Exhibit 10.1

AGREEMENT AND AMENDMENT NO. 7 TO CREDIT AGREEMENT

This AGREEMENT AND AMENDMENT NO. 7 TO CREDIT AGREEMENT (this “Agreement”) dated
April 27, 2016 (the “Effective Date”) is among CARBO Ceramics Inc., a Delaware
corporation (the “Borrower”), the Lenders (as defined below) and Wells Fargo
Bank, National Association, as administrative agent (in such capacity, the
“Administrative Agent”), as swing line lender (the “Swing Line Lender”), and as
issuing lender (in such capacity, the “Issuing Lender”) for such Lenders.

RECITALS

A. The Borrower is party to that certain Credit Agreement dated as of
January 29, 2010, among the Borrower, the lenders party thereto from time to
time (the “Lenders”), the Administrative Agent, the Swing Line Lender, and the
Issuing Lender (as heretofore amended and as may be further amended, restated or
otherwise modified from time to time, the “Credit Agreement”).

B. The Borrower has requested that the Lenders amend the Credit Agreement, as
provided herein and subject to the terms and conditions set forth herein.

THEREFORE, the Borrower, the Lenders, the Administrative Agent, the Swing Line
Lender, and the Issuing Lender hereby agree as follows:

Section 1. Defined Terms. As used in this Agreement, each of the terms defined
in the opening paragraph and the Recitals above shall have the meanings assigned
to such terms therein. Each term defined in the Credit Agreement and used herein
without definition shall have the meaning assigned to such term in the Credit
Agreement, unless expressly provided to the contrary.

Section 2. Other Definitional Provisions. Article, Section, Schedule, and
Exhibit references are to Articles and Sections of and Schedules and Exhibits to
this Agreement, unless otherwise specified. All references to instruments,
documents, contracts, and agreements 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. The words
“hereof,” “herein,” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term “including” means “including,
without limitation.” Paragraph headings have been inserted in this Agreement as
a matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.

Section 3. Amendments to Credit Agreement.

(a) The Credit Agreement is hereby amended as reflected in Annex A attached
hereto.

(b) The Credit Agreement is hereby further amended by inserting the Exhibit B
attached hereto in the appropriate alphabetical order in the Credit Agreement as
Exhibit B.

(c) The Credit Agreement is hereby further amended by inserting the Exhibit C
attached hereto in the appropriate alphabetical order in the Credit Agreement as
Exhibit C.

(d) The Credit Agreement is hereby further amended by replacing Schedule I with
the Schedule I attached to Annex A.

 

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

(e) The Credit Agreement is hereby further amended by replacing Schedule II with
the Schedule II attached to Annex A.

(f) The Credit Agreement is hereby amended by inserting the Schedule 1.1(b)
attached hereto in the appropriate numerical order.

(g) The Credit Agreement is hereby amended by inserting the Schedule 5.9(b)
attached hereto in the appropriate numerical order.

(h) The Credit Agreement is hereby amended by inserting the Schedule 5.12
attached hereto in the appropriate numerical order.

(i) The Credit Agreement is hereby amended by inserting the Schedule 6.8(c)
attached hereto in the appropriate numerical order.

Section 4. Decrease in Commitments. This Agreement shall be deemed written
notice by the Borrower of a ratable reduction in part of the unused portion of
Commitments pursuant to Section 2.1(b)(i) of the Credit Agreement. On the
Effective Date, after giving effect to the contemplated reduction herein,
(a) the Commitments shall be as set forth on the revised Schedule II attached to
Annex A, and (b) each Lender’s Commitment shall be automatically decreased to
the amount set forth adjacent to such Lender’s name on such replacement Schedule
II.

Section 5. Borrower Representations and Warranties. The Borrower represents and
warrants that: (a) the representations and warranties contained in the Credit
Agreement, as amended hereby, and the representations and warranties contained
in the other Credit Documents, are true and correct in all material respects on
and as of the Effective Date as if made on as and as of such date except to the
extent that any such representation or warranty expressly relates solely to an
earlier date, in which case such representation or warranty is true and correct
in all material respects as of such earlier date; (b) no Default has occurred
and is continuing; (c) the execution, delivery and performance of this Agreement
are within the corporate power and authority of the Borrower and have been duly
authorized by appropriate corporate and governing action and proceedings;
(d) this Agreement constitutes the legal, valid, and binding obligation of the
Borrower enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally and general principles of equity;
(e) as of the Effective Date, (i) there are no Material Domestic Subsidiaries
(other than Falcon Technologies and Services, Inc. and StrataGen, Inc.) and
(ii) no Non-Material Domestic Subsidiary is required to be a Guarantor pursuant
to Section 5.6 of the Credit Agreement (other than Falcon Technologies and
Services, Inc. and StrataGen, Inc.) and (f) there are no governmental or other
third party consents, licenses and approvals required in connection with the
execution, delivery, performance, validity and enforceability of this Agreement.

Section 6. Conditions to Effectiveness. This Agreement shall become effective on
the Effective Date and enforceable against the parties hereto upon the
occurrence of the following conditions precedent:

(a) The Administrative Agent shall have received:

(i) this Agreement executed and delivered by each of the Borrower, the
Administrative Agent, the Swing Line Lender, the Issuing Lender, and the
Majority Lenders;

(ii) an Amended and Restated Security Agreement of even effective date herewith
executed and delivered by each of the Borrower and the other Credit Parties and
the Administrative

 

2

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

Agent, which agreement shall amend and restate, in its entirety, the Security
Agreement, together with appropriate UCC-1 or UCC-3 financing statements, if
any, necessary or desirable for filing with the appropriate authorities and any
other documents, agreements, or instruments necessary to create, perfect or
maintain an Acceptable Security Interest in the Collateral described in the
Security Agreement;

(iii) the Guaranty of even effective date herewith executed and delivered by
each of the Borrower and the other Credit Parties;

(iv) a secretary’s certificate from the Borrower and each other Credit Party
certifying such Person’s officers’ incumbency, authorizing resolutions and
organizational documents;

(v) a customary legal opinion of Haynes and Boone, LLP in form and substance
reasonably acceptable to the Administrative Agent; and

(vi) a completed and executed perfection certificate in form and substance
reasonably acceptable to the Administrative Agent;

(b) The Borrower shall have paid (i) the amendment fee as set forth in
Section 7(f) below and (ii) all other costs and expenses which have been
invoiced and are payable pursuant to Section 10.1 of the Credit Agreement; and

Section 7. Acknowledgments and Agreements.

(a) The Borrower acknowledges and agrees that Secured Obligations are payable
without defense, offset, counterclaim or recoupment.

(b) The Administrative Agent and the Lenders hereby expressly reserve all of
their rights, remedies, and claims under the Credit Documents. Nothing in this
Agreement shall constitute a waiver or relinquishment of (i) any Default or
Event of Default under any of the Credit Documents, (ii) any of the agreements,
terms or conditions contained in any of the Credit Documents, (iii) any rights
or remedies of the Administrative Agent or any Lender with respect to the Credit
Documents or (iv) the rights of the Administrative Agent or any Lender to
collect the full amounts owing to them under the Credit Documents.

(c) Each of the Borrower, the Administrative Agent, the Swing Line Lender, the
Issuing Lender and the Lenders does hereby adopt, ratify, and confirm the Credit
Agreement, as amended hereby, and acknowledges and agrees that the Credit
Agreement, as amended hereby, is and remains in full force and effect, and the
Borrower acknowledges and agrees that its liabilities and obligations under the
Credit Agreement, as amended hereby, are not impaired in any respect by this
Agreement.

(d) From and after the Effective Date, all references to the Credit Agreement
and the Credit Documents shall mean such Credit Agreement and such Credit
Documents as amended by this Agreement.

(e) This Agreement is a Credit Document for the purposes of the provisions of
the other Credit Documents. Without limiting the foregoing, any breach of
representations, warranties, and covenants under this Agreement shall be a
Default or Event of Default, as applicable, under the Credit Agreement.

(f) In consideration of the agreements of the Lenders set forth in this
Agreement, the Borrower agrees to pay to the Administrative Agent, for the
account of each Lender, an amendment fee in an amount equal to 0.25% of such
Lender’s Commitment as set forth on Schedule II attached to Annex A. Each such
amendment fee as to such Lender (i) is payable in U.S. dollars in immediately
available funds, free and clear

 

3

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

of, and without deduction for, any and all present or future applicable taxes,
levies, imposts, deductions, charges or withholdings and all liabilities with
respect thereto (with appropriate gross-up for withholding taxes), (ii) is not
refundable under any circumstances, (iii) will not be subject to counterclaim,
defense, setoff or otherwise affected, and (iv) is deemed fully earned by such
Lender once its signature page is delivered as provided above and the Effective
Date has occurred.

(g) Each party hereto hereby agrees that, in no event and under no circumstance
shall any past or future discussions with the Administrative Agent or any other
Secured Party, serve to (i) cause a modification of the Credit Documents,
(ii) establish a custom or course of dealing with respect to any of the Credit
Documents, (iii) operate as a waiver of any existing or future Default or Event
of Default under the Credit Documents, as amended hereby, (iv) entitle any
Credit Party to any other or further notice or demand whatsoever beyond those
required by the Credit Documents, as amended hereby, or (v) in any way modify,
change, impair, affect, diminish or release any Credit Party’s obligations or
liability under the Credit Documents, as amended hereby, or any other liability
any Credit Party may have to the Administrative Agent, the Issuing Lender, the
Swing Line Lender, or any other Secured Party.

Section 8. Release. For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Credit Party hereby, for
itself and its successors and assigns, fully and without reserve, releases,
acquits, and forever discharges each Secured Party, its respective successors
and assigns, officers, directors, employees, representatives, trustees,
attorneys, agents and affiliates (collectively the “Released Parties” and
individually a “Released Party”) from any and all actions, claims, demands,
causes of action, judgments, executions, suits, debts, liabilities, costs,
damages, expenses or other obligations of any kind and nature whatsoever, direct
and/or indirect, at law or in equity, whether now existing or hereafter
asserted, whether absolute or contingent, whether due or to become due, whether
disputed or undisputed, whether known or unknown (INCLUDING, WITHOUT LIMITATION,
ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITH RESPECT TO
THE NEGLIGENCE OF ANY RELEASED PARTY) (collectively, the “Released Claims”), for
or because of any matters or things occurring, existing or actions done, omitted
to be done, or suffered to be done by any of the Released Parties, in each case,
on or prior to the later of (a) the Effective Date and (b) the date the Credit
Parties execute and deliver their signature pages hereto to the Administrative
Agent (or its counsel), and are in any way directly or indirectly arising out of
or in any way connected to any of this Agreement, the Credit Agreement, any
other Credit Document, or any of the transactions contemplated hereby or thereby
(collectively, the “Released Matters”). Each Credit Party, by execution hereof,
hereby acknowledges and agrees that the agreements in this Section 8 are
intended to cover and be in full satisfaction for all or any alleged injuries or
damages arising in connection with the Released Matters herein compromised and
settled. Each Credit Party hereby further agrees that it will not sue any
Released Party on the basis of any Released Claim released, remised and
discharged by the Credit Parties pursuant to this Section 8. In entering into
this Agreement, each Credit Party consulted with, and has been represented by,
legal counsel and expressly disclaims any reliance on any representations, acts
or omissions by any of the Released Parties and hereby agrees and acknowledges
that the validity and effectiveness of the releases set forth herein do not
depend in any way on any such representations, acts and/or omissions or the
accuracy, completeness or validity hereof. The provisions of this Section 8
shall survive the termination of this Agreement, the Credit Agreement and the
other Credit Documents and payment in full of the Obligations.

Section 9. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original and all of which, taken
together, constitute a single instrument. This Agreement may be executed by
facsimile signature and all such signatures shall be effective as originals.

 

4

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

Section 10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Credit Agreement.

Section 11. Invalidity. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement.

Section 12. Governing Law. This Agreement shall be deemed to be a contract made
under and shall be governed by and construed in accordance with the laws of the
State of Texas.

Section 13. USA PATRIOT Act. Each Lender that is subject to the PATRIOT Act and
the Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies each Credit Party that pursuant to the requirements of the PATRIOT Act
it is required to obtain, verify and record information that identifies such
Credit Party, which information includes the name and address of such Credit
Party and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify such Credit Party in accordance with the
PATRIOT Act.

Section 14. Entire Agreement. THIS AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY
THIS AGREEMENT, THE NOTES, AND THE OTHER CREDIT DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[signature pages follow]

 

5

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

EXECUTED effective as of the date first above written.

 

BORROWER: CARBO CERAMICS INC. By:  

/s/ Ernesto Bautista III

  Ernesto Bautista III   Vice President and Chief Financial Officer

 

Signature Page to Agreement and Amendment No. 7 to Credit Agreement

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

ADMINISTRATIVE AGENT/LENDER WELLS FARGO BANK, NATIONAL ASSOCIATION as
Administrative Agent, Swing Line Lender, Issuing Lender and sole Lender By:  

/s/ David Maynard

  David Maynard   Senior Vice President

 

Signature Page to Agreement and Amendment No. 7 to Credit Agreement

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

ANNEX A TO AGREEMENT AND AMENDMENT NO. 7 TO CREDIT AGREEMENT

 

 

 

CREDIT AGREEMENT

dated as of January 29, 2010

Among

CARBO CERAMICS INC.

as Borrower,

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Administrative Agent, Issuing Lender and Swing Line Lender,

and

THE LENDERS NAMED HEREIN

as Lenders

$80,000,000

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

As Sole Lead Arranger

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

ARTICLE 1

  

DEFINITIONS AND ACCOUNTING TERMS

     1   

Section 1.1

  

Certain Defined Terms

     1   

Section 1.2

  

Computation of Time Periods

     21   

Section 1.3

  

Accounting Terms; Changes in GAAP

     21   

Section 1.4

  

Classes and Types of Advances

     21   

Section 1.5

  

Miscellaneous

     21   

ARTICLE 2

  

CREDIT FACILITIES

     22   

Section 2.1

  

Revolving Commitments

     22   

Section 2.2

  

Letters of Credit

     23   

Section 2.3

  

Swing Line Advances

     28   

Section 2.4

  

Advances

     31   

Section 2.5

  

Prepayments

     33   

Section 2.6

  

Repayment

     35   

Section 2.7

  

Fees

     35   

Section 2.8

  

Interest

     36   

Section 2.9

  

Illegality

     37   

Section 2.10

  

Breakage Costs

     38   

Section 2.11

  

Increased Costs

     38   

Section 2.12

  

Payments and Computations

     39   

Section 2.13

  

Taxes

     41   

Section 2.14

  

Replacement of Lenders

     42   

Section 2.15

  

Defaulting Lender Cure

     43   

ARTICLE 3

  

CONDITIONS OF EFFECTIVENESS

     44   

Section 3.1

  

Conditions to Effectiveness

     44   

Section 3.2

  

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

     46   

Section 3.3

  

Determinations Under Sections 3.1 and 3.2

     46   

ARTICLE 4

  

REPRESENTATIONS AND WARRANTIES

     46   

Section 4.1

  

Organization

     46   

Section 4.2

  

Authorization

     47   

Section 4.3

  

Enforceability

     47   

Section 4.4

  

Financial Condition

     47   

Section 4.5

  

Ownership and Liens; Real Property

     47   

Section 4.6

  

True and Complete Disclosure

     47   

Section 4.7

  

Litigation

     48   

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

Section 4.8

  

Compliance with Agreements

   48

Section 4.9

  

Pension Plans

   48

Section 4.10

  

Environmental Condition

   49

Section 4.11

  

Subsidiaries

   49

Section 4.12

  

Investment Company Act

   49

Section 4.13

  

Taxes

   50

Section 4.14

  

Permits, Licenses, etc.

   50

Section 4.15

  

Use of Proceeds

   50

Section 4.16

  

Condition of Property; Casualties

   50

Section 4.17

  

Insurance

   50

Section 4.18

  

Compliance with Laws

   50

Section 4.19

  

Security Interest

   51

Section 4.20

  

FCPA; Sanctions

   51

ARTICLE 5

  

AFFIRMATIVE COVENANTS

   51

Section 5.1

  

Organization

   51

Section 5.2

  

Reporting

   51

Section 5.3

  

Insurance

   55

Section 5.4

  

Compliance with Laws

   55

Section 5.5

  

Taxes

   55

Section 5.6

  

Material Domestic Subsidiaries

   56

Section 5.7

  

Records; Inspection

   56

Section 5.8

  

Maintenance of Property

   56

Section 5.9

  

Security

   57

Section 5.10

  

Further Assurances; Cure of Title Defects

   57

Section 5.11

  

FCPA; Sanctions

   58

Section 5.12

  

Certificates of Title

   58

Section 5.13

  

Appraisal Reports; Field Exams

   58

ARTICLE 6

  

NEGATIVE COVENANTS

   59

Section 6.1

  

Debt

   59

Section 6.2

  

Liens

   60

Section 6.3

  

Investments

   61

Section 6.4

  

Acquisitions

   62

Section 6.5

  

Agreements Restricting Liens

   62

Section 6.6

  

Use of Proceeds; Use of Letters of Credit

   62

 

-2-

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

Section 6.7

  

Corporate Actions

   62

Section 6.8

  

Sale of Assets

   63

Section 6.9

  

Restricted Payments

   63

Section 6.10

  

Affiliate Transactions

   63

Section 6.11

  

Line of Business

   63

Section 6.12

  

Hazardous Materials

   63

Section 6.13

  

Compliance with ERISA

   63

Section 6.14

  

Limitation on Hedging

   64

Section 6.15

  

[Reserved]

   64

Section 6.16

  

[Reserved]

   64

Section 6.17

  

[Reserved]

   64

Section 6.18

  

[Reserved]

   64

Section 6.19

  

Capital Expenditures

   64

Section 6.20

  

Deposit Accounts

   65

Section 6.21

  

Consolidated Cash Balance

   65

Section 6.22

  

Landlord Agreements

   65

ARTICLE 7

  

DEFAULT AND REMEDIES

   65

Section 7.1

  

Events of Default

   65

Section 7.2

  

Optional Acceleration of Maturity

   67

Section 7.3

  

Automatic Acceleration of Maturity

   68

Section 7.4

  

Set-off

   68

Section 7.5

  

Remedies Cumulative, No Waiver

   68

Section 7.6

  

Application of Payments

   69

Section 7.7

  

Administrative Agent May File Proofs of Claim

   70

Section 7.8

  

Credit Bidding

   70

ARTICLE 8

  

THE ADMINISTRATIVE AGENT

   71

Section 8.1

  

Appointment, Powers, and Immunities

   71

Section 8.2

  

Reliance by Administrative Agent

   71

Section 8.3

  

Defaults

   71

Section 8.4

  

Rights as Lender

   72

Section 8.5

  

Indemnification

   72

Section 8.6

  

Non-Reliance on Administrative Agent and Other Lenders

   73

Section 8.7

  

Resignation of Administrative Agent and Issuing Lender

   73

Section 8.8

  

Collateral and Guaranty Matters

   74

 

-3-

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

ARTICLE 9

  

MISCELLANEOUS

   75

Section 9.1

  

Costs and Expenses

   75

Section 9.2

  

Indemnification; Waiver of Damages

   75

Section 9.3

  

Waivers and Amendments

   77

Section 9.4

  

Severability

   77

Section 9.5

  

Survival of Representations and Obligations

   78

Section 9.6

  

Binding Effect

   78

Section 9.7

  

Lender Assignments and Participations

   78

Section 9.8

  

Confidentiality

   79

Section 9.9

  

Notices, Etc.

   80

Section 9.10

  

Business Loans

   80

Section 9.11

  

Usury Not Intended

   80

Section 9.12

  

Usury Recapture

   81

Section 9.13

  

Governing Law

   81

Section 9.14

  

Submission to Jurisdiction

   81

Section 9.15

  

Execution in Counterparts

   82

Section 9.16

  

Waiver of Jury

   82

Section 9.17

  

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

   82

Section 9.18

  

USA Patriot Act

   82

 

-4-

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

EXHIBITS:   

Exhibit A

   – Form of Assignment and Acceptance

Exhibit B

   – Form of Compliance Certificate

Exhibit C

   – Form of Guaranty

Exhibit D

   – Form of Notice of Borrowing

Exhibit E

   – Form of Notice of Continuation or Conversion

Exhibit F-1

   – Form of Revolving Note

Exhibit F-2

   – Form of Swing Line Note SCHEDULES:   

Schedule I

   – Pricing Schedule

Schedule II

   – Commitments, Contact Information

Schedule 1.1(b)

   – Existing Letters of Credit

Schedule 4.1

   – Organizational Information

Schedule 4.7

   – Litigation

Schedule 4.10

   – Environmental Conditions

Schedule 4.11

   – Subsidiaries

Schedule 5.9(b)

   – Real Property

Schedule 5.12

   – Equipment

Schedule 6.1

   – Existing Debt

Schedule 6.8(c)

   – Specified Dispositions

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

CREDIT AGREEMENT

This CREDIT AGREEMENT dated as of January 29, 2010 (the “Agreement”) is among
(a) CARBO Ceramics Inc., a Delaware corporation (the “Borrower”), (b) the
Lenders (as defined below), and (c) Wells Fargo Bank, National Association as
Swing Line Lender (as defined below), Issuing Lender (as defined below), and as
Administrative Agent (as defined below) for the Lenders.

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

ARTICLE 1

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1 Certain Defined Terms. The following terms shall have the following
meanings (unless otherwise indicated, such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

“Acceptable Security Interest” means a security interest which (a) exists in
favor of the Administrative Agent for its benefit and the ratable benefit of the
Issuing Lender, the Swing Line Lender and the Lenders, (b) is superior to all
other security interests (other than the Permitted Liens), (c) secures the
Obligations, and (d) is perfected and enforceable against the Credit Party which
created such security interest.

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

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

“Adjusted Base Rate” means, for any day, the fluctuating rate per annum of
interest equal to the greatest of (a) the Prime Rate in effect on such day,
(b) the Federal Funds Rate in effect on such day plus 1.50%, and (c) a rate
determined by the Administrative Agent to be the Daily One-Month LIBOR plus
1.50%; provided that, if the determination of the Adjusted Base Rate shall be
less than zero, such rate shall be deemed to be zero for such determination. Any
change in the Adjusted Base Rate due to a change in the Prime Rate, Daily
One-Month LIBOR or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate, Daily One-Month LIBOR or the Federal
Funds Rate.

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

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

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

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term “control” (including the terms “controlled by” or “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership, by contract, or otherwise.

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

“Agreement” is defined in the introductory paragraph hereof.

“Amendment No. 2 Effective Date” means July 25, 2013

“Amendment No. 3 Effective Date” means October 31, 2014.

“Amendment No. 4 Effective Date” means July 27, 2015.

“Amendment No. 7 Effective Date” means April 27, 2016.

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

“Applicable Margin” means, at any time with respect to each Type of Advance, the
Letters of Credit and the Commitment Fee, the percentage rate per annum which is
applicable at such time with respect to such Advance, Letter of Credit or
Commitment Fee as set forth in Schedule I and subject to further adjustments as
set forth in Section 2.8(c).

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

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

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

“Availability” means, as of a date of determination, an amount equal to (a) the
aggregate Revolving Commitments in effect at such time minus (b) the
Outstandings at such time.

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

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

“Banking Services” means each and any of the following bank services provided to
the Borrower or any Subsidiary thereof by any Banking Services Provider:
(a) commercial credit cards, (b) stored value cards and (c) any other Treasury
Management Arrangement (including, without limitation, controlled disbursement,
purchase card arrangements, automated clearinghouse transactions, return items,
overdrafts and interstate depository network services).

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

 

-2-

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

“Banking Services Provider” means any Lender or Affiliate of a Lender that
provides Banking Services to the Borrower or any Subsidiary thereof.

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

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

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

“Business Day” means a day (a) other than a Saturday, Sunday, or other day on
which the Administrative Agent is authorized to close under the laws of, or is
in fact closed in, Houston, Texas, and (b) if the applicable Business Day
relates to any LIBOR Advances, on which dealings are carried on by commercial
banks in the London interbank market.

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

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

“Cash Collateral Account” means a special cash collateral account pledged to the
Administrative Agent, for its benefit and the ratable benefit of the Issuing
Lender, the Swing Line Lender and the Lenders, containing cash deposited
pursuant to the terms hereof to be maintained with Wells Fargo, as depository,
in accordance with Section 2.2(h).

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

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

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

(a) the Borrower ceases to own, either directly or indirectly, 100% of the
Equity Interest in any Guarantor other than as a result of transaction permitted
under Section 6.7 or Section 6.8;

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

 

-3-

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

entitled to vote for members of the board of directors or equivalent governing
body of the Borrower on a fully-diluted basis (and taking into account all such
securities that such person or group has the right to acquire pursuant to any
option right); and

(c) during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of the Borrower cease to
be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body.

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

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

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

“Collateral” means all property of the Credit Parties which is “Collateral” (as
defined in the Security Agreement).

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

“Commitment Fee” means the fees set forth on Schedule I, which are payable in
accordance with Section 2.7(a).

“Commitments” means, as to any Lender, its Revolving Commitment.

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

“Consolidated Cash Balance” means, at any time, the aggregate amount of cash and
cash equivalents, marketable securities, treasury bonds and bills, certificates
of deposit, investments in money market funds and commercial paper, in each
case, denominated in Dollars and held or owned by (whether directly or
indirectly), credited to the account of, or otherwise reflected as an asset on
the balance sheet of, the Borrower and its consolidated Subsidiaries maintained
with the Administrative Agent and subject to an account control agreement.

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

 

-4-

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

“Convert,” “Conversion,” and “Converted” each refers to a conversion of Advances
of one Type into Advances of another Type pursuant to Section 2.4(b).

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

“Credit Parties” means the Borrower and the Guarantors.

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

“Debt” means, for any Person, without duplication: (a) indebtedness of such
Person for borrowed money, including the face amount of any letters of credit
supporting the repayment of indebtedness for borrowed money issued for the
account of such Person; (b) to the extent not covered under clause (a) above,
obligations under letters of credit and agreements relating to the issuance of
letters of credit or acceptance financing, including Letters of Credit;
(c) obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, or upon which interest payments are customarily made;
(d) obligations of such Person under conditional sale or other title retention
agreements relating to any Properties purchased by such Person (other than
customary reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business); (e) obligations of such Person
to pay the deferred purchase price of property, services, or Acquisitions
(including, without limitation, any earn-out obligations, contingent
obligations, or other similar obligations associated with such purchase, and
including obligations that are non-recourse to the credit of such Person but are
secured by the assets of such Person); (f) obligations of such Person as lessee
under Capital Leases and obligations of such Person in respect of synthetic
leases (except that the Jenkins Capital Lease Obligations and the Wilkinson
Capital Lease Obligations shall not constitute Debt for purposes of the
calculations for compliance under Sections 6.16 and 6.17); (g) obligations of
such Person under any Hedging Arrangement (except that such obligations shall
not constitute Debt for purposes of the calculations for compliance under
Sections 6.16 and 6.17); (h) obligations of such Person owing in respect of
redeemable preferred stock or other preferred Equity Interest of such Person;
(i) the Debt of any partnership or unincorporated joint venture in which such
Person is a general partner or a joint venturer, but only to the extent to which
there is recourse to such Person for the payment of such Debt; (j) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) of such Person to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (i) above; (k) indebtedness or obligations of others of the kinds
referred to in clauses (a) through (j) secured by any Lien on or in respect of
any Property of such Person, and (l) all liabilities of such Person in respect
of unfunded vested benefits under any Plan.

“Debt Incurrence” means any incurrence, issuance or sale by the Borrower or any
of its Subsidiaries of any Debt after the Amendment No. 7 Effective Date other
than Permitted Debt.

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

 

-5-

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

“Debtor Relief Laws” means (a) the Bankruptcy Code of the United States of
America, and (b) all other liquidation, conservatorship, bankruptcy, assignment
for the benefit of creditors, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief laws of the United States
or other applicable jurisdictions from time to time in effect.

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

“Defaulting Lender” means any Lender (a) that has failed to fund any portion of
the Advances or participations in Letter of Credit Obligations or Swing Line
Advances required to be funded by it hereunder within one Business Day of the
date required to be funded by it hereunder unless, with the consent of the
Administrative Agent and the Borrower (which consent may be withheld at the sole
discretion of the Administrative Agent and the Borrower), such failure has been
cured, (b) that has indicated to the Administrative Agent that such Lender will
not fund any portion of the Advances or participations in Letter of Credit
Obligations or Swing Line Advances required to be funded by it hereunder,
unless, with the consent of the Administrative Agent and the Borrower (which
consent may be withheld at the sole discretion of the Administrative Agent and
the Borrower), such Lender actually funds such Advances or participations,
(c) that has otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or unless, with the consent of the Administrative Agent (which consent may be
withheld at the sole discretion of the Administrative Agent), such failure has
been cured, (d) that the Administrative Agent believes, in good faith, has
become a “defaulting lender” under any other credit facility to which such
Lender is a party and has received notice of such belief from the Administrative
Agent unless, with the consent of the Administrative Agent (which consent may be
withheld at the sole discretion of the Administrative Agent), the consequences
resulting in such “defaulting lender” status is no longer in effect, (e) as to
which a Lender Insolvency Event has occurred and is continuing with respect to
such Lender or (f) that has become the subject of a Bail-in Action. Any
determination that a Lender is a Defaulting Lender will be made by the
Administrative Agent in its sole discretion acting in good faith.

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

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

“Domestic Subsidiary” means any Subsidiary other than a Foreign Subsidiary.

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

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

 

-6-

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

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

“Effective Date” means the date of this Agreement.

“Eligible Assignee” means (a) a Lender, (b) any Affiliate of a Lender approved
by the Administrative Agent, (c) any Approved Fund approved by the
Administrative Agent, or (d) any other Person (other than a natural Person)
approved by the Administrative Agent and, unless an Event of Default has
occurred and is continuing at the time any assignment is effected in accordance
with Section 9.7, the Borrower, such approval not to be unreasonably withheld or
delayed by the Borrower; provided, however, that (i) any financial institution
employing any member of the board of directors (or comparable board) of any
Credit Party shall not qualify as an Eligible Assignee, (ii) neither the
Borrower nor any Affiliate of the Borrower shall qualify as an Eligible
Assignee, and (iii) approval by the Administrative Agent of an Eligible Assignee
shall not be unreasonably withheld, provided however, any disapproval by the
Administrative Agent of a Person that fails to meet any of the following
criteria shall not be considered unreasonable: (A) any commercial bank, savings
and loan association or savings bank organized under the laws of the United
States of America, or any state thereof, or any other Person, that has a
combined capital and surplus of less than $100,000,000, (B) any commercial bank
or Person organized under the laws of any other country, or a political
subdivision of any such country, which is not a member of the Organization for
Economic Cooperation and Development, or (C) any commercial bank or Person
organized under the laws of any other country, or a political subdivision of any
such country, which is a member of the Organization for Economic Cooperation and
Development and has a combined capital and surplus of less than $100,000,000.

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

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

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

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

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

 

-7-

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

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

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

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

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

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

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

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

“Existing Debt” means Debt incurred by the Borrower in connection with that
certain Second Amended and Restated Credit Agreement dated as of December 31,
2000, between the Borrower and Brown Brothers Harriman & Co., as lender.

“Existing Letters of Credit” means those letters of credit issued by Wells Fargo
prior to the Amendment No. 7 Effective Date, for the account of any Credit Party
and set forth on Schedule 1.1(b).

“Extraordinary Receipts” means any proceeds resulting from a Casualty Event,
including any insurance proceeds.

“Fair Market Value” means, with respect to any asset (including any Equity
Interests of any Person), the price at which a willing buyer, not an Affiliate
of the seller, and a willing seller who does not have to sell, would agree to
purchase and sell such asset, as determined in good faith by the board of
directors or, pursuant to a specific delegation of authority by such board of
directors or a designated senior executive officer, of the Borrower, or the
Subsidiary of the Borrower selling such asset.

“Falcon” means Falcon Technologies and Services, Inc., a Delaware corporation.

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

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by

 

-8-

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

Federal funds brokers on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day and (b) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to the Administrative Agent (in its individual capacity) on
such day on such transactions as determined by the Administrative Agent;
provided further that, if the determination of the Federal Funds Rate shall be
less than zero, such rate shall be deemed to be zero for purposes of such
determination.

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

“Fee Letter” means that certain fee letter dated as of January 29, 2010 between
the Borrower and Wells Fargo.

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

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

“GAAP” means United States of America generally accepted accounting principles
as in effect from time to time, applied on a basis consistent with the
requirements of Section 1.3.

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

“Guarantors” means any Person that now or hereafter executes a Guaranty,
including (a) the Borrower, (b) the Subsidiaries of the Borrower listed on
Schedule 4.11; and (c) each Material Domestic Subsidiary or other Subsidiary
that becomes a guarantor of all or a portion of the Secured Obligations and
which has entered into either a joinder agreement substantially in the form
attached to the Guaranty or a new Guaranty.

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

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

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

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

 

-9-

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

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

“Interest Period” means for each LIBOR Advance comprising part of the same
Borrowing, the period commencing on the date of such LIBOR Advance is made or
deemed made and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and Section 2.4, and thereafter, each
subsequent period commencing on the day following the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and Section 2.4. The
duration of each such Interest Period shall be one, three, or six months, in
each case as the Borrower may select, provided that:

(a) the Borrower shall select Interest Periods so that it is not necessary to
repay any portion of any Tranche B Term Advance prior to the last day of the
applicable Interest Period in order to make a mandatory scheduled repayment
required pursuant to Section 2.6(a);

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

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

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

(e) the Borrower may not select any Interest Period for any Advance which ends
after the Maturity Date.

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

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

“Jenkins Bonds” means the Taxable Industrial Development Revenue Bond (CARBO
Ceramics Inc. Project), Series 2012, having a maximum principal amount not to
exceed $255,000,000, issued by the Development Authority of Jenkins County.

“Jenkins Capital Lease Obligations” means the Debt under the Capital Lease
described in Schedule 6.1.

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

 

-10-

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

“Lender Insolvency Event” means that (a) a Lender or its Parent Company is
insolvent, or is generally unable to pay its debts as they become due, or admits
in writing its inability to pay its debts as they become due, or makes a general
assignment for the benefit of its creditors, or (b) such Lender or its Parent
Company is the subject of a bankruptcy, insolvency, reorganization, liquidation
or similar proceeding, or a receiver, trustee, conservator, intervenor or
sequestrator or the like has been appointed for such Lender or its Parent
Company, or such Lender or its Parent Company has taken any action in
furtherance of or indicating its consent to or acquiescence in any such
proceeding or appointment.

“Lenders” means the Persons listed on the signature pages hereto as Lenders, any
other Person that shall have become a Lender hereto pursuant to Section 2.14,
and any other Person that shall have become a Lender hereto pursuant to an
Assignment and Assumption, but in any event, excluding any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption. Unless the
context otherwise requires, the term “Lenders” includes the Swing Line Lender.

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

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

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

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

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

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

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

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

“LIBO Base Rate” means (a) in determining LIBO Rate for purposes of the “Daily
One Month LIBOR”, the rate per annum for Dollar deposits quoted by the
Administrative Agent for the purpose of calculating effective rates of interest
for loans making reference to the “Daily One-Month LIBOR”, as the inter-bank
offered rate in effect from time to time for delivery of funds for one (1) month
in amounts approximately equal to the principal amount of the applicable
Advances; provided that, the Administrative Agent may base its quotation of the
inter-bank offered rate upon such offers or other market indicators of the
inter-bank market as the Administrative Agent in its discretion deems
appropriate including, but not limited to, the rate determined under the
following clause (b), and (b) in determining

 

-11-

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

LIBO Rate for all other purposes, the rate per annum (rounded upward to the
nearest whole multiple of 1/8th of 1%) equal to the interest rate per annum set
forth on the Reuters Reference LIBOR1 page as the London Interbank Offered Rate,
for deposits in Dollars at 11:00 a.m. (London, England time) two Business Days
before the first day of the applicable Interest Period and for a period equal to
such Interest Period; provided that, if such quotation is not available for any
reason, then for purposes of this clause (b), LIBO Base Rate shall then be the
rate determined by the Administrative Agent to be the rate at which deposits in
Dollars for delivery on the first day of such Interest Period in immediately
available funds in the approximate amount of the Advances being made, continued
or converted by the Lenders and with a term equivalent to such Interest Period
would be offered by the Administrative Agent’s London Branch (or other branch or
Affiliate of the Administrative Agent) to major banks in the London or other
offshore inter-bank market for Dollars at their request at approximately 11:00
a.m. (London time) two Business Days prior to the commencement of such Interest
Period; provided further that, if the rate determined under the preceding clause
(a) or clause (b) is less than zero, than “LIBO Base Rate” shall be deemed to be
zero for such determination.

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

 

LIBO Rate =   

LIBO Base Rate

     

1.00 – LIBO Reserve Percentage

  

Where,

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

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

“Liquid Investments” means (a) readily marketable direct full faith and credit
obligations of the United States of America or obligations unconditionally
guaranteed by the full faith and credit of the United States of America;
(b) commercial paper issued by (i) any Lender or any Affiliate of any Lender or
(ii) any commercial banking institutions or corporations rated at least P-1 by
Moody’s or A-1 by S&P; (c) certificates of deposit, time deposits, and bankers’
acceptances issued by (i) any of the Lenders or (ii) any other commercial
banking institution which is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than $250,000,000
and rated Aa by Moody’s or AA by S&P; (d) repurchase agreements which are
entered into with any of the Lenders or any major money center banks included in
the commercial banking institutions described in clause (c) and which are
secured by readily marketable direct full faith and credit obligations of the
government of the United States of America or any agency thereof;
(e) investments in any money market fund which holds investments substantially
of the type described in the foregoing clauses (a) through (d); and (f) other
investments made through the Administrative Agent or its Affiliates and approved
by the Administrative Agent. All the Liquid Investments described in clauses
(a) through (d) above shall have maturities of not more than 365 days from the
date of issue.

 

-12-

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

“Liquidity” means, as of any date of determination, the sum of (a) an amount
equal to (i) the aggregate Commitments in effect at such time, minus (ii) the
Outstandings, plus (b) Unrestricted Cash.

“Majority Lenders” means (a) other than as provided in clause (b) below, two or
more Lenders (other than Lenders that are at such time Defaulting Lenders)
holding at least 51% of the sum of (i) the aggregate unfunded Revolving
Commitments (excluding the Revolving Commitments of Lenders that are at such
time Defaulting Lenders) at such time plus (ii) the aggregate unpaid principal
amount of the Revolving Notes (with the aggregate amount of each Lender’s risk
participation and funded participation in the Letter of Credit Exposure and
Swing Line Advances being deemed as unpaid principal under such Lender’s
Revolving Note but excluding the pro rata shares thereof for any Lender that is
at such time a Defaulting Lender) and (b) at any time when there is only one
Lender or there is only one Lender that is not then a Defaulting Lender, such
Lender.

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

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

“Maturity Date” means the earlier of (a) December 31, 2018 and (b) the earlier
termination in whole of the Revolving Commitments pursuant to Section 2.1(b)(i)
or Article 7.

“Maximum Exposure Amount” means, at any time for each Lender, the sum of (a) the
unfunded Revolving Commitment held by such Lender at such time; plus (b) the
aggregate unpaid principal amount of the Revolving Note held by such Lender at
such time, (with the aggregate amount of such Lender’s risk participation and
funded participation in the Letter of Credit Exposure and Swing Line Advances
being deemed as unpaid principal under such Lender’s Revolving Note).

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

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

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

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

 

-13-

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

“Net Cash Proceeds” means, with respect to any Disposition, all cash and Liquid
Investments received from such Disposition after (a) payment of, or provision
for, all reasonable brokerage commissions, marketing costs, restoration and
refurbishment expenses, and other reasonable out of pocket fees and expenses
actually incurred in connection with such Disposition; (b) payment of any
outstanding obligations secured by the Property that is being Disposed (other
than the Obligations); (c) all Taxes paid or payable by such Person in
connection with such Disposition; and (d) the amount of reserves recorded in
accordance with GAAP for indemnity or similar obligations of the Person making
such Disposition and its Affiliates directly related to such Disposition.

“Net Total Assets” means, as of any date of determination and without
duplication (a) 70% of Receivables of the Borrower and its consolidated
Subsidiaries (as reflected on the most recent balance sheet furnished to the
Lenders hereunder), plus (b) 40% of the value of Inventory of the Borrower and
its consolidated Subsidiaries (as reflected on the most recent balance sheet
furnished to the Lenders hereunder), plus (c) 100% of Unrestricted Cash minus
(d) consolidated current liabilities of the Borrower and its Subsidiaries (other
than (i) Secured Obligations hereunder and (ii) unrealized net losses in the
fair market value of any arrangements under Hedging Arrangements, but including
any losses attributable to the early extinguishment or conversion of
arrangements under Hedging Arrangements or other derivative instruments, in each
case, which constitute current liabilities).

“Net Worth” means, with respect to any Person as of any date of determination,
the excess of the assets of such Person over the sum of the liabilities of such
Person and the minority interests of such Person, as determined in accordance
with GAAP.

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

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

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

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

“Obligations” means all principal, interest (including post-petition interest),
fees, reimbursements, indemnifications, and other amounts now or hereafter owed
by any of the Credit Parties to the Lenders, the Swing Line Lender, the Issuing
Lender, or the Administrative Agent under this Agreement and the other Credit
Documents, including, the Letter of Credit Obligations, and any increases,
extensions, and rearrangements of those obligations under any amendments,
supplements, and other modifications of the documents and agreements creating
those obligations.

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

“OLV” means with respect to any Property, the orderly liquidation value thereof
as established by a written appraisal conducted by an industry recognized third
party appraiser reasonably acceptable to the Administrative Agent stating, among
other things, a detailed orderly liquidation value for such Property, taking
into account any loss, destruction, damage, condemnation, seizure or taking, by
exercise of the power of eminent domain or otherwise, confiscation, or the
requisition, of such Property, and any sale, transfer, lease, assignment, or
other Disposition of all or any portion of such Property that has occurred since
the most recent appraisal report was delivered with respect to such Property.

 

-14-

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

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

“Outstandings” means the sum of (a) the outstanding amount of all Revolving
Advances plus (b) the outstanding amount of all Swing Line Advances plus (c) the
Letter of Credit Exposure.

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

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

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

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

“Permitted Disposition” means any Disposition that is permitted under
Section 6.8.

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

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

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

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

“Prime Rate” means the per annum rate of interest established from time to time
by the Administrative Agent at its principal office in San Francisco as its
prime rate, which rate may not be the lowest rate of interest charged by such
Lender to its customers.

“Potential Defaulting Lender” means, at any time, a Lender (a) as to which the
Administrative Agent has notified the Borrower that an event of the kind
referred to in the definition of “Lender Insolvency Event” has occurred and is
continuing in respect of any Subsidiary of such Lender, (b) as to which the
Administrative Agent or the Issuing Lender has in good faith determined and
notified the Borrower (and in the case of the Issuing Lender the Administrative
Agent) that such Lender or its Parent Company or a Subsidiary thereof has
notified the Administrative Agent, or has stated publicly, that it will not
comply with its funding obligations under any other loan agreement or credit
agreement or other financing agreement or (c) that has, or whose Parent Company
has, a non-investment grade rating from Moody’s or S&P or another nationally
recognized rating agency. Any determination that a Lender is a Potential
Defaulting Lender will be made by the Administrative Agent or, in the case of
clause (b), the Issuing Lender, as the case may be, in its sole discretion
acting in good faith. The Administrative Agent will promptly send to all parties
hereto a copy of any notice to the Borrower provided for in this definition.

 

-15-

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

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

“Qualified ECP Guarantor” means, in respect of any Hedge Obligation, each
Guarantor that has total assets exceeding $10,000,000 at the time the relevant
guaranty or grant of the relevant security interest becomes effective with
respect to such Hedge Obligation or such other person as constitutes an
“eligible contract participant” under the Commodity Exchange Act or any
regulations promulgated thereunder and can cause another person to qualify as an
“eligible contract participant” at such time by entering into a keepwell under
Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

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

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

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

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

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

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

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

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

 

-16-

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

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

“Revolving Advance” means any advance by a Lender to the Borrower as part of a
Revolving Borrowing. For the avoidance of doubt, the Revolving Tranche A
Advances and the Tranche B Term Advances are “Revolving Advances” for all
purposes hereunder.

“Revolving Borrowing” means a Borrowing consisting of simultaneous Revolving
Advances of the same Type made by the Lenders pursuant to Section 2.1(a) or
Converted by each Lender to Revolving Advances of a different Type pursuant to
Section 2.4(b).

“Revolving Commitment” means, for each Lender, the obligation of each Lender to
advance to Borrower the amount set opposite such Lender’s name on Schedule II as
its Revolving Commitment, or if such Lender has entered into any Assignment and
Acceptance, set forth for such Lender as its Revolving Commitment in the
Register, as such amount may be reduced pursuant to Section 2.1(b)(i); provided
that, after the Maturity Date, the Revolving Commitment for each Lender shall be
zero. After giving effect to the penultimate sentence of Section 2.1(a), the
aggregate amount of the Revolving Commitments on the Amendment No. 7 Effective
Date is $15,000,000.

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

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

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

“Revolving Tranche A Advances” means all Revolving Advances other than the
Tranche B Term Advances.

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

“Schlumberger Receivables Transaction” means the sale by the Borrower to
Citibank, N.A. or such other third party from time to time of certain
Receivables owed to the Borrower by Schlumberger Ltd. and or its Subsidiaries
pursuant to a Supplier Agreement and Lien Release and Acknowledgement Agreement,
substantially in the forms provided by the Borrower to the Administrative Agent
on November 30, 2015 or such other form acceptable to the Administrative Agent.

 

-17-

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

“SEC” means, the Securities and Exchange Commission.

“Secured Obligations” means (a) the Obligations, (b) the Banking Services
Obligations, and (c) the Secured Swap Obligations, but in any event, excluding
Excluded Swap Obligations.

“Secured Swap Obligations” means any and all obligations owing by the Borrower
or any Subsidiary thereof (whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising) to any Secured Swap Provider under any Hedging Arrangement
between the Borrower or any Subsidiary thereof and such Secured Swap Provider,
in each case, after giving effect to all netting arrangements relating to such
Hedging Arrangement; provided that if such Secured Swap Provider ceases to be a
Lender or an Affiliate of a Lender hereunder, Secured Swap Obligations shall
only include such obligations to the extent arising from transactions and
confirmations entered into under Hedging Arrangements at any time such Secured
Swap Provider was a Lender or an Affiliate of a Lender hereunder (including
transactions and confirmations entered into under Hedging Arrangements in effect
on the Amendment No. 4 Effective Date), without giving effect to any extension,
increases, or modifications thereof which are made after such Secured Swap
Provider ceases to be a Lender or an Affiliate of a Lender hereunder.

“Secured Swap Provider” means any Person that is a party to a Hedging
Arrangement with any Credit Party if (a) at the time such Hedging Arrangement
was entered into or assumed, such Person was a Lender or an Affiliate of a
Lender hereunder, even if such Person subsequently ceases to be a Lender (or an
Affiliate thereof) for any reason or (b) such Hedging Arrangement was in effect
on the Amendment No. 4 Effective Date and such Person or an Affiliate of such
Person was a Lender on the Amendment No. 4 Effective Date, even if such Person
subsequently ceases to be a Lender (or an Affiliate thereof) for any reason.

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

“Security Agreement” means the Amended and Restated Pledge and Security
Agreement among the Credit Parties and the Administrative Agent in such form
acceptable to the Administrative Agent.

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

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

“Solvent” means, as to any Person, on the date of any determination (a) the fair
value of the Property of such Person is greater than the total amount of debts
and other liabilities (including without limitation, contingent liabilities) of
such Person, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts and other liabilities (including, without limitation,
contingent liabilities) as they become absolute and matured, (c) such Person is
able to realize upon its assets and pay its debts and other liabilities
(including, without limitation, contingent liabilities) as they mature in the
normal course of business, (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities (including, without limitation,
contingent liabilities) beyond such Person’s ability to pay as such debts and
liabilities

 

-18-

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

mature, (e) such Person is not engaged in, and is not about to engage in,
business or a transaction for which such Person’s Property would constitute
unreasonably small capital, and (f) such Person has not transferred, concealed
or removed any Property with intent to hinder, delay or defraud any creditor of
such Person.

“Specified Dispositions” means the sale by any Credit Party of the assets or
Equity Interests set out on Schedule 6.8(c) hereto, as such schedule may be
updated from time to time with respect to the Intellectual Property Collateral
referred to therein relating to “Fusion” and “Quantum” in the Administrative
Agent’s reasonable discretion.

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

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

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

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

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

“Swing Line Lender” means Wells Fargo.

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

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

“Tangible Net Worth” means, as to the Borrower, (i) the consolidated
shareholder’s (or other type of equity holder’s) equity of the Borrower and its
Subsidiaries (determined in accordance with GAAP), less (ii) the amount of
consolidated intangible assets (as defined under GAAP) of the Borrower and its
Subsidiaries.

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

 

-19-

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

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

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

“Tranche B Term Advances” means the Revolving Advances which are designated as
Tranche B Term Advances on the Amendment No. 7 Effective Date as provided under
Section 2.1(a).

“Treasury Management Arrangement” means any agreement or other arrangement
governing the provision of treasury or cash management services, including
deposit accounts, overdraft, credit or debit card, funds transfer, automated
clearinghouse, zero balance accounts, returned check concentration, controlled
disbursement, lockbox, account reconciliation and reporting and trade finance
services and other cash management services

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

“Unrestricted Cash” means, as of any date of determination, the readily and
immediately available cash that would not appear as “restricted” on the balance
sheet of the Borrower and its Subsidiaries and held in deposit accounts of any
Credit Party (other than the Cash Collateral Account) on such date; provided
that, such deposit accounts and the funds therein shall be unencumbered and free
and clear of all Liens and other third party rights other than (a) a Lien in
favor of the Administrative Agent pursuant to Security Documents and (b) a Lien
in favor of the depositary institution holding such deposit accounts arising
solely by virtue of such depositary institution’s standard account documentation
or any statutory or common law provision relating to banker’s liens, rights of
set-off or similar rights and remedies and burdening only such deposit accounts.

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

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

“Wilkinson Bonds” means the Taxable Industrial Development Revenue Bond (Carbo
Ceramics Inc. Project), Series 2008, having a maximum principal amount not to
exceed $410,000,000, issued by the Development Authority of Wilkinson County.

“Wilkinson Capital Lease Obligations” means the Debt under the Capital Lease
described in Schedule 6.1.

 

-20-

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

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

Section 1.2 Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each means “to but
excluding”.

Section 1.3 Accounting Terms; Changes in GAAP.

(a) All accounting terms not specifically defined in this Agreement shall be
construed in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the financial statements delivered to the
Administrative Agent for the fiscal year ending December 31, 2008 as required
under Section 5.2.

(b) Unless otherwise indicated, all financial statements of the Borrower, all
calculations for compliance with covenants in this Agreement, all determinations
of the Applicable Margin, and all calculations of any amounts to be calculated
under the definitions in Section 1.1 shall be based upon the consolidated
accounts of the Borrower and its Subsidiaries in accordance with GAAP and
consistent with the principles of consolidation applied in preparing the
Borrower’s financial statements referred to in Section 4.4.

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

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

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

 

-21-

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

ARTICLE 2

CREDIT FACILITIES

Section 2.1 Revolving Commitments.

(a) Revolving Commitment. Each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Advances to the
Borrower from time to time on any Business Day during the period from the
Effective Date until the Maturity Date; provided that after giving effect to
such Revolving Advances, the Outstandings shall not exceed the aggregate
Revolving Commitments in effect at such time. Each Revolving Borrowing shall
(A) if comprised of Base Rate Advances be in an aggregate amount not less than
$100,000 and in integral multiples of $100,000 in excess thereof, (B) if
comprised of LIBOR Advances be in an aggregate amount not less than $200,000 and
in integral multiples of $100,000 in excess thereof, and (C) consist of
Revolving Advances of the same Type made on the same day by the Lenders ratably
according to their respective Revolving Commitments; provided that,
notwithstanding the foregoing, until such time as agreed to by each Lender in
writing, no Revolving Tranche A Advances may be made on or after the Amendment
No. 7 Effective Date, including reimbursement requests pursuant to
Section 2.2(c)(i); provided, however, that, for the avoidance of doubt, the
foregoing proviso shall not prohibit the issuance of Letters of Credit pursuant
to Section 2.2 in accordance with the terms of such section. On the Amendment
No. 7 Effective Date, $65,000,000 of the Revolving Advances outstanding
immediately prior to giving effect to Amendment No. 7 are hereby designated as
and deemed to constitute Tranche B Term Advances, and each Lender’s pro rata
share of such Tranche B Term Advances is as set forth on Schedule II hereof.
Within the limits of each Lender’s Revolving Commitment, the Borrower may from
time to time borrow, prepay pursuant to Section 2.5, and reborrow under this
Section 2.1(a); provided that, once prepaid or repaid, the Borrower may not
reborrow any Tranche B Term Advances.

(b) Reduction of the Commitments.

(i) Commitments. The Borrower shall have the right, upon at least three Business
Days’ irrevocable notice to the Administrative Agent, to terminate in whole or
reduce in part the unused portion of the Commitments; provided that each partial
reduction shall be in a minimum amount of $200,000 and in integral multiples of
$100,000 in excess thereof. The Commitments shall automatically and permanently
reduce by the amount of any principal prepayment or repayment of the Tranche B
Term Advances on the date of such prepayment or repayment. Other than as
provided in Section 2.1(b)(ii) below, any reduction or termination of the
Commitments pursuant to this Section 2.1(b)(i) shall be applied ratably to each
Lender’s Commitment and shall be permanent, with no obligation of the Lenders to
reinstate such Commitments, and the Commitment Fees shall thereafter be computed
on the basis of the aggregate Commitments, as so reduced. If there are no
outstanding Commitments, Letters of Credit, expenses, fees or any other amounts
owing pursuant to any Credit Document, the Borrower shall have the right, upon
at least one Business Day’s notice to the Administrative Agent, to terminate
this Agreement except the terms hereof which expressly state that such terms
survive the termination of this Agreement or the termination of the Commitments.

(ii) Defaulting Lender. At any time when a Lender is then a Defaulting Lender,
the Borrower, at the Borrower’s election, may terminate such Defaulting Lender’s
Revolving Commitment hereunder; provided that (A) such termination must be of
the Defaulting Lender’s

 

-22-

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

entire Revolving Commitment, (B) the Borrower shall pay all amounts owed by the
Borrower to such Defaulting Lender in such Lender’s capacity as a Lender under
this Agreement and under the other Credit Documents (including principal of and
interest on the Revolving Advances owed to such Defaulting Lender, accrued
commitment fees (subject to Section 2.7(a)), and letter of credit fees but
specifically excluding any amounts owing under Section 2.10 as result of such
payment of Revolving Advances) and shall deposit with the Administrative Agent
into the Cash Collateral Account cash collateral in the amount equal to such
Defaulting Lender’s ratable share of the Letter of Credit Exposure, (C) a
Defaulting Lender’s Revolving Commitment may be terminated by the Borrower under
this Section 2.1(b)(ii) if and only if at such time, the Borrower has elected,
or is then electing, to terminate the Revolving Commitments of all then existing
Defaulting Lenders. Upon written notice to the Defaulting Lender and
Administrative Agent of the Borrower’s election to terminate a Defaulting
Lender’s Revolving Commitment pursuant to this clause (ii) and the payment and
deposit of amounts required to be made by the Borrower under clause (B) above,
(1) such Defaulting Lender shall cease to be a “Lender” hereunder for all
purposes except that such Lender’s rights as a Lender under Sections 2.11, 2.13,
8.5 and 9.2 shall continue with respect to events and occurrences occurring
before or concurrently with its ceasing to be a “Lender” hereunder, (2) such
Defaulting Lender’s Revolving Commitment shall be deemed terminated, and
(3) such Defaulting Lender shall be relieved of its obligations hereunder as a
“Lender”.

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

Section 2.2 Letters of Credit.

(a) Commitment for Letters of Credit. Each Issuing Lender, the Lenders and the
Borrowers agree that effective as of the Amendment No. 7 Effective Date, the
Existing Letters of Credit shall be deemed to have been issued and maintained
under, and be governed by the terms and conditions of, this Agreement as Letters
of Credit. Subject to the terms and conditions set forth in this Agreement, the
Issuing Lender agrees, in reliance upon the agreements of the other Lenders set
forth in this Section 2.2, from time to time on any Business Day during the
period from the Effective Date until the date that is 10 days prior to the
Maturity Date, to issue, increase or extend the expiration date of, Letters of
Credit for the account of any Credit Party, provided that no Letter of Credit
will be issued, increased, or extended (or deemed issued as to the Existing
Letters of Credit):

(i) if such issuance, increase, or extension would cause the Letter of Credit
Exposure to exceed the Letter of Credit Maximum Amount;

(ii) unless such Letter of Credit has an expiration date not later than 10 days
prior to the Maturity Date; provided that, if Revolving Commitments are
terminated in whole pursuant to Section 2.1(b)(i), the Borrower shall, at its
election, either (A) deposit into the Cash Collateral Account cash in an amount
equal to 105% of the Letter of Credit Exposure for the Letters of Credit which
have an expiry date beyond the Maturity Date or (B) provide a replacement letter
of credit (or other security) reasonably acceptable to the Administrative Agent
and the Issuing Lender in an amount equal to 105% of the Letter of Credit
Exposure;

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

 

-23-

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

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

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

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

(vii) if any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender
from issuing, increasing or extending such Letter of Credit, or any Legal
Requirement applicable to the Issuing Lender or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing
Lender refrain from, the issuance, increase or extension of letters of credit
generally or such Letter of Credit in particular or shall impose upon the
Issuing Lender with respect to such Letter of Credit any restriction, reserve or
capital requirement (for which the Issuing Lender is not otherwise compensated
hereunder) not in effect on the Effective Date, or shall impose upon the Issuing
Lender any unreimbursed loss, cost or expense which was not applicable on the
Effective Date and which the Issuing Lender in good faith deems material to it;

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

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

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

Furthermore, anything contained herein to the contrary notwithstanding, the
Issuing Lender may, but shall not be obligated to, issue or cause the issuance
of a Letter of Credit that supports the obligations of the Borrower or its
Subsidiaries in respect of (1) a lease of real property, or (2) an employment
contract.

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

 

-24-

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

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

(i) With respect to any Letter of Credit, in accordance with the related Letter
of Credit Application, the Borrower agrees to pay within three (3) Business Days
to the Administrative Agent on behalf of the Issuing Lender an amount equal to
any amount paid by the Issuing Lender under such Letter of Credit. Upon the
Issuing Lender’s demand for payment under the terms of a Letter of Credit
Application, the Borrower may, subject to Section 2.1(a), with a written notice,
request that the Borrower’s obligations to the Issuing Lender thereunder be
satisfied with the proceeds of a Revolving Tranche A Advance in the same amount
(notwithstanding any minimum size or increment limitations on individual
Revolving Tranche A Advances). If the Borrower does not make such request and
does not otherwise make the payments demanded by the Issuing Lender as required
under this Agreement or the Letter of Credit Application, then the Borrower
shall be deemed for all purposes of this Agreement to have requested such a
Revolving Tranche A Advance in the same amount and the transfer of the proceeds
thereof to satisfy the Borrower’s obligations to the Issuing Lender, and the
Borrower hereby unconditionally and irrevocably authorizes, empowers, and
directs the Lenders to make such Revolving Tranche A Advance, to transfer the
proceeds thereof to the Issuing Lender in satisfaction of such obligations, and
to record and otherwise treat such payments as a Revolving Tranche A Advance to
the Borrower. The Administrative Agent and each Lender may record and otherwise
treat the making of such Revolving Borrowings as the making of a Revolving
Borrowing to the Borrower under this Agreement as if requested by the Borrower.
Nothing herein is intended to release any of the Borrower’s obligations under
any Letter of Credit Application, but only to provide an additional method of
payment therefor. The making of any Borrowing under this Section 2.2(c) shall
not constitute a cure or waiver of any Default, other than the payment Default
which is satisfied by the application of the amounts deemed advanced hereunder,
caused by the Borrower’s failure to comply with the provisions of this Agreement
or the Letter of Credit Application.

(ii) Subject to Section 2.1(a), each Lender (including the Lender acting as
Issuing Lender) shall, upon notice from the Administrative Agent that the
Borrower has requested or is deemed to have requested a Revolving Tranche A
Advance pursuant to Section 2.4 and regardless of whether (A) the conditions in
Section 3.2 have been met, (B) such notice complies with Section 2.4, or (C) a
Default exists, make funds available to the Administrative Agent for the account
of the Issuing Lender in an amount equal to such Lender’s Revolving Pro Rata
Share of the amount of such Revolving Tranche A Advance not later than 1:00 p.m.
on the Business Day specified in such notice by the Administrative Agent,
whereupon each Lender that so makes funds available shall be deemed to have made
a Revolving Tranche A Advance to the Borrower in such amount. The Administrative
Agent shall remit the funds so received to the Issuing Lender.

(iii) If any such Lender shall not have so made its Revolving Advance available
to the Administrative Agent pursuant to this Section 2.2, such Lender agrees to
pay interest thereon for each day from such date until the date such amount is
paid at the lesser of (A) the Federal Funds Rate for such day for the first
three days and thereafter the interest rate applicable to the Revolving Tranche
A Advance and (B) the Maximum Rate. Whenever, at any time after the
Administrative Agent has received from any Lender such Lender’s Revolving
Tranche A Advance, the Administrative Agent receives any payment on account
thereof, the Administrative Agent will pay to such Lender its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s Revolving
Tranche A Advance was outstanding and funded), which payment shall be subject to
repayment by such Lender if such payment received by the Administrative Agent is
required to be returned.

 

-25-

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

Each Lender’s obligation to make the Revolving Tranche A Advance pursuant to
this Section 2.2 shall be absolute and unconditional and shall not be affected
by any circumstance, including (1) any set-off, counterclaim, recoupment,
defense or other right which such Lender or any other Person may have against
the Issuing Lender, the Administrative Agent or any other Person for any reason
whatsoever; (2) the occurrence or continuance of a Default or the termination of
the Revolving Commitments; (3) any breach of this Agreement by any Credit Party
or any other Lender; or (4) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.

(d) Participations. Upon the date of the issuance or increase of a Letter of
Credit under Section 2.2(a), the Issuing Lender shall be deemed to have sold to
each other Lender and each other Lender shall have been deemed to have purchased
from the Issuing Lender a participation in the related Letter of Credit
Obligations equal to such Lender’s Revolving Pro Rata Share at such date and
such sale and purchase shall otherwise be in accordance with the terms of this
Agreement. The Issuing Lender shall promptly notify each such participant Lender
by telex, telephone, or telecopy of each Letter of Credit issued or increased
and the actual dollar amount of such Lender’s participation in such Letter of
Credit.

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

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

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

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

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

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

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

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

(f) Prepayments of Letters of Credit. In the event that any Letter of Credit
shall be outstanding or shall be drawn and not reimbursed on or prior to the 5th
Business Day prior to the Maturity

 

-26-

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

Date, the Borrower shall pay to the Administrative Agent an amount equal to 105%
of the Letter of Credit Exposure allocable to such Letter of Credit, such amount
to be due and payable on the 5th Business Day prior to the Maturity Date, and to
be held in the Cash Collateral Account and applied in accordance with paragraph
(h) below.

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

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

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

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

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

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

(h) Cash Collateral Account.

(i) If the Borrower is required to deposit funds in the Cash Collateral Account
pursuant to Sections 2.2(f), 2.2(i), 2.5(c), 7.2(b) or 7.3(b), then the Borrower
and the Administrative Agent shall establish the Cash Collateral Account and the
Borrower shall execute any documents and agreements, including the
Administrative Agent’s standard form assignment of deposit accounts, that the
Administrative Agent reasonably requests in connection therewith to establish
the Cash Collateral Account and grant the Administrative Agent an Acceptable
Security Interest in such account and the funds therein. The Borrower hereby
pledges to the Administrative Agent and grants the Administrative Agent, for the
ratable benefit of the Secured Parties, a security interest in the Cash
Collateral Account, whenever established, all funds held in the Cash Collateral
Account from time to time, and all proceeds thereof as security for the payment
of the Secured Obligations.

(ii) Funds held in the Cash Collateral Account shall be held as cash collateral
for obligations with respect to Letters of Credit and promptly applied by the
Administrative Agent at the request of the Issuing Lender to any reimbursement
or other obligations under Letters of Credit that exist or occur. To the extent
that any surplus funds are held in the Cash Collateral

 

-27-

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

Account above the Letter of Credit Exposure during the existence of an Event of
Default the Administrative Agent may (A) hold such surplus funds in the Cash
Collateral Account as cash collateral for the Secured Obligations or (B) apply
such surplus funds to any Secured Obligations in any manner directed by the
Majority Lenders. If no Default exists, the Administrative Agent shall release
any surplus funds held in the Cash Collateral Account above the Letter of Credit
Exposure to the Borrower promptly following the Borrower’s written request.
Notwithstanding the foregoing, if the Borrower has complied with the terms of
Section 2.2(i) and no Default exists, or would result therefrom, the
Administrative Agent shall release the funds deposited by the Borrower pursuant
to Section 2.2(i) to the Borrower promptly following the Borrower’s written
request.

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

(i) Defaulting Lender. If, at any time, a Defaulting Lender or a Potential
Defaulting Lender exists hereunder, then, at the request of the Issuing Lender,
the Borrower shall deposit funds with Administrative Agent into the Cash
Collateral Account an amount equal to such Defaulting Lender’s or Potential
Defaulting Lender’s pro rata share of the Letter of Credit Exposure.

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

Section 2.3 Swing Line Advances.

(a) Facility. On the terms and conditions set forth in this Agreement, and if an
AutoBorrow Agreement is in effect, subject to the terms and conditions of such
AutoBorrow Agreement, the Swing Line Lender may, in its sole discretion, from
time-to-time on any Business Day during the period from the date of this
Agreement until the last Business Day occurring before the Maturity Date, make
Swing Line Advances under the Swing Line Note to the Borrower which shall be due
and payable on the Swing Line Payment Date (except that no Swing Line Advance
may mature after the Maturity Date), bearing interest at the Adjusted Base Rate
plus the Applicable Margin for Base Rate Advances, and in an aggregate
outstanding principal amount not to exceed the Swing Line Sublimit Amount at any
time; provided that (i) after giving effect to such Swing Line Advance, the
Outstandings shall not exceed the aggregate Revolving Commitments in effect at
such time; (ii) no Swing Line Advance shall be made by the Swing Line Lender if
the conditions set forth in Section 3.2 have not been met as of the date of such
Swing Line Advance, it being agreed by the Borrower that the giving of the
applicable Notice of Borrowing and the acceptance by the Borrower of the
proceeds of such Swing Line Advance shall constitute a representation and
warranty by the Borrower that on the date of such Swing Line Advance

 

-28-

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

such conditions have been met; and (iii) if an AutoBorrow Agreement is in
effect, such additional terms and conditions of such AutoBorrow Agreement shall
have been satisfied, and in the event that any of the terms of this
Section 2.3(a) conflict with such AutoBorrow Agreement, the terms of the
AutoBorrow Agreement shall govern and control. The indebtedness of the Borrower
to the Swing Line Lender resulting from Swing Line Advances shall be evidenced
by the Swing Line Note. No Lender shall have any rights or obligations under any
AutoBorrow Agreement, but each Lender shall have the obligation to purchase and
fund risk participations in the Swing Line Advances and to refinance Swing Line
Advances as provided below.

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

(c) Reimbursements for Swing Line Obligations.

(i) With respect to the Swing Line Advances and the interest, premium, fees, and
other amounts owed by the Borrower to the Swing Line Lender in connection with
the Swing Line Advances, the Borrower agrees to pay to the Swing Line Lender
such amounts when due and payable to the Swing Line Lender under the terms of
this Agreement and, if an AutoBorrow Agreement is in effect, in accordance with
the terms of such AutoBorrow Agreement. If the Borrower does not pay to the
Swing Line Lender any such amounts when due and payable to the Swing Line
Lender, the Swing Line Lender may upon notice to the Administrative Agent
request the satisfaction of such obligation by the making of a Revolving
Borrowing in the amount of any such amounts not paid when due and payable. Upon
such request, the Borrower shall be deemed to have requested the making of a
Revolving Borrowing in the amount of such obligation and the transfer of the
proceeds thereof to the Swing Line Lender. Such Revolving Borrowing shall bear
interest based upon the Adjusted Base Rate plus the Applicable Margin for Base
Rate Advances. The Administrative Agent shall promptly forward notice of such
Revolving Borrowing to the Borrower and the Lenders, and each Lender shall,
regardless of whether (A) the conditions in Section 3.2 have been met, (B) such
notice complies with Section 2.4, or (C) a Default exists, make available such
Lender’s ratable share of such Revolving Borrowing to the Administrative Agent,
and the Administrative Agent shall promptly deliver the proceeds thereof to the
Swing Line Lender for application to such amounts owed to the Swing Line Lender.
The Borrower hereby unconditionally and irrevocably authorizes, empowers, and
directs the Swing Line Lender to make such requests for Revolving Borrowings on
behalf of the Borrower, and the Lenders to make Revolving Tranche A Advances to
the Administrative Agent for the benefit of the Swing Line Lender in
satisfaction of such obligations. The Administrative Agent and each Lender may
record and otherwise treat the making of such Revolving Borrowings as the making
of a Revolving Tranche A Advance to the Borrower under this Agreement as if
requested by the Borrower. Nothing herein is intended to release the Borrower’s
obligations under the Swing Line Note, but only to provide an additional method
of payment therefor. The making of any Borrowing under this Section 2.3(c) shall
not constitute a cure or waiver of any Default or Event of Default, other than
the payment Default or Event of Default which is satisfied by the application of
the amounts deemed advanced hereunder, caused by the Borrower’s failure to
comply with the provisions of this Agreement or the Swing Line Note.

 

-29-

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

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

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

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

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

 

-30-

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

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

(g) Discretionary Nature of the Swing Line Facility. Notwithstanding any terms
to the contrary contained herein or in any AutoBorrow Agreement, the Swing Line
facility provided herein or in any AutoBorrow Agreement (i) is an uncommitted
facility and the Swing Line Lender may, but shall not be obligated to, make
Swing Line Advances, and (ii) may be terminated at any time by the Swing Line
Lender upon written notice to the Borrower; provided further that,
notwithstanding the foregoing, until such time as agreed to by each Lender in
writing, no Swing Line Advances may be made on or after the Amendment No. 7
Effective Date.

Section 2.4 Advances.

(a) Notice. Each Revolving Borrowing, shall be made pursuant to a Notice of
Borrowing given not later than (i) 11:00 a.m. (Houston, Texas time) on the third
Business Day before the date of the proposed Borrowing, in the case of a LIBOR
Advance or (ii) 11:00 a.m. (Houston, Texas time) on the Business Day before the
date of the proposed Borrowing, in the case of a Base Rate Advance, by the
Borrower to the Administrative Agent, which shall give to each Lender prompt
notice of such proposed Borrowing by facsimile or telex. Each Notice of
Borrowing shall be by facsimile or telex, confirmed promptly by the Borrower
with a hard copy (other than with respect to notice sent by facsimile),
specifying the requested (i) date of such Borrowing, (ii) Type and Class of
Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing,
and (iv) if such Borrowing is to be comprised of LIBOR Advances, Interest Period
for each such Advance. In the case of a proposed Borrowing comprised of LIBOR
Advances, the Administrative Agent shall promptly notify each Lender of the
applicable interest rate under Section 2.8(b). Each Lender shall, before 12:00
noon (Houston, Texas time) on the date of such Borrowing, make available for the
account of its applicable Lending Office to the Administrative Agent at its
address referred to in Section 9.9, or such other location as the Administrative
Agent may specify by notice to the Lenders, in same day funds, such Lender’s
Revolving Pro Rata Share of such Borrowing. After the Administrative Agent’s
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article 3, the Administrative Agent will make such funds available to
the Borrower at its account with the Administrative Agent or as otherwise
directed by the Borrower with written notice to the Administrative Agent.

(b) Conversions and Continuations. In order to elect to Convert or continue a
Revolving Advance under this paragraph, the Borrower shall deliver an
irrevocable Notice of Continuation or Conversion to the Administrative Agent at
the Administrative Agent’s office no later than 11:00 a.m. (Houston, Texas time)
(i) on the Business Day before the date of the proposed conversion date in the
case of a Conversion to a Base Rate Advance and (ii) at least three Business
Days in advance of the proposed Conversion or continuation date in the case of a
Conversion to, or a continuation of, a LIBOR Advance. Each such Notice of
Conversion or Continuation shall be in writing or by telex or facsimile
confirmed promptly by the Borrower with a hard copy (other than with respect to
notice sent by facsimile), specifying (i) the requested Conversion or
continuation date (which shall be a Business Day), (ii) the amount, Type, and
Class of the Advance to be Converted or continued, (iii) whether a Conversion or
continuation is requested and, if a Conversion, into what Type of Advance, and
(iv) in the case of a Conversion to, or a continuation of, a LIBOR Advance, the
requested Interest Period. Promptly after receipt of a Notice of Conversion or
Continuation under this paragraph, the Administrative Agent shall provide each
Lender with a copy thereof and, in the case of a Conversion to or a Continuation
of a LIBOR Advance, notify each Lender of the applicable interest rate under
Section 2.8(b). The portion of Advances comprising part of the same Borrowing
that are converted to Advances of another Type shall constitute a new Borrowing.

 

-31-

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

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

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

(ii) the Borrower may not select LIBOR Advances for any Borrowing at any time
when a Default has occurred and is continuing;

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

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

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

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

 

-32-

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

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

(e) Administrative Agent Reliance. Unless the Administrative Agent shall have
received notice from a Lender before the date of any Revolving Borrowing that
such Lender will not make available to the Administrative Agent such Lender’s
applicable pro rata share of any Borrowing, the Administrative Agent may assume
that such Lender has made its applicable pro rata share of such Borrowing
available to the Administrative Agent on the date of such Borrowing in
accordance with Section 2.4(a), and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made its applicable pro rata share of such Borrowing available to the
Administrative Agent, such Lender and the Borrower severally agree to
immediately repay to the Administrative Agent on demand such corresponding
amount, together with interest on such amount, for each day from the date such
amount is made available to the Borrower until the date such amount is repaid to
the Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable on such day to Advances comprising such Borrowing and (ii) in the
case of such Lender, the lesser of (A) the Federal Funds Rate for such day and
(B) the Maximum Rate. If such Lender shall repay to the Administrative Agent
such corresponding amount and interest as provided above, such corresponding
amount so repaid shall constitute such Lender’s Advance as part of such
Borrowing for purposes of this Agreement even though not made on the same day as
the other Advances comprising such Borrowing.

Section 2.5 Prepayments.

(a) Right to Prepay. The Borrower shall have no right to prepay any principal
amount of any Advance except as provided in this Section 2.5.

(b) Optional. The Borrower may elect to prepay any of the Advances without
penalty or premium except as set forth in Section 2.10 and after giving by
11:00 a.m. (Houston, Texas time) (i) in the case of LIBOR Advances, at least
three Business Days’ or (ii) in case of Base Rate Advances, one Business Day’s
prior written notice to the Administrative Agent stating the proposed date and
aggregate principal amount of such prepayment. If any such notice is given, the
Borrower shall prepay Advances comprising part of the same Borrowing in whole or
ratably in part in an aggregate principal amount equal to the amount specified
in such notice, together with accrued interest to the date of such prepayment on
the principal amount prepaid and amounts, if any, required to be paid pursuant
to Section 2.10 as a result of such prepayment being made on such date; provided
that (A) each optional prepayment of LIBOR Advances shall be in a minimum amount
not less than $200,000 and in multiple integrals of $100,000 in excess thereof,
(B) each optional prepayment of Base Rate Advances shall be in a minimum amount
not less than $100,000 and in multiple integrals of $100,000 in excess thereof
and (C) each optional prepayment of Swing Line Advances shall have no minimum
requirement. If an AutoBorrow Agreement is in effect, each prepayment of Swing
Line Advances shall be made as provided in such AutoBorrow Agreement.

(c) Mandatory.

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

 

-33-

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

(ii) If the Borrower or any Subsidiary completes a Disposition which is not a
Permitted Disposition, then the Borrower shall, no later than three Business
Days following the completion of such Disposition and in an amount equal to 100%
of the Net Cash Proceeds generated from such Disposition first prepay the
outstanding principal amount of the Tranche B Term Advances in the inverse order
of maturity until such time as the Tranche B Term Advances are repaid in full,
second prepay the outstanding principal amount of the Swing Line Advances until
such time as such Advances are repaid in full, third prepay the outstanding
principal amount of the Revolving Tranche A Advances until such time as such
Advances are repaid in full and fourth make deposits with the Administrative
Agent into the Cash Collateral Account to provide Cash Collateral in the amount
of such excess for the Letter of Credit Exposure.

(iii) If the Borrower or any Subsidiary receives any Extraordinary Receipts
(whether from a single Casualty Event or related series of Casualty Events and
whether as one payment or a series of payments) in excess of $250,000 in the
aggregate since the Amendment No. 7 Effective Date, then the Borrower shall, no
later than five Business Days following the receipt of such excess Extraordinary
Receipts and in an amount equal to 100% of the amount of such excess
Extraordinary Receipts, first prepay the outstanding principal amount of the
Tranche B Term Advances in the inverse order of maturity until such time as the
Tranche B Term Advances are repaid in full, second prepay the outstanding
principal amount of the Swing Line Advances until such Advances are repaid in
full, third prepay the outstanding principal amount of the Revolving Tranche A
Advances until such Advances are repaid in full and fourth make deposits with
the Administrative Agent into the Cash Collateral Account to provide Cash
Collateral in the amount of such excess for the Letter of Credit Exposure;
provided that, (A) if no Default exists or would arise therefrom, then such
excess Extraordinary Receipts shall not be required to be so applied on such
date to the extent that Borrower shall have delivered a certificate by a
Responsible Officer of the Borrower to the Administrative Agent on or prior to
such date stating that such Extraordinary Receipts are reasonably expected to be
reinvested in fixed or capital assets of any Credit Party within 180 days
following the date the Borrower or such Subsidiary received such Extraordinary
Receipts (which officer’s certificate shall set forth the estimates of the
amounts to be so expended); (B) if all or any portion of such Extraordinary
Receipts are not reinvested within such 180-day period as provided in clause
(A) above, then 100% of such unused portion shall be applied on the last day of
such period in such order as provided under the first through fourth clauses
above; and (C) if an Event of Default exists and such Extraordinary Receipts are
insurance proceeds, the Borrower shall turn such proceeds over to the
Administrative Agent in accordance with Section 5.3(d).

(iv) Upon the consummation of any Specified Disposition of any assets of Falcon
constituting Inventory or Equipment, the Borrower shall, not later than one
Business Day following the receipt of Net Cash Proceeds from such Disposition,
prepay any Banking Services Obligations of Falcon owed to a Banking Services
Provider until such Banking Services Obligations are repaid in full.

(v) Upon the consummation of any Specified Disposition of any assets of Falcon
constituting real property and fixtures and improvements to such real property,
the Borrower shall, not later than one Business Day following the receipt of Net
Cash Proceeds from such Disposition, first prepay the outstanding principal
amount of the Tranche B Term Advances in the inverse order of maturity until
such time as the Tranche B Term Advances are repaid in full, second prepay the
outstanding principal amount of the Swing Line Advances until such Advances are
repaid in full, third prepay the outstanding principal amount of the Revolving
Tranche A Advances until such Advances are repaid in full and fourth make
deposits with the Administrative Agent into the Cash Collateral Account to
provide Cash Collateral in the amount of such excess for the Letter of Credit
Exposure.

 

-34-

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

(vi) Upon the consummation of any Specified Disposition of bauxite Inventory of
Borrower set forth on Schedule 6.8(c), the Borrower may retain 50% of the Net
Cash Proceeds from such Disposition and with respect to the other 50% of the
remainder of such Net Cash Proceeds, the Borrower shall, not later than one
Business Day following the receipt of Net Cash Proceeds from such Disposition,
first prepay the outstanding principal amount of the Tranche B Term Advances in
the inverse order of maturity until such time as the Tranche B Term Advances are
repaid in full, second prepay the outstanding principal amount of the Swing Line
Advances until such Advances are repaid in full, third prepay the outstanding
principal amount of the Revolving Tranche A Advances until such Advances are
repaid in full and fourth make deposits with the Administrative Agent into the
Cash Collateral Account to provide Cash Collateral in the amount of such excess
for the Letter of Credit Exposure.

(d) Interest; Costs. Each prepayment pursuant to this Section 2.5 shall be
accompanied by accrued interest on the amount prepaid to the date of such
prepayment and amounts, if any, required to be paid pursuant to Section 2.10 as
a result of such prepayment being made on such date.

Section 2.6 Repayment.

(a) Advances. The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of and ratable benefit of each Lender
(i) the aggregate outstanding principal amount of all Advances on the Maturity
Date and (ii) the aggregate outstanding principal amount of the Tranche B Term
Advances in quarterly installments due and payable on each
March 31st, June 30th, September 30th and December 31st, in the amounts and on
the dates set forth below:

 

Amount:

  

Quarterly Payment Dates:

$3,033,000    June 30, 2016 $3,033,000    September 30, 2016 $3,033,000   
December 31, 2016 $3,250,000    March 31, 2017 $3,250,000    June 30, 2017
$3,250,000    September 30, 2017 $3,250,000    December 31, 2017 $3,250,000   
March 31, 2018 $3,250,000    June 30, 2018 $3,250,000    September 30, 2018
$3,250,000    December 31, 2018

For the avoidance of doubt, the unpaid principal balance of the Tranche B Term
Advances shall be due and payable on the Maturity Date.

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

Section 2.7 Fees.

(a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a Commitment Fee on the average daily amount by which
(i) such Lender’s

 

-35-

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

Revolving Commitment exceeds (ii) the sum of such Lender’s outstanding Revolving
Advances plus such Lender’s Revolving Pro Rata Share of the Letter of Credit
Exposure, at the rate equal to the Applicable Margin for Commitment Fees for
such period; provided that, no Commitment Fee shall accrue on the Revolving
Commitment of a Defaulting Lender during the period such Lender remains a
Defaulting Lender. The Commitment Fee is due quarterly in arrears on
March 31, June 30, September 30, and December 31 of each year commencing on
March 31, 2010, and on the Maturity Date. For purposes of this Section 2.7(a)
only, amounts advanced under the Swing Line Note shall not reduce the amount of
the unused Revolving Commitment.

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

(i) To the Administrative Agent for the pro rata benefit of the Lenders a per
annum letter of credit fee for each Letter of Credit issued hereunder, for the
period such Letter of Credit is to be outstanding, in an amount equal to the
greater of (A) four percent (4.00%) per annum on the face amount of such Letter
of Credit, and (B) $600 per Letter of Credit. Such fee shall be due and payable
quarterly in arrears on March 31, June 30, September 30, and December 31 of each
year, and on the Maturity Date.

(ii) To the Issuing Lender, a fronting fee for each Letter of Credit equal to
the greater of (A) 0.250% per annum on the face amount of such Letter of Credit
and (B) $600. Such fee shall be due and payable in advance on the date of the
issuance of the Letter of Credit, and, in the case of an increase or extension
only, on the date of such increase or such extension.

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

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

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

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

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

Section 2.8 Interest.

(a) Base Rate Advances. Each Base Rate Advance shall bear interest at the
Adjusted Base Rate in effect from time to time plus the Applicable Margin for
Base Rate Advances for such period, provided that while an Event of Default is
continuing the Base Rate Advances shall bear interest at the

 

-36-

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

Adjusted Base Rate in effect from time to time plus the Applicable Margin plus
2%. The Borrower shall pay to Administrative Agent for the ratable account of
each Lender all accrued but unpaid interest on such Lender’s Base Rate Advances
on each March 31, June 30, September 30, and December 31 commencing on March 31,
2010, and on the Maturity Date. The Swing Line Advances shall bear interest only
at the Adjusted Base Rate plus the Applicable Margin for Base Rate Advances or
such other per annum rate to be agreed to between the Borrower and the Swing
Line Lender; provided that while an Event of Default is continuing the Swing
Line Advances shall bear interest at the Adjusted Base Rate in effect from time
to time plus the Applicable Margin for Base Rate Advances plus 2%.

(b) LIBOR Advances. Each LIBOR Advance shall bear interest during its Interest
Period equal to at all times the LIBO Rate for such Interest Period plus the
Applicable Margin for LIBOR Advances for such period; provided that while an
Event of Default is continuing, each LIBOR Advance shall bear interest at the
LIBO Rate in effect from time to time plus the Applicable Margin plus 2%. The
Borrower shall pay to the Administrative Agent for the ratable account of each
Lender all accrued but unpaid interest on each of such Lender’s LIBOR Advances
on the last day of the Interest Period therefor (provided that for LIBOR
Advances with six month Interest Periods, accrued but unpaid interest shall also
be due on the day three months from the first day of such Interest Period), on
the date any LIBOR Advance is repaid, and on the Maturity Date.

(c) Retroactive Adjustments of Applicable Margin. In the event that any
financial statement or Compliance Certificate delivered pursuant to Section 5.2
is shown to be inaccurate (regardless of whether this Agreement or the Revolving
Commitments are in effect when such inaccuracy is discovered), and such
inaccuracy, if corrected, would have led to the application of a higher
Applicable Margin for any period then in effect (an “Applicable Period”) than
the Applicable Margin applied for such Applicable Period, then (i) the Borrower
shall immediately deliver to the Administrative Agent a corrected Compliance
Certificate for such Applicable Period, (ii) the Applicable Margin shall be
determined as if the higher Applicable Margin then in effect that would have
applied were applicable for such Applicable Period (and in any event at Level
III if the inaccuracy was the result of dishonesty, fraud or willful
misconduct), and (iii) the Borrower shall immediately, without further action by
the Administrative Agent, any Lender or the Issuing Lender, pay to the
Administrative Agent for the account of the applicable Lenders, the accrued
additional interest owing as a result of such increased Applicable Margin for
such Applicable Period. This Section 2.8(c) shall not limit the rights of the
Administrative Agent and Lenders with respect to the default rate of interest as
set forth in Section 2.8(a) and Section 2.8(b) and Article 7. The Borrower’s
obligations under this Section 2.8(c) shall survive the termination of the
Revolving Commitments and the repayment of all other Obligations hereunder.

Section 2.9 Illegality. If any Lender shall notify the Borrower that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank or other governmental
authority asserts that it is unlawful, for such Lender or its applicable Lending
Office to perform its obligations under this Agreement to make, maintain, or
fund any LIBOR Advances of such Lender then outstanding hereunder, (a) the
Borrower shall, no later than 11:00 a.m. (Houston, Texas, time) (i) if not
prohibited by law, on the last day of the Interest Period for each outstanding
LIBOR Advance or (ii) if required by such notice, on the second Business Day
following its receipt of such notice, prepay all of the LIBOR Advances of such
Lender then outstanding, together with accrued interest on the principal amount
prepaid to the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 2.10 as a result of such prepayment being made on such date,
(b) such Lender shall simultaneously make a Base Rate Advance to the Borrower on
such date in an amount equal to the aggregate principal amount of the LIBOR
Advances prepaid to such Lender, and (c) the right of the Borrower to select
LIBOR Advances from such Lender for any subsequent Borrowing shall be suspended
until such Lender shall notify the Borrower that the circumstances causing such
suspension no longer exist. Each Lender agrees to use commercially reasonable
efforts (consistent with its internal policies and

 

-37-

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

legal and regulatory restrictions) to designate a different Lending Office if
the making of such designation would avoid the effect of this paragraph and
would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.

Section 2.10 Breakage Costs. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment (including any deemed
payment or repayment and any reallocated repayment to non-defaulting Lenders
provided for in Section 2.12(a)) of any Advance other than a Base Rate Advance
on a day other than the last day of the Interest Period for such Advance
(whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);

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

(c) any assignment of an LIBO Rate Advance on a day other than the last day of
the Interest Period therefor as a result of a request by the Borrower pursuant
to Section 2.14;

including any loss of anticipated profits, any foreign exchange losses and any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Advance, from fees payable to terminate the deposits from
which such funds were obtained or from the performance of any foreign exchange
contract. The Borrower shall also pay any customary administrative fees charged
by such Lender in connection with the foregoing. For purposes of calculating
amounts payable by the Borrower to the Lenders under this Section 2.10, the
requesting Lender shall be deemed to have funded the LIBO Rate Advances made by
it at the LIBO Base Rate used in determining the LIBO Rate for such Advance by a
matching deposit or other borrowing in the offshore interbank market for Dollars
for a comparable amount and for a comparable period, whether or not such LIBO
Rate Advance was in fact so funded.

Section 2.11 Increased Costs.

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

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

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

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

 

-38-

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

(b) Capital Adequacy. If, after the Effective Date, any Lender or the Issuing
Lender shall have determined that any Change in Law affecting such Lender or
Issuing Lender or any lending office of such Lender or such Lender’s or Issuing
Lender’s holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on the capital of financial
institutions generally, including such Lender or the Issuing Lender or any
corporation controlling such Lender or the Issuing Lender, as a consequence of
such Lender’s or the Issuing Lender’s obligations hereunder to a level below
that which such Lender or the Issuing Lender or such corporation could have
achieved but for such Change in Law (taking into consideration its policies with
respect to capital adequacy), then from time to time within three Business Days
after written demand by such Lender or the Issuing Lender, as the case may be,
the Borrower shall pay to such Lender or the Issuing Lender such additional
amount or amounts as such Lender determines in good faith to be necessary to
compensate such Lender or the Issuing Lender for such reduction.

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

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

Section 2.12 Payments and Computations.

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

(b) Payment Procedures. The Borrower shall make each payment under this
Agreement and under the Notes not later than 11:00 a.m. (Houston, Texas time) on
the day when due in Dollars to the

 

-39-

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

Administrative Agent at the location referred to in the Notes (or such other
location as the Administrative Agent shall designate in writing to the Borrower)
in same day funds. The Administrative Agent will promptly thereafter, and in any
event prior to the close of business on the day any timely payment is made,
cause to be distributed like funds relating to the payment of principal,
interest or fees ratably (other than amounts payable solely to the
Administrative Agent or a specific Lender pursuant to Sections 2.9, 2.10, 2.11,
2.13, 2.14, and 9.2 but after taking into account payments effected pursuant to
Section 9.1) in accordance with each Lender’s applicable pro rata share to the
Lenders for the account of their respective applicable Lending Offices, and like
funds relating to the payment of any other amount payable to any Lender to such
Lender for the account of its applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. Upon receipt of other
amounts due solely to the Administrative Agent, the Issuing Lender, the Swing
Line Lender, or a specific Lender, the Administrative Agent shall distribute
such amounts to the appropriate party to be applied in accordance with the terms
of this Agreement.

(c) Non-Business Day Payments. Whenever any payment shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided that if such extension would cause payment of interest on or principal
of LIBOR Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.

(d) Computations. All computations of interest for Base Rate Advances shall be
made by the Administrative Agent on the basis of a year of 365/366 days (other
than based on the Daily One-Month LIBOR) and all computations of all other
interest and fees shall be made by the Administrative agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day, but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Administrative Agent of
an amount of interest or fees shall be conclusive and binding for all purposes,
absent manifest error.

(e) Sharing of Payments, Etc. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of the Advances made by it in excess of its ratable share
of payments on account of the Advances or Letter of Credit Obligations obtained
by the Lenders (other than as a result of a termination of a Defaulting Lender’s
Revolving Commitment under Section 2.1(b)(ii), the setoff right of the Borrower
under clause (a) above, or the non-pro rata application of payments provided in
the last sentence of this clause (e)), such Lender shall notify the other
Lenders and forthwith purchase from the other Lenders such participations in the
Advances made by it or the Letter of Credit Obligations held by it as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with the other Lenders; provided that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
the other Lenders shall be rescinded and each such Lender shall repay to the
purchasing Lender the purchase price to the extent of such Lender’s ratable
share, but without interest. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.12(e) may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation. If a Lender fails to fund a Revolving Advance with respect to a
Borrowing as and when required hereunder and the Borrower subsequently makes a
repayment of any Revolving Advances, then, after taking into account any setoffs
made pursuant to Section 2.12(a) above, such payment shall be applied among the
non-defaulting Lenders ratably in accordance with their respective Revolving
Commitment percentages until each Lender (including any Lender that is at such
time a Defaulting Lender) has its percentage of all of the outstanding Revolving
Advances and the balance of such repayment shall be applied among the Lenders in
accordance with their Revolving Pro Rata Share.

 

-40-

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

Section 2.13 Taxes.

(a) No Deduction for Certain Taxes. Any and all payments by any Credit Party
under any of the Credit Documents to the Administrative Agent, the Issuing
Lender, or a Lender shall be made, in accordance with Section 2.12, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges, or withholdings, and all liabilities with respect
thereto, excluding, in the case of the Administrative Agent, the Issuing Lender,
or a Lender, (i) taxes imposed on its income and franchise (or margin) taxes
imposed on it by the jurisdiction (or any political subdivision thereof) under
(A) the laws of which (or under the laws of a political subdivision of which)
the Administrative Agent, the Issuing Lender, or such Lender is organized or in
which its principal executive office is located, (B) in the case of each Lender,
the laws of which (or under the laws of a political subdivision of which) such
Lender’s applicable Lending Office is located, and (C) the laws of the State of
Texas; and (ii) any taxes imposed by the United States of America by means of
withholding at the source, if and to the extent such United States withholding
taxes are in effect on the date a Lender becomes a Lender hereunder (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to as “Taxes”). Except as provided in
Section 2.13(f), if the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable to the Administrative Agent, the Issuing
Lender, or any Lender, (i) the sum payable shall be increased as may be
necessary so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.13), such Lender
receives an amount equal to the sum it would have received had no such
deductions been made; (ii) the Borrower shall make such deductions; and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority or other authority in accordance with applicable law.

(b) Other Taxes. In addition, except as provided in Section 2.13(f), the
Borrower agrees to pay any present or future stamp or documentary taxes or any
other excise or property taxes, charges, or similar levies which arise from any
payment made under any Credit Document or from the execution, delivery, or
registration of, or otherwise with respect to, this Agreement, the Notes, or the
other Credit Documents (hereinafter referred to as “Other Taxes”).

(c) Indemnification. EXCEPT AS PROVIDED IN SECTION 2.13(F), THE BORROWER
INDEMNIFIES EACH LENDER, THE ISSUING LENDER, AND THE ADMINISTRATIVE AGENT FOR
THE FULL AMOUNT OF TAXES OR OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY
TAXES OR OTHER TAXES IMPOSED ON AMOUNTS PAYABLE UNDER THIS SECTION 2.13) PAID BY
SUCH LENDER, THE ISSUING LENDER, OR THE ADMINISTRATIVE AGENT (AS THE CASE MAY
BE) AND ANY LIABILITY (INCLUDING INTEREST AND EXPENSES) ARISING THEREFROM OR
WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR
LEGALLY ASSERTED.

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

(e) Foreign Lender Withholding Exemption. Each Lender that is not incorporated
under the laws of the United States of America or a state thereof and that is
entitled to an exemption from United States withholding tax with respect to
payments under this Agreement under applicable law or any treaty to which the
United States is a party shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation (including Internal Revenue
Service Forms W-8BEN or W-8ECI) prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding.

 

-41-

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

(f) Failure to Provide Forms. For any period with respect to which a Lender has
failed to provide the Borrower or the Administrative Agent with the appropriate
forms referred to in this Section 2.13 (unless such failure is due to a change
in treaty, law or regulation occurring after the date on which such Lender
becomes a Lender hereunder), such Lender shall not be entitled to
indemnification or payment under Section 2.13(a), (b), or (c) with respect to
Taxes imposed by the United States; provided that if a Lender, that is otherwise
exempt from or subject to a reduced rate of withholding tax, becomes subject to
Taxes because of its failure to deliver a form required hereunder, the Borrower
shall take such steps as such Lender shall reasonably request, and at the
expenses of such Lender, to assist such Lender to recover such Taxes.

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

(h) Tax Credits and Refunds. If the Administrative Agent, any Lender or the
Issuing Lender determines, in its sole discretion, that it has received a refund
of any Taxes or Other Taxes as to which it has been indemnified by the Borrower
or with respect to which the Borrower has paid additional amounts pursuant to
this Section, it shall pay to the Borrower an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
the Borrower under this Section with respect to the Taxes or Other Taxes giving
rise to such refund), net of all out-of-pocket expenses of the Administrative
Agent, such Lender or the Issuing Lender, as the case may be, and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that the Borrower, upon the request of
the Administrative Agent, such Lender or the Issuing Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent,
such Lender or the Issuing Lender in the event the Administrative Agent, such
Lender or the Issuing Lender is required to repay such refund to such
Governmental Authority. This subsection shall not be construed to require the
Administrative Agent, any Lender or the Issuing Lender to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to any Borrower or any other Person.

(i) Payment. If the Administrative Agent or any Lender becomes entitled to
receive payment of Taxes, Other Taxes or additional sums pursuant to this
Section 2.13, it shall give notice and demand thereof to the Borrower, and the
Borrower (unless the Administrative Agent or Lender shall withdraw such notice
and demand or the Borrower is not obligated to pay such amounts) shall pay such
Taxes, Other Taxes or additional sums within 30 days after the Borrower’s
receipt of such notice and demand.

Section 2.14 Replacement of Lenders. If (a) the Borrower is required pursuant to
Section 2.11 or 2.13 to make any additional payment to any Lender, (b) any
Lender’s obligation to make or continue, or to convert Base Rate Advances into,
LIBOR Advances shall be suspended pursuant to 2.4(c)(iii) or 2.9, or (c) any
Lender is a Defaulting Lender or a Potential Defaulting Lender (any such Lender
described in any of the preceding clauses (a) – (c), being a “Subject Lender”),
then (i) in the case of a Defaulting Lender or a Potential Defaulting Lender,
the Administrative Agent may, upon notice to the Subject Lender and the
Borrower, require such Subject Lender to assign and delegate, without recourse
(in

 

-42-

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

accordance with and subject to the restrictions contained in, and consents
required by, Section 9.7), all of its interests, rights and obligations under
this Agreement and the related Credit Documents as a Lender to an Eligible
Assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment) and (ii) in the case of any Subject
Lender, including a Potential Defaulting Lender, the Borrower may, upon notice
to the Subject Lender and the Administrative Agent and at the Borrower’s sole
cost and expense, require such Subject Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 9.7), all of its interests, rights and obligations
under this Agreement and the related Credit Documents to an Eligible Assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment), provided that, in any event

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

(B) such Subject Lender shall have received payment of an amount equal to the
outstanding principal of its applicable Advances and participations in
outstanding Letter of Credit Obligations, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Credit
Documents (including any amounts under Section 2.10) from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);

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

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

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply. Solely for purposes of effecting any assignment involving a
Defaulting Lender under this Section 2.14 and to the extent permitted under
applicable Legal Requirements, each Lender hereby designates and appoints the
Administrative Agent as true and lawful agent and attorney-in-fact, with full
power and authority, for and on behalf of and in the name of such Lender to
execute, acknowledge and deliver the Assignment and Acceptance required
hereunder if such Lender is a Defaulting Lender and such Lender shall be bound
thereby as fully and effectively as if such Lender had personally executed,
acknowledged and delivered the same. In lieu of the Borrower or the
Administrative Agent replacing a Defaulting Lender as provided in this
Section 2.14, the Borrower may terminate such Defaulting Lender’s Revolving
Commitment as provided in Section 2.1(b)(ii).

Section 2.15 Defaulting Lender Cure. If the Borrower, the Administrative Agent,
and the Issuing Lender agree in writing in their discretion that a Lender that
is a Defaulting Lender or a Potential Defaulting Lender should no longer be
deemed to be a Defaulting Lender or Potential Defaulting Lender, as the case may
be, the Administrative Agent will so notify the parties hereto, whereupon as of
the effective date specified in such notice and subject to any conditions set
forth therein, such Lender will, to the extent applicable, purchase such portion
of outstanding Advances of the other Lenders and/or make such other adjustments
as the Administrative Agent may determine to be necessary to cause the Advances
and Letter of Credit Exposure of the Lenders to be on a pro rata basis in
accordance with their respective Revolving Commitments, whereupon such Lender
will cease to be a Defaulting Lender or Potential Defaulting Lender (and the
Advances and Letter of Credit Exposure of each Lender will automatically be
adjusted on a prospective basis to reflect the foregoing); provided that no
adjustments will be made retroactively with respect to fees accrued or payments
made by or on behalf of the Borrower while such

 

-43-

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

Lender was a Defaulting Lender; and provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no cessation hereunder as
being a Defaulting Lender or Potential Defaulting Lender will constitute a
waiver or release of any claim of any party hereunder arising from such Lender’s
having been a Defaulting Lender or Potential Defaulting Lender.

ARTICLE 3

CONDITIONS OF EFFECTIVENESS

Section 3.1 Conditions to Effectiveness. This Agreement shall become effective
upon satisfaction of the following conditions precedent:

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

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

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

(iii) a certificate from an authorized officer of the Borrower dated as of the
Effective Date stating that as of such date (A) all representations and
warranties of the Borrower set forth in this Agreement are true and correct and
(B) no Default then exists;

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

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

(vi) a legal opinion of Haynes and Boone, L.L.P. as outside counsel to the
Credit Parties, in form and substance reasonably acceptable to the
Administrative Agent; and

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

(b) Consents; Authorization; Conflicts. The Borrower shall have received any
consents, licenses and approvals required in accordance with applicable law, or
in accordance with any document, agreement, instrument or arrangement to which
the Borrower, or any Subsidiary is a party, in connection with the execution,
delivery, performance, validity and enforceability of this Agreement and the
other Credit Documents. In addition, the Borrower and the Subsidiaries shall
have all such material consents, licenses and approvals required in connection
with the continued operation of the Borrower and the Subsidiaries, and such
approvals shall be in full force and effect, and all applicable waiting periods
shall have expired without any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise impose adverse conditions
on this Agreement and the actions contemplated hereby.

 

-44-

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

(c) Representations and Warranties. The representations and warranties contained
in Article 4 and in each other Credit Document shall be true and correct on and
as of the Effective Date before and after giving effect to the initial
Borrowings or issuance (or deemed issuance) of Letters of Credit and to the
application of the proceeds from such Borrowing, as though made on and as of
such date.

(d) Payment of Fees. The Borrower shall have paid the fees and expenses required
to be paid as of the Effective Date pursuant to Sections 2.7(c) and 9.1 or any
other provision of a Credit Document.

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

(f) Other Reports. The Administrative Agent shall have received, in form and
substance reasonably satisfactory to it, all environmental reports, and such
other reports, audits or certifications as it may reasonably request, which
reports the Administrative Agent acknowledges it has received as of the date of
this Agreement.

(g) Material Adverse Change. No event or circumstance that could reasonably be
expected to result in a material adverse change in the business, condition
(financial or otherwise), prospects, or results of operations of the Borrower
and its Subsidiaries, taken as a whole, shall have occurred since September 30,
2009.

(h) No Default. No Default then exists.

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

(j) Delivery of Financial Statements. The Administrative Agent shall have
received true and correct copies of (i) the audited financial statements for the
fiscal year ended December 31, 2008 and (ii) the unaudited financial statements
for the fiscal quarter ended September 30, 2009.

(k) Due Diligence. The Administrative Agent shall have completed its business
and legal due diligence and be satisfied with the results thereof.

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

 

-45-

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

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

(a) Representations and Warranties. As of the date of the making of any Advance
or issuance, increase, renewal or extension of any Letter of Credit, the
representations and warranties made by any Credit Party or any officer of any
Credit Party contained in the Credit Documents shall be true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) on such date, except that any
representation and warranty which by its terms is made as of a specified date
shall be required to be true and correct only as of such specified date and each
request for the making of any Advance or issuance, increase, renewal or
extension of any Letter of Credit and the making of such Advance or the
issuance, increase, renewal or extension of such Letter of Credit shall be
deemed to be a reaffirmation of such representations and warranties.

(b) Event of Default. As of the date of the making of any Advance or issuance,
increase, renewal or extension of any Letter of Credit, no Default or Event of
Default shall exist, and the making of such Advance or issuance, increase,
renewal or extension of such Letter of Credit would not cause a Default or Event
of Default.

(c) Payment in Full of Existing Debt. Prior to, or concurrently with, the making
of the initial Advances hereunder, all outstanding obligations owing under the
Existing Debt shall have been paid in full and the Administrative Agent shall
have received a “pay-off” letter (or such other evidence) in form and substance
reasonably satisfactory to the Administrative Agent with respect to all such
Debt evidencing the termination of all commitments to lend under the respective
loan documents; and the Administrative Agent shall have received from any Person
holding any Lien securing any such Debt, such UCC (or equivalent) termination
statements, mortgage releases, releases of assignments of leases and rents, and
other instruments, in each case in proper form for recording or filing, as the
Administrative Agent shall have reasonably requested to release and terminate of
record the Liens securing such Debt.

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

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

Each Credit Party hereto represents and warrants as follows:

Section 4.1 Organization. Each Credit Party is duly and validly organized and
existing and in good standing under the laws of its jurisdiction of
incorporation or formation and is authorized to do business and is in good
standing in all jurisdictions in which such qualifications or authorizations are
necessary except where the failure to be so qualified or authorized could not
reasonably be expected to result in a Material Adverse Change. As of the
Effective Date, each Credit Party’s type of organization and jurisdiction of
incorporation or formation are set forth on Schedule 4.1.

 

-46-

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

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

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

Section 4.4 Financial Condition.

(a) The Borrower has delivered to the Administrative Agent the unaudited
financial statements for the Borrower and its Subsidiaries dated as of
September 30, 2009 for the fiscal quarter ending thereon. The financial
statements referred to in the preceding sentence have been prepared in
accordance with GAAP and present fairly the consolidated financial condition of
the aforementioned Persons as of the respective dates thereof. As of the date of
the aforementioned financial statements, there were no material contingent
obligations, liabilities for taxes, unusual forward or long-term commitments, or
unrealized or anticipated losses of the applicable Persons, except as disclosed
therein and adequate reserves for such items have been made in accordance with
GAAP.

(b) Since the Effective Date, after giving pro forma effect to all Advances made
hereunder on the Effective Date, no event or condition has occurred that could
reasonably be expected to result in Material Adverse Change.

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

Section 4.6 True and Complete Disclosure. All written factual information
(whether delivered before or after the date of this Agreement) prepared by or on
behalf of the Borrower and its Subsidiaries and furnished to the Administrative
Agent or the Lenders for purposes of or in connection with this Agreement, any
other Credit Document or any transaction contemplated hereby or thereby does not
contain any material misstatement of fact or omits to state any material fact
necessary to make the statements therein not misleading. There is no fact known
to any officer of any Credit Party on the date of this Agreement that has not
been disclosed to the Administrative Agent that could reasonably be

 

-47-

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

expected to result in a Material Adverse Change. All projections, estimates,
budgets, and pro forma financial information furnished by the Borrower or any of
its Subsidiaries (or on behalf of the Borrower or any such Subsidiary), were
prepared on the basis of assumptions, data, information, tests, or conditions
(including current and reasonably foreseeable business conditions) believed to
be reasonable at the time such projections, estimates, and pro forma financial
information were furnished.

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

Section 4.8 Compliance with Agreements.

(a) Neither the Borrower nor any of its Subsidiaries is a party to any
indenture, loan or credit agreement or any lease or any other types of agreement
or instrument or subject to any charter or corporate restriction or provision of
applicable law or governmental regulation the performance of or compliance with
which could reasonably be expected to cause a Material Adverse Change. Neither
the Borrower nor any of its Subsidiaries is in default under or with respect to
any contract, agreement, lease or any other types of agreement or instrument to
which the Borrower or such Subsidiary is a party and which could reasonably be
expected to cause a Material Adverse Change. To the best knowledge of the Credit
Parties, neither the Borrower nor any of its Subsidiaries is in default under,
or has received a notice of default under, any contract, agreement, lease or any
other document or instrument to which the Borrower or its Subsidiaries is a
party which is continuing and which, if not cured, could reasonably be expected
to cause a Material Adverse Change.

(b) No Default has occurred and is continuing.

Section 4.9 Pension Plans. (a) Except for matters that could not reasonably be
expected to result in a Material Adverse Change, all Plans are in compliance
with all applicable provisions of ERISA, (b) no Termination Event has occurred
with respect to any Plan that would result in an Event of Default under
Section 7.1(i), and, except for matters that could not reasonably be expected to
result in a Material Adverse Change, each Plan has complied with and been
administered in accordance with applicable provisions of ERISA and the Code,
(c) no “accumulated funding deficiency” (as defined in Section 302 of ERISA) has
occurred, and for plan years after December 31, 2007, no unpaid minimum required
contribution exists, and there has been no excise tax imposed under Section 4971
of the Code, (d) to the knowledge of Credit Parties, no Reportable Event has
occurred with respect to any Multiemployer Plan, and each Multiemployer Plan has
complied with and been administered in accordance with applicable provisions of
ERISA and the Code in all material respects, (e) the present value of all
benefits vested under each Plan (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested benefits in an
amount that could reasonably be expected to result in a Material Adverse Change,
(f) neither the Borrower nor any member of the Controlled Group has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any unsatisfied withdrawal liability that could reasonably be expected to result
in a Material Adverse Change or an Event of Default under Section 7.1(i), and
(g)

 

-48-

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

except for matters that could not reasonably result in a Material Adverse
Change, as of the most recent valuation date applicable thereto, neither the
Borrower nor any member of the Controlled Group would become subject to any
liability under ERISA if the Borrower or any Subsidiary has received notice that
any Multiemployer Plan is insolvent or in reorganization. Based upon GAAP
existing as of the date of this Agreement and current factual circumstances, no
Credit Party has any reason to believe that the annual cost during the term of
this Agreement to the Borrower or any Subsidiary for post-retirement benefits to
be provided to the current and former employees of the Borrower or any
Subsidiary under Plans that are welfare benefit plans (as defined in
Section 3(1) of ERISA) could, in the aggregate, reasonably be expected to cause
a Material Adverse Change.

Section 4.10 Environmental Condition.

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

(b) Certain Liabilities. To the Credit Parties’ best knowledge, none of the
present or previously owned or operated Property of any Credit Party or of any
Subsidiary thereof, wherever located, (i) has been placed on or proposed to be
placed on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local analogs,
or have been otherwise investigated, designated, listed, or identified as a
potential site for removal, remediation, cleanup, closure, restoration,
reclamation, or other response activity under any Environmental Laws; (ii) is
subject to a Lien, arising under or in connection with any Environmental Laws,
that attaches to any revenues or to any Property owned or operated by any Credit
Party, wherever located, which could reasonably be expected to cause a Material
Adverse Change; or (iii) has been the site of any Release of Hazardous
Substances or Hazardous Wastes from present or past operations which has caused
at the site or at any third-party site any condition that has resulted in or
could reasonably be expected to result in the need for Response that could cause
a Material Adverse Change.

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

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

Section 4.12 Investment Company Act. Neither the Borrower nor any Subsidiary is
an “investment company” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended. Neither
the Borrower nor any Subsidiary is subject to regulation under any Federal or
state statute, regulation or other Legal Requirement which limits its ability to
incur Debt.

 

-49-

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

Section 4.13 Taxes. To the extent that failure to do so could reasonably, either
individually or in the aggregate, be expected to result in a Material Adverse
Change, proper and accurate (in all material respects), federal, state, local
and foreign tax returns, reports and statements required to be filed (after
giving effect to any extension granted in the time for filing) by the Borrower
and each Subsidiary or any member of the Affiliated Group as determined under
Section 1504 of the Code (hereafter collectively called the “Tax Group”) have
been filed with the appropriate Governmental Authorities, and all taxes (which
are material in amount) and other impositions due and payable have been timely
paid prior to the date on which any fine, penalty, interest, late charge or loss
may be added thereto for non-payment thereof except where contested in good
faith and by appropriate proceeding. Neither the Borrower nor any member of the
Tax Group has given, or been requested to give, a waiver of the statute of
limitations relating to the payment of any federal, state, local or foreign
taxes or other impositions. None of the Property owned by the Borrower or any
other member of the Tax Group is Property which the Borrower or any member of
the Tax Group is required to treat as being owned by any other Person pursuant
to the provisions of Section 168(f)(8) of the Code. Proper and accurate amounts
have been withheld by the Borrower and all other members of the Tax Group from
their employees for all periods to comply in all material respects with the tax,
social security and unemployment withholding provisions of applicable federal,
state, local and foreign law.

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

Section 4.15 Use of Proceeds. The proceeds of the Advances will be used by the
Borrower for the purposes described in Section 6.6. No Credit Party is engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U). No proceeds of any Advance
will be used to purchase or carry any margin stock in violation of Regulation T,
U or X.

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

Section 4.17 Insurance. The Borrower and its Subsidiaries carry insurance (which
may be carried by the Borrower on a consolidated basis) with reputable insurers
in respect of such of their respective Properties, in such amounts and against
such risks as is customarily maintained by other Persons of similar size engaged
in similar businesses or, self-insure to the extent that is customary for
Persons of similar size engaged in similar businesses.

Section 4.18 Compliance with Laws. The Borrower will, and will cause each of the
Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to them or their Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change; provided that, this
Section 4.18 shall not apply with respect to any requirement under Environmental
Laws.

 

-50-

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

Section 4.19 Security Interest. As of the Amendment No. 4 Effective Date, each
Credit Party has authorized, or hereby authorizes, the filing of financing
statements sufficient when filed to perfect the Lien created by the Security
Documents. When such financing statements are filed in the offices noted
therein, the Administrative Agent will have a valid and perfected security
interest in all Collateral that is capable of being perfected by filing
financing statements under Article 9 of the UCC.

Section 4.20 FCPA; Sanctions.

(a) None of the Borrower or any of its Subsidiaries nor, to the knowledge of the
Borrower, any director, officer, agent, employee or other person acting on
behalf of the Borrower or any of its Subsidiaries has taken any action, directly
or indirectly, that would result in a violation in any material respect by such
persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules
and regulations thereunder (the “FCPA”) or any other applicable Anti-Corruption
Law; and the Credit Parties have instituted and maintain policies and procedures
designed to promote and achieve continued compliance therewith.

(b) None of the Borrower, any of its Subsidiaries or any director, officer,
employee, or, to the knowledge of Borrower, agent, or affiliate of the Borrower
or any of its Subsidiaries is an individual or entity that is, or is owned or
controlled by Persons that are: (i) the target of any sanctions administered or
enforced by the U.S. Department of the Treasury’s Office of Foreign Assets
Control (“OFAC”), the U.S. Department of State, the United Nations Security
Council, the European Union, or Her Majesty’s Treasury (collectively,
“Sanctions”), or (ii) located, organized or resident in a country or territory
that is, or whose government is, the subject of Sanctions, including, without
limitation currently, Cuba, Iran, North Korea, Sudan and Syria).

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

ARTICLE 5

AFFIRMATIVE COVENANTS

So long as any Obligation shall remain unpaid, any Lender shall have any
Revolving Commitment hereunder, or there shall exist any Letter of Credit
Exposure, each Credit Party agrees to comply with the following covenants.

Section 5.1 Organization. Each Credit Party shall, and shall cause each of its
respective Subsidiaries to, preserve and maintain its partnership, limited
liability company or corporate existence, rights, franchises and privileges in
the jurisdiction of its organization, and qualify and remain qualified as a
foreign business entity in each jurisdiction in which qualification is necessary
or desirable in view of its business and operations or the ownership of its
Properties and where failure to qualify could reasonably be expected to cause a
Material Adverse Change; provided, however, that nothing herein contained shall
prevent any transaction permitted by Section 6.7 or Section 6.8.

Section 5.2 Reporting.

(a) Annual Financial Reports. The Borrower shall provide, or shall cause to be
provided, to the Administrative Agent, as soon as available, but in any event
within 90 days after the end of each fiscal year of the Borrower (commencing
with the fiscal year ending December 31, 2009), a consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries (excluding, in the case of
Foreign Subsidiaries, consolidating balance sheets) as at the end of such fiscal
year, and the related consolidated

 

-51-

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

and consolidating statements of income or operations, shareholders’ equity and
cash flow for such fiscal year (excluding (i) consolidating cash flow and
(ii) in the case of Foreign Subsidiaries, consolidating statements of income or
operations, shareholders’ equity and cash flow), setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and prepared in accordance with GAAP, such consolidated statements to be
audited and accompanied by a report and opinion of an independent certified
public accountant of nationally recognized standing reasonably acceptable to the
Administrative Agent, which report and opinion shall be prepared in accordance
with generally accepted auditing standards and shall not be subject to any
“going concern” or like qualification or exception or any qualification or
exception as to the scope of such audit, and such consolidating statements to be
certified by the chief executive officer, chief financial officer, treasurer or
controller of the Borrower to the effect that such statements are fairly stated
in all material respects when considered in relation to the consolidated
financial statements of the Borrower and its Subsidiaries.

(b) Quarterly Financials. The Borrower shall provide, or shall cause to be
provided, to the Administrative Agent, as soon as available, but in any event
within 45 days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower (commencing with the fiscal quarter ended March 31,
2010), a consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries (excluding, in the case of Foreign Subsidiaries, consolidating
balance sheets) as at the end of such fiscal quarter, and the related
consolidated and consolidating statements of income or operations, shareholders’
equity and cash flow for such fiscal quarter and for the portion of the
Borrower’s fiscal year then ended (excluding (i) consolidating cash flow and
(ii) in the case of Foreign Subsidiaries, consolidating statements of income or
operations, shareholders’ equity and cash flow), setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail, such consolidated statements to be certified by the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flow of the Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes and such consolidating statements to be certified by the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower to the effect that such statements are fairly stated in all material
respects when considered in relation to the consolidated financial statements of
the Borrower and its Subsidiaries.

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

(d) Monthly Financials; Consolidated Cash Balance. As soon as available and in
any event within 30 days after the end of each calendar month (commencing with
the calendar month of February, 2016 (other than as set forth in clause
(iii) below)), the Borrower shall provide, or shall cause to be provided, to the
Administrative Agent, (i) a consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such calendar month, and the related consolidated
and consolidating statements of income or operations, shareholders’ equity and
cash flow for such calendar month and for the portion of the Borrower’s fiscal
year then ended (excluding (i) consolidating cash flow and (ii) in the case of
Foreign Subsidiaries, consolidating statements of income or operations,
shareholders’ equity and cash flow), setting forth in each case in comparative
form the figures for the corresponding month of the previous fiscal year, all in
reasonable detail acceptable to the Administrative Agent (and otherwise
consistent with the scope and detail of the monthly financial statements
historically prepared by the Borrower), such consolidated financial statements
to be certified by the chief executive officer, chief financial officer,
treasurer or controller of the Borrower as fairly presenting the financial
condition, and shareholders’ equity of the Borrower and its Subsidiaries,
subject to customary quarterly close-out and

 

-52-

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

year-end audit adjustments and the absence of footnotes, and such consolidating
statements to be certified by the chief executive officer, chief financial
officer, treasurer or controller of the Borrower to the effect that such
statements are fairly stated in all material respects when considered in
relation to the consolidated financial statements of the Borrower and its
Subsidiaries; and (ii) commencing with the calendar month of August, 2016, a
Compliance Certificate with a calculation of the Consolidated Cash Balance as of
the end of such calendar month.

(e) Annual Budget. As soon as available and in any event within 30 days after
the end of each fiscal year of the Borrower, the Borrower shall provide to the
Administrative Agent an annual budget to include an income statement, balance
sheet, cash flow statement and capital spending forecast for the immediately
following fiscal year and in reasonable detail.

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

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

(h) Litigation. The Credit Parties shall provide to the Administrative Agent
promptly after the commencement thereof, notice of all actions, suits, and
proceedings before any Governmental Authority, affecting the Borrower or any of
its Subsidiaries that could reasonably be expected to result in a Material
Adverse Change.

(i) Environmental Notices. Promptly upon, and in any event no later than 15 days
after, the receipt thereof, or the acquisition of knowledge thereof, by any
Credit Party, the Credit Parties shall provide the Administrative Agent with a
copy of any form of request, claim, complaint, order, notice, summons or
citation received from any Governmental Authority or any other Person,
(i) concerning violations or alleged violations of Environmental Laws, which
seeks to impose liability therefore in excess of $2,000,000, (ii) concerning any
action or omission on the part of any of the Credit Parties or any of their
former Subsidiaries in connection with Hazardous Waste or Hazardous Substances
which could reasonably result in the imposition of liability in excess of
$2,000,000 or requiring that action be taken to respond to or clean up a Release
of Hazardous Substances or Hazardous Waste into the environment and such action
or clean-up could reasonably be expected to exceed $2,000,000, including without
limitation any information request related to, or notice of, potential
responsibility under CERCLA, or (iii) concerning the filing of a Lien arising
under Environmental Law upon, against or in connection with the Borrower, any
Subsidiary, or any of their respective former Subsidiaries, or any of their
leased or owned Property, wherever located.

(j) Material Changes. The Credit Parties shall provide to the Administrative
Agent prompt written notice of any condition or event of which the Borrower or
any of its Subsidiaries has knowledge, which condition or event has resulted or
may reasonably be expected to result in (i) a Material Adverse Change or (ii) a
breach of or noncompliance with any material term, condition, or covenant of any
material contract to which the Borrower or any of its Subsidiaries is a party or
by which their Properties may be bound which breach or noncompliance could
reasonably be expected to result in a Material Adverse Change.

 

-53-

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

(k) Termination Events. As soon as possible and in any event (i) within 30 days
after the Borrower or any member of the Controlled Group knows or has reason to
know that any Termination Event described in clause (a) of the definition of
Termination Event with respect to any Plan has occurred, and (ii) within 10 days
after the Borrower or any member of the Controlled Group knows or has reason to
know that any other Termination Event with respect to any Plan has occurred, the
Credit Parties shall provide to the Administrative Agent a statement of an
authorized officer of the Borrower describing such Termination Event and the
action, if any, which the Borrower or any Affiliate of the Borrower proposes to
take with respect thereto;

(l) Termination of Plans. Promptly and in any event within seven (7) Business
Days after receipt thereof by the Borrower or any member of the Controlled Group
from the PBGC, the Credit Parties shall provide to the Administrative Agent
copies of each notice received by the Borrower or any such member of the
Controlled Group of the PBGC’s intention to terminate any Plan or to have a
trustee appointed to administer any Plan;

(m) Other ERISA Notices. Promptly and in any event within seven (7) Business
Days after receipt thereof by the Borrower or any member of the Controlled Group
from a Multiemployer Plan sponsor, the Credit Parties shall provide to the
Administrative Agent a copy of each notice received by the Borrower or any
member of the Controlled Group concerning the imposition or amount of withdrawal
liability imposed on the Borrower or any member of the Controlled Group pursuant
to Section 4202 of ERISA;

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

(o) Disputes; etc. The Credit Parties shall provide to the Administrative Agent
prompt written notice of any claims, legal or arbitration proceedings,
proceedings before any Governmental Authority, or disputes, or to the knowledge
of any Credit Party, any such actions threatened, or affecting the Borrower or
any Subsidiary, which, if adversely determined, could reasonably be expected to
cause a Material Adverse Change, or any material labor controversy of which the
Borrower or any of its Subsidiaries has knowledge resulting in or reasonably
considered to be likely to result in a strike against the Borrower or any
Subsidiary;

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

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

 

-54-

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

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

Section 5.3 Insurance.

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

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

(c) If at any time the area in which any real Property constituting Collateral
(to the extent any “buildings” or “mobile home” (as defined in Regulation H of
the Federal Reserve Board) is situated on real Property) is located is
designated a “flood hazard area” in any Flood Insurance Rate Map published by
the Federal Emergency Management Agency (or any successor agency), the Borrower
shall, and shall cause each other Credit Party to, obtain flood insurance in
such total amount as required by Regulation H of the Federal Reserve Board, as
from time to time in effect and all official rulings and interpretations
thereunder or thereof, and otherwise comply with the National Flood Insurance
Program as set forth in the Flood Disaster Protection Act of 1973, as it may be
amended from time to time.

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

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

 

-55-

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

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

Section 5.7 Records; Inspection. Each Credit Party shall, and shall cause each
of its Subsidiaries to maintain proper, complete and consistent, in all material
respects, books of record with respect to such Person’s operations, affairs, and
financial condition. From time to time upon reasonable prior notice, each Credit
Party shall permit any Lender and shall cause each of its Subsidiaries to permit
any Lender, at such reasonable times and intervals and to a reasonable extent
and under the reasonable guidance of officers of or employees delegated by
officers of such Credit Party or such Subsidiary, to, subject to any applicable
confidentiality considerations, examine and copy the books and records of such
Credit Party or such Subsidiary, to visit and inspect the Property of such
Credit Party or such Subsidiary, and to discuss the business operations and
Property of such Credit Party or such Subsidiary with the officers and directors
thereof.

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

 

-56-

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

Section 5.9 Security.

(a) Each Credit Party agrees that at all times before the termination of this
Agreement, payment in full of the Obligations, the termination and return of all
Letters of Credit (other than Letters of Credit as to which arrangements
satisfactory to the Issuing Lender in its sole discretion have been made) and
termination in full of the Commitments, the Administrative Agent shall have an
Acceptable Security Interest in the Collateral to secure the performance and
payment of the Secured Obligations. Each Credit Party shall, and shall cause
each of its Subsidiaries to, promptly grant to the Administrative Agent a Lien
in any Property of such Credit Party or such Subsidiary now owned or hereafter
acquired (other than leased real property unless otherwise requested by the
Administrative Agent) and to take such actions as may be required under the
Security Documents to ensure that the Administrative Agent has an Acceptable
Security Interest in such Collateral.

(b) Notwithstanding the generality of the foregoing Section 5.9(a), (i) the
Credit Parties shall deliver to the Administrative Agent within 14 days after
the Amendment No. 7 Effective Date fully executed control agreement(s) covering
each of the deposit accounts of the Credit Parties held with Wells Fargo Bank,
National Association as required under Section 6.20 of the Credit Agreement,
(ii) the Credit Parties shall deliver to the Administrative Agent within 30 days
after the Amendment No. 7 Effective Date (or such later date as may be agreed by
the Administrative Agent in its sole discretion) stock certificates representing
sixty-five percent (65%) of the outstanding Voting Securities issued by such
Credit Parties’ Foreign Subsidiaries, together with duly executed undated blank
stock powers, or other equivalent instruments of transfer reasonably acceptable
to the Administrative Agent and (iii) with respect to each real property set
forth on Schedule 5.9(b), the Credit Parties shall provide the following to the
Administrative Agent within 120 days after the Amendment No. 7 Effective Date
(or such later date as may be agreed by the Administrative Agent in its sole
discretion):

(i) fully executed Mortgages covering such real property;

(ii) if applicable, flood determination certificates and, if applicable, flood
insurance as required under Section 5.3(c) above;

(iii) satisfactory Lien searches from the counties in which such real property
is located and, if necessary, releases for Liens reflected thereon that are not
Permitted Liens;

(iv) a favorable opinion of counsel for the Credit Parties in form and substance
reasonably satisfactory to the Administrative Agent related to such Mortgage;
and

(v) with respect to each Mortgage, a mortgagee policy of title insurance or
marked unconditional binder of title insurance, fully paid for by the Borrower,
insuring such Mortgage as a valid first priority Lien on the Property described
therein in favor of Administrative Agent, free of all Liens other than the
Permitted Liens, and otherwise reasonably acceptable to the Administrative
Agent, which policy of title insurance shall be issued by any other nationally
recognized title insurance company, reflecting a coverage amount agreed upon by
the Administrative Agent and such title company not to exceed the fair market
value of such Property; it being understood that (A) such mortgagee policy title
insurance shall have been issued at the Borrower’s expense and (B) shall contain
such customary endorsements as may be reasonably required by the Administrative
Agent.

Section 5.10 Further Assurances; Cure of Title Defects. Each Credit Party shall,
and shall cause each Subsidiary to, cure promptly any defects in the execution
and delivery of the Credit Documents. The Credit Parties hereby authorize the
Administrative Agent to file any financing statements to the extent permitted by
applicable Legal Requirements in order to perfect or maintain the

 

-57-

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

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

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

Section 5.12 Certificates of Title. The Borrower shall, and shall cause each
Subsidiary to, deliver, within 120 days (or such longer period as the
Administrative Agent may determine in its sole discretion) after Amendment No. 7
Effective Date, the original certificate of title for the equipment set forth on
Schedule 5.12 hereto naming a Credit Party as the owner and naming the
Administrative Agent as the holder of the first lien thereon.

Section 5.13 Appraisal Reports; Field Exams.

(a) Appraisal Reports. Within 60 days after request thereof by the
Administrative Agent, the Borrower shall deliver or caused to be delivered to
the Administrative Agent, (i) a written appraisal conducted at the Borrower’s
sole cost and expense by an industry recognized third party appraiser reasonably
acceptable to the Administrative Agent stating, among other things, a detailed
OLV for machinery, parts, equipment and other fixed assets, of the Borrower and
its Domestic Subsidiaries, together with a specified procedures letter from such
appraiser satisfactory to the Administrative Agent in its sole but reasonable
discretion; provided that, if no Event of Default has occurred and is continuing
(A) the Administrative Agent shall perform no more than three appraisals during
the period from the Amendment No. 7 Effective Date until the Maturity Date and
(B) only two such appraisals shall be at the Borrower’s sole cost and expense;
and (ii) a written appraisal of the Borrower’s and its Domestic Subsidiaries’
real property conducted at the Borrower’s sole cost and expense by a third party
independent appraiser reasonably acceptable to the Administrative Agent and
otherwise in compliance with the requirements of the Federal Institutions
Reform, Recovery and Enforcement Act of 1989, or any successor thereto, stating
the fair market value of such real property; provided that, if no Event of
Default has occurred and is continuing (A) the Administrative Agent shall
perform no more than three appraisals during the period from the Amendment No. 7
Effective Date until the Maturity Date and (B) only two such appraisals shall be
at the Borrower’s sole cost and expense;

(b) Field Exams. The Borrower shall, and shall cause each of its Subsidiaries
to, permit the Administrative Agent to, at any reasonable time and upon
reasonable prior notice, and from time to time upon request by the
Administrative Agent with reasonable notice, perform a field exam of the
Properties of the Borrower and its Domestic Subsidiaries, including an
inspection and review of the books and records of the Credit Parties; provided
that, if no Event of Default has occurred and is continuing (i) the
Administrative Agent shall perform no more than three field exams during the
period from the Amendment No. 7 Effective Date until the Maturity Date and
(ii) only two such field exams shall be at the Borrower’s sole cost and expense.

 

-58-

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

(c) Default; Beneficiary. If an Event of Default has occurred and is continuing,
the Administrative Agent may perform, or cause to be performed, any additional
appraisal reports and field exams, and all such reports and field exams shall be
performed at the Borrower’s sole cost and expense. Notwithstanding anything
herein to the contrary, (i) no Credit Party nor any Affiliate thereof nor any of
the foregoing’s respective equity holders are intended to, and no such Person
shall be, third party beneficiaries of any appraisal reports, field exams or
collateral audit conducted by any Secured Party or any other Person at the
direction of any Secured Party, (ii) no Secured Party is obligated to share any
such material or information with any Person other than the directly intended
and express beneficiary thereof and (iii) as a condition to any disclosure of
such material or information which a Secured Party may, but is not obligated to,
provide, the applicable Secured Party may require that the Borrower execute and
deliver a confidential, non-reliance, or other disclosure agreement in form and
substance acceptable to the disclosing Secured Party (which agreement would not
go into effect until the delivery of the applicable audit, appraisal report or
field exam).

ARTICLE 6

NEGATIVE COVENANTS

So long as any Obligation shall remain unpaid, any Lender shall have any
Revolving Commitment hereunder, or there shall exist any Letter of Credit
Exposure, the Borrower agrees to comply with the following covenants.

Section 6.1 Debt. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, create, assume, incur, suffer to exist, or in any manner become
liable, directly, indirectly, or contingently in respect of, any Debt other than
the following (collectively, the “Permitted Debt”):

(a) the Obligations;

(b) intercompany Debt incurred in the ordinary course of business owed by any
Credit Party to any other Credit Party; provided that, if applicable, such Debt
as an investment is also permitted in Section 6.3;

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

(d) (i) purchase money indebtedness and Capital Leases in effect on the
Effective Date and set forth in Schedule 6.1 and (ii) such other purchase money
indebtedness or Capital Leases incurred after the Effective Date; provided that,
the aggregate outstanding principal amount of such purchase money indebtedness
and Capital Leases incurred after the Effective Date shall not exceed
$5,000,000.00;

(e) Debt in the form of Qualified Equity Interests;

(f) Debt in respect of Hedging Arrangements;

(g) letters of credit issued by Wells Fargo Bank, National Association;

(h) Debt incurred pursuant to one or more loan agreements between the Borrower
and CARBO Ceramics (Eurasia) LLC, a company duly organized and existing under
the laws of Russia;

 

-59-

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

provided that (i) such Debt is unsecured, (ii) the aggregate principal amount of
such Debt outstanding at any time shall not to exceed $6,000,000.00, and
(iii) such Debt is subordinated to the Debt under this Agreement and the other
Credit Documents on terms reasonably acceptable to the Administrative Agent; and

(i) without duplication, other unsecured subordinated Debt up to $25,000,000.00
in the aggregate principal amount outstanding at any time with the written
consent of the Majority Lenders, such consent not to be unreasonably withheld or
delayed.

Section 6.2 Liens. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, create, assume, incur, or suffer to exist any Lien on the
Property of any Credit Party or any Subsidiary, whether now owned or hereafter
acquired, or assign any right to receive any income, other than the following
(collectively, the “Permitted Liens”):

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

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

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

(d) Liens for taxes, assessment, or other governmental charges which are not yet
due and payable or which are being actively contested in good faith by
appropriate proceedings;

(e) Liens securing purchase money debt or Capital Lease obligations permitted
under Section 6.1(d); provided that each such Lien encumbers only the Property
purchased in connection with the creation of any such purchase money debt or the
subject of any such Capital Lease and the amount secured thereby is not
increased;

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

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

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

(i) Liens on cash or securities pledged to secure performance of tenders, surety
and appeal bonds, government contracts, performance and return of money bonds,
bids, trade contracts, leases, statutory obligations, regulatory obligations and
other obligations of a like nature incurred in the ordinary course of business;

 

-60-

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

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

(k) Liens to secure the Debt permitted under Section 6.1(e).

Section 6.3 Investments. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, make or hold any direct or indirect investment in any Person,
including capital contributions to the Person, investments in or the acquisition
of the debt or equity securities of the Person, or any loans, guaranties, trade
credit, or other extensions of credit to any Person, other than the following
(collectively, the “Permitted Investments”):

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

(b) Liquid Investments;

(c) loans, advances, or capital contributions to, or investments in, or
purchases or commitments to purchase any stock or other securities or evidences
of indebtedness of or interests in any Domestic Subsidiary that is not a Credit
Party, including any travel advances or travel loans to officers and employees;
provided that the aggregate amount of such loans, advances, capital
contributions, investments, purchases and commitments (other than appreciation)
permitted under this clause (c) plus the aggregate amount of Acquisitions
permitted under Section 6.4 shall not exceed the lesser of (i) $20,000,000.00
and (ii) 5% of the Borrower’s Tangible Net Worth as set forth in the financial
statements most recently delivered under Section 5.2;

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

(e) investments in the form of Acquisitions permitted by Section 6.4; provided
that, if such Acquisition is of an equity interest or other securities in a
Person (other than a Credit Party), such investments shall also be permitted
under clause(c) above;

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

(g) the Jenkins Bonds;

(h) the Wilkinson Bonds; and

(i) loans, advances, or capital contributions to, or investments in, or
purchases or commitments to purchase any stock or other securities or evidences
of indebtedness of or interests in any Foreign Subsidiary; provided that the
aggregate amount of such loans, advances, capital contributions, investments,
purchases and commitments (other than appreciation) permitted under this clause
(i) shall not exceed (i) prior to and including August 31, 2016, $2,000,000 and
(ii) thereafter, $3,000,000 plus any unused amounts from clause (i).

 

-61-

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

Section 6.4 Acquisitions. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, make an Acquisition in a transaction or related series of
transactions, unless agreed to in writing by the Majority Lenders.

Section 6.5 Agreements Restricting Liens. No Credit Party shall, nor shall it
permit any of its Subsidiaries to, create, incur, assume or permit to exist any
contract, agreement or understanding (other than this Agreement, the Credit
Documents and agreements governing Debt permitted by Sections 6.1(d) and (e) to
the extent such restrictions govern only the asset financed pursuant to such
Debt) which in any way prohibits or restricts the granting, conveying, creation
or imposition of any Lien on any of its Property, whether now owned or hereafter
acquired, to secure the Obligations or restricts any Subsidiary from paying
Restricted Payments to the Borrower, or which requires the consent of or notice
to other Persons in connection therewith.

Section 6.6 Use of Proceeds; Use of Letters of Credit. No Credit Party shall,
nor shall it permit any of its Subsidiaries to: (a) use the proceeds of the
Revolving Advances for any purposes other than (i) to refinance the advances and
other obligations outstanding under the Existing Debt, (ii) working capital
purposes of any Credit Party, and (iii) other general corporate purposes of any
Credit Party, including the payment of fees and expenses related to the entering
into of this Agreement and the other Credit Documents; or (b) use the proceeds
of the Swing Line Advances or the Letters of Credit for any purposes other than
(i) working capital purposes of any Credit Party and (ii) other general
corporate purposes of any Credit Party. No Credit Party shall, nor shall it
permit any of its Subsidiaries to, directly or indirectly, use any part of the
proceeds of Advances or Letters of Credit for any purpose which violates, or is
inconsistent with, Regulations T, U, or X. No part of the proceeds of the
Advances will be used, directly or indirectly, in furtherance of an offer,
payment, promise to pay, or authorization of the payment or giving of money, or
anything else of value, to any Person in violation of the FCPA or any other
applicable anticorruption law. The Borrower will not, directly or indirectly,
use the proceeds of the Revolving Advances, or lend, contribute or otherwise
make available such proceeds to any subsidiary, or, to its knowledge, to any
joint venture partner or other Person, (i) to fund any activities or business of
or with any Person, or in any country or territory, that, at the time of such
funding, is, or whose government is, the subject of Sanctions, or (ii) in any
other manner that would result in a violation of Sanctions by the Borrower, any
of its Subsidiaries, the Administrative Agent, the Issuing Lender, Swing Line
Lender, any Lender or other party to the Credit Agreement.

Section 6.7 Corporate Actions.

(a) No Credit Party shall, nor shall it permit any of its Subsidiaries to, merge
or consolidate with or into any other Person, except that the Borrower may merge
with any of its wholly-owned Subsidiaries and any Credit Party may merge or be
consolidated with or into any other Credit Party; provided that immediately
after giving effect to any such proposed transaction no Default would exist and,
in the case of any such merger to which the Borrower or the Borrower is a party,
the Borrower or the Borrower is the surviving entity.

(b) No Credit Party shall, nor shall it permit any of its Subsidiaries to,
change its name, change its state of incorporation, formation or organization,
change its organizational identification number or reorganize in another
jurisdiction, create or suffer to exist any Subsidiary not existing on the date
of this Agreement, sell or otherwise dispose of any of its ownership interest in
any of its Subsidiaries, or in any manner rearrange its business structure as it
exists on the date of this Agreement, provided that (i) the Borrower may create
or acquire new Subsidiaries if such new Subsidiaries comply with Section 5.6 and
such transactions otherwise comply with the terms of this Agreement, and (ii) a
Credit Party may change its name, change its state of incorporation, formation
or organization, and change its organizational number provided that such Credit
Party has given the Administrative Agent at least ten (10) days’ prior notice of
such change.

 

-62-

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

(c) The Borrower shall not, nor shall it permit any of its Subsidiaries to,
modify or change its fiscal year or its method of accounting (other than as may
be required to conform to GAAP).

Section 6.8 Sale of Assets. No Credit Party shall, nor shall it permit any of
its Subsidiaries to, sell, convey, or otherwise transfer any of its assets
except that the Borrower and its Subsidiaries may (each, a “Permitted
Disposition”) (a) sell inventory in the ordinary course of business; (b) sell,
convey, or otherwise transfer of equipment that is (i) obsolete, worn out,
depleted or uneconomic and disposed of in the ordinary course of business, or
(ii) contemporaneously replaced by equipment of at least comparable value and
use; provided that no Event of Default shall exist or shall result from such
sale, conveyance, or transfer; (c) consummate the Specified Dispositions;
(d) consummate the Schlumberger Receivables Transaction and (e) in addition to
as provided in the foregoing clauses (c) and (d), sell, convey or otherwise
transfer assets outside the ordinary course of business; provided that, the
aggregate net book value (or if greater, the Fair Market Value) of all assets
sold, conveyed or transferred in reliance on this clause (e) outside the
ordinary course of business shall not exceed $2,500,000.00.

Section 6.9 Restricted Payments. No Credit Party shall, nor shall it permit any
of its Subsidiaries to make any Restricted Payments other than a Restricted
Payment to a Credit Party or a Restricted Payment from a Foreign Subsidiary to
another Foreign Subsidiary.

Section 6.10 Affiliate Transactions. No Credit Party shall, nor shall it permit
any of its Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of transactions (including, but not limited to,
the purchase, sale, lease or exchange of Property, the making of any investment,
the giving of any guaranty, the assumption of any obligation or the rendering of
any service) with any of their Affiliates which are not Credit Parties unless
such transaction or series of transactions is on terms no less favorable to the
Borrower or any Subsidiary, as applicable, than those that could be obtained in
a comparable arm’s length transaction with a Person that is not an affiliate.

Section 6.11 Line of Business. No Credit Party shall, and shall not permit any
of its Subsidiaries to, change the character of the Borrower’s and its
Subsidiaries collective business as conducted on the Effective Date, or engage
in any type of business not reasonably related to the Borrower’s and its
Subsidiaries collective business as of the Effective Date.

Section 6.12 Hazardous Materials. No Credit Party shall, nor shall it permit any
of its Subsidiaries to, (a) create, handle, transport, use, or dispose of any
Hazardous Substance or Hazardous Waste, except in the ordinary course of its
business and except in compliance with Environmental Law other than to the
extent that such non-compliance could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change or in any
liability on the Lenders or the Administrative Agent, and (b) Release any
Hazardous Substance or Hazardous Waste into the environment or permit any Credit
Party’s or any Subsidiary’s Property to be subjected to any Release of Hazardous
Substance or Hazardous Waste, except in compliance with Environmental Law other
than to the extent that such non-compliance could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Change or in
any liability on the Lenders or the Administrative Agent.

Section 6.13 Compliance with ERISA. Except for matters that individually or in
the aggregate could not reasonably be expected to cause a Material Adverse
Change, no Credit Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly: (a) knowingly engage in any transaction in connection
with which the Borrower or any Subsidiary could be subjected to either a civil
penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax
imposed by Chapter 43 of Subtitle D of

 

-63-

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

the Code; (b) terminate, or permit any member of the Controlled Group to
terminate, any Plan in a manner, or take any other action with respect to any
Plan, which could result in any liability to the Borrower, any Subsidiary or any
member of the Controlled Group to the PBGC; (c) fail to make, or permit any
member of the Controlled Group to fail to make, full payment when due of all
amounts which, under the provisions of any Plan, agreement relating thereto or
applicable law, the Borrower, a Subsidiary or member of the Controlled Group is
required to pay as contributions thereto; (d) permit to exist, or allow any
Subsidiary or any member of the Controlled Group to permit to exist, any
accumulated funding deficiency (or unpaid minimum required contribution for plan
years after December 31, 2007) within the meaning of Section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan;
(e) permit, or allow any member of the Controlled Group to permit, the actuarial
present value of the benefit liabilities (as “actuarial present value of the
benefit liabilities” shall have the meaning specified in section 4041 of ERISA)
under any Plan that is regulated under Title IV of ERISA to exceed the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities;
(f) contribute to or assume an obligation to contribute to, or permit any member
of the Controlled Group to contribute to or assume an obligation to contribute
to, any Multiemployer Plan; (g) acquire, or permit any member of the Controlled
Group to acquire, an interest in any Person that causes such Person to become a
member of the Controlled Group if such Person sponsors, maintains or contributes
to, or at any time in the six-year period preceding such acquisition has
sponsored, maintained, or contributed to, (1) any Multiemployer Plan, or (2) any
other Plan that is subject to Title IV of ERISA under which the actuarial
present value of the benefit liabilities under such Plan exceeds the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities;
(h) incur, or permit any member of the Controlled Group to incur, a liability to
or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA; (i) contribute to or assume an obligation to contribute to any employee
welfare benefit plan, as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to former employees of
Borrower or any Subsidiary, that may not be terminated by such entities in their
sole discretion at any time without any liability; or (j) amend or permit any
member of the Controlled Group to amend, a Plan resulting in a material increase
in current liability such that the Borrower, any Subsidiary or any member of the
Controlled Group is required to provide security to such Plan under section
401(a)(29) of the Code.

Section 6.14 Limitation on Hedging. No Credit Party shall, nor shall it permit
any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position
in any commodities market or futures market or enter into any Hedging
Arrangement for speculative purposes; or (b) be party to or otherwise enter into
any Hedging Arrangement which is entered into for reasons other than as a part
of its normal business operations as a risk management strategy and/or hedge
against changes resulting from market conditions related to the Borrower’s or
its Subsidiaries’ operations.

Section 6.15 [Reserved].

Section 6.16 [Reserved].

Section 6.17 [Reserved].

Section 6.18 [Reserved].

Section 6.19 Capital Expenditures. No Credit Party shall, nor shall it permit
any of its Subsidiaries to, cause the Capital Expenditures expended by the
Credit Parties and their respective Subsidiaries in any fiscal year, to exceed
$65,000,000 in the aggregate in such fiscal year; provided that, in any event,
no Credit Party shall, nor shall it permit any of its Subsidiaries to, incur
Capital Expenditures unless, before and after giving effect thereto, the
Borrower is in pro forma compliance with Section 6.21 as of the most recently
ended calendar month.

 

-64-

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

Section 6.20 Deposit Accounts. Commencing with March 11, 2016 (or such later
date agreed to by the Administrative Agent in its sole discretion), the Borrower
shall, and shall cause each of its Subsidiaries to maintain all deposit accounts
that are in the United States with the Administrative Agent and deposit all
proceeds of Receivables of the Borrower and its Domestic Subsidiaries into one
or more such deposit accounts and, if requested by the Administrative Agent,
execute and deliver control agreements and such Security Documents in form and
substance satisfactory to the Administrative Agent to grant and evidence a first
lien, priority security interest in such accounts and funds held therein in
favor of the Administrative Agent; provided that (a) no such control agreements
shall be required for deposit accounts that are designated solely as accounts
for, and are used solely for payroll funding, employee compensation or employee
benefits, and (b) the foregoing requirements in this Section 6.20 shall not
apply to (i) deposit accounts designated solely as accounts for, and are used
solely for, petty cash in an amount not to exceed $150,000 in the aggregate at
any time and (ii) deposit accounts maintained with financial institutions other
than the Administrative Agent in an amount not to exceed $1,000,000 in the
aggregate at any time.

Section 6.21 Consolidated Cash Balance. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, cause the Consolidated Cash Balance as of the
last day of each calendar month, commencing with the calendar month ending
August 31, 2016 to be less than (a) $40,000,000 for the calendar months ending
August 31, 2016 through and including March 31, 2017, (b) $30,000,000 for the
calendar months ending April 30, 2017 through and including December 31, 2017
and (c) $25,000,000 for each calendar month thereafter.

Section 6.22 Landlord Agreements. No Credit Party shall, nor shall it permit any
of its Subsidiaries, that is, or is required to be, a Credit Party to

(a) hold, store or otherwise maintain any Equipment or Inventory that is
intended to constitute Collateral pursuant to the Security Documents at premises
within the US which are not owned by a Credit Party unless (i) such Equipment is
located at the job site under which such Equipment is in use, (ii) such
Equipment or Inventory is located at Third Party Locations and which such Credit
Party has delivered, by the 45th day after the Amendment No. 7 Effective Date
(or such later date as may be agreed to in writing by the Administrative Agent
in its sole discretion), a Collateral Access Agreement to the Administrative
Agent, (iii) such Equipment is office equipment located at such Credit Party’s
regional corporate headquarters or sales offices, (iv) Inventory located on
premises owned or operated by the customer that is to purchase such Inventory,
(v) in the case of any Equipment that has been damaged, such Equipment is
located at the place of repair of such Equipment, or (vi) the aggregate value of
all other Equipment and Inventory located at Third Party Locations and which are
not covered by a Collateral Access Agreement is less than $250,000; or

(b) after the Amendment No. 7 Effective Date, enter into any new verbal or
written leases for premises located in the United States which is not subject to
a Collateral Access Agreement.

ARTICLE 7

DEFAULT AND REMEDIES

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

(a) Payment Failure. Any Credit Party (i) fails to pay any principal or any
amount owed under Section 2.2(c)(i) when due under this Agreement or (ii) fails
to pay, within three Business Days of when due, any other amount due under this
Agreement or any other Credit Document, including payments of interest, fees,
reimbursements, and indemnifications;

 

-65-

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

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

(c) Breach of Covenant. (i) Any breach by any Credit Party of any of the
covenants in Section 5.2(d), Section 5.2(f), Section 5.2(g), Section 5.3(a),
Section 5.6 or Article 6 of this Agreement or the corresponding covenants in any
Guaranty; provided, however, if the Borrower is in breach of Section 6.21 solely
as a result of Borrower being subject to a “blackout period” or other legal or
regulatory matter temporarily restricting the sale of securities by the Borrower
under applicable securities laws associated with one or more capital raise
transactions undertaken by the Borrower, the Borrower shall have a period of
thirty days after the earlier of (A) the date on which the Borrower has actual
knowledge of such breach and (B) the date written notice of such breach shall
have been given to the Borrower by the Administrative Agent or any Lender (such
grace period to be applicable only in the event such Default can be remedied by
corrective action of a Credit Party or any of its Subsidiaries) to remedy such
breach prior to such breach becoming an Event of Default; or (ii) any breach by
any Credit Party of any other covenant contained in this Agreement or any other
Credit Document and such breach shall remain unremedied for a period of thirty
days after the earlier of (A) the date on which any Credit Party has actual
knowledge of such breach and (B) the date written notice of such breach shall
have been given to the Borrower by the Administrative Agent or any Lender (such
grace period to be applicable only in the event such Default can be remedied by
corrective action of a Credit Party or any of its Subsidiaries);

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

(e) Cross-Default. (i) The Borrower or any Guarantor shall fail to pay any
principal of or premium or interest on its Debt which is outstanding in a
principal amount of at least $2,000,000 individually or when aggregated with all
such Debt of the Borrower and the Subsidiaries so in default (but excluding Debt
evidenced by the Notes) when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; (ii) any other event shall
occur or condition shall exist under any agreement or instrument relating to
Debt which is outstanding in a principal amount of at least $2,000,000
individually or when aggregated with all such Debt of the Borrower and the
Subsidiaries so in default (other than Debt evidenced by the Notes), and shall
continue after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt prior to the stated
maturity thereof; or (iii) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment); provided that, for purposes of this paragraph (f), the “principal
amount” of the obligations in respect of Hedging Arrangements at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
would be required to be paid if such Hedging Arrangements were terminated at
such time;

 

-66-

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

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

(g) Adverse Judgment. The Borrower or any of its Subsidiaries suffers final
judgments against any of them since the date of this Agreement in an aggregate
amount, less any insurance proceeds covering such judgments which are received
or as to which the insurance carriers admit liability, greater than $2,000,000
and either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgments or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgments, by reason of a pending
appeal or otherwise, shall not be in effect;

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

(i) Plan Withdrawals. The Borrower or any member of the Controlled Group as
employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and such withdrawing employer shall have
incurred a withdrawal liability in an annual amount exceeding $2,000,000; or

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

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

Section 7.2 Optional Acceleration of Maturity. If any Event of Default (other
than an Event of Default pursuant to Section 7.1(f)) shall have occurred and be
continuing, then, and in any such event,

(a) the Administrative Agent (i) shall at the request, or may with the consent,
of the Majority Lenders, by notice to the Borrower, declare that the obligation
of each Lender to make Advances and the obligation of the Issuing Lender to
issue Letters of Credit shall be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Majority Lenders, by notice to the Borrower, declare the Notes, all interest
thereon, and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Notes, all such interest, and all such amounts shall
become and be forthwith due and payable in full, without presentment, demand,
protest or further notice of any kind (including, without limitation, any notice
of intent to accelerate or notice of acceleration), all of which are hereby
expressly waived by each of the Credit Parties,

 

-67-

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

(b) the Borrower shall, on demand of the Administrative Agent at the request or
with the consent of the Majority Lenders, deposit with the Administrative Agent
into the Cash Collateral Account an amount of cash equal to 105% of the
outstanding Letter of Credit Exposure as security for the Secured Obligations to
the extent the Letter of Credit Obligations are not otherwise paid or cash
collateralized at such time, and

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

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

(a) the obligation of each Lender to make Advances and the obligation of the
Issuing Lender to issue Letters of Credit shall immediately and automatically be
terminated and the Notes, all interest on the Notes, and all other amounts
payable under this Agreement shall immediately and automatically become and be
due and payable in full, without presentment, demand, protest or any notice of
any kind (including, without limitation, any notice of intent to accelerate or
notice of acceleration), all of which are hereby expressly waived by each of the
Credit Parties,

(b) the Borrower shall, on demand of the Administrative Agent at the request or
with the consent of the Majority Lenders, deposit with the Administrative Agent
into the Cash Collateral Account an amount of cash equal to 105% of the
outstanding Letter of Credit Exposure as security for the Secured Obligations to
the extent the Letter of Credit Obligations are not otherwise paid or cash
collateralized at such time, and

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

Section 7.4 Set-off. Upon the occurrence and during the continuance of any Event
of Default, the Administrative Agent and each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the
Administrative Agent or such Lender to or for the credit or the account of any
Credit Party against any and all of the Secured Obligations of the Borrower now
or hereafter existing under this Agreement, the Notes held by the Administrative
Agent or such Lender, and the other Credit Documents, irrespective of whether or
not the Administrative Agent or such Lender shall have made any demand under
this Agreement, such Note, or such other Credit Documents, and although such
obligations may be unmatured. Each Lender agrees to promptly notify the Borrower
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Administrative Agent and each Lender under this
Section 7.4 are in addition to any other rights and remedies (including, without
limitation, other rights of set-off) which the Administrative Agent or such
Lender may have.

Section 7.5 Remedies Cumulative, No Waiver. No right, power, or remedy conferred
to any Lender in this Agreement or the Credit Documents, or now or hereafter
existing at law, in equity, by statute, or otherwise shall be exclusive, and
each such right, power, or remedy shall to the full extent

 

-68-

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

permitted by law be cumulative and in addition to every other such right, power
or remedy. No course of dealing and no delay in exercising any right, power, or
remedy conferred to any Lender in this Agreement and the Credit Documents or now
or hereafter existing at law, in equity, by statute, or otherwise shall operate
as a waiver of or otherwise prejudice any such right, power, or remedy. Any
Lender may cure any Event of Default without waiving the Event of Default. No
notice to or demand upon the Borrower or any other Credit Party shall entitle
the Borrower or any other Credit Party to similar notices or demands in the
future.

Section 7.6 Application of Payments. Prior to an Event of Default, all payments
made hereunder shall be applied by the Administrative Agent as directed by the
Borrower, but subject to the terms of this Agreement, including the application
of prepayments according to Section 2.5 and Section 2.12. During the existence
of an Event of Default, all payments and collections received by the
Administrative Agent shall be applied to the Secured Obligations in accordance
with Section 2.12 and otherwise in such manner as determined by the
Administrative Agent or as directed by the Majority Lenders. In the event that
the Obligations have been accelerated pursuant to Section 7.2 or Section 7.3 or
the Administrative Agent or any Lender has exercised any remedy set forth in
this Agreement or any other Credit Document, all payments received on account of
the Secured Obligations and all net proceeds from the enforcement of the Secured
Obligations shall be applied by the Administrative Agent as follows:

First, to payment of that portion of the Secured Obligations constituting fees,
indemnities, expenses and other amounts, including attorney fees, payable to the
Administrative Agent in its capacity as such, the Issuing Lender in its capacity
as such and the Swing Line Lender in its capacity as such, ratably among the
Administrative Agent, the Issuing Lender and Swing Line Lender in proportion to
the respective amounts described in this clause First payable to them;

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

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

Fourth, to payment of that portion of the Secured Obligations constituting
unpaid principal of the Advances, Letter of Credit Obligations and payment
obligations constituting Secured Obligations (other than Obligations), ratably
among the Secured Parties in proportion to the respective amounts described in
this clause Fourth payable to them;

Fifth, to the Administrative Agent for the account of the Issuing Lender, to
cash collateralize any Letters of Credit then outstanding; and

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

Notwithstanding the foregoing, (a) payments and collections received by the
Administrative Agent from any Credit Party that is not a Qualified ECP Guarantor
(and any proceeds received in respect of such Credit Party’s Collateral (as
defined in the Security Agreement)) shall not be applied to Excluded Swap
Obligations with respect to any Credit Party, provided, however, that the
Administrative Agent shall make such adjustments as it determines are
appropriate with respect to payments and collections received from the other
Credit Parties (or proceeds received in respect of such other Credit Parties’
Collateral) to

 

-69-

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

preserve, as nearly as possible, the allocation to Secured Obligations otherwise
set forth above in this Section 7.6 (assuming that, solely for purposes of such
adjustments, Secured Obligations includes Excluded Swap Obligations), and
(b) Banking Services Obligations and Secured Swap Obligations may be excluded
from the application described above if the Administrative Agent has not
received written notice thereof, together with such supporting documentation as
the Administrative Agent may request, from the applicable Secured Party as the
case may be. Each Secured Party not a party to this Agreement that has given the
notice contemplated by the preceding sentence shall, by such notice, be deemed
to have acknowledged and accepted the appointment of the Administrative Agent
pursuant to the terms of Article 8 for itself and its Affiliates as if a
“Lender” party hereto.

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

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

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the Issuing Lender to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders and the Issuing Lender, to pay
to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due the Administrative Agent.

Section 7.8 Credit Bidding.

(a) The Administrative Agent, on behalf of itself and the Lenders, shall have
the right to credit bid and purchase for the benefit of the Administrative Agent
and the Lenders all or any portion of Collateral at any sale thereof conducted
by the Administrative Agent under the provisions of the UCC, including pursuant
to Sections 9-610 or 9-620 of the UCC, at any sale thereof conducted under the
provisions of the United States Bankruptcy Code, including Section 363 thereof,
or a sale under a plan of reorganization, or at any other sale or foreclosure
conducted by the Administrative Agent (whether by judicial action or otherwise)
in accordance with Legal Requirements.

(b) Each Lender hereby agrees that, except as otherwise provided in any Credit
Documents or with the written consent of the Administrative Agent and the
Majority Lenders, it will not take any enforcement action, accelerate
obligations under any Credit Documents, or exercise any right that it might
otherwise have under Legal Requirements to credit bid at foreclosure sales, UCC
sales or other similar dispositions of Collateral.

 

-70-

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

ARTICLE 8

THE ADMINISTRATIVE AGENT

Section 8.1 Appointment, Powers, and Immunities. Each Lender hereby irrevocably
appoints and authorizes the Administrative Agent to act as its agent under this
Agreement and the other Credit Documents with such powers and discretion as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and the other Credit Documents, together with such other powers as are
reasonably incidental thereto. The Administrative Agent (which term as used in
this sentence and in Section 8.5 and the first sentence of Section 8.6 shall
include its Affiliates and its own and its Affiliates’ officers, directors,
employees, and agents): (a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender; (b) shall not be responsible to the Lenders for any
recital, statement, representation, or warranty (whether written or oral) made
in or in connection with any Credit Document or any certificate or other
document referred to or provided for in, or received by any of them under, any
Credit Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Credit Document, or any other document
referred to or provided for therein or for any failure by any Credit Party or
any other Person to perform any of its obligations thereunder; (c) shall not be
responsible for or have any duty to ascertain, inquire into, or verify the
performance or observance of any covenants or agreements by any Credit Party or
the satisfaction of any condition or to inspect the Property (including the
books and records) of any Credit Party or any of its Subsidiaries or Affiliates;
(d) shall not be required to initiate or conduct any litigation or collection
proceedings under any Credit Document unless requested by the Majority Lenders
in writing and it receives indemnification satisfactory to it from the Lenders;
and (e) shall not be responsible for any action taken or omitted to be taken by
it under or in connection with any Credit Document, except for its own gross
negligence or willful misconduct. The Administrative Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by the Administrative Agent
with reasonable care.

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

Section 8.3 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default or Event of Default unless
the Administrative Agent has received written notice from a Lender or the
Borrower specifying such Default or Event of Default and stating that such
notice is a “Notice of Default”. In the event that the Administrative Agent
receives such a notice of the occurrence of a Default or Event of Default, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall (subject to Section 8.2) take such action with

 

-71-

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

respect to such Default or Event of Default as shall reasonably be directed by
the Majority Lenders, provided that, unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interest of the Lenders.

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

Section 8.5 Indemnification.

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

 

-72-

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

(b) THE LENDERS SEVERALLY AGREE TO INDEMNIFY THE ISSUING LENDER AND EACH
AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND
AGENTS (TO THE EXTENT NOT REIMBURSED BY THE BORROWER), ratably according to the
respective principal amounts of the Revolving Advances then held by each of them
(or if no principal of the Revolving Advances is at the time outstanding,
ratably according to the respective amounts of the Revolving Commitments then
held by each of them, or, if no such principal amounts are then outstanding and
no Revolving Commitments are then existing, ratably according to the Revolving
Commitments held by each of them immediately prior to the termination or
expiration thereof), FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY, OR ASSERTED AGAINST THE ISSUING LENDER IN ANY WAY RELATING TO OR ARISING OUT
OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY THE ISSUING LENDER UNDER
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING THE ISSUING LENDER’S OWN
NEGLIGENCE), AND INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES,
PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES, OR DISBURSEMENTS RESULTING FROM THE ISSUING LENDER’S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER AGREES
TO REIMBURSE THE ISSUING LENDER PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE
(DETERMINED AS SET FORTH ABOVE IN THIS PARAGRAPH) OF ANY OUT-OF-POCKET EXPENSES
(INCLUDING COUNSEL FEES) INCURRED BY THE ISSUING LENDER IN CONNECTION WITH THE
PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF,
OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENT, TO THE EXTENT THAT THE ISSUING LENDER IS NOT
REIMBURSED FOR SUCH BY THE BORROWER.

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

Section 8.7 Resignation of Administrative Agent and Issuing Lender. The
Administrative Agent or the Issuing Lender may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon receipt of notice
of any such resignation, the Majority Lenders shall have the right to appoint a
successor Administrative Agent or Issuing Lender with, so long as no Event of
Default has occurred and is continuing, the consent of the Borrower, which
consent shall not be unreasonably withheld. If no successor Administrative Agent
or Issuing Lender shall have been so appointed by the

 

-73-

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

Majority Lenders with the consent of the Borrower, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent’s or Issuing
Lender’s giving of notice of resignation, then the retiring Administrative Agent
or Issuing Lender may, on behalf of the Lenders and the Borrower, appoint a
successor Administrative Agent or Issuing Lender, which shall be, in the case of
a successor agent, a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $250,000,000 and, in the case of the Issuing Lender, a
Lender; provided that, if the Administrative Agent or Issuing Lender shall
notify the Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent or Issuing
Lender shall be discharged from its duties and obligations hereunder and under
the other Credit Documents (except that (A) in the case of any collateral
security held by the Administrative Agent on behalf of the Lenders or the
Issuing Lender under any of the Credit Documents, the retiring Administrative
Agent shall continue to hold such collateral security until such time as a
successor Administrative Agent is appointed and (B) the retiring Issuing Lender
shall remain the Issuing Lender with respect to any Letters of Credit
outstanding on the effective date of its resignation or removal and the
provisions affecting the Issuing Lender with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Lender until the termination
of all such Letters of Credit) and (2) all payments, communications and
determinations provided to be made by, to or through the retiring Administrative
Agent shall instead be made by or to each Lender and the Issuing Lender
directly, until such time as the Required Lenders appoint a successor
Administrative Agent or Issuing Lender, as applicable, as provided for above in
this paragraph. Upon the acceptance of any appointment as Administrative Agent
or Issuing Lender by a successor Administrative Agent or Issuing Lender, such
successor Administrative Agent or Issuing Lender shall thereupon succeed to and
become vested with all the rights, powers, privileges, and duties of the
retiring Administrative Agent or Issuing Lender, and the retiring Administrative
Agent or Issuing Lender shall be discharged from its duties and obligations
under this Agreement and the other Credit Documents, except that the retiring
Issuing Lender shall remain the Issuing Lender with respect to any Letters of
Credit outstanding on the effective date of its resignation or removal and the
provisions affecting the Issuing Lender with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Lender until the termination
of all such Letters of Credit. After any retiring Administrative Agent’s or
Issuing Lender’s resignation as Administrative Agent or Issuing Lender, the
provisions of this Article 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent or Issuing Lender
under this Agreement and the other Credit Documents.

Section 8.8 Collateral and Guaranty Matters.

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

(b) The Lenders hereby, and any other Secured Party by accepting the benefit of
the Liens granted pursuant to the Security Documents, irrevocably authorize the
Administrative Agent to (i) release any Lien granted to or held by the
Administrative Agent upon any Collateral (a) as provided in Section 5.9(b),
(b) upon termination of this Agreement, repayment of all Secured Swap
Obligations then due and owing (other than Secured Swap Obligations as to which
arrangements satisfactory to the applicable

 

-74-

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

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

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

ARTICLE 9

MISCELLANEOUS

Section 9.1 Costs and Expenses. The Borrower agrees to pay on demand

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

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

Section 9.2 Indemnification; Waiver of Damages.

(a) INDEMNIFICATION. EACH CREDIT PARTY HERETO AGREES TO, JOINTLY AND SEVERALLY,
INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE AGENT, THE ISSUING LENDER AND
EACH LENDER AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS (EACH, AN “INDEMNITEE”) FROM AND
AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE

 

-75-

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

ATTORNEYS’ FEES) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY
INDEMNITEE, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF
(INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION,
LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE
CREDIT DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR
PROPOSED USE OF THE PROCEEDS OF THE 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 9.2 APPLIES, SUCH INDEMNITY SHALL BE
EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT
BY ANY CREDIT PARTY, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNITEE
OR ANY OTHER PERSON OR ANY INDEMNITEE IS OTHERWISE A PARTY THERETO AND WHETHER
OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. THE FOREGOING
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, OR AS A DIRECT CONSEQUENCE OF, SUCH
INDEMNITEE BEING A DEFAULTING LENDER UNDER CLAUSE (A) OR (B) OF THE DEFINITION
OF “DEFAULTING LENDER”, WHETHER ASSERTED BY ANY CREDIT PARTY, THE ADMINISTRATIVE
AGENT, THE ISSUING LENDER OR THE SWING LINE LENDER.

(b) Waiver of Consequential Damages, Etc.

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

(ii) To the fullest extent permitted by applicable law, no Indemnitee shall
assert, agrees not to assert, and hereby waives, any claim against any Credit
Party, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Credit Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Advance or Letter of Credit or the use of the proceeds
thereof other than for such claims provide for in this Agreement.

 

-76-

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

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

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

(a) no amendment, waiver, or consent shall, unless in writing and signed by all
the Lenders and the Borrower, do any of the following: (i) reduce the principal
of, or interest on, the Revolving Notes, (ii) postpone or extend any date fixed
for any payment of principal of, or interest on, the Revolving Notes, including,
without limitation, the Maturity Date, (iii) change the number of Lenders which
shall be required for the Lenders to take any action hereunder or under any
other Credit Document, or (iv) amend Section 2.2(f)(ii) or waive or consent to
any departure by the Borrower from the terms of thereof;

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

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

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

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

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

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

 

-77-

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

Section 9.5 Survival of Representations and Obligations. All representations and
warranties contained in this Agreement or made in writing by or on behalf of the
Credit Parties in connection herewith shall survive the execution and delivery
of this Agreement and the other Credit Documents, the making of the Advances or
the issuance of any Letters of Credit and any investigation made by or on behalf
of the Lenders, none of which investigations shall diminish any Lender’s right
to rely on such representations and warranties. All obligations of the Borrower
or any other Credit Party provided for in Sections 2.10, 2.11, 2.13(c), 9.1 and
9.2 and all of the obligations of the Lenders in Section 8.5 shall survive any
termination of this Agreement and repayment in full of the Obligations.

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

Section 9.7 Lender Assignments and Participations.

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

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

 

-78-

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

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

(d) Each Lender may sell participations to one or more Persons in all or a
portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Revolving Commitments or its
Advances) provided, however, that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the yield protection
provisions contained in Sections 2.10 and 2.11 and the right of set-off
contained in Section 7.4, and (iv) the Borrower shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Advances and its Notes
and to approve any amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Advances
or Notes, extending any scheduled principal payment date or date fixed for the
payment of interest on such Advances or Notes, or extending its Revolving
Commitment).

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

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

Section 9.8 Confidentiality. The Administrative Agent, the Swing Line Lender,
the Issuing Lender, and each Lender (each a “Lending Party”) agree to keep
confidential any information furnished or made available to it by any Credit
Party pursuant to this Agreement and identified by such Credit Party as
proprietary or confidential; provided that nothing herein shall prevent any
Lending Party from disclosing such information (a) to any other Lending Party or
any Affiliate of any Lending Party, or any officer, director, employee, agent,
or advisor of any Lending Party or Affiliate of any Lending Party for purposes
of administering, negotiating, considering, processing, implementing,
syndicating, assigning, or evaluating the credit facilities provided herein and
the transactions contemplated hereby, (b) to any other Person if directly
incidental to the administration of the credit facilities provided herein,
(c) as required by any Legal Requirement, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any other Lending Party prohibited by this Agreement, (g) in connection with any
litigation relating to this Agreement or any other Credit Document to which such
Lending Party or any of its Affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any right or remedy under this
Agreement or any other Credit Document, and (i) to any actual or proposed
participant or assignee, in each case, subject to provisions similar to those
contained in this Section 9.8. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, nothing in this Agreement shall (a) restrict any

 

-79-

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

Lending Party from providing information to any bank or other regulatory or
governmental authorities, including the Federal Reserve Board and its
supervisory staff; (b) require or permit any Lending Party to disclose to any
Credit Party that any information will be or was provided to the Federal Reserve
Board or any of its supervisory staff; or (c) require or permit any Lending
Party to inform any Credit Party of a current or upcoming Federal Reserve Board
examination or any nonpublic Federal Reserve Board supervisory initiative or
action.

Section 9.9 Notices, Etc. All notices and other communications (other than
Notices of Borrowing and Notices of Continuation or Conversion, which are
governed by Article 2 of this Agreement) shall be in writing and hand delivered
with written receipt, telecopied, sent by facsimile (with a hard copy sent as
otherwise permitted in this Section 9.9), sent by a nationally recognized
overnight courier, or sent by certified mail, return receipt requested as
follows: if to a Credit Party, as specified on Schedule II and if to any Lender,
the Swing Line Lender, or the Issuing Lender, at its credit contact specified
under its name on Schedule II. Each party may change its notice address by
written notification to the other parties. All such notices and communications
shall be effective when delivered, except that notices and communications to any
Lender, Swing Line Lender, or the Issuing Lender pursuant to Article 2 shall not
be effective until received and, in the case of telecopy, such receipt is
confirmed by such Lender, Swing Line Lender or Issuing Lender, as applicable,
verbally or in writing.

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

Section 9.11 Usury Not Intended. It is the intent of each Credit Party and each
Lender in the execution and performance of this Agreement and the other Credit
Documents to contract in strict compliance with applicable usury laws, including
conflicts of law concepts, governing the Advances of each Lender including such
applicable laws of the State of Texas, if any, and the United States of America
from time to time in effect. In furtherance thereof, the Lenders and the Credit
Parties stipulate and agree that none of the terms and provisions contained in
this Agreement or the other Credit Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes of
this Agreement “interest” shall include the aggregate of all charges which
constitute interest under such laws that are contracted for, charged or received
under this Agreement; and in the event that, notwithstanding the foregoing,
under any circumstances the aggregate amounts taken, reserved, charged, received
or paid on the Advances, include amounts which by applicable law are deemed
interest which would exceed the Maximum Rate, then such excess shall be deemed
to be a mistake and each Lender receiving same shall credit the same on the
principal of its Notes (or if such Notes shall have been paid in full, refund
said excess to the Borrower). In the event that the maturity of the Notes are
accelerated by reason of any election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest may never include more than the Maximum Rate, and excess interest, if
any, provided for in this Agreement or otherwise shall be canceled automatically
as of the date of such acceleration or prepayment and, if theretofore paid,
shall be credited on the applicable Notes (or, if the applicable Notes shall
have been paid in full, refunded to the Borrower of such interest). In
determining whether or not the interest paid or payable under any specific
contingencies exceeds the Maximum Rate, the Credit Parties and the Lenders shall
to the maximum extent permitted under applicable law amortize, prorate, allocate
and spread in equal parts during the period of the full stated term of the Notes
all amounts considered to be interest under applicable law at any time
contracted for, charged, received or reserved in connection with the
Obligations. The provisions of this Section shall control over all other
provisions of this Agreement or the other Credit Documents which may be in
apparent conflict herewith.

 

-80-

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

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

Section 9.13 Governing Law. This Agreement, the Notes and the other Credit
Documents (unless otherwise expressly provided therein) shall be governed by,
and construed and enforced in accordance with, the laws of the State of Texas.
Without limiting the intent of the parties set forth above, (a) Chapter 346 of
the Texas Finance Code, as amended (relating to revolving loans and revolving
tri-party accounts (formerly Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch. 15)),
shall not apply to this Agreement, the Notes, or the transactions contemplated
hereby and (b) to the extent that any Lender may be subject to Texas law
limiting the amount of interest payable for its account, such Lender shall
utilize the indicated (weekly) rate ceiling from time to time in effect. Each
Letter of Credit shall be governed by either (i) the Uniform Customs and
Practice for Documentary Credits (2007 Revision), International Chamber of
Commerce Publication No. 600, or (ii) the International Standby Practices
(ISP98), International Chamber of Commerce Publication No. 590, in either case,
including any subsequent revisions thereof approved by a Congress of the
International Chamber of Commerce and adhered to by the Issuing Lender.

Section 9.14 Submission to Jurisdiction. Each Credit Party hereby irrevocably
submits to the jurisdiction of any Texas state or federal court sitting in
Houston, Texas in any action or proceeding arising out of or relating to this
Agreement or the other Credit Documents, and each Credit Party hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such court. Each Credit Party hereby unconditionally
and irrevocably waives, to the fullest extent it may effectively do so, any
right it may have to the defense of an inconvenient forum to the maintenance of
such action or proceeding. Each Credit Party hereby agrees that service of
copies of the summons and complaint and any other process which may be served in
any such action or proceeding may be made by mailing or delivering a copy of
such process to such Credit Party at its address set forth in this Agreement.
Each Credit Party hereby agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section shall affect the rights of any Lender to serve legal process in any
other manner permitted by the law or affect the right of any Lender to bring any
action or proceeding against any Credit Party or its Property in the courts of
any other jurisdiction.

 

-81-

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

Section 9.15 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

Section 9.16 Waiver of Jury. EACH CREDIT PARTY, 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 AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

Section 9.17 Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Credit Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Credit Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

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

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

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

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

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

Section 9.18 USA Patriot Act. Each Lender that is subject to the Patriot Act and
the Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies each Credit Party that pursuant to the requirements of the Patriot Act
it is required to obtain, verify and record information that identifies such
Credit Party, which information includes the name and address of such Credit
Party and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify such Credit Party in accordance with the
Patriot Act.

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

THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN

 

-82-

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

THE PARTIES ARE SUPERSEDED BY AND MERGED INTO THE LOAN AGREEMENT. THIS WRITTEN
AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS AGREEMENT, REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTERS SET FORTH
HEREIN AND 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 follow.]

 

-83-

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

SCHEDULE I

Pricing Schedule

The Applicable Margin with respect to Commitment Fee, Revolving Tranche A
Advances, Tranche B Term Advances and Swing Line Advances shall be determined in
accordance with the following Table A:

TABLE A

 

LIBO
Advances     Base Rate
Advances     Commitment Fee     7.00 %      6.00 %      0.50 % 

 

Schedule I

 

-1-

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

SCHEDULE II

Commitments, Contact Information

 

ADMINISTRATIVE AGENT Wells Fargo Bank, National Association    Address:    1700
Lincoln St., 5th Floor       Denver, CO 80209    MAC C7300-059    Attn:   
Wholesale Loan Servicing    Telephone:    (303) 863-5378    Facsimile:    (303)
863-2729    with a copy to:       Address:    1000 Louisiana, 9th Floor      
MAC T5002-090       Houston, Texas 77002    Attn:    Kristen Brockman, Director
   Telephone:    (713) 319-1954    Facsimile:    (713) 739-1087 CREDIT PARTIES
Borrower/Guarantors    Address for Notices:    Energy Center II    575 N. Dairy
Ashford Rd., Ste 300    Houston, TX 77079    Attn:    Ernesto Bautista III      
Chief Financial Officer    Telephone:    (281) 931-8884    Facsimile:    (281)
931-8302 LENDERS Wells Fargo Bank, National Association    Address for Notices:
      1700 Lincoln St., 5th Floor       Denver, CO 80209 Revolving Commitment:
   MAC C7300-059 $15,000,000    Attn:    Wholesale Loan Servicing    Telephone:
   (303) 863-5378 Tranche B Term Advances Outstanding:    Facsimile:    (303)
863-2729 $65,000,000          with a copy to:    Address:    1000 Louisiana, 9th
Floor       MAC T5002-090       Houston, Texas 77002    Attn:    Kristen
Brockman, Vice President    Telephone:    (713) 319-1954    Facsimile:    (713)
739-1087

 

Schedule II

 

-1-

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

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

FOR THE PERIOD FROM             , 20     TO             , 20    

This certificate dated as of             ,          is prepared pursuant to the
Credit Agreement dated as of January 29, 2010 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”)
among CARBO Ceramics Inc., a Delaware corporation (“Borrower”), the lenders
party thereto from time to time (the “Lenders”), and Wells Fargo Bank, National
Association, as administrative agent for such Lenders (in such capacity, the
“Administrative Agent”), as issuing lender and as swing line lender. Unless
otherwise defined in this certificate, capitalized terms that are defined in the
Credit Agreement shall have the meanings assigned to them by the Credit
Agreement.

The undersigned certifies that:

(a) all of the representations and warranties made by any one or more of the
Credit Parties in the Credit Agreement and the Guaranties to which such Credit
Parties are party are true and correct in all material respects as if made on
this date, except to the extent that any such representation or warranty
expressly relates solely to an earlier date, in which case it shall have been
true and correct in all material respects as of such earlier date;

(b) attached hereto in Schedule A is a detailed spreadsheet reflecting the
covenant calculations, as of the date and for the periods covered by this
certificate, the Borrower’s Capital Expenditures, Liquidity and Consolidated
Cash Balance;

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

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

                                         ; and]

(d) that as of the date hereof for the periods set forth below the following
statements, amounts, and calculations included herein and in Schedule A, were
true and correct in all material respects:

 

I. Section 6.19 – Capital Expenditures.1

 

(a)

 

Capital Expenditures

   $     

(b)

 

Maximum Capital Expenditure Amount

   $ 65,000,000.00     

Capital Expenditure covenant:

     (a) £ (b) 2 

 

Compliance

   Yes    No

 

1 Calculated as of each fiscal year end, for the fiscal year then ended.

2  Before and after giving effect to any Capital Expenditure, Borrower must be
in pro forma compliance with the covenant set forth in Section 6.21 as of the
most recently ended calendar month.

 

Exhibit B – Form of Compliance Certificate

 

Page 1 of 3

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

II. Section 6.21 – Consolidated Cash Balance.3

 

Consolidated Cash Balance4

   $     

Minimum Consolidated Cash Balance

   $ [40,000,000]5[30,000,000]6[25,000,000]7   

 

Was Borrower subject to a “blackout period” or other legal or regulatory matter
temporarily restricting the same of securities by the Borrower under applicable
securities Laws associated with one or more capital raise transactions
undertaken by the Borrower at any time during the period covered by this
certificate?

      Yes    No   

Compliance

   Yes    No8   

Section 5.6 – Material Domestic Subsidiaries.

 

(a)

  

Non-Material Domestic Subsidiaries’ collective operating income9

   $                

(b)

  

Borrower’s consolidated operating income

   $                   

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

                  % 

(c)

  

Non-Material Domestic Subsidiaries collective book value of total assets

   $                   

(d)

  

Borrower’s consolidated book value of total assets

   $                      

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

                  %       

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

  

Yes        

     No           

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

 

3  Calculated as of each calendar month end, commencing with the calendar month
ending August 31, 2016.

4  The aggregate amount of cash and cash equivalents, marketable securities,
treasury bonds and bills, certificates of deposit, investments in money market
funds and commercial paper, in each case, denominated in Dollars and held or
owned by (whether directly or indirectly), credited to the account of, or
otherwise reflected as an asset on the balance sheet of, the Borrower and its
consolidated Subsidiaries maintained with the Administrative Agent and subject
to an account control agreement.

5  Use for calendar months ending August 31, 2016 through and including
March 31, 2017.

6  Use for calendar months ending April 30, 2017 through and including
December 31, 2017.

7  Use for calendar months ending on and after January 31, 2018.

8  Subject to 30-day cure period if Borrower is subject to a “blackout period”
or other legal or regulatory matter temporarily restricting the sale of
securities by the Borrower under applicable securities laws associated with one
or more capital raise transactions undertaken by the Borrower.

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

 

Exhibit B – Form of Compliance Certificate

 

Page 2 of 3

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

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

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

 

CARBO CERAMICS INC.

 

Name:  

 

Title:  

 

 

Exhibit B – Form of Compliance Certificate

 

Page 3 of 3

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

EXHIBIT C

FORM OF GUARANTY AGREEMENT

This Guaranty Agreement dated as of April 27, 2016 (as amended, supplemented,
amended and restated or otherwise modified from time to time, this “Guaranty”)
is executed by each of the undersigned (individually a “Guarantor” and
collectively, the “Guarantors”), in favor of Wells Fargo Bank, National
Association, as Administrative Agent (as defined below) for the ratable benefit
of the Secured Parties (as defined in the Credit Agreement).

INTRODUCTION

A. This Guaranty is given in connection with that certain Credit Agreement dated
as of January 29, 2010 (as the same may be amended, restated, supplement or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrower, the lenders party thereto (the “Lenders”), and Wells Fargo Bank,
National Association, as administrative agent (the “Administrative Agent”),
Swing Line Lender and as Issuing Lender for the Lenders.

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

C. Each Guarantor is executing and delivering this Guaranty (i) to induce the
Lenders to provide and to continue to provide Advances under the Credit
Agreement, (ii) to induce the Issuing Lender to provide and to continue to
provide Letters of Credit under the Credit Agreement, (iii) to induce the
Secured Swap providers to enter into Hedging Arrangements with the Credit
Parties, (iv) to induce the Banking Services Providers to provide Banking
Services to the Credit Parties and (v) intending it to be a legal, valid,
binding, enforceable and continuing obligation of such Guarantor.

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

Section 1. Definitions. All capitalized terms not otherwise defined in this
Guaranty that are defined in the Credit Agreement shall have the meanings
assigned to such terms by the Credit Agreement.

Section 2. Guaranty.

(a) Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees
the punctual payment and performance, when due, whether at stated maturity, by
acceleration or otherwise, of all Secured Obligations (including all
Obligations, Banking Service Obligations and Secured Swap Obligations (other
than Excluded Swap Obligations)), whether absolute or contingent and whether for
principal, interest (including, without limitation, interest that but for the
existence of a bankruptcy, reorganization or similar proceeding would accrue),
fees, amounts owing in respect of Letter of Credit Obligations, amounts required
to be provided

 

Exhibit C – Form of Guaranty Agreement

 

Page 1 of 14

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

as collateral, indemnities, expenses or otherwise (collectively, the “Guaranteed
Obligations”). Without limiting the generality of the foregoing, each
Guarantor’s liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Borrower or any Material
Domestic Subsidiary of the Borrower to the Administrative Agent, the Issuing
Lender, the Swing Line Lender or any Lender under the Credit Documents and by
the Borrower or any Material Domestic Subsidiary of the Borrower to the Secured
Swap Provider or any Banking Services Provider but for the fact that they are
unenforceable or not allowable due to insolvency or the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower or any
Material Domestic Subsidiary of the Borrower.

(b) In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree that in the event a payment shall be made on
any date under this Guaranty by any Guarantor (the “Funding Guarantor”), each
other Guarantor (each a “Contributing Guarantor”) shall indemnify the Funding
Guarantor in an amount equal to the amount of such payment, in each case
multiplied by a fraction the numerator of which shall be the net worth of the
Contributing Guarantor as of such date and the denominator of which shall be the
aggregate net worth of all the Contributing Guarantors together with the net
worth of the Funding Guarantor as of such date. Any Contributing Guarantor
making any payment to a Funding Guarantor pursuant to this Section 2(b) shall be
subrogated to the rights of such Funding Guarantor to the extent of such
payment.

(c) Each Qualified ECP Guarantor hereby jointly and severally absolutely,
unconditionally and irrevocably undertakes to provide such funds or other
support as may be needed from time to time by each other Credit Party to honor
all of its obligations under this Guaranty in respect of Secured Swap
Obligations (provided, however, that each Qualified ECP Guarantor shall only be
liable under this Section 2 for the maximum amount of such liability that can be
hereby incurred without rendering its obligations under this Section 2, or
otherwise under this Guaranty, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater amount).
The obligations of each Qualified ECP Guarantor under this Section shall remain
in full force and effect until the Termination Date (as defined in the Security
Agreement). Each Qualified ECP Guarantor intends that this Section 2 constitute,
and this Section 2 shall be deemed to constitute, a “keepwell, support, or other
agreement” for the benefit of each other Credit Party for all purposes of
Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

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

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

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

 

Exhibit C – Form of Guaranty Agreement

 

Page 2 of 14

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

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

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

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

Section 3. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Credit
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent, the Issuing Lender, the Swing Line Lender, any Lender, any
Secured Swap Provider or any Banking Services Provider with respect thereto but
subject to Section 2(d) above. The obligations of each Guarantor under this
Guaranty

 

Exhibit C – Form of Guaranty Agreement

 

Page 3 of 14

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

are independent of the Guaranteed Obligations or any other obligations of any
other Person under the Credit Documents or in connection with any Hedging
Arrangement or any Banking Services, and a separate action or actions may be
brought and prosecuted against a Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Borrower, any other
Guarantor or any other Person or whether the Borrower, any other Guarantor or
any other Person is joined in any such action or actions. The liability of each
Guarantor under this Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives any defenses it
may now or hereafter have in any way relating to, any or all of the following:

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

(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations or any other obligations of any
Person under the Credit Documents or any agreement or instrument relating to
Hedging Arrangements with a Secured Swap Provider or Banking Services with a
Banking Services Provider, or any other amendment or waiver of or any consent to
departure from any Credit Document or any agreement or instrument relating to
Hedging Arrangements with a Secured Swap Provider or Banking Services with a
Banking Services Provider, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional credit to the
Borrower or otherwise;

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

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

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

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

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

 

Exhibit C – Form of Guaranty Agreement

 

Page 4 of 14

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

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

Section 4. Continuation and Reinstatement, Etc. Each Guarantor agrees that, to
the extent that payments of any of the Guaranteed Obligations are made, or any
Secured Party receives any proceeds of collateral, and such payments or proceeds
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or otherwise required to be repaid, then to the extent
of such repayment the Guaranteed Obligations shall be reinstated and continued
in full force and effect as of the date such initial payment or collection of
proceeds occurred. EACH GUARANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED PARTY
FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE UNDER THIS
SECTION 4 (INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES) IN THE DEFENSE OF
ANY SUCH ACTION OR SUIT, INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR
EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED SECURED PARTY’S OWN NEGLIGENCE
BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS
FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION
TO HAVE RESULTED FROM SUCH INDEMNIFIED SECURED PARTY’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES
HERETO THAT EACH INDEMNIFIED SECURED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN
NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE
IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL.

Section 5. Waivers and Acknowledgments.

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

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

(c) Each Guarantor acknowledges that it will receive substantial direct and
indirect benefits from (i) the financing arrangements involving the Borrower or
any Guarantor contemplated by the Credit Documents, (ii) the Hedging
Arrangements with a Secured Swap Provider and (iii) the Banking Services
provided to any Guarantor by a Banking Services Provider, and that the waivers
set forth in this Guaranty are knowingly made in contemplation of such benefits.

 

Exhibit C – Form of Guaranty Agreement

 

Page 5 of 14

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

Section 6. Subrogation and Subordination.

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

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

Section 7. Representations and Warranties. Each Guarantor hereby represents and
warrants as follows:

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

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

(c) The obligations of such Guarantor under this Guaranty are the valid, binding
and legally enforceable obligations of such Guarantor, (except as limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws at the time in

 

Exhibit C – Form of Guaranty Agreement

 

Page 6 of 14

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

effect affecting the rights of creditors generally and (ii) general principles
of equity whether applied by a court of law or equity), and the execution and
delivery of this Guaranty by such Guarantor has been duly and validly authorized
in all respects by all requisite corporate, limited liability company or
partnership actions on the part of such Guarantor, and the Person who is
executing and delivering this Guaranty on behalf of such Guarantor has full
power, authority and legal right to so do, and to observe and perform all of the
terms and conditions of this Guaranty on such Guarantor’s part to be observed or
performed.

Section 8. Right of Set-Off. Upon the occurrence and during the continuance of
any Event of Default, any Lender or the Administrative Agent, the Issuing
Lender, the Swing Line Lender and any other Secured Party is hereby authorized
at any time, to the fullest extent permitted by law, to set-off and apply any
deposits (general or special, time or demand, provisional or final) and other
indebtedness owing by such Secured Party to the account of each Guarantor
against any and all of the obligations of the Guarantors under this Guaranty,
irrespective of whether or not such Secured Party shall have made any demand
under this Guaranty and although such obligations may be contingent and
unmatured. Such Secured Party shall promptly notify the affected Guarantor after
any such set-off and application is made, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of the Secured Parties under this Section 8 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which any
Secured Party may have.

Section 9. Amendments, Etc. No amendment or waiver of any provision of this
Guaranty and no consent to any departure by any Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the
affected Guarantor and the Administrative Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

Section 10. Notices, Etc. All notices and other communications provided for
hereunder shall be sent in the manner provided for in Section 9.9 of the Credit
Agreement, in writing and hand delivered with written receipt, telecopied, sent
by facsimile, sent by a nationally recognized overnight courier, or sent by
certified mail, return receipt requested, if to a Guarantor, at its address for
notices specified in Schedule II to the Security Agreement, and if to the
Administrative Agent, the Issuing Lender or any Lender, at its address specified
in or pursuant to the Credit Agreement. All such notices and communications
shall be effective when delivered.

Section 11. No Waiver: Remedies. No failure on the part of the Administrative
Agent or any other Secured Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

Section 12. Continuing Guaranty: Assignments under the Credit Agreement. This
Guaranty is a continuing guaranty and shall (a) remain in full force and effect
until the Termination Date (as defined in the Security Agreement), (b) be
binding upon each Guarantor and its successors and assigns, (c) inure to the
benefit of and be enforceable by the

 

Exhibit C – Form of Guaranty Agreement

 

Page 7 of 14

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

Administrative Agent, each Lender, the Issuing Lender, and the Swing Line Lender
and their respective successors, and, in the case of transfers and assignments
made in accordance with the Credit Agreement, transferees and assigns, (d) inure
to the benefit of and be enforceable by a Secured Swap Provider and each of its
successors, transferees and assigns to the extent such successor, transferee or
assign was a Lender or an Affiliate of a Lender on the Amendment No. 4 Effective
Date, and (e) inure to the benefit of and be enforceable by a Banking Services
Provider and each of its successors, transferees and assigns to the extent such
successor, transferee or assign was a Lender or an Affiliate of a Lender on the
Amendment No. 4 Effective Date. Without limiting the generality of the foregoing
clause (c), subject to Section 9.7 of the Credit Agreement, any Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement (including, without limitation, all or any portion of
its Commitment, the Advances owing to it and the Note or Notes held by it) to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to such Lender herein or otherwise,
subject, however, in all respects to the provisions of the Credit Agreement.
Each Guarantor acknowledges that upon any Person becoming a Lender, the
Administrative Agent, the Issuing Lender or the Swing Line Lender in accordance
with the Credit Agreement, such Person shall be entitled to the benefits hereof.

Section 13. Governing Law. This Guaranty shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas. Each Guarantor
hereby irrevocably submits to the jurisdiction of any Texas state or federal
court sitting in Houston, Texas in any action or proceeding arising out of or
relating to this Guaranty and the other Credit Documents, and each Guarantor
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such court. Each Guarantor hereby
irrevocably waives, to the fullest extent it may effectively do so, any right it
may have to the defense of an inconvenient forum to the maintenance of such
action or proceeding. Each Guarantor hereby agrees that service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding may be made by mailing or delivering a copy of such process
to such Guarantor at its address set forth in the Credit Agreement or set forth
on the signature page of this Guaranty. Each Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section shall affect the rights of any Secured
Party to serve legal process in any other manner permitted by the law or affect
the right of any Secured Party to bring any action or proceeding against any
Guarantor or its Property in the courts of any other jurisdiction.

Section 14. INDEMNIFICATION. EACH GUARANTOR HEREBY INDEMNIFIES AND HOLDS
HARMLESS THE ADMINISTRATIVE AGENT, EACH SECURED PARTY AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (THE “INDEMNITEES”) FROM
AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND
EXPENSES OF ANY KIND OR NATURE WHATSOEVER TO WHICH ANY OF THEM MAY BECOME
SUBJECT RELATING TO OR ARISING OUT OF THIS GUARANTY, INCLUDING SUCH INDEMNITEE’S
OWN NEGLIGENCE, EXCEPT TO THE EXTENT SUCH CLAIMS, LOSSES OR LIABILITIES ARE
FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION
TO HAVE RESULTED FROM SUCH INDEMNITEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

Exhibit C – Form of Guaranty Agreement

 

Page 8 of 14

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

Section 15. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH CREDIT DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE ADMINISTRATIVE AGENT, ANY OTHER SECURED PARTY OR ANY OBLIGOR IN
CONNECTION THEREWITH. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT, EACH LENDER AND
ISSUING LENDER ENTERING INTO THE CREDIT DOCUMENTS.

Section 16. Additional Guarantors. Pursuant to Section 5.6 of the Credit
Agreement, certain Material Domestic Subsidiaries that were not in existence on
the Amendment No. 7 Effective Date are required to enter into this Guaranty as a
Guarantor upon becoming a Material Domestic Subsidiary. 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 Guarantor hereunder with the same force and
effect as if originally named as a Guarantor herein. The execution and delivery
of any instrument adding an additional Guarantor as a party to this Guaranty
shall not require the consent of any other Guarantor hereunder. The rights and
obligations of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Guaranty.

Section 17. USA Patriot Act. Each Secured Party that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any other Secured Party) hereby notifies each Guarantor that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001))(the “Act”), it is required to obtain, verify and record
information that identifies such Guarantor, which information includes the name
and address of such Guarantor and other information that will allow such Secured
Party or the Administrative Agent, as applicable, to identify such Guarantor in
accordance with the Act. Following a request by any Secured Party, each
Guarantor shall promptly furnish all documentation and other information that
such Secured Party reasonably requests in order to comply with its ongoing
obligations under the applicable “know your customer” and anti-money laundering
rules and regulations, including the Act.

Section 18. ORAL AGREEMENTS. PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE, AN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN AGREEMENT EXCEEDS
$50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING AND
SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY’S AUTHORIZED REPRESENTATIVE.

 

Exhibit C – Form of Guaranty Agreement

 

Page 9 of 14

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

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

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Remainder of this page intentionally left blank.]

 

Exhibit C – Form of Guaranty Agreement

 

Page 10 of 14

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

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

 

GUARANTORS: CARBO CERAMICS INC. By:  

 

Name:  

 

Title:  

 

FALCON TECHNOLOGIES AND SERVICES, INC. By:  

 

Name:  

 

Title:  

 

STRATAGEN, INC. By:  

 

Name:  

 

Title:  

 

 

Exhibit C – Form of Guaranty Agreement

 

Page 11 of 14

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

Annex 1 to the Guaranty Agreement

SUPPLEMENT NO.      dated as of                      (the “Supplement”), to the
Guaranty Agreement dated as of April 27, 2016 (as amended, supplemented or
otherwise modified from time to time, the “Guaranty Agreement”), among CARBO
Ceramics Inc. (the “Borrower”), each Material Domestic Subsidiary of Borrower
party thereto (individually, a “Guarantor” and collectively, the “Guarantors”)
and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the
“Administrative Agent”) for the benefit of the Administrative Agent and the
Lenders (as defined below, together with the Administrative Agent, each a
“Secured Party”)).

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

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

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

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

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

SECTION 2. The New Guarantor represents and warrants to the Administrative Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it by all requisite corporate limited liability
company or partnership action and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws

 

Exhibit C – Form of Guaranty Agreement

 

Page 12 of 14

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

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)).

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 Guarantor and the Administrative Agent.
Delivery of an executed signature page to this Supplement by fax transmission
shall be as effective as delivery of a manually executed counterpart of this
Supplement.

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

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

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

 

Exhibit C – Form of Guaranty Agreement

 

Page 13 of 14

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

SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Guaranty Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction). The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

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

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

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

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

 

[Name of New Guarantor] By:  

 

Name:  

 

Title:  

 

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

 

Name:  

 

Title:  

 

 

Exhibit C – Form of Guaranty Agreement

 

Page 14 of 14