jurisdiction of its organization, and (b) qualify and remain qualified as a
foreign business entity in each jurisdiction in which qualification is necessary
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 6.7 or Section 6.8.

Section 5.2. Reporting.

(a) Annual Financial Reports. The Borrower shall provide, or shall cause to be
provided, to the Administrative Agent, as soon as available, but in any event
within 120 days after the end of each fiscal year of the Borrower (commencing
with the fiscal year ended December 31, 2012), a consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such fiscal year, and the
related

 

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consolidated statements of income or operations, partners’ equity and cash flows
for such fiscal year, 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 audited and accompanied
by a report and opinion of an independent certified public accountant of
nationally recognized standing reasonably acceptable to the Administrative
Agent, which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit, and such statements to be certified by the chief executive
officer or chief financial officer of the Borrower, to the effect that (i) such
statements fairly, in all material respects, present the financial condition,
results of operations, partners’ equity and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP and (ii) there were no material contingent
obligations, material unaccrued liabilities for taxes, material unusual forward
or long-term commitments, or material unrealized or anticipated losses of the
Borrower and its Subsidiaries, except as disclosed therein or as otherwise
disclosed in writing to the Administrative Agent and adequate reserves for such
items have been made in accordance with GAAP;

(b) Quarterly Financial Reports. The Borrower shall provide, or shall cause to
be provided, to the Administrative Agent, 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 ending
September 30, 2012), (i) consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal quarter, and the related consolidated
statements of income or operations, partners’ equity and cash flows for such
fiscal quarter and for the portion of the Borrower’s fiscal year then ended,
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 or the chief financial officer of
the Borrower as (A) fairly presenting, in all material respects, the financial
condition, results of operations, partners’ equity and cash flows of the
Borrower and its Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes, and (B) showing that
there were no material contingent obligations, material unaccrued liabilities
for taxes, material unusual forward or long term commitments, or material
unrealized or anticipated losses of the Borrower and its Subsidiaries, except as
disclosed therein or as otherwise disclosed in writing to the Administrative
Agent and adequate reserves for such items have been made in accordance with
GAAP, and (ii) a copy of the management discussion and analysis with respect to
such financial statements;

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

(d) Annual Budget. As soon as available and in any event within 60 days after
the end of each fiscal year of the Borrower, the Borrower shall provide to the
Administrative Agent an annual operating, capital and cash flow budget for the
immediately following fiscal year and detailed on a quarterly basis;

(e) Defaults. The Credit Parties shall provide to the Administrative Agent
promptly, but in any event within five (5) Business Days after the occurrence
thereof, a notice of each Default known to the Responsible Officer of the
Borrower or to any of its Subsidiaries, together with a statement of a
Responsible Officer of the Borrower setting forth the details of such Default
and the actions which the Credit Parties have taken and proposes to take with
respect thereto;

 

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(f) Other Creditors. The Credit Parties shall provide to the Administrative
Agent promptly after the giving or receipt thereof, copies of any default
notices given or received by the Borrower or by any of its Subsidiaries pursuant
to the terms of any indenture, loan agreement, credit agreement, royalty
agreement or similar agreement;

(g) Litigation. The Credit Parties shall provide to the Administrative Agent
promptly after the commencement thereof, notice of all actions, suits, and
proceedings before any Governmental Authority, affecting the Borrower or any of
its Subsidiaries or any of their respective assets that has a claim for damages
in excess of $500,000 or that could otherwise result in a cost, expense or loss
to the Borrower or any of its Subsidiaries in excess of $500,000;

(h) Environmental Notices. Promptly upon, and in any event no later than thirty
(30) days after, the receipt thereof, or the acquisition of knowledge thereof,
by any Credit Party, the Credit Parties shall provide the Administrative Agent
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, which
seeks to impose liability therefore in excess of $500,000, (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
which could reasonably result in the imposition of liability in excess of
$500,000 or requiring that action be taken to respond to or clean up a Release
of Hazardous Substances or Hazardous Waste into the environment and such action
or clean-up could reasonably be expected to exceed $500,000, including without
limitation any information request related to, or notice of, potential
responsibility under CERCLA, or (iii) concerning the filing of a Lien securing
liabilities in excess of $500,000 described in clause (i) or (ii) above upon,
against or in connection with the Borrower, any Subsidiary, or any of their
respective former Subsidiaries, or any of their material leased or owned
Property, wherever located;

(i) Material Changes. The Credit Parties shall provide to the Administrative
Agent prompt written notice of any event, development of circumstance that has
had or would reasonably be expected to give rise to a Material Adverse Change;

(j) Termination Events. As soon as possible and in any event (i) within thirty
(30) 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 ten (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 Administrative
Agent 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;

(k) Termination of Plans. Promptly and in any event within five (5) 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 Administrative Agent
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;

(l) Other ERISA Notices. Promptly and in any event within five (5) 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
Administrative Agent 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;

 

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(m) Other Governmental Notices. Promptly and in any event within five
(5) Business Days after receipt thereof by the Borrower or any Subsidiary, the
Credit Parties shall provide to the Administrative Agent 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;

(n) Disputes; etc. The Credit Parties shall provide to the Administrative Agent
prompt written notice of (i) 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 the Borrower or
any Subsidiary, which could reasonably be expected to cause a Material Adverse
Change, 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, and (ii) any claim,
judgment, Lien or other encumbrance (other than a Permitted Lien) affecting any
Property of the Borrower or any Subsidiary, if the value of the claim, judgment,
Lien, or other encumbrance affecting such Property shall exceed $500,000;

(o) Management Letters; Other Accounting Reports. Promptly upon receipt thereof,
a copy of any final management letter submitted to the Borrower or any
Subsidiary by its independent accountants, and a copy of any response by the
Borrower or any Subsidiary of the Borrower, or the board of directors or
managers (or other applicable governing body) of the Borrower or any Subsidiary
of the Borrower, to such letter;

(p) Material Contracts. Promptly upon receipt thereof, the applicable Credit
Party shall provide to the Administrative Agent a copy of any amendment of or
notice of default under any Material Contract to which it is a party;

(q) Securities Law Filings and other Public Information. The Borrower shall
provide to the Administrative Agent promptly after the same are available,
copies of each annual report, proxy or financial statement or other material
report or communication sent to the equityholders 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 Securities Exchange Act of 1934 or any other securities
Governmental Authority, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto; and

(r) Financial Reports for Augusta. The Borrower shall request from Augusta
pursuant to Section 7.1 of that certain First Amended and Restated Limited
Liability Company Agreement of Augusta dated January 31, 2013, and shall, to the
extent received from Augusta, provide to the Administrative Agent (i) within 45
days after the end of each fiscal quarter (except for the fourth fiscal quarter
in each fiscal year), (A) an unaudited balance sheet as of the end of such
fiscal quarter and an unaudited related income statement, and statement of cash
flows for such fiscal quarter including any notes thereto (if any) prepared in
accordance with GAAP (with the exception of normal year-end adjustments and
absence of notes), consistently applied, and (B) a discussion and analysis of
the material operational and financial developments during such fiscal quarter
and (ii) within 90 days after the end of each fiscal year, (A) an unaudited
balance sheet as of the end of such fiscal year and an unaudited related income
statement, statement of members’ equity and statement of cash flows for such
fiscal year prepared in accordance with GAAP, consistently applied, and (B) a
discussion and analysis of the material operational and financial developments
during such fiscal year.

(s) (r) Other Information. Subject to the confidentiality provisions of
Section 9.8, the Credit Parties shall provide to the Administrative Agent such
other information respecting the business, operations, or Property of the
Borrower or any Subsidiary, financial or otherwise, as any Lender through the
Administrative Agent may reasonably request.

 

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The Borrower hereby acknowledges that (1) the Administrative Agent will make
available to the Lenders materials and/or information provided by or on behalf
of the Borrower and its Subsidiaries hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or another similar
electronic system (the “Platform”) and (2) certain of the Lenders may be
“public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”). The Borrower hereby agrees that (w) all Borrower Materials
that are to be made available to Public Lenders shall be clearly and
conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the
Administrative Agent, the Swing Line Lender, the Issuing Lender and the Lenders
to treat such Borrower Materials as not containing any material non-public
information with respect to the Borrower, its Subsidiaries or their securities
for purposes of United States Federal and state securities laws; (y) all
Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated “Public Investor;” and (z) the Administrative
Agent shall be entitled to treat any Borrower Materials that are not marked
“PUBLIC” as being suitable only for posting on a portion of the Platform not
designated “Public Investor.”

Documents required to be delivered pursuant to Section 5.2(q) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrower posts such documents, or provides a link
thereto on the Borrower’s website on the Internet and (ii) on which such
documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided, however, that (x) the Borrower shall deliver
paper copies of such documents to the Administrative Agent or any Lender that
requests the Borrower to deliver such paper copies until a written request to
cease delivering paper copies is given by the Administrative Agent or such
Lender and (y) the Borrower shall notify the Administrative Agent and each
Lender (by telecopier or electronic mail) of the posting of any such documents.

Section 5.3. Insurance.

(a) Each Credit Party shall, and shall cause each of its Subsidiaries to, carry
and maintain all such other insurance in such amounts and against such risks as
is customarily maintained by other Persons of similar size engaged in similar
businesses and reasonably acceptable to the Administrative Agent and with
reputable insurers reasonably acceptable to the Administrative Agent.

(b) If requested by the Administrative Agent, copies of all policies of
insurance or certificates thereof covering the property or business of the
Credit Parties, and endorsements and renewals thereof, certified as true and
correct copies of such documents by a Responsible Officer of the Borrower shall
be delivered by Borrower to and retained by the Administrative Agent. 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
Administrative Agent for its benefit and the ratable benefit of the Secured
Parties or name the Administrative Agent as loss payee for its benefit and the
ratable benefit of the Secured Parties, in either case, in form reasonably
satisfactory to the Administrative Agent, and all policies of liability
insurance with respect to the Credit Parties shall name the Administrative Agent
for its benefit and the ratable benefit of the Secured Parties as an additional
insured and shall provide for a waiver of subrogation in favor of the
Administrative Agent for its benefit and the ratable benefit of the Secured
Parties. All policies or 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

 

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provision that notwithstanding any contrary agreements between the Borrower, its
Subsidiaries, and the applicable insurance company, such policies will not be
canceled or allowed to lapse without renewal without at least thirty (30) days’
(or ten (10) days in the case of non-payment) prior written notice to the
Administrative Agent.

(c) If at any time the area in which any real property constituting Collateral
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 of its Subsidiaries to, obtain flood
insurance in such total amount as required by Regulation H of the Federal
Reserve Board, as from time to time in effect and all official rulings and
interpretations thereunder or thereof, and otherwise comply with the National
Flood Insurance Program as set forth in the Flood Disaster Protection Act of
1973, as it may be amended from time to time.

(d) Notwithstanding Section 2.4(c)(ii) of this Agreement, after the occurrence
and during the continuance of an Event of Default, all proceeds of insurance,
including any casualty insurance proceeds, property insurance proceeds, proceeds
from actions, and any other proceeds, shall be paid directly to the
Administrative Agent and if necessary, assigned to the Administrative Agent, to
be applied in accordance with Section 7.6 of this Agreement, whether or not the
Secured Obligations are then due and payable.

(e) In the event that any insurance proceeds are paid to any Credit Party in
violation of clause (d), such Credit Party shall hold the proceeds in trust for
the Administrative Agent, segregate the proceeds from the other funds of such
Credit Party, and promptly pay the proceeds to the Administrative Agent with any
necessary endorsement. Upon the request of the Administrative Agent, each of the
Borrower and its Subsidiaries shall execute and deliver to the Administrative
Agent any additional assignments and other documents as may be necessary or
desirable to enable the Administrative Agent to directly collect the proceeds as
set forth herein.

Section 5.4. Compliance with Laws. 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, OFAC, FCPA and the Patriot Act) 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;
provided that this Section 5.4 shall not prevent any Credit Party from, in good
faith and with reasonable diligence, contesting the validity or application of
any such laws or regulations by appropriate legal proceedings for which adequate
reserves have been established in compliance with GAAP.

Section 5.5. Taxes. Each Credit Party shall, and shall cause each of its
Subsidiaries to pay and discharge all taxes, assessments, and other charges and
claims related thereto, in each case, which are material in amount, imposed on
the Borrower or any of its Subsidiaries prior to the date on which penalties
attach other than any tax, assessment, charge, or claims which is being
contested in good faith and for which adequate reserves have been established in
compliance with GAAP.

Section 5.6. New Subsidiaries. The Borrower shall deliver to the Administrative
Agent each of the items set forth in Schedule III attached hereto with respect
to each Domestic Subsidiary of the Borrower created or acquired after the
Effective Date and within the time requirements set forth in Schedule III.

Section 5.7. Security. Each Credit Party agrees that at all times before the
termination of this Agreement, payment in full of the Obligations, the
termination and return of all Letters of Credit (other than Letters of Credit as
to which arrangements satisfactory to the Issuing Lender in its sole discretion

 

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have been made) and termination in full of the Commitments, the Administrative
Agent shall have an Acceptable Security Interest in the Collateral to secure the
performance and payment of the Secured Obligations. Each Credit Party shall, and
shall cause each of its Domestic Subsidiaries to, grant to the Administrative
Agent a Lien in any Collateral of such Credit Party or such Domestic Subsidiary
now owned or hereafter acquired (other than leased real property unless
otherwise requested by the Administrative Agent) promptly and to take such
actions as may be required under the Security Documents to ensure that the
Administrative Agent has an Acceptable Security Interest in such Property;
provided, however, notwithstanding the foregoing or anything contained in this
Agreement or any other Credit Document to the contrary, a Credit Party or
Domestic Subsidiary shall only be required to grant a Lien in Equity Interests
of Subsidiaries owned or acquired by such Credit Party or Domestic Subsidiary in
accordance with the following: (i) in the case of Equity Interests of a Domestic
Subsidiary, 100% of the Equity Interests of such Domestic Subsidiary; (ii) in
the case of Equity Interests of a First-Tier Foreign Subsidiary; provided that,
as to the Equity Interest of any Foreign Subsidiary, solely 100% of the Equity
Interests of such First-Tier Foreign Subsidiary that are not Voting Securities
and no more than 66% of the Equity Interests of such Foreign Subsidiary that are
Voting Securities; and (iii) in the case of Equity Interests of a Foreign
Subsidiary that is not a First-Tier Foreign Subsidiary, 0% of the Equity
Interests of such Foreign Subsidiary shall be required to be pledged hereunder
or in any other Credit Document.

Section 5.8. Deposit Accounts. Each Credit Party shall, and shall cause each of
its Subsidiaries to, maintain their principal operating accounts and other
deposit accounts with a Lender or any other bank that is reasonably acceptable
to the Administrative Agent. Each Credit Party shall, and shall cause each of
its Subsidiaries to, ensure such accounts (other than accounts with the Lender
serving as the Administrative Agent) are subject to Account Control Agreements;
provided that, notwithstanding anything to the contrary contained in this
Agreement or the other Credit Documents, the requirements of this Section 5.8
shall not apply to deposit accounts that (x) do not contain at any time,
deposits in an aggregate amount in excess of $50,000, (y) are designated solely
as accounts for, and are used solely for, payroll (and related payroll tax)
funding, sales and other tax obligations or trust funds or (z) are operating
accounts used solely for the purpose of accruing overnight interest.
Notwithstanding the foregoing, upon consummating any Acquisition permitted
hereby, each Credit Party shall have until the date that is 90 days after the
date of such Acquisition (or such longer period of time as may be agreed by the
Administrative Agent) to comply with the terms of this Section 5.8 with respect
to deposit accounts subject to such Acquisition.

Section 5.9. Records; Inspection. Each Credit Party shall, and shall cause each
of its Subsidiaries to maintain proper, complete and consistent books of record
with respect to such Person’s operations, affairs, and financial condition in
accordance with GAAP in all material respects. 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, and to discuss the
business operations and Property of such Credit Party or such Subsidiary with
the officers and directors thereof; provided that, unless an Event of Default
shall have occurred and be continuing, (a) only the Administrative Agent on
behalf of the Lenders may exercise inspection, examination or audit rights under
this Section 5.9 and (b) the Borrower shall bear the cost of only two (2) such
inspections per fiscal year.

Section 5.10. Maintenance of Property. Each Credit Party shall, and shall cause
each of its Subsidiaries to, maintain their material owned, leased, or operated
Property necessary in the operation of its business in good condition and
repair, normal wear and tear and casualty and condemnation (excluding casualty
and condemnation which could, individually or in the aggregate, reasonably be
expected to cause

 

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a Material Adverse Change) 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; provided, however,
that no Credit Party shall be required to maintain any property if the
preservation thereof is no longer desirable in the conduct of the business of
such Credit Party and the loss thereof is not adverse in any material respect to
such Credit Party or the Lenders.

Section 5.11. Royalty Agreements. The Borrower shall, and shall cause each of
its Subsidiaries to, timely pay all amounts owing pursuant to any royalty
agreement to which the Borrower or any of its Subsidiaries is a party except
where the failure to do so (a) does not materially impair the ability of the
Borrower and its Subsidiaries to use the Property subject to any Lien created by
such royalty agreement in its business and (b) could not reasonably be expected
to result in a Material Adverse Change.

Section 5.12. Appraisal Reports; Sand Reserve Reports. The Borrower shall, and
shall cause each of its Subsidiaries to, permit the Administrative Agent or a
third party selected by the Administrative Agent to, at any reasonable time, and
from time to time upon request by the Administrative Agent with reasonable
notice, perform the following:

(a) an appraisal of the machinery, parts, equipment and other fixed assets of
the Credit Parties; provided that, (i) if no Event of Default has occurred and
is continuing, the Borrower shall bear the costs of only one such appraisal to
be provided upon the completion of each facility of the Credit Parties
constructed or acquired after the Effective Date, and (ii) in any event, any
appraisals performed at the request of the Borrower shall be performed at the
Borrower’s sole cost and expense;

(b) an Independent Engineering Report of the Sand Reserves of the Credit
Parties; provided that, if no Event of Default has occurred and is continuing,
the Borrower shall bear the costs of only one (1) such Independent Engineering
Report to be provided upon the completion of each facility of the Credit Parties
constructed or acquired after the Effective Date.

If an Event of Default has occurred and is continuing, the Administrative Agent
may perform any additional appraisals, and all such appraisals shall be
performed at the Borrower’s sole cost and expense.

Section 5.13. Legal Separateness. The Borrower (a) shall cause the management,
business and affairs of the Borrower and its Subsidiaries to be conducted in
such a manner so that the Hi-Crush Proppants Entities will be treated as
entities separate and distinct from the Borrower and its Subsidiaries
(including, without limitation, by keeping separate books of account and by not
permitting Property of the Borrower and its Subsidiaries to be commingled with
that of the Hi-Crush Proppants Entities); and (b) shall not, and shall not
permit any of its Subsidiaries to, incur, assume, guarantee or be or become
liable for any Debt of the Hi-Crush Proppants Entities.

ARTICLE 6

NEGATIVE COVENANTS

So long as any Obligation (other than (a) Letter of Credit Obligations which are
not yet due and payable in connection with Letters of Credit which have been
cash collateralized in accordance with this Agreement and (b) contingent
indemnification obligations which are not due and payable and which by their
terms survive the termination or expiration of this Agreement and the other
Credit Documents) shall remain unpaid, any Lender shall have any Commitment
hereunder, or there shall exist any Letter of Credit Exposure (other than Letter
of Credit Exposure which has been cash collateralized in accordance with this
Agreement), each Credit Party agrees to comply with the following covenants.

 

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Section 6.1. 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) intercompany Debt incurred in the ordinary course of business owed by any
Credit Party to any other Credit Party; provided that (i) if such Debt is
secured by Liens, such Debt and any Liens securing such Debt are subordinated to
the Secured Obligations and the Liens securing the Secured Obligations on terms
and conditions and pursuant to documentation acceptable to the Administrative
Agent in its sole discretion and (ii), if applicable, such Debt as an investment
is also permitted in Section 6.3;

(c) Debt in the form of accounts payable to trade creditors (including
reimbursements made to Hi-Crush Services LLC or other Persons in accordance with
the Partnership Agreement) 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 by appropriate proceedings
and adequate reserves for such items have been made in accordance with GAAP;

(d) purchase money indebtedness or Capital Leases in an aggregate principal
amount not to exceed $2,500,000 at any time;

(e) Hedging Arrangements permitted under Section 6.15;

(f) Debt arising from the endorsement of instruments for collection in the
ordinary course of business;

(g) Debt arising from the financing of insurance premiums of any Credit Party in
an aggregate amount not to exceed $750,000 incurred to defer the cost of such
insurance for the underlying term of such insurance policy;

(h) unsecured Debt under the Subordinated Notes and any Permitted Refinancing
thereof; provided that (i) the scheduled maturity date thereof is not earlier
than 91 days after the latest of the Revolving Maturity Date and the Term
Maturity Date, (ii) the holders of such Debt shall have entered into a
Subordination Agreement and (iii) the terms and provisions of such Debt shall be
reasonably satisfactory to the Administrative Agent;

(i) Debt under performance, stay, appeal and surety bonds or with respect to
workers’ compensation or other like employee benefit claims, in each case
incurred in the ordinary course of business;

(j) Debt assumed in connection with any Permitted Investment or Acquisition and
not incurred in contemplation thereof in an aggregate principal amount not
exceeding $500,000 at any time, and any Permitted Refinancing thereof;

(k) Debt owed to the seller of any property acquired in an Investment permitted
under Section 6.3(k) or (l) or an Acquisition permitted under Section 6.4 on an
unsecured subordinated basis, which subordination agreement shall be on terms
substantially similar to the Subordination Agreement or otherwise satisfactory
to the Administrative Agent in its sole discretion; provided that the terms and
provisions of such Debt shall be reasonably satisfactory to the Administrative
Agent;

 

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(l) Debt incurred in an Investment permitted under Section 6.3(k) or (l), an
Acquisition permitted under Section 6.4 or a disposition of assets permitted
under Section 6.8(j), in each case, pursuant to reasonable and customary
agreements providing for indemnification, the adjustment of purchase price or
similar adjustments;

(m) guarantees of Debt of any Credit Party permitted under this Section 6.1;

(n) Debt arising from royalty agreements on customary terms entered into by the
Borrower and its Subsidiaries in the ordinary course of business in connection
with the purchase of Sand Reserves;

(o) Debt existing on the date hereof and set forth on Schedule 6.1; and

(p) unsecured Debt not otherwise permitted under the preceding provisions of
this Section 6.1; provided that, the aggregate principal amount thereof shall
not exceed $500,000 at any time.

Section 6.2. 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 Secured Obligations pursuant to the Security Documents;

(b) Liens imposed by law, such as landlord’s, materialmen’s, mechanics’,
carriers’, workmen’s and repairmen’s liens, and other similar liens arising in
the ordinary course of business securing obligations which if overdue for a
period of more than 30 days 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, if overdue, which are being actively contested in good faith
by appropriate proceedings and adequate reserves for such items have been made
in accordance with GAAP;

(e) Liens securing purchase money debt or Capital Lease obligations permitted
under Section 6.1(d); 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 all proceeds and products thereof
(including insurance proceeds) and accessions thereto, and the amount secured
thereby is not increased;

(f) 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;

 

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(g) 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 depositary
institution;

(h) Liens on cash or securities pledged to secure 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;

(i) judgment and attachment Liens not giving rise to an Event of Default;

(j) Liens in favor a banking institution arising by operation of law encumbering
deposits in accounts held by such banking institution incurred in the ordinary
course of business and which are within the general parameters customary in the
banking industry;

(k) Liens existing on any property or assets prior to the acquisition thereof by
the Borrower or any of its Subsidiaries securing liabilities not exceeding
$500,000 in the aggregate; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition, (ii) such Lien does not
materially impair the ability of any Credit Party to use such asset in its
business and (iii) such Lien does not apply to any other Property of the
Borrower or its Subsidiaries;

(l) Liens (i) on advances of cash or earnest money deposits in favor of the
seller of any property to be acquired in connection with a Capital Expenditure
or Acquisition permitted hereunder, which advances shall be applied against the
purchase price for such permitted Capital Expenditure or Acquisition or (ii) or
consisting of an agreement to dispose of any Property in an asset sale permitted
by Section 6.8 solely to the extent such asset sale would have been permitted on
the date of the creation of such Lien;

(m) Any interest or title of a lessor, sublessor, licensor or sublicensor under
any lease or license entered into in the ordinary course of business and
covering only the asset so leased or licensed;

(n) Defects and irregularities in title to any Property which in the aggregate
do not materially impair the fair market value or use of the Property for the
purposes for which it is or may reasonably be expected to be held;

(o) Liens on Property of the Borrower or its Subsidiaries existing on the date
hereof and set forth in Schedule 6.2; provided that such Liens shall secure only
those obligations which they secure on the date hereof and refinancing,
extensions, renewals and replacements thereof permitted hereunder; and

(p) other Liens securing Debt or other obligations outstanding in an aggregate
principal amount not in excess of $200,000.

Section 6.3. Investments. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, make or hold any direct or indirect investment (each, an
“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”):

(a) 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;

 

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(b) Liquid Investments;

(c) 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 Person and existing on the date hereof,
in each case as specified in the attached Schedule 6.3; provided that, the
respective amounts of such loans, advances, capital contributions, investments,
purchases and commitments shall not be increased (other than appreciation);

(d) Investments by a Credit Party to any other Credit Party;

(e) creation of any additional Subsidiaries domiciled in the U.S. in compliance
with Section 5.6;

(f) Investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers,
in each case, arising in the ordinary course of business;

(g) promissory notes and other non-cash consideration received by the Borrower
and its Subsidiaries in connection with any asset sale permitted by
Section 6.8(j);

(h) loans and advances to employees of the Borrower and its Subsidiaries in the
ordinary course of business; provided that the aggregate principal amount of all
such loans and advances shall not exceed $100,000 at any one time outstanding;

(i) guarantees of obligations (not in respect of Debt) of the Credit Parties
incurred in the ordinary course of business;

(j) Investments consisting of Debt or Acquisitions permitted by Article 6;

(k) (i) the Augusta Drop Down; provided that, (A) such Investment is consummated
on or before March 31, 2013, (B) all of the Equity Interests of Augusta owned by
any Credit Party are pledged to the Administrative Agent pursuant to the
Security Agreement, (C) no Event of Default shall have occurred or be continuing
or would result from such Investment, and (D) the Borrower and its Subsidiaries
shall be in pro forma compliance with the financial covenants in Section 6.16
and 6.17 after giving effect to such Investment; and

(ii) Investments consisting of Equity Interests of entities which are not
Subsidiaries of any Credit Party; provided that, (A) the aggregate amount of
such Investments at any time outstanding does not exceed an amount equal to the
sum of $10,000,000 plus the aggregate amount of such Investments financed with
Equity Issuance Proceeds, (B) such Investment is substantially related to the
business of the Borrower and its Subsidiaries, taken as a whole, and is not
hostile, (C) all of the Equity Interests of such joint venture entity owned by
any Credit Party are pledged to the Administrative Agent pursuant to the
Security Agreement, except to the extent that such pledge would be prohibited
under such entity’s Organization Documents, (D) no Event of Default shall have
occurred or be continuing or would result from such Investment, and (E) the
Borrower and its Subsidiaries shall be in pro forma compliance with the
financial covenants in Section 6.16 and 6.17 after giving effect to such
Investment; and

(l) other Investments in an aggregate amount not to exceed $250,000 at any time
outstanding.

 

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Section 6.4. Acquisitions. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, make any Acquisition, unless (a) such Acquisition is
substantially related to the business of the Borrower and its Subsidiaries,
taken as a whole, and is not hostile, (b) if such Acquisition is an Acquisition
of the Equity Interests of a Person, such Acquisition is structured so that the
acquired Person (or its successor in interest) shall become a direct or indirect
Domestic Subsidiary of the Borrower and comply with the requirements of
Section 5.6, (c) if such Acquisition is an Acquisition of assets, such
Acquisition is structured so that a Credit Party shall acquire such assets,
(d) no Event of Default shall have occurred or be continuing or would result
from such Acquisition, (eand (e) either (i) (A) the Leverage Ratio, calculated
on a pro forma basis after giving effect to such Acquisition as of the beginning
of the period of four fiscal quarters most recently ended, is less than 2.0 to
1.0 and (B) after giving effect to such Acquisition, Liquidity would be greater
than or equal to $15,000,000 or (ii) (A) the total consideration (including the
adjustment of purchase price or similar adjustments) for such Acquisition and
all other Acquisitions permitted under this clause (e)(ii) during any fiscal
year expended by the Borrower or any of its Subsidiaries in such fiscal year
shall not exceed an aggregate amount equal to $10,000,000 and (B) the Borrower
and its Subsidiaries shall be in pro forma compliance with the financial
covenants in Section 6.16 and 6.17 after giving effect to such Acquisition as of
the beginning of the period of four fiscal quarters most recently ended and
(f) after giving effect to such Acquisition, Liquidity would be greater than or
equal to $15,000,000..

Section 6.5. 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, or the
other Credit Documents, (ii) agreements governing Debt permitted by Sections
6.1(d) or (j) to the extent such restrictions govern only the Property (and all
proceeds and products thereof and accessions thereto) financed pursuant to such
Debt, (iii) any prohibition or limitation that exists pursuant to applicable
requirements of a Governmental Authority, (iv) any prohibition or limitation
that restricts subletting or assignment of leasehold interests contained in any
lease governing a leasehold interest of Borrower or its Subsidiaries and
customary provisions in other contracts restricting assignment thereof,
(v) agreements in connection with a sale of assets permitted by Section 6.8,
(vi) the Subordinated Notes and (vii) any prohibition or limitation that exists
in any contract to which a Credit Party is a party on the date hereof so long as
(x) such prohibition or limitation is generally applicable and does not
specifically prohibit any of the Debt or the Liens granted under the Credit
Documents, and (y) the noncompliance of such prohibition or limitation would not
reasonably be expected to be adverse to the Administrative Agent or the Lenders)
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 Secured 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, which consent or notice has not
been obtained or given on a permanent and irrevocable basis such that no further
consent of or notice to such other Person is required to be given in connection
with any such Lien or Restricted Payment.

Section 6.6. Use of Proceeds; Use of Letters of Credit. No Credit Party shall,
nor shall it permit any of its Subsidiaries to use the proceeds of the Revolving
Advances, the Term Advances, the Swing Line Advances or the Letters of Credit
for any purposes other than (a) working capital purposes of any Credit Party and
(b) other general corporate purposes of any Credit Party, including to make
Restricted Payments permitted by Section 6.9. No Credit Party shall, nor shall
it permit any of its Subsidiaries to, directly or indirectly, use any part of
the proceeds of Advances or Letters of Credit for any purpose which violates, or
is inconsistent with, Regulations T, U, or X.

Section 6.7. Corporate Actions; Accounting Changes.

 

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(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 and any Credit Party may merge
or be consolidated with or into any other Credit Party and (ii) any wholly-owned
Subsidiary of the Borrower may merge with another Person in order to consummate
an Acquisition or Disposition permitted under Section 6.4 or 6.8, respectively,
so long as, in the case of any such permitted Acquisition, such wholly-owned
Subsidiary is the surviving entity; 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 the Borrower is a party, the Borrower is the
surviving entity.

(b) No Credit Party shall, nor shall it permit any of its Subsidiaries to,
(i) without 10 days prior written notice to the Administrative Agent, change its
name, change its state of incorporation, formation or organization, change its
organizational identification number or reorganize in another jurisdiction,
(ii) create or suffer to exist any Subsidiary not existing on the date of this
Agreement, provided that, the Borrower may create or acquire a new Subsidiary if
the Credit Parties and such new Subsidiary complies with Section 5.6 and such
transactions otherwise comply with the terms of this Agreement and so long as
such new Subsidiary is not a Foreign Subsidiary, (iii) without prior written
notice to, and prior consent of, the Administrative Agent, amend, supplement,
modify or restate their articles or certificate of incorporation or formation,
limited partnership agreement (including, without limitation, the Partnership
Agreement), bylaws, limited liability company agreements, or other equivalent
organizational documents in a manner that could reasonably be expected to be
materially adverse to the interests of the Administrative Agent and the Lenders,
or (iv) change the method of accounting employed in the preparation of the
Initial Financial Statements except in accordance with GAAP or change the fiscal
year end of the Borrower unless, in each case, approved in writing by the
Administrative Agent.

Section 6.8. Sale of Assets. No Credit Party shall, nor shall it permit any of
its Subsidiaries to, sell, convey, or otherwise transfer any of its assets
except that (a) any Credit Party may sell inventory in the ordinary course of
business; (b) any Credit Party may sell, convey, dispose or otherwise transfer
any of its assets to any other Credit Party; (c) dispositions of obsolete or
worn out Property in the ordinary course of business, and dispositions of
Property no longer useful or used by the Borrower and its Subsidiaries in the
conduct of its business; (d) dispositions of equipment to the extent that such
Property is exchanged for credit against the purchase price of similar
replacement Property or the proceeds of which are reasonably promptly applied to
the purchase price of such replacement Property; (e) dispositions of Liquid
Investments; (f) dispositions of accounts receivable in connection with the
collection or compromise thereof in the ordinary course of business; (g) leases,
subleases, licenses or sublicenses or Property in the ordinary course of
business and which do not materially interfere with the business of the Borrower
and its Subsidiaries; (h) transfers of property subject to Casualty Events,
subject to the Borrower’s compliance with Section 2.4(c)(ii); (i) dispositions
permitted by Sections 6.3, 6.7 and 6.9; and (j) the Borrower and its
Subsidiaries may sell, convey, dispose or otherwise transfer any Properties not
otherwise permitted under the preceding clauses (a) through (i); provided that,
(i) no Default has occurred and is continuing or would be caused thereby,
(ii) at least 80% of the proceeds of all such sales, conveyance, dispositions
and transfers shall consist of cash or Liquid Investments and shall be in an
amount no less than the fair market value of such Properties and (iii) the
aggregate amount of all such sales, conveyance, dispositions and transfers shall
not exceed $2,000,000 in any fiscal year.

Section 6.9. Restricted Payments. No Credit Party shall, nor shall it permit any
of its Subsidiaries to make any Restricted Payments except that:

(a) the Subsidiaries of the Borrower may make Restricted Payments to the
Borrower or any other Credit Party that is a Subsidiary of the Borrower;

 

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(b) so long as no Event of Default shall have occurred and be continuing,
repurchases of Equity Interests or payments in respect thereof not exceeding
$250,000 in the aggregate during any fiscal year to officers, employees,
consultants or members of management of the General Partner, the Borrower or its
Subsidiaries (or their respective estates, heirs, family members, spouses or
former spouses) upon the termination, death or disability of such Person or in
connection with the exercise of stock options or similar equity incentives
pursuant to management incentive plans; and

(c) so long as no Event of Default shall have occurred and be continuing, the
Borrower may make cash distributions to the holders of its Equity Interests from
“Operating Surplus” (as such term is defined in the Partnership Agreement)
calculated on a cumulative basis from the Effective Date through the date of
such distribution.

Section 6.10. 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 such an
affiliate except for (a) the Restricted Payments permitted under Section 6.9,
(b) reasonable and customary director, officer and employee compensation,
including bonuses and severance (which compensation may be paid to affiliates of
such directors, officers and employees at the direction of the applicable
director, officer or employee), indemnification and other benefits (including
retirement, health, stock option and other benefit plans), (c) reasonable and
customary Equity Investor indemnification, (d) the payment of reasonable and
customary reimbursement of out of pocket expenses of Equity Investors and
directors of the General Partner, the Borrower and its Subsidiaries, (e) any
Drop Down Acquisition approved by the Conflicts Committee (as such term is
defined in the Partnership Agreement) of the General Partner, (f) payments or
transactions pursuant to the Partnership Agreement, (g) transactions effected in
accordance with the terms of indemnification, omnibus and other agreements with
Hi-Crush Proppants and its affiliates attached as exhibits to the Registration
Statement, (h) the transactions set forth on Schedule 6.10, and (i) the issuance
by the Borrower of Equity Interests to any Affiliate (other than to a Subsidiary
of the Borrower) or the receipt by the Borrower of any equity contributions from
an Affiliate (other than from a Subsidiary of the Borrower).

Section 6.11. 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 the Effective Date, or engage
in any type of business not reasonably related to the Borrower’s and its
Subsidiaries collective business as presently and normally conducted.

Section 6.12. Hazardous Materials. No Credit Party (a) shall, nor shall it
permit any of its Subsidiaries to, 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 or in any
liability to the Lenders or the Administrative Agent, and (b) shall, nor shall
it permit any of its Subsidiaries to, Release any Hazardous Substance or
Hazardous Waste into the Environment and shall not 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 or in any
liability on the Lenders or the Administrative Agent.

 

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Section 6.13. 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) 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 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; or (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 such entities, that may not be terminated by
such entities in their sole discretion at any time without any liability.

Section 6.14. Sale and Leaseback Transactions. No Credit Party shall, nor shall
it permit any of its Subsidiaries to, sell or transfer to a Person any Property,
whether now owned or hereafter acquired, if at the time or thereafter the
Borrower or a Subsidiary shall lease as lessee such Property or any part thereof
or other Property which the Borrower or a Subsidiary intends to use for
substantially the same purpose as the Property sold or transferred.

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 (i) 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, or (ii) obligates the Borrower or any of its
Subsidiaries to any margin call requirements or otherwise requires the Borrower
or any of its Subsidiaries to put up money, assets or other security (other than
unsecured letters of credit). Furthermore, no Credit Party shall, nor shall it
permit any of its Subsidiaries be party to or otherwise enter into any Hedging
Arrangement which relate to interest rates if (A) such Hedging Arrangement
relate to payment obligations on Debt which is not permitted to be incurred
under Section 6.1 above, (B) the aggregate notional amount of all such Hedging
Arrangements exceeds 100% of the anticipated

 

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outstanding principal balance of the Debt to be hedged by such Hedging
Arrangements or an average of such principal balances calculated using a
generally accepted method of matching interest swap contracts to declining
principal balances, the floating rate index of each such contract generally
matches the index used to determine the floating rates of interest on the
corresponding indebtedness to be hedged by such contract, (C) such Hedging
Arrangement is with a counterparty or has a guarantor of the obligation of the
counterparty who (unless such counterparty is a Lender or one of its Affiliates)
at the time the Hedging Arrangement is made is rated lower than A by S & P or A2
by Moody’s, or (D) the floating rate index of such Hedging Arrangement does not
generally match the index used to determine the floating rates of interest on
the corresponding Debt to be hedged by such Hedging Arrangement.

Section 6.16. Leverage Ratio. Borrower shall not permit the Leverage Ratio as of
each fiscal quarter end, commencing with the fiscal quarter ending September 30,
2012, to be more than 3.00 to 1.00; provided that, during an Acquisition
Adjustment Period, the Leverage Ratio shall not be greater than 3.50 to 1.00.

Section 6.17. Interest Coverage Ratio. ; Debt Service Coverage Ratio.

(a) Borrower shall not permit the Interest Coverage Ratio as of each fiscal
quarter end, commencing with the fiscal quarter ending September 30, 2012,
occurring on or prior to the Term Out Trigger Date to be less than 2.50 to 1.00.

(b) Borrower shall not permit the Debt Service Coverage Ratio as of each fiscal
quarter end occurring after the Term Out Trigger Date to be less than 1.50 to
1.00.

Section 6.18. Capital Expenditures. If the Leverage Ratio as of the last day of
the most recently ended fiscal quarter is greater than 2.50 to 1.00, then noNo
Credit Party shall, nor shall it permit any of its Subsidiaries to, make Capital
Expenditures (other than Maintenance Capital Expenditures or Capital
Expenditures financed with Equity Issuance Proceeds or the proceeds of Debt)
unless (a) after giving effect to such Capital Expenditures, Liquidity would be
greater than or equal to $15,000,000.15,000,000 or (b) the Leverage Ratio,
calculated on a pro forma basis after giving effect to such Capital Expenditures
as of the beginning of the period of four fiscal quarters most recently ended,
is less than 2.50 to 1.00.

Section 6.19. Landlord Agreements. No Credit Party shall, nor shall it permit
any of its Subsidiaries to (a) hold, store or otherwise maintain any equipment
or inventory that is intended to constitute Collateral pursuant to the Security
Documents at premises within the U.S. which are not owned by a Credit Party and
located in the U.S. unless (i) such equipment is located at the job site under
which such equipment is then currently under contract, (ii) such equipment or
inventory is located at premises within the U.S. that are leasednot owned by a
Credit Party and which are covered bywith respect to which such Credit Party has
used commercially reasonable efforts to obtain a lien waiver or subordination
agreement in form and substance satisfactory to the Administrative Agent,
(iii) such equipment is office equipment, (iv) such equipment or inventory is in
transit or being temporarily stored for the purposes of being transported,
(v) such equipment is off location for servicing, repairs or modification,
(vi) such equipment is being held for delivery, or (vii) the aggregate value of
all equipment and inventory located at premises which are not owned by a Credit
Party and with respect to which are not covered bya Credit Party has not used
commercially reasonable efforts to obtain a lien waiver or subordination
agreement in form and substance satisfactory to the Administrative Agent does
not exceed $250,000, or (b) after the date hereof, enter into any new verbal or
written leases for premises with any Person who has not executed a lien waiver
or subordination agreement in form and substance satisfactory to the
Administrative Agent unless the equipment or inventory located on such premises
would fall under any of the provisions in the foregoing clause (a).

 

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Section 6.20. Operating Leases. No Credit Party shall, nor shall it permit any
of its Subsidiaries to, enter into any lease that constitutes an operating lease
under GAAP if the obligations of a Credit Party or such Subsidiary as lessee
under such lease would cause its lease payments (excluding payments for taxes,
insurance, and other non-rental expenses to the extent not included within the
stated amount of the rental payments under such lease) in respect of all such
leases entered into by the Borrower and its Subsidiaries to exceed
$4,000,0008,000,000 during any fiscal year of the Borrower.

Section 6.21. Prepayment of Certain Debt. No Credit Party shall, nor shall it
permit any of its Subsidiaries to, prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or make
any payment in violation of any subordination terms of, any Debt, except (a) the
prepayment of the Obligations in accordance with the terms of this Agreement,
(b) regularly scheduled or required repayments or redemptions of Permitted Debt
(other than Permitted Subordinated Debt) and refinancings and refundings of such
Permitted Debt so long as such refinancings and refundings would otherwise
comply with Section 6.1, (c) so long as no Event of Default exists or would
result therefrom, other prepayments of Permitted Debt not described in the
immediately preceding clauses (a) and (b), but specifically excluding any
prepayments, redemptions, purchases, defeasance, or other satisfaction of
Permitted Subordinated Debt. No Credit Party shall, nor shall it permit any of
its Subsidiaries to, make any payments of principal, interest, fees or other
amounts with respect to Permitted Subordinated Debt except as permitted under
the applicable Subordination Agreement.

Section 6.22. Amendment of the Subordinated Notes and Material Contracts. No
Credit Party shall, nor shall it permit any of its Subsidiaries to, amend,
restate, supplement or otherwise modify any Subordinated Note or Material
Contract, in each case in a manner materially adverse to the interests of the
Administrative Agent or the Lenders, without the prior written consent of the
Majority Lenders.

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 interest or any other amount due under this Agreement or any other
Credit Document, including payments of 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 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(a), Section 5.2(c), Section 5.2(e), Section 5.3(a),
Section 5.11 or Article 6 (other than Sections 6.12, 6.13 or 6.19) of this
Agreement or (ii) any breach by any Credit Party of any other covenant contained
in this Agreement or any other Credit Document and such breach shall remain
unremedied for a period of thirty (30) days following the earlier of (A) the
date on which Administrative Agent gave notice of such failure to Borrower and
(B) the date any Responsible Officer of the Borrower or any Subsidiary acquires
actual knowledge of such failure (such grace period to be applicable only in the
event such Default can be remedied by corrective action of the Borrower or any
Subsidiary);

 

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(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;

(e) Security Documents. Any Security Document shall at any time and for any
reason cease to create an Acceptable Security Interest in Collateral with a fair
value in excess of $250,000 in the aggregate purported to be subject to such
agreement in accordance with the terms of such agreement or any material
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 (unless released or terminated pursuant to the terms of such
Security Document), except as a result of the Administrative Agent’s failure to
(i) maintain possession of any stock certificates, promissory notes or other
instruments delivered to it under the Security Documents or (ii) file UCC
continuation statements;

(f) Cross-Default. (i) The Borrower or any Guarantor shall fail to pay any
principal of or premium or interest on its Debt which is outstanding in a
principal amount of at least $3,000,000 individually or when aggregated with all
such Debt of the Borrower and the Subsidiaries so in default (but excluding Debt
hereunder) when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or (ii) any other event shall occur or
condition shall exist under any agreement or instrument relating to Debt which
is outstanding in a principal amount of at least $3,000,000 individually or when
aggregated with all such Debt of the Borrower and the Subsidiaries so in default
(other than Debt hereunder), and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt prior to the stated maturity thereof; provided that, for
purposes of this paragraph (f), the “principal amount” of the obligations in
respect of Hedging Arrangements at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that would be required to be
paid if such Hedging Arrangements were terminated at such time;

(g) Bankruptcy and Insolvency. Any Credit Party (i) admits in writing its
inability to pay its debts generally as they become due; makes an assignment for
the benefit of its creditors; consents to or acquiesces in the appointment of a
receiver, liquidator, fiscal agent, or trustee of itself or any of its Property;
files a petition under bankruptcy or other laws for the relief of debtors; or
consents to any reorganization, arrangement, workout, liquidation, dissolution,
or similar relief or (ii) shall have had, without its consent: any court enter
an order appointing a receiver, liquidator, fiscal agent, or trustee of itself
or any of its Property; any petition filed against it seeking reorganization,
arrangement, workout, liquidation, dissolution or similar relief under
bankruptcy or other laws for the relief of debtors and such petition shall not
be dismissed, stayed, or set aside for an aggregate of 60 days, whether or not
consecutive;

(h) Settlements; Adverse Judgment. The Borrower or any of its Subsidiaries
enters into a settlement of any claim against any of them when a suit has been
filed or suffers final judgments against any of them since the date of this
Agreement in an aggregate amount, less (x) any insurance proceeds covering such
settlements or judgments which are received or as to which the insurance
carriers have not denied liability and (y) with respect to settlements, any
portion of such settlement not required to be paid in cash during the term of
this Agreement, greater than $3,000,000 and, in the case of final judgments,
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgments or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgments, by reason of a pending
appeal or otherwise, shall not be in effect;

 

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(i) 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 Administrative Agent, 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 $3,000,000;

(j) 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 $1,500,000;

(k) Credit Documents. Any material provision of any Credit Document, except to
the extent permitted by the terms thereof, shall for any reason cease to be
valid and binding on the Borrower or a Guarantor or any of their respective
Subsidiaries or any such Person shall so state in writing;

(l) Subordination Agreement. Any material provision of any Subordination
Agreement shall cease to be in full force and effect or shall be declared null
and void by any court or the validity or enforceability thereof shall be
contested or challenged in any court by any holder of any Subordinated Note;

(m) Material Contracts. The occurrence of any breach or nonperformance by any
Person under a Material Contract or any early termination of any Material
Contract, which breach, nonperformance or early termination could reasonably be
expected to cause a Material Adverse Change; or

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

Section 7.2. Optional Acceleration of Maturity. If any Event of Default shall
have occurred and be continuing, then, and in any such event,

(a) the Administrative Agent (i) shall at the request, or may with the consent,
of the Majority Lenders, by notice to the Borrower, declare that the obligation
of each Lender to make Advances and the obligation of the Issuing Lender to
issue Letters of Credit shall be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Majority Lenders, by notice to the Borrower, declare the Notes, all accrued and
unpaid interest thereon, and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon the Notes, all such interest, and all
such amounts 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,

(b) the Borrower shall, on demand of the Administrative Agent at the request or
with the consent of the Majority Lenders, deposit with the Administrative Agent
into the Cash Collateral Account an amount of cash equal to the outstanding
Letter of Credit Exposure as security for the Secured Obligations to the extent
the Letter of Credit Obligations are not otherwise paid or cash collateralized
at such time, and

(c) the Administrative Agent shall at the request of, or may with the consent
of, the Majority Lenders proceed to enforce its rights and remedies under the
Security Documents, the Guaranty, or any other Credit Document for the ratable
benefit of the Secured Parties by appropriate proceedings.

 

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Section 7.3. Automatic Acceleration of Maturity. If any Event of Default
pursuant to Section 7.1(g) shall occur,

(a) the obligation of each Lender to make Advances and the obligation of the
Issuing Lender to issue Letters of Credit shall immediately and automatically be
terminated and the Notes, all accrued and unpaid interest on the Notes, and all
other amounts payable under this Agreement shall immediately and automatically
become and be due and payable in full, without presentment, demand, protest or
any 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,

(b) the Borrower shall, on demand of the Administrative Agent at the request or
with the consent of the Majority Lenders, deposit with the Administrative Agent
into the Cash Collateral Account an amount of cash equal to the outstanding
Letter of Credit Exposure as security for the Secured Obligations to the extent
the Letter of Credit Obligations are not otherwise paid or cash collateralized
at such time, and

(c) the Administrative Agent shall at the request of, or may with the consent
of, the Majority Lenders proceed to enforce its rights and remedies under the
Security Documents, the Guaranty, or any other Credit Document for the ratable
benefit of the Secured Parties by appropriate proceedings.

Section 7.4. Set-off. Upon (a) the occurrence and during the continuance of any
Event of Default and (b) the making of the request or the granting of the
consent, if any, specified by Section 7.2 to authorize the Administrative Agent
to declare the Notes and any other amount payable hereunder due and payable
pursuant to the provisions of Section 7.2 or the automatic acceleration of the
Notes and all amounts payable under this Agreement pursuant to Section 7.3, the
Administrative Agent and each Lender 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 indebtedness at any time owing by the Administrative
Agent or such Lender to or for the credit or the account of any Credit Party
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement, the Notes held by the Administrative Agent or such Lender,
and the other Credit Documents, irrespective of whether or not the
Administrative Agent or such Lender shall have made any demand under this
Agreement, such Note, or such other Credit Documents, and although such
obligations may be unmatured. Each Lender agrees to promptly notify the Borrower
after any such set off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set off and
application. The rights of the Administrative Agent and each Lender under this
Section 7.4 are in addition to any other rights and remedies (including, without
limitation, other rights of set off) which the Administrative Agent or such
Lender may have.

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. Any
Lender may cure any Event of Default without waiving the Event of Default. 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.

 

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Section 7.6. Application of Payments. Prior to an Event of Default, all payments
made hereunder shall be applied by the Administrative Agent as directed by the
Borrower, but subject to the terms of this Agreement, including the application
of prepayments according to Section 2.4 and Section 2.11. During the existence
of an Event of Default, all payments and collections received by the
Administrative Agent shall be applied to the Secured Obligations in accordance
with Section 2.11 and otherwise in the following order:

FIRST, to the payment of all documented out-of-pocket costs and expenses
incurred by the Administrative Agent (in its capacity as such hereunder or under
any other Credit Document) in connection with and pursuant to the terms of any
Credit Document, the repayment of all advances made by the Administrative Agent
as secured party hereunder or under any other Credit Document on behalf of any
Credit Party and any other costs or expenses incurred by the Administrative
Agent in connection with the exercise of any right or remedy hereunder or under
any other Credit Document;

SECOND, to the payment of all accrued and unpaid interest constituting part of
the Secured Obligations (the amounts so applied to be distributed ratably among
the Lenders (and to the extent applicable to Hedging Arrangements, the Swap
Counterparties and to the extent applicable to Banking Services Obligations, the
Lenders or their Affiliates that is owed such obligations) pro rata in
accordance with the amounts of the Secured Obligations owed to them on the date
of any such distribution);

THIRD, to the payment of any then due and owing principal constituting part of
the Secured Obligations (the amounts so applied to be distributed ratably among
the Lenders (and to the extent applicable to Hedging Arrangements, the Swap
Counterparties and to the extent applicable to Banking Services Obligations, the
Lenders or their Affiliates that is owed such obligations) pro rata in
accordance with the principal amounts of the Obligations owed to them on the
date of any such distribution), and when applied to make distributions by the
Administrative Agent to pay the principal amount of the outstanding Borrowings,
pro rata to the Lenders;

FOURTH, to the payment of any then due and owing other amounts (including fees
and expenses) constituting part of the Secured Obligations (the amounts so
applied to be distributed ratably among the Lenders (and to the extent
applicable to Hedging Arrangements, the Swap Counterparties and to the extent
applicable to Banking Services Obligations, the Lenders or its Affiliate that is
owed such obligations) pro rata in accordance with such amounts owed to them on
the date of any such distribution), and when applied to make distributions by
the Administrative Agent to pay such amounts payable to the Lenders under this
Credit Agreement, pro rata to the Lenders; and

FIFTH, to the Credit Parties, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.

ARTICLE 8

THE ADMINISTRATIVE AGENT

Section 8.1. Appointment, Powers, and Immunities. Each Lender hereby irrevocably
appoints and authorizes the Administrative Agent to act as its agent under this
Agreement and the other Credit Documents with such powers and discretion as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and the other Credit Documents, together with such other powers as are
reasonably incidental thereto. The Administrative Agent (which term as used in
this sentence and in Section 8.5 and the first sentence of Section 8.6 shall
include its Affiliates and its own and its Affiliates’ officers, directors,
employees, and agents): (a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender; (b) shall not

 

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be responsible to the Lenders for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Credit
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Credit Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Credit
Document, or any other document referred to or provided for therein or for any
failure by any Credit Party or any other Person to perform any of its
obligations thereunder; (c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the satisfaction of any condition
or to inspect the Property (including the books and records) of any Credit Party
or any of its Subsidiaries or Affiliates; (d) shall not be required to initiate
or conduct any litigation or collection proceedings under any Credit Document
unless requested by the Majority Lenders in writing and it receives
indemnification satisfactory to it from the Lenders; and (e) shall not be
responsible for any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross negligence or
willful misconduct. The Administrative Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by the Administrative Agent
with reasonable care.

Section 8.2. Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon any certification, notice, instrument, writing, or other
communication (including, without limitation, any thereof by telephone or
telecopy) believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for any Credit Party),
independent accountants, and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Notes as the holder
thereof for all purposes hereof unless and until the Administrative Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 9.7. As to any matters not expressly provided for by this Agreement, the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that the Administrative Agent shall not be required
to take any action that exposes the Administrative Agent to personal liability
or that is contrary to any Credit Document or applicable law or unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking any such
action.

Section 8.3. Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default unless the Administrative
Agent has received written notice from a Lender or the Borrower specifying such
Default and stating that such notice is a “Notice of Default”. In the event that
the Administrative Agent receives such a notice of the occurrence of a Default,
the Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall (subject to Section 8.2) take such action with
respect to such Default as shall reasonably be directed by the Majority Lenders,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interest of the Lenders.

Section 8.4. Rights as Lender. With respect to its Commitments and the Advances
made by it, Amegy (and any successor acting as Administrative Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Administrative Agent, and the term “Lender” or “Lenders” shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. Amegy (and any successor acting as Administrative Agent) and its
Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
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engage in any kind of lending, trust, or other business with any Credit Party or
any of its Subsidiaries or Affiliates as if it were not acting as Administrative
Agent, and Amegy (and any successor acting as Administrative Agent) and its
Affiliates may accept fees and other consideration from any Credit Party or any
of its Subsidiaries or Affiliates for services in connection with this Agreement
or otherwise without having to account for the same to the Lenders.

Section 8.5. Indemnification. THE LENDERS SEVERALLY AGREE TO INDEMNIFY THE
ADMINISTRATIVE AGENT, THE ISSUING LENDER AND EACH OF THEIR RESPECTIVE AFFILIATES
AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (TO THE EXTENT
NOT REIMBURSED BY THE BORROWER), RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL
AMOUNTS OF THE REVOLVING ADVANCES THEN HELD BY EACH OF THEM (OR IF NO PRINCIPAL
OF THE REVOLVING ADVANCES IS AT THE TIME OUTSTANDING, RATABLY ACCORDING TO THE
RESPECTIVE AMOUNTS OF THE COMMITMENTS THEN HELD BY EACH OF THEM, OR, IF NO SUCH
PRINCIPAL AMOUNTS ARE THEN OUTSTANDING AND NO COMMITMENTS ARE THEN EXISTING,
RATABLY ACCORDING TO THE COMMITMENTS HELD BY EACH OF THEM IMMEDIATELY PRIOR TO
THE TERMINATION OR EXPIRATION THEREOF), FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT OR ISSUING
LENDER IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION
TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT OR THE ISSUING LENDER UNDER THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT (IN ALL CASES, WHETHER OR NOT CAUSED BY
OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE
NEGLIGENCE OF THE ADMINISTRATIVE AGENT OR THE ISSUING LENDER), AND INCLUDING,
WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES, PROVIDED THAT NO LENDER SHALL BE
LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS
RESULTING FROM THE ADMINISTRATIVE AGENT’S OR THE ISSUING LENDER’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, EACH
LENDER AGREES TO REIMBURSE THE ADMINISTRATIVE AGENT AND THE ISSUING LENDER
PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE (DETERMINED AS SET FORTH ABOVE IN
THIS PARAGRAPH) OF ANY OUT OF POCKET EXPENSES (INCLUDING COUNSEL FEES) INCURRED
BY THE ADMINISTRATIVE AGENT OR THE ISSUING LENDER IN CONNECTION WITH THE
PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF,
OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENT, TO THE EXTENT THAT THE ADMINISTRATIVE AGENT OR THE
ISSUING LENDER IS NOT REIMBURSED FOR SUCH BY THE BORROWER.

Section 8.6. Non-Reliance on Administrative Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower and the other
Credit Parties and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under the Credit Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to the Lenders by
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Administrative Agent hereunder and for other information in the Administrative
Agent’s possession which has been requested by a Lender and for which such
Lender pays the Administrative Agent’s expenses in connection therewith, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition, or business of any Credit Party or any of its Subsidiaries or
Affiliates that may come into the possession of the Administrative Agent or any
of its Affiliates.

Section 8.7. Resignation of Administrative Agent and Issuing Lender. The
Administrative Agent or the Issuing Lender may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon receipt of notice
of any such resignation, the Majority Lenders shall have the right to appoint a
successor Administrative Agent or Issuing Lender with, so long as no Event of
Default has occurred and is continuing, the consent of the Borrower, which
consent shall not be unreasonably withheld. If no successor Administrative Agent
or Issuing Lender shall have been so appointed by the Majority Lenders with the
consent of the Borrower, and shall have accepted such appointment, within 30
days after the retiring Administrative Agent’s or Issuing Lender’s giving of
notice of resignation, then the retiring Administrative Agent or Issuing Lender
may, on behalf of the Lenders and the Borrower (subject to consultation with the
Borrower), appoint a successor Administrative Agent or Issuing Lender, which
shall be, in the case of a successor agent, a commercial bank organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $250,000,000 and, in the case of the
Issuing Lender, a Lender; provided that, if the Administrative Agent or Issuing
Lender shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Administrative
Agent or Issuing Lender shall be discharged from its duties and obligations
hereunder and under the other Credit Documents (except that (A) in the case of
any collateral security held by the Administrative Agent on behalf of the
Lenders or the Issuing Lender under any of the Credit Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such
time as a successor Administrative Agent is appointed and (B) the retiring
Issuing Lender shall remain the Issuing Lender with respect to any Letters of
Credit outstanding on the effective date of its resignation or removal and the
provisions affecting the Issuing Lender with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Lender until the termination
of all such Letters of Credit) and (2) all payments, communications and
determinations provided to be made by, to or through the retiring Administrative
Agent shall instead be made by or to each Lender and the Issuing Lender
directly, until such time as the Majority Lenders appoint a successor
Administrative Agent or Issuing Lender, as applicable, as provided for above in
this paragraph. Upon the acceptance of any appointment as Administrative Agent
or Issuing Lender by a successor Administrative Agent or Issuing Lender, such
successor Administrative Agent or Issuing Lender shall thereupon succeed to and
become vested with all the rights, powers, privileges, and duties of the
retiring Administrative Agent or Issuing Lender, and the retiring Administrative
Agent or Issuing Lender shall be discharged from its duties and obligations
under this Agreement and the other Credit Documents, except that the retiring
Issuing Lender shall remain the Issuing Lender with respect to any Letters of
Credit outstanding on the effective date of its resignation or removal and the
provisions affecting the Issuing Lender with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Lender until the termination
of all such Letters of Credit. After any retiring Administrative Agent’s or
Issuing Lender’s resignation as Administrative Agent or Issuing Lender, the
provisions of this Article 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent or Issuing Lender
under this Agreement and the other Credit Documents.

 

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Section 8.8. Collateral Matters.

(a) The Administrative Agent is authorized on behalf of the Secured Parties,
without the necessity of any notice to or further consent from such Secured
Parties, from time to time, to take any actions with respect to any Collateral
or Security Documents which may be necessary to perfect and maintain the Liens
upon the Collateral granted pursuant to the Security Documents. The
Administrative Agent is further authorized (but not obligated) on behalf of the
Secured Parties, without the necessity of any notice to or further consent from
the Secured Parties, from time to time, to take any action in exigent
circumstances as may be reasonably necessary to preserve any rights or
privileges of the Secured Parties under the Credit Documents or applicable Legal
Requirements. By accepting the benefit of the Liens granted pursuant to the
Security Documents, each Secured Party hereby agrees to the terms of this
paragraph (a).

(b) The Lenders hereby, and any other Secured Party by accepting the benefit of
the Liens granted pursuant to the Security Documents, irrevocably authorize the
Administrative Agent to (i) release any Lien granted to or held by the
Administrative Agent upon any Collateral (a) upon termination of this Agreement,
termination of all Hedging Agreements with such Persons (other than Hedging
Agreements as to which arrangements satisfactory to the applicable counterparty
in its sole discretion have been made), termination of all Letters of Credit
(other than Letters of Credit as to which arrangements satisfactory to the
Issuing Lender in its sole discretion have been made), and the payment in full
of all outstanding Advances, Letter of Credit Obligations and all other Secured
Obligations payable under this Agreement and under any other Credit Document;
(b) constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted under this Agreement or any other
Credit Document; (c) constituting property in which no Credit Party owned an
interest at the time the Lien was granted or at any time thereafter; or
(d) constituting property leased to any Credit Party under a lease which has
expired or has been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by such Credit
Party to be, renewed or extended; and (ii) release a Guarantor from its
obligations under a Guaranty and any other applicable Credit Document if such
Person ceases to be a Subsidiary as a result of a transaction permitted under
this Agreement. Upon the request of the Administrative Agent at any time, the
Secured Parties will confirm in writing the Administrative Agent’s authority to
release particular types or items of Collateral pursuant to this Section 8.8.

(c) Notwithstanding anything contained in any of the Credit Documents to the
contrary, the Credit Parties, the Administrative Agent, and each Secured Party
hereby agree that no Secured Party shall have any right individually to realize
upon any of the Collateral or to enforce the Guaranty, it being understood and
agreed that all powers, rights and remedies hereunder and under the Security
Documents may be exercised solely by Administrative Agent on behalf of the
Secured Parties in accordance with the terms hereof and the other Credit
Documents. By accepting the benefit of the Liens granted pursuant to the
Security Documents, each Secured Party not party hereto hereby agrees to the
terms of this paragraph (c).

Section 8.9. No Other Duties, etc. Anything herein to the contrary
notwithstanding, the Syndication Agent, Co-Documentation Agents, Lead Arranger
and Sole Bookrunner listed on the cover page hereof shall not have any powers,
duties or responsibilities under this Agreement or any of the other Credit
Documents, except in its capacity, as applicable, as the Administrative Agent, a
Lender or the Issuing Lender hereunder.

Section 8.10. Flood Laws. The Administrative Agent has adopted internal policies
and procedures that address requirements placed on federally regulated lenders
under the National Flood Insurance Reform Act of 1994 and related legislation
(the “Flood Laws”). Upon request of any Lender, the Administrative Agent will
provide to such Lender any documents that the Administrative Agent receives in
connection with the Flood Laws. Notwithstanding the foregoing, each Lender and
participant is responsible for assuring its own compliance with requirements
under Flood Laws.

 

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ARTICLE 9

MISCELLANEOUS

Section 9.1. Costs and Expenses. The Borrower agrees to pay promptly (and in any
event within ten (10) days after written demand therefor (accompanied by
detailed invoices)):

(a) all reasonable and documented out-of-pocket costs and expenses of
Administrative Agent (but not of other Lenders) in connection with the
preparation, execution, delivery, administration, modification, and amendment of
this Agreement, the Notes, and the other Credit Documents including costs
associated with field examinations, appraisals, and the reasonable fees and out
of pocket expenses of one outside counsel for Administrative Agent (but not of
other Lenders) and one local counsel for Administrative Agent (but not of other
Lenders) in each relevant jurisdiction, with respect to advising the
Administrative Agent as to its rights and responsibilities under this Agreement,
and

(b) all documented out-of-pocket costs and expenses, if any, of the
Administrative Agent and each Lender (including fees and expenses of one outside
counsel and, if reasonably necessary, one local counsel in each relevant
jurisdiction for the Administrative Agent and the Lenders and, in the case of an
actual or perceived conflict of interest, one additional counsel for each
affected party) in connection with the enforcement (whether through
negotiations, 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 THE ADMINISTRATIVE AGENT, THE ISSUING LENDER AND
EACH LENDER AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ADVISORS, PARTNERS, ADMINISTRATORS AND TRUSTEES
(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)
(i) THE CREDIT DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE
ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE ADVANCES OR (ii) ANY ACTUAL OR
ALLEGED PRESENCE OR RELEASE OF HAZARDOUS SUBSTANCE ON OR FROM ANY PROPERTY OWNED
OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL
CLAIM RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, IN ALL
CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE
COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE APPLICABLE INDEMNITEE,
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 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. THE FOREGOING

 

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INDEMNITY AND HOLD HARMLESS PROVISIONS SHALL NOT APPLY TO ANY CLAIMS, DAMAGES,
LOSSES, LIABILITIES, COSTS OR EXPENSES THAT IS INCURRED BY OR ASSERTED OR
AWARDED AGAINST ANY INDEMNITEE DIRECTLY FOR, OR AS A DIRECT CONSEQUENCE OF, SUCH
INDEMNITEE BEING A DEFAULTING LENDER UNDER CLAUSE (A) OR (B) OF THE DEFINITION
OF “DEFAULTING LENDER”, WHETHER ASSERTED BY ANY CREDIT PARTY, THE ADMINISTRATIVE
AGENT, THE SWING LINE LENDER OR THE ISSUING LENDER. NO CREDIT PARTY SHALL,
WITHOUT THE PRIOR WRITTEN CONSENT OF EACH INDEMNITEE AFFECTED THEREBY (WHICH
CONSENT WILL NOT BE UNREASONABLY WITHHELD), SETTLE ANY THREATENED OR PENDING
CLAIM OR ACTION THAT WOULD GIVE RISE TO THE RIGHT OF ANY INDEMNITEE TO CLAIM
INDEMNIFICATION HEREUNDER UNLESS SUCH SETTLEMENT (X) INCLUDES A FULL AND
UNCONDITIONAL RELEASE OF ALL LIABILITIES ARISING OUT OF SUCH CLAIM OR ACTION
AGAINST SUCH INDEMNITEE AND (Y) DOES NOT INCLUDE ANY STATEMENT AS TO OR AN
ADMISSION OF FAULT, CULPABILITY OR FAILURE TO ACT BY OR ON BEHALF OF ANY
INDEMNITEE.

(b) Waiver of Consequential Damages, Etc. 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 Advance or Letter
of Credit or the use of the proceeds thereof. 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.

(c) Payments. All payments required to be made under this Section 9.2 shall be
made within 10 days of demand therefor.

(d) 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,
the termination of all Commitments, and the payment in full of the Advances 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 (other than the Fee
Letter), 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 Majority 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:

(a) no amendment, waiver, or consent shall, unless in writing and signed by all
the affected Lenders and the Borrower, do any of the following: (i) waive any of
the conditions specified in Section 3.1 or Section 3.2, (ii) reduce any
principal, interest, fees or other amounts payable hereunder or under any other
Credit Document (provided that the waiver of default interest shall only require
the consent of the Majority Lenders), (iii) postpone or extend any date fixed
for any payment of any principal, interest, fees or other amounts payable
hereunder, including, without limitation, the Maturity Date (it being understood
and agreed that a waiver of a mandatory prepayment shall only require the
consent of the

 

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Majority Lenders), (iv) amend Section 2.11(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, amend the definition of
“Majority Lenders”, or change the number of Lenders which shall be required for
the Lenders to take any action hereunder or under any other Credit Document, or
(v) except as specifically provided in the Credit Documents and as a result of
transactions permitted by the terms of this Agreement, release any Guarantor
from its obligation under any Guaranty or release all or a material portion of
the Collateral;

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

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

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

(e) no amendment, waiver or consent shall, unless in writing and signed by the
Swing Line Lender in addition to the Lenders required above to take such action,
affect the rights or duties of the Swing Line Lender 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
Advances or the issuance of any Letters of Credit 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 2.9, 2.10,
2.12(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 when it shall
have been executed by the Borrower and the Administrative Agent, and when the
Administrative Agent shall have, as to each Lender, either received a
counterpart hereof executed by such Lender or been notified by such Lender that
such Lender has executed it and thereafter shall be binding upon and inure to
the benefit of the Borrower, the Administrative Agent, and each Lender and their
respective successors and permitted 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.

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 Advances, its Notes, and its Commitments); provided,
however, that (i) each such assignment shall be to an Eligible

 

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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 shall be in an amount at least equal to $5,000,000
unless the Administrative Agent and, so long as no Event of Default has occurred
and is continuing, the Borrower otherwise consents to a lower amount (each such
consent not to be unreasonably withheld or delayed); provided that the Borrower
shall be deemed to have consented to such lower amount unless it shall have
objected thereto by written notice to the Administrative Agent within five
(5) Business Days after having received notice thereof; (iii) each assignment of
a Lender’s rights and obligations with respect to Advances and its Commitments
shall be of a constant, and not varying, percentage of all of its rights and
obligations under this Agreement as a Lender and the Notes (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 Revolving Advances and Term Advances, and its Commitment; and (iv) the
parties to such assignment shall execute and deliver to the Administrative Agent
for its acceptance an Assignment and Acceptance, together with any Notes subject
to such assignment and the assignor or assignee Lender shall pay a processing
fee of $3,500; provided that such processing fee shall not be required for the
initial assignments made by Amegy as a Lender in connection with the initial
syndication of its Commitments hereunder and such processing fee may be waived
at the sole discretion of the Administrative Agent. 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
Administrative Agent and the Borrower shall make appropriate arrangements so
that, if requested, new Notes are issued to the assignor and the assignee. The
assignee shall deliver to the Borrower and the Administrative Agent any
applicable forms or certifications in accordance with Section 2.12(e).

(b) The Administrative Agent, acting solely for this purpose as an agent of the
Borrower for tax purposes, shall maintain at its address 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 the Commitments of, and principal amount (and stated interest) of
the Advances 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 Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.

(c) Upon its receipt of an Assignment and Acceptance executed by the parties
thereto, together with any Notes subject to such assignment and payment of the
processing fee, the Administrative Agent 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 and/or obligations under this Agreement (including all or
a portion of its Commitments or its Advances) 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 contained in Sections 2.9 and 2.10
(but with respect to any particular participant, to no greater extent than the
Lender that sold the participation to such participant) and the right of set-off
contained in Section 7.4, and (iv) the Borrower shall continue to deal solely
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

 

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enforce the obligations of the Borrower relating to its Advances and its Notes
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 Advances
or Notes, extending any scheduled principal payment date or date fixed for the
payment of interest on such Advances or Notes, or extending its Commitment).
Each Lender that sells a participation shall, acting solely for this purpose as
an 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 Advances 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 United States 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. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

(e) Notwithstanding any other provision set forth in this Agreement, any Lender
may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including
any pledge or assignment to secure obligations to a Federal Reserve Bank or any
other central bank having jurisdiction over such Lender; provided that no such
pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

(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 Section 9.8.

Section 9.8. Confidentiality. The Administrative Agent, the Swing Line Lender,
each Issuing Lender, and 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 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 or any Hedging Arrangement (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and will be instructed to keep such
information confidential), (b) to any other Person if directly incidental to the
administration of the credit facilities provided herein (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such information and will be instructed to keep such
information confidential), (c) as required by any Legal Requirement (with, to
the extent permitted by applicable law, prompt notice to the Borrower), (d) upon
the order of any court or administrative agency (with, to the extent permitted
by applicable law, prompt notice to the Borrower), (e) upon the request or
demand of any regulatory agency or authority having jurisdiction or purporting
to have jurisdiction over such Lending Party (including any self-regulatory
authority, such as the National Association of Insurance Commissioners),
(f) that is or becomes available to the public (other than as a result of a
breach of this Section by such Lending Party) or that is or becomes available to
any Lending Party on a non-confidential basis as a result of a disclosure by any
Person other than a Credit Party, (g) in connection with any litigation relating
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any other Credit Document to which such Lending Party or any of its Affiliates
may be a party (with, to the extent permitted by applicable law, prompt notice
to the Borrower), (h) to the extent necessary in connection with the exercise of
any right or remedy under this Agreement or any other Credit Document, (i) to
any actual or proposed participant or Eligible Assignee, in each case, subject
to provisions similar to those contained in this Section 9.8 and, in the event
such participant or Eligible Assignee is a direct competitor of the Borrower or
its Subsidiaries and no Event of Default has occurred and is continuing, with
the prior written consent of the Borrower, (j) on a confidential basis to
(i) any rating agency in connection with rating the Borrower or its Subsidiaries
or the credit facilities provided herein, (ii) the CUSIP Service Bureau or any
similar agency in connection with the issuance and monitoring of CUSIP numbers
with respect to the credit facilities provided herein, or (iii) any credit
insurer, and (k) with the consent of the Borrower. NOTWITHSTANDING ANYTHING TO
THE CONTRARY CONTAINED HEREIN, nothing in this Agreement shall (a) restrict any
Lending Party from providing information to any bank or other 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. In the event that any of the terms of this Section 9.8 conflict with any
non-disclosure agreement executed by a Lending Party prior to the date hereof,
then the terms of this Section 9.8 shall govern and control.

Section 9.9. Notices, Etc.

(a) Except as provided in paragraph (b) below, all notices and other
communications (other than Notices of Borrowing and Notices of Continuation or
Conversion, which are governed by Article 2 of this Agreement) 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 II,
if to the Swing Line Lender, the Administrative Agent or the Issuing Lender, at
its credit contact specified under its name on Schedule II, and if to any Lender
at is credit contact specified in its Administrative Questionnaire. 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, the Swing Line Lender or the Issuing
Lender pursuant to Article 2 shall not be effective until received and, in the
case of telecopy, such receipt is confirmed by the Swing Line Lender, such
Lender or Issuing Lender, as applicable, verbally or in writing. Notices
delivered through electronic communications to the extent provided in paragraph
(b) below, shall be effect as provided in said paragraph (b).

(b) Notices and other communications to the Administrative Agent and each Lender
hereunder may be delivered or furnished by electronic communication (including
e-mail, internet or intranet websites) pursuant to procedures approved by the
Administrative Agent; provided that (x) such communication is followed promptly
by an original delivered in accordance with paragraph (a) above and (y) the
foregoing shall not apply to notices to the Administrative Agent or any Lender
pursuant to Article 2 if such person has notified the Borrower that it is
incapable of receiving notices under such article by electronic communication.
Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon sender’s
receipt of an acknowledgment from the recipient (such as by the “Return Receipt
Requested” function, as available, return e-mail or other written
acknowledgment), and (ii) notices or communications posted to an internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(1) of notification that such notice or communication is available and
identifying the website address therefor.

 

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Section 9.10. 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 Advances 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 Agreement; and in the event that, notwithstanding the foregoing,
under any circumstances the aggregate amounts taken, reserved, charged, received
or paid on the Advances, 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 of its Notes (or if such Notes shall have been paid in full, refund
said excess to the Borrower). In the event that the maturity of the Notes 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 on the applicable Notes (or, if the applicable Notes 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 Notes
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 9.11. 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 Advances shall bear interest at the Maximum Rate until
the total amount of interest paid or accrued on the Advances equals the amount
of interest which would have been paid or accrued on the Advances 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 Advances, the total amount of interest
paid or accrued under the terms of this Agreement and the Advances 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 the
Administrative Agent for the account of 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 Advances if the Maximum Rate had, at all times, been in
effect and (B) the amount of interest which would have accrued on its Advances
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
Advances. 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
Advances, and if no such principal is then outstanding, such excess or part
thereof remaining shall be paid to the Borrower.

Section 9.12. Governing Law; Service of Process. This Agreement, the Notes and
the other Credit Documents (unless otherwise expressly provided therein) shall
be deemed a contract under, and shall be governed by, and construed and enforced
in accordance with, the laws of the State of Texas without regard to conflicts
of laws principles. Without limiting the intent of the parties set forth above,
(a) Chapter 346 of the Texas Finance Code, as amended (relating to revolving
loans and revolving tri-

 

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party accounts), shall not apply to this Agreement, the Notes, or the
transactions contemplated hereby and (b) 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. Each Letter of Credit shall be governed by either (i) the Uniform
Customs and Practice for Documentary Credits (2007 Revision), International
Chamber of Commerce Publication No. 600, or (ii) the International Standby
Practices (ISP98), International Chamber of Commerce Publication No. 590, in
either case, including any subsequent revisions thereof approved by a Congress
of the International Chamber of Commerce and adhered to by the Issuing Lender.
The Borrower 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 the Borrower at the
address set forth for the Borrower in this Agreement. 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 the Borrower or its Property in the courts of any other
jurisdiction.

Section 9.13. Submission to Jurisdiction. Each party hereto 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 party hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such court. Each party hereto 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 party hereto 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 Person at its address set forth in this Agreement. Each
party hereto 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 the Administrative Agent or any Lender to
serve legal process in any other manner permitted by the law or affect the right
of the Administrative Agent or any Lender to bring any action or proceeding
against any Credit Party or its Property in the courts of any other
jurisdiction.

Section 9.14. 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 9.15. Dispute Resolution. This section contains a jury waiver,
arbitration clause, and a class action waiver. READ IT CAREFULLY.

This dispute resolution provision shall supersede and replace any prior “Jury
Waiver,” “Judicial Reference,” “Class Action Waiver,” “Arbitration,” “Dispute
Resolution,” or similar alternative dispute agreement or provision between or
among the parties.

JURY TRIAL WAIVER; CLASS ACTION WAIVER. As permitted by applicable law, each
party waives their respective rights to a trial before a jury in connection with
any Dispute (as “Dispute” is hereinafter defined), and Disputes shall be
resolved by a judge sitting without a jury. If a court determines that this
provision is not enforceable for any reason and at any time prior to trial of
the Dispute, but not later than 30 days after entry of the order determining
this provision is unenforceable, the Administrative Agent or any Credit Party
shall be entitled to move the court for an order compelling arbitration and
staying or dismissing such litigation pending arbitration (“Arbitration Order”).
If permitted by applicable law, each party also waives the right to litigate in
court or an arbitration proceeding any Dispute as a class action, either as a
member of a class or as a representative, or to act as a private attorney
general.

 

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ARBITRATION. If a claim, dispute, or controversy arises with respect to this
Agreement, related agreements, or any other agreement or business relationship
whether or not related to the subject matter of this Agreement (all of the
foregoing, a “Dispute”), and only if a jury trial waiver is not permitted by
applicable law or ruling by a court, either party may require that the Dispute
be resolved by binding arbitration before a single arbitrator. By agreeing to
arbitrate a Dispute, each party gives up any right that party may have to a jury
trial, as well as other rights that party would have in court that are not
available or are more limited in arbitration, such as the rights to discovery
and to appeal.

Arbitration shall be commenced by filing a petition with, and in accordance with
the applicable arbitration rules of, JAMS or National Arbitration Forum
(“Administrator”) as selected by the initiating party. If the parties agree,
arbitration may be commenced by appointment of a licensed attorney who is
selected by the parties and who agrees to conduct the arbitration without an
Administrator. Disputes include matters (i) relating to a deposit account,
application for or denial of credit, enforcement of any of the obligations any
party has to another party, compliance with applicable laws and/or regulations,
performance or services provided under any agreement by any party, (ii) based on
or arising from an alleged tort, or (iii) involving any party’s employees,
agents, affiliates, or assigns. However, Disputes do not include the validity,
enforceability, meaning, or scope of this arbitration provision and such matters
may be determined only by a court. If a third party is a party to a Dispute,
each party consents to including the third party in the arbitration proceeding
for resolving the Dispute with the third party. Venue for the arbitration
proceeding shall be at a location determined by mutual agreement of the parties
or, if no agreement, in Houston, Texas.

If a court orders arbitration of a Dispute, the party to the Dispute that did
not seek the Arbitration Order shall commence arbitration. The party that sought
the Arbitration Order may commence arbitration, but shall have no obligation to
do so, and shall not in any way be adversely prejudiced by initiating or
participating in litigation or electing not to commence arbitration. The
arbitrator shall (i) hear and rule on appropriate dispositive motions for
judgment on the pleadings, for failure to state a claim, or for full or partial
summary judgment; (ii) render a decision and any award applying applicable law;
(iii) give effect to any limitations period in determining any Dispute or
defense; (iv) enforce the doctrines of compulsory counterclaim, res judicata,
and collateral estoppel, if applicable; (v) with regard to motions and the
arbitration hearing, apply rules of evidence governing civil cases; and
(vi) apply the law of the state specified in the agreement giving rise to the
Dispute. Filing of a petition for arbitration shall not prevent any party from
(i) seeking and obtaining from a court of competent jurisdiction
(notwithstanding ongoing arbitration) provisional or ancillary remedies
including but not limited to injunctive relief, property preservation orders,
foreclosure, eviction, attachment, replevin, garnishment, and/or the appointment
of a receiver, (ii) pursuing non-judicial foreclosure, or (iii) availing itself
of any self-help remedies such as setoff and repossession. The exercise of such
rights shall not constitute a waiver of the right to submit any Dispute to
arbitration.

Judgment upon an arbitration award may be entered in any court having
jurisdiction, except that, if the arbitration award exceeds $4,000,000, any
party shall be entitled to a de novo appeal of the award before a panel of three
arbitrators. To allow for such appeal, if the award (including Administrator,
arbitrator, and attorney’s fees and costs) exceeds $4,000,000, the arbitrator
will issue a written, reasoned decision supporting the award, including a
statement of authority and its application to the Dispute. A request for de novo
appeal must be filed with the arbitrator within 30 days following the date of
the arbitration award; if such a request is not made within that time period,
the arbitration decision shall become final and binding. On appeal, the
arbitrators shall review the award de novo, meaning that they shall reach their
own findings of fact and conclusions of law rather than deferring in any manner
to the original arbitrator. Appeal of an arbitration award shall be pursuant to
the rules of the Administrator or, if the Administrator has no such rules, then
the JAMS arbitration appellate rules shall apply.

 

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Arbitration under this provision concerns a transaction involving interstate
commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et
seq. This arbitration provision shall survive any termination, amendment, or
expiration of this Agreement. If the terms of this provision vary from the
Administrator’s rules, this arbitration provision shall control.

RELIANCE. Each party (i) certifies that no one has represented to such party
that any other party would not seek to enforce jury and class action waivers in
the event of suit, and (ii) acknowledges that it and each other party have been
induced to enter into this Agreement by, among other things, the mutual waivers,
agreements, and certifications in this section.

Section 9.16. Subordination Agreements. The Administrative Agent is hereby
authorized on behalf of the Lenders, the Swing Line Lender and the Issuing
Lender to enter into the Subordination Agreements. A copy of each such
Subordination Agreement will be made available to each Secured Party upon
request. Each Secured Party (by receiving the benefits thereunder and of the
Collateral) acknowledges and agrees to the terms of each such Subordination
Agreement and agrees that the terms thereof shall be binding on such Secured
Party and its successors and assigns, as if it were a party thereto.

Section 9.17. USA Patriot Act. Each Lender that is subject to the Patriot Act
and the Administrative Agent (for itself and not on behalf of any Lender) 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 or the Administrative
Agent, as applicable, to identify such Credit Party in accordance with the
Patriot Act.

Section 9.18. Business Loans. The Borrower warrants and represents that the
Advances 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 9.19. No Fiduciary or Agency Relationship. The Borrower acknowledges and
agrees that neither the Administrative Agent, the Issuing Lender, any Lender nor
any Affiliate thereof has assumed, and neither the Administrative Agent, the
Issuing Lender, any Lender nor any Affiliate thereof will assume, an agency or
fiduciary responsibility in the Borrower’s, its Subsidiaries’ or their
respective Affiliates’ favor with respect to the Credit Documents or any of the
transactions contemplated thereby (irrespective of whether the Administrative
Agent, the Issuing Lender, any Lender or any Affiliate thereof has advised or is
currently advising the Borrower, its Subsidiaries or their respective Affiliates
on other matters).

Section 9.20. Integration. THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND
SUPERSEDE ALL PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL,
RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN. ADDITIONALLY, THIS
AGREEMENT AND THE CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES.

 

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IN EXECUTING THIS AGREEMENT, EACH CREDIT PARTY HEREBY WARRANTS AND REPRESENTS IT
IS NOT RELYING ON ANY STATEMENT OR REPRESENTATION OTHER THAN THOSE IN THIS
AGREEMENT AND IS RELYING UPON ITS OWN JUDGMENT AND ADVICE OF ITS ATTORNEYS.

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

 

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EXECUTED as of the date first above written.

SIGNATURE PAGES HAVE BEEN OMITTED FROM THIS CONFORMED COPY OF THE CREDIT
AGREEMENT.

Signature Page to Credit Agreement

(Hi-Crush Partners LP)