Exhibit 10.1

FIRST LIEN CREDIT AGREEMENT

by and among

ACF FINCO I LP,

as Administrative Agent,

THE LENDERS THAT ARE PARTIES HERETO

as the Lenders,

and

NUVERRA ENVIRONMENTAL SOLUTIONS, INC.

as Borrower

Dated as of August 7, 2017

 

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Table of Contents

 

               Page  

1.

   DEFINITIONS AND CONSTRUCTION      2      1.1    Definitions      2      1.2
   Accounting Terms      2      1.3    Code      2      1.4    Construction     
2      1.5    Time References      3      1.6    Schedules and Exhibits      3  

2.

   LOANS AND TERMS OF PAYMENT      3      2.1    Revolving Loans      3      2.2
   Term Loan      4      2.3    Borrowing Procedures and Settlements      5     
2.4    Payments; Reductions of Commitments; Prepayments      10      2.5   
Promise to Pay      16      2.6    Interest Rates and Letter of Credit Fee:
Rates, Payments, and Calculations      16      2.7    Crediting Payments      19
     2.8    Designated Account      19      2.9    Maintenance of Loan Account;
Statements of Obligations      20      2.10    Fees      20      2.11    Letters
of Credit      22      2.12    Incremental Facilities      29      2.13   
Capital Requirements      30      2.14    Collections      32  

3.

   CONDITIONS; TERM OF AGREEMENT      33      3.1    Conditions Precedent to the
Initial Extension of Credit      33      3.2    Conditions Precedent to all
Extensions of Credit      33      3.3    [Reserved      34      3.4    Effect of
Maturity      34      3.5    Reserved      34      3.6    Conditions Subsequent
     34  

4.

   REPRESENTATIONS AND WARRANTIES      35      4.1    Due Organization and
Qualification; Subsidiaries      35      4.2    Due Authorization; No Conflict
     36  

 

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Table of Contents

 

               Page      4.3    Governmental Consents      36      4.4   
Binding Obligations; Perfected Liens      36      4.5    Title to Assets; No
Encumbrances      37      4.6    Litigation      37      4.7    Compliance with
Laws      37      4.8    No Material Adverse Effect      37      4.9    Solvency
     38      4.10    Employee Benefits      38      4.11    Environmental
Condition      38      4.12    Complete Disclosure      38      4.13    Patriot
Act      39      4.14    Indebtedness      39      4.15    Payment of Taxes     
39      4.16    Margin Stock      39      4.17    Governmental Regulation     
40      4.18    OFAC      40      4.19    Employee and Labor Matters      40  
   4.20    Material Contracts      40      4.21    Leases      40      4.22   
Eligible Accounts      41      4.23    [Reserved.]      41      4.24    Location
of Equipment      41      4.25    [Reserved      41      4.26    Immaterial
Subsidiaries      41      4.27    Name and Address; Properties      41      4.28
   Existing Business Relationships      41      4.29    O.S.H.A      41     
4.30    Second Lien Loan Documents      42  

5.

   AFFIRMATIVE COVENANTS      42      5.1    Financial Statements, Reports,
Certificates      42      5.2    Reporting      42      5.3    Existence      42
 

 

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Table of Contents

 

               Page      5.4    Maintenance of Properties      42      5.5   
Taxes      42      5.6    Insurance      43      5.7    Inspection      43     
5.8    Compliance with Laws      44      5.9    Environmental      44      5.10
   Disclosure Updates      44      5.11    Formation of Subsidiaries      45  
   5.12    Further Assurances      45      5.13    Lender Meetings      46     
5.14    Location of Collateral; Offices      46      5.15    Bank Products     
46      5.16    Material Contracts      47      5.17    Name Change;
Organizational Change; Creation of Affiliates      47      5.18    [Reserved]   
  47      5.19    Updated Borrowing Base Certificate      47      5.20   
Financial Advisor      47      5.21    Subsequent Deposits      47  

6.

   NEGATIVE COVENANTS      47      6.1    Indebtedness      47      6.2    Liens
     48      6.3    Restrictions on Fundamental Changes      48      6.4   
Disposal of Assets      48      6.5    Nature of Business      48      6.6   
Prepayments; Amendments; Settlements      48      6.7    Restricted Payments   
  49      6.8    Accounting Methods      50      6.9    Investments      50     
6.10    Transactions with Affiliates      50      6.11    Use of Proceeds     
50      6.12    Limitation on Issuance of Equity Interests      51      6.13   
Immaterial Subsidiaries      51  

 

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Table of Contents

 

               Page      6.14    Holding Company      51      6.15    Removal of
Collateral      51      6.16    Burdensome Agreement      51      6.17   
Capital Expenditures      52  

7.

   FINANCIAL COVENANTS      52  

8.

   EVENTS OF DEFAULT      54      8.1    Payments      54      8.2    Covenants
     54      8.3    Judgments      54      8.4    Voluntary Bankruptcy, etc     
55      8.5    Involuntary Bankruptcy, etc      55      8.6    Default Under
Other Agreements      55      8.7    Representations, etc      55      8.8   
Guaranty      55      8.9    Security Documents      55      8.10    Loan
Documents      56      8.11    Change of Control      56      8.12   
Subordination Provisions      56      8.13    Settlement Payments      56  

9.

   RIGHTS AND REMEDIES      56      9.1    Rights and Remedies      56      9.2
   Remedies Cumulative      57  

10.

   WAIVERS; INDEMNIFICATION      57      10.1    Demand; Protest; etc      57  
   10.2    The Lender Group’s Liability for Collateral      57      10.3   
Indemnification      58  

11.

   NOTICES      59  

12.

   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION     
60  

13.

   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS      62      13.1    Assignments
and Participations      62      13.2    Successors      66  

14.

   AMENDMENTS; WAIVERS      66  

 

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Table of Contents

 

               Page      14.1    Amendments and Waivers      66      14.2   
Replacement of Certain Lenders      68      14.3    No Waivers; Cumulative
Remedies      69  

15.

   AGENT; THE LENDER GROUP      69      15.1    Appointment and Authorization of
Agent      69      15.2    Delegation of Duties      70      15.3    Liability
of Agent      70      15.4    Reliance by Agent      71      15.5    Notice of
Default or Event of Default      71      15.6    Credit Decision      71     
15.7    Costs and Expenses; Indemnification      72      15.8    Agent in
Individual Capacity      73      15.9    Successor Agent      73      15.10   
Lender in Individual Capacity      74      15.11    Collateral Matters      74  
   15.12    Restrictions on Actions by Lenders; Sharing of Payments      75     
15.13    Agency for Perfection      76      15.14    Payments by Agent to the
Lenders      76      15.15    Concerning the Collateral and Related Loan
Documents      76      15.16    Field Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information      76      15.17   
Several Obligations; No Liability      77  

16.

   WITHHOLDING TAXES      78      16.1    Payments      78      16.2   
Exemptions      78      16.3    Reductions      80      16.4    Refunds      80
 

17.

   GENERAL PROVISIONS      81      17.1    Effectiveness      81      17.2   
Section Headings      81      17.3    Interpretation      81      17.4   
Severability of Provisions      81      17.5    [Reserved]      81  

 

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Table of Contents

 

               Page     

17.6

  

Debtor-Creditor Relationship

     81     

17.7

  

Counterparts; Electronic Execution

     81     

17.8

  

Revival and Reinstatement of Obligations; Certain Waivers

     82     

17.9

  

Confidentiality

     82     

17.10

  

Survival

     84     

17.11

  

Patriot Act

     84     

17.12

  

Integration

     84     

17.13

  

No Setoff

     84     

17.14

  

Intercreditor Agreement

     85  

 

 

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EXHIBITS AND SCHEDULES

 

Exhibit A-1    Form of Assignment and Acceptance Exhibit B-1    Form of
Borrowing Base Certificate Exhibit C-1    Form of Compliance Certificate Exhibit
P-1    Form of Perfection Certificate Schedule A-1    Agent’s Account Schedule
A-2    Authorized Persons Schedule C-1    Commitments Schedule D-1    Designated
Account Schedule E-1    Locations of Eligible Equipment Schedule E-2    Existing
Letters of Credit Schedule E-3    List of Certificated Equipment Unperfected on
the Closing Date Schedule P-1    Permitted Dispositions Schedule P-2   
Permitted Investments Schedule P-3    Permitted Liens Schedule R-1    Real
Property Collateral Schedule 1.1    Definitions Schedule 3.1    Conditions
Precedent Schedule 3.6    Post-Closing Items Schedule 4.1(b)    Capitalization
of Borrower Schedule 4.1(c)    Capitalization of Borrower’s Subsidiaries
Schedule 4.1(d)    Subscriptions, Options, Warrants, Calls Schedule 4.6(b)   
Litigation Schedule 4.11    Environmental Matters Schedule 4.14    Permitted
Indebtedness Schedule 4.20    Material Contracts Schedule 4.26    Liabilities of
Nuverra Rocky Mountain Schedule 4.27    Other Names and Properties Schedule 4.28
   Existing Business Relationships Schedule 5.1    Financial Statements,
Reports, Certificates Schedule 5.2    Collateral Reporting Schedule 5.14   
Locations of Collateral; Chief Executive Offices Schedule 6.5    Nature of
Business Schedule 6.16    Burdensome Agreements

 

 

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FIRST LIEN CREDIT AGREEMENT

THIS FIRST LIEN CREDIT AGREEMENT (this “Agreement”), is entered into as of
August 7, 2017, by and among the lenders identified on the signature pages
hereof (each of such lenders, together with its successors and permitted
assigns, is referred to hereinafter as a “Lender”, as that term is hereinafter
further defined), ACF FINCO I LP, an entity managed by Ares Management, L.P., as
administrative agent for each member of the Lender Group (in such capacity,
together with its successors and assigns in such capacity, “Agent”), and NUVERRA
ENVIRONMENTAL SOLUTIONS, INC., a Delaware corporation (“Borrower”).

WHEREAS, Borrower and its debtor affiliates, as debtors and debtors in
possession (collectively, the “Debtors”), commenced voluntary bankruptcy cases
on April 30, 2017 under Chapter 11 of title 11 of the United States Code, 11
U.S.C. §§ 101-1532 (as amended, the “Bankruptcy Code”) in the U.S. Bankruptcy
Court for the District of Delaware (the “Bankruptcy Court”), which proceedings
are jointly administered under case number 17-10949 (KJC) (the “Bankruptcy
Cases”);

WHEREAS, Borrower is party to that certain Amended and Restated Credit
Agreement, dated as of February 3, 2014 (as amended, modified or supplemented
prior to the date hereof, the “Prepetition ABL Credit Agreement”), among
Borrower, the lenders party thereto from time to time and Wells Fargo Bank,
National Association, as administrative agent;

WHEREAS, each of the Debtors is party to that certain Debtor-in-Possession
Credit Agreement, dated as of April 30, 2017 (as amended, modified or
supplemented prior to the date hereof, the “DIP ABL Credit Agreement”), among
such Debtors, the lenders party thereto from time to time and Wells Fargo Bank,
National Association, as administrative agent;

WHEREAS, pursuant to that certain Findings of Fact, Conclusions of Law and Order
Approving (i) the Adequacy of the Disclosure Statement; (ii) Prepetition
Solicitation Procedures; and (iii) Confirmation of the Prepackaged Plan, entered
by the Bankruptcy Court on July 25, 2017 (the “Order”) in connection with the
Bankruptcy Cases, the Bankruptcy Court confirmed the Approved Plan (as defined
below); and

WHEREAS, Borrower has requested, following the end of the stay period as
described in the Order and subject to the conditions set forth herein, the
Lenders extend to Borrower (a) a $30,000,000 senior secured revolving credit
facility and (b) a $15,000,000 senior secured term loan facility (i) to repay
obligations outstanding under the Prepetition ABL Credit Agreement and the DIP
ABL Credit Agreement, (ii) to make certain payments as provided in the Approved
Plan, (iii) to pay costs and expenses incurred in connection with the Approved
Plan, and (iv) for working capital, transaction expenses and other general
corporate purposes.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

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1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP; provided, that if Borrower notifies Agent
that Borrower requests an amendment to any provision hereof to eliminate the
effect of any Accounting Change occurring after the Closing Date or in the
application thereof on the operation of such provision (or if Agent notifies
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such Accounting Change or in the application thereof, then Agent and
Borrower agree that they will negotiate in good faith amendments to the
provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lenders and
Borrower after such Accounting Change conform as nearly as possible to their
respective positions prior to giving effect to such Accounting Change and, until
any such amendments have been agreed upon and agreed to by the Required Lenders,
the provisions in this Agreement shall be calculated as if no such Accounting
Change had occurred. When used herein, the term “financial statements” shall
include the notes and schedules thereto. Whenever the term “Borrower” is used in
respect of a financial covenant or a related definition, it shall be understood
to mean Borrower and its Subsidiaries on a consolidated basis, unless the
context clearly requires otherwise. Notwithstanding anything to the contrary
contained herein, (a) all financial statements delivered hereunder shall be
prepared, and all financial covenants contained herein shall be calculated,
without giving effect to any election under the Statement of Financial
Accounting Standards No. 159 (or any similar accounting principle) permitting a
Person to value its financial liabilities or Indebtedness at the fair value
thereof, and (b) the term “unqualified opinion” as used herein to refer to
opinions or reports provided by accountants shall mean an opinion or report that
is (i) unqualified, and (ii) does not include any explanation, supplemental
comment, or other comment concerning the ability of the applicable Person to
continue as a going concern or concerning the scope of the audit.

1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein;
provided, that to the extent that the Code is used to define any term herein and
such term is defined differently in different Articles of the Code, the
definition of such term contained in Article 9 of the Code shall govern.

1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall

 

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include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). The words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties. Any
reference herein or in any other Loan Document to the satisfaction, repayment,
or payment in full of the Obligations shall mean (a) the payment or repayment in
full in immediately available funds of (i) the principal amount of, and interest
accrued and unpaid with respect to, all outstanding Loans, together with the
payment of any premium applicable to the repayment of the Loans, (ii) all Lender
Group Expenses that have accrued and are unpaid regardless of whether demand has
been made therefor, (iii) all fees or charges that have accrued hereunder or
under any other Loan Document (including the Letter of Credit Fee and the Unused
Line Fee) and are unpaid, (b) in the case of contingent reimbursement
obligations with respect to Letters of Credit, providing Letter of Credit
Collateralization, (c) the receipt by Agent of cash collateral in order to
secure any other contingent Obligations for which a claim or demand for payment
has been made on or prior to such time or in respect of matters or circumstances
known to Agent or a Lender at such time that are reasonably expected to result
in any loss, cost, damage, or expense (including attorneys’ fees and legal
expenses), such cash collateral to be in such amount as Agent reasonably
determines is appropriate to secure such contingent Obligations, (d) the payment
or repayment in full in immediately available funds of all other outstanding
Obligations other than unasserted contingent indemnification Obligations, and
(e) the termination of all of the Commitments of the Lenders. Any reference
herein to any Person shall be construed to include such Person’s successors and
assigns. Any requirement of a writing contained herein or in any other Loan
Document shall be satisfied by the transmission of a Record.

1.5 Time References. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, all references to time of day refer to
Eastern standard time or Eastern daylight saving time, as in effect in New York,
New York on such day. For purposes of the computation of a period 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 and including”;
provided that, with respect to a computation of fees or interest payable to
Agent or any Lender, such period shall in any event consist of at least one full
day.

1.6 Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

2. LOANS AND TERMS OF PAYMENT.

2.1 Revolving Loans.

(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, each Revolving Lender agrees (severally, not jointly or
jointly and severally) to make revolving loans (all such loans and Incremental
Revolving Loans, collectively, the “Revolving Loans”) to Borrower under a
revolving credit facility in an amount at any one time outstanding not to exceed
the lesser of:

 

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(i) such Lender’s Revolver Commitment, or

(ii) such Lender’s Pro Rata Share of an amount equal to the lesser of:

(A) the amount equal to (1) the Maximum Revolver Amount less (2) the Letter of
Credit Usage at such time, and

(B) the amount equal to the Borrowing Base as of such date (based upon the most
recent Borrowing Base Certificate delivered by Borrower to Agent, as adjusted by
Agent for Reserves established by Agent from time to time) less the Letter of
Credit Usage at such time.

(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement. The outstanding principal amount of the Revolving Loans,
together with interest accrued and unpaid thereon, shall constitute Obligations
and shall be due and payable on the Maturity Date or, if earlier, on the date on
which they are declared due and payable pursuant to the terms of this Agreement.

(c) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall
have the right (but not the obligation), in the exercise of its Permitted
Discretion, to establish and increase or decrease Reserves against the Borrowing
Base or the Maximum Revolver Amount. The amount of any Reserve shall have a
reasonable relationship to the event, condition, other circumstance, or fact
that is the basis for such Reserve and shall not be duplicative of any other
reserve established and currently maintained. Agent shall endeavor to give
Borrower concurrent notice of the implementation of any reserve but shall not be
liable for the failure to do so and the failure to do so shall not affect the
validity of such reserve.

2.2 Term Loan. Subject to the terms and conditions of this Agreement, on the
Closing Date, each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make a term loan (the “Term Loan”) to
Borrower in an aggregate principal amount equal to such Lender’s Pro Rata Share
of the Term Loan Commitment. The aggregate Term Loan Commitment of all Lenders
as of the Closing Date is $15,000,000. The outstanding principal of the Term
Loan shall be repaid on the following dates and in the following amounts:

 

Date

   Installment Amount  

September 1, 2017, and on the first day of every calendar month thereafter prior
to the Maturity Date

   $ 178,571.43  

The outstanding unpaid principal balance and all accrued and unpaid interest on
the Term Loan shall be due and payable on the earlier of (1) the Maturity Date,
and (2) the date of the acceleration of the Term Loan in accordance with the
terms hereof. Any principal amount of the Term Loan that is repaid or prepaid
may not be reborrowed. All principal of, interest on, and other amounts payable
in respect of the Term Loan shall constitute Obligations.

 

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2.3 Borrowing Procedures and Settlements.

(a) Procedure for Borrowing Loans. Each Borrowing shall be made by a written
request by an Authorized Person delivered to Agent and received by Agent no
later than 12:00 p.m. Eastern on the Business Day that is three (3) Business
Days prior to the requested Funding Date, specifying (A) the amount of such
Borrowing, and (B) the requested Funding Date (which shall be a Business Day);
provided, that Agent may, in its sole discretion, elect to accept as timely
requests that are received later than 12:00 p.m. Eastern on the applicable
Business Day. With respect to each request for a Borrowing pursuant to this
Section 2.3(a), each Lender agrees that Agent may in Agent’s sole discretion,
but Agent shall not be obligated to, make such requested Borrowing to Borrower
on behalf of the Lenders as an Interim Advance.

(b) [Reserved.]

(c) Making of Loans.

(i) After receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent
at its option and in its discretion shall do either of the following:

(A) in Agent’s sole discretion, advance the amount of the requested Borrowing to
Borrower disproportionately (an “Interim Advance”) out of the Agent’s own funds
on behalf of Lenders, which advance shall be on the Funding Date specified in
the relevant request for a Borrowing, and thereby elect settlement in accordance
with clause (e) below such that, upon such settlement, each Lender’s share of
the Lender’s funded portion of the Loans (including the amount of any such
Interim Advance settled on such date) equals, at all times, such Lender’s Pro
Rata Share of the outstanding Loans. With proceeds of Interim Advances, Agent
shall make the proceeds thereof available to Borrower on the applicable Funding
Date by transferring immediately available funds equal to such proceeds received
by Agent to the Designated Account. Agent shall charge to the Loan Account usual
and customary fees for the wire transfer of each Borrowing. All Interim Advances
made under this Section 2.3(c)(i)(A) shall be subject to Settlement in
accordance with Section 2.3(e) below; it being understood that all payments on
any such Interim Advances shall be payable solely to Agent until Settlement
thereof shall have occurred. For the avoidance of doubt, all Interim Advances
constitute Loans hereunder; or

(B) notify the Lenders by telecopy, telephone, email, or other electronic form
of transmission, of the requested Borrowing; such notification to be sent by
1:00 p.m. on the Business Day that is three (3) Business Days prior to the
requested Funding Date. If Agent has notified the Lenders of a requested
Borrowing on the Business Day that is one (1) Business Day prior to the Funding
Date, then each Lender shall make the amount of such Lender’s Pro Rata Share of
the requested Borrowing available to Agent in immediately available funds, to
Agent’s Account, not later than 10:00 a.m. on the Business Day that is the
requested Funding Date. After Agent’s receipt of the proceeds of such Loans from
the Lenders, Agent shall make the proceeds thereof available to Borrower on the
applicable Funding Date by

 

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transferring immediately available funds equal to such proceeds received by
Agent to the Designated Account; provided, that, subject to the provisions of
Section 2.3(d)(ii), no Lender shall have an obligation to make any Loan, if
(1) one or more of the applicable conditions precedent set forth in Section 3
will not be satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested Borrowing would
exceed the Availability on such Funding Date. Agent shall charge to the Loan
Account usual and customary fees for the wire transfer of each Borrowing.

(ii) Unless Agent receives notice from a Lender prior to 9:30 a.m. on the
Business Day that is the requested Funding Date relative to a requested
Borrowing as to which Agent has notified the Lenders of a requested Borrowing
that such Lender will not make available as and when required hereunder to Agent
for the account of Borrower the amount of that Lender’s Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such amount
available to Agent in immediately available funds on the Funding Date and Agent
may (but shall not be so required), in reliance upon such assumption, make
available to Borrower a corresponding amount. If, on the requested Funding Date,
any Lender shall not have remitted the full amount that it is required to make
available to Agent in immediately available funds and if Agent has made
available to Borrower such amount on the requested Funding Date, then such
Lender shall make the amount of such Lender’s Pro Rata Share of the requested
Borrowing available to Agent in immediately available funds, to Agent’s Account,
no later than 10:00 a.m. on the Business Day that is the first Business Day
after the requested Funding Date (in which case, the interest accrued on such
Lender’s portion of such Borrowing for the Funding Date shall be for Agent’s
separate account). If any Lender shall not remit the full amount that it is
required to make available to Agent in immediately available funds as and when
required hereby and if Agent has made available to Borrower such amount, then
that Lender shall be obligated to immediately remit such amount to Agent,
together with interest at the Defaulting Lender Rate for each day until the date
on which such amount is so remitted. A notice submitted by Agent to any Lender
with respect to amounts owing under this Section 2.3(c)(ii) shall be conclusive,
absent manifest error. If the amount that a Lender is required to remit is made
available to Agent, then such payment to Agent shall constitute such Lender’s
Loan for all purposes of this Agreement. If such amount is not made available to
Agent on the Business Day following the Funding Date, Agent will notify Borrower
of such failure to fund and, upon demand by Agent, Borrower shall pay such
amount to Agent for Agent’s account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Revolving Loans composing such
Borrowing.

(d) Protective Advances and Optional Overadvances.

(i) Any contrary provision of this Agreement or any other Loan Document
notwithstanding, but subject to Section 2.3(d)(iv), at any time (A) after the
occurrence and during the continuance of a Default or an Event of Default, or
(B) that any of the other applicable conditions precedent set forth in
Section 3.2 are not satisfied, Agent hereby is authorized by Borrower and the
Lenders, from time to time, in Agent’s sole discretion, to make Revolving Loans
to, or for the benefit of, Borrower, on behalf of the Lenders, that Agent, in
its Permitted Discretion, deems necessary or desirable (1) to preserve or
protect the Collateral, or any portion thereof, or (2) to enhance the likelihood
of repayment of the Obligations (the

 

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Revolving Loans described in this Section 2.3(d)(i) shall be referred to as
“Protective Advances”). Notwithstanding the foregoing, no Protective Advance
shall be made which would cause (A) the aggregate amount of all Protective
Advances outstanding at any one time to exceed 10% of the Maximum Revolver
Amount unless the Required Lenders otherwise agree or (B) the aggregate amount
of Revolver Usage outstanding at any one time to exceed the Maximum Revolver
Amount.

(ii) Any contrary provision of this Agreement or any other Loan Document
notwithstanding, but subject to Section 2.3(d)(iv), the Lenders hereby authorize
Agent, and Agent may, but is not obligated to, knowingly and intentionally,
continue to make Revolving Loans to Borrower notwithstanding that an Overadvance
exists or would be created thereby, so long as (A) after giving effect to such
Revolving Loans, the outstanding Revolver Usage does not exceed the Borrowing
Base by more than 10% of the Maximum Revolver Amount (unless Required Lenders
agree to a higher amount), and (B) after giving effect to such Revolving Loans,
the outstanding Revolver Usage (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses) does not exceed the
Maximum Revolver Amount. In the event Agent obtains actual knowledge that an
Overadvance exists, regardless of the amount of, or reason for, such excess,
Agent shall notify the Lenders as soon as practicable and the Lenders with
Revolver Commitments thereupon shall, together with Agent, jointly determine the
terms of arrangements that shall be implemented with Borrower intended to
eliminate the Overadvance within 30 days. In such circumstances, if any Lender
with a Revolver Commitment objects to the proposed terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required Lenders. The
foregoing provisions are meant for the benefit of the Lenders and Agent and are
not meant for the benefit of Borrower, which shall continue to be bound by the
provisions of Section 2.4(e). Each Lender with a Revolver Commitment shall be
obligated to make Revolving Loans in accordance with Section 2.3(c) in, or
settle Overadvances made by Agent with Agent as provided in Section 2.3(e) (or
Section 2.3(g), as applicable) for, the amount of such Lender’s Pro Rata Share
of any unintentional Overadvances by Agent reported to such Lender, any
intentional Overadvances made as permitted under this Section 2.3(d)(ii), and
any Overadvances resulting from the charging to the Loan Account of interest,
fees, or Lender Group Expenses.

(iii) Each Protective Advance and each Overadvance (each, an “Extraordinary
Advance”) shall be deemed to be a Revolving Loan hereunder. Prior to Settlement
with respect to Extraordinary Advances, all payments on the Extraordinary
Advances made by Agent, including interest thereon, shall be payable to Agent
solely for its own account. The Extraordinary Advances shall be repayable on
demand, secured by Agent’s Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Revolving Loans. The
provisions of this Section 2.3(d) are for the exclusive benefit of Agent and the
Lenders and are not intended to benefit Borrower (or any other Loan Party) in
any way.

(iv) Notwithstanding anything contained in this Agreement or any other Loan
Document to the contrary, no Extraordinary Advance may be made by Agent if such
Extraordinary Advance would cause the aggregate principal amount of
Extraordinary Advances outstanding to exceed an amount equal to 10% of the
Maximum Revolver Amount (unless Required Lenders otherwise agree to a higher
amount).

 

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(e) Settlement. It is agreed that each Lender’s funded portion of the Loans is
intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of
the outstanding Loans. Such agreement notwithstanding, Agent and the Lenders
agree (which agreement shall not be for the benefit of Borrower) that in order
to facilitate the administration of this Agreement and the other Loan Documents,
settlement among the Lenders as to the Loans (including the Interim Advances and
Extraordinary Advances) shall take place on a periodic basis in accordance with
the following provisions:

(i) Agent shall request settlement (“Settlement”) with the Lenders on a weekly
basis, or on a more frequent basis if so determined by Agent in its sole
discretion (1) for itself, with respect to the outstanding Interim Advances and
Extraordinary Advances, and (2) with respect to Borrower’s or its Subsidiaries’
payments or other amounts received, as to each by notifying the Lenders by
telecopy, telephone, or other similar form of transmission, of such requested
Settlement, no later than 2:00 p.m. on the Business Day immediately prior to the
date of such requested Settlement (the date of such requested Settlement being
the “Settlement Date”). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Loans (including Interim Advances and
Extraordinary Advances) for the period since the prior Settlement Date. Subject
to the terms and conditions contained herein (including Section 2.3(g)): (y) if
the amount of the Loans (including Interim Advances and Extraordinary Advances)
made by a Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata
Share of the Loans (including Interim Advances and Extraordinary Advances) as of
a Settlement Date, then Agent shall, by no later than 12:00 p.m. on the
Settlement Date, transfer in immediately available funds to a Deposit Account of
such Lender (as such Lender may designate), an amount such that each such Lender
shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata
Share of the Loans (including Interim Advances and Extraordinary Advances), and
(z) if the amount of the Loans (including Interim Advances and Extraordinary
Advances) made by a Lender is less than such Lender’s Pro Rata Share of the
Loans (including Interim Advances and Extraordinary Advances) as of a Settlement
Date, such Lender shall no later than 12:00 p.m. on the Settlement Date transfer
in immediately available funds to Agent’s Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the Settlement Date, its
Pro Rata Share of the Loans (including Interim Advances and Extraordinary
Advances). Such amounts made available to Agent under clause (z) of the
immediately preceding sentence shall be applied against the amounts of the
applicable Interim Advances or Extraordinary Advances. If any such amount is not
made available to Agent by any Lender on the Settlement Date applicable thereto
to the extent required by the terms hereof, Agent shall be entitled to recover
for its account such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.

(ii) In determining whether a Lender’s balance of the Loans (including Interim
Advances and Extraordinary Advances) is less than, equal to, or greater than
such Lender’s Pro Rata Share of the Loans (including Interim Advances and
Extraordinary Advances) as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments actually
received in good funds by Agent with respect to principal, interest, fees
payable by Borrower and allocable to the Lenders hereunder, and proceeds of
Collateral.

 

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(iii) Between Settlement Dates, Agent, to the extent Interim Advances or
Extraordinary Advances for the account of Agent are outstanding, may apply any
payments or other amounts received by Agent, that in accordance with the terms
of this Agreement would be applied to the reduction of the Loans, to the Interim
Advances and Extraordinary Advances. During the period between Settlement Dates,
Agent with respect to Interim Advances and Extraordinary Advances, and each
Lender with respect to the Loans other than Interim Advances and Extraordinary
Advances, shall be entitled to interest at the applicable rate or rates payable
under this Agreement on the daily amount of funds employed by Agent, or the
Lenders, as applicable.

(iv) Anything in this Section 2.3(e) to the contrary notwithstanding, in the
event that a Lender is a Defaulting Lender, Agent shall be entitled to refrain
from remitting settlement amounts to the Defaulting Lender and, instead, shall
be entitled to elect to implement the provisions set forth in Section 2.3(g).

(f) Notation. Agent, as a non-fiduciary agent for Borrower, shall maintain a
register showing the principal amount of the Loans owing to each Lender, and
Interim Advances and/or Extraordinary Advances owing to Agent, and the interests
therein of each Lender, from time to time and such register shall, absent
manifest error, conclusively be presumed to be correct and accurate.

(g) Defaulting Lenders. Notwithstanding the provisions of Section 2.4(b)(ii),
Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by Borrower to Agent for the Defaulting Lender’s benefit or any proceeds of
Collateral that would otherwise be remitted hereunder to the Defaulting Lender,
and, in the absence of such transfer to the Defaulting Lender, Agent shall
transfer any such payments (A) first, to Agent to the extent of any Interim
Advances and Extraordinary Advances that were made by Agent and that were
required to be, but were not, paid by Default Lender, (B) second, to Issuing
Bank, to the extent of the portion of a Letter of Credit Disbursement that was
required to be, but was not, paid by the Defaulting Lender, (C) third, to each
Non-Defaulting Lender ratably in accordance with their Commitments (but, in each
case, only to the extent that such Defaulting Lender’s portion of a Revolving
Loan (or other funding obligation) was funded by such other Non-Defaulting
Lender), (D) fourth, in Agent’s sole discretion, to a suspense account
maintained by Agent, the proceeds of which shall be retained by Agent and may be
made available to be re-advanced to or for the benefit of Borrower (upon the
request of Borrower and subject to the conditions set forth in Section 3.2) as
if such Defaulting Lender had made its portion of Revolving Loans (or other
funding obligations) hereunder, and (E) fifth, from and after the date on which
all other Obligations have been paid in full, to such Defaulting Lender in
accordance with tier (L) of Section 2.4(b)(ii). Subject to the foregoing, Agent
may hold and, in its discretion, re-lend to Borrower for the account of such
Defaulting Lender the amount of all such payments received and retained by Agent
for the account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents (including the
calculation of Pro Rata Share in connection therewith) and for the purpose of
calculating the fee payable under Section 2.10(b), such Defaulting Lender shall
be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to
be zero; provided, that the foregoing shall not apply to any of the matters
governed by Section 14.1(a)(i) through (iii). The provisions of this
Section 2.3(g) shall remain effective with respect to such Defaulting Lender
until the earlier of (y) the date on which all of the Non-Defaulting Lenders,
Agent, Issuing Bank, and Borrower shall have waived, in writing, the application
of this Section 2.3(g) to such Defaulting Lender, or (z) the date on

 

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which such Defaulting Lender makes payment of all amounts that it was obligated
to fund hereunder, pays to Agent all amounts owing by Defaulting Lender in
respect of the amounts that it was obligated to fund hereunder, and, if
requested by Agent, provides adequate assurance of its ability to perform its
future obligations hereunder (on which earlier date, so long as no Event of
Default has occurred and is continuing, any remaining cash collateral held by
Agent pursuant to Section 2.3(g)(ii) shall be released to Borrower). The
operation of this Section 2.3(g) shall not be construed to increase or otherwise
affect the Commitment of any Lender, to relieve or excuse the performance by
such Defaulting Lender or any other Lender of its duties and obligations
hereunder, or to relieve or excuse the performance by Borrower of its duties and
obligations hereunder to Agent, Issuing Bank, or to the Lenders other than such
Defaulting Lender. Any failure by a Defaulting Lender to fund amounts that it
was obligated to fund hereunder shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrower, at its option,
upon written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be reasonably
acceptable to Agent. In connection with the arrangement of such a substitute
Lender, the Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of Assignment and
Acceptance in favor of the substitute Lender (and agrees that it shall be deemed
to have executed and delivered such document if it fails to do so) subject only
to being paid its share of the outstanding Obligations (including (1) all
interest, fees, and other amounts that may be due and payable in respect
thereof, and (2) an assumption of its Pro Rata Share of its participation in the
Letters of Credit); provided, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups’ or Borrower’s rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund. In the event of a
direct conflict between the priority provisions of this Section 2.3(g) and any
other provision contained in this Agreement or any other Loan Document, it is
the intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.3(g) shall control and
govern.

(h) Independent Obligations. All Loans (other than Interim Advances and
Extraordinary Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Loan (or other extension of credit) hereunder, nor shall any Commitment
of any Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligations hereunder, and (ii) no failure by any Lender
to perform its obligations hereunder shall excuse any other Lender from its
obligations hereunder.

2.4 Payments; Reductions of Commitments; Prepayments.

(a) Payments by Borrower.

(i) Except as otherwise expressly provided herein, all payments by Borrower
shall be made to Agent’s Account for the account of the Lender Group and shall
be made in immediately available funds, no later than 1:30 p.m. on the date
specified herein. Any payment received by Agent later than 1:30 p.m. shall be
deemed to have been received (unless Agent, in its sole discretion, elects to
credit it on the date received) on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.

 

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(ii) Unless Agent receives notice from Borrower prior to the date on which any
payment is due to the Lenders that Borrower will not make such payment in full
as and when required, Agent may assume that Borrower has made (or will make)
such payment in full to Agent on such date in immediately available funds and
Agent may (but shall not be so required to), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent Borrower does not make such payment in
full to Agent on the date when due, each Lender severally shall repay to Agent
on demand such amount distributed to such Lender, together with interest thereon
at the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.

(b) Apportionment and Application.

(i) So long as no Application Event has occurred and is continuing and except as
otherwise provided herein with respect to Defaulting Lenders, all principal and
interest payments received by Agent shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
received by Agent (other than fees or expenses that are for Agent’s separate
account or for the separate account of Issuing Bank) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee or expense relates. Subject to
Section 2.4(b)(iv) and Section 2.4(e), all payments to be made hereunder by
Borrower shall be remitted to Agent and all such payments, and all proceeds of
Collateral received by Agent, shall be applied, so long as no Application Event
has occurred and is continuing and except as otherwise provided herein with
respect to Defaulting Lenders, to reduce the balance of the Loans outstanding
and, thereafter, to Borrower (to be wired to the Designated Account) or such
other Person entitled thereto under applicable law.

(ii) At any time that an Application Event has occurred and is continuing and
except as otherwise provided herein with respect to Defaulting Lenders, all
payments remitted to Agent and all proceeds of Collateral received by Agent
shall be applied as follows:

(A) first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Agent under the Loan Documents, until
paid in full,

(B) second, to pay any fees or premiums then due to Agent under the Loan
Documents until paid in full,

(C) third, to pay interest due in respect of all Protective Advances until paid
in full,

 

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(D) fourth, to pay the principal of all Protective Advances until paid in full,

(E) fifth, ratably, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan
Documents, until paid in full,

(F) sixth, ratably, to pay any fees or premiums then due to any of the Lenders
under the Loan Documents until paid in full,

(G) [reserved],

(H) [reserved],

(I) seventh, ratably, to pay interest accrued in respect of the Loans (other
than Protective Advances) until paid in full,

(J) eighth, ratably

i. ratably, to pay the principal of all Revolving Loans until paid in full,

ii. to Agent, to be held by Agent, for the benefit of Issuing Bank (and for the
ratable benefit of each of the Lenders that have an obligation to pay to Agent,
for the account of Issuing Bank, a share of each Letter of Credit Disbursement),
as cash collateral in an amount up to 105% of the Letter of Credit Usage (to the
extent permitted by applicable law, such cash collateral shall be applied to the
reimbursement of any Letter of Credit Disbursement as and when such disbursement
occurs and, if a Letter of Credit expires undrawn, the cash collateral held by
Agent in respect of such Letter of Credit shall, to the extent permitted by
applicable law, be reapplied pursuant to this Section 2.4(b)(ii), beginning with
tier (A) hereof), and

iii. to pay the outstanding principal balance of the Term Loan (in the order of
priority set forth in Section 2.4(b)(ii)(I) until the Term Loan is paid in full,

(K) ninth, to pay any other Obligations other than Obligations owed to
Defaulting Lenders,

(L) tenth, ratably to pay any Obligations owed to Defaulting Lenders; and

(M) eleventh, to Borrower (to be wired to the Designated Account) or such other
Person entitled thereto under applicable law.

(iii) Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided in
Section 2.3(e).

 

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(iv) In each instance, so long as no Application Event has occurred and is
continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrower to
Agent and specified by Borrower to be for the payment of specific Obligations
then due and payable (or prepayable) under any provision of this Agreement or
any other Loan Document.

(v) For purposes of Section 2.4(b)(ii), “paid in full” of a type of Obligation
means payment in cash or immediately available funds of all amounts owing on
account of such type of Obligation, including interest accrued after the
commencement of any Insolvency Proceeding, default interest, interest on
interest, any premium or prepayment penalty, Liquidated Damages and expense
reimbursements, irrespective of whether any of the foregoing would be or is
allowed or disallowed in whole or in part in any Insolvency Proceeding.

(vi) In the event of a direct conflict between the priority provisions of this
Section 2.4 and any other provision contained in this Agreement or any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, if the conflict relates to the provisions of
Section 2.3(g) and this Section 2.4, then the provisions of Section 2.3(g) shall
control and govern, and if otherwise, then the terms and provisions of this
Section 2.4 shall control and govern.

(c) Reduction of Commitments.

(i) Revolver Commitments. The Revolver Commitments shall terminate on the
Maturity Date. Borrower may reduce the Revolver Commitments, subject to payment
of Liquidated Damages in accordance with Section 2.10(e), to an amount (which
may be zero) not less than the sum of (A) the Revolver Usage as of such date,
plus (B) the principal amount of all Revolving Loans not yet made as to which a
request has been given by Borrower under Section 2.3(a), plus (C) the amount of
all Letters of Credit not yet issued as to which a request has been given by
Borrower pursuant to Section 2.11(a). Each such reduction shall be in an
aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof (unless the Revolver Commitments are being reduced to zero and the
amount of the Revolver Commitments in effect immediately prior to such reduction
are less than $5,000,000), shall be made by providing not less than 10 Business
Days prior written notice to Agent, and shall be irrevocable. Once reduced, the
Revolver Commitments may not be increased. Each such reduction of the Revolver
Commitments shall reduce the Revolver Commitments of each Lender proportionately
in accordance with its ratable share thereof.

(ii) Term Loan Commitments. The Term Loan Commitments shall terminate upon the
making of the Term Loan on the Closing Date.

(d) Optional Prepayments. Borrower may prepay the Loans at any time, in whole or
in part, plus the applicable Liquidated Damages, plus accrued and unpaid
interest on the principal amount being prepaid to the prepayment date and all
fees, costs, expenses and other amounts related thereto. Each prepayment of the
Term Loan shall be applied to the remaining installments of principal due on the
Term Loan pro rata among such remaining installments. No prepayment of Revolving
Loans under this clause (d) shall result in a permanent reduction of the
Revolver Commitments.

 

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(e) Mandatory Prepayments.

(i) Borrowing Base. If, at any time, (A) the Revolver Usage on such date exceeds
(B) the Borrowing Base reflected in the Borrowing Base Certificate most recently
delivered by Borrower to Agent (as adjusted by Agent for Reserves established by
Agent from time to time), then Borrower shall immediately prepay the Obligations
in accordance with Section 2.4(f)(i) in an aggregate amount equal to the amount
of such excess.

(ii) Dispositions.

(A) Within three (3) Business Days of the date of receipt (or if an Event of
Default has occurred and is continuing and Agent has exercised dominion over the
Loan Parties’ Deposit Accounts, concurrently with receipt) by Borrower or any of
its Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale
or disposition by Borrower or any of its Subsidiaries of any Accounts, Borrower
shall prepay the outstanding principal amount of the Obligations in accordance
with Section 2.4(f)(ii) in an amount equal to 100% of such Net Cash Proceeds
received by such Person in connection with such sales or dispositions; and

(B) Within three (3) Business Days of the date of receipt (or if an Event of
Default has occurred and is continuing and Agent has exercised dominion over the
Loan Parties’ Deposit Accounts, concurrently with receipt) by Borrower or any of
its Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale
or disposition by Borrower or any of its Subsidiaries of any assets other than
Accounts (including casualty losses or condemnations but excluding sales or
dispositions which qualify as Permitted Dispositions under clauses (b), (c),
(d), (e), (j), (k), (l), (m), or (n) of the definition of Permitted
Dispositions), Borrower shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(f)(ii) in an amount equal to 100% of
such Net Cash Proceeds (including condemnation awards and payments in lieu
thereof) received by such Person in connection with such sales or dispositions;
provided that, so long as (A) no Default or Event of Default shall have occurred
and is continuing or would result therefrom, (B) Borrower shall have given Agent
written notice of Borrower’s intention to apply such monies to the costs of
replacement of the properties or assets that are the subject of such sale or
disposition or the cost of purchase or construction of other assets useful in
the business of Borrower or its Subsidiaries within 180 days after the initial
receipt of such monies (or to enter into a binding commitment thereof within
said 180 day period), (C) the monies are held in a Deposit Account in which
Agent has a perfected first-priority security interest, and (D) Borrower or its
Subsidiaries, as applicable, complete such replacement, purchase, or
construction within 180 days after the initial receipt of such monies (or, in
the case of such binding commitment, subsequently complete such replacement,
purchase, or construction within an additional 90 days thereafter), then the
Loan Party whose assets were the subject of such disposition shall have the
option to apply such monies to the costs of replacement of the assets that are
the subject of such sale or disposition or the costs of purchase or construction
of other assets useful in the business of such Loan Party unless and to the
extent that such applicable period shall have expired without such replacement,
purchase, or

 

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construction being made or completed, in which case, any amounts remaining in
the Deposit Account referred to in clause (C) above shall be paid to Agent and
applied in accordance with Section 2.4(f)(ii); provided, however, that Borrower
shall not have the right to use any Net Cash Proceeds in excess of $10,000,000
in the aggregate to make such replacements, purchases or construction in any
given Fiscal Year.

(C) Nothing contained in this Section 2.4(e)(ii) shall permit Borrower or any of
its Subsidiaries to sell or otherwise dispose of any assets other than in
accordance with Section 6.4.

(iii) Extraordinary Receipts. Within three (3) Business Days of the date of
receipt (or if an Event of Default has occurred and is continuing and Agent has
exercised dominion over the Loan Parties’ Deposit Accounts, concurrently with
receipt) is in effect concurrently with receipt) by Borrower or any of its
Subsidiaries of any Extraordinary Receipts, Borrower shall prepay the
outstanding principal amount of the Obligations in accordance with
Section 2.4(f)(ii) in an amount equal to 100% of such Extraordinary Receipts,
net of any reasonable expenses incurred in collecting such Extraordinary
Receipts.

(iv) Indebtedness. Within three (3) Business Days of the date of incurrence (or
if an Event of Default has occurred and is continuing and Agent has exercised
dominion over the Loan Parties’ Deposit Accounts, concurrently with receipt) by
Borrower or any of its Subsidiaries of any Indebtedness (other than Permitted
Indebtedness), Borrower shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(f)(ii) in an amount equal to 100% of
the Net Cash Proceeds received by such Person in connection with such
incurrence. The provisions of this Section 2.4(e)(iv) shall not be deemed to be
implied consent to any such incurrence otherwise prohibited by the terms of this
Agreement.

(v) Professional Fee Account Funds. Concurrently with receipt by Borrower or any
of its Subsidiaries of any funds released from the Professional Fee Account,
Borrower shall prepay the Obligations in accordance with Section 2.4(f)(i) in an
aggregate amount equal to the amount of such funds.

(vi) Specified Contribution. Concurrently with receipt by Borrower of a
Specified Contribution, Borrower shall prepay the outstanding principal amount
of the Term Loan in accordance with Section 2.4(f)(ii) in an amount equal to
100% of such Specified Contribution.

(vii) Term Loan Limit. If, at any time, (A) the outstanding principal amount of
the Term Loan on such date exceeds (B) the Term Loan Limit, then Borrower shall
immediately prepay the Obligations in accordance with Section 2.4(f)(ii) in an
aggregate amount equal to the amount of such excess.

(f) Application of Payments.

(i) Each prepayment pursuant to Section 2.4(e)(i) or Section 2.4(e)(v) shall,
(A) so long as no Application Event shall have occurred and be continuing, be
applied, first, to the outstanding principal amount of the Revolving Loans until
paid in full, and second, to cash collateralize the Letters of Credit in an
amount equal to 105% of the then outstanding Letter of Credit Usage, and (B) if
an Application Event shall have occurred and be continuing, be applied in the
manner set forth in Section 2.4(b)(ii).

 

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(ii) Each other prepayment pursuant to Section 2.4(e) shall, (A) so long as no
Application Event shall have occurred and be continuing, be applied, first, to
the remaining installments of principal due on the Term Loan pro rata among such
remaining installments, second, to the outstanding principal amount of the
Revolving Loans until paid in full, and third, to cash collateralize the Letters
of Credit in an amount equal to 105% of the then outstanding Letter of Credit
Usage, and (B) if an Application Event shall have occurred and be continuing, be
applied in the manner set forth in Section 2.4(b)(ii).

(iii) No prepayment applied to the Revolving Loans or to cash collateralize
Letter of Credit Usage under Section 2.4(f)(i) shall result in a reduction in
the Maximum Revolver Amount; provided, that if an Event of Default exists,
Required Lenders may elect for any such prepayment under Section 2.4(f)(ii) to
result in a permanent reduction of the Maximum Revolver Amount.

2.5 Promise to Pay.

(a) Borrower agrees to pay the Lender Group Expenses on the earlier of (i) the
first day of the month following the date on which the applicable Lender Group
Expenses were first incurred or (ii) the date on which demand therefor is made
by Agent (it being acknowledged and agreed that (A) any charging of such costs,
expenses or Lender Group Expenses to the Loan Account pursuant to the provisions
of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for
the purposes of this subclause (ii) and (B) Agent is authorized and directed to
deduct and retain sufficient amounts from any deposits paid by Borrower to the
Agent on or prior to the Closing Date or pursuant to Section 5.21, as
applicable; Borrower promises to pay all of the Obligations (including
principal, interest, premiums, if any, fees, costs, and expenses (including
Lender Group Expenses)) in full on the Maturity Date or, if earlier, on the date
on which the Obligations become due and payable pursuant to the terms of this
Agreement. Borrower agrees that (i) its obligations contained in the first
sentence of this Section 2.5 shall survive payment or satisfaction in full of
all other Obligations and (ii) all payments of the Lender Group Expenses shall
be nonrefundable under all circumstances.

(b) Any Lender may request that any portion of its Commitments or the Loans made
by it be evidenced by one or more promissory notes. In such event, Borrower
shall execute and deliver to such Lender the requested promissory notes payable
to the order of such Lender in a form furnished by Agent and reasonably
satisfactory to Borrower. Thereafter, the portion of the Commitments and Loans
evidenced by such promissory notes and interest thereon shall at all times be
represented by one or more promissory notes in such form payable to the order of
the payee named therein.

2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in Section 2.6(c),

 

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(i) all Revolving Loans and other Obligations (except for undrawn Letters of
Credit and the Term Loan) shall bear interest at a per annum rate equal to the
LIBOR Rate plus 5.25%, and

(ii) the Term Loan shall bear interest at a per annum rate equal to the LIBOR
Rate plus 7.25%.

(b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable benefit of
the Revolving Lenders), a Letter of Credit fee (the “Letter of Credit Fee”)
(which fee shall be in addition to the fronting fees and commissions, other
fees, charges and expenses set forth in Section 2.11(k)) that shall accrue at a
per annum rate equal to the rate then applicable to Revolving Loans hereunder on
the average daily amount of the Letter of Credit Usage during the period from
and including the date of issuance of such Letter of Credit to but excluding the
date on which there ceases to be Letter of Credit Usage.

(c) Default Rate. Upon the occurrence and during the continuation of (A) an
Event of Default described in Section 8.4 or Section 8.5, automatically, and
(B) any other Event of Default, at the election of Agent in its sole discretion,

(i) all Loans, and Obligations (except for undrawn Letters of Credit) that have
been charged to the Loan Account pursuant to the terms hereof, shall bear
interest at a per annum rate equal to three (3) percentage points above the per
annum rate otherwise applicable thereunder, and

(ii) the Letter of Credit Fee shall be increased to three (3) percentage points
above the per annum rate otherwise applicable hereunder.

(d) Payment. Except to the extent provided to the contrary in Section 2.10,
Section 2.11(k) or Section 2.12(a), (i) all interest, all Letter of Credit Fees
and all other fees payable hereunder or under any of the other Loan Documents
shall be due and payable, in arrears, on the first day of each month, and
(ii) all costs and expenses payable hereunder or under any of the other Loan
Documents, and all Lender Group Expenses shall be due and payable on the earlier
of (x) the first day of the month following the date on which the applicable
costs, expenses, or Lender Group Expenses were first incurred or (y) the date on
which demand therefor is made by Agent (it being acknowledged and agreed that
any charging of such costs, expenses or Lender Group Expenses to the Loan
Account pursuant to the provisions of the following sentence shall be deemed to
constitute a demand for payment thereof for the purposes of this subclause (y)).
Borrower hereby authorizes Agent, from time to time without prior notice to
Borrower, to charge to the Loan Account (A) on the first day of each month, all
interest accrued during the prior month on the Loans hereunder, (B) on the first
day of each month, all Letter of Credit Fees accrued or chargeable hereunder
during the prior month, (C) as and when incurred or accrued, all fees and costs
provided for in Section 2.10 (a) or (c), (D) on the first day of each month, the
Unused Line Fee accrued during the prior month pursuant to Section 2.10(b),
(E) as and when due and payable, all other fees payable hereunder or under any
of the other Loan Documents, (F) as and when incurred or accrued, the fronting
fees and all commissions, other fees, charges and expenses provided for in
Section 2.11(k), (G) as and when incurred or accrued, all other Lender Group
Expenses, and (H) as and when due and payable, all other payment

 

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obligations payable under any Loan Document. All amounts (including interest,
fees, costs, expenses, Lender Group Expenses, or other amounts payable hereunder
or under any other Loan Document) charged to the Loan Account shall thereupon
constitute Revolving Loans hereunder, shall constitute Obligations hereunder,
and shall initially accrue interest at the rate then applicable to Revolving
Loans.

(e) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360-day year, in each case, for the actual number
of days elapsed in the period during which the interest or fees accrue.

(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, that, anything contained herein to the
contrary notwithstanding, if such rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto, as of the
date of this Agreement, Borrower is and shall be liable only for the payment of
such maximum amount as is allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.

(g) Inability to Determine Interest Rate. If, at any applicable time, the basis
for determining the LIBOR Rate ceases to be reported on the applicable page of
the Reuters screen and if Agent shall have reasonably determined (which
determination shall be conclusive and binding upon the Lenders) that, by reason
of circumstances affecting the relevant market, other adequate and reasonable
means do not exist for ascertaining the interest rate applicable to the offering
of Dollar deposits to major banks in the London interbank eurodollar market for
the applicable period, then Agent shall forthwith give notice thereof to
Borrower. If such notice is given, (i) the interest rate applicable to (A) the
Revolving Loans and other Obligations shall be the Prime Rate plus 4.25% and
(B) the Term Loan shall be the Prime Rate plus 6.25%, in each case determined
and effective immediately, (ii) each reference herein to the “LIBOR Rate” shall
be deemed thereafter to be a reference to the Prime Rate, and (iii) subject to
Section 2.6(i), such substituted rate shall thereafter be determined by Agent in
accordance with the terms hereof. Until notice contemplated by Section 2.6(i) is
furnished by Agent, the LIBOR Rate shall not apply to any Loan or any other
Obligations.

(h) LIBOR Rate Unlawful or Impractical. In the event that any change in market
conditions or any Change in Law shall at any time after the date hereof, in the
reasonable opinion of any Lender, make it unlawful or impractical for such
Lender to fund or maintain Loans bearing interest at the LIBOR Rate or to
continue such funding or maintaining, or to determine or charge interest rates
at the LIBOR Rate, such Lender shall give notice of such changed circumstances
to Agent and Borrower and Agent promptly shall transmit the notice to each other
Lender and (i) in the case of any outstanding Loans of such Lender bearing
interest at the LIBOR Rate, the date specified in such Lender’s notice shall be
deemed to be the last day such Loans shall bear interest at the LIBOR Rate, and
interest upon the Loans of such Lender thereafter shall accrue interest at the
Prime Rate and (y) such Prime Rate shall continue to be applicable to the
Obligations until such Lender determines that it would no longer be unlawful or
impractical to fund or maintain Loans bearing interest at the LIBOR Rate.

 

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(i) Reinstatement of LIBOR Rate. If there has been at any time an interest rate
substituted for the LIBOR Rate in accordance with this Section 2.6 and if in the
reasonable opinion of Agent, the circumstances causing such substitution have
ceased, then Agent shall promptly notify Borrower in writing of such cessation,
and thereafter the LIBOR Rate shall be determined as originally defined hereby.
Nevertheless, thereafter the provisions of Section 2.6(a), Section 2.6(g) and
Section 2.6(h) shall continue to be effective.

(j) Special Provisions Applicable to LIBOR Rate. The LIBOR Rate may be adjusted
by Agent with respect to any Lender on a prospective basis to take into account
any additional or increased costs to such Lender of maintaining or obtaining any
eurodollar deposits or increased costs (other than Taxes which shall be governed
by Section 16), in each case, due to changes in applicable law, including any
Changes in Law and changes in the reserve requirements imposed by the Board of
Governors, which additional or increased costs would increase the cost of
funding or maintaining loans bearing interest at the LIBOR Rate. In any such
event, the affected Lender shall give Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the notice to
each other Lender and, upon its receipt of the notice from the affected Lender,
Borrower may, by notice to such affected Lender (A) require such Lender to
furnish to Borrower a statement setting forth in reasonable detail the basis for
adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (B) repay the Loans of such Lender with respect to which such
adjustment is made.

2.7 Crediting Payments. The receipt of any payment item by Agent shall not be
required to be considered a payment on account unless such payment item is a
wire transfer of immediately available federal funds made to Agent’s Account or
unless and until such payment item is honored when presented for payment. Should
any payment item not be honored when presented for payment, then Borrower shall
be deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into
Agent’s Account on a Business Day on or before 1:30 p.m. If any payment item is
received into Agent’s Account on a non-Business Day or after 1:30 p.m. on a
Business Day (unless Agent, in its sole discretion, elects to credit it on the
date received), it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. Available amounts
in a Deposit Account subject to a control agreement shall be given credit for
purposes of calculating interest two (2) Business Days after such collections
are received by Agent.

2.8 Designated Account. Agent is authorized to make the Loans, and Issuing Bank
is authorized to issue the Letters of Credit, under this Agreement based upon
telephonic or other instructions received from anyone purporting to be an
Authorized Person or, without instructions, if pursuant to Section 2.6(d).
Borrower agrees to establish and maintain the Designated Account with the
Designated Account Bank for the purpose of receiving the proceeds of the Loans
requested by Borrower and made by Agent or the Lenders hereunder. Unless
otherwise agreed by Agent and Borrower, any Loan requested by Borrower and made
by Agent or the Lenders hereunder shall be made to the Designated Account.

 

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2.9 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain
an account on its books in the name of Borrower (the “Loan Account”) on which
Borrower will be charged with the Loans (including Interim Advances and
Extraordinary Advances) made by Agent or the Lenders to Borrower or for
Borrower’s account, the Letters of Credit issued or arranged by Issuing Bank for
Borrower’s account, and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Group Expenses. In accordance with Section 2.7, the Loan Account will be
credited with all payments received by Agent from Borrower or for Borrower’s
account. Agent shall make available to Borrower monthly statements regarding the
Loan Account, including the principal amount of the Loans, interest accrued
hereunder, fees accrued or charged hereunder or under the other Loan Documents,
and a summary itemization of all charges and expenses constituting Lender Group
Expenses accrued hereunder or under the other Loan Documents, and each such
statement, absent manifest error, shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrower and the Lender
Group unless, within 30 days after Agent first makes such a statement available
to Borrower, Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in such statement.

2.10 Fees.

(a) Agent Fees. Borrower shall pay to Agent, for the account of Agent, as and
when due and payable under the terms of the Fee Letter, the fees set forth in
the Fee Letter.

(b) Unused Line Fee. Borrower shall pay to Agent, for the ratable account of the
Revolving Lenders, an unused line fee (the “Unused Line Fee”) in an amount equal
to the Applicable Unused Line Fee Percentage per annum times the result of
(i) the aggregate amount of the Revolver Commitments, less (ii) the Average
Revolver Usage during the immediately preceding month (or portion thereof),
which Unused Line Fee shall be due and payable monthly in arrears on the first
day of each month from and after the Closing Date up to the first day of the
month prior to the date on which the Obligations are paid in full and on the
date on which the Obligations are paid in full.

(c) Collateral Monitoring Fee. Borrower shall pay to Agent monthly a collateral
monitoring fee (the “Collateral Monitoring Fee”) in an amount equal to 0.25% of
the Maximum Facility Amount. The Collateral Monitoring Fee shall be due and
payable monthly in advance on the first day of each month from and after the
Closing Date, commencing with the such date after the Closing Date, until the
Obligations are paid in full and on the date on which the Obligations are paid
in full. Upon the occurrence and during the continuation of a Default or Event
of Default, Agent may, in its sole discretion, increase the monthly Collateral
Monitoring Fee by an additional 0.25% per annum.

(d) Field Examination and Other Fees. Borrower shall pay to Agent, field
examination, appraisal, and valuation fees and charges, as and when incurred or
chargeable; provided, that for so long as no Default or Event of Default shall
have occurred and be

 

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continuing, Borrower shall not be obligated to reimburse Agent for more than
(A) two field examinations in any twelve month period, (B) two appraisals on
Equipment in any twelve month period and (C) one appraisal on all other asset
categories in any twelve month period; provided that any additional field
examinations or appraisals required by Agent in any given twelve month period
shall be performed at the expense of Agent; and, provided, further, that if a
Default or Event of Default shall have occurred and be continuing, Agent may
conduct additional field examinations and appraisals at Borrower’s expense. For
the avoidance of doubt, the reimbursement limitations set forth in this clause
(d) shall not apply to field examinations and appraisals conducted in connection
with a Permitted Acquisition.

(e) Liquidated Damages.

(i) If at any time (x) Borrower (1) prepays all or any portion of the principal
amount of the Term Loan (other than pursuant to Section 2.2, Section 2.4(e)(v),
Section 2.4(e)(vi) or Section 2.4(e)(vii)), (2) reduces all or any portion of,
or terminates, the Revolver Commitment or the Revolving Facility, or (3) fails
to pay the outstanding Obligations in full on the Maturity Date, or (y) pursuant
to the terms of this Agreement or any other Loan Document, either (I) Agent or
any Lender demands repayment of the outstanding Obligations in whole or in part,
(II) Agent or any Lender reduces or terminates the Revolver Commitments or the
Revolving Facility, or (III) repayment of the outstanding Obligations are
otherwise accelerated in whole or in part, then at the time of such repayment,
prepayment, demand or acceleration, and in addition to the principal balance of
the Loans being prepaid, all accrued and unpaid interest thereon, all fees,
costs, expenses and other amounts payable to Agent and the Lenders in connection
with the Loans, and all other Obligations paid to Agent and the Lenders under
this Agreement and the other Loan Documents required to be paid at such time,
Borrower shall pay liquidated damages to Agent and the Lenders in an amount
equal to the product of (A) and (B) below (the “Liquidated Damages”):

(A) (1) if such prepayment, repayment, demand, acceleration or failure to pay on
the Maturity Date relates to the Term Loan in whole or in part, the outstanding
principal amount of the Term Loan being prepaid or not paid, as applicable, plus
(2) if such prepayment, repayment, demand, reduction, termination, acceleration
or failure to pay on the Maturity Date relates to the Revolving Facility or the
Revolver Commitment, the amount of such prepayment, repayment or demand or such
reduction or, in the case of the termination, acceleration or failure to pay on
the Maturity Date, of the Revolving Facility or Revolver Commitment, the
aggregate outstanding Revolver Usage amount;

multiplied by

(B) (1) four percent (4.00%) if such prepayment, repayment, demand, reduction,
termination or acceleration occurs on or prior to the first (1st) anniversary of
the Closing Date, (2) two percent (2.00%) if such prepayment, repayment, demand,
reduction or acceleration occurs after the first (1st) anniversary of the
Closing Date but on or prior to the second (2nd) anniversary of the Closing
Date, and (3) one percent (1.00%) if such prepayment, repayment, demand,
reduction, termination or acceleration occurs after the second (2nd) anniversary
of the Closing Date (but not on the Maturity Date, so long as the Obligations
are paid in full on such date).

 

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(ii) Borrower’s election to prepay the Term Loan in whole or in part shall be
delivered to Agent in writing (a “Principal Reduction Notice”) at least twenty
(20) calendar days prior to the date of such prepayment. A Principal Reduction
Notice shall be irrevocable when delivered to Agent.

(iii) Borrower acknowledges and agrees that (A) it would be difficult or
impractical to calculate the Lender Group’s actual damages from the prepayment
of the Term Loan and/or early termination of the Revolving Facility or reduction
or termination of the Revolver Commitment and the Lender Group’s compensation
from Loans hereunder following such early termination or reduction, (B) the
liquidated damages provided above are intended to be fair and reasonable
approximations of such damages, and (C) the liquidated damages are not intended
to be penalties.

2.11 Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, upon the request of
Borrower made in accordance herewith, and prior to the Maturity Date, Issuing
Bank agrees to issue a requested Letter of Credit for the account of Borrower
(it being understood that, notwithstanding that such Letter of Credit shall be
for the account of Borrower, it may be issued for the benefit or support of any
Loan Party). By submitting a request to Issuing Bank for the issuance of a
Letter of Credit, Borrower shall be deemed to have requested that Issuing Bank
issue the requested Letter of Credit. Each request for the issuance of a Letter
of Credit, or the amendment, renewal, or extension of any outstanding Letter of
Credit, shall be irrevocable and shall be made on a Business Day in writing by
an Authorized Person and delivered to Issuing Bank via telefacsimile or other
electronic method of transmission reasonably acceptable to Issuing Bank and
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension. Each such request shall be in form and substance reasonably
satisfactory to Issuing Bank and (i) shall specify (A) the amount of such Letter
of Credit, (B) the date of issuance, amendment, renewal, or extension of such
Letter of Credit, (C) the proposed expiration date of such Letter of Credit,
(D) the name and address of the beneficiary of the Letter of Credit, and
(E) such other information (including, the conditions to drawing, and, in the
case of an amendment, renewal, or extension, identification of the Letter of
Credit to be so amended, renewed, or extended) as shall be necessary to prepare,
amend, renew, or extend such Letter of Credit, and (ii) shall be accompanied by
such Issuer Documents as Agent or Issuing Bank may request or require, to the
extent that such requests or requirements are consistent with the Issuer
Documents that Issuing Bank generally requests for Letters of Credit in similar
circumstances. Bank’s records of the content of any such request will be
conclusive.

(b) Issuing Bank shall not issue a Letter of Credit if any of the following
would result after giving effect to the requested issuance:

(i) the Letter of Credit Usage would exceed $5,000,000, or

(ii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less
the outstanding amount of Revolving Loans, or

 

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(iii) the Letter of Credit Usage would exceed the Borrowing Base at such time
less the outstanding principal balance of the Revolving Loans at such time.

(c) [Reserved].

(d) Any Issuing Bank (other than Agent or any of its Affiliates) shall notify
Agent in writing no later than the Business Day immediately following the
Business Day on which such Issuing Bank issued any Letter of Credit; provided
that (i) until Agent advises any such Issuing Bank that the provisions of
Section 3.2 are not satisfied, or (ii) unless the aggregate amount of the
Letters of Credit issued in any such week exceeds such amount as shall be agreed
by Agent and such Issuing Bank, such Issuing Bank shall be required to so notify
Agent in writing only once each week of the Letters of Credit issued by such
Issuing Bank during the immediately preceding week as well as the daily amounts
outstanding for the prior week, such notice to be furnished on such day of the
week as Agent and such Issuing Bank may agree. Each Letter of Credit shall be in
form and substance reasonably acceptable to Issuing Bank, including the
requirement that the amounts payable thereunder must be payable in Dollars. If
Issuing Bank makes a payment under a Letter of Credit, Borrower shall pay to
Agent an amount equal to the applicable Letter of Credit Disbursement on the
Business Day such Letter of Credit Disbursement is made and, in the absence of
such payment, the amount of the Letter of Credit Disbursement immediately and
automatically shall be deemed to be a Revolving Loan hereunder and, for the
avoidance of doubt, shall constitute Revolver Usage (notwithstanding any failure
to satisfy any condition precedent set forth in Section 3) and, initially, shall
bear interest at the rate then applicable to Revolving Loans. If a Letter of
Credit Disbursement is deemed to be a Revolving Loan hereunder, Borrower’s
obligation to pay the amount of such Letter of Credit Disbursement to Issuing
Bank shall be automatically converted into an obligation to pay the resulting
Revolving Loan. Promptly following receipt by Agent of any payment from Borrower
pursuant to this paragraph, Agent shall distribute such payment to Issuing Bank
or, to the extent that Revolving Lenders have made payments pursuant to
Section 2.11(e) to reimburse Issuing Bank, then to such Revolving Lenders and
Issuing Bank as their interests may appear.

(e) Promptly following receipt of a notice of a Letter of Credit Disbursement
pursuant to Section 2.11(d), each Revolving Lender agrees to fund its Pro Rata
Share of any Revolving Loan deemed made pursuant to Section 2.11(d) on the same
terms and conditions as if Borrower had requested the amount thereof as a
Revolving Loan and Agent shall promptly pay to Issuing Bank the amounts so
received by it from the Revolving Lenders. By the issuance of a Letter of Credit
(or an amendment, renewal, or extension of a Letter of Credit) and without any
further action on the part of Issuing Bank or the Revolving Lenders, Issuing
Bank shall be deemed to have granted to each Revolving Lender, and each
Revolving Lender shall be deemed to have purchased, a participation in each
Letter of Credit issued by Issuing Bank, in an amount equal to its Pro Rata
Share of such Letter of Credit, and each such Revolving Lender agrees to pay to
Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share
of any Letter of Credit Disbursement made by Issuing Bank under the applicable
Letter of Credit. In consideration and in furtherance of the foregoing, each
Revolving Lender hereby absolutely and unconditionally agrees to pay to Agent,
for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of each
Letter of Credit Disbursement made by Issuing Bank and not reimbursed by
Borrower on the date due as provided in Section 2.11(d), or of any reimbursement
payment that is required to be refunded (or that Agent or Issuing Bank elects,
based upon the

 

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advice of counsel, to refund) to Borrower for any reason. Each Revolving Lender
acknowledges and agrees that its obligation to deliver to Agent, for the account
of Issuing Bank, an amount equal to its respective Pro Rata Share of each Letter
of Credit Disbursement pursuant to this Section 2.11(e) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3. If any such Revolving Lender fails to make
available to Agent the amount of such Revolving Lender’s Pro Rata Share of a
Letter of Credit Disbursement as provided in this Section, such Revolving Lender
shall be deemed to be a Defaulting Lender and Agent (for the account of Issuing
Bank) shall be entitled to recover such amount on demand from such Revolving
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.

(f) Borrower agrees to indemnify, defend and hold harmless each member of the
Lender Group (including Issuing Bank and its branches, Affiliates, and
correspondents) and each other Indemnified Person (each, including Issuing Bank,
a “Letter of Credit Related Person”) (to the fullest extent permitted by law)
from and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), which may be incurred by
or awarded against any such Letter of Credit Related Person (other than Taxes,
which shall be governed by Section 16) (the “Letter of Credit Indemnified
Costs”), and which arise out of or in connection with, or as a result of:

(i) any Letter of Credit or any pre-advice of its issuance;

(ii) any transfer, sale, delivery, surrender or endorsement of any Drawing
Document at any time(s) held by any such Letter of Credit Related Person in
connection with any Letter of Credit;

(iii) any action or proceeding arising out of, or in connection with, any Letter
of Credit (whether administrative, judicial or in connection with arbitration),
including any action or proceeding to compel or restrain any presentation or
payment under any Letter of Credit, or for the wrongful dishonor of, or honoring
a presentation under, any Letter of Credit;

(iv) any independent undertakings issued by the beneficiary of any Letter of
Credit;

(v) any unauthorized instruction or request made to Issuing Bank in connection
with any Letter of Credit or requested Letter of Credit or error in computer or
electronic transmission;

(vi) an adviser, confirmer or other nominated person seeking to be reimbursed,
indemnified or compensated;

(vii) any third party seeking to enforce the rights of an applicant,
beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds
or holder of an instrument or document;

 

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(viii) the fraud, forgery or illegal action of parties other than the Letter of
Credit Related Person;

(ix) Issuing Bank’s performance of the obligations of a confirming institution
or entity that wrongfully dishonors a confirmation; or

(x) the acts or omissions, whether rightful or wrongful, of any present or
future de jure or de facto governmental or regulatory authority or cause or
event beyond the control of the Letter of Credit Related Person;

in each case, including that resulting from the Letter of Credit Related
Person’s own negligence; provided, however, that such indemnity shall not be
available to any Letter of Credit Related Person claiming indemnification under
clauses (i) through (x) above to the extent that such Letter of Credit
Indemnified Costs may be finally determined in a non-appealable judgment of a
court of competent jurisdiction to have resulted directly from the gross
negligence or willful misconduct of the Letter of Credit Related Person claiming
indemnity. Borrower hereby agrees to pay the Letter of Credit Related Person
claiming indemnity on demand from time to time all amounts owing under this
Section 2.11(f). If and to the extent that the obligations of Borrower under
this Section 2.11(f) are unenforceable for any reason, Borrower agrees to make
the maximum contribution to the Letter of Credit Indemnified Costs permissible
under applicable law. This indemnification provision shall survive termination
of this Agreement and all Letters of Credit.

(g) The liability of Issuing Bank (or any other Letter of Credit Related Person)
under, in connection with or arising out of any Letter of Credit (or
pre-advice), regardless of the form or legal grounds of the action or
proceeding, shall be limited to direct damages suffered by Borrower that are
caused directly by Issuing Bank’s gross negligence or willful misconduct in
(i) honoring a presentation under a Letter of Credit that on its face does not
at least substantially comply with the terms and conditions of such Letter of
Credit, (ii) failing to honor a presentation under a Letter of Credit that
strictly complies with the terms and conditions of such Letter of Credit or
(iii) retaining Drawing Documents presented under a Letter of Credit. Issuing
Bank shall be deemed to have acted with due diligence and reasonable care if
Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice
or in accordance with this Agreement. Borrower’s aggregate remedies against
Issuing Bank and any Letter of Credit Related Person for wrongfully honoring a
presentation under any Letter of Credit or wrongfully retaining honored Drawing
Documents shall in no event exceed the aggregate amount paid by Borrower to
Issuing Bank in respect of the honored presentation in connection with such
Letter of Credit under Section 2.11(d), plus interest at the rate then
applicable to Revolving Loans hereunder. Borrower shall take action to avoid and
mitigate the amount of any damages claimed against Issuing Bank or any other
Letter of Credit Related Person, including by enforcing its rights against the
beneficiaries of the Letters of Credit. Any claim by Borrower under or in
connection with any Letter of Credit shall be reduced by an amount equal to the
sum of (x) the amount (if any) saved by Borrower as a result of the breach or
alleged wrongful conduct complained of; and (y) the amount (if any) of the loss
that would have been avoided had Borrower taken all reasonable steps to mitigate
any loss, and in case of a claim of wrongful dishonor, by specifically and
timely authorizing Issuing Bank to effect a cure.

 

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(h) Borrower is responsible for preparing or approving the final text of the
Letter of Credit as issued by Issuing Bank, irrespective of any assistance
Issuing Bank may provide such as drafting or recommending text or by Issuing
Bank’s use or refusal to use text submitted by Borrower. Borrower is solely
responsible for the suitability of the Letter of Credit for Borrower’s purposes.
With respect to any Letter of Credit containing an “automatic amendment” to
extend the expiration date of such Letter of Credit, Issuing Bank, in its sole
and absolute discretion, may give notice of nonrenewal of such Letter of Credit
and, if Borrower does not at any time want such Letter of Credit to be renewed,
Borrower will so notify Agent and Issuing Bank at least 15 calendar days before
Issuing Bank is required to notify the beneficiary of such Letter of Credit or
any advising bank of such nonrenewal pursuant to the terms of such Letter of
Credit.

(i) Borrower’s reimbursement and payment obligations under this Section 2.11 are
absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever, including:

(i) any lack of validity, enforceability or legal effect of any Letter of Credit
or this Agreement or any term or provision therein or herein;

(ii) payment against presentation of any draft, demand or claim for payment
under any Drawing Document that does not comply in whole or in part with the
terms of the applicable Letter of Credit or which proves to be fraudulent,
forged or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, or which is signed, issued or presented by a Person
or a transferee of such Person purporting to be a successor or transferee of the
beneficiary of such Letter of Credit;

(iii) Issuing Bank or any of its branches or Affiliates being the beneficiary of
any Letter of Credit;

(iv) Issuing Bank or any correspondent honoring a drawing against a Drawing
Document up to the amount available under any Letter of Credit even if such
Drawing Document claims an amount in excess of the amount available under the
Letter of Credit;

(v) the existence of any claim, set-off, defense or other right that Borrower or
any other Person may have at any time against any beneficiary, any assignee of
proceeds, Issuing Bank or any other Person;

(vi) any other event, circumstance or conduct whatsoever, whether or not similar
to any of the foregoing that might, but for this Section 2.11(i), constitute a
legal or equitable defense to or discharge of, or provide a right of set-off
against, Borrower’s reimbursement and other payment obligations and liabilities,
arising under, or in connection with, any Letter of Credit, whether against
Issuing Bank, the beneficiary or any other Person; or

(vii) the fact that any Default or Event of Default shall have occurred and be
continuing;

 

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provided, however, that subject to Section 2.11(g) above, the foregoing shall
not release Issuing Bank from such liability to Borrower as may be finally
determined in a final, non-appealable judgment of a court of competent
jurisdiction against Issuing Bank following reimbursement or payment of the
obligations and liabilities, including reimbursement and other payment
obligations, of Borrower to Issuing Bank arising under, or in connection with,
this Section 2.11 or any Letter of Credit.

(j) Without limiting any other provision of this Agreement, Issuing Bank and
each other Letter of Credit Related Person (if applicable) shall not be
responsible to Borrower for, and Issuing Bank’s rights and remedies against
Borrower and the obligation of Borrower to reimburse Issuing Bank for each
drawing under each Letter of Credit shall not be impaired by:

(i) honor of a presentation under any Letter of Credit that on its face
substantially complies with the terms and conditions of such Letter of Credit,
even if the Letter of Credit requires strict compliance by the beneficiary;

(ii) honor of a presentation of any Drawing Document that appears on its face to
have been signed, presented or issued (A) by any purported successor or
transferee of any beneficiary or other Person required to sign, present or issue
such Drawing Document or (B) under a new name of the beneficiary;

(iii) acceptance as a draft of any written or electronic demand or request for
payment under a Letter of Credit, even if nonnegotiable or not in the form of a
draft or notwithstanding any requirement that such draft, demand or request bear
any or adequate reference to the Letter of Credit;

(iv) the identity or authority of any presenter or signer of any Drawing
Document or the form, accuracy, genuineness or legal effect of any Drawing
Document (other than Issuing Bank’s determination that such Drawing Document
appears on its face substantially to comply with the terms and conditions of the
Letter of Credit);

(v) acting upon any instruction or request relative to a Letter of Credit or
requested Letter of Credit that Issuing Bank in good faith believes to have been
given by a Person authorized to give such instruction or request;

(vi) any errors, omissions, interruptions or delays in transmission or delivery
of any message, advice or document (regardless of how sent or transmitted) or
for errors in interpretation of technical terms or in translation or any delay
in giving or failing to give notice to Borrower;

(vii) any acts, omissions or fraud by, or the insolvency of, any beneficiary,
any nominated person or entity or any other Person or any breach of contract
between the beneficiary and Borrower or any of the parties to the underlying
transaction to which the Letter of Credit relates;

(viii) assertion or waiver of any provision of the ISP or UCP that primarily
benefits an issuer of a letter of credit, including any requirement that any
Drawing Document be presented to it at a particular hour or place;

 

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(ix) payment to any paying or negotiating bank (designated or permitted by the
terms of the applicable Letter of Credit) claiming that it rightfully honored or
is entitled to reimbursement or indemnity under Standard Letter of Credit
Practice applicable to it;

(x) acting or failing to act as required or permitted under Standard Letter of
Credit Practice applicable to where Issuing Bank has issued, confirmed, advised
or negotiated such Letter of Credit, as the case may be;

(xi) honor of a presentation after the expiration date of any Letter of Credit
notwithstanding that a presentation was made prior to such expiration date and
dishonored by Issuing Bank if subsequently Issuing Bank or any court or other
finder of fact determines such presentation should have been honored;

(xii) dishonor of any presentation that does not strictly comply or that is
fraudulent, forged or otherwise not entitled to honor; or

(xiii) honor of a presentation that is subsequently determined by Issuing Bank
to have been made in violation of international, federal, state or local
restrictions on the transaction of business with certain prohibited Persons.

(k) Borrower shall pay immediately upon demand to Agent as non-refundable fees,
commissions, and charges (it being acknowledged and agreed that any charging of
such fees, commissions and charges to the Loan Account pursuant to the
provisions of Section 2.6(d) shall be deemed to constitute a demand for payment
thereof for the purposes of this Section 2.11(k)): (i) a fronting fee which
shall be imposed by Issuing Bank upon the issuance of each Letter of Credit of
0.25% per annum of the face amount thereof, plus (ii) any and all other
customary commissions, fees and charges then in effect imposed by, and any and
all expenses incurred by, Agent and/or Issuing Bank, or by any adviser,
confirming institution or entity or other nominated person, relating to Letters
of Credit, at the time of issuance of any Letter of Credit and upon the
occurrence of any other activity with respect to any Letter of Credit (including
transfers, assignments of proceeds, amendments, drawings, renewals or
cancellations).

(l) If by reason of (x) any Change in Law, or (y) compliance by Issuing Bank or
any other member of the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Board of Governors as from
time to time in effect (and any successor thereto):

(i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued or caused to be issued
hereunder or hereby, or

(ii) there shall be imposed on Issuing Bank or any other member of the Lender
Group any other condition regarding any Letter of Credit,

and the result of the foregoing is to increase, directly or indirectly, the cost
to Issuing Bank or any other member of the Lender Group of issuing, making,
participating in, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof, then, and in any such case,

 

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Agent may, at any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify Borrower, and Borrower shall
pay within 30 days after demand therefor, such amounts as Agent may specify to
be necessary to compensate Issuing Bank or any other member of the Lender Group
for such additional cost or reduced receipt, together with interest on such
amount from the date of such demand until payment in full thereof at the rate
then applicable to Revolving Loans hereunder; provided, that (A) Borrower shall
not be required to provide any compensation pursuant to this Section 2.11(l) for
any such amounts incurred more than 180 days prior to the date on which the
demand for payment of such amounts is first made to Borrower, and (B) if an
event or circumstance giving rise to such amounts is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof. The determination by Agent of any amount due
pursuant to this Section 2.11(l), as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.

(m) Unless otherwise expressly agreed by Issuing Bank and Borrower when a Letter
of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter
of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter
of Credit.

(n) In the event of a direct conflict between the provisions of this
Section 2.11 and any provision contained in any Issuer Document, it is the
intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.11 shall control and
govern.

2.12 Incremental Facilities.

(a) Requests. Borrower may, by written notice to Agent (each, an “Incremental
Facility Request”), request increases in the Revolver Commitment (each, an
“Incremental Revolver Commitment” and the loans thereunder, “Incremental
Revolving Loans”; each Incremental Revolver Commitment is sometimes referred to
herein individually as an “Incremental Facility” and collectively as the
“Incremental Facilities”) in Dollars in an aggregate amount not to exceed
$20,000,000 for all such Incremental Facilities such that the aggregate Revolver
Commitment will not exceed $50,000,000 at any time; provided that no commitment
of any Lender shall be increased without the consent of such Lender. Such notice
shall set forth (i) the amount of the Incremental Revolver Commitment being
requested (which shall be in a minimum amount of $1,000,000 and multiples of
$1,000,000 in excess thereof), and (ii) the date (an “Incremental Effective
Date”) on which such Incremental Facility is requested to become effective
(which, unless otherwise agreed by Agent, shall not be less than ten
(10) Business Days nor more than sixty (60) days after the date of such notice).

(b) Lenders. Upon delivery of the applicable Incremental Facility Request, such
Incremental Facility shall be offered to all Lenders pro rata according to the
respective outstanding principal amounts of the Revolving Loans and Revolver
Commitments held by each Lender. If the applicable Lenders do not accept the
offered Incremental Facility in its entirety on a pro rata basis within five
(5) Business Days of such offer, that portion of the Incremental Facility not
accepted by such Lenders shall be offered to the accepting Lenders on a non-pro
rata

 

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basis; provided, that no existing Lender will have any obligation to provide all
or any portion of such Incremental Facilities. If the accepting Lenders do not
elect to increase their Revolver Commitments on a non-pro rata basis, Borrower
may offer the Incremental Facility to other Persons satisfying the requirements
of Section 13.1.

(c) Conditions. No Incremental Facility shall become effective under this
Section 2.12(c) unless, (i) after giving effect to such Incremental Facility,
the Loans to be made thereunder (and assuming that the entire amount of such
Incremental Revolver Commitment is funded), and the application of the proceeds
therefrom, (A) no Default or Event of Default shall exist or result therefrom,
(B) Borrower shall have paid the Lenders providing such Incremental Facility an
upfront fee in an amount to be mutually agreed, (C) the Collateral Monitoring
Fee required by Section 2.10(c) hereof shall be increased in proportion to the
increase in the Revolver Commitment represented by such Incremental Facility,
(D) the Lenders providing such Incremental Facility shall be satisfactory to
Agent in its reasonable discretion and (E) Agent shall have received a
certificate of an Authorized Officer of Borrower certifying as to the foregoing.

(d) Term. Any Incremental Revolving Loans shall be on the same terms (including
maturity date, interest rate margins, any interest rate floors, original issue
discount and upfront fees (based on the lesser of a four-year average life to
maturity or the remaining life to maturity), and any arrangement, structuring
and underwriting fees paid or payable with respect to such increase) as, and
pursuant to documentation applicable to, the initial Revolving Loans.

(e) Requested Amendments. Each of the parties hereto hereby agrees that, upon
the effectiveness of any Incremental Facility, this Agreement may be amended to
the extent (but only to the extent) necessary to reflect the existence of such
Incremental Facility and the Loans evidenced thereby, and any joinder agreement
or amendment may without the consent of the other Lenders effect such amendments
to this Agreement and the other Loan Documents as may be necessary or
appropriate, in the reasonable opinion of Agent and Borrower, to effectuate the
provisions of this Section 2.12, and, for the avoidance of doubt, this
Section 2.12(e) shall supersede any provisions in Section 13.1. From and after
each Incremental Effective Date, the Revolving Loans and Revolver Commitments
established pursuant to this Section 2.12 shall constitute Revolving Loans and
Revolver Commitments under, and shall be entitled to all the benefits afforded
by, this Agreement and the other Loan Documents, and shall, without limiting the
foregoing, benefit equally and ratably from the guarantees and security
interests created by the applicable Security Documents. The Loan Parties shall
take any actions reasonably required by Agent to ensure and/or demonstrate that
the Liens and security interests granted by the applicable Security Documents
continue to be perfected under the UCC or otherwise after giving effect to the
establishment of any such new Revolving Loans and Revolver Commitments,
including, without limitation, compliance with Section 5.1.

2.13 Capital Requirements.

(a) If, after the date hereof, Issuing Bank or any Lender determines that
(i) any Change in Law regarding capital or reserve requirements for banks or
bank holding companies, or (ii) compliance by Issuing Bank or such Lender, or
their respective parent bank holding companies, with any guideline, request or
directive of any Governmental Authority regarding capital adequacy (whether or
not having the force of law), has the effect of reducing

 

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the return on Issuing Bank’s, such Lender’s, or such holding companies’ capital
as a consequence of Issuing Bank’s or such Lender’s commitments, Loans,
participations or other obligations hereunder to a level below that which
Issuing Bank, such Lender, or such holding companies could have achieved but for
such Change in Law or compliance (taking into consideration Issuing Bank’s, such
Lender’s, or such holding companies’ then existing policies with respect to
capital adequacy and assuming the full utilization of such entity’s capital) by
any amount deemed by Issuing Bank or such Lender to be material, then Issuing
Bank or such Lender may notify Borrower and Agent thereof. Following receipt of
such notice, Borrower agrees to pay Issuing Bank or such Lender on demand the
amount of such reduction of return of capital as and when such reduction is
determined, payable within 30 days after presentation by Issuing Bank or such
Lender of a statement in the amount and setting forth in reasonable detail
Issuing Bank’s or such Lender’s calculation thereof and the assumptions upon
which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, Issuing Bank or such
Lender may use any reasonable averaging and attribution methods. Failure or
delay on the part of Issuing Bank or any Lender to demand compensation pursuant
to this Section shall not constitute a waiver of Issuing Bank’s or such Lender’s
right to demand such compensation; provided that Borrower shall not be required
to compensate Issuing Bank or a Lender pursuant to this Section for any
reductions in return incurred more than 180 days prior to the date that Issuing
Bank or such Lender notifies Borrower of such Change in Law giving rise to such
reductions and of such Lender’s intention to claim compensation therefor;
provided further that if such claim arises by reason of the Change in Law that
is retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

(b) If Issuing Bank or any Lender requests additional or increased costs
referred to in Section 2.6(j) or Section 2.11(l) or amounts under
Section 2.13(a) or sends a notice under Section 2.6(h) relative to changed
circumstances (such Issuing Bank or Lender, an “Affected Lender”), then such
Affected Lender shall use reasonable efforts to promptly designate a different
one of its lending offices or to assign its rights and obligations hereunder to
another of its offices or branches, if (i) in the reasonable judgment of such
Affected Lender, such designation or assignment would eliminate or reduce
amounts payable pursuant to Section 2.6(j), Section 2.11(l), or Section 2.13(a),
as applicable, or would eliminate the illegality or impracticality of funding or
maintaining Loans bearing interest at the LIBOR Rate and (ii) in the reasonable
judgment of such Affected Lender, such designation or assignment would not
subject it to any material unreimbursed cost or expense and would not otherwise
be materially disadvantageous to it. Borrower agrees to pay all reasonable
out-of-pocket costs and expenses incurred by such Affected Lender in connection
with any such designation or assignment. If, after such reasonable efforts, such
Affected Lender does not so designate a different one of its lending offices or
assign its rights to another of its offices or branches so as to eliminate
Borrower’s obligation to pay any future amounts to such Affected Lender pursuant
to Section 2.6(j), Section 2.11(l), or Section 2.13(a), as applicable, or to
enable Borrower to obtain Loans bearing interest at the LIBOR Rate, then
Borrower (without prejudice to any amounts then due to such Affected Lender
under Section 2.6(j), Section 2.11(l), or Section 2.13(a), as applicable) may,
unless prior to the effective date of any such assignment the Affected Lender
withdraws its request for such additional amounts under Section 2.6(j),
Section 2.11(l), or Section 2.13(a), as applicable, or indicates that it is no
longer unlawful or impractical to fund or maintain Loans bearing interest at the
LIBOR Rate, may designate a different Issuing Bank or substitute a

 

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Lender, in each case, reasonably acceptable to Agent to purchase the Obligations
owed to such Affected Lender and such Affected Lender’s commitments hereunder (a
“Replacement Lender”), and if such Replacement Lender agrees to such purchase,
such Affected Lender shall assign to the Replacement Lender its Obligations and
commitments, and upon such purchase by the Replacement Lender, which such
Replacement Lender shall be deemed to be “Issuing Bank” or a “Lender” (as the
case may be) for purposes of this Agreement and such Affected Lender shall cease
to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this
Agreement.

(c) Notwithstanding anything herein to the contrary, the protection of Sections
2.6(h), 2.6(j), 2.11(l), and 2.13 shall be available to Issuing Bank and each
Lender (as applicable) regardless of any possible contention of the invalidity
or inapplicability of the law, rule, regulation, judicial ruling, judgment,
guideline, treaty or other change or condition which shall have occurred or been
imposed, so long as it shall be customary for issuing banks or lenders affected
thereby to comply therewith. Notwithstanding any other provision herein, neither
Issuing Bank nor any Lender shall demand compensation pursuant to this
Section 2.13 if it shall not at the time be the general policy or practice of
Issuing Bank or such Lender (as the case may be) to demand such compensation in
similar circumstances under comparable provisions of other credit agreements, if
any.

2.14 Collections.

(a) The Loan Parties shall establish and maintain cash management services of a
type, number, with a financial institution and on terms, in each case,
reasonably satisfactory to Agent (each a “Collection Account” and, collectively,
the “Collection Accounts”). Each Loan Party shall take reasonable steps to
(A) ensure that all of its Account Debtors forward payment of the amounts owed
by such Account Debtors directly to a Collection Account or to a Blocked
Account, and (B) deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all of the
Loan Parties’ collections and proceeds of Collateral (including those sent
directly by Account Debtors to any Loan Party) into a Collection Account or to a
Blocked Account. Each Deposit Account (excluding any Excluded Account but
including each Collection Account) of a Loan Party and each Securities Account
of a Loan Party shall be subject to a Control Agreement among such Loan Party,
the applicable bank or securities intermediary, the Agent and the Second Lien
Agent, and no Loan Party will permit any Investment consisting of cash, Cash
Equivalents or amounts credited to a Deposit Account (excluding any Excluded
Account) or a Securities Account to be maintained in a Deposit Account or
Securities Account unless such Deposit Account or Securities Account, as
applicable, is subject to a Control Agreement among such Loan Party, the
applicable bank or securities intermediary, and Agent. Collected funds in the
Collection Accounts shall be deposited into a lockbox account with a financial
institution satisfactory to Agent and subject to Agent’s sole dominion and
control (including, but not limited to the sole power of withdrawal) (each, a
“Blocked Account”). The agreement(s) relating to the Blocked Account between
Agent, such financial institution and Borrower shall be in form and content
satisfactory to Agent.

(b) Each Control Agreement shall provide, among other things, that (A) the
applicable bank or securities intermediary will comply with any instructions
originated by Agent directing the disposition of the funds in the applicable
Deposit Account or Securities Account subject to such Control Agreement, without
further consent by the applicable Loan Party, (B) the

 

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applicable bank or securities intermediary waives, subordinates, or agrees not
to exercise any rights of setoff or recoupment or any other claim against the
applicable Deposit Account or Securities Account other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, (C) with respect to
each Collection Account and each Blocked Account, the applicable bank will
forward (or initiate a bank wire transfer for the forwarding of), by daily
sweep, all amounts in such Collection Account and Blocked Account to the Agent’s
Account, (D) with respect to the Collection Accounts and the Blocked Accounts,
such accounts shall be subject to Agent’s sole dominion and control (including,
but not limited to the sole power of withdrawal), and (E) with respect to each
Deposit Account (other than an Excluded Account, Collection Account or Blocked
Account) or Securities Account, upon written notice from Agent to the applicable
bank or securities intermediary after the occurrence and during the continuance
of an Event of Default, the applicable bank or securities intermediary will
forward, by daily sweep, all amounts in such account to the Agent’s Account.

(c) The Loan Parties shall cause Persons processing or collecting any credit
card payments or proceeds of receivables on behalf of the Loan Parties to
deliver such payments or proceeds to the Agent’s Account promptly, but not less
frequently than once every week.

(d) Promptly upon confirmation thereof, and no later than sixty (60) days after
the Closing Date, the Loan Parties shall deliver to Agent evidence satisfactory
to the Agent that the Loan Parties have caused all the collection accounts
maintained at Wells Fargo Bank, National Association on the Closing Date to be
closed.

(e) On each Business Day, Agent may withdraw available funds from each Blocked
Account and credit available funds received to the payment of the Obligations
(in the order of priority set forth in Section 2.4(b)(ii)).

3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
each Lender to make its initial Loans and of the Issuing Bank, or cause to be
issued, the initial Letters of Credit, are subject to the fulfillment, to the
satisfaction of Agent and each Lender, of each of the conditions precedent set
forth on Schedule 3.1; provided, that no Lender shall be obligated to make its
Revolving Loans and no Issuing Bank shall cause to be issued any Letters of
Credit until such time as Borrower delivers to Agent a completed Borrowing Base
Certificate dated as of July 31, 2017, in form and substance satisfactory to
Agent.

3.2 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Loans hereunder (or to extend
any other credit hereunder) at any time shall be subject to the following
conditions precedent:

(a) the representations and warranties of Borrower and its Subsidiaries
contained in this Agreement or in the other Loan Documents shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) on and as of the date
of such extension of credit, as though made on and as of such date

 

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(except to the extent that such representations and warranties relate solely to
an earlier date, in which case such representations and warranties shall be true
and correct in all material respects (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) as of such earlier
date);

(b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making
thereof; and

(c) the receipt by Agent from Borrower of (A) (i) a request for Borrowing
pursuant to the requirements of Section 2.3(a), (ii) a request for issuance of a
Letter of Credit pursuant to the requirements of Section 2.11(a) or (iii) an
Incremental Facility Request pursuant to the requirements of Section 2.12(a), as
applicable, and (B) in the case of clauses (i) and (iii) (solely with respect to
Revolving Loans or Revolver Commitments), a Borrowing Base Certificate no later
than 12:00 noon on the date of such request.

3.3 [Reserved.]

3.4 Effect of Maturity. On the Maturity Date, all commitments of the Lender
Group to provide additional credit hereunder shall automatically be terminated
and all of the Obligations immediately shall become due and payable without
notice or demand and Borrower shall be required to repay all of the Obligations
in full. No termination of the obligations of the Lender Group (other than
payment in full of the Obligations and termination of the Commitments) shall
relieve or discharge any Loan Party of its duties, obligations, or covenants
hereunder or under any other Loan Document and Agent’s Liens in the Collateral
shall continue to secure the Obligations and shall remain in effect until all
Obligations have been paid in full and the Commitments have been terminated.
When all of the Obligations have been paid in full and the Lender Group’s
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrower’s sole expense, execute and
deliver any termination statements, lien releases, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record,
Agent’s Liens and all notices of security interests and liens previously filed
by Agent.

3.5 Reserved.

3.6 Conditions Subsequent. The obligation of the Lender Group (or any member
thereof) to continue to make Loans (or otherwise extend credit hereunder) is
subject to the fulfillment, on or before the date applicable thereto, of the
conditions subsequent set forth on Schedule 3.6 (the failure by Borrower to so
perform or cause to be performed such conditions subsequent as and when required
by the terms thereof (unless such date is extended, in writing, by Agent, which
Agent may do without obtaining the consent of the other members of the Lender
Group), shall constitute an Event of Default).

 

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4. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, Borrower makes
the following representations and warranties to the Lender Group which shall be
true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as of the Closing Date, and shall be true, correct, and complete, in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof), as of the date of the making of
each Loan (or other extension of credit) made thereafter, as though made on and
as of the date of such Loan (or other extension of credit) (except to the extent
that such representations and warranties relate solely to an earlier date, in
which case such representations and warranties shall be true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) as of such earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:

4.1 Due Organization and Qualification; Subsidiaries.

(a) Each Loan Party (i) is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization, (ii) is qualified to do
business in any state where the failure to be so qualified could reasonably be
expected to result in a Material Adverse Effect, and (iii) has all requisite
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents to which it is a party and to carry out the transactions contemplated
thereby.

(b) Set forth on Schedule 4.1(b) (as such Schedule may be updated from time to
time to reflect changes resulting from transactions permitted under this
Agreement) is a complete and accurate description of the authorized Equity
Interests of Borrower, by class, and, as of the Closing Date, a description of
the number of shares of each such class that are issued and outstanding. Except
as may be required under Borrower’s equity incentive and compensation plans or
agreements (which plans and agreements are subject to the restrictions set forth
in Section 6.7), Borrower is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its Equity
Interests or any security convertible into or exchangeable for any of its Equity
Interests.

(c) Set forth on Schedule 4.1(c) (as such Schedule may be updated from time to
time to reflect changes resulting from transactions permitted under this
Agreement), is a complete and accurate list of the Loan Parties’ direct and
indirect Subsidiaries, showing: (i) the number of shares of each class of common
and preferred Equity Interests authorized for each of such Subsidiaries, and
(ii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Borrower. All of the outstanding Equity
Interests of each such Subsidiary has been validly issued and is fully paid and
non-assessable.

(d) Except as set forth on Schedule 4.1(d), there are no subscriptions, options,
warrants, or calls relating to any shares of Borrower’s or its Subsidiaries’
Equity Interests, including any right of conversion or exchange under any
outstanding security or other instrument.

 

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4.2 Due Authorization; No Conflict.

(a) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party have been duly authorized by
all necessary action on the part of such Loan Party.

(b) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to any Loan Party or its Subsidiaries, the Governing Documents of any
Loan Party or its Subsidiaries, or any order, judgment, or decree of any court
or other Governmental Authority binding on any Loan Party or its Subsidiaries,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material agreement of any Loan Party
or its Subsidiaries where any such conflict, breach or default could
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any assets of any Loan Party, other than
Permitted Liens, or (iv) require any approval of any holder of Equity Interests
of a Loan Party or any approval or consent of any Person under any material
agreement of any Loan Party, other than consents or approvals that have been
obtained and that are still in force and effect and except, in the case of
material agreements, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Effect.

4.3 Governmental Consents. The execution, delivery, and performance by each Loan
Party of the Loan Documents to which such Loan Party is a party and the
consummation of the transactions contemplated by the Loan Documents do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than
registrations, consents, approvals, notices, or other actions that have been
obtained and that are still in force and effect and except for filings and
recordings with respect to the Collateral to be made, or otherwise delivered to
Agent for filing or recordation, as of the Closing Date.

4.4 Binding Obligations; Perfected Liens.

(a) Each Loan Document has been duly executed and delivered by each Loan Party
that is a party thereto and is the legally valid and binding obligation of such
Loan Party, enforceable against such Loan Party in accordance with its
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors’ rights generally.

(b) Agent’s Liens are validly created, perfected (other than (i) money,
(ii) letter-of-credit rights (other than supporting obligations),
(iii) commercial tort claims (other than those that, by the terms of the
Guaranty and Security Agreement, are required to be perfected), and (iv) any
Deposit Accounts and Securities Accounts not subject to a Control Agreement as
permitted by Section 7(k)(iv) of the Guaranty and Security Agreement), and first
priority Liens, subject only to Permitted Liens which are non-consensual
Permitted Liens, permitted purchase money Liens, or the interests of lessors
under Capital Leases.

 

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4.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its
Subsidiaries has (a) good, sufficient and legal title to (in the case of fee
interests in Real Property), (b) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (c) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 5.1, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby. All of such assets are free
and clear of Liens except for Permitted Liens.

4.6 Litigation.

(a) There are no actions, suits, or proceedings pending or, to the knowledge of
Borrower, after due inquiry, threatened in writing against a Loan Party or any
of its Subsidiaries that either individually or in the aggregate could
reasonably be expected to result in a Material Adverse Effect.

(b) Schedule 4.6(b) sets forth a complete and accurate description, with respect
to each of the actions, suits, or proceedings with asserted liabilities in
excess of, or that could reasonably be expected to result in liabilities in
excess of, $750,000 that, as of the Closing Date, is pending or, to the
knowledge of Borrower, after due inquiry, threatened against a Loan Party or any
of its Subsidiaries, of (i) the parties to such actions, suits, or proceedings,
(ii) the nature of the dispute that is the subject of such actions, suits, or
proceedings, (iii) the procedural status, as of the Closing Date, with respect
to such actions, suits, or proceedings, and (iv) whether any liability of the
Loan Parties’ and their Subsidiaries in connection with such actions, suits, or
proceedings is covered by insurance.

4.7 Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is in
violation of any applicable laws, rules, regulations, executive orders, or codes
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, or (b) is subject
to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect.

4.8 No Material Adverse Effect. All historical financial statements relating to
the Loan Parties and their Subsidiaries that have been delivered by Borrower to
Agent have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects, the
Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the
date thereof and results of operations for the period then ended. Since
April 30, 2017, no event, circumstance, or change has occurred that has or could
reasonably be expected to result in a Material Adverse Effect with respect to
the Loan Parties and their Subsidiaries, other than (i) as customarily resulting
from the commencement of petitions for relief similar to the Bankruptcy Cases
and (ii) as contemplated in Borrower’s business plan delivered to Agent prior to
July 28, 2017.

 

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4.9 Solvency.

(a) Each Loan Party is Solvent.

(b) No transfer of property is being made by any Loan Party and no obligation is
being incurred by any Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Loan Party.

4.10 Employee Benefits. No Loan Party, none of its Subsidiaries, nor any of
their respective ERISA Affiliates maintains or contributes to any Benefit Plan.

4.11 Environmental Condition. Except as set forth on Schedule 4.11, (a) no Loan
Party’s nor any of its Subsidiaries’ properties or assets has ever been used by
a Loan Party, its Subsidiaries, or, to Borrower’s knowledge, by previous owners
or operators in the disposal of, or to produce, store, handle, treat, release,
or transport, any Hazardous Materials, where such disposal, production, storage,
handling, treatment, release or transport was in violation, in any material
respect, of or could reasonably be expected to result in any material liability
under any applicable Environmental Law, (b) no Loan Party’s nor any of its
Subsidiaries’ properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) no Loan Party nor any of its Subsidiaries has received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any Real Property owned or operated by a Loan Party or its Subsidiaries,
(d) no Loan Party nor any of its Subsidiaries nor any of their respective
facilities or operations is subject to any outstanding written order, consent
decree, or settlement agreement with any Person relating to any Environmental
Law or Environmental Liability that, individually or in the aggregate, could
reasonably be expected to result in a material liability to any Loan Party or
its Subsidiaries, (e) the Loan Parties and their Subsidiaries hold and are in
compliance in all material respects with all permits, licenses, consents,
authorizations and registrations required under Environmental Laws
(“Environmental Permits”), and (f) the Loan Parties and their Subsidiaries
comply with all applicable financial assurance obligations arising under
Environmental Laws.

4.12 Complete Disclosure. All factual information taken as a whole (other than
forward-looking information and projections and information of a general
economic nature and general information about Borrower’s industry) furnished by
or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement or
the other Loan Documents, and all other such factual information taken as a
whole (other than forward-looking information and projections and information of
a general economic nature and general information about Borrower’s industry)
hereafter furnished by or on behalf of a Loan Party or its Subsidiaries in
writing to Agent or any Lender will be, true and accurate, in all material
respects, on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. The Projections
delivered to Agent on July 5, 2017 and July 17, 2017 represent, and as of the
date on which any other Projections are delivered to Agent, such

 

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additional Projections represent, Borrower’s good faith estimate, on the date
such Projections are delivered, of the Loan Parties’ and their Subsidiaries’
future performance for the periods covered thereby based upon assumptions
believed by Borrower to be reasonable at the time of the delivery thereof to
Agent (it being understood that such Projections are subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Loan Parties and their Subsidiaries, and no assurances can be given that such
Projections will be realized, and although reflecting Borrower’s good faith
estimate, projections or forecasts based on methods and assumptions which
Borrower believed to be reasonable at the time such Projections were prepared,
are not to be viewed as facts, and that actual results during the period or
periods covered by the Projections may differ materially from projected or
estimated results).

4.13 Patriot Act. To the extent applicable, each Loan Party is in compliance, in
all material respects, with the (a) Trading with the Enemy Act, as amended, and
each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (b) Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of the
proceeds of the loans made hereunder will be used by any Loan Party or any of
their Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

4.14 Indebtedness. Set forth on Schedule 4.14 is a true and complete list of all
Indebtedness of each Loan Party and each of its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding immediately
after giving effect to the closing hereunder on the Closing Date and such
Schedule accurately sets forth the aggregate principal amount of such
Indebtedness as of the Closing Date.

4.15 Payment of Taxes. Except as otherwise permitted under Section 5.5, all tax
returns and reports of each Loan Party and its Subsidiaries required to be filed
by any of them have been timely filed, and all taxes shown on such tax returns
to be due and payable and all assessments, fees and other governmental charges
upon a Loan Party and its Subsidiaries and upon their respective assets, income,
businesses and franchises that are due and payable have been paid when due and
payable. Each Loan Party and each of its Subsidiaries have made adequate
provision in accordance with GAAP for all taxes not yet due and payable.
Borrower knows of no proposed tax assessment against a Loan Party or any of its
Subsidiaries that is not being actively contested by such Loan Party or such
Subsidiary diligently, in good faith, and by appropriate proceedings; provided
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.

4.16 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the loans made to Borrower will be used to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock or for any purpose that violates the provisions of
Regulation T, U or X of the Board of Governors.

 

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4.17 Governmental Regulation. No Loan Party nor any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

4.18 OFAC. No Loan Party nor any of its Subsidiaries is in violation of any of
the country or list based economic and trade sanctions administered and enforced
by OFAC. No Loan Party nor any of its Subsidiaries (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 loan made hereunder 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.

4.19 Employee and Labor Matters. There is (i) no unfair labor practice complaint
pending or, to the knowledge of Borrower, threatened against Borrower or its
Subsidiaries before any Governmental Authority and no grievance or arbitration
proceeding pending or threatened against Borrower or its Subsidiaries which
arises out of or under any collective bargaining agreement and that could
reasonably be expected to result in a material liability, (ii) no strike, labor
dispute, slowdown, stoppage or similar action or grievance pending or threatened
in writing against Borrower or its Subsidiaries that could reasonably be
expected to result in a material liability, or (iii) to the knowledge of
Borrower, after due inquiry, no union representation question existing with
respect to the employees of Borrower or its Subsidiaries and no union organizing
activity taking place with respect to any of the employees of Borrower or its
Subsidiaries. None of Borrower or its Subsidiaries has incurred any liability or
obligation under the Worker Adjustment and Retraining Notification Act or
similar state law, which remains unpaid or unsatisfied. The hours worked and
payments made to employees of Borrower or its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable legal
requirements, except to the extent such violations could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
All material payments due from Borrower or its Subsidiaries on account of wages
and employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of Borrower, except where the failure to do
so could not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

4.20 Material Contracts. Set forth on Schedule 4.20 is a list of the Material
Contracts as of the Closing Date.

4.21 Leases. Each Loan Party and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and, subject to Permitted Protests,
all of such material leases are valid and subsisting and no material default by
the applicable Loan Party or its Subsidiaries exists under any of them.

 

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4.22 Eligible Accounts. As to each Account that is identified by Borrower as an
Eligible Accepted Account or Eligible Ticket Held Account in a Borrowing Base
Certificate submitted to Agent, such Account is (a) a bona fide existing payment
obligation of the applicable Account Debtor created by the sale and delivery of
Inventory or the rendition of services to such Account Debtor in the ordinary
course of a Loan Party’s business, (b) owed to a Loan Party without any known
defenses, disputes, offsets, counterclaims, or rights of return or cancellation,
and (c) not excluded as ineligible by virtue of one or more of the excluding
criteria (other than any Administrative Agent-discretionary criteria) set forth
in the definition of Eligible Accepted Accounts or Eligible Ticket Held
Accounts.

4.23 [Reserved.]

4.24 Location of Equipment. The Equipment of Borrower and its Subsidiaries is
not stored with a bailee, warehouseman, or similar party and is located only at,
or in-transit between, the locations identified on Schedule 5.14 (as such
Schedule may be updated pursuant to Section 5.14).

4.25 [Reserved.]

4.26 Immaterial Subsidiaries. No Immaterial Subsidiary (a) owns any assets
(other than assets of a de minimis nature), (b) has any liabilities (other than
liabilities of a de minimis nature), or (c) engages in any business activity.
The value of assets held by Nuverra Rocky Mountain does not exceed $25,000 in
the aggregate and Nuverra Rocky Mountain has no liabilities of any kind except
as set forth on Schedule 4.26.

4.27 Name and Address; Properties. During the preceding five (5) years, no Loan
Party has been known by and has used any other name, whether corporate,
fictitious or otherwise, except as set forth on Schedule 4.27. Schedule 4.27
also lists all real property owned or leased by Loan Parties, and if leased, the
correct name and address of the landlord and the date and term of the applicable
lease. Borrower’s main office is at the main office address identified as such
in Schedule 4.27 and Borrower and its Subsidiaries maintain no other offices or
facilities except as described therein.

4.28 Existing Business Relationships. Except as described in Schedule 4.28 there
exists no actual or threatened termination, cancellation or limitation of, or
any adverse modification or change in, the business relationship of Borrower and
its Subsidiaries with any supplier, customer or group of customers that
individually or in the aggregate could reasonably be expect to result in a
Material Adverse Effect.

4.29 O.S.H.A. Each of Borrower and its Subsidiaries has complied in all Material
respects with, and its facilities, business, leaseholds, equipment and other
property are in Material compliance with, the provisions of the federal
Occupational Safety and Health Act and all rules and regulations promulgated
thereunder, and all Federal, state and local governmental rules, ordinances and
regulations similar thereto. There are no outstanding citations, notices or
orders of non-compliance issued to Borrower or any Subsidiary or relating to its
facilities, business, leaseholds, equipment or other property under the federal
Occupational Safety and Health Act, any rule or regulation promulgated
thereunder, or any similar state or local Governmental Rules.

 

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4.30 Second Lien Loan Documents. As of the Closing Date, Borrower has delivered
to Agent a complete and correct copy of the Second Lien Loan Documents
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith).

5. AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that, until termination of all of the Commitments
and payment in full of the Obligations:

5.1 Financial Statements, Reports, Certificates. Borrower (a) will deliver to
Agent, with copies to each Lender, each of the financial statements, reports,
projections and other items set forth on Schedule 5.1 no later than the times
specified therein, (b) agrees that no Subsidiary of a Loan Party will have a
fiscal year different from that of Borrower, (c) agrees to maintain a system of
accounting that enables Borrower to produce financial statements in accordance
with GAAP, and (d) agrees that it will, and will cause each other Loan Party to,
(i) keep a reporting system that shows all additions, sales, claims, returns,
and allowances with respect to its and its Subsidiaries’ sales, and
(ii) maintain its billing systems and practices substantially as in effect as of
the Closing Date and shall only make material modifications thereto with notice
to, and with the consent of, Agent. The financial statements delivered to Agent
pursuant to this Schedule 5.1 shall fairly present Borrower’s and its
Subsidiaries’ financial condition and results of operations as of the dates and
for the periods covered, and shall not contain any material misstatements.

5.2 Reporting. Borrower (a) will deliver to Agent (and if so requested by Agent,
with copies for each Lender) each of the reports set forth on Schedule 5.2 at
the times specified therein, and (b) agrees to use commercially reasonable
efforts in cooperation with Agent to facilitate and implement a system of
electronic collateral reporting in order to provide electronic reporting of each
of the items set forth on such Schedule.

5.3 Existence. Except as otherwise permitted under Section 6.3 or Section 6.4,
Borrower will, and will cause each of its Subsidiaries to, at all times preserve
and keep in full force and effect such Person’s valid existence and good
standing in its jurisdiction of organization and, except as could not reasonably
be expected to result in a Material Adverse Effect, good standing with respect
to all other jurisdictions in which it is qualified to do business and any
rights, franchises, permits, licenses, accreditations, authorizations, or other
approvals material to their businesses.

5.4 Maintenance of Properties. Borrower will, and will cause each of its
Subsidiaries to, maintain and preserve all of its assets that are necessary or
useful in the proper conduct of its business in good working order and
condition, ordinary wear, tear, casualty, and condemnation and Permitted
Dispositions excepted.

5.5 Taxes. Borrower will, and will cause each of its Subsidiaries to, pay in
full before delinquency or before the expiration of any extension period all
material governmental assessments and taxes imposed, levied, or assessed against
it, or any of its assets or in respect of any of its income, businesses, or
franchises, except to the extent that the validity of such governmental
assessment or tax is the subject of a Permitted Protest.

 

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5.6 Insurance. Borrower will, and will cause each of its Subsidiaries to, at
Borrower’s expense, (a) maintain insurance respecting each of Borrower’s and its
Subsidiaries’ assets wherever located, covering liabilities, losses or damages
as are customarily are insured against by other Persons engaged in same or
similar businesses and similarly situated and located, and (b) with respect to
all Real Property Collateral located in any area that has been designated by the
Federal Emergency Management Agency as a “Special Flood Hazard Area”, maintain
flood insurance with respect to such Real Property Collateral (including any
personal property which is located thereon) complying with the Flood Disaster
Protection Act of 1973, as amended from time to time, in an amount satisfactory
to all Lenders and otherwise satisfactory to all Lenders. All such policies of
insurance shall be with financially sound and reputable insurance companies
acceptable to Agent and in such amounts as is carried generally in accordance
with sound business practice by companies in similar businesses similarly
situated and located and, in any event, in amount, adequacy, and scope
reasonably satisfactory to Agent (it being agreed that the amount, adequacy and
scope of the policies of insurance of Borrower in effect as of the Closing Date
are acceptable to Agent as of the Closing Date). All property insurance policies
covering the Collateral are to be made payable to Agent for the benefit of Agent
and the Lenders, as their interests may appear, in case of loss, pursuant to a
standard loss payable endorsement with a standard non-contributory “lender” or
“secured party” clause and are to contain such other provisions as Agent may
reasonably require to fully protect the Lenders’ interest in the Collateral and
to any payments to be made under such policies. All certificates of property and
general liability insurance are to be delivered to Agent, with the loss payable
(but only in respect of Collateral) and additional insured endorsements in favor
of Agent and shall provide for not less than 30 days (10 days in the case of
non-payment) prior written notice to Agent of the exercise of any right of
cancellation. If Borrower or its Subsidiaries fail to maintain such insurance,
Agent may arrange for such insurance, but at Borrower’s expense and without any
responsibility on Agent’s part for obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims.
Borrower shall give Agent prompt notice of any loss exceeding $250,000 covered
by its or its Subsidiaries’ casualty or business interruption insurance. Upon
the occurrence and the continuance of an Event of Default, Agent shall have the
sole right to file claims under any property and general liability insurance
policies in respect of the Collateral, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.

5.7 Inspection. Subject to the limitations on Borrower’s reimbursement
obligations set forth in Section 2.10(c),

(a) Borrower will, and will cause each of its Subsidiaries to, permit Agent, any
Lender, and each of their respective duly authorized representatives or agents
to visit any of its properties and inspect any of its assets or books and
records, to examine and make copies of its books and records, and to discuss its
affairs, finances, and accounts with, and to be advised as to the same by, its
officers and employees (provided an authorized representative of Borrower

 

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shall be allowed to be present) at such reasonable times and intervals as Agent
or any Lender, as applicable, may designate and, so long as no Default or Event
of Default has occurred and is continuing, with reasonable prior notice to
Borrower and during regular business hours.

(b) Borrower will, and will cause each of its Subsidiaries to, permit Agent and
each of its duly authorized representatives or agents to conduct appraisals and
valuations at such reasonable times and intervals as Agent may designate.

5.8 Compliance with Laws. Borrower will, and will cause each of its Subsidiaries
to, comply with the requirements of all applicable laws, rules, regulations, and
orders of any Governmental Authority, other than laws, rules, regulations, and
orders the non-compliance with which, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.

5.9 Environmental. Borrower will, and will cause each of its Subsidiaries to,

(a) Keep any property either owned or operated by Borrower or its Subsidiaries
free of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,

(b) Comply, in all material respects, with Environmental Laws and provide to
Agent documentation of such compliance which Agent reasonably requests,

(c) Promptly notify Agent of any release of which Borrower has knowledge of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Borrower or its Subsidiaries and take any Remedial Actions required
to abate said release or otherwise to come into compliance, in all material
respects, with applicable Environmental Law, and

(d) Promptly, but in any event within 5 Business Days of its receipt thereof,
provide Agent with written notice of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of Borrower or its Subsidiaries, (ii) commencement of any Environmental Action
or written notice that an Environmental Action will be filed against Borrower or
its Subsidiaries, and (iii) written notice of a violation, citation, or other
administrative order from a Governmental Authority.

5.10 Disclosure Updates. Borrower will, promptly and in no event later than 5
Business Days after obtaining knowledge thereof, notify Agent if any written
information, exhibit, or report furnished to Agent or the Lenders contained, at
the time it was furnished, any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made. The foregoing to the
contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material
fact or omission of any material fact nor shall any such notification have the
effect of amending or modifying this Agreement or any of the Schedules hereto.

 

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5.11 Formation of Subsidiaries. Borrower will, at the time that any Loan Party
forms any direct or indirect Subsidiary (other than an Immaterial Subsidiary) or
acquires any direct or indirect Subsidiary (other than an Immaterial Subsidiary)
after the Closing Date, within 10 Business Days of such formation or acquisition
(or such later date as permitted by Agent in its sole discretion) (a) cause such
new Subsidiary to provide to Agent a joinder to the Guaranty and Security
Agreement, together with such other security agreements (including mortgages
with respect to any Real Property owned in fee of such new Subsidiary with a
fair market value greater than $2,500,000), as well as appropriate financing
statements (and with respect to all property subject to a mortgage, fixture
filings), all in form and substance reasonably satisfactory to Agent (including
being sufficient to grant Agent a first priority Lien (subject to Permitted
Liens) in and to the assets of such newly formed or acquired Subsidiary);
provided, that the joinder to the Guaranty and Security Agreement, and such
other security agreements shall not be required to be provided to Agent with
respect to any Subsidiary of Borrower that is a CFC if providing such agreements
would result in adverse tax consequences or the costs to the Loan Parties of
providing such guaranty or such security agreements are unreasonably excessive
(as determined by Agent in consultation with Borrower) in relation to the
benefits to Agent and the Lenders of the security or guarantee afforded thereby,
(b) provide, or cause the applicable Loan Party to provide, to Agent a pledge
agreement (or an addendum to the Guaranty and Security Agreement) and
appropriate certificates and powers or financing statements, pledging all of the
direct or beneficial ownership interest in such new Subsidiary in form and
substance reasonably satisfactory to Agent; provided, that only 65% of the total
outstanding voting Equity Interests of any first tier Subsidiary of Borrower
that is a CFC (and none of the Equity Interests of any Subsidiary of such CFC)
shall be required to be pledged if pledging a greater amount would result in
adverse tax consequences or the costs to the Loan Parties of providing such
pledge are unreasonably excessive (as determined by Agent in consultation with
Borrower) in relation to the benefits to Agent and the Lenders of the security
afforded thereby (which pledge, if reasonably requested by Agent, shall be
governed by the laws of the jurisdiction of such Subsidiary), and (c) provide to
Agent all other documentation, including one or more opinions of counsel
reasonably satisfactory to Agent, which, in its opinion, is appropriate with
respect to the execution and delivery of the applicable documentation referred
to above (including policies of title insurance, flood certification
documentation, or other documentation with respect to all Real Property owned in
fee and subject to a mortgage). Any document, agreement, or instrument executed
or issued pursuant to this Section 5.11 shall constitute a Loan Document.

5.12 Further Assurances. Borrower will, and will cause each of the other Loan
Parties to, at any time upon the reasonable request of Agent, execute or deliver
to Agent any and all financing statements, fixture filings, security agreements,
pledges, assignments, mortgages, deeds of trust, opinions of counsel, and all
other documents, including, if applicable, completion of all flood insurance
documentation and diligence and coverage in accordance with the Flood Disaster
Protection Act of 1973, as amended (the “Additional Documents”) that Agent may
reasonably request in form and substance reasonably satisfactory to Agent, to
create, perfect, and continue perfected or to better perfect Agent’s Liens in
all of the assets of Borrower and its Subsidiaries (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Agent in any Real Property acquired by
Borrower or any other Loan Party, and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents; provided
that the foregoing shall not apply to any Subsidiary of Borrower that is a CFC
if providing such documents would result in adverse tax consequences or the
costs to the Loan Parties of providing such documents are unreasonably excessive
(as determined by Agent in consultation with Borrower) in relation to the

 

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benefits to Agent and the Lenders of the security afforded thereby. To the
maximum extent permitted by applicable law, if Borrower or any other Loan Party
refuses or fails to execute or deliver any reasonably requested Additional
Documents within a reasonable period of time following the request to do so,
Borrower and each other Loan Party hereby authorizes Agent to execute any such
Additional Documents in the applicable Loan Party’s name and authorizes Agent to
file such executed Additional Documents in any appropriate filing office. In
furtherance of, and not in limitation of, the foregoing, each Loan Party shall
take such actions as Agent may reasonably request from time to time to ensure
that the Obligations are guaranteed by the Guarantors and are secured by
substantially all of the assets of Borrower and its Subsidiaries, including all
of the outstanding capital Equity Interests of Borrower’s Subsidiaries (subject
to exceptions and limitations contained in the Loan Documents with respect to
CFCs). With respect to any Real Property acquired by Borrower or any other Loan
Party on which Agent will be taking a Lien, (x) Borrower will give Agent no less
than forty five (45) days’ prior written notice of such acquisition,
(y) Borrower or such other Loan Party, as applicable, may not grant a Lien on
such Real Property in favor of Agent until the completion of all flood insurance
documentation and diligence and coverage in accordance with the Flood Disaster
Protection Act of 1973, as amended, by all Lenders and, (z) in the event that
any such Real Property is located in any area that has been designated by the
Federal Emergency Management Agency as a “Special Flood Hazard Area”, Borrower
and Loan Parties will maintain flood insurance with respect to such Real
Property Collateral (including any personal property which is located thereon)
complying with the Flood Disaster Protection Act of 1973, as amended from time
to time, in an amount satisfactory to all Lenders and otherwise satisfactory to
all Lenders.

5.13 Lender Meetings. Borrower will, within 90 days after the close of each
fiscal year of Borrower, at the request of Agent or of the Required Lenders and
upon reasonable prior notice and subject to Section 17.9, hold a meeting (at a
mutually agreeable location and time or, at the option of Agent, by conference
call) with all Lenders who choose to attend such meeting at which meeting shall
be reviewed the financial results of the previous fiscal year and the financial
condition of Borrower and its Subsidiaries and the projections presented for the
current fiscal year of Borrower.

5.14 Location of Collateral; Offices. Borrower will, and will cause each of its
Subsidiaries to, keep its Equipment only at the locations identified on Schedule
5.14 and their chief executive offices, or any office where Borrower or any
Subsidiary maintains its Records (including computer printouts and programs)
with respect to any Collateral, only at the locations identified on Schedule
5.14; provided, that (a) Borrower may amend Schedule 4.24 or Schedule 5.14 so
long as such amendment occurs by written notice to Agent not less than 10 days
prior to the date on which such Equipment is moved to such new location or such
chief executive office is relocated and so long as such new location is within
the continental United States, and (b) Certificated Equipment may be moved
within the United States.

5.15 Bank Products. Loan Parties shall establish their primary depository and
treasury management relationships with financial institutions acceptable to
Agent and maintain such depository and treasury management relationships at all
times during the term of the Agreement.

 

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5.16 Material Contracts. Borrower shall, and shall cause each of its
Subsidiaries to maintain in full force and effect the Material Contracts and
Borrower shall provide notice to Agent promptly, but in any event within 5
Business Days after the occurrence thereof, of any material amendments,
supplements or other modifications to any Material Contract.

5.17 Name Change; Organizational Change; Creation of Affiliates. Borrower shall,
and shall cause each of its Subsidiaries to, provide Agent with no fewer than
thirty (30) calendar days’ notice prior to any proposed (a) change in Borrower’s
or any Subsidiary’s state of organization or organizational structure,
(b) change of Borrower’s or any Subsidiary’s name, (c) use of any trade name or
fictitious name, “d/b/a” or other similar designation, (d) creation of any new
Affiliate under the control of Borrower, or (e) transaction or series of
transactions pursuant to which Borrower or any of its Subsidiaries would become
an Affiliate under the control of any other Person.

5.18 [Reserved].

5.19 Updated Borrowing Base Certificate. Within 3 Business Days of the written
request of Required Lenders (which may be requested no more than once a month if
no Default or Event of Default exists or at any time if a Default or Event of
Default exists), Borrower shall deliver an updated executed Borrowing Base
Certificate reflecting changes in the Eligible Accounts availability since the
last Borrowing Base Certificate.

5.20 Financial Advisor.

(a) Borrower shall use commercially reasonable efforts to identify and appoint a
chief financial officer (the “CFO”) as soon as practicable following execution
of this Agreement. Prior to the date on which a CFO reasonably satisfactory to
Agent is appointed, Borrower will continue to employ a financial advisor
reasonably satisfactory to Agent (the “Financial Advisor”).

(b) Until the CFO has been appointed and the Financial Advisor’s engagement has
been terminated, Borrower and each of its Subsidiaries hereby authorizes the
Financial Advisor to communicate directly with Agent and Agent’s professionals
and advisors regarding Borrower and its Subsidiaries and any matters within the
scope of the Financial Advisor’s work related thereto.

5.21 Subsequent Deposits. Upon request by Agent, Borrower shall, and shall cause
each of its Subsidiaries to, make nonrefundable deposits of cash for application
against accrued and unpaid Lender Group Expenses in amounts satisfactory to
Agent.

6. NEGATIVE COVENANTS.

Borrower covenants and agrees that, until termination of all of the Commitments
and payment in full of the Obligations:

6.1 Indebtedness. Borrower will not, and will not permit any of its Subsidiaries
to create, incur, assume, suffer to exist, guarantee, or otherwise become or
remain, directly or indirectly, liable with respect to any Indebtedness, except
for Permitted Indebtedness.

 

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6.2 Liens. Borrower will not, and will not permit any of its Subsidiaries to
create, incur, assume, or suffer to exist, directly or indirectly, any Lien on
or with respect to any of its assets, of any kind, whether now owned or
hereafter acquired, or any income or profits therefrom, except for Permitted
Liens.

6.3 Restrictions on Fundamental Changes. Borrower will not, and will not permit
any of its Subsidiaries to,

(a) other than in order to consummate a Permitted Acquisition, enter into any
merger, consolidation, reorganization, or recapitalization, or reclassify its
Equity Interests, except for (i) any merger between Loan Parties, provided, that
Borrower must be the surviving entity of any such merger to which it is a party,
(ii) any merger between a Loan Party and a Subsidiary of such Loan Party that is
not a Loan Party so long as such Loan Party is the surviving entity of any such
merger, and (iii) any merger between Subsidiaries of Borrower that are not Loan
Parties (for the avoidance of doubt, in no event shall Nuverra Rocky Mountain be
permitted to merge or consolidate into any Loan Party or Subsidiary of any Loan
Party),

(b) liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of Borrower with nominal assets and nominal liabilities, (ii) the
liquidation or dissolution of a Loan Party (other than Borrower) or any of its
wholly-owned Subsidiaries so long as all of the assets (including any interest
in any Equity Interests) of such liquidating or dissolving Loan Party or
Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, or (iii) the liquidation or dissolution of a Subsidiary of Borrower
that is not a Loan Party (other than any such Subsidiary the Equity Interests of
which (or any portion thereof) are subject to a Lien in favor of Agent) so long
as all of the assets of such liquidating or dissolving Subsidiary are
transferred to a Subsidiary of Borrower that is not liquidating or dissolving,
or

(c) suspend or cease operating a substantial portion of its or their business,
except as permitted pursuant to clauses (a) or (b) above or in connection with a
transaction permitted under Section 6.4.

6.4 Disposal of Assets. Other than Permitted Dispositions or transactions
expressly permitted by Sections 6.3 or 6.9, Borrower will not, and will not
permit any of its Subsidiaries to convey, sell, lease, license, assign,
transfer, or otherwise dispose of (or enter into an agreement to convey, sell,
lease, license, assign, transfer, or otherwise dispose of) any of its or their
assets.

6.5 Nature of Business. Borrower will not, and will not permit any of its
Subsidiaries to make any change in the nature of its or their business as
described in Schedule 6.5 or acquire any properties or assets that are not
reasonably related to the conduct of such business activities; provided, that
the foregoing shall not prevent Borrower and its Subsidiaries from engaging in
any business that is reasonably related or ancillary to its or their business.

6.6 Prepayments; Amendments; Settlements. Borrower will not, and will not permit
any of its Subsidiaries to,

(a) do any of the following:

 

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(i) except in connection with Refinancing Indebtedness permitted by Section 6.1,
optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness (other than the Second Lien Indebtedness, which shall be subject to
the restrictions in clause (ii) below) of Borrower or its Subsidiaries, other
than (A) the Obligations in accordance with this Agreement and (B) Permitted
Intercompany Advances,

(ii) (A) make any payment, prepayment, redemption, defeasance, purchase or other
acquisition on account of Second Lien Indebtedness if such payment is not
permitted at such time under the Intercreditor Agreement, or (B) make any cash
payment of interest in respect of Second Lien Indebtedness if Borrower has the
option to make such payment in kind, or

(iii) make any payment on account of other Indebtedness that has been
contractually subordinated in right of payment to the Obligations if such
payment is not permitted at such time under the subordination terms and
conditions,

(b) directly or indirectly, amend, modify, or change any of the terms or
provisions of:

(i) any agreement, instrument, document, indenture, or other writing evidencing
or concerning Permitted Indebtedness other than (A) the Obligations in
accordance with this Agreement, (B) Permitted Intercompany Advances,
(C) Indebtedness permitted under clauses (c), (h), (j) and (k) of the definition
of Permitted Indebtedness, and (D) Second Lien Indebtedness, provided that such
amendment, modification or other change is permitted under the Intercreditor
Agreement, or

(ii) the Governing Documents of any Loan Party or any of its Subsidiaries if the
effect thereof, either individually or in the aggregate, could reasonably be
expected to be materially adverse to the interests of the Lenders, or

(c) make any payment of any settlement amounts, costs, fees and expenses
incurred in connection with the dismissal or settling of any appeals of the
Order (including, without limitation, the Hargreaves Appeal), except solely with
the proceeds of Second Lien Indebtedness.

6.7 Restricted Payments. Borrower will not, and will not permit any of its
Subsidiaries to make any Restricted Payment; provided, that, so long as it is
permitted by law, and so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom,

(a) Borrower may make distributions to former employees, officers, or directors
of Borrower (or any spouses, ex-spouses, or estates of any of the foregoing) on
account of redemptions of Equity Interests of Borrower held by such Persons,
provided, that the aggregate amount of such redemptions made by Borrower during
the term of this Agreement plus the amount of Indebtedness outstanding under
clause (l) of the definition of Permitted Indebtedness, does not exceed $500,000
in the aggregate, and

 

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(b) Borrower may make distributions to former employees, officers, or directors
of Borrower (or any spouses, ex-spouses, or estates of any of the foregoing),
solely in the form of forgiveness of Indebtedness of such Persons owing to
Borrower on account of repurchases of the Equity Interests of Borrower held by
such Persons; provided that such Indebtedness was incurred by such Persons
solely to acquire Equity Interests of Borrower.

6.8 Accounting Methods. Borrower will not, and will not permit any of its
Subsidiaries to modify or change its fiscal year or its method of accounting
(other than as may be required to conform to GAAP).

6.9 Investments. Borrower will not, and will not permit any of its Subsidiaries
to, directly or indirectly, make or acquire any Investment or incur any
liabilities (including contingent obligations) for or in connection with any
Investment except for Permitted Investments.

6.10 Transactions with Affiliates. Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction with any Affiliate of Borrower or any of its Subsidiaries except
for:

(a) transactions (other than the payment of management, consulting, monitoring,
or advisory fees) between Borrower or its Subsidiaries, on the one hand, and any
Affiliate of Borrower or its Subsidiaries, on the other hand, so long as such
transactions (i) are fully disclosed to Agent prior to the consummation thereof,
if they involve one or more payments by Borrower or its Subsidiaries in excess
of $500,000 for any single transaction or series of related transactions, and
(ii) are no less favorable, taken as a whole, to Borrower or its Subsidiaries,
as applicable, than would be obtained in an arm’s length transaction with a
non-Affiliate,

(b) so long as it has been approved by Borrower’s or its applicable Subsidiary’s
board of directors (or comparable governing body) in accordance with applicable
law, any indemnity provided for the benefit of directors (or comparable
managers) of Borrower or its applicable Subsidiary,

(c) so long as it has been approved by Borrower’s or its applicable Subsidiary’s
board of directors (or comparable governing body) in accordance with applicable
law, the payment of reasonable compensation, severance, or employee benefit
arrangements to employees, officers, and outside directors of Borrower and its
Subsidiaries in the ordinary course of business and consistent with industry
practice, and

(d) (i) transactions permitted by Section 6.3 or Section 6.7, (ii) any Permitted
Intercompany Advance and (iii) the Second Lien Loan Documents.

6.11 Use of Proceeds. Borrower will not, and will not permit any of its
Subsidiaries to use the proceeds of any Loan or other extension of credit made
hereunder for any purpose other than as described in the recitals hereto;
provided, however, that no part of the proceeds of the Loans made to Borrower
will be used to purchase or carry any such Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any such Margin Stock or for
any purpose that violates the provisions of Regulation T, U or X of the Board of
Governors).

 

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Additionally, Borrower shall not, directly or indirectly, use the proceeds of
the Loans, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person, (a) to fund any activities or
business of or with any Person, or in any country or territory, that, at the
time of such funding, is, or whose government is, the subject of sanctions
pursuant to any Anti-Terrorism Laws, (b) in any other manner that would result
in a violation of sanctions under any Anti-Terrorism Laws by any Person
(including any Person participating in the Loans, whether as underwriter,
advisor, investor, or otherwise), or (c) in any manner which would violate
Anti-Corruption Laws or applicable Sanctions.

6.12 Limitation on Issuance of Equity Interests. Except for the issuance or sale
of Qualified Equity Interests by Borrower, and except as contemplated by the
Approved Plan, Borrower will not, and will not permit any of its Subsidiaries to
issue or sell or enter into any agreement or arrangement for the issuance or
sale of any of its Equity Interests.

6.13 Immaterial Subsidiaries. Borrower will not permit any Immaterial Subsidiary
to (a) own any assets (other than assets of a de minimis nature), (b) have any
liabilities (other than liabilities of a de minimis nature), or (c) engage in
any business activity. Notwithstanding anything contained in the Loan Documents
to the contrary, no Loan Party shall make an Investment in, sell, lease,
license, assign, contribute or otherwise transfer any assets to, make any
distributions or payments to, or otherwise engage in, or enter into, any
transaction with, any Immaterial Subsidiary, which involves in excess of
$100,000 in any fiscal year for all such Investments, transfers, distributions,
payments and transactions with all Immaterial Subsidiaries.

6.14 Holding Company. In the case of Borrower, engage in any business or
activity other than (a) the ownership of all outstanding Equity Interests in its
Subsidiaries, (b) maintaining its corporate existence, (c) participating in tax,
accounting and other administrative activities as the parent of the consolidated
group of companies, including the Loan Parties, (d) the execution and delivery
of the Loan Documents and the Second Lien Loan Documents to which it is a party
and the performance of its obligations thereunder, (e) activities consistent
with current business practices as conducted by the Borrower on the date hereof
and (f) activities incidental to the businesses or activities described in
clauses (a) through (e) of this Section.

6.15 Removal of Collateral. Borrower will not, and will not permit any of its
Subsidiaries to remove, or cause or permit to be removed, any of the Collateral
from the premises where such Collateral is currently located and described in
Schedule 5.14, except in connection with (a) dispositions permitted under
Section 6.4, (b) off-site repairs of Equipment in the ordinary course of
Borrower’s and its Subsidiaries’ business as conducted on the Closing Date and
(c) vehicles.

6.16 Burdensome Agreement. Borrower will not, and will not permit any of its
Subsidiaries to, enter into or permit to exist any contractual obligation (other
than the Loan Documents or the Second Lien Loan Documents) that (a) limits the
ability (i) of any Subsidiary to make Restricted Payments to any Loan Party or
to otherwise transfer property to or invest in any Loan Party, except for any
agreement in effect (A) on the date hereof and set forth on Schedule 6.16 or
(B) at the time any Subsidiary becomes a Subsidiary of Borrower, so long as such
agreement was not entered into solely in contemplation of such Person becoming a
Subsidiary of Borrower, (ii) of any Subsidiary to guarantee the Indebtedness of
any Loan Party

 

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or (iii) of Borrower or any Subsidiary to create, incur, assume or suffer to
exist Liens on property of such Person; provided, however, that this clause
(iii) shall not prohibit any negative pledge incurred or provided in favor of
any holder of Indebtedness permitted under clause (c) of the definition of
“Permitted Indebtedness” solely to the extent any such negative pledge relates
to the property financed by or the subject of such Indebtedness; or (b) requires
the grant of a Lien to secure an obligation of such Person if a Lien is granted
to secure another obligation of such Person.

6.17 Capital Expenditures. Borrower will not permit Capital Expenditures to
exceed, individually or in the aggregate, during each fiscal year set forth
below, the amount set forth opposite such fiscal year:

 

Fiscal Year Ended

   Amount  

From the Closing Date to December 31, 2017

   $ 16,800,000  

December 31, 2018 and each fiscal year thereafter

   $ 25,200,000  

provided, however, that so long as no Default has occurred and is continuing or
would result therefrom, up to 33% of any amount set forth above, if not expended
in the fiscal year for which it is permitted above, may be carried over for
expenditure in the following fiscal year (but not, for the avoidance of doubt,
any subsequent year).

7. FINANCIAL COVENANTS.

(a) Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, Borrower will not permit:

(i) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, determined as
of the last day of each fiscal quarter for each period of four fiscal quarters
ending on the dates indicated below, to be less than the ratio set forth below
opposite such measurement date:

 

Fiscal Quarter Date

   Fixed Charge Coverage Ratio  

Closing Date through December 31, 2017

     -1.40 to 1.00  

March 31, 2018

     -0.45 to 1.00  

June 30, 2018

     0.15 to 1.00  

September 30, 2018

     1.05 to 1.00  

 

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Fiscal Quarter Date

   Fixed Charge Coverage Ratio  

December 31, 2018

     1.15 to 1.00  

March 31, 2019 and each fiscal quarter thereafter

     1.20 to 1.00  

(ii) Minimum Excess Availability. At any time that the Availability Block is not
in effect, Excess Availability at such time to be less than $3,000,000.

(b) Specified Contributions. In the event Borrower fails to comply with the
Fixed Charge Coverage Ratio covenant set forth in Section 7(a)(i) as of the last
day of any fiscal quarter, any cash equity contribution to Borrower (funded with
proceeds of common Equity Interests or other Equity Interests having terms
reasonably acceptable to Agent and in any case, not constituting Disqualified
Equity Interests) or proceeds of any Subordinated Indebtedness received after
the last day of such fiscal quarter and on or prior to the day that is ten
(10) days after the day on which financial statements are required to be
delivered for such fiscal quarter will, at the irrevocable election of Borrower,
be included in the calculation of EBITDA solely for the purposes of determining
compliance with the Fixed Charge Coverage Ratio covenant at the end of such
fiscal quarter (each, a “Cure Quarter”) and any subsequent period that includes
such Cure Quarter (any such equity contribution or proceeds of Subordinated
Indebtedness so included in the calculation of EBITDA, a “Specified
Contribution”); provided that (i) notice of Borrower’s intent to accept a
Specified Contribution shall be delivered to Agent by Borrower no later than the
day on which financial statements are required to be delivered for the
applicable fiscal quarter, (ii) in each consecutive four (4) fiscal quarter
period there will be at least two (2) fiscal quarters in which no Specified
Contribution is made, (iii) the amount of any Specified Contribution will be no
greater than the amount required to cause Borrower to be in compliance with the
Fixed Charge Coverage Ratio covenant (the “Cure Amount”), (iv) all Specified
Contributions will be disregarded for purposes of the calculation of EBITDA for
all other purposes, including calculating basket levels, pricing, determining
compliance with incurrence based or pro forma calculations or conditions and any
other items governed by reference to EBITDA, (v) there shall be no more than
four (4) Specified Contributions made in the aggregate after the Closing Date,
(vi) the proceeds received by Borrower from all Specified Contributions shall be
promptly used by Borrower to prepay the Term Loan until paid in full and then to
prepay the Revolving Loans (without permanent reduction of the Revolver
Commitments) until paid in full and (vii) there shall be no reduction in the
amount of Fixed Charges as a result of the prepayment of Indebtedness in
connection with any Specified Contribution (or the application of the proceeds
thereof) for determining compliance with the Fixed Charge Coverage Ratio
covenant for the period ending on the last day of the applicable Cure Quarter
and any subsequent period that includes such Cure Quarter. Upon Agent’s receipt
of notice from Borrower of its intention to make a Specified Contribution
pursuant to this Section 7(b) no later than the day on which financial
statements are required to be delivered for the applicable fiscal quarter, then,
until the day that is ten (10) days after such date, neither Agent nor any
Lender shall exercise the right to accelerate the Loans or terminate the
Commitments and neither Agent nor any Lender shall exercise any right to
foreclose on or take possession of the Collateral solely on the basis of an
Event of Default having occurred and continuing under Section 7(a)(i) in respect
of the period ending on the last day of such fiscal quarter.

 

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8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

8.1 Payments. If Borrower fails to pay when due and payable, or when declared
due and payable, (a) all or any portion of the Obligations consisting of
interest, fees, or charges due the Lender Group, reimbursement of Lender Group
Expenses, or other amounts (other than any portion thereof constituting
principal) constituting Obligations (including Liquidated Damages, as
applicable, and any portion of the Obligations that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), and
such failure continues for a period of three (3) Business Days, (b) all or any
portion of the principal of the Loans, or (c) any amount payable to Issuing Bank
in reimbursement of any drawing under a Letter of Credit;

8.2 Covenants. If any Loan Party or any of its Subsidiaries:

(a) fails to perform or observe any covenant or other agreement contained in any
of (i) Sections 3.6, 3.7, 5.1, 5.2, 5.3 (solely as to existence or if Borrower
is not in good standing in its jurisdiction of organization), 5.6, 5.7 (solely
if Borrower refuses to allow Agent or its representatives or agents to visit
Borrower’s properties, inspect its assets or books or records, examine and make
copies of its books and records, or discuss Borrower’s affairs, finances, and
accounts with officers and employees of Borrower), 5.10, 5.11, 5.13, 5.14, 5.15,
5.17, 5.19, 5.20 or 5.21 of this Agreement, (ii) Section 6 of this Agreement,
(iii) Section 7 of this Agreement (subject to Section 7(b)), or (iv) Section 7
of the Guaranty and Security Agreement;

(b) fails to perform or observe any covenant or other agreement contained in any
of Sections 5.3 (other than as to existence or if Borrower is not in good
standing in its jurisdiction of organization), 5.4, 5.5, 5.8, and 5.12 of this
Agreement and such failure continues for a period of 10 days after the earlier
of (i) the date on which such failure shall first become known to any officer of
Borrower or (ii) the date on which written notice thereof is given to Borrower
by Agent; or

(c) fails to perform or observe any covenant or other agreement contained in
this Agreement, or in any of the other Loan Documents, in each case, other than
any such covenant or agreement that is the subject of another provision of this
Section 8 (in which event such other provision of this Section 8 shall govern),
and such failure continues for a period of 30 days after the earlier of (i) the
date on which such failure shall first become known to any officer of Borrower
or (ii) the date on which written notice thereof is given to Borrower by Agent;

8.3 Judgments. If one or more judgments, orders, or awards for the payment of
money involving an aggregate amount of $1,500,000, or more (except to the extent
covered (other than to the extent of customary deductibles) by insurance
pursuant to which the insurer has not denied coverage) is entered or filed
against a Loan Party or any of its Subsidiaries, or with respect to any of their
respective assets, and either (a) there is a period of 30 consecutive

 

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days at any time after the entry of any such judgment, order, or award during
which (1) the same is not discharged, satisfied, vacated, or bonded pending
appeal, or (2) a stay of enforcement thereof is not in effect, or
(b) enforcement proceedings are commenced upon such judgment, order, or award;

8.4 Voluntary Bankruptcy, etc. If an Insolvency Proceeding is commenced by a
Loan Party or any of its Subsidiaries;

8.5 Involuntary Bankruptcy, etc. If an Insolvency Proceeding is commenced
against a Loan Party or any of its Subsidiaries and any of the following events
occur: (a) such Loan Party or such Subsidiary consents to the institution of
such Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted, (c) the petition commencing
the Insolvency Proceeding is not dismissed within 60 calendar days of the date
of the filing thereof, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, such Loan Party or its
Subsidiary, or (e) an order for relief shall have been issued or entered
therein;

8.6 Default Under Other Agreements. If there is (a) a default under the Second
Lien Credit Agreement or in one or more agreements to which a Loan Party or any
of its Subsidiaries is a party with one or more third Persons relative to a Loan
Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate amount
of $1,000,000 or more, and such default (i) occurs at the final maturity of the
obligations thereunder, or (ii) results in a right by such third Person,
irrespective of whether exercised, to accelerate the maturity of such Loan
Party’s or its Subsidiary’s obligations thereunder; or (b) a default in or an
involuntary early termination of one or more Hedge Agreements to which a Loan
Party or any of its Subsidiaries is a party involving an aggregate amount of
$1,000,000 or more;

8.7 Representations, etc. If any warranty, representation, certificate,
statement, or Record made herein or in any other Loan Document or delivered in
writing to Agent or any Lender in connection with this Agreement or any other
Loan Document proves to be untrue in any material respect (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of the date of issuance or making or deemed making thereof;

8.8 Guaranty. If the obligation of any Guarantor under the guaranty contained in
the Guaranty and Security Agreement is limited or terminated by operation of law
or by such Guarantor (other than in accordance with the terms of this
Agreement);

8.9 Security Documents. If Guaranty and Security Agreement or any other Loan
Document that purports to create a Lien, shall, for any reason, fail or cease to
create a valid and perfected and, except to the extent of Permitted Liens which
are non-consensual Permitted Liens, permitted purchase money Liens or the
interests of lessors under Capital Leases, first priority Lien on the Collateral
covered thereby, except (a) as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement or (b) as the result
of an action or failure to act on the part of Agent;

 

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8.10 Loan Documents. The validity or enforceability of any Loan Document shall
at any time for any reason (other than solely as the result of an action or
failure to act on the part of Agent) be declared to be null and void, or a
proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any
Governmental Authority having jurisdiction over a Loan Party or its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof,
or a Loan Party or its Subsidiaries shall deny that such Loan Party or its
Subsidiaries has any liability or obligation purported to be created under any
Loan Document;

8.11 Change of Control. A Change of Control shall occur;

8.12 Subordination Provisions. The Intercreditor Agreement or any subordination
provisions in respect of the documents evidencing or governing any Subordinated
Indebtedness (the “Subordination Provisions”) shall, in whole or in part,
terminate, cease to be effective or cease to be legally valid, binding and
enforceable against any holder of the Second Lien Indebtedness or applicable
Subordinated Indebtedness; or (ii) Borrower or any other Loan Party shall,
directly or indirectly, disavow or contest in any manner (A) the effectiveness,
validity or enforceability of any of the Subordination Provisions, (B) that the
Subordination Provisions exist for the benefit of the Lender Group or (C) that
all payments of principal of or premium and interest on the Second Lien
Indebtedness or applicable Subordinated Indebtedness, or realized from the
liquidation of any property of any Loan Party, shall be subject to any of the
Subordination Provisions.

8.13 Settlement Payments. Borrower fails to make any payment of any settlement
amounts, costs, fees and expenses incurred in connection with the dismissal or
settling of any appeals of the Order (including, without limitation, the
Hargreaves Appeal).

9. RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and the continuation of an Event of
Default, Agent may, and, at the instruction of the Required Lenders, shall (in
each case under clauses (a) or (b) by written notice to Borrower), in addition
to any other rights or remedies provided for hereunder or under any other Loan
Document or by applicable law, do any one or more of the following:

(a) (i) declare the principal of, and any and all accrued and unpaid interest
and fees (including Liquidated Damages, as applicable) in respect of, the Loans
and all other Obligations, whether evidenced by this Agreement or by any of the
other Loan Documents to be immediately due and payable, whereupon the same shall
become and be immediately due and payable and Borrower shall be obligated to
repay all of such Obligations in full, without presentment, demand, protest, or
further notice or other requirements of any kind, all of which are hereby
expressly waived by Borrower, and (ii) direct Borrower to provide (and Borrower
agrees that upon receipt of such notice it will provide) Letter of Credit
Collateralization to Agent to be held as security for Borrower’s reimbursement
obligations for drawings that may subsequently occur under issued and
outstanding Letters of Credit;

 

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(b) declare the Commitments terminated, whereupon the Commitments shall
immediately be terminated together with (i) any obligation of any Lender to make
Loans and (ii) the obligation of Issuing Bank to issue Letters of Credit; and

(c) exercise all other rights and remedies available to Agent or the Lenders
under the Loan Documents, under applicable law, or in equity.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrower or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations, inclusive of the principal of, and any and all accrued and unpaid
interest and fees (including Liquidated Damages, as applicable) in respect of,
the Loans and all other Obligations, whether evidenced by this Agreement or by
any of the other Loan Documents, shall automatically become and be immediately
due and payable and Borrower shall automatically be obligated to repay all of
such Obligations in full (including Borrower being obligated to provide (and
Borrower agrees that it will provide) Letter of Credit Collateralization to
Agent to be held as security for Borrower’s reimbursement obligations in respect
of drawings that may subsequently occur under issued and outstanding Letters of
Credit), without presentment, demand, protest, or notice or other requirements
of any kind, all of which are expressly waived by Borrower.

9.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

10. WAIVERS; INDEMNIFICATION.

10.1 Demand; Protest; etc. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which Borrower may in any way be liable.

10.2 The Lender Group’s Liability for Collateral. Borrower hereby agrees that:
(a) so long as Agent complies with its obligations, if any, under the Code, the
Lender Group shall not in any way or manner be liable or responsible for:
(i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring
or arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Borrower.

 

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10.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all losses, claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses, joint and several, actually incurred in connection
therewith or in connection with the enforcement of this indemnification (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution and delivery (provided that
Borrower shall not be liable for costs and expenses (including attorneys’ fees)
of any Lender (other than Agent) incurred in advising, structuring, drafting,
reviewing, administering or syndicating the Loan Documents), enforcement,
performance, or administration (including any restructuring or workout with
respect hereto) of this Agreement, any of the other Loan Documents, or any
claim, litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any Indemnified Person is a party thereto, whether or not
such claim, litigation, investigation or proceeding are brought by Borrower or
its equity holders, affiliates, creditors or any other person, or the
transactions contemplated hereby or thereby or the monitoring of Borrower’s and
its Subsidiaries’ compliance with the terms of the Loan Documents, and to
reimburse each Indemnified Person within 30 days of written demand for any
reasonable actual documented out of pocket expenses incurred in connection with
investigating or defending any of the foregoing (provided, that the
indemnification in this clause (a) shall not extend to any proceeding (other
than a proceeding against Agent acting pursuant to the Loan Documents in its
capacity as Agent or any of its Affiliates or its or their respective officers,
directors, employees, controlling persons or members) solely between or among
Indemnified Persons that does not arise from any acts or omissions by Borrower
or any of its Subsidiaries; it being understood and agreed that the
indemnification in this clause (a) shall extend to the Agent-Related Persons and
their successors (but not the Lenders) relative to disputes between or among
Agent on the one hand, and one or more Lenders, or one or more of their
Affiliates, on the other hand, or (iii) any Taxes or any costs attributable to
Taxes, which shall be governed by Section 16), (b) with respect to any actual or
prospective investigation, litigation, or proceeding related to this Agreement,
any other Loan Document, the making of any Loans or issuance of any Letters of
Credit hereunder, or the use of the proceeds of the Loans or the Letters of
Credit provided hereunder (irrespective of whether any Loan Party or Indemnified
Person is a party thereto), or any act, omission, event, or circumstance in any
manner related thereto, and (c) in connection with or arising out of any
presence or release of Hazardous Materials at, on, under, to or from any assets
or properties owned, leased or operated by Borrower or any of its Subsidiaries
or any Environmental Actions, Environmental Liabilities or Remedial Actions
related in any way to Borrower, any of its Subsidiaries or any assets,
properties, operations or actions of Borrower or any of its Subsidiaries or any
other violations of or liabilities arising under Environmental Law or
Environmental Permits by or relating to Borrower or any of its Subsidiaries or
any assets or properties owned, leased or operated by Borrower or any of its
Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this Section 10.3 with respect to (1) any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from (A) the gross negligence, bad faith or willful misconduct
of such Indemnified Person or its officers, directors, employees, controlling
persons or members or (B) a material breach in bad faith by any Indemnified
Person of its obligations under this Agreement or the other Loan Documents. This
provision shall survive the termination of this Agreement

 

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and the repayment in full of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which Borrower was required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Borrower with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON. THE PROVISIONS OF THIS SECTION 10.3 SHALL SURVIVE THE RESIGNATION
OR TERMINATION OF ANY AGENT AND TERMINATION OF THIS AGREEMENT.

11. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile. In the case of notices or
demands to Borrower or Agent, as the case may be, they shall be sent to the
respective address set forth below:

 

If to Borrower:              

NUVERRA ENVIRONMENTAL SOLUTIONS, INC.

14624 North Scottsdale Road, Suite 300

Scottsdale, Arizona 85254

Attn: Chief Legal Officer

Tel: (602) 903-7802

Fax No.: (602) 903-7806

with copies to:               SQUIRE PATTON BOGGS (US) LLP
1 E. Washington St., Suite 2700
Phoenix, Arizona 85004
Attn: Matthew M. Holman, Esq.
Tel: (602) 528-4083
Fax No.: (602) 253-8129

 

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If to Agent:            

 

ACF FINCO I LP

Attn: Credit Officer/Nuverra Environmental Solutions, Inc.

560 White Plains Road, Suite 400

Tarrytown, NY 10591

Tel: (914) 418-1200

Fax No.: (914) 921-1154

 

ACF FINCO I LP

Attn: Oleh Szczupak, Vice President

560 White Plains Road, Suite 400

Tarrytown, NY 10591

Tel: (914) 418-1200 (ext. 216)

Fax No.: (914) 921-1154

with copies to:            

 

MORGAN, LEWIS & BOCKIUS LLP

101 Park Ave

New York, NY 10178-0060

Attn: Rick Eisenbiegler, Esq.

Tel: (212) 309-6720

Fax No. (212) 309-6001

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or three
(3) Business Days after the deposit thereof in the mail; provided, that
(a) notices sent by overnight courier service shall be deemed to have been given
when received, (b) notices by facsimile shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
Business Day for the recipient) and (c) notices by electronic mail shall be
deemed received upon the sender’s receipt of an acknowledgment from the intended
recipient (such as by the “return receipt requested” function, as available,
return email or other written acknowledgment).

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL
MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY
CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

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(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND
EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 12(b).

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND EACH MEMBER
OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY
TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR
INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A
“CLAIM”). BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

(d) BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK
AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT. EACH OF THE PARTIES HERETO 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 AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

(e) NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST AGENT, ANY LENDER, ISSUING
BANK, OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE,
AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF ANY CLAIM
FOR BREACH OF

 

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CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY
HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES,
WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS
FAVOR.

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1 Assignments and Participations.

(a) (i) Subject to the conditions set forth in clause (a)(ii) below, any Lender
may assign and delegate all or any portion of its rights and duties under the
Loan Documents (including the Obligations owed to it and its Commitments) to one
or more assignees (each, an “Assignee”), with the prior written consent (such
consent not be unreasonably withheld or delayed) of:

(A) Borrower; provided, that no consent of Borrower shall be required (1) if an
Event of Default has occurred and is continuing or (2) in connection with an
assignment to a Person that is a Lender or an Affiliate (other than natural
persons) of a Lender or a Related Fund; provided further, that Borrower shall be
deemed to have consented to a proposed assignment unless it objects thereto by
written notice to Agent within five (5) Business Days after having received
notice thereof; and

(B) Agent, which consent may be granted or withheld in Agent’s reasonable
discretion, and Issuing Bank.

(ii) Assignments shall be subject to the following additional conditions:

(A) no assignment may be made (x) to a natural person or (y) to a Loan Party or
an Affiliate of a Loan Party,

(B) the amount of the Commitments and the other rights and obligations of the
assigning Lender hereunder and under the other Loan Documents subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to Agent) shall be in a minimum amount
(unless waived by Agent) of $1,000,000 (except such minimum amount shall not
apply to (I) an assignment or delegation by any Lender to any other Lender, an
Affiliate of any Lender, or a Related Fund of such Lender or (II) a group of new
Lenders, each of which is an Affiliate of each other or a Related Fund of such
new Lender to the extent that the aggregate amount to be assigned to all such
new Lenders is at least $1,000,000);

(C) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;

 

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(D) the parties to each assignment shall execute and deliver to Agent an
Assignment and Acceptance; provided, that Borrower and Agent may continue to
deal solely and directly with the assigning Lender in connection with the
interest so assigned to an Assignee until (1) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Borrower and Agent by such Lender
and the Assignee, (2) such Lender and the Assignee have delivered to Borrower
and Agent an Assignment and Acceptance and Agent has notified the assigning
Lender of its receipt thereof and (3) unless waived by Agent, the assigning
Lender or Assignee has paid to Agent, for Agent’s separate account, a processing
fee in the amount of $3,500; and

(E) the assignee, if it is not a Lender, shall deliver to Agent an
Administrative Questionnaire in a form approved by Agent (the “Administrative
Questionnaire”).

(b) From and after the date that Agent receives the executed Assignment and
Acceptance and, if applicable, payment of the required processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall be a “Lender” and shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 10.3) and be released from any future
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto); provided, that nothing contained
herein shall release any assigning Lender from obligations that survive the
termination of this Agreement, including such assigning Lender’s obligations
under Section 15 and Section 17.9(a).

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(iv) such Assignee will, independently and without reliance upon Agent, such
assigning Lender 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 this Agreement, (v) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to
Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

 

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(d) Immediately upon Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”) participating interests in all
or any portion of its Obligations, its Commitment, and the other rights and
interests of that Lender (the “Originating Lender”) hereunder and under the
other Loan Documents; provided, that (i) the Originating Lender shall remain a
“Lender” for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a “Lender” hereunder or under the other Loan
Documents and the Originating Lender’s obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrower, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender’s rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would
(A) extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender (other than a waiver of default interest), or
(E) decreases the amount or postpones the due dates of scheduled principal
repayments or prepayments or premiums payable to such Participant through such
Lender, (v) no participation shall be sold to a natural person, (vi) no
participation shall be sold to a Loan Party, and (vii) all amounts payable by
Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrower, the Collateral, or
otherwise in respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.

 

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(f) In connection with any such assignment or participation or proposed
assignment or participation or any grant of a security interest in, or pledge
of, its rights under and interest in this Agreement, a Lender may, subject to
the provisions of Section 17.9, disclose all documents and information which it
now or hereafter may have relating to Borrower and its Subsidiaries and their
respective businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

(h) The Loan Parties hereby acknowledge that the Lenders and their Affiliates
may securitize the Loans (a “Securitization”) through the pledge of the Loans as
collateral security for loans to the Lenders or their Affiliates or through the
sale of the Loans or the issuance of direct or indirect interests in the Loans
to their controlled Affiliates, which loans to the Lenders or their Affiliates
or direct or indirect interests will be rated by Moody’s, S&P or one or more
other rating agencies. The Loan Parties shall, to the extent commercially
reasonable, cooperate with the Lenders and their Affiliates to effect any and
all Securitizations. Notwithstanding the foregoing, no such Securitization shall
release the Lender party thereto from any of its obligations hereunder or
substitute any pledgee, secured party or any other party to such Securitization
for such Lender as a party hereto and no change in ownership of the Loans may be
effected except pursuant to this Section 13.1.

(i) Agent (as a non-fiduciary agent on behalf of Borrower) shall maintain, or
cause to be maintained, a register (the “Register”) on which it enters the name
and address of each Lender as the registered owner of the Revolver Commitments
(and the principal amount thereof and stated interest thereon) held by such
Lender (each, a “Registered Loan”). Other than in connection with an assignment
by a Lender of all or any portion of its portion of the Revolver Commitments to
an Affiliate of such Lender or a Related Fund of such Lender (i) a Registered
Loan (and the registered note, if any, evidencing the same) may be assigned or
sold in whole or in part only by registration of such assignment or sale on the
Register (and each registered note shall expressly so provide) and (ii) any
assignment or sale of all or part of such Registered Loan (and the registered
note, if any, evidencing the same) may be effected only by registration of such
assignment or sale on the Register, together with the surrender of the
registered note, if any, evidencing the same duly endorsed by (or accompanied by
a written instrument of assignment or sale duly executed by) the holder of such
registered note, whereupon, at the request of the designated assignee(s) or
transferee(s), one or more new registered notes in the same aggregate principal
amount shall be issued to the designated assignee(s) or transferee(s). Prior to
the registration of assignment or sale of any Registered Loan (and the
registered note, if any evidencing the same), Borrower shall treat the Person in
whose name such Registered Loan (and the registered note, if any, evidencing the
same) is registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding notice to the

 

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contrary. In the case of any assignment by a Lender of all or any portion of its
Revolver Commitments to an Affiliate of such Lender or a Related Fund of such
Lender, and which assignment is not recorded in the Register, the assigning
Lender, on behalf of Borrower, shall maintain a register comparable to the
Register.

(j) In the event that a Lender sells participations in the Registered Loan, such
Lender, as a non-fiduciary agent on behalf of Borrower, shall maintain (or cause
to be maintained) a register on which it enters the name of all participants in
the Registered Loans held by it (and the principal amount (and stated interest
thereon) of the portion of such Registered Loans that is subject to such
participations) (the “Participant Register”). A Registered Loan (and the
Registered Note, if any, evidencing the same) may be participated in whole or in
part only by registration of such participation on the Participant Register (and
each registered note shall expressly so provide). Any participation of such
Registered Loan (and the registered note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.

(k) Agent shall make a copy of the Register (and each Lender shall make a copy
of its Participant Register to the extent it has one) available for review by
Borrower from time to time as Borrower may reasonably request.

13.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, that
Borrower may not assign this Agreement or any rights or duties hereunder without
the Lenders’ prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by the Lenders shall release
Borrower from its Obligations. A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 13.1 and, except as expressly required pursuant to Section 13.1, no
consent or approval by Borrower is required in connection with any such
assignment.

14. AMENDMENTS; WAIVERS.

14.1 Amendments and Waivers.

(a) No amendment, waiver or other modification of any provision of this
Agreement or any other Loan Document (other than the Fee Letter), and no consent
with respect to any departure by Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by Agent at
the written request of the Required Lenders) and the Loan Parties that are party
thereto and then any such waiver or consent shall be effective, but only in the
specific instance and for the specific purpose for which given; provided, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
of the Lenders directly affected thereby and all of the Loan Parties that are
party thereto, do any of the following:

(i) increase the amount of or extend the expiration date of any Commitment of
any Lender or amend, modify, or eliminate the last sentence of Section 2.4(c),

 

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(ii) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees (including Liquidated
Damages), or other amounts due hereunder or under any other Loan Document,

(iii) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except in connection with the waiver
of applicability of Section 2.6(c) (which waiver shall be effective with the
written consent of the Required Lenders)),

(iv) amend, modify, or eliminate this Section or any provision of this Agreement
providing for consent or other action by all Lenders,

(v) amend, modify, or eliminate Section 3.1 or 3.2,

(vi) amend, modify, or eliminate Section 15.11,

(vii) other than as permitted by Section 15.11, release Agent’s Lien in and to
any of the Collateral,

(viii) amend, modify, or eliminate the definitions of “Required Lenders”,
“Supermajority Lenders” or “Pro Rata Share”,

(ix) contractually subordinate any of Agent’s Liens,

(x) other than in connection with a merger, liquidation, dissolution or sale of
such Person expressly permitted by the terms hereof or the other Loan Documents,
release Borrower or any Guarantor from any obligation for the payment of money
or consent to the assignment or transfer by Borrower or any Guarantor of any of
its rights or duties under this Agreement or the other Loan Documents,

(xi) amend, modify, or eliminate any of the provisions of Section 2.4(b)(i) or
(ii), or

(xii) amend, modify, or eliminate any of the provisions of Section 13.1 with
respect to assignments to, or participations with, Persons who are Loan Parties
or Affiliates of Loan Parties.

(b) No amendment, waiver, modification, or consent shall amend, modify, waive,
or eliminate,

(i) the definition of, or any of the terms or provisions of, the Fee Letter,
without the written consent of Agent and Borrower (and shall not require the
written consent of any of the Lenders),

(ii) any provision of Section 15 pertaining to Agent, or any other rights or
duties of Agent under this Agreement or the other Loan Documents, without the
written consent of Agent, Borrower, and the Required Lenders,

 

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(c) No amendment, waiver, modification, elimination, or consent shall amend,
without written consent of Agent, Borrower and the Supermajority Lenders,
modify, or eliminate the definition of Borrowing Base or any of the defined
terms (including the definitions of Eligible Accounts, Eligible Accepted
Accounts and Eligible Ticket Held Accounts) that are used in such definition, or
the definition of Eligible Equipment, Eligible Term Loan Collateral or Term Loan
Limit, to the extent that any such change results in more credit being made
available to Borrower based upon the Borrowing Base or the Term Loan Limit, as
the case may be, but not otherwise, or the definition of Maximum Revolver
Amount,

(d) No amendment, waiver, modification, elimination, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to Issuing Bank, or any other rights or duties of Issuing Bank under
this Agreement or the other Loan Documents, without the written consent of
Issuing Bank, Agent, Borrower, and the Required Lenders,

(e) Anything in this Section 14.1 to the contrary notwithstanding, (i) any
amendment, modification, elimination, waiver, consent, termination, or release
of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of Borrower,
shall not require consent by or the agreement of any Loan Party, and (ii) any
amendment, waiver, modification, elimination, or consent of or with respect to
any provision of this Agreement or any other Loan Document may be entered into
without the consent of, or over the objection of, any Defaulting Lender other
than any of the matters governed by Section 14.1(a)(i) through (iii) that affect
such Lender or Section 14.1(a)(iv) but only if such amendment, waiver,
modification, elimination or consent of such Section 14.1(a)(iv) is in respect
of an amendment, modification or elimination of Section 14.1(a)(i) through
(iii) that affects such Lender, and

(f) No amendment, waiver, or modification shall increase the Revolver
Commitments or extend the Maturity Date until the completion of all flood
insurance documentation, diligence and coverage as required by the Flood
Disaster Protection Act of 1973, as amended, or as otherwise satisfactory to all
Lenders.

14.2 Replacement of Certain Lenders.

(a) If (i) any action to be taken by the Lender Group or Agent hereunder
requires the consent, authorization, or agreement of all Lenders or all Lenders
affected thereby and if such action has received the consent, authorization, or
agreement of the Required Lenders but not of all Lenders or all Lenders affected
thereby, or (ii) any Lender makes a claim for compensation under Section 16,
then Borrower or Agent, upon at least 5 Business Days prior irrevocable notice,
may permanently replace any Lender that failed to give its consent,
authorization, or agreement (a “Non-Consenting Lender”) or any Lender that made
a claim for compensation (a “Tax Lender”) with one or more Replacement Lenders,
and the Non-Consenting Lender or Tax Lender, as applicable, shall have no right
to refuse to be replaced hereunder. Such notice to replace the Non-Consenting
Lender or Tax Lender, as applicable, shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.

 

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(b) Prior to the effective date of such replacement, the Non-Consenting Lender
or Tax Lender, as applicable, and each Replacement Lender shall execute and
deliver an Assignment and Acceptance, subject only to the Non-Consenting Lender
or Tax Lender, as applicable, being repaid in full its share of the outstanding
Obligations (without any premium or penalty of any kind whatsoever, but
including (i) all interest, fees and other amounts that may be due in payable in
respect thereof, and (ii) an assumption of its Pro Rata Share of participations
in the Letters of Credit). If the Non-Consenting Lender or Tax Lender, as
applicable, shall refuse or fail to execute and deliver any such Assignment and
Acceptance prior to the effective date of such replacement, Agent may, but shall
not be required to, execute and deliver such Assignment and Acceptance in the
name or and on behalf of the Non-Consenting Lender or Tax Lender, as applicable,
and irrespective of whether Agent executes and delivers such Assignment and
Acceptance, the Non-Consenting Lender or Tax Lender, as applicable, shall be
deemed to have executed and delivered such Assignment and Acceptance. The
replacement of any Non-Consenting Lender or Tax Lender, as applicable, shall be
made in accordance with the terms of Section 13.1. Until such time as one or
more Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Non-Consenting Lender
or Tax Lender, as applicable, hereunder and under the other Loan Documents, the
Non-Consenting Lender or Tax Lender, as applicable, shall remain obligated to
make the Non-Consenting Lender’s or Tax Lender’s, as applicable, Pro Rata Share
of Loans and to purchase a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of participations in such Letters of Credit.

14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.

15. AGENT; THE LENDER GROUP.

15.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints Agent as its agent under this Agreement and the other Loan Documents
and each Lender hereby irrevocably authorizes Agent to execute and deliver each
of the other Loan Documents on its behalf and to take such other action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Agent agrees to act as agent
for and on behalf of the Lenders on the conditions contained in this Section 15.
Any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other Loan
Documents, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
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against Agent. Without limiting the generality of the foregoing, the use of the
term “agent” in this Agreement or the other Loan Documents with reference to
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only a representative relationship between independent contracting
parties. Each Lender hereby further authorizes Agent to act as the secured party
under each of the Loan Documents that create a Lien on any item of Collateral.
Except as expressly otherwise provided in this Agreement, Lenders agree that
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
payments and proceeds of Collateral, and related matters, (b) execute or file
any and all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents, (c) make Loans, for itself or on
behalf of Lenders, as provided in the Loan Documents, (d) exclusively receive,
apply, and distribute payments and proceeds of the Collateral as provided in the
Loan Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes, (f) perform, exercise, and enforce
any and all other rights and remedies of the Lender Group with respect to
Borrower or its Subsidiaries, the Obligations, the Collateral, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.

15.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

15.3 Liability of Agent. None of the Agent-Related Persons shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any of its
Subsidiaries or Affiliates, or any officer or director thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or its
Subsidiaries or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lenders to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the books and records or properties of
Borrower or its Subsidiaries.

 

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15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Lenders.

15.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a “notice of default.” Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 15.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, that unless and
until Agent has received any such request, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.

15.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Borrower and its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such due diligence, documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower or any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrower. Each Lender also represents that it will, independently and
without reliance

 

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upon any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Borrower or any other Person party
to a Loan Document. Except for notices, reports, and other documents expressly
herein required to be furnished to the Lenders by Agent, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower or any other Person party to
a Loan Document that may come into the possession of any of the Agent-Related
Persons. Each Lender acknowledges that Agent does not have any duty or
responsibility, either initially or on a continuing basis (except to the extent,
if any, that is expressly specified herein) to provide such Lender with any
credit or other information with respect to Borrower, its Affiliates or any of
their respective business, legal, financial or other affairs, and irrespective
of whether such information came into Agent’s or its Affiliates’ or
representatives’ possession before or after the date on which such Lender became
a party to this Agreement.

15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys’ fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not Borrower is obligated to reimburse Agent or
Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from (a) any
deposits paid on or prior to the Closing Date and any subsequent deposits paid
by Borrower to Agent pursuant to Section 5.21, or (b) payments or proceeds of
the Collateral received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses by Borrower or its
Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay
to Agent such Lender’s ratable thereof. Whether or not the transactions
contemplated hereby are consummated, (i) the Agent is authorized and directed to
deduct and retain sufficient amounts from any deposits paid on or prior to the
Closing Date and any subsequent deposits paid by Borrower to Agent pursuant to
Section 5.21 for the payment of the Indemnified Liabilities and (ii) each of the
Lenders, on a ratable basis, shall indemnify and defend the Agent-Related
Persons (to the extent not reimbursed by or on behalf of Borrower and without
limiting the obligation of Borrower to do so) from and against any and all
Indemnified Liabilities; provided, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person’s gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make a Loan or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender’s ratable share of any costs or out of pocket expenses (including
attorneys, accountants, advisors, and consultants fees and expenses) incurred by
Agent 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

 

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responsibilities under, this Agreement or any other Loan Document to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.

15.8 Agent in Individual Capacity. Agent and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire Equity
Interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Borrower and its Subsidiaries and
Affiliates and any other Person party to any Loan Document as though Agent were
not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, Agent or its Affiliates may
receive information regarding Borrower or its Affiliates or any other Person
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms “Lender” and “Lenders” include Agent in its individual capacity.

15.9 Successor Agent. Agent may resign as Agent upon 30 days (10 days if an
Event of Default has occurred and is continuing) prior written notice to the
Lenders (unless such notice is waived by the Required Lenders) and Borrower
(unless such notice is waived by Borrower or an Event of Default exists). If
Agent resigns under this Agreement, the Required Lenders shall be entitled, with
(so long as no Event of Default has occurred and is continuing) the consent of
Borrower (such consent not to be unreasonably withheld, delayed, or
conditioned), appoint a successor Agent for the Lenders. If, at the time that
Agent’s resignation is effective, it is acting as Issuing Bank, such resignation
shall also operate to effectuate its resignation as Issuing Bank, and it shall
automatically be relieved of any further obligation to issue Letters of Credit.
If no successor Agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with the Lenders and
Borrower, a successor Agent from among the Lenders, or if no Lender agrees to be
Agent, such other Person as Agent shall select. If Agent has materially breached
or failed to perform any material provision of this Agreement or of applicable
law, the Required Lenders may agree in writing to remove and replace Agent with
a successor Agent from among the Lenders with (so long as no Event of Default
has occurred and is continuing) the consent of Borrower (such consent not to be
unreasonably withheld, delayed, or conditioned). In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term “Agent” shall mean such successor Agent and the retiring Agent’s
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent’s
notice of resignation, the retiring Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.

 

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15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire Equity Interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Borrower or its Affiliates or any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances, such Lender shall not be under any obligation to provide
such information to them.

15.11 Collateral Matters.

(a) The Lenders hereby irrevocably authorize Agent to release any Lien on any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all of the Obligations, (ii) constituting
property being sold or disposed of if a release is required or desirable in
connection therewith and if Borrower certifies to Agent that the sale or
disposition is permitted under Section 6.4 (and Agent may rely conclusively on
any such certificate, without further inquiry), (iii) constituting property in
which neither Borrower nor its Subsidiaries owned any interest at the time
Agent’s Lien was granted nor at any time thereafter, (iv) constituting property
leased or licensed to Borrower or its Subsidiaries under a lease or license that
has expired or is terminated in a transaction permitted under this Agreement, or
(v) in connection with a credit bid or purchase authorized under this
Section 15.11. The Loan Parties and the Lenders hereby irrevocably authorize
Agent, based upon the instruction of the Required Lenders, to (a) consent to,
credit bid or purchase (either directly or indirectly through one or more
entities) all or any portion of the Collateral at any sale thereof conducted
under the provisions of the Bankruptcy Code, including Section 363 of the
Bankruptcy Code, (b) credit bid or purchase (either directly or indirectly
through one or more entities) all or any portion of the Collateral at any sale
or other disposition thereof conducted under the provisions of the Code,
including pursuant to Sections 9-610 or 9-620 of the Code, or (c) credit bid or
purchase (either directly or indirectly through one or more entities) all or any
portion of the Collateral at any other sale or foreclosure conducted or
consented to by Agent in accordance with applicable law in any judicial action
or proceeding or by the exercise of any legal or equitable remedy. In connection
with any such credit bid or purchase, (i) the Obligations owed to the Lenders
shall be entitled to be, and shall be, credit bid on a ratable basis (with
Obligations with respect to contingent or unliquidated claims being estimated
for such purpose if the fixing or liquidation thereof would not impair or unduly
delay the ability of Agent to credit bid or purchase at such sale or other
disposition of the Collateral and, if such contingent or unliquidated claims
cannot be estimated without impairing or unduly delaying the ability of Agent to
credit bid at such sale or other disposition, then such claims shall be
disregarded, not credit bid, and not entitled to any interest in the Collateral
that is the subject of such credit bid or purchase) and the Lenders whose
Obligations are credit bid shall be entitled to receive interests (ratably based
upon the proportion of their Obligations credit bid in relation to the aggregate
amount of Obligations so credit bid) in the Collateral that is the subject of
such credit bid or purchase (or in the Equity Interests of the any entities that
are used to consummate such credit bid or purchase), and (ii) Agent, based upon

 

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the instruction of the Required Lenders, may accept non-cash consideration,
including debt and equity securities issued by any entities used to consummate
such credit bid or purchase and in connection therewith Agent may reduce the
Obligations owed to the Lenders (ratably based upon the proportion of their
Obligations credit bid in relation to the aggregate amount of Obligations so
credit bid) based upon the value of such non-cash consideration. Except as
provided above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or
(z) otherwise, the Required Lenders. Upon request by Agent or Borrower at any
time, the Lenders will confirm in writing Agent’s authority to release any such
Liens on particular types or items of Collateral pursuant to this Section 15.11;
provided, that (1) anything to the contrary contained in any of the Loan
Documents notwithstanding, Agent shall not be required to execute any document
or take any action necessary to evidence such release on terms that, in Agent’s
opinion, could expose Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly released) upon (or obligations of Borrower in respect of) any and all
interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral. Each Lender further
hereby irrevocably authorizes Agent, at its option and in its sole discretion,
to subordinate any Lien granted to or held by Agent under any Loan Document to
the holder of any Permitted Lien on such property if such Permitted Lien secures
Permitted Purchase Money Indebtedness.

(b) Agent shall have no obligation whatsoever to any of the Lenders (i) to
verify or assure that the Collateral exists or is owned by Borrower or its
Subsidiaries or is cared for, protected, or insured or has been encumbered,
(ii) to verify or assure that Agent’s Liens have been properly or sufficiently
or lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, (iii) to verify or assure that any particular items of
Collateral meet the eligibility criteria applicable in respect thereof, (iv) to
impose, maintain, increase, reduce, implement, or eliminate any particular
reserve hereunder or to determine whether the amount of any reserve is
appropriate or not, or (v) to exercise at all or in any particular manner or
under any duty of care, disclosure or fidelity, or to continue exercising, any
of the rights, authorities and powers granted or available to Agent pursuant to
any of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to the terms
and conditions contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent’s own interest in the Collateral
in its capacity as one of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing, except as
otherwise expressly provided herein.

15.12 Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express written
consent of Agent, set off against the Obligations, any amounts owing by such
Lender to Borrower or its Subsidiaries or any deposit accounts of Borrower or
its Subsidiaries now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings to enforce any Loan Document
against Borrower or any Guarantor or to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral.

 

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(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided, that to
the extent that such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

15.13 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting Agent’s Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected by possession or control.
Should any Lender obtain possession or control of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor
shall deliver possession or control of such Collateral to Agent or in accordance
with Agent’s instructions.

15.14 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.

15.15 Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

15.16 Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information. By becoming a party to this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field examination report respecting
Borrower or its Subsidiaries (each, a “Report”) prepared by or at the request of
Agent, and Agent shall so furnish each Lender with such Reports,

 

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(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any field
examination will inspect only specific information regarding Borrower and its
Subsidiaries and will rely significantly upon Borrower’s and its Subsidiaries’
books and records, as well as on representations of Borrower’s personnel,

(d) agrees to keep all Reports and other material, non-public information
regarding Borrower and its Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner in accordance
with Section 17.9, and

(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
fail to take or any conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrower, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys’ fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

(f) In addition to the foregoing, (x) any Lender may from time to time request
of Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower or its Subsidiaries to Agent that has not been
contemporaneously provided by Borrower or such Subsidiary to such Lender, and,
upon receipt of such request, Agent promptly shall provide a copy of same to
such Lender, (y) to the extent that Agent is entitled, under any provision of
the Loan Documents, to request additional reports or information from Borrower
or its Subsidiaries, any Lender may, from time to time, reasonably request Agent
to exercise such right as specified in such Lender’s notice to Agent, whereupon
Agent promptly shall request of Borrower the additional reports or information
reasonably specified by such Lender, and, upon receipt thereof from Borrower or
such Subsidiary, Agent promptly shall provide a copy of same to such Lender, and
(z) any time that Agent renders to Borrower a statement regarding the Loan
Account, Agent shall send a copy of such statement to each Lender.

15.17 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint)

 

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obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 15.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for such Lender or on its behalf, nor to take any other action on
behalf of such Lender hereunder or in connection with the financing contemplated
herein.

16. WITHHOLDING TAXES.

16.1 Payments. All such payments will be made free and clear of, and without
deduction or withholding for, any present or future Indemnified Taxes, and in
the event any deduction or withholding of Indemnified Taxes is required,
Borrower shall comply with the next sentence of this Section 16.1. If any
Indemnified Taxes are so levied or imposed, Borrower agrees to pay the full
amount of such Indemnified Taxes and such additional amounts as may be necessary
so that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16.1 after
withholding or deduction for or on account of any Indemnified Taxes, will not be
less than the amount provided for herein. Borrower will furnish to Agent as
promptly as possible after the date the payment of any Indemnified Tax is due
pursuant to applicable law, certified copies of tax receipts evidencing such
payment by Borrower. Borrower agrees to pay any present or future stamp, value
added or documentary taxes or any other excise or property taxes, charges, or
similar levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document.

16.2 Exemptions.

(a) If a Lender or Participant is entitled to claim an exemption or reduction
from United States withholding tax, such Lender or Participant agrees with and
in favor of Agent, to deliver to Agent (or, in the case of a Participant, to the
Lender granting the participation only) one of the following before receiving
its first payment under this Agreement:

(i) if such Lender or Participant is entitled to claim an exemption from United
States withholding tax pursuant to the portfolio interest exception, (A) a
statement of the Lender or Participant, signed under penalty of perjury, that it
is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a
10% shareholder of Borrower (within the meaning of Section 871(h)(3)(B) of the
IRC), or (III) a controlled foreign corporation related to Borrower within the
meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and
executed IRS Form W-8BEN, Form W-8BEN-E or Form W-8IMY (with proper
attachments);

 

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(ii) if such Lender or Participant is entitled to claim an exemption from, or a
reduction of, withholding tax under a United States tax treaty, a properly
completed and executed copy of IRS Form W-8BEN or Form W-8BEN-E;

(iii) if such Lender or Participant is entitled to claim that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender, a
properly completed and executed copy of IRS Form W-8ECI;

(iv) if such Lender or Participant is entitled to claim that interest paid under
this Agreement is exempt from United States withholding tax because such Lender
or Participant serves as an intermediary, a properly completed and executed copy
of IRS Form W-8IMY (with proper attachments); or

(v) a properly completed and executed copy of any other form or forms, including
IRS Form W-9, as may be required under the IRC or other laws of the United
States as a condition to exemption from, or reduction of, United States
withholding or backup withholding tax.

(b) Each Lender or Participant shall provide new forms (or successor forms) upon
the expiration or obsolescence of any previously delivered forms and to promptly
notify Agent (or, in the case of a Participant, to the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

(c) If a Lender or Participant claims an exemption from withholding tax in a
jurisdiction other than the United States, such Lender or such Participant
agrees with and in favor of Agent, to deliver to Agent (or, in the case of a
Participant, to the Lender granting the participation only) any such form or
forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
before receiving its first payment under this Agreement, but only if such Lender
or such Participant is legally able to deliver such forms, provided, that
nothing in this Section 16.2(c) shall require a Lender or Participant to
disclose any information that it deems to be confidential (including without
limitation, its tax returns). Each Lender and each Participant shall provide new
forms (or successor forms) upon the expiration or obsolescence of any previously
delivered forms and to promptly notify Agent (or, in the case of a Participant,
to the Lender granting the participation only) of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

(d) If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrower to such Lender or Participant, such Lender or Participant agrees to
notify Agent (or, in the case of a sale of a participation interest, to the
Lender granting the participation only) of the percentage amount in which it is
no longer the beneficial owner of Obligations of Borrower to such Lender or
Participant. To the extent of such percentage amount, Agent will treat such
Lender’s or such Participant’s documentation provided pursuant to
Section 16.2(a) or 16.2(c) as no longer valid. With respect to such percentage

 

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amount, such Participant or Assignee may provide new documentation, pursuant to
Section 16.2(a) or 16.2(c), if applicable. Borrower agrees that each Participant
shall be entitled to the benefits of this Section 16 with respect to its
participation in any portion of the Commitments and the Obligations so long as
such Participant complies with the obligations set forth in this Section 16 with
respect thereto.

16.3 Reductions.

(a) If a Lender or a Participant is entitled to a reduction in the applicable
withholding tax, Agent (or, in the case of a Participant, to the Lender granting
the participation) may withhold from any interest payment to such Lender or such
Participant an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
Section 16.2(a) or 16.2(c) are not delivered to Agent (or, in the case of a
Participant, to the Lender granting the participation), then Agent (or, in the
case of a Participant, to the Lender granting the participation) may withhold
from any interest payment to such Lender or such Participant not providing such
forms or other documentation an amount equivalent to the applicable withholding
tax.

(b) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent (or, in the case of a Participant, to
the Lender granting the participation) did not properly withhold tax from
amounts paid to or for the account of any Lender or any Participant due to a
failure on the part of the Lender or any Participant (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify Agent (or such Participant failed to notify the Lender granting the
participation) of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify and hold Agent harmless (or, in the case of a
Participant, such Participant shall indemnify and hold the Lender granting the
participation harmless) for all amounts paid, directly or indirectly, by Agent
(or, in the case of a Participant, to the Lender granting the participation), as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Agent (or, in the case of
a Participant, to the Lender granting the participation only) under this
Section 16, together with all costs and expenses (including attorneys’ fees and
expenses). The obligation of the Lenders and the Participants under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Agent.

16.4 Refunds. If Agent or a Lender reasonably determines that it has received a
refund of any Indemnified Taxes to which Borrower has paid additional amounts
pursuant to this Section 16, so long as no Default or Event of Default has
occurred and is continuing, it shall pay over such refund to Borrower (but only
to the extent of payments made, or additional amounts paid, by Borrower under
this Section 16 with respect to Indemnified Taxes giving rise to such a refund),
net of all out-of-pocket expenses of Agent or such Lender and without interest
(other than any interest paid by the applicable Governmental Authority with
respect to such a refund); provided, that Borrower, upon the request of Agent or
such Lender, agrees to repay the amount paid over to Borrower (plus any
penalties, interest or other charges, imposed by the applicable Governmental
Authority, other than such penalties, interest or other charges imposed as a
result of the willful misconduct or gross negligence of Agent hereunder) to
Agent or such Lender in the event Agent or such Lender is required to repay such
refund to such Governmental Authority.

 

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Notwithstanding anything in this Agreement to the contrary, this Section 16
shall not be construed to require Agent or any Lender to make available its tax
returns (or any other information which it deems confidential) to Borrower or
any other Person.

17. GENERAL PROVISIONS.

17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrower, Agent, and each Lender whose signature is provided for on
the signature pages hereof.

17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

17.3 Interpretation . Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against the Lender Group or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.

17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

17.5 [Reserved].

17.6 Debtor-Creditor Relationship. The relationship between the Lenders and
Agent, on the one hand, and the Loan Parties, on the other hand, is solely that
of creditor and debtor. No member of the Lender Group has (or shall be deemed to
have) any fiduciary relationship or duty to any Loan Party arising out of or in
connection with the Loan Documents or the transactions contemplated thereby, and
there is no agency or joint venture relationship between the members of the
Lender Group, on the one hand, and the Loan Parties, on the other hand, by
virtue of any Loan Document or any transaction contemplated therein.

17.7 Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

 

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17.8 Revival and Reinstatement of Obligations; Certain Waivers. If any member of
the Lender Group repays, refunds, restores, or returns in whole or in part, any
payment or property (including any proceeds of Collateral) previously paid or
transferred to such member of the Lender Group in full or partial satisfaction
of any Obligation or on account of any other obligation of any Loan Party under
any Loan Document, because the payment, transfer, or the incurrence of the
obligation so satisfied is asserted or declared to be void, voidable, or
otherwise recoverable under any law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent transfers, preferences,
or other voidable or recoverable obligations or transfers (each, a “Voidable
Transfer”), or because such member of the Lender Group elects to do so on the
reasonable advice of its counsel in connection with a claim that the payment,
transfer, or incurrence is or may be a Voidable Transfer, then, as to any such
Voidable Transfer, or the amount thereof that such member of the Lender Group
elects to repay, restore, or return (including pursuant to a settlement of any
claim in respect thereof), and as to all reasonable costs, expenses, and
attorneys’ fees of such member of the Lender Group related thereto, (i) the
liability of the Loan Parties with respect to the amount or property paid,
refunded, restored, or returned will automatically and immediately be revived,
reinstated, and restored and will exist and (ii) Agent’s Liens securing such
liability shall be effective, revived, and remain in full force and effect, in
each case, as fully as if such Voidable Transfer had never been made. If, prior
to any of the foregoing, (A) Agent’s Liens shall have been released or
terminated or (B) any provision of this Agreement shall have been terminated or
cancelled, Agent’s Liens, or such provision of this Agreement, shall be
reinstated in full force and effect and such prior release, termination,
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect the obligation of any Loan Party in respect of such liability
or any Collateral securing such liability.

17.9 Confidentiality.

(a) Agent and Lenders each individually (and not jointly or jointly and
severally) agree that material, non-public information regarding Borrower and
its Subsidiaries, their operations, assets, and existing and contemplated
business plans (“Confidential Information”) shall be treated by Agent and the
Lenders in a confidential manner, and shall not be disclosed by Agent and the
Lenders to Persons who are not parties to this Agreement, except: (i) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group and to employees, directors and officers of any
member of the Lender Group (the Persons in this clause (i), “Lender Group
Representatives”) on a “need to know” basis in connection with this Agreement
and the transactions contemplated hereby and on a confidential basis, (ii) to
investors, prospective investors, lenders, Subsidiaries and Affiliates of any
member of the Lender Group, provided that any such investor, prospective
investor, lender, Subsidiary or Affiliate shall have agreed to receive such
information hereunder subject to the terms of this Section 17.9, (iii) as may be
required by regulatory authorities so long as such authorities are informed of
the confidential nature of such information, (iv) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation; provided
that (x) prior to any disclosure under this clause (iv), the disclosing party
agrees to provide Borrower with prior notice thereof, to the extent that it is
practicable to do so and to the extent that the disclosing party is permitted to
provide such prior notice to Borrower pursuant to the terms of the applicable
statute, decision, or judicial or administrative order, rule, or regulation and
(y) any disclosure under this clause (iv) shall be limited to the portion of the
Confidential Information as may be required by such statute, decision, or
judicial or administrative order, rule, or regulation, (v) as may be agreed to
in advance in writing by Borrower, (vi) as requested or required by any

 

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Governmental Authority pursuant to any subpoena or other legal process,
provided, that, (x) prior to any disclosure under this clause (vi) the
disclosing party agrees to provide Borrower with prior written notice thereof,
to the extent that it is practicable to do so and to the extent that the
disclosing party is permitted to provide such prior written notice to Borrower
pursuant to the terms of the subpoena or other legal process and (y) any
disclosure under this clause (vi) shall be limited to the portion of the
Confidential Information as may be required by such Governmental Authority
pursuant to such subpoena or other legal process, (vii) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or the Lenders or the Lender Group
Representatives), (viii) in connection with any assignment, participation or
pledge of any Lender’s interest under this Agreement, provided that prior to
receipt of Confidential Information any such assignee, participant, or pledgee
shall have agreed in writing to receive such Confidential Information either
subject to the terms of this Section 17.9 or pursuant to confidentiality
requirements substantially similar to those contained in this Section 17.9 (and
such Person may disclose such Confidential Information to Persons employed or
engaged by them as described in clause (i) above), (ix) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents;
provided, that, prior to any disclosure to any Person (other than any Loan
Party, Agent, any Lender, any of their respective Affiliates, or their
respective counsel) under this clause (ix) with respect to litigation involving
any Person (other than Borrower, Agent, any Lender, any of their respective
Affiliates, or their respective counsel), the disclosing party agrees to provide
Borrower with prior written notice thereof, and (x) in connection with, and to
the extent reasonably necessary for, the exercise of any secured creditor remedy
under this Agreement or under any other Loan Document.

(b) Anything in this Agreement to the contrary notwithstanding, Agent and
Lenders may disclose information concerning the terms and conditions of this
Agreement and the other Loan Documents to loan syndication and pricing reporting
services or in its marketing or promotional materials, with such information to
consist of deal terms and other information customarily found in such
publications or marketing or promotional materials. Borrower and each Subsidiary
hereby authorizes and gives permission for Agent, Lenders and their respective
Affiliates to use the legal or fictional company name, logo, trademark and/or
personal quotes in connection with promotional materials that Agent or any
Lender may disseminate to the public relating to Agent or such Lender’s
relationship with Borrower. Promotional materials may include, but are not
limited to, brochures, video tapes, emails, internet websites, advertising in
newspapers and/or other periodicals, lucites, pictures and photographs.

(c) The Loan Parties hereby acknowledge that Agent or its Affiliates may make
available to the Lenders materials or information provided by or on behalf of
Borrower hereunder (collectively, “Borrower Materials”) by posting Borrower
Materials on IntraLinks, SyndTrak or another similar electronic system (the
“Platform”) and 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 Loan Parties or their securities) (each, a “Public Lender”). The Loan
Parties shall be deemed to have authorized Agent and its Affiliates and the
Lenders to treat Borrower Materials marked “PUBLIC” or otherwise at any time
filed with the SEC as not containing any material non-public information with
respect to the Loan Parties or their securities for purposes of United States
federal and state securities laws. All Borrower Materials

 

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marked “PUBLIC” are permitted to be made available through a portion of the
Platform designated as “Public Investor” (or another similar term). Agent and
its Affiliates and the Lenders shall be entitled to treat any Borrower Materials
that are not marked “PUBLIC” or that are not at any time filed with the SEC as
being suitable only for posting on a portion of the Platform not marked as
“Public Investor” (or such other similar term).

17.10 Survival. All representations and warranties made by the Loan Parties in
the Loan Documents and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that Agent,
Issuing Bank, or any Lender may have had notice or knowledge of any Default or
Event of Default or incorrect representation or warranty at the time any credit
is extended hereunder, and shall continue in full force and effect as long as
the principal of, or any accrued interest on, any Loan or any fee or any other
amount payable under this Agreement is outstanding or unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not expired or been
terminated.

17.11 Patriot Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies Borrower that pursuant to the requirements of the
Act, it is required to obtain, verify and record information that identifies the
Loan Parties, which information includes the names, address and tax
identification numbers of the Loan Parties and other information that will allow
such Lender to identify the Loan Parties in accordance with the Patriot Act. In
addition, if Agent is required by law or regulation or internal policies to do
so, it shall have the right to periodically conduct (a) Patriot Act searches,
OFAC/PEP searches, and customary individual background checks for the Loan
Parties and (b) OFAC/PEP searches and customary individual background checks for
the Loan Parties’ senior management and key principals, and Borrower agrees to
cooperate in respect of the conduct of such searches and further agrees that the
reasonable costs and charges for such searches shall constitute Lender Group
Expenses hereunder and be for the account of Borrower. This notice is given in
accordance with the requirements of the Patriot Act and is effective for Agent.

17.12 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

17.13 No Setoff. All payments made by Borrower hereunder or under any note or
other Loan Document will be made in immediately available funds and without
setoff, counterclaim, or other defense.

 

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17.14 Intercreditor Agreement. Agent and each Lender hereunder, by its
acceptance of the benefits provided hereunder, (a) agrees that it will be bound
by, and will take no actions contrary to, the provisions of the Intercreditor
Agreement, and (b) authorizes and instructs Agent to enter into the
Intercreditor Agreement as Agent on behalf of each Lender. Agent and each Lender
hereby agrees that the terms, conditions and provisions contained in this
Agreement are subject to the Intercreditor Agreement and, in the event of a
conflict between the terms of the Intercreditor Agreement and this Agreement,
the terms of the Intercreditor Agreement shall govern and control.

[Signature pages to follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

BORROWER:    NUVERRA ENVIRONMENTAL SOLUTIONS, INC., a Delaware corporation   
By:   

/s/ Joseph M. Crabb

   Name:    Joseph M. Crabb    Title:    Executive Vice President

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ACF FINCO I LP, a national banking association, as Agent and as a Lender By:  

/s/ Oleh Szczupak

Name:   Oleh Szczupak Its Authorized Signatory

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EXHIBIT A-1

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered
into as of                                                   between
                                         (“Assignor”) and
                                         (“Assignee”). Reference is made to the
First Lien Credit Agreement described in Annex I hereto (the “Credit
Agreement”). Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Credit Agreement.

 

1. In accordance with the terms and conditions of Section 13 of the Credit
Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor’s rights and obligations under the Loan Documents as of the date
hereof with respect to the Obligations owing to the Assignor, and Assignor’s
portion of the Commitments, all to the extent specified on Annex I.

 

2. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim and (ii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment Agreement and to consummate the transactions contemplated hereby;
(b) makes no representation or warranty and assumes no responsibility with
respect to (i) any statements, representations or warranties made in or in
connection with the Loan Documents, or (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or any Guarantor or the performance or
observance by Borrower or any Guarantor of any of their respective obligations
under the Loan Documents or any other instrument or document furnished pursuant
thereto, and (d) represents and warrants that the amount set forth as the
Purchase Price on Annex I represents the amount owed by Borrower to Assignor
with respect to Assignor’s share of the Revolving Loans assigned hereunder, as
reflected on Assignor’s books and records.

 

3.

The Assignee (a) confirms that it has received copies of the Credit Agreement
and the other Loan Documents, together with copies of the financial statements
referred to therein and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement; (b) agrees that it will, independently and without
reliance upon Agent, Assignor, or any other Lender, based upon such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action under the Loan
Documents; (c) [Reserved]; (d) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (e) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender; [and (f) attaches
the forms prescribed by the Internal Revenue Service of the United States
certifying as to the Assignee’s status for purposes of determining exemption
from United States

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

  withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement or such other documents as are necessary to indicate
that all such payments are subject to such rates at a rate reduced by an
applicable tax treaty.]

 

4. Following the execution of this Assignment Agreement by the Assignor and
Assignee, the Assignor will deliver this Assignment Agreement to the Agent for
recording by the Agent. The effective date of this Assignment (the “Settlement
Date”) shall be the latest to occur of (a) the date of the execution and
delivery hereof by the Assignor and the Assignee, (b) the receipt by Agent for
its sole and separate account a processing fee in the amount of $3,500 (if
required by the Credit Agreement), (c) the receipt of any required consent of
the Agent, and (d) the date specified in Annex I.

 

5. As of the Settlement Date (a) the Assignee shall be a party to the Credit
Agreement and, to the extent of the interest assigned pursuant to this
Assignment Agreement, have the rights and obligations of a Lender thereunder and
under the other Loan Documents, and (b) the Assignor shall, to the extent of the
interest assigned pursuant to this Assignment Agreement, relinquish its rights
and be released from its obligations under the Credit Agreement and the other
Loan Documents, provided, however, that nothing contained herein shall release
any assigning Lender from obligations that survive the termination of this
Agreement, including such assigning Lender’s obligations under Article 15 and
Section 17.9(a) of the Credit Agreement.

 

6. Upon the Settlement Date, Assignee shall pay to Assignor the Purchase Price
(as set forth in Annex I). From and after the Settlement Date, Agent shall make
all payments that are due and payable to the holder of the interest assigned
hereunder (including payments of principal, interest, fees and other amounts) to
Assignor for amounts which have accrued up to but excluding the Settlement Date
and to Assignee for amounts which have accrued from and after the Settlement
Date. On the Settlement Date, Assignor shall pay to Assignee an amount equal to
the portion of any interest, fee, or any other charge that was paid to Assignor
prior to the Settlement Date on account of the interest assigned hereunder and
that are due and payable to Assignee with respect thereto, to the extent that
such interest, fee or other charge relates to the period of time from and after
the Settlement Date.

 

7. This Assignment Agreement may be executed in counterparts and by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one and the
same instrument. This Assignment Agreement may be executed and delivered by
telecopier or other electronic transmission all with the same force and effect
as if the same were a fully executed and delivered original manual counterpart.

 

8. THIS ASSIGNMENT AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE
OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION
12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS
REFERENCE, MUTATIS MUTANDIS.

[Remainder of page intentionally left blank. Signature page to follow.]

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

 

[NAME OF ASSIGNOR]

as Assignor

By  

 

  Name:   Title

[NAME OF ASSIGNOR]

as Assignor

By  

 

  Name:   Title

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

ACCEPTED THIS          DAY OF                     

 

ACF FINCO I LP,

as Agent

By:                                     
                                                       Name: Title:

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ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

 

  1.    Borrower: Nuverra Environmental Solutions, Inc., a Delaware corporation
     2.    Name and Date of Credit Agreement:     

First Lien Credit Agreement dated as of August 7, 2017 (as amended, restated,
supplemented, or otherwise modified from time to time, the “Credit Agreement”)
by and among Borrower, the lenders party thereto as “Lenders”, and ACF FinCo I
LP, an entity managed by Ares Management, L.P., as administrative agent for each
member of the Lender Group (in such capacity, together with its successors and
assigns in such capacity, “Agent”).

3.      Date of Assignment Agreement:                         4.      Amounts:
     (a)    Assigned Amount of Revolver Commitment    $                   (b)   
Assigned Amount of Revolving Loans    $                   (c)    Assigned Amount
of Term Loan    $                 5.      Settlement Date:   
                     6.      Purchase Price    $                 7.      Notice
and Payment Instructions, etc.   

 

    

Assignee:

 

                                                                              

                                                                              

                                                                              

  

Assignor:

 

                                                                    
             

                                                                    
             

                                                                    
             

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EXHIBIT C-1

FORM OF COMPLIANCE CERTIFICATE

[on Borrower’s letterhead]

 

To: ACF FINCO I LP

560 White Plains Road, Suite 400

Tarrytown, NY 10591

Attn: Credit Officer/Nuverra Environmental Solutions, Inc.

Re: Compliance Certificate dated                     , 20    

Ladies and Gentlemen:

Reference is made to that certain First Lien Credit Agreement dated as of
August 7, 2017 (as amended, restated, supplemented, or otherwise modified from
time to time, the “Credit Agreement”) by and among NUVERRA ENVIRONMENTAL
SOLUTIONS, INC., a Delaware corporation, as borrower (“Borrower”), the lenders
party thereto as “Lenders” (each of such Lenders, together with its successors
and permitted assigns, is referred to hereinafter as a “Lender”), and ACF FINCO
I LP, an entity managed by Ares Management, L.P., as administrative agent for
each member of the Lender Group (in such capacity, together with its successors
and assigns in such capacity, “Agent”). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.

Pursuant to Section 5.1 of the Credit Agreement, the undersigned officer of
Borrower hereby certifies as of the date hereof that:

1. The financial information of Borrower and its Subsidiaries furnished
alongside this Compliance Certificate pursuant to Section 5.1 of the Credit
Agreement has been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for year-end audit adjustments and the lack of
footnotes), fairly presents Borrower’s and its Subsidiaries’ financial condition
and results of operations as of the dates and for the periods covered, and does
not contain any material misstatements.

2. Such officer has reviewed the terms of the Credit Agreement and has made, or
caused to be made under his/her supervision, a review in reasonable detail of
the transactions and financial condition of Borrower and its Subsidiaries during
the accounting period covered by the financial statements delivered pursuant to
Section 5.1 of the Credit Agreement.

3. Such review has not disclosed the existence on and as of the date hereof, and
the undersigned does not have knowledge of the existence as of the date hereof,
of any event or condition that constitutes a Default or Event of Default, except
for such conditions or events listed on Schedule 2 attached hereto, in each case
specifying the nature and period of existence thereof and what action Borrower
and/or its Subsidiaries have taken, are taking, or propose to take with respect
thereto.

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4. Except as set forth on Schedule 3 attached hereto, the representations and
warranties of Borrower and its Subsidiaries contained in the Credit Agreement or
in the other Loan Documents are true and correct in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) on and as of the date hereof, as though made on
and as of the date hereof (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects (except that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of such earlier date).

5. As of the date hereof, Borrower and its Subsidiaries are in compliance with
the covenants contained in Section 6.17 and Section 7 of the Credit Agreement,
as demonstrated on Schedule 4 hereof, and the computations set forth on such
Schedule are true and correct as at and for the period ending on the date first
set forth above.

6. As of the date hereof, the outstanding principal amount of the Term Loan on
such date does not exceed the Term Loan Limit, as demonstrated on Schedule 5
hereof, and the computations set forth on such Schedule are true and correct as
of the date first set forth above.

[Remainder of page left blank. Signature pages to follow.]

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IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this              day of                     ,                 .

 

NUVERRA ENVIRONMENTAL SOLUTIONS, INC., a Delaware corporation, as Borrower
By:                                     
                                                            
Name:                                     
                                                       Title:

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SCHEDULE 1

Financial Statements

(See attached)

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

SCHEDULE 2

Default and Events of Default

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

SCHEDULE 3

Representations and Warranties

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

SCHEDULE 4

Financial Covenants

Calculations as of                     ,             

 

I. Section 6.17 Capital Expenditures

 

A.     Amount of Capital Expenditures made during such fiscal year

     $                    

B.     Unused amount of permitted Capital Expenditures from the immediately
preceding fiscal year

     $                    

C.     33% of Line B

     $                    

D.     Amount of Capital Expenditures permitted to be made during such fiscal
year

     $                    

Maximum permitted:

    

Period

  Amount   

Closing Date through December 31, 2017

  $16,800,000   

Fiscal Year ending December 31, 2018 and each fiscal year thereafter

  $25,200,000   

E.     Lines A plus Line C

     $                    

F.      In Compliance? (Line D equals or exceeds Line E)

     yes/no

 

II. Section 7(a)(i) Fixed Charge Coverage Ratio1

A.     EBITDA for such fiscal period:

  

1.      Borrower’s consolidated net earnings (or loss)

   $                    

2.      Extraordinary gains (including gains from disposition of assets)

   $                    

3.      Interest income

   $                    

4.      Gains in connection with any Hedge Agreement

   $                    

 

1  For purposes of determining the components of the Fixed Charge Coverage Ratio
for the fiscal quarter ending (a) September 30, 2017, all such components of the
Fixed Charge Coverage Ratio shall be the amount of such components for such
fiscal quarter multiplied by four, (b) December 31, 2017, all such components of
the Fixed Charge Coverage Ratio shall be the amount of such components for the
two fiscal quarters then ended multiplied by two, and (c) March 31, 2018, all
such components of the Fixed Charge Coverage Ratio shall be the amount of such
components for the three fiscal quarters then ended multiplied by 4/3.

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5.      Non-cash gains

   $                    

6.      Sum of Lines A2 through A5, inclusive

   $                    

7.      Non-cash extraordinary losses

   $                    

8.      Interest Expense

   $                    

9.      Income taxes

   $                    

10.    Depreciation and amortization for such period, in each case, determined
on a consolidated basis in accordance with GAAP

   $                    

11.    Any non-cash impairment charge or asset write-off or write-down related
to intangible assets, long-lived assets and other assets, and investment in debt
and equity securities pursuant to GAAP

   $                    

12.    Non-cash stock-based awards, non-cash compensation expense, including
non-cash charges arising from stock options, restricted stock or other equity
incentive programs

   $                    

13.    Other non-cash charges, including purchase accounting adjustments in
accordance with GAAP and any non-cash loss or expense resulting from bonus
payments made to repay non-cash loans made to officers, directors or employees

   $                    

14.    Non-cash losses in connection with any Hedge Agreement

   $                    

15.    All fees, costs and expenses incurred in connection with any amendment to
any Loan Document

   $                    

16.    All fees, costs and expenses incurred in connection with any amendment to
any Second Lien Loan Document

   $                    

17.    All reasonable fees, costs and expenses incurred in connection with any
Permitted Acquisition or any acquisition consented to by the Required Lenders in
an aggregate amount not to exceed $750,000 per acquisition, whether or not
consummated, in the applicable period

   $                    

18.    Any fees, expenses, commissions, costs or other charges incurred prior to
one hundred and eighty (180) days following the Closing Date and related to the
Bankruptcy Cases, the Approved Plan and the transactions contemplated by the
Bankruptcy Cases and the Approved Plan

   $                    

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19.    Any fees, expenses, commissions, costs or other charges incurred in
connection with the Bankruptcy Cases with respect to (A) the Borrower’s
engagement of the Financial Advisor, and (B)(1) the Hargreaves Appeal or (2) any
other appeals of the Order, in an aggregate amount in the case of (1) and (2)
not to exceed $750,000

   $                    

20.    Non-recurring non-cash charges, expenses and losses (including losses
from disposition of assets)

   $                    

21.    All expenses and charges to the extent fully reimbursed in cash by a
third party

   $                    

22.    Sum of Lines A7 through A21, inclusive

   $                    

23.    EBITDA (Line A1 minus Line A6 plus Line A22)

   $                    

B.     Capital Expenditures (other than Capital Expenditures financed with
Indebtedness (other than Revolving Loans)) made or incurred during such period

   $                    

C.     Fixed Charges for such period:

  

1.      Interest Expense accrued (other than interest paid-in-kind, amortization
of financing fees, and other non-cash Interest Expense) during such period

   $                    

2.      Principal payments in respect of Indebtedness that are required to be
paid during such period

   $                    

3.      All federal, state, and local income taxes accrued during such period

   $                    

4.      All Restricted Payments paid (whether in cash or other property, other
than common Equity Interests) during such period

   $                    

5.      Fixed Charges (Sum of Lines C1 through C4, inclusive)

   $                    

D.     Line A23 minus Line B

   $                    

E.     Ratio of Line D to Line C5

           :1.00

 

Maximum permitted:

  

Period

   Ratio  

Closing Date through December 31, 2017

     -1.40:1.00  

Fiscal Quarter ended March 31, 2018

     -0.45:1.00  

Fiscal Quarter ended June 30, 2018

     0.15:1.00  

Fiscal Quarter ended September 30, 2018

     1.05:1.00  

Fiscal Quarter ended December 31, 2018

     1.15:1.00  

Fiscal Quarter ended March 31, 2019

     1.20:1.00  

and each fiscal quarter thereafter

  

 

E.     In Compliance?

   yes/no

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

III.    Section 7(a)(ii)          Excess Availability2    A.    Availability   
   1.    Aggregate Revolver Commitments    $                        2.   
Borrowing Base, based upon the most recent Borrowing Base Certificate delivered
by Borrower to Agent    $                        3.    Letter of Credit Usage   
$                        4.    Line A2 minus Line A3    $                       
5.    Availability (lesser of Line A1 and Line A4)    $                     B.
   Availability    $                        1.    Availability (from Line A8
above)       2.    Aggregate amount of all trade payables of Borrower and its
Subsidiaries aged in excess of 30 days with respect thereto and all book
overdrafts of Borrower and its Subsidiaries in excess of historical practices
with respect thereto, in each case as determined by Agent in its Permitted
Discretion    $                     $                        3.    Excess
Availability (Line B1 minus Line B2)    $3,000,000    4.    Line B3 must not be
less than:    yes/no    5.    In Compliance?   

 

2  Only to be tested if Availability Block is not in effect.

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

SCHEDULE 5

Term Loan Limit

Calculations as of                     ,                

 

 

 

A.   Term Loan Limit     1.    Per definition of “Term Loan Limit”     
$15,000,000     2.    Revised Orderly Liquidation Value in Place     
$                         3.    Net Orderly Liquidation Value of the Eligible
Term Loan Collateral      $                         4.    Reserves     
$                         5.    Line A2 plus Line A3 minus Line A4     
$                         6.    25% of Line A5      $                         7.
   Term Loan Limit (lesser of Line A1 and Line A6)      $                      
  8.    Outstanding principal amount of the Term Loan on such date     
$                         9.    Mandatory prepayment required, if any (excess of
Line A8 over Line A7)      $                      

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

Exhibit P-1

PERFECTION CERTIFICATE

FOR

Nuverra Environmental Solutions, Inc.1

To: ACF FinCo I LP

To assist you in evaluation of the financing that you are considering on our
behalf, to expedite the preparation of any documentation which may be required,
and to induce you to provide such financing, the undersigned submits and
represents the following information about our company, its organizational
structure, and other matters of interest to you:

 

1. THE COMPANY

 

a. The full and correct name of our company (as it appears in our Articles of
Incorporation or other organizational document) is: Nuverra Environmental
Solutions, Inc., hereinafter the “Company”.

 

b. During the past 5 years, the Company has had the following corporate names:
[            ]

 

c. During the past 5 years, the Company has used the following trade name(s)
and/or trade style(s):

 

Name

 

Date Used

 

d. The Company was incorporated on [            ], under the laws of
[            ], and it is in good standing under those laws. The Company has
qualified to do business in the following states and is in good standing under
the laws of those states: [            ]

 

e. The federal taxpayer identification number of the Company is: [            ]

 

f. The Company is affiliated with, or has ownership interests in, the following
corporations (including subsidiaries):

 

 

1  Please also complete this form for each direct and indirect subsidiary of the
Company.

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

Name and Address

 

Type of Operation

 

Ownership Percentage or Relationship

 

g. During the preceding 5 year period, the Company has not been a party to any
merger, consolidation, stock acquisition or purchase of a substantial portion of
the assets of any person or entity, except as follows (if none, so state):

 

Type of Transaction

 

Date Concluded

 

2. LOCATIONS OF COMPANY

 

a. The chief executive office of the Company is currently located at, and
additional locations at which the Company maintains any books or records are at
the following addresses:

 

b. During the past 5 years, the Company’s chief executive office has been
located at the following additional addresses:

 

c. The following are all of the locations where the Company maintains (or within
the past four months has maintained) any equipment, inventory or other tangible
property (including county and ZIP code):

 

d. The following are the names and addresses of all warehousemen, bailees, or
consignees who have possession of any of the Company’s inventory:

 

e. The following are all locations where the Company owns, leases or occupies
any real property:

 

3. SPECIAL TYPES OF COLLATERAL

 

a. The following are all of the patents, trademarks, servicemarks, and
copyrights, or applications therefor, of the Company:

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

Patents:

 

Description

 

Application / Patent No.

     

Issue Dates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademarks and Servicemarks:

 

Description

 

Application / Registration No.

     

Issue Dates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Copyrights:

 

Description

  

Application / Registration No.

       

Issue Dates

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

b. The following are all the licenses or similar agreements to use trademarks,
patents and copyrights of others:

 

c. The Company owns the following kinds of assets:

 

Franchises, marketing agreements, or similar agreements:

     Yes                 No           

Stocks, bonds, or other securities:

     Yes                 No           

Promissory notes, or other instruments or evidence of indebtedness in favor of
such person:

     Yes                 No           

Leases of equipment, security agreements naming such person as secured party, or
other chattel paper:

     Yes                 No           

Aircraft:

     Yes                 No           

Vessels, boats or ships:

     Yes                 No           

Railroad rolling stock:

     Yes                 No           

Motor Vehicles or similar certificated collateral:

     Yes                 No           

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

If the answer is yes to any of the above, please provide a detailed description
of such assets as well as copies of any recent certificates, agreements or other
documents relating thereto.

 

d. The following are all banks or savings institutions at which the Company
maintains deposit accounts:

 

Name of Institutions

 

Account Number

 

Branch Address

 

Description of Account

 

e. The following are all of the providers of credit card clearinghouse or credit
card processing services to the Company:

 

4. ownership of the company

 

a. There is no agreement of the owners of the Company nor any provision in the
governing documents of the Company requiring any vote or consent of the equity
holders to authorize the creation of a security interest in any assets of the
Company or any subsidiary, except (describe, if any):

 

b. The following collectively own 100% of the equity interests of the Company:

 

Name

 

Ownership Percentage

 

5. officers of the Company

 

a. The officers of the Company are as follows (Use an “x” to indicate members of
the Board of Directors):

 

b. Additional members of the Board are:

 

c. The following persons will have signatory powers as to all your transactions
with the Company:

 

6. Additional information

 

a. The Company has the following employee benefit plans (pension, profit
sharing, etc.):

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

b. The Company is not a party to any collective bargaining or other agreement
with any organization or representative of any of its employees, except (if
none, so state):

 

c. The following is a list of all known hazardous or toxic waste storage or dump
sites on any premises owned or leased by the Company or any of its subsidiaries
and a description of the nature of the substances located thereon and the type
of facility:

 

d. The Company will be represented by the law firm of:

Name of Firm:

Address:

Phone Number:

Partner Handling Relationship:

 

e. The Certified Public Accountants for the Company is the firm of:

Name of Firm:

Address:

Phone Number:

Partner Handling Relationship:

Were statements uncertified for any fiscal year?:

 

f. The Insurance Broker for the Company is:

 

g. The Company’s fiscal year end is:

 

h. Schedule 6(h) provides the following information for any current indebtedness
of the Company that is to be paid for at the closing of the proposed financing:
each creditor’s name, a contact person, that person’s phone and fax numbers, and
the approximate amount of such indebtedness to be paid off. Copies of all
applicable documents related to such indebtedness are provided herewith.

 

i. There are no tax liens or judgments against the Company, its subsidiaries or
affiliates or any of its officers, except as follows (if none, so state):

 

j. There are no lawsuits pending against the Company, its subsidiaries or
affiliates or any of its officers, except as follows (if none, so state):

[Remainder of page intentionally left blank]

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

By the execution and delivery hereof, we hereby represent and warrant to you
that all of the foregoing information is true, correct, and complete. In
addition, we also confirm your authority to file (including pre-filing) any and
all financing statements or other records naming the Company and identifying all
of its assets as collateral as you deem necessary or advisable in connection
with the pursuit of the proposed financing.

 

Very truly yours, [                                         ]

 

By: Title:

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

Schedule 1.1

As used in the Agreement, the following terms shall have the following
definitions:

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a general intangible.

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

“Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity
Interests are acquired by Borrower or any of its Subsidiaries in a Permitted
Acquisition; provided, that such Indebtedness (a) is either purchase money
Indebtedness or a Capital Lease with respect to Equipment or mortgage financing
with respect to Real Property, (b) was in existence prior to the date of such
Permitted Acquisition, (c) was not incurred in connection with, or in
contemplation of, such Permitted Acquisition and (d) is not guaranteed by any
other Loan Party.

“Acquisition” means (a) the purchase or other acquisition by a Person or its
Subsidiaries of all or a material portion of the assets of (or any division or
business line of) any other Person, or (b) the purchase or other acquisition
(whether by means of a merger, consolidation, or otherwise) by a Person or its
Subsidiaries of all or substantially all of the Equity Interests of any other
Person.

“Additional Documents” has the meaning specified therefor in Section 5.12 of the
Agreement.

“Administrative Questionnaire” has the meaning specified therefor in
Section 13.1(a) of the Agreement.

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the
Agreement.

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Equity Interests, by contract, or
otherwise; provided, that, for purposes of Section 6.10 of the Agreement:
(a) any Person which owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of directors or other
members of the governing body of a Person or 10% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed an Affiliate of such Person, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such
Person, and (c) each partnership in which a Person is a general partner shall be
deemed an Affiliate of such Person.

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

“Agent” has the meaning specified therefor in the preamble to the Agreement.

“Agent-Related Persons” means Agent, together with its Affiliates, controlling
persons and their respective directors, officers, employees, partners, advisors,
agents and other representatives of each of the foregoing and their respective
successors.

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1
to the Agreement (or such other Deposit Account of Agent that has been
designated as such, in writing, by Agent to Borrower and the Lenders).

“Agent’s Liens” means the Liens granted by Borrower or its Subsidiaries to Agent
under the Loan Documents and securing the Obligations.

“Agreement” means the First Lien Credit Agreement to which this Schedule 1.1 is
attached.

“Anti-Corruption Laws” means any and all laws, rules, and regulations of any
jurisdiction applicable to Borrower or any subsidiary from time to time
concerning or relating to bribery or corruption, including, without limitation,
the United States Foreign Corrupt Practices Act of 1977, as amended, the UK
Bribery Act 2010 and other similar legislation in any other jurisdictions.

“Anti-Terrorism Laws” means any and all laws, regulations, rules, orders, etc.
in effect from time to time relating to anti-money laundering and terrorism,
including, without limitation, Executive Order No. 13224 (effective
September 24, 2001) and the USA Patriot Act (Pub. L. No. 107-56 (Oct. 12,
2001)).

“Appeal Claim Amount” means, at any time, the amount of claims that are the
subject of a pending appeal, if any, of the Order at such time other than the
Hargreaves Appeal.

“Applicable Unused Line Fee Percentage” means 0.50 percentage points.

“Application Event” means the occurrence and continuance of (a) a failure by
Borrower to repay all of the Obligations in full on the Maturity Date, or (b) an
Event of Default and the election by Agent or the Required Lenders to require
that payments and proceeds of Collateral be applied pursuant to
Section 2.4(b)(ii) of the Agreement.

“Approved Plan” means those certain plans of reorganization approved by the
United States Bankruptcy Court for the District of Delaware pursuant to the
Order.

“Assignee” has the meaning specified therefor in Section 13.1(a) of the
Agreement.

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1 to the Agreement.

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

“Authorized Person” means any one of the individuals identified on Schedule A-2
to the Agreement, as such schedule is updated from time to time by written
notice from Borrower to Agent.

“Availability” means, as of any date of determination, the amount that Borrower
is entitled to borrow as Revolving Loans under Section 2.1 of the Agreement
(after giving effect to the then outstanding Revolver Usage).

“Availability Block” means, as of any date of determination, (a) for the period
commencing on the Closing Date through and including August 8, 2017,
$14,500,000, (b) for the period commencing on August 9, 2017 through the date on
which financial statements are delivered for the fiscal quarter ending
December 31, 2017, $10,000,000 plus the lesser of (i) the Appeal Claim Amount at
such time and (ii) $4,500,000, (c) for the period commencing on the date on
which financial statements are delivered for the fiscal quarter ending
December 31, 2017 through the date on which financial statements are delivered
for the fiscal quarter ending March 31, 2018, $9,000,000 plus the lesser of
(i) the Appeal Claim Amount at such time and (ii) $4,500,000, and (d) at all
times thereafter that EBITDA calculated on a pro forma basis for the most
recently ended six (6) month period is less than $15,000,000, $8,000,000 plus
the lesser of (i) the Appeal Claim Amount at such time and (ii) $4,500,000.

“Average Revolver Usage” means, with respect to any period, the sum of the
aggregate amount of Revolver Usage for each Business Day in such period
(calculated as of the end of each respective Business Day) divided by the number
of Business Days in such period.

“Bankruptcy Cases” has the meaning set forth in the recitals to the Agreement.

“Bankruptcy Code” has the meaning set forth in the recitals to the Agreement.

“Bankruptcy Court” has the meaning set forth in the recitals to the Agreement.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which Borrower or any of its Subsidiaries or ERISA Affiliates has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

“Blocked Account” has the meaning specified therefor in Section 2.14(a) of the
Agreement.

“Board of Directors” means, as to any Person, the board of directors (or
comparable managers) of such Person, or any committee thereof duly authorized to
act on behalf of the board of directors (or comparable managers).

“Board of Governors” means the Board of Governors of the Federal Reserve System
of the United States (or any successor).

“Borrower” has the meaning specified therefor in the preamble to the Agreement.

“Borrower Materials” has the meaning specified therefor in Section 17.9(c) of
the Agreement.

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

“Borrowing” means a borrowing consisting of Loans made on the same day by the
Lenders (or Agent on behalf thereof), or by Agent in the case of an Interim
Advance or Extraordinary Advance.

“Borrowing Base” means, as of any date of determination, the lesser of (I) the
Maximum Revolver Amount and (II) the result of:

(a) the sum of:

(i) (A) 85% of the amount of Eligible Accepted Accounts less (B) the amount, if
any, of the Dilution Reserve, and

(ii) (A) the lowest of (x) $7,500,000, (y) 65% of the amount of Eligible Ticket
Held Accounts, and (z) 30% of the amount of clause (i) above, less (B) the
amount, if any, of the Dilution Reserve, minus

(b) the Availability Block, minus

(c) without duplication, the aggregate amount of all Reserves in effect at such
time.

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.

“Business Day” means any day excluding Saturday, Sunday, and any day which is a
legal holiday under the laws of the State of New York or which is a day on which
Agent is otherwise closed for transacting business with the public, except that,
if a determination of a Business Day shall relate to amounts accruing interest
at the LIBOR Rate, the term “Business Day” also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.

“Capital Expenditures” means, with respect to any Person for any period, the
amount of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed, but excluding, without
duplication (a) expenditures made during such period in connection with the
replacement, substitution, or restoration of assets or properties pursuant to
Section 2.4(e)(ii) of the Agreement, (b) with respect to the purchase price of
assets that are purchased substantially contemporaneously with the trade-in of
existing assets during such period, the amount that the gross amount of such
purchase price is reduced by the credit granted by the seller of such assets for
the assets being traded in at such time, (c) expenditures made during such
period to consummate one or more Permitted Acquisitions, (d) expenditures made
during such period to the extent made with the identifiable proceeds of an
equity investment in Borrower which equity investment is made substantially
contemporaneously with the making of the expenditure, (e) capitalized software
development costs to the extent such costs are deducted from net earnings under
the definition of EBITDA for such period, and (f) expenditures during such
period that, pursuant to a written agreement, are reimbursed by a third Person
(excluding Borrower or any of its Affiliates).

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

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $1,000,000,000, (e) Deposit
Accounts maintained with (i) any bank that satisfies the criteria described in
clause (d) above, or (ii) any other bank organized under the laws of the United
States or any state thereof so long as the full amount maintained with any such
other bank is insured by the Federal Deposit Insurance Corporation,
(f) repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition or recognized securities dealer having combined
capital and surplus of not less than $1,000,000,000, having a term of not more
than seven days, with respect to securities satisfying the criteria in clauses
(a) or (d) above, (g) debt securities with maturities of six months or less from
the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the criteria described in clause (d) above, and
(h) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (g) above.

“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements.

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

“CFC” means a controlled foreign corporation (as that term is defined in the
IRC).

“CFO” has the meaning specified therefor in Section 5.20(a) of the Agreement.

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

“Change in Law” means the occurrence after the date of the Agreement of: (a) the
adoption or effectiveness of any law, rule, regulation, judicial ruling,
judgment or treaty, (b) any change in any law, rule, regulation, judicial
ruling, judgment or treaty or in the administration, interpretation,
implementation or application by any Governmental Authority of any law, rule,
regulation, guideline or treaty, or (c) the making or issuance by any
Governmental Authority of any request, rule, guideline or directive, whether or
not having the force of law; provided that notwithstanding anything in the
Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith and (ii) all requests, rules, guidelines or
directives concerning capital adequacy 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 shall,
in each case, be deemed to be a “Change in Law,” regardless of the date enacted,
adopted or issued.

“Change of Control” means that:

(a) (i) Gates Capital Management LLC and Ascribe Capital LLC shall cease to own
and control legally and beneficially (free and clear of all Liens), either
directly or indirectly, equity securities in Borrower representing more than 40%
of the combined voting power of all of equity securities entitled to vote for
members of the board of directors or equivalent governing body of Borrower, or
(ii) Ascribe Capital LLC shall cease to (x) own and control legally and
beneficially (free and clear of all Liens), either directly or indirectly,
equity securities in Borrower representing more than 25% of the combined voting
power of all of the equity securities entitled to vote for members of the board
of directors or equivalent governing body of Borrower, in each case, on a
fully-diluted basis (and taking into account all such securities that the Equity
Investors have the right to acquire pursuant to any option right (as defined in
clause (b) below)) and (y) have a right to designate or appoint at least 2/5 of
the members of the board of directors or equivalent governing body of Borrower;
or

(b) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
other than the Equity Investors becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an
“option right”)), directly or indirectly, of 35% or more of the Equity Interests
of Borrower entitled to vote for members of the board of directors or equivalent
governing body of Borrower on a fully-diluted basis (and taking into account all
such securities that such “person” or “group” has the right to acquire pursuant
to any option right); or

(c) during any period of 12 consecutive months, individuals who at the beginning
of such period were members of Borrower’s board of directors cease for any
reason to constitute a majority of the directors of Borrower then in office
unless (i) such new directors were elected by a majority of the directors of
Borrower who constituted the board of directors of Borrower at the beginning of
such period (or by directors so elected) or by the stockholders pursuant to the
nomination of the existing directors, or (ii) the reason for such directors
failing to constitute a majority is a result of retirement by directors due to
age, death or disability, or

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

(d) Borrower shall cease, directly or indirectly, to own and control legally and
beneficially all of the Equity Interests in the other Loan Parties; or

(e) a “Change of Control” (as defined in the Second Lien Credit Agreement) shall
occur.

“China Water” means China Water and Drinks, Inc., a Delaware corporation.

“Closing Date” means the date of the making of the initial Loans (or other
extension of credit) under the Agreement.

“Code” means the New York Uniform Commercial Code, as in effect from time to
time.

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by Borrower or any of its Subsidiaries in or upon
which a Lien is granted by such Person in favor of Agent or the Lenders under
any of the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in Borrower’s or its Subsidiaries’ Collateral, books and records or Equipment,
in each case, in form and substance reasonably satisfactory to Agent.

“Collection Account” has the meaning specified therefor in Section 2.14(a) of
the Agreement.

“Commitment” means, with respect to each Lender, its Revolver Commitment or its
Term Loan Commitment, as the context requires, and, with respect to all Lenders,
their Revolver Commitments or their Term Loan Commitments, as the context
requires, in each case as such Dollar amounts are set forth beside such Lender’s
name under the applicable heading on Schedule C-1 to the Agreement or in the
Assignment and Acceptance pursuant to which such Lender became a Lender under
the Agreement, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1
of the Agreement.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 to the Agreement delivered by the chief financial officer of
Borrower to Agent.

“Confidential Information” has the meaning specified therefor in Section 17.9(a)
of the Agreement.

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Borrower or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

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“Cure Amount” has the meaning specified therefor in Section 7(b) of the
Agreement.

“Cure Quarter” has the meaning specified therefor in Section 7(b) of the
Agreement.

“Debtors” has the meaning set forth in the recitals to the Agreement.

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed to fund any amounts
required to be funded by it under the Agreement within 2 Business Days of the
date that it is required to do so under the Agreement (including the failure to
make available to Agent amounts required pursuant to a Settlement or to make a
required payment in connection with a Letter of Credit Disbursement),
(b) notified Borrower, Agent, or any Lender in writing that it does not intend
to comply with all or any portion of its funding obligations under the
Agreement, (c) has made a public statement to the effect that it does not intend
to comply with its funding obligations under the Agreement or under other
agreements generally (as reasonably determined by Agent) under which it has
committed to extend credit, (d) failed, within 1 Business Day after written
request by Agent, to confirm that it will comply with the terms of the Agreement
relating to its obligations to fund any amounts required to be funded by it
under the Agreement, (e) otherwise failed to pay over to Agent or any other
Lender any other amount required to be paid by it under the Agreement within 2
Business Days of the date that it is required to do so under the Agreement, or
(f) (i) becomes or is insolvent or has a parent company that has become or is
insolvent or (ii) becomes the subject of a bankruptcy or insolvency proceeding,
or has had a receiver, conservator, trustee, or custodian or appointed for it,
or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment or has a
parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, or custodian appointed
for it, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment.

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date
the relevant payment is due, the Prime Rate, and (b) thereafter, the interest
rate then applicable to Loans that as if the Prime Rate were applicable thereto.

“Deposit Account” means any deposit account (as that term is defined in the
Code).

“Designated Account” means the Deposit Account of Borrower identified on
Schedule D-1 to the Agreement (or such other Deposit Account of Borrower located
at Designated Account Bank that has been designated as such, in writing, by
Borrower to Agent).

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“Designated Account Bank” has the meaning specified therefor in Schedule D-1 to
the Agreement (or such other bank that is located within the United States that
has been designated as such, in writing, by Borrower to Agent).

“Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 3 months, that is the result of dividing the
Dollar amount of (a) bad debt write-downs, discounts, advertising allowances,
credits, or other dilutive items with respect to Borrower’s Accounts during such
period, by (b) Borrower’s billings with respect to Accounts during such period.

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accepted Accounts and Eligible
Ticket Held Accounts by 1 percentage point for each percentage point by which
Dilution is in excess of 5%.

“DIP ABL Credit Agreement” has the meaning set forth in the recitals to the
Agreement.

“Disqualified Equity Interests” means any Equity Interests that, by their terms
(or by the terms of any security or other Equity Interests into which they are
convertible or for which they are exchangeable), or upon the happening of any
event or condition (a) mature or are mandatorily redeemable (other than solely
for Qualified Equity Interests), pursuant to a sinking fund obligation or
otherwise (except as a result of a change of control or asset sale so long as
any rights of the holders thereof upon the occurrence of a change of control or
asset sale event shall be subject to the prior repayment in full of the Loans
and all other Obligations that are accrued and payable and the termination of
the Commitments), (b) are redeemable at the option of the holder thereof (other
than solely for Qualified Equity Interests), in whole or in part, (c) provide
for the scheduled payments of dividends in cash, or (d) are or become
convertible into or exchangeable for Indebtedness or any other Equity Interests
that would constitute Disqualified Equity Interests, in each case, prior to the
date that is 180 days after the Maturity Date.

“Dollars” or “$” means United States dollars.

“Drawing Document” means any Letter of Credit or other document presented for
purposes of drawing under any Letter of Credit.

“Earn-Outs” means unsecured liabilities of a Loan Party arising under an
agreement to make any deferred payment as a part of the purchase price for a
Permitted Acquisition, including performance bonuses or consulting payments in
any related services, employment or similar agreement, in an amount that is
subject to or contingent upon the revenues, income, cash flow or profits (or the
like) of the target of such Permitted Acquisition.

“EBITDA” means, with respect to any fiscal period,

(a) Borrower’s consolidated net earnings (or loss), minus

(b) without duplication, the sum of the following amounts of Borrower for such
period to the extent included in determining consolidated net earnings (or loss)
for such period:

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(i) extraordinary gains (including gains from disposition of assets),

(ii) interest income,

(iii) gains in connection with any Hedge Agreement, and

(iv) non-cash gains,

plus

(c) without duplication, the sum of the following amounts of Borrower for such
period to the extent included in determining consolidated net earnings (or loss)
for such period:

(i) non-cash extraordinary losses,

(ii) Interest Expense,

(iii) income taxes,

(iv) depreciation and amortization for such period, in each case, determined on
a consolidated basis in accordance with GAAP,

(v) any non-cash impairment charge or asset write-off or write-down related to
intangible assets, long-lived assets and other assets, and investment in debt
and equity securities pursuant to GAAP,

(vi) non-cash stock-based awards, non-cash compensation expense, including
non-cash charges arising from stock options, restricted stock or other equity
incentive programs,

(vii) other non-cash charges, including purchase accounting adjustments in
accordance with GAAP and any non-cash loss or expense resulting from bonus
payments made to repay non-cash loans made to officers, directors or employees,

(viii) non-cash losses in connection with any Hedge Agreement,

(ix) all fees, costs and expenses incurred in connection with any amendment to
any Loan Document,

(x) all fees, costs and expenses incurred in connection with any amendment to
any Second Lien Loan Document,

(xi) all reasonable fees, costs and expenses incurred in connection with any
Permitted Acquisition or any acquisition consented to by the Required Lenders in
an aggregate amount not to exceed $750,000 per acquisition, whether or not
consummated, in the applicable period,

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(xii) any fees, expenses, commissions, costs or other charges incurred prior to
one hundred and eighty (180) days following the Closing Date and related to the
Bankruptcy Cases, the Approved Plan and the transactions contemplated by the
Bankruptcy Cases and the Approved Plan,

(xiii) any fees, expenses, commissions, costs or other charges incurred in
connection with the Bankruptcy Cases with respect to (A) the Borrower’s
engagement of the Financial Advisor, and (B)(1) the Hargreaves Appeal or (2) any
other appeals of the Order, in an aggregate amount in the case of (1) and (2)
not to exceed $750,000,

(xiv) non-recurring non-cash charges, expenses and losses (including losses from
disposition of assets), and

(xv) all expenses and charges to the extent fully reimbursed in cash by a third
party.

“Eligible Accepted Accounts” means those Accounts created by a Loan Party in the
ordinary course of its business, that arise out of its sale of goods or
rendition of services in the United States that have been acknowledged as
accepted by the applicable Account Debtor, that comply with each of the
representations and warranties respecting Eligible Accepted Accounts made in the
Loan Documents, and that are not excluded as ineligible by virtue of one or more
of the excluding criteria set forth below; provided, that such criteria may be
revised from time to time by Agent in Agent’s Permitted Discretion to address
the results of any field examination performed by (or on behalf of) Agent from
time to time after the Closing Date. In determining the amount to be included,
Eligible Accepted Accounts shall be calculated net of customer deposits,
unapplied cash, taxes, discounts, credits, allowances, and rebates. Eligible
Accepted Accounts shall not include the following:

(a) Accounts that the Account Debtor has failed to pay within 90 days of
original invoice date, Accounts that are more than 60 days past due, or Accounts
with selling terms of more than 60 days,

(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,

(c) Accounts with respect to which the Account Debtor is an Affiliate of a Loan
Party or an employee or agent of a Loan Party or any Affiliate of a Loan Party,

(d) Accounts arising in a transaction wherein goods are placed on consignment or
are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a
bill and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,

(e) Accounts that are not payable in Dollars,

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(f) Accounts with respect to which the Account Debtor either (i) does not
maintain its chief executive office in the United States, or (ii) is not
organized under the laws of the United States or any state thereof, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(A) the Account is supported by an irrevocable letter of credit reasonably
satisfactory to Agent (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Agent and is directly drawable by Agent, or
(B) the Account is covered by credit insurance in form, substance, and amount,
and by an insurer, reasonably satisfactory to Agent,

(g) Accounts of a Loan Party with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which such Loan
Party has complied, to the reasonable satisfaction of Agent, with the Assignment
of Claims Act, 31 USC §3727), or (ii) any state of the United States,

(h) Accounts with respect to which the Account Debtor is a creditor of a Loan
Party, has or has asserted a right of recoupment or setoff, or has disputed its
obligation to pay all or any portion of the Account, but only to the extent of
such claim, right of recoupment or setoff, or dispute,

(i) Accounts with respect to an Account Debtor whose total obligations owing to
Loan Parties exceed (x) in the case of all Account Debtors (other than Hess
Corp., Oasis Petroleum and Indigo Minerals, LLC) 10% (such percentage, as
applied to a particular Account Debtor, being subject to reduction by Agent in
its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations owing
by such Account Debtor, (y) in the case of Hess Corp., 20% (such percentage, as
applied to such Account Debtor in excess of such percentage, being subject to
reduction by Agent in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates) of all Eligible Accounts, to the extent of the
obligations owing by such Account Debtor in excess of such percentage, and
(z) in the case of Oasis Petroleum and Indigo Minerals, LLC, 15% (such
percentage, as applied to any of such Account Debtors, being subject to
reduction by Agent in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates) of all Eligible Accounts, to the extent of the
obligations owing by such Account Debtor in excess of such percentage; provided,
that, in each case, the amount of Eligible Accounts that are excluded because
they exceed the foregoing applicable percentage shall be determined by Agent
based on all of the otherwise Eligible Accounts prior to giving effect to any
eliminations based upon the foregoing concentration limit,

(j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
a Loan Party has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,

(k) Accounts, the collection of which, Agent, in its Permitted Discretion,
believes to be doubtful, including by reason of the Account Debtor’s financial
condition,

(l) Accounts that are not subject to a valid and perfected first priority
Agent’s Lien,

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(m) Accounts with respect to which (i) the goods giving rise to such Account
have not been shipped and billed to the Account Debtor, or (ii) the services
giving rise to such Account have not been performed and billed to the Account
Debtor,

(n) Accounts with respect to which the Account Debtor is a Sanctioned Person or
Sanctioned Entity,

(o) Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by a Loan
Party of the subject contract for goods or services, or

(p) Accounts owned by a target acquired in connection with a Permitted
Acquisition or any other Permitted Investment, until the completion of a field
examination conducted by Agent or the receipt of other information reasonably
requested by Agent with respect to such target, in each case, reasonably
satisfactory to Agent (which field examination may be conducted prior to the
closing of such Permitted Acquisition or Permitted Investment).

“Eligible Accounts” means Eligible Accepted Accounts and Eligible Ticket Held
Accounts.

“Eligible Equipment” means Equipment (including Equipment acquired after the
Closing Date) of a Loan Party that complies with each of the representations and
warranties respecting Eligible Equipment made in the Loan Documents, and that is
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, that such criteria may be revised from time to time
by Agent in Agent’s Permitted Discretion to address the results of any field
examination or appraisal performed by Agent from time to time after the Closing
Date. An item of Equipment shall not be included in Eligible Equipment if:

(a) a Loan Party does not have good, valid, and marketable title thereto,

(b) it is not located at one of the locations in the United States set forth on
Schedule E-1 (as such Schedule may be updated by Borrower with the prior written
consent of Agent) unless it constitutes Certificated Equipment and is not
located at one of such locations in the ordinary course of Loan Parties’
business,

(c) it is Certificated Equipment and Agent’s Lien thereon has not been noted on
the applicable certificate of title (provided, that the criterion set forth in
this clause (c) shall not be applicable to the Certificated Equipment listed on
Schedule E-3 during the 90 day period following the Closing Date),

(d) it is in-transit,

(e) it is located on real property leased by a Loan Party or in a contract
warehouse, in each case, unless (i) it is subject to a Collateral Access
Agreement executed by the lessor or warehouseman, as the case may be, or
(ii) Agent has established a Landlord Reserve with respect to such location,

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(f) it is not subject to a valid, perfected and first priority Agent’s Lien,
subject to Permitted Liens,

(g) it is not in good working order and marketable condition (ordinary wear and
tear excepted),

(h) it is worn out, obsolete, damaged or defective Equipment,

(i) it consists of computer hardware,

(j) it consists of fixtures, or, unless Agent otherwise agrees, it consists of
Equipment that is not readily removable from the Real Property upon which it is
located without causing physical damage to such Real Property,

(k) it consists of tooling,

(l) it is leased to a Borrower or by a Borrower, or

(m) it has not been appraised by an appraiser acceptable to Agent pursuant to
the most recent appraisal of the Equipment of Loan Parties acceptable to Agent,
upon which Agent is expressly entitled to rely, to determine the Net Orderly
Liquidation Value thereof, unless such Equipment was acquired by a Loan Party
after the date of such most recent appraisal as new and unused.

“Eligible Term Loan Collateral” means Eligible Equipment and those certain
assets described in the Great American Appraisal, other than the Saltwater
Disposal Assets.

“Eligible Ticket Held Accounts” means Accounts of a Loan Party (a) arising from
the rendition of services in the United States that have been completed by the
applicable Loan Party and that are evidenced by work tickets and (b) that
qualify as Eligible Accepted Accounts except that the invoice applicable to such
Accounts has not been issued to the applicable Account Debtor because the
applicable Account Debtor has not approved the applicable work tickets; provided
that an Account shall cease to be an Eligible Ticket Held Account upon the
earlier of (i) the date the invoice applicable to such Account is issued to the
applicable Account Debtor and (ii) 30 days after the services giving rise to
such Account have been completed by the applicable Loan Party. In determining
the amount to be included, Eligible Ticket Held Accounts shall be calculated net
of customer deposits and unapplied cash.

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of or liability
under Environmental Laws or releases of Hazardous Materials, including, without
limitation, (a) from any assets, properties, or businesses of any Borrower, any
Subsidiary of a Borrower, or any of their predecessors in interest, (b) from
adjoining properties or businesses, or (c) from or onto any facilities which
received Hazardous Materials generated by any Borrower, any Subsidiary of a
Borrower, or any of their predecessors in interest.

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“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Borrower or its Subsidiaries, relating to the environment, the effect of the
environment on human health, employee health, or Hazardous Materials, in each
case as amended from time to time.

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies and diminution in value), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand, or Remedial Action
required, by any Governmental Authority or any third party, and which relate to
any Environmental Action or otherwise relating to or arising under Environmental
Laws or Environmental Permits.

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

“Environmental Permits” has the meaning specified therefor in Section 4.11 of
the Agreement.

“Equipment” means equipment (as that term is defined in the Code).

“Equity Interests” means, with respect to a Person, all of the shares, options,
warrants, interests, participations, or other equivalents (regardless of how
designated) of or in such Person, whether voting or nonvoting, including capital
stock (or other ownership or profit interests or units), preferred stock, or any
other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).

“Equity Investors” means Mark D. Johnsrud, Gates Capital Management LLC, Ascribe
Capital LLC, and their respective Affiliates.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Borrower or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower or its Subsidiaries under IRC Section 414(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or its Subsidiaries under IRC Section 414(o).

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“Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.

“Excess Availability” means, as of any date of determination, the amount equal
to Availability minus the aggregate amount, if any, of all trade payables of
Borrower and its Subsidiaries aged in excess of 30 days with respect thereto and
all book overdrafts of Borrower and its Subsidiaries in excess of historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

“Excluded Accounts” means (a) the Professional Fee Account, (b) Deposit Accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for any Loan Parties’ employees, (c) zero
balance accounts and (d) escrow accounts for purposes of worker’s compensation
insurance claims.

“Excluded Taxes” means (i) any tax imposed on the net income or net profits of
any Lender or any Participant (including any branch profits taxes), in each case
imposed by the jurisdiction (or by any political subdivision or taxing authority
thereof) in which such Lender or such Participant is organized or the
jurisdiction (or by any political subdivision or taxing authority thereof) in
which such Lender’s or such Participant’s principal office is located in each
case as a result of a present or former connection between such Lender or such
Participant and the jurisdiction or taxing authority imposing the tax (other
than any such connection arising solely from such Lender or such Participant
having executed, delivered or performed its obligations or received payment
under, or enforced its rights or remedies under the Agreement or any other Loan
Document); (ii) taxes resulting from a Lender’s or a Participant’s failure to
comply with the requirements of Section 16.2 of the Agreement, (iii) any United
States federal withholding taxes that would be imposed on amounts payable to a
Foreign Lender based upon the applicable withholding rate in effect at the time
such Foreign Lender becomes a party to the Agreement (or designates a new
lending office), except that Taxes shall include (A) any amount that such
Foreign Lender (or its assignor, if any) was previously entitled to receive
pursuant to Section 16.1 of the Agreement, if any, with respect to such
withholding tax at the time such Foreign Lender becomes a party to the Agreement
(or designates a new lending office), and (B) additional United States federal
withholding taxes that may be imposed after the time such Foreign Lender becomes
a party to the Agreement (or designates a new lending office), as a result of a
change in law, rule, regulation, order or other decision with respect to any of
the foregoing by any Governmental Authority, and (iv) any United States federal
withholding taxes imposed under FATCA.

“Existing Letters of Credit” means those certain letters of credit issued by
Wells Fargo Bank, N.A. in favor of Borrower or its Subsidiaries as described on
Schedule E-2 to the Agreement.

“Extraordinary Advances” has the meaning specified therefor in
Section 2.3(d)(iii) of the Agreement.

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“Extraordinary Receipts” means (a) so long as no Event of Default has occurred
and is continuing, proceeds of judgments, proceeds of settlements, or other
consideration of any kind received in connection with any cause of action or
claim, and (b) if an Event of Default has occurred and is continuing, any
payments received by Borrower or any of its Subsidiaries not in the ordinary
course of business (and not consisting of proceeds described in
Section 2.4(e)(ii) of the Agreement) consisting of (i) proceeds of judgments,
proceeds of settlements, or other consideration of any kind received in
connection with any cause of action or claim, (ii) indemnity payments (other
than to the extent such indemnity payments are immediately payable to a Person
that is not an Affiliate of Borrower or any of its Subsidiaries, and (iii) any
purchase price adjustment received in connection with any purchase agreement.

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of the
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof.

“Fee Letter” means, collectively, (i) that certain fee letter, dated as of
July 28, 2017, between Borrower and Agent and (ii) that certain letter
agreement, dated as of July 25, 2017, between Borrower and Agent, as amended
from time to time.

“Financial Advisor” has the meaning specified therefor in Section 5.20(a) of the
Agreement.

“Fixed Charge Coverage Ratio” means, as of any date of determination and with
respect to Borrower determined on a consolidated basis in accordance with GAAP,
the ratio of (a) for the four fiscal quarters ending on such date, EBITDA minus
Capital Expenditures (other than Capital Expenditures financed with Indebtedness
(other than Revolving Loans)) made or incurred during such period, to (b) Fixed
Charges for such period. Notwithstanding the foregoing, for purposes of
determining the components of the Fixed Charge Coverage Ratio for the fiscal
quarter ending (a) September 30, 2017, all such components of the Fixed Charge
Coverage Ratio shall be the amount of such components for such fiscal quarter
multiplied by four, (b) December 31, 2017, all such components of the Fixed
Charge Coverage Ratio shall be the amount of such components for the two fiscal
quarters then ended multiplied by two, and (c) March 31, 2018, all such
components of the Fixed Charge Coverage Ratio shall be the amount of such
components for the three fiscal quarters then ended multiplied by 4/3.

“Fixed Charges” means, with respect to any fiscal period and with respect to
Borrower determined on a consolidated basis in accordance with GAAP, the sum,
without duplication, of (a) Interest Expense accrued (other than interest
paid-in-kind, amortization of financing fees, and other non-cash Interest
Expense) during such period, (b) principal payments in respect of Indebtedness
that are required to be paid during such period, (c) all federal, state, and
local income taxes accrued during such period, and (d) all Restricted Payments
paid (whether in cash or other property, other than common Equity Interests)
during such period.

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of IRC section 7701(a)(30).

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“Funding Date” means the date on which a Borrowing occurs.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

“Governmental Authority” means the government of any nation or any political
subdivision thereof, whether at the national, state, territorial, provincial,
municipal or any other level, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of, or pertaining to, government (including any supra-national bodies such as
the European Union or the European Central Bank).

“Great American Appraisal” means those certain appraisals delivered by Great
American Group to Borrower, effective July 12, 2017 and effective May 31, 2017
(as supplemented by that certain letter from Great American Group to Borrower
dated July 18, 2017), indicating, among other things, an initial gross value for
the Salt Water Disposal Assets of $38,600,000 prior to the application of
disposition expenses based upon assumptions acceptable to Agent. Disposition
expenses in the appraisal dated May 31, 2017 (as so supplemented) reflected
disposition costs estimated at 10% of gross value, suggesting that the orderly
liquidation value in place for the Salt Water Disposal Assets would be
$34,740,000.

“Guarantor” means (a) each Subsidiary of Borrower organized in the United States
of America as of the Closing Date, and (b) each other Person that becomes a
guarantor after the Closing Date pursuant to Section 5.11 of the Agreement;
provided that it is understood and agreed that (i) Nuverra Rocky Mountain and
(ii) China Water shall each not be required to become a guarantor hereunder so
long as it remains an Immaterial Subsidiary (and that, in either case, upon
ceasing to be an Immaterial Subsidiary, it shall within 10 Business Days take
all actions required under the Loan Documents, including Section 5.11 of the
Agreement, to become a guarantor hereunder and take all actions incidental
thereto).

“Guaranty and Security Agreement” means the guaranty and security agreement,
dated as of even date with the Agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Borrower and each of the
Guarantors to Agent.

“Hargreaves Appeal” means that certain appeal of the Order by David Hargreaves
filed prior to July 28, 2017.

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

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“Hedge Agreement” means a “swap agreement” as that term is defined in
Section 101(53B)(A) of the Bankruptcy Code.

“Hilco Exam” means that certain field exam report dated July 23, 2017 and
certain additional subsequent information provided by Hilco Valuation Services
with respect to certain assets of Borrower.

“Immaterial Subsidiaries” means any Subsidiary of Borrower which does not
(a) own any assets (other than assets of a de minimis nature), (b) have any
liabilities (other than liabilities of a de minimis nature), or (c) engage in
any business activity and “Immaterial Subsidiary” means any one of them. As of
the Closing Date, Nuverra Rocky Mountain and China Water are Immaterial
Subsidiaries.

“Incremental Effective Date” has the meaning specified therefor in Section 2.12
of the Agreement.

“Incremental Facility” has the meaning specified therefor in Section 2.12 of the
Agreement.

“Incremental Facility Request” has the meaning specified therefor in
Section 2.12 of the Agreement.

“Incremental Revolver Commitment” has the meaning specified therefor in
Section 2.12 of the Agreement.

“Incremental Revolving Loans” has the meaning specified therefor in Section 2.12
of the Agreement.

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices and, for the
avoidance of doubt, other than royalty payments payable in the ordinary course
of business in respect of non-exclusive licenses) and any Earn-Out required to
be paid in cash or similar obligation, (f) all monetary obligations of such
Person owing under Hedge Agreements (which amount shall be calculated based on
the amount that would be payable by such Person if the Hedge Agreement were
terminated on the date of determination), (g) any Disqualified Equity Interests
of such Person, and (h) any obligation of such Person guaranteeing or intended
to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes

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Indebtedness under any of clauses (a) through (g) above. For purposes of this
definition, (i) the amount of any Indebtedness represented by a guaranty or
other similar instrument shall be the lesser of the principal amount of the
obligations guaranteed and still outstanding and the maximum amount for which
the guaranteeing Person may be liable pursuant to the terms of the instrument
embodying such Indebtedness, and (ii) the amount of any Indebtedness which is
limited or is non-recourse to a Person or for which recourse is limited to an
identified asset shall be valued at the lesser of (A) if applicable, the limited
amount of such obligations, and (B) if applicable, the fair market value of such
assets securing such obligation.

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of
the Agreement.

“Indemnified Person” has the meaning specified therefor in Section 10.3 of the
Agreement.

“Indemnified Taxes” means, any Taxes other than Excluded Taxes.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

“Intercompany Subordination Agreement” means an intercompany subordination
agreement, dated as of even date with the Agreement, executed and delivered by
Borrower, each of its Subsidiaries, and Agent, the form and substance of which
is reasonably satisfactory to Agent.

“Intercreditor Agreement” means the Subordination and Intercreditor Agreement,
dated of even date herewith, by and among Agent, the Second Lien Agent, Borrower
and each other obligor party thereto, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

“Interest Expense” means, for any period, the aggregate of the interest expense
of Borrower for such period, determined on a consolidated basis in accordance
with GAAP.

“Interim Advances” has the meaning specified therefor in Section 2.3(c)(i)(A) of
the Agreement.

“Inventory” means inventory (as that term is defined in the Code).

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide accounts receivable arising in the ordinary course
of business), or acquisitions of Indebtedness, Equity Interests, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a

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balance sheet prepared in accordance with GAAP. The amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
thereto, without any adjustment for increases or decreases in value, or
write-ups, write-downs, or write-offs with respect to such Investment.

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“ISP” means, with respect to any Letter of Credit, the International Standby
Practices 1998 (International Chamber of Commerce Publication No. 590) and any
subsequent revision thereof adopted by the International Chamber of Commerce on
the date such Letter of Credit is issued.

“Issuer Document” means, with respect to any Letter of Credit, a letter of
credit application, a letter of credit agreement, or any other document,
agreement or instrument entered into (or to be entered into) by Borrower in
favor of Issuing Bank and relating to such Letter of Credit.

“Issuing Bank” means any Person acceptable to Agent that, at the request of
Borrower and with the consent of Agent, agrees, in such Person’s sole
discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2.11 of the Agreement.

“Landlord Reserve” means, as to each location at which Borrower has Collateral
or books and records located and as to which a Collateral Access Agreement has
not been received by Agent, a reserve in an amount equal to the greater of
(a) the number of month’s rent for which the landlord will have, under
applicable law, a Lien in the Collateral of Borrower to secure the payment of
rent or other amounts under the lease relative to such location, or (b) 3
month’s rent under the lease relative to such location.

“Lender” has the meaning set forth in the preamble to the Agreement, shall
include Issuing Bank and any other Person made a party to the Agreement pursuant
to the provisions of Section 13.1 of the Agreement and “Lenders” means each of
the Lenders or any one or more of them.

“Lender Group” means each of the Lenders (including Issuing Bank) and Agent, or
any one or more of them.

“Lender Group Expenses” means all (a) costs or expenses (including taxes and
insurance premiums) required to be paid by Borrower or its Subsidiaries under
any of the Loan Documents that are paid, advanced, or incurred by the Lender
Group, (b) documented out-of-pocket fees or charges paid or incurred by Agent in
connection with the Lender Group’s transactions with Borrower or its
Subsidiaries under any of the Loan Documents, including, without limitation, the
reasonable out-of-pocket fees and expenses of Agent’s outside counsel (limited,
in the case of the fees and disbursements of counsel, to the fees, disbursements
and other out-of-pocket charges of one primary counsel and, if reasonably
necessary or advisable, any special counsel, one local counsel in any relevant
jurisdiction, and special Delaware bankruptcy counsel) and out-of-pocket costs
incurred in connection with travel and due diligence, photocopying,
notarization, couriers and messengers, telecommunication, public

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record searches, filing fees, recording fees, publication, real estate surveys,
real estate title policies and endorsements, and environmental audits,
(c) Agent’s customary fees and charges imposed or incurred in connection with
any background checks or OFAC/PEP searches related to Borrower or its
Subsidiaries, (d) Agent’s customary fees and charges (as adjusted from time to
time) with respect to the disbursement of funds (or the receipt of funds) to or
for the account of Borrower (whether by wire transfer or otherwise), together
with any out-of-pocket costs and expenses incurred in connection therewith,
(e) customary charges imposed or incurred by Agent resulting from the dishonor
of checks payable by or to any Loan Party, (f) reasonable documented
out-of-pocket costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or during the
continuance of an Event of Default, in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (g) consulting or advisory fees and expenses of
Agent and fees and expenses related to any field examinations, appraisals, or
valuation, (h) Agent’s, Issuing Bank’s and Lenders’ reasonable costs and
expenses (including reasonable documented attorneys’ fees and expenses) relative
to third party subpoenas, claims or any other lawsuit or adverse proceeding paid
or incurred, whether in enforcing or defending the Loan Documents or otherwise
in connection with the transactions contemplated by the Loan Documents, Agent’s
Liens in and to the Collateral, or the Lender Group’s relationship with Borrower
or any of its Subsidiaries, (i) Agent’s reasonable documented costs and expenses
(including reasonable documented attorneys’ fees and due diligence expenses)
incurred in advising, structuring, drafting, reviewing, administering (including
travel, meals, and lodging), syndicating (including reasonable costs and
expenses relative to the CUSIP, DXSyndicate™, SyndTrak or other communication
costs incurred in connection with a syndication of the loan facilities), or
amending, waiving, or modifying the Loan Documents, and (j) Agent’s and each
Lender’s reasonable documented costs and expenses (including reasonable
documented attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
“workout,” a “restructuring,” or an Insolvency Proceeding concerning Borrower or
any of its Subsidiaries or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether a lawsuit
or other adverse proceeding is brought, or in taking any enforcement action or
any Remedial Action with respect to the Collateral.

“Lender Group Representatives” has the meaning specified therefor in
Section 17.9 of the Agreement.

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

“Letter of Credit” means a letter of credit (as that term is defined in the
Code) issued by Issuing Bank.

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including
provisions that specify that the Letter of Credit Fees and all commissions,
fees, charges and expenses provided for in Section 2.11(k) of the Agreement
(including any fronting fees) will continue to accrue while the

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Letters of Credit are outstanding) to be held by Agent for the benefit of the
Revolving Lenders in an amount equal to 105% of the then existing Letter of
Credit Usage, (b) delivering to Agent documentation executed by all
beneficiaries under the Letters of Credit, in form and substance reasonably
satisfactory to Agent and Issuing Bank, terminating all of such beneficiaries’
rights under the Letters of Credit, or (c) providing Agent with a standby letter
of credit, in form and substance reasonably satisfactory to Agent, from a
commercial bank acceptable to Agent (in its sole discretion) in an amount equal
to 105% of the then existing Letter of Credit Usage (it being understood that
the Letter of Credit Fee and all fronting fees set forth in the Agreement will
continue to accrue while the Letters of Credit are outstanding and that any such
fees that accrue must be an amount that can be drawn under any such standby
letter of credit).

“Letter of Credit Disbursement” means a payment made by Issuing Bank pursuant to
a Letter of Credit.

“Letter of Credit Fee” has the meaning specified therefor in Section 2.6(b) of
the Agreement.

“Letter of Credit Indemnified Costs” has the meaning specified therefor in
Section 2.11(f) of the Agreement.

“Letter of Credit Related Person” has the meaning specified therefor in
Section 2.11(f) of the Agreement.

“Letter of Credit Usage” means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit.

“LIBOR Rate” means the greater of (i) 1.00% and (ii) the annual rate of interest
for deposits in Dollars for a term of 30 days as reported by Reuters. The LIBOR
Rate may not be the lowest or best rate at which Agent calculates interest or
extends credit. The LIBOR Rate for each calendar month shall be adjusted (if
necessary) on the first day of such calendar month and shall be equal to the
LIBOR Rate in effect as of the close of business on the last Business Day of the
immediately preceding calendar month.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

“Liquidated Damages” has the meaning specified therefor in Section 2.10(e) of
the Agreement.

“Loan” means any Revolving Loan, Term Loan, Interim Advance or Extraordinary
Advance (or to be made) hereunder.

“Loan Account” has the meaning specified therefor in Section 2.9 of the
Agreement.

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“Loan Documents” means the Agreement, the Control Agreements, any Borrowing Base
Certificate, each Compliance Certificate, the Fee Letter, the Intercreditor
Agreement, the Guaranty and Security Agreement, the Intercompany Subordination
Agreement, any Issuer Documents, the Letters of Credit, the Mortgages, the
Trademark Security Agreement, the Patent Security Agreement, any note or notes
executed by Borrower in connection with the Agreement and payable to any member
of the Lender Group, and any other instrument or agreement entered into, now or
in the future, by Borrower or any of its Subsidiaries and any member of the
Lender Group in connection with the Agreement.

“Loan Party” means Borrower or any Guarantor.

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect
from time to time.

“Material Adverse Effect” means (a) a material adverse effect in the business,
operations, results of operations, assets, liabilities or financial condition of
Borrower and its Subsidiaries, taken as a whole, (b) a material impairment of
Borrower’s and its Subsidiaries ability to perform their obligations under the
Loan Documents to which they are parties or of the Lender Group’s ability to
enforce the Obligations or realize upon the Collateral (other than as a result
of as a result of an action taken or not taken that is solely in the control of
Agent), or (c) a material impairment of the enforceability or priority of
Agent’s Liens with respect to all or a material portion of the Collateral.

“Material Contract” means each contract or instrument to which Borrower or any
of its Subsidiaries is a party or by which Borrower, any of its Subsidiaries or
any of their properties is bound (a) which is deemed to be a material contract
as provided in Regulation S-K promulgated by the SEC under the Securities Act,
or (b) the termination or suspension of which, or the failure of any party
thereto to perform its obligations thereunder, could reasonably be expected to
cause a Material Adverse Effect.

“Maturity Date” means August 7, 2020.

“Maximum Facility Amount” means the sum of the Maximum Revolver Amount and the
aggregate Term Loan Commitment.

“Maximum Revolver Amount” means $30,000,000.

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

“Mortgages” means, individually and collectively, one or more mortgages, deeds
of trust, or deeds to secure debt, executed and delivered by Borrower or its
Subsidiaries in favor of Agent, in form and substance reasonably satisfactory to
Agent, that encumber the Real Property Collateral.

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“Net Cash Proceeds” means:

(a) with respect to any sale or disposition by Borrower or any of its
Subsidiaries of assets, the amount of cash proceeds received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of Borrower or its
Subsidiaries, in connection therewith after deducting therefrom only (i) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than (A) Indebtedness owing to Agent or any Lender under the Agreement or the
other Loan Documents and (B) Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such sale or
disposition, (ii) reasonable fees, commissions, and expenses related thereto and
required to be paid by Borrower or such Subsidiary in connection with such sale
or disposition, (iii) taxes paid or payable to any taxing authorities by
Borrower or such Subsidiary in connection with such sale or disposition, in each
case to the extent, but only to the extent, that the amounts so deducted are, at
the time of receipt of such cash, actually paid or payable to a Person that is
not an Affiliate of Borrower or any of its Subsidiaries, and are properly
attributable to such transaction; and (iv) all amounts that are set aside as a
reserve (A) for adjustments in respect of the purchase price of such assets,
(B) for any liabilities associated with such sale or casualty, to the extent
such reserve is required by GAAP, and (C) for the payment of unassumed
liabilities relating to the assets sold or otherwise disposed of at the time of,
or within 30 days after, the date of such sale or other disposition, to the
extent that in each case the funds described above in this clause (iv) are
(x) deposited into escrow with a third party escrow agent or set aside in a
separate Deposit Account that is subject to a Control Agreement in favor of
Agent and (y) paid to Agent as a prepayment of the applicable Obligations in
accordance with Section 2.4(e) of the Agreement at such time when such amounts
are no longer required to be set aside as such a reserve; and

(b) with respect to the issuance or incurrence of any Indebtedness by Borrower
or any of its Subsidiaries, or the issuance by Borrower or any of its
Subsidiaries of any Equity Interests, the aggregate amount of cash received
(directly or indirectly) from time to time (whether as initial consideration or
through the payment or disposition of deferred consideration) by or on behalf of
Borrower or such Subsidiary in connection with such issuance or incurrence,
after deducting therefrom only (i) reasonable fees, commissions, and expenses
related thereto and required to be paid by Borrower or such Subsidiary in
connection with such issuance or incurrence, (ii) taxes paid or payable to any
taxing authorities by Borrower or such Subsidiary in connection with such
issuance or incurrence, in each case to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash, actually paid
or payable to a Person that is not an Affiliate of Borrower or any of its
Subsidiaries, and are properly attributable to such transaction.

“Net Orderly Liquidation Value” means, at any time, the orderly liquidation
value with respect to the applicable asset as set forth in the most recent
appraisal acceptable to Agent, upon which Agent is expressly entitled to rely,
prepared by an appraiser acceptable to Agent, net of operating expenses,
liquidation expenses and commissions set forth in such appraisal; provided, that
to the extent operating expenses, liquidation expenses and commissions set forth
in such appraisal are not allocated to specific items of Equipment, such
operating expenses, liquidation expenses and commissions may be allocated by
Agent to specific assets as determined in Agent’s Permitted Discretion; and
provided further, that the liquidation timeframe is acceptable to Agent.

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“Non-Consenting Lender” has the meaning specified therefor in Section 14.2(a) of
the Agreement.

“Non-Defaulting Lender” means each Lender other than a Defaulting Lender.

“Nuverra Rocky Mountain” means Nuverra Rocky Mountain Pipeline, LLC, a Delaware
limited liability company, together with any direct or indirect subsidiaries
thereof formed or acquired after the Closing Date, and any successors or assigns
of the foregoing entities (provided, that in no event shall any such successors
or assigns be a Loan Party or other direct or indirect Subsidiary of a Loan
Party).

“Obligations” means all loans (including the Term Loan and the Revolving Loans
(inclusive of Interim Advances and Extraordinary Advances)), debts, principal,
interest (including any interest that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), reimbursement or
indemnification obligations with respect to Letters of Credit (irrespective of
whether contingent), premiums, liabilities (including all amounts charged to the
Loan Account pursuant to the Agreement), obligations (including indemnification
obligations), fees (including the fees provided for in the Fee Letter), Lender
Group Expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
guaranties, and all covenants and duties of any other kind and description owing
by any Loan Party arising out of, under, pursuant to, in connection with, or
evidenced by the Agreement or any of the other Loan Documents and irrespective
of whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all other expenses or other amounts
that Borrower is required to pay or reimburse by the Loan Documents or by law or
otherwise in connection with the Loan Documents. Without limiting the generality
of the foregoing, the Obligations of Borrower under the Loan Documents include
the obligation to pay (i) the principal of the Loans, (ii) interest accrued on
the Loans, (iii) the amount necessary to reimburse Issuing Bank for amounts paid
or payable pursuant to Letters of Credit, (iv) Letter of Credit commissions, and
fees (including fronting fees) and charges, (v) Lender Group Expenses, (vi) fees
payable under the Agreement or any of the other Loan Documents, and
(vii) indemnities and other amounts payable by any Loan Party under any Loan
Document. Any reference in the Agreement or in the Loan Documents to the
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

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

“Order” has the meaning set forth in the recitals to the Agreement.

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“Originating Lender” has the meaning specified therefor in Section 13.1(e) of
the Agreement.

“Overadvance” means, as of any date of determination, that the Revolver Usage is
greater than any of the limitations set forth in Section 2.1 or Section 2.11.

“Participant” has the meaning specified therefor in Section 13.1(e) of the
Agreement.

“Participant Register” has the meaning set forth in Section 13.1(j) of the
Agreement.

“Patent Security Agreement” has the meaning specified therefor in the Guaranty
and Security Agreement.

“Patriot Act” has the meaning specified therefor in Section 4.13 of the
Agreement.

“Perfection Certificate” means a certificate in the form of Exhibit P-1 to the
Agreement.

“Permitted Acquisition” means any Acquisition so long as:

(a) no Default or Event of Default shall have occurred and be continuing or
would result from the consummation of the proposed Acquisition and the proposed
Acquisition is consensual,

(b) no Indebtedness will be incurred, assumed, or would exist with respect to
Borrower or its Subsidiaries as a result of such Acquisition, other than
Indebtedness permitted under clauses (f) or (g) of the definition of Permitted
Indebtedness and no Liens will be incurred, assumed, or would exist with respect
to the assets of Borrower or its Subsidiaries as a result of such Acquisition
other than Permitted Liens,

(c) Borrower has provided Agent with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such
proposed Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case, determined as if the combination had been
accomplished at the beginning of the relevant period; such eliminations and
inclusions to be mutually and reasonably agreed upon by Borrower and Agent)
created by adding the historical combined financial statements of Borrower
(including the combined financial statements of any other Person or assets that
were the subject of a prior Permitted Acquisition during the relevant period) to
the historical consolidated financial statements of the Person to be acquired
(or the historical financial statements related to the assets to be acquired)
pursuant to the proposed Acquisition, Borrower and its Subsidiaries (i) would
have been in compliance with the financial covenants in Section 7 of the
Agreement for the 4 fiscal quarter period ended immediately prior to the
proposed date of consummation of such proposed Acquisition, and (ii) are
projected to be in compliance with the financial covenants in Section 7 of the
Agreement for the 4 fiscal quarter period ended one year after the proposed date
of consummation of such proposed Acquisition,

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(d) for Acquisitions with aggregate consideration in excess of $500,000,
Borrower has provided Agent with its due diligence package relative to the
proposed Acquisition, including forecasted balance sheets, profit and loss
statements, and cash flow statements of the Person or assets to be acquired, all
prepared on a basis consistent with such Person’s (or assets’) historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions for the 1 year period following the date of
the proposed Acquisition, on a quarter by quarter basis), in form and substance
(including as to scope and underlying assumptions) reasonably satisfactory to
Agent,

(e) Borrower shall have Excess Availability in an amount equal to or greater
than 20% of the Maximum Revolver Amount immediately after giving effect to the
consummation of the proposed Acquisition,

(f) the assets being acquired or the Person whose Equity Interests are being
acquired did not have negative EBITDA (calculated on an annualized basis) for
the most recently ended three (3) consecutive month period prior to the date of
the proposed Acquisition,

(g) Borrower has provided Agent with written notice of the proposed Acquisition
at least 15 Business Days prior to the anticipated closing date of the proposed
Acquisition and, not later than 5 Business Days prior to the anticipated closing
date of the proposed Acquisition, copies of the acquisition agreement and other
material documents relative to the proposed Acquisition,

(h) the assets being acquired (other than a de minimis amount of assets in
relation to Borrower’s and its Subsidiaries’ total assets), or the Person whose
Equity Interests are being acquired, are useful in or engaged in, as applicable,
the business of Borrower and its Subsidiaries or a business reasonably related
thereto,

(i) the assets being acquired (other than a de minimis amount of assets in
relation to the assets being acquired) are located within the United States or
the Person whose Equity Interests are being acquired is organized in a
jurisdiction located within the United States,

(j) the subject assets or Equity Interests, as applicable, are being acquired
directly by Borrower or one of its Subsidiaries that is a Loan Party, and, in
connection therewith, Borrower or the applicable Loan Party shall have complied
with Section 5.11 or 5.12 of the Agreement, as applicable, of the Agreement and,
in the case of an acquisition of Equity Interests, Borrower or the applicable
Loan Party shall have demonstrated to Agent that the new Loan Parties have
received consideration sufficient to make the joinder documents binding and
enforceable against such new Loan Parties,

(k) the consideration payable (including deferred payment obligations, earn-outs
or other similar contingent considerations) in connection with such Acquisition
does not exceed $2,000,000, and, when combined with all other Acquisitions,
$5,000,000 in any eighteen (18) consecutive month period,

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(l) after giving effect to such Acquisition, the Borrower is in pro forma
compliance with covenant set forth in Section 7(a)(i), and

(m) Agent shall have received prior to the proposed Acquisition, a certificate
signed by an officer of Borrower certifying compliance with the foregoing
conditions.

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured asset-based lender) business judgment.

“Permitted Dispositions” means:

(a) sales, abandonment, or other dispositions of Equipment that is substantially
worn, damaged, or obsolete or no longer used or useful in the ordinary course of
business and leases or subleases of Real Property not useful in the conduct of
the business of Borrower and its Subsidiaries,

(b) sales of Inventory to buyers in the ordinary course of business,

(c) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents,

(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business,

(e) the granting of Permitted Liens,

(f) the sale or discount, in each case without recourse, of accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof,

(g) any involuntary loss, damage or destruction of property,

(h) any involuntary condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property,

(i) the leasing or subleasing of assets of Borrower or its Subsidiaries in the
ordinary course of business,

(j) the sale or issuance of Equity Interests (other than Disqualified Equity
Interests) of Borrower,

(k) (i) the lapse of registered patents, trademarks, copyrights and other
intellectual property of Borrower and its Subsidiaries to the extent not
economically desirable in the conduct of their business or (ii) the abandonment
of patents, trademarks, copyrights, or other intellectual property rights in the
ordinary course of business so long as (in each case under clauses (i) and
(ii)), (A) with respect to copyrights, such copyrights are not material revenue
generating copyrights, and (B) such lapse is not materially adverse to the
interests of the Lender Group,

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(l) the making of Restricted Payments that are expressly permitted to be made
pursuant to the Agreement,

(m) the making of Permitted Investments,

(n) so long as no Event of Default has occurred and is continuing or would
immediately result therefrom, transfers of assets (i) from Borrower or any of
its Subsidiaries to a Loan Party, and (ii) from any Subsidiary of Borrower that
is not a Loan Party to any other Subsidiary of Borrower,

(o) the transfer or sale of assets and dissolution of Appalachian Water
Services, LLC as contemplated pursuant to, and in accordance with, that certain
Order Approving Motion for Authorization for Debtors to Enter into Stipulation
Resolving Contract Rights, Claims and Objections of the Shallenberger Parties,
entered by the Bankruptcy Court on July 21, 2017,

(p) the disposition of assets set forth on Schedule P-1 to the Agreement, and

(q) sales or dispositions of fixed assets not otherwise permitted in clauses
(a) through (o) above so long as (1) no Default or Event of Default then exists
or would arise therefrom, (2) made at fair market value, (3) if such sales or
dispositions are to an Affiliate of Borrower or its Subsidiaries, they are
(x) on terms that no less favorable, taken as a whole, to Borrower or its
Subsidiaries, as applicable, than would be obtained in an arm’s length
transaction with a non-Affiliate, and (y) not prohibited by Section 6.10 of the
Agreement, and (4) the aggregate fair market value of all assets disposed of
(including the proposed disposition) would not exceed $12,000,000 per year (or
such greater amount as agreed to by Agent in writing in its sole discretion).

“Permitted Indebtedness” means:

(a) Indebtedness evidenced by the Agreement or the other Loan Documents,

(b) Indebtedness set forth on Schedule 4.14 to the Agreement and any Refinancing
Indebtedness in respect of such Indebtedness,

(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness,

(d) endorsement of instruments or other payment items for deposit,

(e) Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary
course of business with respect to surety and appeal bonds, performance bonds,
bid bonds, appeal bonds, completion guarantee and similar obligations;
(ii) unsecured guarantees arising with respect to customary indemnification
obligations to purchasers in connection with Permitted Dispositions; and
(iii) unsecured guarantees with respect to Indebtedness of Borrower or one of
its Subsidiaries, to the extent that the Person that is obligated under such
guaranty could have incurred such underlying Indebtedness,

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(f) Subordinated Indebtedness (including Earn-Outs) incurred solely for purposes
of Permitted Acquisitions in an aggregate amount not to exceed $3,250,000 per
year,

(g) Acquired Indebtedness in an amount not to exceed $2,500,000 outstanding at
any one time,

(h) Indebtedness incurred in the ordinary course of business under performance,
surety, statutory, or appeal bonds,

(i) Indebtedness owed to any Person providing property, casualty, liability, or
other insurance to Borrower or any of its Subsidiaries, so long as the amount of
such Indebtedness is not in excess of the amount of the unpaid cost of, and
shall be incurred only to defer the cost of, such insurance for the year in
which such Indebtedness is incurred and such Indebtedness is outstanding only
during such year,

(j) the incurrence by Borrower or its Subsidiaries of Indebtedness under Hedge
Agreements that are incurred for the bona fide purpose of hedging the interest
rate, commodity, or foreign currency risks associated with Borrower’s and its
Subsidiaries’ operations and not for speculative purposes,

(k) Indebtedness incurred in the ordinary course of business in respect of
credit cards, credit card processing services, debit cards, stored value cards,
commercial cards (including so-called “commercial cards”, “procurement cards” or
“p-cards”), or Cash Management Services, in an aggregate amount not to exceed
$250,000,

(l) unsecured Indebtedness of Borrower owing to former employees, officers, or
directors (or any spouses, ex-spouses, or estates of any of the foregoing)
incurred in connection with the repurchase by Borrower of the Equity Interests
of Borrower that have been issued to such Persons, so long as (i) no Default or
Event of Default has occurred and is continuing or would result from the
incurrence of such Indebtedness, (ii) the aggregate amount of all such
Indebtedness outstanding at any one time does not exceed $500,000, and
(iii) such Indebtedness is subordinated to the Obligations on terms and
conditions reasonably acceptable to Agent,

(m) contingent liabilities in respect of any indemnification obligation,
adjustment of purchase price of Borrower or the applicable Loan Party incurred
in connection with the consummation of one or more Permitted Acquisitions,

(n) to the extent constituting Indebtedness, Permitted Investments,

(o) unsecured Indebtedness incurred in respect of netting services, overdraft
protection, and other like services, in each case, incurred in the ordinary
course of business,

(p) accrual of interest, accretion or amortization of original issue discount,
or the payment of interest in kind, in each case, on Indebtedness that otherwise
constitutes Permitted Indebtedness,

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(q) Subordinated Indebtedness solely for purposes of a Specified Contribution,
in an aggregate amount not to exceed the amount required for such Specified
Contribution,

(r) Indebtedness in an aggregate principal amount not to exceed $4,160,378.25 in
respect of the Existing Letters of Credit, so long as such Existing Letters of
Credit are cancelled and returned to the issuer thereof within ninety (90) days
from the Closing Date,

(s) Second Lien Indebtedness pursuant to the Second Lien Loan Documents to the
extent that the aggregate principal amount of such Indebtedness does not exceed
the maximum amount permitted under, and such Indebtedness is subject to the
terms and conditions of, the Intercreditor Agreement, and

(t) any other unsecured Indebtedness incurred by Borrower or any of its
Subsidiaries in an aggregate outstanding amount not to exceed $500,000 at any
one time.

“Permitted Intercompany Advances” means loans and other Investments made by
(a) a Loan Party to another Loan Party, (b) a Subsidiary of Borrower that is not
a Loan Party to another Subsidiary of Borrower that is not a Loan Party, (c) a
Subsidiary of Borrower that is not a Loan Party to a Loan Party, so long as the
parties thereto are party to the Intercompany Subordination Agreement, and (d) a
Loan Party to a Subsidiary of Borrower that is not a Loan Party so long as
(i) the aggregate amount of all such loans and other Investments (by type, not
by the borrower) does not exceed $250,000 outstanding at any one time, and
(ii) at the time of the making of such loan and other Investments, no Event of
Default has occurred and is continuing or would result therefrom.

“Permitted Investments” means:

(a) Investments in cash and Cash Equivalents,

(b) Investments in negotiable instruments deposited or to be deposited for
collection in the ordinary course of business,

(c) advances made in connection with purchases of goods or services in the
ordinary course of business,

(d) Investments received in settlement of amounts due to any Loan Party or any
of its Subsidiaries effected in the ordinary course of business or owing to any
Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings
involving an account debtor or upon the foreclosure or enforcement of any Lien
in favor of a Loan Party or its Subsidiaries,

(e) Investments owned by any Loan Party or any of its Subsidiaries on the
Closing Date and set forth on Schedule P-2 to the Agreement,

(f) guarantees permitted under the definition of Permitted Indebtedness,

(g) Permitted Intercompany Advances,

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(h) Equity Interests or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to a Loan
Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise
outside the ordinary course of business) or as security for any such
Indebtedness or claims,

(i) deposits of cash made in the ordinary course of business to secure
performance of operating leases,

(j) (i) non-cash loans and advances to employees, officers, and directors of
Borrower or any of its Subsidiaries for the purpose of purchasing Equity
Interests in Borrower so long as the proceeds of such loans are used in their
entirety to purchase such Equity Interests in Borrower, and (ii) loans and
advances to employees and officers of Borrower or any of its Subsidiaries in the
ordinary course of business for any other business purpose and in an aggregate
amount not to exceed $250,000 at any one time,

(k) Permitted Acquisitions,

(l) Investments resulting from entering into agreements relative to Indebtedness
that is permitted under clause (j) of the definition of Permitted Indebtedness,

(m) equity Investments by any Loan Party in any Subsidiary of such Loan Party
which is required by law to maintain a minimum net capital requirement or as may
be otherwise required by applicable law,

(n) Investments consisting of non-cash consideration received in connection with
Permitted Dispositions, so long as the non-cash consideration received in
connection with any Permitted Disposition does not exceed 20% of the total
consideration received in connection with such Permitted Disposition, and

(o) so long as no Event of Default has occurred and is continuing or would
result therefrom, any other Investments in an aggregate amount not to exceed
$1,000,000 during the term of the Agreement.

“Permitted Liens” means

(a) Liens granted to, or for the benefit of, Agent to secure the Obligations,

(b) Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) do not have priority over
Agent’s Liens and the underlying taxes, assessments, or charges or levies are
the subject of Permitted Protests,

(c) judgment Liens arising solely as a result of the existence of judgments,
orders, or awards that do not constitute an Event of Default under Section 8.3
of the Agreement,

(d) Liens set forth on Schedule P-3 to the Agreement; provided, that to qualify
as a Permitted Lien, any such Lien described on Schedule P-3 to the Agreement
shall only secure the Indebtedness that it secures on the Closing Date and any
Refinancing Indebtedness in respect thereof,

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(e) the interests of lessors under operating leases and non-exclusive licensors
under license agreements,

(f) purchase money Liens on fixed assets or the interests of lessors under
Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as (i) such Lien attaches only to the
fixed asset purchased or acquired and the proceeds thereof, and (ii) such Lien
only secures the Indebtedness that was incurred to acquire the fixed asset
purchased or acquired or any Refinancing Indebtedness in respect thereof,

(g) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests,

(h) Liens on amounts deposited to secure Borrower’s and its Subsidiaries
obligations in connection with worker’s compensation or other unemployment
insurance,

(i) Liens on amounts deposited to secure Borrower’s and its Subsidiaries
obligations in connection with the making or entering into of bids, tenders, or
leases in the ordinary course of business and not in connection with the
borrowing of money,

(j) Liens on amounts deposited to secure Borrower’s and its Subsidiaries
reimbursement obligations with respect to surety or appeal bonds obtained in the
ordinary course of business,

(k) with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof,

(l) non-exclusive licenses of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business,

(m) Liens that are replacements of Permitted Liens to the extent that the
original Indebtedness is the subject of permitted Refinancing Indebtedness and
so long as the replacement Liens only encumber those assets that secured the
original Indebtedness,

(n) rights of setoff or bankers’ liens upon deposits of funds in favor of banks
or other depository institutions, solely to the extent incurred in connection
with the maintenance of such Deposit Accounts in the ordinary course of
business,

(o) Liens granted in the ordinary course of business on the unearned portion of
insurance premiums securing the financing of insurance premiums to the extent
the financing is permitted under the definition of Permitted Indebtedness,

(p) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods,

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(q) Liens solely on any cash earnest money deposits made by Borrower or any of
its Subsidiaries in connection with any letter of intent or purchase agreement
with respect to a Permitted Acquisition,

(r) Liens assumed by Borrower or its Subsidiaries in connection with a Permitted
Acquisition that secure Acquired Indebtedness that is Permitted Indebtedness to
the extent such Liens are on the Equipment and Real Property acquired with such
Acquired Indebtedness,

(s) Lien securing Second Lien Indebtedness, so long as such Liens are subject to
the Intercreditor Agreement,

(t) Liens securing Indebtedness permitted pursuant to clause (r) of the
definition of Permitted Indebtedness,

(u) subject to the terms of the Intercreditor Agreement, Liens securing
Indebtedness permitted pursuant to clause (s) of the definition of Permitted
Indebtedness,

(v) Liens solely in cash deposits in an aggregate amount not to exceed $123,500
made by Borrower pursuant to the payoff arrangements in respect of the
Prepetition ABL Credit Agreement and the DIP ABL Credit Agreement, and

(w) other Liens which do not secure Indebtedness for borrowed money or letters
of credit and as to which the aggregate amount of the obligations secured
thereby does not exceed $750,000.

“Permitted Protest” means the right of Borrower or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on Borrower’s or its Subsidiaries’ books and
records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Borrower or its Subsidiary, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of Agent’s Liens.

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Indebtedness (other than the Obligations, but including Capitalized Lease
Obligations), incurred after the Closing Date and at the time of, or within 20
days after, the acquisition of any fixed assets for the purpose of financing all
or any part of the acquisition cost thereof, in an aggregate principal amount
outstanding at any one time not in excess of $8,500,000.

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

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“Platform” has the meaning specified therefor in Section 17.9(c) of the
Agreement.

“Prepetition ABL Credit Agreement” has the meaning set forth in the recitals to
the Agreement.

“Prime Rate” means, at any time, the prime rate published in the “Money Rates”
column of The Wall Street Journal at such time, and in the event that The Wall
Street Journal is not available at such time, the prime rate published in
another publication as determined by Agent in its discretion.

“Principal Reduction Notice” has the meaning specified therefor in
Section 2.10(e) of the Agreement.

“Professional Fee Account” means that certain deposit account ending in 7118
established with Wells Fargo Bank, N.A., established solely for purposes of the
payment of certain professional fees accrued during the pendency of, and in
connection with, the Bankruptcy Cases with an aggregate amount on deposit not to
exceed $8,500,000.

“Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.

“Pro Rata Share” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make all or a portion of the
Revolving Loans, with respect to such Lender’s right to receive payments of
interest, fees, and principal with respect to the Revolving Loans, and with
respect to all other computations and other matters related to the Revolver
Commitments or the Revolving Loans, the percentage obtained by dividing (i) the
Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan
Exposure of all Lenders,

(b) with respect to a Lender’s obligation to participate in the Letters of
Credit, with respect to such Lender’s obligation to reimburse Issuing Bank, and
with respect to such Lender’s right to receive payments of Letter of Credit
Fees, and with respect to all other computations and other matters related to
the Letters of Credit, the percentage obtained by dividing (i) the Revolving
Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of
all Lenders; provided, that if all of the Revolving Loans have been repaid in
full and all Revolver Commitments have been terminated, but Letters of Credit
remain outstanding, Pro Rata Share under this clause shall be determined as if
the Revolver Commitments had not been terminated and based upon the Revolver
Commitments as they existed immediately prior to their termination,

(c) (i) with respect to a Lender’s obligation to make the Term Loan, the
percentage obtained by dividing (y) such Lender’s Term Loan Commitment by
(z) the aggregate amount of all Lenders’ Term Loan Commitments, and (ii) with
respect to a Lender’s right to receive payments of interest, fees and principal
with respect to the Term Loan, the percentage obtained by dividing (y) the
principal amount of such Lender’s portion of the Term Loan by (z) the aggregate
principal amount of the Term Loan, and

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(d) with respect to all other matters and for all other matters as to a
particular Lender (including the indemnification obligations arising under
Section 15.7 of the Agreement), the percentage obtained by dividing (i) the
Revolving Loan Exposure of such Lender plus the outstanding principal amount of
such Lender’s portion of the Term Loan by (ii) the aggregate Revolving Loan
Exposure of all Lenders plus the outstanding aggregate principal amount of the
Term Loan, in any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to Section 13.1; provided, that if all of the
Loans have been repaid in full, all Letters of Credit have been made the subject
of Letter of Credit Collateralization, and all Commitments have been terminated,
Pro Rata Share under this clause shall be determined as if the Revolving Loan
Exposures and the Term Loan had not been repaid, collateralized, or terminated
and shall be based upon the Revolving Loan Exposures and Term Loan holdings as
they existed immediately prior to their repayment, collateralization, or
termination.

“Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of
the Agreement.

“Public Lender” has the meaning specified therefor in Section 17.9(c) of the
Agreement.

“Qualified Equity Interests” means and refers to any Equity Interests issued by
Borrower (and not by one or more of its Subsidiaries) that is not a Disqualified
Equity Interest.

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by Borrower or its Subsidiaries and the improvements thereto.

“Real Property Collateral” means (a) the Real Property identified on Schedule
R-1 to the Agreement and (b) any Real Property hereafter acquired by Borrower or
its Subsidiaries with a fair market value in excess of $2,500,000.

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

(a) such refinancings, renewals, or extensions do not result in an increase in
the principal amount of the Indebtedness so refinanced, renewed, or extended,
other than by the amount of premiums paid thereon and the fees and expenses
incurred in connection therewith and by the amount of unfunded commitments with
respect thereto,

(b) such refinancings, renewals, or extensions do not result in a shortening of
the average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be
expected to be materially adverse to the interests of the Lenders,

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(c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and

(d) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.

“Register” has the meaning set forth in Section 13.1(i) of the Agreement.

“Registered Loan” has the meaning set forth in Section 13.1(i) of the Agreement.

“Related Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course and that is administered, advised or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers, advises or manages a Lender.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
the Agreement.

“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

“Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (d) of the definition of Pro Rata Shares) exceed 50%;
provided, that the Revolving Loan Exposure of any Defaulting Lender shall be
disregarded in the determination of the Required Lenders.

“Reserves” means, as of any date of determination, those reserves that Agent
deems necessary or appropriate, in its Permitted Discretion and subject to
Section 2.1(c), to establish and maintain (including reserves with respect to
(a) sums that Borrower or its Subsidiaries are required to pay under any Section
of the Agreement or any other Loan Document (such as taxes, assessments,
insurance premiums, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay, and (b) amounts owing by
Borrower or its Subsidiaries to any Person to the extent secured by a Lien on,
or trust over, any of the Collateral (other than a Permitted Lien), which Lien
or trust, in the Permitted Discretion of Agent likely would have a priority
superior to Agent’s Liens (such as Liens or trusts in favor of

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landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral) with respect to the Borrowing Base or the Maximum Revolver Amount.
Without limiting the foregoing, Agent may establish Reserves in the event the
methodology used to calculate depreciation in any appraisal obtained to
determine the Net Orderly Liquidation Value of Eligible Equipment is different
from the depreciation methodology utilized by Borrower.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Person or any of its Subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to any Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment.

“Revised Orderly Liquidation Value In Place” means the orderly liquidation value
in place of the Saltwater Disposal Assets, as estimated by Great American Group
in the Great American Appraisal, and as further set forth in the most recent
appraisal acceptable to Agent, upon which Agent is expressly entitled to rely,
prepared by an appraiser acceptable to Agent, net of operating expenses,
liquidation expenses and commissions set forth in such appraisal; provided, that
to the extent operating expenses, liquidation expenses and commissions set forth
in such appraisal are not allocated to specific items of Saltwater Disposal
Assets, such operating expenses, liquidation expenses and commissions may be
allocated by Agent to specific assets as determined in Agent’s Permitted
Discretion; and provided further, that the liquidation timeframe is acceptable
to Agent.

“Revolver Commitment” means, with respect to each Revolving Lender, its Revolver
Commitment, and, with respect to all Revolving Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Revolving Lender’s name under the applicable heading on Schedule C-1 to the
Agreement or in the Assignment and Acceptance pursuant to which such Revolving
Lender became a Revolving Lender under the Agreement, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1 of the Agreement.

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Revolving Loans (inclusive of Protective Advances), plus
(b) the amount of the Letter of Credit Usage.

“Revolving Facility” means, at any time, the aggregate amount of the Revolving
Lenders’ Revolver Commitments at such time.

“Revolving Lender” means a Lender that has a Revolver Commitment or that has an
outstanding Revolving Loan.

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“Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any
date of determination (a) prior to the termination of the Revolver Commitments,
the amount of such Lender’s Revolver Commitment, and (b) after the termination
of the Revolver Commitments, the aggregate outstanding principal amount of the
Revolving Loans of such Lender.

“Revolving Loans” has the meaning specified therefor in Section 2.1(a) of the
Agreement.

“Saltwater Disposal Assets” means those certain assets described in the Great
American Appraisal consisting of certain saltwater disposal wells, affiliated
pipelines and a landfill.

“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
or determined to be 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.

“Sanctions” means all economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by OFAC or the U.S. Department of State, or (b) the
United Nations Security Council, the European Union or Her Majesty’s Treasury of
the United Kingdom.

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

“Second Lien Agent” means the “Agent” under and as defined in the Second Lien
Credit Agreement.

“Second Lien Credit Agreement” means that certain Second Lien Credit Agreement,
dated as of the date hereof, by and among the Second Lien Agent, the Second Lien
Lenders, Borrower and each other Person party thereto from time to time as a
loan party thereunder, as amended and in effect from time to time to the extent
permitted herein and in the Intercreditor Agreement.

“Second Lien Indebtedness” means the Indebtedness evidenced by the Second Lien
Loan Documents.

“Second Lien Lenders” means each of the “Lenders” under and as defined in the
Second Lien Credit Agreement.

“Second Lien Loan Documents” means the Second Lien Credit Agreement and each
other agreement, document and instrument executed and delivered in connection
therewith, as amended and in effect from time to time to the extent permitted
herein and in the Intercreditor Agreement.

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“Securities Account” means a securities account (as that term is defined in the
Code).

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Securitization” has the meaning specified therefor in Section 13.1(h) of the
Agreement.

“Security Documents” means, collectively, the Guaranty and Security Agreement,
the Mortgages, the Trademark Security Agreement, the Patent Security Agreement
and each other security agreement or other instrument or document executed and
delivered pursuant to terms of the Agreement or pursuant to any of the Security
Documents to secure any of the Obligations.

“Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Solvent” means, with respect to any Person as of any date of determination,
that (a) such Person is not engaged or about to engage in a business or
transaction for which the remaining assets of such Person are unreasonably small
in relation to the business or transaction or for which the property remaining
with such Person is an unreasonably small capital, and (b) such Person has not
incurred and does not intend to incur, or reasonably believe that it will incur,
debts beyond its ability to pay such debts as they become due (whether at
maturity or otherwise), and (c) such Person is “solvent” or not “insolvent”, as
applicable within the meaning given those terms and similar terms under
applicable laws relating to fraudulent transfers and conveyances (provided, that
this clause (c) shall exclude any definition of “solvent” or “insolvent” which
is defined as at fair valuations, the sum of such Person’s debts and liabilities
(including contingent liabilities) is less than all of such Person’s assets).
For purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability (irrespective of whether
such contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standard No. 5).

“Specified Contribution” has the meaning specified therefor in Section 7(b) of
the Agreement.

“Standard Letter of Credit Practice” means, for Issuing Bank, any domestic or
foreign law or letter of credit practices applicable in the city in which
Issuing Bank issued the applicable Letter of Credit or, for its branch or
correspondent, such laws and practices applicable in the city in which it has
advised, confirmed or negotiated such Letter of Credit, as the case may be, in
each case, (a) which letter of credit practices are of banks that regularly
issue letters of credit in the particular city, and (b) which laws or letter of
credit practices are required or permitted under ISP or UCP, as chosen in the
applicable Letter of Credit.

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“Subject Holder” has the meaning specified therefor in Section 2.4(e)(v) of the
Agreement.

“Subordinated Indebtedness” means any unsecured Indebtedness of Borrower or its
Subsidiaries incurred from time to time that is subordinated in right of payment
(which, for the avoidance of doubt, shall include a restriction on all cash
payments with respect to such Indebtedness) to the Obligations and (a) that is
only guaranteed by the Guarantors, (b) that is not subject to scheduled
amortization, redemption, sinking fund or similar payment and does not have a
final maturity, in each case, on or before the date that is six months after the
Maturity Date, (c) that does not include any financial covenants or any covenant
or agreement that is more restrictive or onerous on any Loan Party in any
material respect than any comparable covenant in the Agreement and is otherwise
on terms and conditions reasonably acceptable to Agent, (d) shall be limited to
cross-payment default and cross-acceleration to designated “senior debt”
(including the Obligations), and (e) the terms and conditions of such
subordination and any such Indebtedness shall be acceptable to Agent in its sole
discretion.

“Subordination Provisions” has the meaning specified therefor in Section 8.12 of
the Agreement.

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Equity Interests having ordinary voting power to elect a majority
of the Board of Directors of such corporation, partnership, limited liability
company, or other entity.

“Supermajority Lenders” means, at any time, Lenders whose aggregate Pro Rata
Shares (calculated under clause (d) of the definition of Pro Rata Shares) exceed
66 2/3%; provided, that the Revolving Loan Exposure of any Defaulting Lender
shall be disregarded in the determination of the Required Lenders.

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein, and all
interest, penalties or similar liabilities with respect thereto.

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“Term Loan” has the meaning specified therefor in Section 2.2 of the Agreement.

“Term Loan Limit” means, at any time, the lesser of (a) $15,000,000 and (b) 25%
of the sum of (i) the Revised Orderly Liquidation Value in Place plus (ii) the
Net Orderly Liquidation Value of the Eligible Term Loan Collateral, subject to
applicable Reserves, on such date.

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“Term Loan Commitment” means, with respect to each Lender, its Term Loan
Commitment, and, with respect to all Lenders, their Term Loan Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender under the Agreement, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1 of the Agreement.

“Trademark Security Agreement” has the meaning specified therefor in the
Guaranty and Security Agreement.

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and
Practice for Documentary Credits 2007 Revision, International Chamber of
Commerce Publication No. 600 and any subsequent revision thereof adopted by the
International Chamber of Commerce on the date such Letter of Credit is issued.

“United States” means the United States of America.

“Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of the
Agreement.

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the
Agreement.

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Schedule 3.1

The effectiveness of this Agreement is subject to the fulfillment, to the
satisfaction of Agent and each Lender, of each of the following conditions
precedent:

(a) the Closing Date shall occur on or before August 7, 2017;

(b) Agent shall have received appropriate financing statements on Form UCC-1
duly filed in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect Agent’s Liens in and to the Collateral, and Agent
shall have received searches reflecting the filing of all such financing
statements;

(c) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent, duly executed and delivered, and each such
document shall be in full force and effect:

(i) this Agreement;

(ii) the Intercreditor Agreement;

(iii) a completed Borrowing Base Certificate dated as of July 21, 2017;

(iv) the Control Agreements required to be delivered on the Closing Date
pursuant to the Agreement,

(v) the Fee Letter,

(vi) the Guaranty and Security Agreement,

(vii) the Intercompany Subordination Agreement,

(viii) a Perfection Certificate, and

(ix) the Trademark Security Agreement;

(d) Agent shall have received a certificate from a responsible officer of each
Loan Party:

(i) attesting to the resolutions of such Loan Party’s board of directors
authorizing its execution, delivery, and performance of the Loan Documents to
which it is a party,

(ii) authorizing specific officers of such Loan Party to execute the same,
attesting to the incumbency and signatures of such specific officers of such
Loan Party,

(iii) attesting to copies of each Loan Party’s Governing Documents, as amended,
modified, or supplemented to the Closing Date, which Governing Documents shall
be (A) certified by the responsible officer of such Loan Party, and (B) with
respect to Governing Documents that are charter documents, certified as of a
recent date (not more than 30 days prior to the Closing Date) by the appropriate
governmental official,

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(iv) attesting to certificates of status with respect to each Loan Party, dated
within 10 days of the Closing Date, such certificates to be issued by the
appropriate officer of the jurisdiction of organization of such Loan Party,
which certificates shall indicate that such Loan Party is in good standing in
such jurisdiction, and

(v) attesting to certificates of status with respect to each Loan Party, each
dated within 30 days of the Closing Date, such certificates to be issued by the
appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such Loan Party) in which such Loan Party’s failure to be duly
qualified or licensed would constitute a Material Adverse Effect, which
certificates shall indicate that such Loan Party is in good standing in such
jurisdictions;

(e) after giving effect to the Loans funded on the Closing Date, the payment of
all fees and expenses required to be paid by Borrower and application of the
Availability Block, Excess Availability shall be greater than or equal to
$2,500,000;

(f) since the date the Loan Parties filed the Bankruptcy Cases, there shall not
have occurred a Material Adverse Effect, other than (i) as customarily resulting
from the commencement of petitions for relief similar to the Bankruptcy Cases
and (ii) as contemplated in Borrower’s business plan delivered to Agent prior to
July 28, 2017;

(g) the Order shall be in full force and effect and shall not be stayed pending
appeal or otherwise, and no amendments, supplements or other modifications
thereto shall have been effected without the consent of Agent;

(h) the transactions contemplated by this Agreement and the other Loan
Documents, including, without limitation, the funding under the Second Lien
Credit Agreement, shall have been consummated (i) on terms consistent with those
outlined in the Approved Plan, (ii) in compliance with applicable law, court and
regulatory approvals and (iii) satisfactory to Agent;

(i) Agent shall have received executed copies of the material Second Lien Loan
Documents, certified by a responsible officer of Borrower as being true, correct
and complete, and Agent shall be satisfied with the terms and conditions of the
Second Lien Loan Documents;

(j) all Indebtedness and obligations of the Loan Parties and their subsidiaries,
and the Liens securing same, (a) that are outstanding immediately after
consummation of the Approved Plan shall not exceed the amount contemplated
thereby and (b) contemplated by the Approved Plan to be converted to equity or
extinguished prior to or substantially contemporaneously with the Closing Date
shall have been so converted or extinguished;

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(k) Agent shall have received all reasonably requested Collateral Access
Agreements in favor of Agent, from all mortgagees, landlords and operators of
warehouses in which a Loan Party operates or maintains any Collateral; provided
that any locations not subject to such Collateral Access Agreements shall be
subject to a Landlord Reserve at Agent’s sole discretion;

(l) Agent shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 5.6 of this Agreement, the form
and substance of which shall be satisfactory to Agent;

(m) Agent shall have received satisfactory evidence (including a certificate of
the chief executive officer of Borrower) that all tax returns required to be
filed by Borrower and its Subsidiaries have been timely filed and all taxes,
including, but not limited to, sales tax, upon Borrower and its Subsidiaries or
their properties, assets, income, and franchises (including real property taxes,
sales taxes, and payroll taxes) have been paid prior to delinquency;

(n) Agent shall have received an opinion of the Loan Parties’ counsel in form
and substance satisfactory to Agent;

(o) Agent shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of Borrower’s and its
Subsidiaries books and records and verification of Borrower’s representations
and warranties to Agent and the Lenders, the results of which shall be
satisfactory to Agent, (ii) an inspection of each of the locations where
Borrower’s and its Subsidiaries’ Inventory is located, the results of which
shall be satisfactory to Agent, (iii) satisfactory review by Agent of all
contracts with Federal, state, municipal and governmental agencies, (iv) a
review of Borrower’s and its Subsidiaries’ insurance and (v) a review of (A) a
quality of earnings report of Borrower and its Subsidiaries, (B) all Material
Contracts, (C) all surety bonds, licenses and permits, and (D) the results of
the Hilco Exam, each of which shall be satisfactory to Agent;

(p) Agent shall have received completed reference and background checks with
respect to Borrower’s senior management, the results of which are satisfactory
to Agent in Agent’s sole discretion;

(q) Agent shall have received an audit of Eligible Accounts and an appraisal of
the Eligible Equipment, in each case the results of which shall be satisfactory
to Agent;

(r) Agent shall have received (i) monthly financial statements of Borrower and
its Subsidiaries as of the date ending at least 30 days prior to the Closing
Date, (ii) audited financial statements for the fiscal year ended December 31,
2016, and (iii) monthly financial projections for the fiscal year ending
December 31, 2017, in form and substance reasonably satisfactory to Agent;

(s) Borrower shall have paid all Lender Group Expenses incurred in connection
with the transactions contemplated by this Agreement and the other Loan
Documents;

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(t) Borrower and each of its Subsidiaries shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrower or its Subsidiaries of
the Loan Documents or with the consummation of the transactions contemplated
thereby; and

(u) all other documents and legal matters in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Agent.

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Schedule 5.1

Deliver to Agent (and if so requested by Agent, with copies to each Lender) each
of the financial statements, reports, or other items set forth below at the
following times in form satisfactory to Agent:

 

as soon as available, but in any event within 30 days after the end of each
month during each of Borrower’s fiscal years,   

(a) an unaudited consolidated and consolidating balance sheet, income statement,
statement of cash flow, and statement of shareholder’s equity covering
Borrower’s and its Subsidiaries’ operations during such period and compared to
the prior period and plan, together with a corresponding discussion and analysis
of results from management to the extent prepared by Borrower (and, to the
extent not so prepared by Borrower, an e-mail summary with performance
highlights and other detail reasonably requested by Agent), and

 

(b) a Compliance Certificate.

as soon as available, but in any event within 120 days after the end of each of
Borrower’s fiscal years,   

(c) consolidated financial statements of Borrower and its Subsidiaries for each
such fiscal year, audited by independent certified public accountants reasonably
acceptable to Agent and certified, without any qualifications (including any
(A) qualification or exception as to the scope of such audit or
(B) qualification which relates to the treatment or classification of any item
and which, as a condition to the removal of such qualification, would require an
adjustment to such item, the effect of which would be to cause any noncompliance
with the provisions of Section 7 of the Agreement), by such accountants to have
been prepared in accordance with GAAP (such audited financial statements to
include a balance sheet, income statement, statement of cash flow, and statement
of shareholder’s equity, and, if prepared, such accountants’ letter to
management); provided that such audited annual consolidated financial statements
for the fiscal year ending December 31, 2017 shall only cover the portion of
such year commencing with the Closing Date and ending December 31, 2017. If
Borrower’s independent certified public accountant has prepared footnotes to
accompany any such financial statements, Borrower shall deliver such footnotes
to Agent contemporaneously with Borrower’s delivery of the associated financial
statements to Agent,

 

(d) a Compliance Certificate, and

 

(e) a detailed calculation demonstrating whether or not each Subsidiary that has
been excluded as a Loan Party by virtue of being an Immaterial Subsidiary
remains an Immaterial Subsidiary.

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as soon as available, but in any event within 60 days after the end of each of
Borrower’s fiscal years,    (f) copies of Borrower’s Projections, in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent, in its Permitted Discretion, for the forthcoming fiscal year, month by
month, certified by a responsible officer of Borrower as being such officer’s
good faith estimate of the financial performance of Borrower during the period
covered thereby. if and when filed by Borrower, provided, however, that Borrower
shall be deemed to have furnished the information required if it shall have
timely filed such information for public availability with the SEC and/or on its
internet home page,   

(g) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports,

 

(h) any other filings made by Borrower with the SEC, and

 

(i) any other information that is provided by Borrower to its shareholders
generally.

promptly, but in any event within 2 days after Borrower has knowledge of any
event or condition that constitutes a Default or an Event of Default,    (j)
notice of such event or condition and a statement of the curative action that
Borrower proposes to take with respect thereto. promptly after the commencement
thereof, but in any event within 5 days after the service of process with
respect thereto on Borrower or any of its Subsidiaries,    (k) notice of all
actions, suits, or proceedings brought by or against Borrower or any of its
Subsidiaries before any Governmental Authority which reasonably could be
expected to result in a Material Adverse Effect.

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promptly, but in any event within three (3) Business Days, after entering into a
change, modification, amendment, revision, waiver or consent to the Second Lien
Loan Documents,    (l) written notice (together with copies of all executed
instruments relating thereto) of any such change, modification, amendment,
revision, waiver or consent to the Second Lien Loan Documents. promptly, but in
any event within three (3) Business Days, after the furnishing thereof pursuant
to the Second Lien Loan Documents or the documents relating to such Subordinated
Indebtedness,    (m) copies of any statement or report furnished to Second Lien
Agent, any Second Lien Lender or any holder of Subordinated Indebtedness, in
Second Lien Agent’s, such Second Lien Lender’s or such holder’s capacity as
creditor to such Person, pursuant to the terms of the Second Lien Loan Documents
or the documentation relating to such Subordinated Indebtedness and not
otherwise required to be furnished to the Lenders pursuant to this Schedule 5.1.
upon the request of Agent,    (n) any other information reasonably requested
relating to the financial condition of Borrower or its Subsidiaries.

Documents required to be delivered pursuant to this Schedule 5.1 (to the extent
any such documents are included in materials otherwise filed with the SEC) may
be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which Borrower posts such documents, or provides a
link thereto on Borrower’s website on the Internet at www.nuverra.com and
notifies Agent that such documents are available; or (ii) on which such
documents are posted on Borrower’s behalf on an Internet or intranet website, if
any, to which each Lender and Agents have access (whether a commercial,
third-party website or whether sponsored by Agent) and Agent receives
notification from Borrower that such documents are available; provided, that
Borrower shall deliver paper copies of such documents to Agent or any Lender
upon its request to Borrower to deliver such paper copies. Notwithstanding
anything contained in this paragraph to the contrary, in every instance Borrower
shall be required to provide copies of the Compliance Certificates
electronically or otherwise in a manner reasonably satisfactory to Agent. Agent
shall have no obligation to request the delivery of or to maintain paper copies
of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by Borrower with any such request for
delivery by a Lender, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.

Compliance with the requirements set forth in this Schedule 5.1 does not relieve
Borrower of the other reporting requirements set forth in the Agreement,
including but not limited to Section 5.1.

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Schedule 5.2

Provide Agent (and if so requested by Agent, with copies for each Lender) with
each of the documents set forth below at the following times in form
satisfactory to Agent:

 

Monthly (no later than the 10th Business Day of each month), and with each
request for a Borrowing    (a) an executed Borrowing Base Certificate. Monthly
(no later than the 10th Business Day of each month), and with each request for a
Borrowing   

(b) a detailed aging, by total, of Borrower’s and its Subsidiaries Accounts,
together with a reconciliation and supporting documentation for any reconciling
items noted (delivered electronically in an acceptable format, if Borrower has
implemented electronic reporting),

 

(c) a general ledger trial balance and a detailed calculation of those Accounts
that are not eligible for the Borrowing Base, if Borrower has not implemented
electronic reporting, and

 

(d) a summary aging, by vendor, of Borrower’s and its Subsidiaries’ accounts
payable and any book overdraft (delivered electronically in an acceptable
format, if Borrower has implemented electronic reporting) and an aging, by
vendor, of any held checks.

Monthly (no later than the 10th Business Day of each month), and, commencing 60
days following the Closing Date, with each request for a Borrowing    (e) an
Account roll-forward, in a format acceptable to Agent in its discretion, with
supporting details supplied from sales journals, collection journals, credit
registers and any other records, tied to the beginning and ending account
receivable balances of Borrower’s general ledger. Monthly (no later than the
10th Business Day of each month)   

(f) a detailed report regarding Borrower’s and its Subsidiaries’ cash and Cash
Equivalents, and

 

(g) a detailed report showing additions of, and deletions to, Eligible
Equipment, and a calculation of the net book value (calculated in accordance
with GAAP on a basis consistent with Borrower’s historical accounting practices)
of Eligible Equipment at the end of such period.

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Monthly (no later than the 30th day of each month)   

(h) a reconciliation of Accounts and trade accounts payable of Borrower’s
general ledger accounts to its monthly financial statements including any book
reserves related to each category, and

 

(i) a detailed report describing accrued expenses.

Quarterly   

(j) a report regarding Borrower’s and its Subsidiaries’ accrued but unpaid, ad
valorem taxes, and

 

(k) a Perfection Certificate or a supplement to the Perfection Certificate, if
requested by Agent.

Annually    (l) a detailed list of Borrower’s and its Subsidiaries’ customers,
with address and contact information. Upon request by Agent   

(o) an insurance claim report,

 

(p) such other reports as to the Collateral or the financial condition of
Borrower and its Subsidiaries, as Agent may reasonably request.

Compliance with the requirements set forth in this Schedule 5.2 does not relieve
Borrower of the other reporting requirements set forth in the Agreement,
including but not limited to Section 5.1.