Exhibit 10.2

AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

This AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT, dated as of April 27,
2016 (as amended, supplemented, amended and restated or otherwise modified from
time to time, this “Security Agreement”), is by and among CARBO CERAMICS INC., a
Delaware corporation (the “Borrower”), each Material Domestic Subsidiary of the
Borrower party hereto from time to time (collectively with the Borrower, the
“Grantors” and individually, a “Grantor”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Administrative Agent (in such capacity, the “Administrative
Agent”) for the ratable benefit of the Secured Parties (as defined in the Credit
Agreement referred to herein).

W I T N E S S E T H:

WHEREAS, this Security Agreement is entered into in connection with that certain
Credit Agreement, dated as of January 29, 2010 (as heretofore and hereafter
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Credit Agreement”), among the Borrower, the lenders party thereto
from time to time (the “Lenders”), and Wells Fargo Bank, National Association,
as Administrative Agent, as issuing lender (in such capacity, the “Issuing
Lender”) and as swing line lender (in such capacity, the “Swing Line Lender”);
and

WHEREAS, the Borrower has previously executed and delivered the Security
Agreement dated July 27, 2015 (as amended or otherwise modified, the “Existing
Security Agreement”) between the Borrower and the Administrative Agent; and

WHEREAS, as a condition precedent to the effectiveness of an amendment to the
Credit Agreement, the Borrower and each additional Grantor is required to
execute and deliver this Security Agreement, which shall amend and restate the
Existing Security Agreement; and

WHEREAS, it is in the best interests of each Grantor to execute this Security
Agreement inasmuch as each Grantor will derive substantial direct and indirect
benefits from (i) the transactions contemplated by the Credit Agreement and the
other Credit Documents (as defined in the Credit Agreement), (ii) the Hedging
Arrangements (as defined in the Credit Agreement) entered into by the Borrower
or any other Credit Party (as defined in the Credit Agreement) with a Secured
Swap Provider (as defined in the Credit Agreement), and (iii) the Banking
Services (as defined in the Credit Agreement) provided by a Banking Services
Provider, and each Grantor is willing to execute, deliver and perform its
obligations under this Security Agreement to secure the Secured Obligations (as
defined in the Credit Agreement).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Grantor agrees, for the benefit of each
Secured Party, as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Certain Terms. The following terms (whether or not underscored)
when used in this Security Agreement, including its preamble and recitals, shall
have the following meanings (such definitions to be equally applicable to the
singular and plural forms thereof):

“Administrative Agent” has the meaning set forth in the preamble.

 

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“Borrower” has the meaning set forth in the preamble.

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

“Collateral” has the meaning set forth in Section 2.1(a).

“Collateral Account” has the meaning set forth in Section 4.1(b).

“Computer Hardware and Software Collateral” means (a) all computer and other
electronic data processing hardware, integrated computer systems, central
processing units, memory units, display terminals, printers, features, computer
elements, card readers, tape drives, hard and soft disk drives, cables,
electrical supply hardware, generators, power equalizers, accessories and all
peripheral devices and other related computer hardware, including all operating
system software, utilities and application programs in whatsoever form owned by
a Grantor or leased or licensed to Grantor, (b) software programs (including
both source code, object code and all related applications and data files),
designed for use on the computers and electronic data processing hardware
described in clause (a) above owned by a Grantor or leased or licensed to a
Grantor, (c) all firmware associated therewith, (d) all documentation (including
flow charts, logic diagrams, manuals, guides, specifications, training
materials, charts and pseudo codes) with respect to such hardware, software and
firmware described in the preceding clauses (a) through (c), and (e) all rights
with respect to all of the foregoing, including copyrights (including renewal
rights) and trade secrets rights, contract rights of a Grantor with respect to
all or any of the foregoing, licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications and any substitutions, replacements,
improvements, error corrections, updates, additions or model conversions of any
of the foregoing.

“Copyright Collateral” means all copyrights of any Grantor, registered or
unregistered and whether published or unpublished, now or hereafter in force
throughout the world including all of such Grantor’s rights, titles and
interests in and to all copyrights registered in the United States Copyright
Office or anywhere else in the world, including those copyright registrations or
applications therefor set forth in Item C of Schedule III hereto, and
registrations and recordings thereof and all applications for registration
thereof, whether pending or in preparation, all copyright licenses, the right to
sue for past, present and future infringements of any of the foregoing, all
rights corresponding thereto, all extensions and renewals of any thereof and all
proceeds of the foregoing, including licenses, royalties, income, payments,
claims, damages and Proceeds of suit, which are owned or licensed by such
Grantor.

“Credit Agreement” has the meaning set forth in the first recital.

“Distributions” means all cash, cash dividends, stock dividends, other
distributions, liquidating dividends, shares of stock resulting from (or in
connection with the exercise of) stock splits, reclassifications, warrants,
options, non-cash dividends, and all other distributions or payments (whether
similar or dissimilar to the foregoing) on or with respect to, or on account of,
any Pledged Interest.

“Equipment” has the meaning set forth in Section 2.1(a)(i).

“Excluded Collateral” has the meaning set forth in Section 2.1(b).

“Excluded Contract” means any contract (and any contract rights arising
thereunder) to which any of the Grantors is a party on the date hereof or which
is entered into by any Grantor after the date hereof which complies with
Section 6.5 of the Credit Agreement (and the provisions of which are not agreed
to by a Grantor for the purposes of excluding such contract from the Lien
granted hereunder), in any case to the extent (but only to the extent) that a
Grantor is prohibited from granting a security interest

 

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in, pledge of, or charge, mortgage or lien upon any such Property by reason of
(a) a negative pledge, anti-assignment provision or other contractual
restriction in existence on the date hereof or, as to contracts entered into
after the date hereof, in existence in compliance with Section 6.5 of the Credit
Agreement (and the provisions of which are not agreed to by a Grantor for the
purposes of excluding such contract from the Lien granted hereunder), or
(b) applicable Legal Requirement to which such Grantor or such Property is
subject; provided, however, to the extent that (i) either of the prohibitions
discussed in clause (a) and (b) above is ineffective or subsequently rendered
ineffective under Sections 9.406, 9.407, 9.408 or 9.409 of the UCC or under any
other Legal Requirement or is otherwise no longer in effect or enforceable, or
(ii) the applicable Grantor has obtained the consent of the other parties to
such Excluded Contract to the creation of a lien and security interest in, such
Excluded Contract, then such contract (and any contract rights arising
thereunder) shall cease to be an “Excluded Contract” and shall automatically be
subject to the lien and security interests granted hereby and to the terms and
provisions of this Security Agreement as a “Collateral”; provided further, that
any proceeds received by any Grantor from the sale, transfer or other
disposition of Excluded Contracts shall constitute Collateral unless any
Property constituting such proceeds are themselves subject to the exclusions set
forth above.

“Excluded Foreign Stock” means the Equity Interests issued by Foreign
Subsidiaries other than (a) 65% of the Voting Securities issued by a First Tier
Foreign Subsidiary and (b) 100% of Equity Interests issued by a First Tier
Foreign Subsidiary that are not Voting Securities.

“Excluded Governmental Approvals” means any Governmental Approval to the extent
(but only to the extent) that a Grantor is prohibited from granting a security
interest in, pledge of, or charge, mortgage or lien upon any such Property by
reason of (a) a negative pledge, anti-assignment provision or other contractual
restriction or (b) applicable Legal Requirement to which such Grantor or such
Property is subject; provided, however, to the extent that (i) either of the
prohibitions discussed in clause (a) and (b) above is ineffective or
subsequently rendered ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of
the UCC or under any other Legal Requirement or is otherwise no longer in effect
or enforceable, or (ii) the applicable Grantor has obtained the consent of the
applicable Governmental Authority to the creation of a lien and security
interest in, such Excluded Governmental Approval, then such Governmental
Approval shall cease to be an “Excluded Governmental Approval” and shall
automatically be subject to the lien and security interests granted hereby and
to the terms and provisions of this Security Agreement as “Collateral”; provided
further, that any proceeds received by any Grantor from the sale, transfer or
other disposition of Excluded Governmental Approval shall constitute Collateral
unless any Property constituting such proceeds are themselves subject to the
exclusions set forth above or otherwise constitute Excluded Collateral.

“Excluded Trademark Collateral” means all United States intent to use trademark
applications with respect to which the grant of a security interest therein
would impair the validity or enforceability of said intent to use trademark
application under federal law; provided, however, to the extent that such
applicable law is no longer in effect, then such trademark application shall
cease to be an “Excluded Trademark Collateral” and shall automatically be
subject to the lien and security interests granted hereby and to the terms and
provisions of this Security Agreement as “Collateral”; provided further, that
any proceeds received by any Grantor from the sale, transfer or other
disposition of Excluded Trademark Collateral shall constitute Collateral unless
any Property constituting such proceeds are themselves subject to the exclusions
set forth above or otherwise constitute Excluded Collateral.

“General Intangibles” means all “general intangibles” and all “payment
intangibles”, each as defined in the UCC, and shall include all interest rate or
currency protection or hedging arrangements, all tax refunds, all licenses,
permits, concessions and authorizations and all Intellectual Property Collateral
(in each case, regardless of whether characterized as general intangibles under
the UCC).

 

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“Governmental Approval” has the meaning set forth in Section 2.1(a)(vi).

“Grantor” has the meaning set forth in the preamble.

“Indemnitee” has the meaning set forth in Section 6.3(a).

“Intellectual Property Collateral” means, collectively, the Computer Hardware
and Software Collateral, the Copyright Collateral, the Patent Collateral, the
Trademark Collateral and the Trade Secrets Collateral.

“Inventory” has the meaning set forth in Section 2.1(a)(ii).

“Lenders” has the meaning set forth in the first recital.

“Patent Collateral” means (a) all inventions and discoveries, whether patentable
or not, all letters patent and applications for letters patent throughout the
world, including those patents and patent applications referred to in Item A of
Schedule III hereto, (b) all reissues, divisions, continuations, continuations
in part, extensions, renewals and reexaminations of any of the items described
in clause (a), (c) all patent licenses, and other agreements providing any
Grantor with the right to use any items of the type referred to in clauses
(a) and (b) above, and (d) all proceeds of, and rights associated with, the
foregoing (including licenses, royalties income, payments, claims, damages and
proceeds of infringement suits), the right to sue third parties for past,
present or future infringements of any patent or patent application, and for
breach or enforcement of any patent license.

“Pledged Interests” means all Equity Interests or other ownership interests of
any Pledged Interests Issuer, including those described in Item A of Schedule II
hereto; all registrations, certificates, articles, by-laws, regulations, limited
liability company agreements or constitutive agreements governing or
representing any such interests; all options and other rights, contractual or
otherwise, at any time existing with respect to such interests, as such
interests are amended, modified, or supplemented from time to time, and together
with any interests in any Pledged Interests Issuer taken in extension or renewal
thereof or substitution therefor.

“Pledged Interests Issuer” means each Person identified in Item A of Schedule II
hereto as the issuer of the Pledged Interests identified opposite the name of
such Person.

“Pledged Note Issuer” means each Person identified in Item B of Schedule II
hereto as the issuer of the Pledged Notes identified opposite the name of such
Person.

“Pledged Notes” means all promissory notes of any Pledged Note Issuer (each such
note being payable to one or more Grantors) evidencing Debt incurred pursuant to
Section 6.1(b) of the Credit Agreement in form and substance reasonably
satisfactory to the Administrative Agent delivered by any Grantor to the
Administrative Agent as Pledged Property hereunder, as such promissory notes, in
accordance with Section 7.3, are amended, modified or supplemented from time to
time and together with any promissory note of any Pledged Note Issuer taken in
extension or renewal thereof or substitution therefor.

“Pledged Property” means all Pledged Notes, Pledged Interests, all assignments
of any amounts due or to become due with respect to the Pledged Interests, all
other instruments which are now being delivered by any Grantor to the
Administrative Agent or may from time to time hereafter be delivered by any
Grantor to the Administrative Agent for the purpose of pledging under this
Security Agreement or any other Credit Document, and all proceeds of any of the
foregoing.

 

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“Receivables” has the meaning set forth in Section 2.1(a)(iii).

“Related Contracts” has the meaning set forth in Section 2.1(a)(iii).

“Secured Parties” has the meaning set forth in the Credit Agreement.

“Security Agreement” has the meaning set forth in the preamble.

“Termination Date” means the date that (i) all Secured Obligations have been
paid in full in cash (other than reimbursement and indemnity obligations for
which no notice of a claim has been made), all Letters of Credit have been
terminated or expired (or been cash collateralized to the reasonable
satisfaction of the respective Issuing Lender), all Hedging Arrangements with
Secured Swap Providers have been terminated or novated to a counterparty that is
not a Secured Party (or separately collateralized to the reasonable satisfaction
of such Secured Swap Provider), and all Commitments shall have terminated or
(ii) the Liens granted herein are otherwise terminated in full pursuant to the
terms of the Credit Agreement.

“Trademark Collateral” means (a) (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, certification marks, collective marks, logos and other source or
business identifiers, and all goodwill of the business associated therewith, now
existing or hereafter adopted or acquired, including those trademarks referred
to in Item B of Schedule III hereto, whether currently in use or not, all
registrations and recordings thereof and all applications in connection
therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any office or agency of the United States of America, or
any State thereof or any other country or political subdivision thereof or
otherwise, and all common law rights relating to the foregoing, and (ii) the
right to obtain all reissues, extensions or renewals of the foregoing
(collectively referred to as the “Trademark”), (b) all trademark licenses for
the grant by or to any Grantor of any right to use any trademark, (c) all of the
goodwill of the business connected with the use of, and symbolized by the items
described in, clause (a), and to the extent applicable, clause (b), (d) the
right to sue third parties for past, present and future infringements of any
Trademark Collateral described in clause (a) and, to the extent applicable,
clause (b), and (e) all Proceeds of, and rights associated with, the foregoing,
including any claim by any Grantor against third parties for past, present or
future infringement or dilution of any Trademark, Trademark registration or
Trademark license, or for any injury to the goodwill associated with the use of
any such Trademark or for breach or enforcement of any Trademark license and all
rights corresponding thereto throughout the world.

“Trade Secrets Collateral” means all common law and statutory trade secrets and
all other confidential, proprietary or useful information and all know how
obtained by or used in or contemplated at any time for use in the business of
any Grantor, and any patent applications in preparation for filing (all of the
foregoing being collectively called a “Trade Secret”), including all documents
and things embodying, incorporating or referring in any way to such Trade
Secret, all Trade Secret licenses, and including the right to sue for and to
enjoin and to collect damages for the actual or threatened misappropriation of
any Trade Secret and for the breach or enforcement of any such Trade Secret
license.

“UCC” means the Uniform Commercial Code, as in effect in the State of Texas, as
the same may be amended from time to time.

SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Security Agreement, including
its preamble and recitals, have the meanings provided in the Credit Agreement.

 

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SECTION 1.3. UCC Definitions. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the UCC are used in
this Security Agreement, including its preamble and recitals, with such
meanings.

SECTION 1.4. Miscellaneous. Article, Section, Schedule, and Exhibit references
are to Articles and Sections of and Schedules and Exhibits to this Security
Agreement, unless otherwise specified. All references to instruments, documents,
contracts, and agreements (including this Security Agreement) are references to
such instruments, documents, contracts, and agreements as the same may be
amended, supplemented, and otherwise modified from time to time, unless
otherwise specified and shall include all schedules and exhibits thereto unless
otherwise specified. The words “hereof”, “herein”, and “hereunder” and words of
similar import when used in this Security Agreement shall refer to this Security
Agreement as a whole and not to any particular provision of this Security
Agreement. The term “including” means “including, without limitation,”.
Paragraph headings have been inserted in this Security Agreement as a matter of
convenience for reference only and it is agreed that such paragraph headings are
not a part of this Security Agreement and shall not be used in the
interpretation of any provision of this Security Agreement.

ARTICLE II

SECURITY INTEREST

SECTION 2.1. Grant of Security Interest.

(a) Each Grantor hereby pledges, hypothecates, assigns, charges, mortgages,
delivers, and transfers to the Administrative Agent, for the ratable benefit of
each Secured Party, and hereby grants to the Administrative Agent, for the
ratable benefit of each Secured Party, a continuing security interest in all of
such Grantor’s right, title and interest in, to and under, all of the following,
whether now owned or hereafter acquired by such Grantor, and wherever located
and whether now owned or hereafter existing or arising (collectively, the
“Collateral”):

(i) all equipment in all of its forms (including all drilling platforms and rigs
and remotely operated vehicles, trenchers, and other equipment used by any
Grantor, vehicles, motor vehicles, rolling stock, vessels, and aircraft) of such
Grantor, wherever located, and all surface or subsurface machinery, equipment,
facilities, supplies, or other tangible personal property, including tubing,
rods, pumps, pumping units and engines, pipe, pipelines, meters, apparatus,
boilers, compressors, liquid extractors, connectors, valves, fittings, power
plants, poles, lines, cables, wires, transformers, starters and controllers,
machine shops, tools, machinery and parts, storage yards and equipment stored
therein, buildings and camps, telegraph, telephone, and other communication
systems, loading docks, loading racks, and shipping facilities, and any manuals,
instructions, blueprints, computer software (including software that is imbedded
in and part of the equipment), and similar items which relate to the above, and
any and all additions, substitutions and replacements of any of the foregoing,
wherever located together with all improvements thereon and all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto (any and all of the foregoing being the “Equipment”);

(ii) all inventory in all of its forms of such Grantor, wherever located,
including (A) all raw materials and work in process therefore, finished goods
thereof, and materials used or consumed in the manufacture or production
thereof, (B) all documents of title covering any inventory, including work in
process, materials used or consumed in any Grantor’s business, now owned or
hereafter acquired or manufactured by any Grantor and held for sale in the
ordinary course of its business (C) all goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind (including
goods in which such Grantor has an interest or right

 

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as consignee), (D) all goods which are returned to or repossessed by such
Grantor, and all accessions thereto, products thereof and documents therefore,
and (E) any other item constituting “inventory” under the UCC (any and all such
inventory, materials, goods, accessions, products and documents being the
“Inventory”);

(iii) all accounts, money, payment intangibles, deposit accounts (including the
Cash Collateral Accounts and all amounts on deposit therein and all cash
equivalent investments carried therein and all proceeds thereof), contracts,
contract rights, all rights constituting a right to the payment of money,
chattel paper, documents, documents of title, instruments, and General
Intangibles of such Grantor, whether or not earned by performance or arising out
of or in connection with the sale or lease of goods or the rendering of
services, including all moneys due or to become due in repayment of any loans or
advances, and all rights of such Grantor now or hereafter existing in and to all
security agreements, guaranties, leases, agreements and other contracts securing
or otherwise relating to any such accounts, money, payment intangibles, deposit
accounts, contracts, contract rights, rights to the payment of money, chattel
paper, documents, documents of title, instruments, and General Intangibles (any
and all such accounts, money, payment intangibles, deposit accounts, contracts,
contract rights, rights to the payment of money, chattel paper, documents,
documents of title, instruments, and General Intangibles being the
“Receivables”, and any and all such security agreements, guaranties, leases,
agreements and other contracts being the “Related Contracts”);

(iv) all Intellectual Property Collateral of such Grantor;

(v) all books, correspondence, credit files, records, invoices, tapes, cards,
computer runs, writings, data bases, information in all forms, paper and
documents and other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the foregoing in
this Section 2.1(a);

(vi) all governmental approvals, permits, licenses, authorizations, consents,
rulings, tariffs, rates, certifications, waivers, exemptions, filings, claims,
orders, judgments and decrees and other Legal Requirements (each a “Governmental
Approval”);

(vii) all interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements, and all other agreements or arrangements
designed to protect such Grantor against fluctuations in interest rates or
currency exchange rates and all commodity hedge, commodity swap, exchange,
forward, future, floor, collar or cap agreements, fixed price agreements and all
other agreements or arrangements designed to protect such Grantor against
fluctuations in commodity prices (including any Financial Contract);

(viii) to the extent not included in the foregoing, all bank accounts,
investment property, fixtures, supporting obligations, and goods;

(ix) all Pledged Interests, Pledged Notes, and any other Pledged Property and
all Distributions, interest, and other payments and rights with respect to such
Pledged Property;

(x) (A) all policies of insurance now or hereafter held by or on behalf of such
Grantor, including casualty, liability, key man life insurance, business
interruption, foreign credit insurance, and any title insurance, (B) all
proceeds of insurance, and (C) all rights, now or hereafter held by such Grantor
to any warranties of any manufacturer or contractor of any other Person;

 

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(xi) all accessions, substitutions, replacements, products, offspring, rents,
issues, profits, returns, income and proceeds of and from any and all of the
foregoing Collateral (including proceeds which constitute property of the types
described in sub-clauses (i)-(x) and proceeds deposited from time to time in any
lock boxes of such Grantor, and, to the extent not otherwise included, all
payments and proceeds under insurance (whether or not the Administrative Agent
is the loss payee thereof), or any condemnation award, indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the Collateral);

(xii) any and all Liens and security interests (together with the documents
evidencing such security interests) granted to such Grantor by an obligor to
secure such obligor’s obligations owing under any Instrument, Chattel Paper, or
contract that is pledged hereunder or with respect to which a security interest
in such Grantor’s rights in such Instrument, Chattel Paper, or contract is
granted hereunder;

(xiii) any and all guaranties given by any Person for the benefit of such
Grantor which guarantees the obligations of an obligor under any Instrument,
Chattel Paper, or contract, which are pledged hereunder; and

(xiv) all of such Grantor’s other property and rights of every kind and
description and interests therein, including all other “Accounts”, “Certificated
Securities”, “Chattel Paper”, “Commodity Accounts”, “Commodity Contracts”,
“Deposit Accounts”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”,
“Goods”, “Instruments”, “Inventory”, “Investment Property”, “Money”, “Payment
Intangibles”, “Proceeds”, “Securities”, “Securities Accounts”, “Security
Entitlements”, “Supporting Obligations” and “Uncertificated Securities”, as each
such terms are defined in the UCC;

(b) Notwithstanding anything to the contrary contained in Section 2.1(a) and
other than to the extent set forth in this Section 2.1(b), the following
property shall be excluded from the lien and security interest granted hereunder
(and shall, as applicable, not be included as “Accounts”, “Certificated
Securities”, “Chattel Paper”, “Collateral”, “Commodity Accounts”, “Commodity
Contracts”, “Deposit Accounts”, “Documents”, “Equipment”, “Fixtures”, “General
Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”,
“Money”, “Payment Intangibles”, “Proceeds”, “Securities”, “Securities Accounts”,
“Security Entitlements”, “Supporting Obligations” or “Uncertificated Securities”
for purposes of this Security Agreement) (collectively, the “Excluded
Collateral”):

(i) commercial tort claims;

(ii) letter of credit rights;

(iii) Excluded Contracts;

(iv) Excluded Governmental Approvals;

(v) Excluded Foreign Stock; and

(vi) Excluded Trademark Collateral;

provided, however, that (x) the exclusion from the Lien and security interest
granted by any Grantor hereunder of any Excluded Collateral shall not limit,
restrict or impair the grant by such Grantor of the Lien and security interest
in any accounts or receivables arising under any such Excluded

 

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Collateral or any payments due or to become due thereunder unless the conditions
in effect which qualify such Property as Excluded Collateral applies with
respect to such accounts and receivables and (y) any proceeds received by any
Grantor from the sale, transfer or other disposition of Excluded Collateral
shall constitute Collateral unless the conditions in effect which qualify such
Property as Excluded Collateral applies with respect to such proceeds.

SECTION 2.2. Security for Obligations.

(a) This Security Agreement, and the Collateral in which the Administrative
Agent for the benefit of the Secured Parties is granted a security interest
hereunder by each Grantor, secures the prompt and payment in full in cash and
performance of all Secured Obligations.

(b) Notwithstanding anything contained herein to the contrary, it is the
intention of each Grantor, the Administrative Agent and the other Secured
Parties that the amount of the Secured Obligations secured by each Grantor’s
interests in any of its Property shall be in, but not in excess of, the maximum
amount permitted by fraudulent conveyance, fraudulent transfer and other similar
law, rule or regulation of any Governmental Authority applicable to such
Grantor. Accordingly, notwithstanding anything to the contrary contained in this
Security Agreement or in any other agreement or instrument executed in
connection with the payment of any of the Secured Obligations, the amount of the
Secured Obligations secured by each Grantor’s interests in any of its Property
pursuant to this Security Agreement shall be limited to an aggregate amount
equal to the largest amount that would not render such Grantor’s obligations
hereunder or the Liens and security interest granted to the Administrative Agent
hereunder subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provision of any other applicable law.

SECTION 2.3. Continuing Security Interest; Transfer of Advances; Reinstatement.
This Security Agreement shall create continuing security interests in the
Collateral and shall (a) except as otherwise provided in the Credit Agreement,
remain in full force and effect until the Termination Date, (b) be binding upon
each Grantor and its successors, transferees and assigns, and (c) inure,
together with the rights and remedies of the Administrative Agent hereunder, to
the benefit of the Administrative Agent and each other Secured Party and its
respective permitted successors, transferees and assigns, subject to the
limitations as set forth in the Credit Agreement. Without limiting the
generality of the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Advance held by it as provided in Section 9.7
of the Credit Agreement, and any successor or assignee thereof shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Secured Party under any Credit Document (including this Security
Agreement), or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and as applicable to the provisions of Section 9.7 and
Article 8 of the Credit Agreement. If at any time all or any part of any payment
theretofore applied by the Administrative Agent or any other Secured Party to
any of the Secured Obligations is or must be rescinded or returned by the
Administrative Agent or any such Secured Party for any reason whatsoever
(including the insolvency, bankruptcy, reorganization or other similar
proceeding of any Grantor or any other Person), such Secured Obligations shall,
for purposes of this Security Agreement, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued to be in existence,
notwithstanding any application by the Administrative Agent or such Secured
Party or any termination agreement or release provided to any Grantor, and this
Security Agreement shall continue to be effective or reinstated, as the case may
be, as to such Secured Obligations, all as though such application by the
Administrative Agent or such Secured Party had not been made.

 

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SECTION 2.4. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and will
perform all of its duties and obligations under such contracts and agreements to
the same extent as if this Security Agreement had not been executed, (b) the
exercise by the Administrative Agent of any of its rights hereunder shall not
release any Grantor from any of its duties or obligations under any such
contracts or agreements included in the Collateral, and (c) neither the
Administrative Agent nor any other Secured Party shall have any obligation or
liability under any contracts or agreements included in the Collateral by reason
of this Security Agreement, nor shall the Administrative Agent nor any Secured
Party be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.

SECTION 2.5. Security Interest Absolute, etc. This Security Agreement shall in
all respects be a continuing, absolute, unconditional and irrevocable grant of
security interest, and shall remain in full force and effect until the
Termination Date; provided that upon the consummation of any Permitted
Disposition, the Administrative Agent shall promptly release its Lien as to any
asset or Equity Interest subject to such Permitted Disposition. All rights of
the Secured Parties and the security interests granted to the Administrative
Agent (for its benefit and the ratable benefit of each other Secured Party)
hereunder, and all obligations of each Grantor hereunder, shall, in each case,
be absolute, unconditional and irrevocable irrespective of (a) any lack of
validity, legality or enforceability of any Credit Document, (b) the failure of
any Secured Party (i) to assert any claim or demand or to enforce any right or
remedy against any Grantor or any other Person under the provisions of any
Credit Document or otherwise, or (ii) to exercise any right or remedy against
any other guarantor of, or collateral securing, any Secured Obligations, (c) any
change in the time, manner or place of payment of, or in any other term of, all
or any part of the Secured Obligations, or any other extension, compromise or
renewal of any Secured Obligations, (d) any reduction, limitation, impairment or
termination of any Secured Obligations (except in the case of the occurrence of
the Termination Date) for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and each
Grantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability of, or
any other event or occurrence affecting, any Secured Obligations or otherwise,
(e) any amendment to, rescission, waiver, or other modification of, or any
consent to or departure from, any of the terms of any Credit Document, (f) any
addition, exchange or release of any Collateral of the Secured Obligations, or
any surrender or non-perfection of any collateral, or any amendment to or waiver
or release or addition to, or consent to or departure from, any other guaranty
held by any Secured Party securing any of the Secured Obligations, or (g) any
other circumstance which might otherwise constitute a defense available to, or a
legal or equitable discharge of, any Grantor or any other Credit Party, any
surety or any guarantor.

SECTION 2.6. Waiver of Subrogation. Until 91 days after the Termination Date,
each Grantor hereby irrevocably waives any claim or other rights which it may
now or hereafter acquire against any Credit Party that arise from the existence,
payment, performance or enforcement of such Grantor’s obligations under this
Security Agreement or any other Credit Document, including any right of
subrogation, reimbursement, exoneration or indemnification, any right to
participate in any claim or remedy of any Secured Party against any Credit Party
or any collateral which any Secured Party now has or hereafter acquires, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including the right to take or receive from any Credit Party,
directly or indirectly, in cash or other property or by set-off or in any
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Grantor in violation of the preceding sentence and
the Termination Date shall not have occurred, then such amount shall be deemed
to have been paid to such Grantor for the benefit of, and held in trust for, the
Administrative Agent (on behalf of the Secured Parties), and shall forthwith be
paid to the Administrative Agent to be credited and applied upon the Secured
Obligations, whether matured or unmatured. Each Grantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the waiver set forth in this
Section 2.6 is knowingly made in contemplation of such benefits.

 

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SECTION 2.7. Election of Remedies. Except as otherwise provided in the Credit
Agreement, if any Secured Party may, under applicable law, proceed to realize
its benefits under any of this Security Agreement or the other Credit Documents
giving any Secured Party a Lien upon any Collateral, either by judicial
foreclosure or by non-judicial sale or enforcement, such Secured Party may, at
its sole option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Security Agreement. If, in
the exercise of any of its rights and remedies, any Secured Party shall forfeit
any of its rights or remedies, including its right to enter a deficiency
judgment against any Credit Party or any other Person, whether because of any
applicable laws pertaining to “election of remedies” or the like, each Grantor
hereby consents to such action by such Secured Party and waives any claim based
upon such action, even if such action by such Secured Party shall result in a
full or partial loss of any rights of subrogation that such Grantor might
otherwise have had but for such action by such Secured Party.

SECTION 2.8. Delivery of Pledged Property; Instruments and Tangible Chattel
Paper. All certificates or instruments representing or evidencing (i) all
Pledged Interests and Pledged Notes and (ii) other Collateral consisting of
Instruments and Tangible Chattel Paper individually evidencing amounts payable
in excess of $500,000, or collectively, evidencing amounts payable in excess of
$1,000,000, shall be delivered to and held by or on behalf of (or in the case of
the Pledged Notes, endorsed to the order of) the Administrative Agent pursuant
hereto, shall be in suitable form for transfer by delivery, and shall be
accompanied by all necessary endorsements or instruments of transfer or
assignment, duly executed in blank. To the extent any of the Collateral
constitutes an “uncertificated security” (as defined in Section 8-102(a)(18) of
the UCC) or a “security entitlement” (as defined in Section 8-102(a)(17) of the
UCC), then at the Administrative Agent’s request and its determination that such
Property is not Excluded Collateral, the applicable Grantor shall take and cause
the appropriate Person (including any issuer, entitlement holder or securities
intermediary thereof) to take all actions necessary to grant “control” (as
defined in 8-106 of the UCC) to the Agent (for the benefit of the Secured
Parties) over such Collateral.

SECTION 2.9. Distributions on Pledged Interests. In the event that any
Distribution with respect to any Pledged Interest pledged hereunder is permitted
to be paid (in accordance with Section 6.9 of the Credit Agreement), such
Distribution or payment may be paid directly to the applicable Grantor. If any
Distribution is made in contravention of Section 6.9 of the Credit Agreement,
the applicable Grantor shall hold the same segregated and in trust for the
Administrative Agent until paid to the Administrative Agent in accordance with
Section 4.1(e).

ARTICLE III

REPRESENTATIONS AND WARRANTIES

In order to induce the Secured Parties to enter into the Credit Agreement and
make Advances thereunder and for the Issuing Lenders to issue Letters of Credit
thereunder, and to induce the Secured Parties to enter into Hedging Arrangements
and Banking Services, each Grantor represents and warrants unto each Secured
Party as set forth in this Article.

SECTION 3.1. Ownership, No Liens, etc. Such Grantor is the legal and beneficial
owner of, and has good title to (and has full right and authority to pledge,
grant and assign) the Collateral, free and clear of all Liens, except for any
Lien that is a Permitted Lien. No effective UCC financing statement or other
filing similar in effect covering all or any part of the Collateral is on file
in any recording office, except those filed in favor of the Administrative Agent
relating to this Security Agreement, Permitted Liens or as to which a duly
authorized termination statement relating to such UCC financing statement or
other

 

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instrument has been delivered to the Administrative Agent on date hereof. This
Security Agreement creates a valid security interest in the Collateral, securing
the payment of the Secured Obligations, and, except for (a) the proper filing of
the applicable financing statements with the filing offices listed on Item A-1
of Schedule I attached hereto, (b) the recordation of security agreements with
the U.S. Patent and Trademark Office and the U.S. Copyright Office, (c) taking
possession of any Pledged Property with necessary endorsements, and (d) the
notation of the Administrative Agent’s security interest on the certificate of
title for Certificated Equipment that does not constitute Excluded Collateral,
all filings and other actions necessary to perfect and protect such security
interest in the Collateral have been duly taken and, subject to Permitted Liens,
such security interest shall be a first priority security interest.

SECTION 3.2. Grantor’s Name, Location, etc.

(a) Other than as otherwise permitted pursuant to any Credit Document, (i) the
jurisdiction in which such Grantor is located for purposes of Sections 9.301 and
9.307 of the UCC is set forth in Item A-1 of Schedule I hereto, (ii) as of the
date hereof or such later date on which such Grantor joins this Security
Agreement, the place of business of such Grantor or, if such Grantor has more
than one place of business, the chief executive office of such Grantor and the
office where such Grantor keeps its records concerning the Receivables, is set
forth in Item A-2 of Schedule I hereto, and (iii) such Grantor’s federal
taxpayer identification number is set forth in Item A-3 of Schedule I hereto.

(b) Within the past five years, such Grantor has not been known by any legal
name different from the one set forth on the signature page hereto, nor has such
Grantor been the subject of any merger or other corporate reorganization, except
as set forth in Item B of Schedule I hereto.

(c) None of the Receivables in excess of $500,000 is evidenced by a promissory
note or other instrument other than a promissory note or instrument that has
been delivered to the Administrative Agent (with appropriate endorsements).

(d) As of the date hereof or such later date on which such Grantor joins this
Security Agreement, the name set forth on the signature page attached hereto
(or, if applicable, the signature page to the supplement document pursuant to
which such Grantor joins this Security Agreement) is the true and correct legal
name (as defined in the UCC) of such Grantor.

SECTION 3.3. Possession of Inventory; Control. Such Grantor has exclusive
possession and control, subject to Permitted Liens, of the Inventory, except as
otherwise required, necessary or customary in the ordinary course of its
business. Such Grantor has not consented to, and is otherwise unaware of, any
Person (other than, if applicable, the Administrative Agent pursuant to
Section 4.1(b) hereof) having control (within the meaning of Section 9.104 or
Section 8.106 of the UCC) over any Collateral, or any other interest in any of
such Grantor’s rights in respect thereof.

SECTION 3.4. Instruments and Tangible Chattel Paper. Such Grantor has,
contemporaneously herewith or as otherwise permitted herein, delivered (or will
deliver as required herein) to the Administrative Agent possession of all
originals of all certificates or instruments representing or evidencing any
Collateral consisting of Instruments and Tangible Chattel Paper that
individually, or collectively, evidence amounts payable in excess of $1,000,000,
owned or held by such Grantor (duly endorsed, in blank, if requested by the
Administrative Agent).

SECTION 3.5. Authorization, Approval, etc. Except as have been obtained or made
and are in full force and effect, no Governmental Approval, authorization,
approval or other action by, and no notice to or filing with, any Governmental
Authority or any other third party is required (a) for the grant by such Grantor
of the security interest granted hereby, (b) for the perfection or maintenance
of the security

 

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interests hereunder including the first priority (subject to Permitted Liens)
nature of such security interest or the exercise by the Administrative Agent of
its rights and remedies hereunder or (c) for the exercise by the Administrative
Agent of the voting or other rights provided for in this Security Agreement.

SECTION 3.6. Best Interests. It is in the best interests of each Grantor to
execute this Security Agreement in as much as such Grantor will, as a result of
being the Borrower, or a Material Domestic Subsidiary of the Borrower, derive
substantial direct and indirect benefits from (a) the Advances and other
extensions of credit (including Letters of Credit) made from time to time to the
Borrower or any other Grantor by the Lenders and the Issuing Lender pursuant to
the Credit Agreement, (b) the Hedging Arrangements entered into with the Secured
Swap Providers, and (c) the Banking Services provided by the Lenders or their
Affiliates, and each Grantor agrees that the Secured Parties are relying on this
representation in agreeing to make such Advances and other extensions of credit
pursuant to the Credit Agreement to the Borrower. Furthermore, such extensions
of credit, Hedging Arrangements and Banking Services are (i) in furtherance of
each Grantor’s corporate purposes, and (ii) necessary or convenient to the
conduct, promotion or attainment of each Grantor’s business.

SECTION 3.7. As to Equity Interests of the Subsidiaries, Investment Property.

(a) With respect to the Pledged Interests, all such Pledged Interests (i) other
than with respect to Pledged Interests in limited liability companies and
partnerships, are duly authorized and validly issued, fully paid and
non-assessable, and (ii) unless otherwise noted on Schedule II, are represented
by a certificate.

(b) With respect to the Pledged Interests, no such Pledged Interests (i) are
dealt in or traded on securities exchanges or in securities markets, or (ii) are
held in a Securities Account, except, with respect to this clause (b), Pledged
Interests (A) for which the Administrative Agent is the registered owner or
(B) with respect to which the Pledged Interests Issuer has agreed in an
authenticated record with such Grantor and the Administrative Agent to comply
with any instructions of the Administrative Agent without the consent of such
Grantor.

(c) Such Grantor has delivered all Certificated Securities constituting
Collateral held by such Grantor on the date hereof to the Administrative Agent,
together with duly executed undated blank stock powers, or other equivalent
instruments of transfer reasonably acceptable to the Administrative Agent.

(d) With respect to Uncertificated Securities constituting Collateral owned by
such Grantor on the date hereof, such Grantor has caused the Pledged Interests
Issuer or other issuer thereof either (i) to register the Administrative Agent
as the registered owner of such security, or (ii) to agree in an authenticated
record with such Grantor and the Administrative Agent that such Pledged
Interests Issuer or other issuer will comply with instructions with respect to
such security originated by the Administrative Agent without further consent of
such Grantor.

(e) The percentage of the issued and outstanding Pledged Interests of each
Pledged Interests Issuer pledged by such Grantor hereunder is as set forth on
Schedule II and the percentage of the total membership, partnership and/or other
Equity Interests in the Pledged Interests Issuer is indicated on Schedule II, in
each case, as such Schedule II may be supplemented from time to time pursuant to
the terms hereof. All of the Pledged Interests constitute one hundred percent
(100%) of such Grantor’s interest in the applicable Pledged Interests Issuer,
except in the case of the Pledged Interests that are issued by Foreign
Subsidiaries with respect to which such Grantor has pledged (i) sixty-five
percent (65%) of the outstanding Voting Securities issued by such Foreign
Subsidiaries and (ii) one hundred percent (100%) of all Equity Interests issued
by such Foreign Subsidiaries that are not Voting Securities, in any case, as
indicated on Schedule II.

 

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(f) There are no outstanding rights, rights to subscribe, options, warrants or
convertible securities outstanding or any other rights outstanding whereby any
Person would be entitled to acquire shares, member interests or units of any
Pledged Interests Issuer other than (i) as to Pledged Interests Issuers that are
not Subsidiaries or (ii) such rights that constitute Collateral.

(g) In the case of each Pledged Note, all of such Pledged Notes have been duly
authorized, executed, endorsed, issued and delivered, and are the legal, valid
and binding obligation of the issuers thereof, and, as of the date hereof, are
not in default.

SECTION 3.8. Intellectual Property Collateral. Such Grantor represents that
except for any Patent Collateral, Trademark Collateral, and Copyright Collateral
specified in Item A, Item B and Item C, respectively, of Schedule III hereto,
and any and all Trade Secrets Collateral, as of the date hereof, such Grantor
does not own and has no interests in any other Intellectual Property Collateral,
other than the Computer Hardware and Software Collateral. Such Grantor further
represents and warrants that (a) such Intellectual Property Collateral is valid,
subsisting, unexpired and enforceable and has not been abandoned or adjudged
invalid or unenforceable, in whole or in part, (b) other than with respect to
Intellectual Property Collateral licensed to it, such Grantor is the sole and
exclusive owner of the right, title and interest in and to such Intellectual
Property Collateral, subject to Permitted Liens, and, no claim has been made
that the use of such Intellectual Property Collateral does or may, conflict
with, infringe, misappropriate, dilute, misuse or otherwise violate any of the
rights of any third party, (c) such Grantor has made all necessary filings and
recordations to protect its interest in such Intellectual Property Collateral,
including recordations of any of its interests in the Patent Collateral and
Trademark Collateral in the United States Patent and Trademark Office and, if
requested by the Administrative Agent, in corresponding offices throughout the
world, and its claims to the Copyright Collateral in the United States Copyright
Office and, if requested by the Administrative Agent, in corresponding offices
throughout the world, (d) such Grantor has taken all reasonable steps to
safeguard its material Trade Secrets Collateral and none of such Trade Secrets
Collateral of such Grantor has been used, divulged, disclosed or appropriated
for the benefit of any other Person other than such Grantor, the Borrower or any
Subsidiary thereof, (e) no third party is infringing upon any such Intellectual
Property Collateral owned or used by such Grantor in any material respect, or
any of its respective licensees, (f) no settlement or consents, covenants not to
sue, nonassertion assurances, or releases have been entered into by such Grantor
or to which such Grantor is bound that adversely affects its rights to own or
use any such Intellectual Property Collateral, and (g) the consummation of the
transactions contemplated by the Credit Agreement and this Security Agreement
will not result in the termination or material impairment of any material
portion of such Intellectual Property Collateral.

ARTICLE IV

COVENANTS

Each Grantor covenants and agrees that, until the Termination Date, it will
perform, comply with and be bound by the obligations set forth below.

SECTION 4.1. As to Accounts.

(a) Each Grantor shall have the right to collect all Accounts so long as no
Event of Default shall have occurred and be continuing.

 

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(b) Upon (i) the occurrence and continuance of an Event of Default and (ii) the
delivery of notice by the Administrative Agent to each Grantor, all Proceeds of
Collateral received by any Grantor shall be delivered in kind to the
Administrative Agent for deposit in a Deposit Account of such Grantor
(A) maintained with the Administrative Agent or (B) maintained at a depositary
bank other than the Administrative Agent to which such Grantor, the
Administrative Agent and the depositary bank have entered into a Control
Agreement in form and substance acceptable to the Administrative Agent in its
sole discretion providing that the depositary bank will comply with the
instructions originated by the Administrative Agent directing disposition of the
funds in the account without further consent by such Grantor (any such Deposit
Accounts, together with any other Deposit Accounts pursuant to which any portion
of the Collateral is deposited with the Administrative Agent, a “Collateral
Account,” and collectively, the “Collateral Accounts”), and such Grantor shall
not commingle any such Proceeds, and shall hold separate and apart from all
other property, all such Proceeds in express trust for the benefit of the
Administrative Agent until delivery thereof is made to the Administrative Agent.

(c) Following the delivery of notice pursuant to clause (b)(ii) during the
continuance of an Event of Default, the Administrative Agent shall have the
right to apply any amount in the Collateral Account to the payment of any
Secured Obligations which are due and payable or in accordance with Section 7.6
of the Credit Agreement.

(d) With respect to each of the Collateral Accounts, it is hereby confirmed and
agreed that (i) deposits in such Collateral Account are subject to a security
interest as contemplated hereby, (ii) such Collateral Account shall be under the
control of the Administrative Agent after the occurrence and during the
continuance of an Event of Default (unless otherwise agreed to by the Borrower
and the Majority Lenders), and (iii) the Administrative Agent shall have the
sole right of withdrawal over such Collateral Account; provided that such
withdrawals shall only be made during the existence of an Event of Default.

(e) No Grantor shall adjust, settle, or compromise the amount or payment of any
Receivable, nor release wholly or partly any account debtor or obligor thereof,
nor allow any credit or discount thereon; provided that, a Grantor may make such
adjustments, settlements or compromises and release wholly or partly any account
debtor or obligor thereof and allow any credit or discounts thereon so long as
(i) such action is taken in the ordinary course of business, and (ii) such
action is, in such Grantor’s good faith business judgment, advisable.

SECTION 4.2. As to Grantor’s Use of Collateral.

(a) Subject to clause (b), each Grantor (i) may in the ordinary course of its
business, at its own expense, sell, lease or furnish under the contracts of
service any of the Inventory held by such Grantor for such purpose, and use and
consume any raw materials, work in process or materials held by such Grantor for
such purpose, (ii) following the occurrence and during the continuance of an
Event of Default, shall, at its own expense, endeavor to collect, as and when
due, all amounts due with respect to any of the Collateral, including the taking
of such action with respect to such collection as the Administrative Agent may
request or, in the absence of such request, as such Grantor may deem advisable,
and (iii) may grant, in the ordinary course of business, to any party obligated
on any of the Collateral, any rebate, refund or allowance to which such party
may be lawfully entitled, and may accept, in connection therewith, the return of
Goods, the sale or lease of which shall have given rise to such Collateral.

(b) At any time following the occurrence and during the continuance of an Event
of Default, whether before or after the maturity of any of the Secured
Obligations, the Administrative Agent may (i) revoke any or all of the rights of
any Grantor set forth in clause (a), (ii) notify any parties

 

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obligated on any of the Collateral to make payment to the Administrative Agent
of any amounts due or to become due thereunder, and (iii) enforce collection of
any of the Collateral by suit or otherwise and surrender, release, or exchange
all or any part thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any indebtedness thereunder or
evidenced thereby.

(c) Upon request of the Administrative Agent following the occurrence and during
the continuance of an Event of Default, each Grantor will, at its own expense,
notify any parties obligated on any of the Collateral to make payment to the
Administrative Agent of any amounts due or to become due thereunder.

(d) At any time following the occurrence and during the continuation of an Event
of Default, the Administrative Agent may endorse, in the name of the applicable
Grantor, any item, howsoever received by the Administrative Agent, representing
any payment on or other Proceeds of any of the Collateral.

SECTION 4.3. As to Equipment and Inventory and Goods. Each Grantor agrees to
take such action (or cause its Subsidiaries that are also Credit Parties to take
such action), including endorsing certificates of title or executing
applications for transfer of title, as is reasonably required by the
Administrative Agent to enable it to properly perfect and protect its Lien on
all Certificated Equipment owned on the Amendment No. 7 Effective Date and to
transfer the same. Each Grantor agrees to take such action (or cause its
Subsidiaries that are also Credit Parties to take such action) as is reasonably
requested by the Administrative Agent to enable it to properly perfect and
protect its Lien on Equipment and Inventory and Goods constituting Collateral
that such Grantor has transferred from a jurisdiction within the United States
of America or its offshore waters to a jurisdiction outside of the United States
of America or its offshore waters.

SECTION 4.4. As to Electronic Chattel Paper and Transferable Records. If any
Grantor at any time holds or acquires an interest in any electronic chattel
paper or any “transferable record,” as that term is defined in Section 201 of
the U.S. Federal Electronic Signatures in Global and National Commerce Act, or
in Section 16 of the U.S. Uniform Electronic Transactions Act as in effect in
any relevant jurisdiction which constitutes Collateral and with a value in
excess of $1,000,000, such Grantor shall promptly notify the Administrative
Agent thereof and, at the reasonable request of the Administrative Agent, shall
take such action as the Administrative Agent may reasonably request to vest in
the Administrative Agent control (for the ratable benefit of Secured Parties)
under Section 9.105 of the UCC of such electronic chattel paper or control under
Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or, as the case may be, Section 16 of the Uniform Electronic Transactions
Act, as so in effect in such jurisdiction, of such transferable record. The
Administrative Agent agrees with each Grantor that the Administrative Agent will
arrange, pursuant to procedures reasonably satisfactory to the Administrative
Agent and so long as such procedures will not result in the Administrative
Agent’s loss of control, for such Grantor to make alterations to the electronic
chattel paper or transferable record permitted under Section 9.105 of the UCC
or, as the case may be, Section 201 of the U.S. Federal Electronic Signatures in
Global and National Commerce Act or Section 16 of the U.S. Uniform Electronic
Transactions Act for a party in control to allow without loss of control, unless
an Event of Default has occurred and is continuing or would occur after taking
into account any action by such Grantor with respect to such electronic chattel
paper or transferable record.

SECTION 4.5. Further Assurances, etc. Each Grantor shall warrant and defend the
right and title herein granted unto the Administrative Agent in and to the
Collateral (and all right, title and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. Each Grantor agrees
that, from time to time at its own expense, it will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
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Agent may reasonably request, in order to perfect, preserve and protect any
security interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral subject to the terms hereof. Each Grantor agrees
that, upon the acquisition after the date hereof by such Grantor of any
Collateral, with respect to which the security interest granted hereunder is not
perfected automatically upon such acquisition, to take such actions with respect
to such Collateral or any part thereof as required by the Credit Documents.
Without limiting the generality of the foregoing, each Grantor will:

(a) from time to time upon the request of the Administrative Agent, promptly
deliver to the Administrative Agent such stock powers, instruments and similar
documents, reasonably satisfactory in form and substance to the Administrative
Agent, with respect to such Collateral representing an amount payable in excess
of $1,000,000 as the Administrative Agent may reasonably request and will, from
time to time upon the request of the Administrative Agent, after the occurrence
and during the continuance of any Event of Default, (i) promptly transfer any
securities constituting Collateral into the name of any nominee designated by
the Administrative Agent and (ii) if any Collateral shall be evidenced by an
Instrument, negotiable Document, promissory note or tangible Chattel Paper,
deliver and pledge to the Administrative Agent hereunder such Instrument,
negotiable Document, promissory note, or tangible Chattel Paper duly endorsed
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to the Administrative Agent;

(b) file (and hereby authorize the Administrative Agent to file) such financing
statements or continuation statements, or amendments thereto, and such other
instruments or notices (including any assignment of claim form under or pursuant
to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or
amended version thereof or any regulation promulgated under or pursuant to any
version thereof), as may be necessary or that the Administrative Agent may
reasonably request in order to perfect and preserve the security interests in
accordance with the UCC and other applicable Texas law and other rights granted
or purported to be granted to the Administrative Agent hereby; and

(c) furnish to the Administrative Agent, from time to time at the Administrative
Agent’s reasonable request, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.

The authorization contained in Section 4.5(b) above shall be irrevocable and
continuing until the Termination Date. Each Grantor agrees that a carbon,
photographic or other reproduction of this Security Agreement or any UCC
financing statement covering the Collateral or any part thereof shall be
sufficient as a UCC financing statement where permitted by law. Each Grantor
hereby authorizes the Administrative Agent to file financing statements
describing as the collateral covered thereby “all of the debtor’s personal
property or assets” or words to that effect, notwithstanding that such wording
may be broader in scope than the Collateral described in this Security
Agreement.

SECTION 4.6. As to Investment Property, etc.

(a) Equity Interests of Subsidiaries. No Grantor shall allow or permit any of
its Subsidiaries (i) that is a corporation, business trust, joint stock company
or similar Person, to issue Uncertificated Securities, unless such Person
promptly takes the actions set forth in Section 4.6(b)(ii) with respect to any
such Uncertificated Securities, (ii) that is a partnership or limited liability
company, to (A) issue Equity Interests that are to be dealt in or traded on
securities exchanges or in securities markets, (B) expressly provide in its
organizational documents that its Equity Interests are securities governed by
Article 8 of the UCC, or (C) place such Subsidiary’s Equity Interests in a
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Person promptly takes the actions set forth in Section 4.6(b)(ii) with respect
to any such Equity Interests, or (iii) to issue Equity Interests in addition to
or in substitution for the Pledged Property or any other Equity Interests
pledged hereunder, except for additional Equity Interests issued to such
Grantor; provided that (A) such Equity Interests are pledged and delivered to
the Administrative Agent within 10 Business Days, and (B) such Grantor delivers
a supplement to Schedule I to the Administrative Agent identifying such new
Equity Interests as Pledged Property, in each case pursuant to the terms of this
Security Agreement. No Grantor shall permit any of its Subsidiaries to issue any
warrants, options, contracts or other commitments or other securities that are
convertible to any of the foregoing (except as to Equity Interests issued by
Subsidiaries that are not wholly-owned by one or more Credit Parties) or that
entitle any Person to purchase any of the foregoing, and except for this
Security Agreement or any other Credit Document, shall not, and shall not permit
any of its Subsidiaries to, enter into any agreement creating any restriction or
condition upon the transfer, voting or control of any Pledged Property.

(b) Investment Property (other than Certificated Securities).

(i) With respect to any Securities Accounts, Commodity Accounts, Commodity
Contracts or Security Entitlements constituting Investment Property owned or
held by any Grantor, such Grantor will, following (A) the occurrence and during
the continuance of an Event of Default and (B) the request of the Administrative
Agent, either (1) cause the intermediary maintaining such Investment Property to
execute an Account Control Agreement relating to such Investment Property
pursuant to which such intermediary agrees to comply with the Administrative
Agent’s instructions with respect to such Investment Property without further
consent by such Grantor, or (2) transfer such Investment Property to
intermediaries that have or will agree to execute such Account Control
Agreements.

(ii) With respect to any Uncertificated Securities (other than Uncertificated
Securities credited to a Securities Account) owned or held by any Grantor, such
Grantor will (y) cause the Pledged Interests Issuer or other issuer of such
securities (if other than a Grantor) to either (A) register the Administrative
Agent as the registered owner thereof on the books and records of the issuer, or
(B) execute an Account Control Agreement relating to such Investment Property
pursuant to which the Pledged Interests Issuer or other issuer agrees to comply
with the Administrative Agent’s instructions with respect to such Uncertificated
Securities without further consent by such Grantor following the occurrence and
during the continuance of an Event of Default, and (z) take and cause the
appropriate Person (including any issuer, entitlement holder or securities
intermediary thereof) to take all other actions necessary to grant “control” (as
defined in 8-106 of the UCC) to the Administrative Agent (for the ratable
benefit of the Secured Parties) over such Collateral.

(c) Certificated Securities (Stock Powers). Each Grantor agrees that all Pledged
Interests which are certificated (and all other certificated shares of Equity
Interests constituting Collateral) delivered by such Grantor pursuant to this
Security Agreement will be accompanied by duly endorsed undated blank stock
powers, or other equivalent instruments of transfer reasonably acceptable to the
Administrative Agent. Each Grantor will, from time to time upon the reasonable
request of the Administrative Agent, promptly deliver to the Administrative
Agent such stock powers, instruments and similar documents, reasonably
satisfactory in form and substance to the Administrative Agent, with respect to
the Collateral and will, from time to time upon the request of the
Administrative Agent during the continuance of any Event of Default, promptly
transfer any Pledged Interests or other shares of Equity Interests constituting
Collateral into the name of any nominee designated by the Administrative Agent.

 

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(d) Continuous Pledge. Each Grantor will (subject to the terms of the Credit
Agreement and this Security Agreement) at all times keep pledged to the
Administrative Agent pursuant hereto, on a first-priority, perfected basis all
Pledged Property and all Distributions with respect thereto, and all Proceeds
and rights from time to time received by or distributable to such Grantor in
respect of any of the foregoing Collateral (other than, as to perfection,
Excluded Collateral). Each Grantor agrees that it will, no later than ten
(10) Business Days following receipt thereof, deliver to the Administrative
Agent possession of all originals of Pledged Property that it acquires following
the date hereof and shall deliver to the Administrative Agent a supplement to
Schedule I identifying any such new Pledged Property.

(e) Voting Rights; Dividends, etc. Each Grantor agrees:

(i) that promptly upon receipt of notice of the occurrence and continuance of an
Event of Default from the Administrative Agent and without any request therefor
by the Administrative Agent, so long as such Event of Default shall continue, to
deliver (properly endorsed where required hereby or requested by the
Administrative Agent) to the Administrative Agent all Distributions with respect
to Investment Property, all interest, principal and other cash payments on the
Pledged Property and all Proceeds of the Pledged Property, in case thereafter
received by such Grantor, all of which shall be held by the Administrative Agent
as additional Collateral; and

(ii) if an Event of Default shall have occurred and be continuing and the
Administrative Agent has notified such Grantor of the Administrative Agent’s
intention to exercise its voting power under this Section 4.6(e)(ii),

(A) the Administrative Agent may exercise (to the exclusion of such Grantor) the
voting power and all other incidental rights of ownership with respect to any
Pledged Interests, Investment Property or other Equity Interests constituting
Collateral. EACH GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE
PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL SUCH EVENT OF
DEFAULT SHALL HAVE BEEN CURED OR WAIVED) EXERCISABLE UNDER SUCH CIRCUMSTANCES,
TO VOTE THE PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL;
AND

(B) promptly to deliver to the Administrative Agent such additional proxies and
other documents as may be necessary to allow the Administrative Agent to
exercise such voting power.

All Distributions, interest, principal, cash payments, Payment Intangibles and
Proceeds that may at any time and from time to time be held by any Grantor but
which such Grantor is then obligated to deliver to the Administrative Agent,
shall, until delivery to the Administrative Agent, be held by such Grantor
separate and apart from its other property in trust for the Administrative
Agent. The Administrative Agent agrees that unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
the notice referred to in this Section 4.6(e), each Grantor shall be entitled to
receive and retain all Distributions and shall have the exclusive voting power,
and is granted a proxy, with respect to any Equity Interests constituting
Collateral. Administrative Agent shall, upon the written request of any Grantor,
promptly deliver such proxies and other documents, if any, as shall be
reasonably requested by such Grantor which are necessary to allow such Grantor
to exercise that voting power with respect to any such Equity Interests
constituting Collateral; provided, however, that no vote shall be cast, or
consent, waiver, or ratification given, or action taken by such Grantor that
would violate any provision of the Credit Agreement or any other Credit Document
(including this Security Agreement).

 

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SECTION 4.7. As to Intellectual Property Collateral. Each Grantor covenants and
agrees to comply with the following provisions as such provisions relate to any
Intellectual Property Collateral material to the operations or business of such
Grantor:

(a) such Grantor will not (i) do or fail to perform any act whereby any such
Patent Collateral may lapse or become abandoned or dedicated to the public or
unenforceable except upon the expiration of the life of the applicable patent,
(ii) permit any of its licensees to (A) fail to continue to use any of such
Trademark Collateral in order to maintain all of such Trademark Collateral in
full force free from any claim of abandonment for non-use, (B) fail to maintain
as in the past the quality of products and services offered under all such
Trademark Collateral, (C) fail to employ all of such Trademark Collateral
registered with any federal or state, or if requested by the Administrative
Agent, foreign authority with an appropriate notice of such registration,
(D) knowingly adopt or use any other Trademark which is confusingly similar or a
colorable imitation of any such Trademark Collateral, (E) use any such Trademark
Collateral registered with any federal, state or if requested by the
Administrative Agent, foreign authority except for the uses for which
registration or application for registration of all of the Trademark Collateral
has been made, or (F) do or permit any act or knowingly omit to do any act
whereby any such Trademark Collateral may lapse or become invalid or
unenforceable, or (iii) do or permit any act or knowingly omit to do any act
whereby any such Copyright Collateral or any such Trade Secrets Collateral may
lapse or become invalid or unenforceable or placed in the public domain except
upon expiration of the end of an unrenewable term of a registration thereof,
unless, in the case of any of the foregoing requirements in clauses (i),
(ii) and (iii), such Grantor shall reasonably and in good faith determine that
any of such Intellectual Property Collateral is of negligible economic value to
such Grantor or in the case of Trade Secret Collateral, the publication of such
information is customary in the ordinary course of business of such Grantor;

(b) such Grantor shall promptly notify the Administrative Agent if it knows that
any application or registration relating to any material item of such
Intellectual Property Collateral may become abandoned or dedicated to the public
or placed in the public domain or invalid or unenforceable (other than upon the
expiration of the life of the applicable patent), or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or if requested by the
Administrative Agent, any foreign counterpart thereof or any court) regarding
such Grantor’s ownership of any such Intellectual Property Collateral, its right
to register the same or to keep and maintain and enforce the same;

(c) in no event will such Grantor or any of its agents, employees, designees or
licensees file an application for the registration of any such material
Intellectual Property Collateral with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, unless it promptly
informs the Administrative Agent, and upon request of the Administrative Agent
(subject to the terms of the Credit Agreement), such Grantor shall execute and
deliver all agreements, instruments and documents as the Administrative Agent
may reasonably request to evidence the Administrative Agent’s security interest
in such Intellectual Property Collateral;

(d) such Grantor will take all necessary steps, including in any proceeding
before the United States Patent and Trademark Office, the United States
Copyright Office or (subject to the terms of the Credit Agreement), if requested
by the Administrative Agent, any similar office or agency in any other country
or any political subdivision thereof, to maintain and pursue any application
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the relevant registration) filed with respect to, and to maintain any
registration of, each such Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings and
the payment of fees and taxes (except to the extent that dedication, abandonment
or invalidation is permitted under the foregoing clause (a) or (b) or to the
extent such Grantor shall reasonably and in good faith determine is of
immaterial economic value to such Grantor);

(e) following the obtaining of an interest in any such Intellectual Property
Collateral by such Grantor, such Grantor shall deliver a supplement to Schedule
III identifying such new Intellectual Property Collateral; and

(f) following the obtaining of an interest in any such Intellectual Property
Collateral by such Grantor or, following the occurrence and during the
continuance of an Event of Default, upon the request of the Administrative
Agent, such Grantor shall deliver all agreements, instruments and documents the
Administrative Agent may reasonably request to evidence the Administrative
Agent’s security interest in such Intellectual Property Collateral and as may
otherwise be required to acknowledge or register or perfect the Administrative
Agent’s interest in any part of such item of Intellectual Property Collateral.

SECTION 4.8. As to Deposit Accounts.

(a) With respect to any Deposit Account owned or held by any Grantor that is
required to be subject to an Account Control Agreement pursuant to the Credit
Agreement, such Grantor will cause the depositary bank maintaining such Deposit
Account to execute an Account Control Agreement relating to such Deposit Account
and the funds therein pursuant to which such depositary bank agrees to comply
with the Administrative Agent’s instructions with respect to such Deposit
Account without further consent by such Grantor; and

(b) With respect to any Deposit Account owned or held by a Grantor not described
in Section 4.8(a) above, such Grantor will, following (a) the occurrence and
continuance of an Event of Default or (b) the request of the Administrative
Agent, either (i) cause the depositary bank maintaining such Deposit Account to
execute an Account Control Agreement relating to such Deposit Account and the
funds therein pursuant to which such depositary bank agrees to comply with the
Administrative Agent’s instructions with respect to such Deposit Account without
further consent by such Grantor, or (ii) transfer the funds in such Deposit
Account to depositary banks that have or will agree to execute such Account
Control Agreements and close such Deposit Account.

ARTICLE V

THE ADMINISTRATIVE AGENT

SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Administrative Agent its attorney-in-fact, with
full authority in the place and stead of such Grantor and in the name of such
Grantor or otherwise, from time to time in the Administrative Agent’s
discretion, following the occurrence and during the continuance of an Event of
Default, to take any action and to execute any instrument which the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Security Agreement, including (a) to ask, demand, collect, sue for,
recover, compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral, (b) to receive,
endorse, and collect any drafts or other Instruments, Documents and Chattel
Paper constituting Collateral, in connection with clause (a) above, (c) to file
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Administrative Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Administrative Agent
with respect to any of the Collateral, and (d) to perform the affirmative
obligations of such Grantor hereunder. EACH GRANTOR HEREBY ACKNOWLEDGES,
CONSENTS AND AGREES THAT THE POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION
5.1 IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL THE
TERMINATION DATE.

SECTION 5.2. Administrative Agent May Perform. If any Grantor fails to perform
any agreement contained herein, the Administrative Agent may, during the
continuance of any Event of Default, itself perform, or cause performance of,
such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall be payable by such Grantor pursuant to Section 6.3
hereof and Section 9.1 of the Credit Agreement and the Administrative Agent may
from time to time take any other action which the Administrative Agent
reasonably deems necessary for the maintenance, preservation or protection of
any of the Collateral or of its security interest therein.

SECTION 5.3. Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of
the Secured Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Investment
Property and any other Pledged Property, whether or not the Administrative Agent
has or is deemed to have knowledge of such matters, or (b) taking any necessary
steps to preserve rights against prior parties or any other rights pertaining to
any Collateral.

SECTION 5.4. Reasonable Care. The Administrative Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided, that the Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral (a) if such Collateral is accorded treatment substantially equal to
that which the Administrative Agent accords its own personal property, or (b) if
the Administrative Agent takes such action for that purpose as any Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of an Event of Default; provided, further, that failure
of the Administrative Agent to comply with any such request at any time shall
not in itself be deemed a failure to exercise reasonable care.

ARTICLE VI

REMEDIES

SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred and
be continuing:

(a) The Administrative Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may
(i) take possession of any Collateral not already in its possession without
demand and without legal process, (ii) require any Grantor to, and each Grantor
hereby agrees that it will, at its expense and upon request of the
Administrative Agent forthwith, assemble all or part of the Collateral as
directed by the Administrative Agent and make it available to the Administrative
Agent at a place to be designated by the Administrative Agent that is reasonably
convenient to both parties, (iii) subject to applicable law or agreements with
landlords, bailees, or warehousemen, enter onto the property where any
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located and take possession thereof without demand and without legal process,
(iv) without notice except as specified below, lease, license, sell or otherwise
dispose of the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Administrative Agent’s offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable. Each Grantor agrees that,
to the extent notice of sale shall be required by law, at least ten (10) days’
prior notice to the applicable Grantor of the time and place of any public sale
or the time of any private sale is to be made shall constitute reasonable
notification; provided, however, that with respect to Collateral that is
(x) perishable or threatens to decline speedily in value, or (y) is of a type
customarily sold on a recognized market (including Investment Property), no
notice of sale or disposition need be given. For purposes of this Article VI,
notice of any intended sale or disposition of any Collateral may be given by
first-class mail, hand-delivery (through a delivery service or otherwise),
facsimile or email, and shall be deemed to have been “sent” upon deposit in the
U.S. Mails with adequate postage properly affixed, upon delivery to an express
delivery service or upon electronic submission through telephonic or internet
services, as applicable. The Administrative Agent shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Administrative Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

(b) Each Grantor that is or may become a fee estate owner of property where any
Collateral is located (regardless of ownership thereof by any other Grantor)
agrees and acknowledges that (i) Administrative Agent may remove the Collateral
or any part thereof from such property in accordance with statutory law
appertaining thereto without objection, delay, hindrance or interference by such
Grantor and in such case such Grantor will make no claim or demand whatsoever
against the Collateral, (ii) it will (x) cooperate with Administrative Agent in
its efforts to assemble and/or remove all of the Collateral located on such
property; (y) permit Administrative Agent and its agents to enter upon such
property and occupy the property at any or all times to conduct an auction or
sale, and/or to inspect, audit, examine, safeguard, assemble, appraise, display,
remove, maintain, prepare for sale or lease, repair, lease, transfer, auction
and/or sell the Collateral; and (z) not hinder Administrative Agent’s actions in
enforcing its security interest in the Collateral.

(c) Each Grantor agrees and acknowledges that a commercially reasonable
disposition of Inventory, Equipment, Goods, Computer Hardware and Software
Collateral or Intellectual Property Collateral may be by lease or license of, in
addition to the sale of, such Collateral. Each Grantor further agrees and
acknowledges that the following shall be deemed a reasonable commercial
disposition: (i) a disposition made in the usual manner on any recognized
market, (ii) a disposition at the price current in any recognized market at the
time of disposition, and (iii) a disposition in conformity with reasonable
commercial practices among dealers in the type of property subject to the
disposition.

(d) All cash Proceeds received by the Administrative Agent in respect of any
sale of, collection from, or other realization upon, all or any part of the
Collateral shall be applied by the Administrative Agent against, all or any part
of the Obligations as set forth in Section 7.6 of the Credit Agreement. The
Administrative Agent shall not be obligated to apply or pay over for application
noncash proceeds of collection or enforcement unless (i) the failure to do so
would be commercially unreasonable, and (ii) the affected party has provided the
Administrative Agent with a written demand to apply or pay over such noncash
proceeds on such basis.

(e) The Administrative Agent may do any or all of the following: (i) transfer
all or any part of the Collateral into the name of the Administrative Agent or
its nominee, with or without disclosing that such Collateral is subject to the
Lien hereunder, (ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to become due
thereunder, (iii) withdraw, or cause or direct the withdrawal, of all funds with
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Account, (iv) enforce collection of any of the Collateral by suit or otherwise,
and surrender, release or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original period)
any obligations of any nature of any party with respect thereto, (v) endorse any
checks, drafts, or other writings in the applicable Grantor’s name to allow
collection of the Collateral, (vi) take control of any Proceeds of the
Collateral, or (vii) execute (in the name, place and stead of the applicable
Grantor) endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.

SECTION 6.2. Compliance with Restrictions. Each Grantor agrees that in any sale
of any of the Collateral whenever an Event of Default shall have occurred and be
continuing, the Administrative Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to Persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority or official, and each
Grantor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Administrative Agent be liable nor accountable to such Grantor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.

SECTION 6.3. Indemnity and Expenses.

(a) WITHOUT LIMITING THE GENERALITY OF THE PROVISIONS OF SECTION 9.2 OF THE
CREDIT AGREEMENT, EACH GRANTOR HEREBY AGREES TO, JOINTLY AND SEVERALLY,
INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE AGENT, EACH SECURED PARTY AND
EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND ADVISORS
(ANY OF THE FOREGOING BEING, AN “INDEMNITEE”) FROM AND AGAINST ANY AND ALL
CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS’ FEES) THAT MAY BE INCURRED BY OR ASSERTED OR
AWARDED AGAINST ANY INDEMNITEE, IN EACH CASE ARISING OUT OF OR IN CONNECTION
WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY
INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION
THEREWITH), THIS SECURITY AGREEMENT, THE CREDIT DOCUMENTS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS
OF THE ADVANCES, INCLUDING SUCH INDEMNITEE’S OWN NEGLIGENCE, EXCEPT TO THE
EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A
FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM SUCH INDEMNITEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE
CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY
IN THIS SECTION 6.3 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT
SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY ANY CREDIT PARTY, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNITEE OR ANY OTHER PERSON OR ANY
INDEMNITEE IS OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED. THE FOREGOING INDEMNITY AND HOLD HARMLESS
SHALL NOT APPLY TO ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES
THAT IS INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNITEE DIRECTLY FOR,
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CONSEQUENCE OF, SUCH INDEMNITEE BEING A DEFAULTING LENDER UNDER CLAUSE (A) OR
(B) OF THE DEFINITION OF “DEFAULTING LENDER”, WHETHER ASSERTED BY ANY CREDIT
PARTY, THE ADMINISTRATIVE AGENT, THE ISSUING LENDER OR THE SWING LINE LENDER.

(b) Other than as set forth in clause (c) below, each Grantor will upon demand
pay to the Administrative Agent the amount of any and all reasonable
out-of-pocket costs and expenses, including the reasonable fees and
out-of-pocket expenses of its counsel, which the Administrative Agent may incur
in connection herewith, including in connection with the administration of this
Security Agreement and the custody, preservation, use or operation of, any of
the Collateral.

(c) Each Grantor will upon demand pay to the Administrative Agent the amount of
any and all out-of-pocket costs expenses, including the fees and expense of its
outside counsel and of outside counsel of each Lender, which the Administrative
Agent may incur in connection (i) the sale of, collection from, or other
realization upon, any of the Collateral, (ii) the exercise or enforcement of any
of the rights of the Administrative Agent or any of the Secured Parties
hereunder, or (iii) the failure by any Grantor to perform or observe any of the
provisions hereof.

SECTION 6.4. Warranties. The Administrative Agent may sell the Collateral
without giving any warranties or representations as to the Collateral. The
Administrative Agent may disclaim any warranties of title or the like. Each
Grantor agrees that this procedure will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.

ARTICLE VII

MISCELLANEOUS PROVISIONS

SECTION 7.1. Credit Document. This Security Agreement is a Credit Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof, including Article 9 thereof.

SECTION 7.2. Binding on Successors, Transferees and Assigns; Assignment. This
Security Agreement shall remain in full force and effect until the Termination
Date has occurred, shall be binding upon each Grantor and its successors,
transferees and assigns and, subject to the limitations set forth in the Credit
Agreement, shall inure to the benefit of and be enforceable by each Secured
Party and its successors, transferees and assigns; provided that, no Grantor
shall assign any of its obligations hereunder (unless otherwise permitted under
the terms of the Credit Agreement or this Security Agreement).

SECTION 7.3. Amendments, etc. No amendment to or waiver of any provision of this
Security Agreement, nor consent to any departure by any Grantor from its
obligations under this Security Agreement, shall in any event be effective
unless the same shall be in writing and signed by the Administrative Agent (on
behalf of the Lenders or the Majority Lenders, as the case may be, pursuant to
Section 9.3 of the Credit Agreement) and such Grantor and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

SECTION 7.4. Notices. Except as otherwise provided in this Security Agreement,
all notices and other communications provided for hereunder shall be in writing
and hand delivered with written receipt, telecopied, sent by facsimile (with a
hard copy sent as otherwise permitted pursuant to the Credit Agreement), sent by
a nationally recognized overnight courier, or sent by certified mail, return
receipt requested to the appropriate party at the address or facsimile number of
such party specified in the Credit Agreement, on the signature pages of this
Security Agreement or at such other address or facsimile number as may be
designated by such party in a notice to the other party. Except as otherwise
provided in this Security Agreement, all such notices and communications shall
be effective when delivered.

 

Amended and Restated Pledge and Security Agreement

Page 25 of 40

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SECTION 7.5. No Waiver; Remedies. In addition to, and not in limitation of
Section 2.5, no right, power, or remedy conferred to any Secured Party in this
Security Agreement, or now or hereafter existing at law, in equity, by statute,
or otherwise shall be exclusive, and each such right, power, or remedy shall to
the full extent permitted by law be cumulative and in addition to every other
such right, power or remedy. No course of dealing and no delay in exercising any
right, power, or remedy conferred to any Secured Party in this Security
Agreement or now or hereafter existing at law, in equity, by statute, or
otherwise shall operate as a waiver of or otherwise prejudice any such right,
power, or remedy. Any Secured Party may cure any Event of Default without
waiving the Event of Default. No notice to or demand upon any Grantor shall
entitle such Grantor or any other Grantor to similar notices or demands in the
future.

SECTION 7.6. Headings. Paragraph headings have been inserted in this Security
Agreement as a matter of convenience for reference only and it is agreed that
such paragraph headings are not a part of this Security Agreement and shall not
be used in the interpretation of any provision of this Security Agreement.

SECTION 7.7. Severability. In case one or more provisions of this Security
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality,
and enforceability of the remaining provisions contained herein or therein shall
not be affected or impaired thereby.

SECTION 7.8. Counterparts. This Security Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page of this Security Agreement by facsimile
or by e-mail “PDF” copy shall be effective as delivery of a manually executed
counterpart of this Security Agreement

SECTION 7.9. Consent as Holder of Equity and as Pledged Interests Issuer. Each
Grantor hereby (a) consents to the execution by each other Grantor of this
Security Agreement and grant by each other Grantor of a security interest,
encumbrance, pledge and hypothecation in all Pledged Interests and other
Collateral of such other Grantor to the Administrative Agent pursuant hereto,
and (b) without limiting the generality of the foregoing, consents to the
transfer of any Pledged Interest to the Administrative Agent or its nominee
pursuant to the terms of this Security Agreement following the occurrence and
during the continuance of an Event of Default and to the substitution of the
Administrative Agent or its nominee as a partner under the limited partnership
agreement or as a member under the limited liability company agreement, in any
case, as heretofore and hereafter amended. Furthermore, each Grantor as the
holder of any Equity Interests in a Pledged Interests Issuer, hereby (i) waives
all rights of first refusal, rights to purchase, and rights to consent to
transfer (to any Secured Party or to any purchaser resulting from the exercise
of a Secured Party’s remedy provided hereunder or under applicable law) and
(ii) if required by the organizational documents of such Pledged Interests
Issuer, agrees to cause such Pledged Interests Issuer to register the Lien
granted hereunder and encumbering such Equity Interests in the registry books of
such Pledged Interests Issuer.

SECTION 7.10. Additional Grantors. Additional Material Domestic Subsidiaries of
Borrower may from time to time enter into this Security Agreement as a Grantor.
Upon execution and delivery after the date hereof by the Administrative Agent
and such Material Domestic Subsidiary of an instrument in the form of Annex 1,
such Material Domestic Subsidiary shall become a Grantor hereunder with the

 

Amended and Restated Pledge and Security Agreement

Page 26 of 40

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same force and effect as if originally named as a Grantor herein. The execution
and delivery of any instrument adding an additional Grantor as a party to this
Security Agreement shall not require the consent of any other Grantor hereunder.
The rights and obligations of each Grantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Grantor as a party to this
Security Agreement.

SECTION 7.11. Acknowledgment of Pledged Interests Issuers. Each Pledged
Interests Issuer that is party hereto agrees that it will comply with
instructions of the Administrative Agent with respect to the applicable
Uncertificated Securities without further consent by the applicable Grantor.

SECTION 7.12. Conflicts with Credit Agreement. To the fullest extent possible,
the terms and provisions of the Credit Agreement shall be read together with the
terms and provisions of this Security Agreement so that the terms and provisions
of this Security Agreement do not conflict with the terms and provisions of the
Credit Agreement; provided, however, notwithstanding the foregoing, in the event
that any of the terms or provisions of this Security Agreement conflict with any
terms or provisions of the Credit Agreement, the terms or provisions of the
Credit Agreement shall govern and control for all purposes; provided that the
inclusion in this Security Agreement of terms and provisions, supplemental
rights or remedies in favor of the Administrative Agent not addressed in the
Credit Agreement shall not be deemed to be in conflict with the Credit Agreement
and all such additional terms, provisions, supplemental rights or remedies
contained herein shall be given full force and effect.

SECTION 7.13. Governing Law. This Security Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas.

SECTION 7.14. Submission to Jurisdiction. EACH GRANTOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY TEXAS STATE OR FEDERAL COURT SITTING IN
HOUSTON, TEXAS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT OR THE OTHER CREDIT DOCUMENTS, AND EACH GRANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH COURT. EACH CREDIT PARTY HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
RIGHT IT MAY HAVE TO THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING. EACH GRANTOR HEREBY AGREES THAT SERVICE OF COPIES OF
THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS
TO SUCH GRANTOR AT ITS ADDRESS SET FORTH IN THIS SECURITY AGREEMENT. EACH
GRANTOR HEREBY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION SHALL
AFFECT THE RIGHTS OF ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY THE LAW OR AFFECT THE RIGHT OF ANY LENDER TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY GRANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.

SECTION 7.15. [Reserved].

SECTION 7.16. Amendment and Restatement; Ratification. Each of the Grantors
hereby (a) ratifies and affirms its obligations under the Existing Security
Agreement, as amended and restated herein, (b) agrees that all of the liens and
security interests created by and existing under the Existing Security Agreement
shall continue to be valid and subsisting liens and security interests securing
the obligations under the Credit Agreement, the other Credit Documents, the
Banking Services provided by Banking Services Providers, and the Hedging
Arrangements with Secured Swap Providers, (c) agrees that the Existing Security
Agreement and the liens and security interests created thereunder shall remain
in

 

Amended and Restated Pledge and Security Agreement

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full force and effect, as amended and restated herein, and (d) agrees that all
rights, titles, interests, liens and security interests existing under the
Existing Security Agreement are renewed, extended, carried forward and conveyed
hereby to secure all of the obligations of the Grantors under the Credit
Agreement, the other Credit Documents, Banking Services provided by Banking
Services Providers, and the Hedging Arrangements with Secured Swap Providers.

SECTION 7.17. Waiver of Jury. EACH GRANTOR, THE LENDERS, THE ADMINISTRATIVE
AGENT, THE ISSUING LENDER, AND THE SWING LINE LENDER HEREBY IRREVOCABLY WAIVE
ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS SECURITY AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.

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

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be duly executed and delivered by its Responsible Officer as of the
date first above written.

 

GRANTORS CARBO CERAMICS INC. By:   /S/ ERNESTO BAUTISTA III

Name:   Ernesto Bautista III

Title:   Vice President and Chief Financial Officer

 

FALCON TECHNOLOGIES AND SERVICES, INC. By:   /S/ ERNESTO BAUTISTA III

Name:   Ernesto Bautista III

Title:   Vice President and Chief Financial Officer

 

STRATAGEN, INC. By:   /S/ ERNESTO BAUTISTA III

Name:   Ernesto Bautista III

Title:   Vice President and Chief Financial Officer

 

Signature Page to Amended and Restated Pledge and Security Agreement

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ADMINISTRATIVE AGENT: WELLS FARGO BANK, NATIONAL ASSOCIATION By:   /S/ DAVID
MAYNARD

Name:   David Maynard

Title:   Senior Vice President

 

Signature Page to Amended and Restated Pledge and Security Agreement

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SCHEDULE I

to Amended and Restated Pledge and Security

Agreement

 

Item A-1. Location of Grantor for purposes of UCC.

Borrower:

 

CARBO Ceramics Inc.    Delaware

 

Item A-2. Grantor’s place of business or principal office.

Borrower:

CARBO Ceramics Inc.

575 N. Dairy Ashford Road, Suite 300

Houston, Texas 77079

 

Item A-3. Taxpayer ID number.

Borrower:

 

CARBO Ceramics Inc.    72-1100013

 

Item B. Merger or other corporate reorganization.

None.

 

Amended and Restated Pledge and Security Agreement

Schedule I

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SCHEDULE II

to Amended and Restated Pledge and Security

Agreement

ITEM A – PLEDGED INTERESTS

 

Common Stock

Pledgor

  

Pledged Interests Issuer
(corporate)

  

Cert. #

  

# of Shares

  

Authorized

Shares

  

% of Total Shares
Pledged

 

Limited Liability Company Interests

(Uncertificated unless otherwise noted)

Pledgor

  

Pledged Interests Issuer
(limited liability company)

  

% of Limited Liability

Company Interests Owned

  

% of Limited Liability

Company Interests Pledged

  

Type of Limited Liability

Company Interests Pledged

 

Partnership Interests

Pledgor

  

Pledged Interests Issuer
(partnership)

  

% of Partnership

Interests Owned

  

% of Partner-ship

Interests Pledged

  

Type of Partnership
Interests Pledged

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

ITEM B – PLEDGED NOTES

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

SCHEDULE III – A

to Amended and Restated Pledge and Security

Agreement

INTELLECTUAL PROPERTY COLLATERAL

Item A. Patent Collateral.

Issued Patents

 

Country

  

Patent No.

  

Issue Date

  

Inventor(s)

  

Title

Patent Applications

 

Country

  

Patent No.

  

Issue Date

  

Inventor(s)

  

Title

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

SCHEDULE III – B

to Amended and Restated Pledge and Security

Agreement

Item B. Trademark Collateral

 

Registration #

  

Trademarks/Service Marks

  

Goods or Services

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

SCHEDULE III – C

to Amended and Restated Pledge and Security

Agreement

Item C. Copyright Collateral.

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

Annex 1 to Amended and Restated Pledge and Security

Agreement

SUPPLEMENT NO.              dated as of                     , 20         (the
“Supplement”), to the Amended and Restated Pledge and Security Agreement dated
as of April 27, 2016 (as amended, supplemented, restated, or otherwise modified
from time to time, the “Security Agreement”), among CARBO CERAMICS INC., a
Delaware corporation (the “Borrower”) and each Material Domestic Subsidiary of
the Borrower party thereto from time to time (collectively with the Borrower,
the “Grantors” and individually, a “Grantor”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Wells Fargo”), as Administrative Agent (the “Administrative
Agent”) for the ratable benefit of the Secured Parties (as defined in the Credit
Agreement referred to herein).

A. Reference is made to that certain Credit Agreement, dated as of January 29,
2010 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the “Credit Agreement”), among the Borrower, the lenders party
thereto from time to time (the “Lenders”), and Wells Fargo Bank, National
Association, as the Administrative Agent, the issuing lender and the swing line
lender.

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

C. Section 7.10 of the Security Agreement provides that additional Material
Domestic Subsidiaries of the Borrower may become Grantors under the Security
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Material Domestic Subsidiary of the Borrower (the
“New Grantor”) is executing this Supplement in accordance with the requirements
of the Credit Agreement to become a Grantor under the Security Agreement.

Accordingly, the Administrative Agent and the New Grantor agree as follows:

SECTION 1. In accordance with Section 7.10 of the Security Agreement, the New
Grantor by its signature below becomes a Grantor under the Security Agreement
with the same force and effect as if originally named therein as a Grantor and
the New Grantor hereby agrees (a) to all the terms and provisions of the
Security Agreement applicable to it as a Grantor thereunder and (b) represents
and warrants that the representations and warranties made by it as a Grantor
thereunder are true and correct on and as of the date hereof. In furtherance of
the foregoing, the New Grantor, as security for the payment and performance in
full of the Secured Obligations (as defined in the Credit Agreement), does
hereby create and grant to the Administrative Agent, its successors and assigns,
for the benefit of the Secured Parties, their successors and assigns as provided
in the Security Agreement, a continuing security interest in and Lien on all of
the New Grantor’s right, title and interest in and to the Collateral (as defined
in the Security Agreement) of the New Grantor. Each reference to a “Grantor” in
the Security Agreement shall be deemed to include the New Grantor. The Security
Agreement is hereby incorporated herein by reference.

SECTION 2. The New Grantor represents and warrants to the Administrative Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors’ rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether enforcement
is sought in a proceeding in equity or at law)).

 

Amended and Restated Pledge and Security Agreement

Annex 1

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

SECTION 3. This Supplement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Administrative
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Administrative Agent.
Delivery of an executed signature page to this Supplement by facsimile or other
electronic transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.

SECTION 4. The New Grantor hereby agrees that the schedules attached to the
Security Agreement are hereby supplemented by the corresponding schedules
attached to this Supplement. The New Grantor hereby represents and warrants that
the information provided in the schedules attached hereto are true and correct
as of the date hereof.

SECTION 5. The New Grantor hereby expressly acknowledges and agrees to the terms
of Section 6.3. (Indemnity and Expenses) of the Security Agreement.

SECTION 6. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.

SECTION 7. In case one or more provisions of this Supplement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality, and enforceability of the remaining provisions contained herein or
therein shall not be affected or impaired thereby.

SECTION 8. All communications and notices hereunder shall be in writing and
given as provided in the Security Agreement. All communications and notices
hereunder to the New Grantor shall be given to it at the address set forth under
its signature hereto.

SECTION 9. The New Grantor agrees to reimburse the Administrative Agent for its
reasonable out-of-pocket costs and expenses in connection with this Supplement,
including the reasonable fees and out-of-pocket expenses of outside counsel for
the Administrative Agent.

SECTION 10. Governing Law. This Security Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas.

SECTION 11. Submission to Jurisdiction. EACH GRANTOR HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY TEXAS STATE OR FEDERAL COURT SITTING IN HOUSTON,
TEXAS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT OR THE OTHER CREDIT DOCUMENTS, AND EACH GRANTOR HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH COURT. EACH CREDIT PARTY HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY RIGHT IT
MAY HAVE TO THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING. EACH GRANTOR HEREBY AGREES THAT SERVICE OF COPIES OF THE
SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS
TO SUCH GRANTOR AT ITS ADDRESS SET FORTH IN THIS SUPPLEMENT. EACH GRANTOR HEREBY
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHTS OF ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY THE
LAW OR AFFECT THE RIGHT OF ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST
ANY GRANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

 

Amended and Restated Pledge and Security Agreement

Annex 1

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

SECTION 12. Waiver of Jury. EACH GRANTOR, THE LENDERS, THE ADMINISTRATIVE AGENT,
THE ISSUING LENDER, AND THE SWING LINE LENDER HEREBY IRREVOCABLY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS SUPPLEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

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

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.

 

[Name of New Grantor], By:    

Name:    

Title:    

 

Address:            

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent By:    

Name:    

Title:    

 

Amended and Restated Pledge and Security Agreement

Annex 1

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

SCHEDULES TO SUPPLEMENT NO. 1

[AS APPROPRIATE]

 

Amended and Restated Pledge and Security Agreement

Annex 1