Exhibit 10.2

Execution Version

BACKSTOP COMMITMENT AGREEMENT

AMONG

PIONEER ENERGY SERVICES CORP.

AND

THE COMMITMENT PARTIES PARTY HERETO

Dated as of February 28, 2020

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TABLE OF CONTENTS

 

 

 

          PAGE  

Section 1.

   THE RIGHTS OFFERING      3  

Section 2.

   THE COMMITMENTS      6  

Section 3.

   TRANSFER OF COMMITMENT      8  

Section 4.

   COMMITMENT PARTY DEFAULT      8  

Section 5.

   REPRESENTATIONS AND WARRANTIES OF THE COMPANY      9  

Section 6.

   REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTIES      18  

Section 7.

   ADDITIONAL COVENANTS OF THE COMPANY      20  

Section 8.

   ADDITIONAL COVENANTS OF THE COMMITMENT PARTIES      27  

Section 9.

   ADDITIONAL COVENANTS OF THE COMPANY AND THE COMMITMENT PARTIES      27  

Section 10.

   TAX TREATMENT      28  

Section 11.

   CONDITIONS TO THE OBLIGATIONS OF THE COMMITMENT PARTIES      28  

Section 12.

   CONDITIONS TO THE OBLIGATIONS OF THE COMPANY      29  

Section 13.

   SURVIVAL OF REPRESENTATIONS AND WARRANTIES      30  

Section 14.

   TERMINATION      31  

Section 15.

   INDEMNIFICATION OBLIGATIONS      36  

Section 16.

   NOTICES      39  

Section 17.

   SURVIVAL      40  

Section 18.

   ASSIGNMENT; THIRD PARTY BENEFICIARIES      40  

Section 19.

   COMPLETE AGREEMENT      40  

Section 20.

   GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM; WAIVER OF
TRIAL BY JURY      40  

Section 21.

   COUNTERPARTS      40  

Section 22.

   ACTION BY, OR CONSENT OR APPROVAL OF, THE COMMITMENT PARTIES      41  

Section 23.

   AMENDMENTS AND WAIVERS      41  

Section 24.

   SPECIFIC PERFORMANCE      41  

Section 25.

   RULES OF CONSTRUCTION      41  

 

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INDEX OF DEFINED TERMS

 

Term    Section

Affiliate

   3

Affiliate Agreement

   5(q)

Agreement

   Preamble

Antitrust Laws

   7(g)

Backstop Cap

   Recitals

Backstop Commitment

   2(a)(i)

Backstop Commitment Percentage

   Recitals

Backstop Commitment Premium

   Recitals

Backstop Party

   Preamble

Backstop Securities

   1(g)(iii)

Bankruptcy Code

   Recitals

Bankruptcy Court

   Recitals

BCA Approval Order

   14(c)(xvi)

Business Day

   1(d)

Chapter 11 Cases

   Recitals

Commitment Party

   Preamble

Commitment Party Securities

   6(d)

Commitments

   2(a)(ii)

Company

   Preamble

Company Disclosure Letter

   5

Confirmation Order

   Recitals

Control

   3

Davis Polk

   2(e)

Debtors

   Recitals

Defaulting Commitment Party

   4

Eligible Claims

   1(a)

Eligible Equity Holder

   1(a)

Eligible Equity Holder Initial Principal Amount

   Recitals

Eligible Holder

   1(a)

Eligible Noteholder

   1(a)

Eligible Noteholder Initial Principal Amount

   Recitals

Environmental Law

   5(n)

Subscription Agent Account

   2(c)

Financial Statements

   5(i)

Funding Amount

   1(g)(iii)

Funding Notice

   1(g)

GAAP

   5(f)

Governmental Entity

   5(l)

Hazardous Materials

   5(n)

HSR Act

   7(g)

Indemnified Claim

   15(b)

Indemnifying Parties

   15(a)

Indemnified Person

   15(a)

Indenture

   Recitals

 

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Term    Section

Intellectual Property Rights

   5(p)(i)

Issuer

   Recitals

Legend

   7(e)

Losses

   15(a)

Management Commitment Party

   Preamble

Management Commitment Percentage

   14(e)

Management Commitment Premium

   Recitals

Management Commitment Securities

   Recitals

Management Funding Amount

   2(c)

Management Funding Deadline

   2(c)

Management Funding Notice

   2(c)

Material Adverse Effect

   5(f)

Material Contract

   5(y)

Notes Claim

   Recitals

Outside Date

   14(a)(ii)

Parties

   Preamble

Party

   Preamble

Person

   5(l)

Permitted Transferee

   3

Petition Date

   Recitals

Plan

   Recitals

Plan Effective Date

   Recitals

Reference Date

   5(h)(ii)

Related Fund

   3

Required Commitment Parties

   Recitals

Rights Exercise Period

   Recitals

Rights Offering Procedures

   1

Rights Offering Subscription Form

   1(d)(1)

Rights Offering Securities

   Recitals

RSA

   Recitals

Securities Act

   6(d)

Special Voting Stock

   Recitals

Subscription Agent

   1(d)(1)

Subscription Commencement Date

   Recitals

Subscription Instruction Deadline

   1(d)

Subscription Rights

   1(a)

Taxes

   5(u)(v)

Termination Date

   14(d)

Transaction Expenses

   2(e)

Unsubscribed Securities

   Recitals

 

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BACKSTOP COMMITMENT AGREEMENT

This BACKSTOP COMMITMENT AGREEMENT (including exhibits and schedules attached
hereto and incorporated herein, this “Agreement”), dated as of February 28, 2020
is made by and among Pioneer Energy Services Corp., a Texas corporation (the
“Company”) and the ultimate parent of each of the other Debtors (as defined
below), on behalf of itself and the other Debtors, on the one hand, and the
Management Commitment Parties set forth on Schedule 1 (each, a “Management
Commitment Party”) and the Backstop Parties set forth on Schedule 2 hereto
(each, a “Backstop Party” and, collectively with the Management Commitment
Parties, the “Commitment Parties”), on the other hand. The Company and each
Commitment Party is referred to herein, individually, as a “Party” and,
collectively, as the “Parties”. Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Plan (as defined below).

WHEREAS, the Debtors, the Commitment Parties and certain of the Debtors’ other
creditors and interest holders have entered into a Restructuring Support
Agreement, dated as of February 28, 2020 (such agreement, as may be amended,
restated, supplemented or otherwise modified from time to time, including all
the exhibits thereto, the “RSA”), which provides for the restructuring of the
Company’s capital structure and financial obligations pursuant to a
“prepackaged” plan of reorganization (as it may be amended, modified or
supplemented from time to time as provided in the RSA, the “Plan”). The Company
and certain of its subsidiaries as set forth on Schedule 3 (collectively, the
“Debtors”) will file voluntary petitions for relief (the “Chapter 11 Cases”)
under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101, et
seq. (the “Bankruptcy Code”), in the United States Bankruptcy Court for the
Southern District of Texas (Houston Division) (the “Bankruptcy Court”) (the date
of such filings being referred to herein as the “Petition Date”) and will seek
confirmation of the Plan;

WHEREAS, subject to the Bankruptcy Court’s entry of an order confirming the Plan
(the “Confirmation Order”), consummation of the Plan, and the other conditions
specified in Section 11 and Section 12 hereof, prior to or on the effective date
of the Plan (the “Plan Effective Date”), Company, as reorganized pursuant to and
under the Plan, or any successor or assign thereto, by merger, amalgamation,
consolidation, or otherwise, on or after the Plan Effective Date (the “Issuer”)
will offer and sell, pursuant to this Agreement and the other Rights Offering
Documents (as defined in the RSA), (x) $125,000,000 aggregate principal amount
(for the avoidance of doubt, excluding $9,584,000 aggregate principal amount of
Convertible Bonds issued as the Backstop Commitment Premium and the Management
Commitment Premium (each as defined below)) of the Convertible Bonds (as defined
in Exhibit A to the Term Sheet (as defined in the RSA)) to be issued pursuant to
the New Convertible Bond Indenture (as defined in the RSA), and (y) 9,375,000
shares of special voting stock (the “Special Voting Stock”) (for the avoidance
of doubt, excluding 718,800 shares of Special Voting Stock issued in connection
with the Backstop Commitment Premium and the Management Commitment Premium),
which shall be stapled to the Convertible Bonds such that at all times each
holder of Convertible Bonds shall also hold 75 shares of Special Voting Stock
per $1,000 principal amount of Convertible Bonds;

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WHEREAS, (1) $1,795,000 aggregate principal amount of Convertible Bonds and
134,625 shares of Special Voting Stock (collectively, the “Management Commitment
Securities”) will be sold to the Management Commitment Parties pursuant to this
Agreement in accordance with their respective commitments set forth on Schedule
1, and (2) $123,205,000 aggregate principal amount of Convertible Bonds and
9,240,375 shares of Special Voting Stock (collectively, the “Rights Offering
Securities”) will be offered pro rata to (A) all holders of claims under the
Indenture, dated March 18, 2014 (as may be amended, supplemented, or otherwise
modified from time to time, the “Indenture”, and each claim under such
agreement, a “Notes Claim”), and may be subscribed for by all Eligible
Noteholders (as defined below) of Eligible Claims (as defined below) for an
aggregate purchase price of $116,121,000 (the “Eligible Noteholder Initial
Principal Amount”) in cash and (B) all holders of Existing Equity Interests (as
defined in the Term Sheet) of the Company, and may be subscribed for by all
Eligible Equity Holders (as defined below) for an aggregate purchase price of
$7,084,000 (the “Eligible Equity Holder Initial Principal Amount”) in cash, in
each case of (A) and (B), during the period (the “Rights Exercise Period”)
beginning on the date the Rights Offering (as defined in the Term Sheet) is
commenced (the “Subscription Commencement Date”) and ending on the Subscription
Instruction Deadline (as defined below) pursuant to the Rights Offering;

WHEREAS, in order to facilitate the Plan and the Rights Offering, pursuant to
this Agreement, and subject to the terms, conditions and limitations set forth
herein, (A) the Management Commitment Parties, severally and not jointly, have
agreed to purchase from the Issuer, on the Plan Effective Date, the Management
Commitment Securities for a purchase price of $1,795,000 and (B) each Backstop
Party, severally and not jointly, has agreed to purchase from the Issuer, on the
Plan Effective Date, (i) all Rights Offering Securities allocated to such
Backstop Party based on its ownership of Eligible Claims (as defined below),
subject to the Backstop Cap (as defined below), and (ii) such Backstop Party’s
percentage (its “Backstop Commitment Percentage”), as set forth on Schedule 2
opposite such Backstop Party’s name, of a number of the Rights Offering
Securities (the “Unsubscribed Securities”) equal to (a) the difference between
$123,205,000 and the aggregate cash consideration to be paid for Rights Offering
Securities duly purchased in the Rights Offering in accordance with the Rights
Offering Documents (other than any such Rights Offering Securities purchased by
any Backstop Parties in the Rights Offering), divided by (b) $1,000; provided,
that in no event shall a Backstop Party be required to purchase Rights Offering
Securities (whether exercised in the Rights Offering or any Unsubscribed
Securities purchased pursuant to this Agreement) in an amount in excess of such
Backstop Party’s Backstop Commitment Percentage multiplied by $118,013,000 (such
Backstop Party’s “Backstop Cap”) pursuant to this Agreement;

WHEREAS, as consideration for their respective Commitments (as defined below),
the Backstop Parties will receive, upon the earlier of the Plan Effective Date
and three (3) Business Days after the termination of this Agreement under the
circumstances set forth in Section 14(e), a nonrefundable commitment premium of
$9,440,000 (the “Backstop Commitment Premium”), payable (i) in $9,440,000
principal amount of Convertible Bonds issued at par and 708,000 shares of
Special Voting Stock, in the case of such payment on the Plan Effective Date, or
(ii) in cash, in the case of an earlier

 

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termination of this Agreement under the circumstances set forth in
Section 14(e); and the Management Commitment Parties will receive, upon the
earlier of the Plan Effective Date and three (3) Business Days after the
termination of this Agreement under the circumstances set forth in
Section 14(e), a nonrefundable commitment premium of $144,000 (the “Management
Commitment Premium”), payable (i) in $144,000 principal amount of Convertible
Bonds issued at par and 10,800 shares of Special Voting Stock, in the case of
such payment on the Plan Effective Date, or (ii) in cash, in the case of an
earlier termination of this Agreement under the circumstances set forth in
Section 14(e); and

WHEREAS, for purposes of this Agreement, “Required Commitment Parties” shall
mean those Commitment Parties whose allocated amount of the Backstop Cap and
Management Commitments (as defined below) collectively is more than 66.67% of
the sum of the aggregate Backstop Cap and aggregate Management Commitments held
by all of the Commitment Parties (excluding any Defaulting Commitment Parties
(as defined below)).

NOW, THEREFORE, in consideration of the foregoing, and the representations,
warranties and covenants set forth herein, and other good and valuable
consideration, the Company and the Commitment Parties agree as follows:

Section 1. THE RIGHTS OFFERING. The Rights Offering will be conducted in
accordance with the Rights Offering procedures to be consistent with the
provisions of this Agreement or otherwise acceptable to the Required Commitment
Parties and the Company (the “Rights Offering Procedures”) and as follows:

(a) Pursuant to the RSA and the Plan, each holder of a Notes Claim that is
either (i) an “accredited investor” as defined in Rule 501(a) under the
Securities Act (as defined below) or (ii) a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act and makes certain other customary
representations and warranties (each such holder, an “Eligible Noteholder”)
during the Rights Exercise Period will receive the rights (the “Subscription
Rights”) with respect to the Notes Claims held by such Eligible Holder as of
such time (such claims being “Eligible Claims”) to subscribe for its pro rata
share (measured as the amount of Eligible Claims held by such Eligible
Noteholder (for the avoidance of doubt, after taking into account transfers of
such Eligible Claims after the Subscription Commencement Date) as compared to
the aggregate amount of Notes Claims held by all holders of Notes Claims) of the
Eligible Noteholder Initial Principal Amount of Rights Offering Securities.
Pursuant to the RSA and the Plan, each holder of Existing Equity Interests (as
defined in the Term Sheet) that is either (i) an “accredited investor” as
defined in Rule 501(a) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act and makes
certain other customary representations and warranties (each such holder, an
“Eligible Equity Holder”, and together with an Eligible Noteholder, “Eligible
Holders”) during the Rights Exercise Period will receive Subscription Rights to
subscribe for its pro rata share (measured as the number of shares represented
by the Existing Equity Interests held by such Eligible Equity Holder (for the
avoidance of doubt, after taking into account transfers of such Existing Equity
Interests after the Subscription Commencement Date) as compared to the aggregate
number of shares represented by the Existing Equity Interests held by all
holders of Existing Equity Interests) of the Eligible Equity Holder Initial
Principal Amount of Rights Offering Securities.

 

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(b) Subject to the terms and conditions of this Agreement, the Company hereby
undertakes to cause the Issuer to offer Rights Offering Securities for
subscription by Eligible Holders of Eligible Claims pursuant to the RSA and the
Plan as set forth in this Agreement.

(c) The Company will cause the Issuer to issue Subscription Rights to purchase
the Rights Offering Securities. Each Eligible Noteholder holding Eligible Claims
during the Rights Exercise Period will receive a Subscription Right to subscribe
for its pro rata share of the Eligible Noteholder Initial Principal Amount of
Rights Offering Securities. Each Eligible Equity Holder holding Existing Equity
Interests during the Rights Exercise Period will receive a Subscription Right to
subscribe for its pro rata share of the Eligible Equity Holder Initial Principal
Amount of Rights Offering Securities.

(d) (1) Following the Petition Date, the Company will provide, or cause to be
provided, to each Eligible Holder of Eligible Claims or Existing Equity
Interests a subscription form (the “Rights Offering Subscription Form”), whereby
each Eligible Holder of Eligible Claims or Existing Equity Interests may
exercise its Subscription Rights in whole or in part, provided that such
Eligible Holder of Eligible Claims or Existing Equity Interests (i) timely and
properly executes and delivers its Rights Offering Subscription Form (with
accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable), and for
transferees only, a transfer notice included as an exhibit to the Rights
Offering Subscription Form, to the subscription agent for the Rights Offering
selected by the Company (the “Subscription Agent”) in advance of the
Subscription Instruction Deadline and (ii) delivers the securities underlying
its Eligible Claims or Existing Equity Interests through The Depository Trust
Company Automated Tender Offer Program in advance of the Subscription
Instruction Deadline and (A) if such Eligible Holder is not a Backstop Party,
the aggregate purchase price of the Rights Offering Securities elected to be
purchased by the Eligible Holder of Eligible Claims shall be paid in accordance
with the Rights Offering Procedures or (B) if such Eligible Holder is a Backstop
Party, such Backstop Party pays the aggregate purchase price of its Rights
Offering Securities in accordance with Section 1(g).

(2) In advance of the Subscription Instruction Deadline, each Backstop Party
shall timely and properly exercise its rights to purchase its allocated portion
of the Rights Offering Securities (subject to its Backstop Cap), pursuant to the
procedures set forth in the preceding clause (1) and the Rights Offering
Procedures, subject to payment in accordance with Section 1(g). For the
avoidance of doubt, each Backstop Party shall fully exercise all Subscription
Rights allotted to it for the purchase of the Rights Offering Securities,
subject to its Backstop Cap.

 

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(3) For purposes of this Agreement, the “Subscription Instruction Deadline”
means 5:00 p.m. New York City time on such date that is specified in the Rights
Offering Procedures or such other date as the Company, subject to the approval
of the Required Commitment Parties, may specify in a notice provided to the
Eligible Holders of Eligible Claims before 9:00 a.m. New York City time on the
Business Day before the then-effective Subscription Instruction Deadline. For
purposes of this Agreement, “Business Day” means any day of the year on which
national banking institutions in New York City are open to the public for
conducting business and are not required or authorized to close.

(e) The Company will cause the Issuer to issue the Rights Offering Securities to
the Eligible Holders of Eligible Claims or Existing Equity Interests with
respect to which Subscription Rights were validly exercised by such Eligible
Holders of Eligible Claims or Existing Equity Interests upon the Plan Effective
Date. The portion of Rights Offering Securities issued to an Eligible Holder who
elects to acquire such Rights Offering Securities shall be rounded down to the
nearest security.

(f) If the Subscription Agent for any reason does not receive from an Eligible
Holder of Eligible Claims or Existing Equity Interests each of (i) a timely and
duly completed Rights Offering Subscription Form, (ii) timely tender of the
securities underlying its Eligible Claims or Existing Equity Interests and
(iii) timely payment for the Rights Offering Securities being purchased by such
Eligible Holder of Eligible Claims or Existing Equity Interests, the Rights
Offering Procedures shall provide that, unless otherwise approved by the Company
and the Required Commitment Parties, such Eligible Holder of Eligible Claims or
Existing Equity Interests shall be deemed to have relinquished and waived its
right to participate in the Rights Offering.

(g) No later than five (5) Business Days following the Subscription Instruction
Deadline, the Company hereby agrees and undertakes to deliver to each Backstop
Party by email delivery a written notice (the “Funding Notice”) of (i) the
number of Rights Offering Securities that such Backstop Party has subscribed to
purchase pursuant to such Backstop Party’s Rights Offering Subscription Form, if
any, and the aggregate purchase price therefor; (ii) the aggregate number of
Unsubscribed Securities, if any, and the aggregate purchase price; (iii) the
number of Unsubscribed Securities to be issued and sold by the Issuer to such
Backstop Party (based upon each Backstop Party’s Backstop Commitment Percentage)
and the aggregate purchase price therefor (together with the amounts referenced
in (i), such Backstop Party’s “Funding Amount”, and such number of Unsubscribed
Securities, the “Backstop Securities”); (iv) wire instructions for a segregated
bank account of the Subscription Agent to which such Backstop Party shall
deliver an amount equal to its Funding Amount; and (v) the estimated deadline
for delivery of the Funding Amount, which shall be the Plan Effective Date for
each Backstop Party (the “Backstop Funding Deadline”). No later than the
Backstop Funding Deadline, each Backstop Party shall deliver and pay its
applicable Funding Amount by wire transfer in immediately available funds in
U.S. dollars to the segregated bank account of the Subscription Agent designated
by the Subscription Agent in the Funding Notice, or make other arrangements that
are acceptable to the applicable Backstop Party and the Company. If this
Agreement is terminated pursuant to Section 14 after such delivery, such funds
shall be released, without any interest accrued thereon, promptly following such
termination.

 

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Section 2. THE COMMITMENTS.

(a) On the basis of the representations and warranties contained herein, but
subject to the conditions set forth in Section 11, each of the Commitment
Parties, severally and not jointly, agrees to:

(i) in the case of each Backstop Party, subscribe for, in accordance with
Section 1(d), and purchase, in accordance with Section 1(g), the Rights Offering
Securities and Backstop Securities allocated to such Backstop Party (the
“Backstop Commitments”); and

(ii) in the case of each Management Commitment Party, purchase, in accordance
with Section 2(c), at the aggregate purchase price therefor, the Management
Commitment Securities allocated to such Management Commitment Party (the
“Management Commitments”, and together with the Backstop Commitments, the
“Commitments”).

(b) Each Backstop Party’s Backstop Commitment Percentage and Backstop Cap are
set forth on Schedule 2 opposite such Backstop Party’s name.

(c) No later than five (5) Business Days following the Subscription Instruction
Deadline, the Company hereby agrees and undertakes to deliver to each Management
Commitment Party by email delivery a written notice (the “Management Funding
Notice”) of (i) the aggregate principal amount of Management Commitment
Securities to be issued and sold by the Issuer to such Management Commitment
Party, as set forth on Schedule 1 opposite such Management Commitment Party’s
name), and the aggregate purchase price therefor (such Management Commitment
Party’s “Management Funding Amount”); (ii) wire instructions for a segregated
bank account of the Subscription Agent designated by the Subscription Agent (the
“Subscription Agent Account”) in the Management Funding Notice to which such
Management Commitment Party shall deliver an amount equal to its Management
Funding Amount; and (iii) the estimated deadline for delivery of the Management
Funding Amount, which shall be no earlier than five (5) Business Days prior to,
and no later than, three (3) Business Days before the expected Plan Effective
Date (the “Management Funding Deadline”). The Company shall cause an additional
notice of the Management Funding Deadline to be provided after the Confirmation
Order has been entered by the Bankruptcy Court; provided that the Management
Funding Deadline shall be a minimum of five (5) Business Days after date of such
notice. Each Management Commitment Party shall deliver and pay its applicable
Management Funding Amount by wire transfer in immediately available funds in
U.S. dollars into the Subscription Agent Account. If this Agreement is
terminated pursuant to Section 14 after such delivery, such funds shall be
released, without any interest accrued thereon, promptly following such
termination.

(d) On the basis of the representations and warranties herein contained, as
consideration for the Commitments, and the other undertakings of the Commitment
Parties herein, the Company will cause the Issuer to pay, on the Plan Effective
Date, to (i) the Backstop Parties, in the aggregate, the Backstop Commitment
Premium and (ii) the

 

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Management Commitment Parties, the Management Commitment Premium; which shall be
deemed fully earned by the Backstop Parties or the Management Commitment
Parties, as applicable, upon execution of this Agreement. The Backstop
Commitment Premium shall be payable (i) in $9,440,000 principal amount of
Convertible Bonds issued at par and 708,000 shares of Special Voting Stock, in
the case of such payment on the Plan Effective Date, or (ii) in cash, in the
case of an earlier termination of this Agreement under the circumstances
provided in Section 14(e), and allocated pro rata based on such Backstop Party’s
Backstop Commitment Percentage. The Management Commitment Premium shall be
payable (i) in $144,000 principal amount of Convertible Bonds issued at par and
10,800 shares of Special Voting Stock, in the case of such payment on the Plan
Effective Date, or (ii) in cash, in the case of an earlier termination of this
Agreement under the circumstances provided in Section 14(e), and allocated as
set forth on Schedule 1.

(e) Subject to the entry of the Confirmation Order, which order shall approve
this Section 2(e), on the Plan Effective Date, the Company or the Issuer, as
applicable, will reimburse or pay, as the case may be, the reasonable and
documented out-of-pocket expenses incurred by the Backstop Parties, whether
prior to or after the date hereof (the “Transaction Expenses”), and including,
but not limited to, all reasonable and documented out-of-pocket fees and
expenses of Davis Polk & Wardwell LLP (“Davis Polk”), Haynes and Boone LLP,
Houlihan Lokey, Inc., as counsel, local counsel, and financial advisor,
respectively, to the Backstop Parties, in connection with the transactions and
agreements contemplated hereby, in each case in accordance with the terms of
their applicable engagement letters and/or fee letters with the Company.

(f) On the Plan Effective Date, the Commitment Parties will purchase, and the
Issuer will sell, only such amount of Rights Offering Securities and
Unsubscribed Securities or Management Commitment Securities, as applicable, as
is listed in the Funding Notice or Management Funding Notice, without prejudice
to the rights of the Issuer or the Commitment Parties to seek later an upward or
downward adjustment if the amount of Rights Offering Securities and Unsubscribed
Securities or Management Commitment Securities in such Funding Notice or
Management Funding Notice is inaccurate or there is a Defaulting Commitment
Party.

(g) Delivery of the Rights Offering Securities and Unsubscribed Securities will
be made by the Issuer to the respective Backstop Parties on the Plan Effective
Date upon the receipt by the Subscription Agent of the Funding Amount of each
Backstop Party, upon which time such funds shall be delivered to the Issuer by
wire transfer of immediately available funds to the account specified by the
Issuer to the Commitment Parties at least twenty four (24) hours in advance.

(h) Delivery of the Management Commitment Securities will be made by the Issuer
to the respective Management Commitment Parties on the Plan Effective Date upon
the release of the Management Funding Amount of each Management Commitment Party
by the Subscription Agent, upon which time such funds shall be delivered to the
Issuer by wire transfer of immediately available funds to the account specified
by the Issuer to the Commitment Parties at least twenty four (24) hours in
advance

 

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(i) Delivery of the Convertible Bonds and Special Voting Stock in satisfaction
of (i) the Backstop Commitment Premium will be made by the Issuer to the
respective Backstop Parties; and (ii) the Management Commitment Premium will be
made by the Issuer to the respective Management Commitment Parties, in each case
on the Plan Effective Date.

Section 3. TRANSFER OF COMMITMENT. Each Commitment Party’s Commitment shall be
non-transferable without the consent of the Company and the Required Commitment
Parties. Notwithstanding the foregoing, a Backstop Party may assign its
Commitment to (1) any other Backstop Party or (ii) any fund, account or
investment vehicle that is controlled, managed, advised or sub-advised by such
Backstop Party, an Affiliate thereof or the same investment manager, advisor or
subadvisor as the Backstop Party or an Affiliate of such investment manager,
advisor or subadvisor (each, a “Related Fund”, and together with (1), “Permitted
Transferees”), in which case such Permitted Transferee shall agree in writing to
be bound by the obligations of such transferring Backstop Party under this
Agreement and the RSA and shall, as a condition of such transfer, provide the
Company and the non-transferring Backstop Parties with evidence reasonably
satisfactory to them that such transferee is reasonably capable of fulfilling
such obligations. For purposes of this Agreement, (i) “Affiliate” shall mean
with respect to any specified Person, any other Person that, at the time of
determination, directly or indirectly through one or more intermediaries,
Controls (as defined below), is Controlled by or is under common Control with
such specified Person and (ii) “Control” shall mean, as to any Person, the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
The terms “Controlled by,” “Controlled” and “under common Control with” shall
have correlative meanings.

Section 4. COMMITMENT PARTY DEFAULT. Any Backstop Party or Management Commitment
Party that fails to timely fund its Commitment or, in the case of a Backstop
Party, fully exercise all Subscription Rights held by it in the Rights Offering,
(a “Defaulting Commitment Party”) will be liable for its breach and the Company
and the Commitment Parties may enforce all of their respective rights and
remedies hereunder and under applicable law, including the right to seek money
damages (including setoff of any Plan recovery) and/or specific performance upon
the failure to timely fund by the Defaulting Commitment Party. Each of the
non-defaulting Backstop Parties shall have the right, but not the obligation, to
assume its pro rata share of such Defaulting Commitment Party’s Commitment based
on the proportion of its Backstop Commitment to the aggregate amount of Backstop
Commitments of all non-defaulting Backstop Parties assuming such Defaulting
Commitment Party’s Commitment. If a Defaulting Commitment Party does not cure
its failure to fund its Commitment within two (2) days after receiving notice of
such failure from the Company, such Commitment Party shall not be entitled to
any portion of the Backstop Commitment Premium or Management Commitment Premium,
as applicable.

 

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Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in
the disclosure letter delivered to the Backstop Parties on the date hereof (the
“Company Disclosure Letter”), the Company represents and warrants to the
Backstop Parties as set forth below. Except for representations, warranties and
agreements that are expressly limited as to their date, each representation,
warranty and agreement is made as of the date hereof.

(a) Organization and Qualification. Each of the Company and its subsidiaries is
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization and has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as now conducted, in each case except, in the case of the Company’s
subsidiaries, as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (as defined below). Each of the
Company and its subsidiaries is duly qualified or authorized to do business and
is in good standing under the laws of each jurisdiction in which it owns or
leases real property or in which the conduct of its business or the ownership of
its properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing in each non-Texas
jurisdiction would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

(b) Power and Authority.

(i) The Company has the requisite corporate power and authority to enter into,
execute and deliver this Agreement and any other agreements contemplated herein
or in the Plan and, subject to entry of the Confirmation Order and consummation
of the Plan, to perform its obligations hereunder, including to cause the Issuer
to issue the Subscription Rights and the Rights Offering Securities. The Company
has taken all necessary corporate action required for the due authorization,
execution, delivery and performance by it of this Agreement and any other
agreements contemplated herein or in the Plan, and following the entry of the
Confirmation Order will have taken all necessary corporate action required for
the issuance of the Subscription Rights and the Rights Offering Securities.

(ii) The Company has the requisite corporate power and authority to file the
Plan with the Bankruptcy Court and, subject to entry of the Confirmation Order
and consummation of the Plan, to perform its obligations thereunder, and will
have taken all necessary corporate action required for the due authorization,
execution, delivery and performance by it of the Plan.

(c) Execution and Delivery; Enforceability.

(i) This Agreement and the other applicable Definitive Documents (as defined in
the RSA) have been and will be duly and validly executed and delivered by the
Company, and, subject to entry of the Confirmation Order and consummation of the
Plan, constitute or will constitute the valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.

 

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(ii) Upon entry of the Confirmation Order and consummation of the Plan, the Plan
will constitute the valid and binding obligation of the Company, enforceable
against it in accordance with its terms.

(d) Authorized Capital. Upon the Plan Effective Date, the authorized capital of
the Issuer shall be consistent with the terms of the Plan and Disclosure
Statement (as defined below), and the issued and outstanding Rights Offering
Securities of the Issuer shall be consistent with the terms of the Plan and
Disclosure Statement.

(e) Issuance. The distribution of the Subscription Rights and, subject to entry
of the Confirmation Order and consummation of the Plan, the issuance of the
Rights Offering Securities, including the Convertible Bonds subscribed for by
the Backstop Parties in the Rights Offering, the Management Commitment
Securities, the Unsubscribed Securities and the securities issued pursuant to
the Backstop Commitment Premium and the Management Commitment Premium, will have
been duly and validly authorized and, when the Rights Offering Securities are
issued and delivered against payment therefor in the Rights Offering or to the
Backstop Parties hereunder, will be duly and validly issued and outstanding,
fully paid, non-assessable and free and clear of all Taxes (as defined below),
Liens (as defined below), preemptive rights, rights of first refusal,
subscription and similar rights, except as set forth herein.

(f) No Conflict. The distribution of the Subscription Rights, and, subject to
entry of the Confirmation Order and consummation of the Plan, the sale, issuance
and delivery of the Rights Offering Securities upon exercise of the Subscription
Rights, the consummation of the Rights Offering by the Issuer, the sale,
issuance and delivery of the Unsubscribed Securities pursuant to the terms
hereof, and the execution and delivery (or, with respect to the Plan, the filing
with the Bankruptcy Court) by the Company of this Agreement and the Plan and
compliance by it with all of the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby (i) will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under (with or without notice or lapse of
time, or both), or result, except to the extent expressly provided in or
contemplated by the Plan, in the acceleration of, or the creation of any Lien
under, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of their
properties or assets is subject; (ii) will not result in any violation of the
provisions of the organizational documents of the Company or any of its
subsidiaries; and (iii) assuming the accuracy of the Backstop Parties’
representations and warranties in Section 6, will not result in any violation
of, or any termination or material impairment of any rights under, any statute
or any license, authorization, injunction, judgment, order, decree, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties,
except in any such case described in clauses (i) and (iii), as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. “Material Adverse Effect” means any fact, event, change, effect,
development, circumstance, or occurrence that, individually or in the aggregate,
has had or would reasonably be expected to have a material adverse effect on,
and/or material adverse

 

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developments that would reasonably be expected to result in a material adverse
effect with respect to: (i) the business, operations, properties, assets,
prospects or financial condition of the Company and its subsidiaries, in each
case, taken as a whole; or (ii) the ability of the Company or any of its
subsidiaries, in each case taken as a whole, to perform their obligations under
this Agreement, the Plan and the RSA; provided, that, for the purposes of clause
(i), none of the following, either alone or in combination, will constitute a
Material Adverse Effect: (A) any changes in applicable Laws (as defined in the
RSA) or United States generally accepted accounting principles (“GAAP”); (B) any
change resulting from the filing or pendency of or emergence from the Chapter 11
Cases, actions taken in connection with the Chapter 11 Cases, or from any action
approved by the Bankruptcy Court; (C) any change resulting from the public
announcement of the Chapter 11 Cases or the entry into this Agreement,
compliance with terms of this Agreement or the consummation of the transactions
contemplated hereby; (D) any change resulting from the taking of any action
taken by the Company and its subsidiaries after the date hereof with the prior
consent of the Required Commitment Parties; (E) any effects or changes arising
from or related to the breach of this Agreement by any Backstop Parties; or
(F) any fact, event, change, effect, development, circumstance, or occurrence
publicly disclosed by the Company in any filing with the SEC prior to the date
hereof.

(g) Consents and Approvals. Assuming the accuracy of the Backstop Parties’
representations and warranties in Section 6, no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties is required for the
distribution of the Subscription Rights, the sale, issuance and delivery of the
Rights Offering Securities upon exercise of the Subscription Rights, the
issuance, sale and delivery of Unsubscribed Securities to the Backstop Parties
and Management Commitment Securities to the Management Commitment Parties
hereunder, the consummation of the Rights Offering by the Issuer and the
execution and delivery by the Company of this Agreement or the Plan and
performance of and compliance by them with all of the provisions hereof and
thereof (including payment of the Backstop Commitment Premium and the Management
Commitment Premium and Transaction Expenses of the Backstop Parties as required
in Section 2(e) herein) and the consummation of the transactions contemplated
hereby and thereby, except (i) the entry of the Confirmation Order,
(ii) filings, if any, pursuant to the HSR Act (as defined below) and the
expiration or termination of all applicable waiting periods thereunder or any
applicable notification, authorization, approval or consent under any other
Antitrust Laws (as defined below) in connection with the transactions
contemplated by this Agreement, (iii) the filing of any other corporate
documents in connection with the transactions contemplated by this Agreement
with applicable state filing agencies, (iv) such consents, approvals,
authorizations, registrations or qualifications as may be required under foreign
securities laws, federal securities laws or state securities or “blue sky” Laws
in connection with the offer and sale of the Rights Offering Securities,
Unsubscribed Securities, the Backstop Commitment Premium and the Management
Commitment Premium and (v) such consents, approvals, authorizations,
registrations or qualifications the absence of which would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

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(h) No Undisclosed Material Liabilities. There are no debts, liabilities or
obligations of the Company or any of its subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined or determinable, and there is
no existing condition, situation or set of circumstances that would reasonably
be expected to result in such a liability or obligation other than
(i) liabilities or obligations disclosed and provided for in the Financial
Statements (as defined below) and (ii) liabilities or obligations incurred in
the ordinary course of business consistent with past practices since the date of
the most recent balance sheet presented in the Financial Statements (as defined
below) (the “Reference Date”).

(i) Financial Statements. The audited consolidated balance sheets of the Company
as at December 31, 2018 and the related consolidated statements of operations
and of cash flows for the fiscal year then ended, accompanied by a report
thereon by KPMG LLP, in each case included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2018 filed with the SEC, and the
unaudited consolidated balance sheets of the Company as at September 30, 2019
and the related consolidated statements of operations and of cash flows for the
fiscal quarter then ended, in each case included in the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2019 (collectively, the
“Financial Statements”), present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of the
dates indicated and the results of their operations and their cash flows for the
periods specified. The Financial Statements have been prepared in conformity
with GAAP throughout the periods covered thereby.

(j) No Violation. The Company and each of its subsidiaries are not, except as a
result of the Chapter 11 Cases, in violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except for any such default or violation that would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.

(k) Legal Proceedings. Other than the Chapter 11 Cases and any adversary
proceedings or contested motions commenced in connection therewith, and other
than as set forth in Section 5(k) of the Company Disclosure Letter, there are no
legal, governmental or regulatory investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened, in each case, to which
the Company and its subsidiaries is or may be a party or to which any property
of the Company and its subsidiaries is or may be the subject that, individually
or in the aggregate would reasonably be expected to result in a Material Adverse
Effect. For the purposes of this Agreement, “knowledge of the Company” shall
mean the actual knowledge after reasonable inquiry of the chief executive
officer, chief financial officer, or general counsel of the Company.

(l) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party
to any contract, agreement or understanding with any other individual, firm,
corporation (including any non-profit corporation), partnership, limited
liability company, joint venture, association, trust, Governmental Entity or
other entity or organization (each a “Person”) (other than this Agreement) that
would give rise to a valid claim against it or

 

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the Commitment Parties for a brokerage commission, finder’s fee or like payment
(in the case of the Company, excluding, for the avoidance of doubt, any success
or financing fee) in connection with the transactions contemplated hereunder.
For purposes of this Agreement, “Governmental Entity” means any U.S. or
non-U.S. international, regional, federal, state, municipal or local
governmental, judicial, administrative, legislative or regulatory authority,
entity, instrumentality, agency, department, commission, court, or tribunal of
competent jurisdiction (including any branch, department or official thereof);
excluding, however, any Person engaged in the oil and gas extraction or services
business that is owned in whole or in part by any such U.S. or non-U.S.
international, regional, federal, state, municipal or local governmental,
judicial, administrative, legislative or regulatory authority, entity,
instrumentality, agency, department, commission, court, or tribunal of competent
jurisdiction (including any branch, department or official thereof).

(m) Absence of Certain Changes. As of the date hereof, since the Reference Date,
no change, event, circumstance, effect, development, occurrence or state of
facts has occurred or exists that has or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

(n) Environmental. Except as to matters that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, (i) no
written notice, claim, demand, request for information, order, complaint or
penalty has been received by the Company or any of its subsidiaries, and there
are no judicial, administrative or other actions, suits or proceedings pending
or, to the knowledge of the Company, threatened which allege a violation of or
liability under any Environmental Laws, in each case relating to the Company or
any of its subsidiaries, (ii) the Company and each of its subsidiaries is in
compliance with Environmental Law and has obtained, maintains in full force and
effect, and is in compliance with all permits, licenses and other approvals
currently required under any Environmental Law for conduct of its business as
presently conducted by the Company and each of its subsidiaries and (iii) no
Hazardous Materials have been released by the Company or any of its subsidiaries
at any location in a manner that would reasonably be expected to give rise to
any cost, liability or obligation of the Company or any of its subsidiaries
under any Environmental Laws. For purposes of this Agreement, “Environmental
Law” means all applicable foreign, federal, state and local conventions,
treaties, protocols, laws, statutes, rules, regulations, ordinances, orders and
decrees relating in any manner to contamination, pollution or protection of the
environment or exposure to hazardous or toxic substances, materials or wastes,
and “Hazardous Materials” means all materials, substances, chemicals or wastes
(or combination thereof) that are listed, defined, designated, regulated or
classified as hazardous, toxic, radioactive, dangerous, a pollutant, a
contaminant, petroleum, oil or words of similar meaning or effect under any
Environmental Law.

(o) Insurance. The Company and each of its subsidiaries, as applicable, has
insured its respective properties and assets against such risks and in such
amounts as are customary for companies engaged in similar businesses. All
premiums due and payable in respect of material insurance policies maintained by
the Company and its subsidiaries have been paid. As of the date hereof, to the
knowledge of the Company and its subsidiaries, neither the Company nor any of
its subsidiaries has received notice from any insurer or agent of such insurer
with respect to any material insurance policies of the Company or any of its
subsidiaries of cancellation or termination of such policies, other than such
notices which are received in the ordinary course of business or for policies
that have expired in accordance with their terms.

 

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(p) Intellectual Property. (i) The Company and its subsidiaries own, or possess
the right to use, all of the patents, patent rights, trademarks, service marks,
trade names, copyrights, licenses, domain names, and any and all applications or
registrations for any of the foregoing (collectively, “Intellectual Property
Rights”) that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other person, (ii) to the
knowledge of the Company, neither the Company and its subsidiaries nor any
Intellectual Property Right, proprietary right, product, process, method,
substance, part, or other material now employed, sold or offered by the Company
and its subsidiaries, is infringing upon, misappropriating or otherwise
violating any valid Intellectual Property Rights of any person and (iii) no
claim or litigation regarding any of the foregoing is pending or, to the
knowledge of the Company, threatened.

(q) No Undisclosed Relationship. Except for employment relationships and
compensation, benefits and travel advances in the ordinary course of business or
as disclosed in Section 5(q) of the Company Disclosure Letter, neither the
Company nor any of its subsidiaries is a party to any agreement with, or
involving the making of any payment or transfer of assets to any stockholder
beneficially owning greater than 5% of the Company or any officer or director of
the Company or any of its subsidiaries (each, an “Affiliate Agreement”).

(r) Money Laundering Laws. The operations of the Company and its subsidiaries
are, and have been at all times, conducted in compliance in all material
respects with applicable financial recordkeeping and reporting requirements of
the U.S. Currency and Foreign Transactions Reporting Act of 1970, the money
laundering statutes of all jurisdictions in which the Company and its
subsidiaries operate (and the rules and regulations promulgated thereunder) and
any related or similar laws and there has been no material legal proceeding by
or before any Governmental Entity or any arbitrator involving the Company or any
of its subsidiaries with respect to such laws is pending or, to the knowledge of
the Company, threatened.

(s) Sanctions Laws. Neither the Company and its subsidiaries nor, to the
knowledge of the Company, any of its respective directors, officers, employees
or other Persons acting on its behalf with express authority to so act are
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department. The Company and its subsidiaries
will not directly or indirectly use the proceeds of the Rights Offering, or
lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other Person, for the purpose of financing the
activities of any Person that, to the knowledge of the Company, is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department.

 

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(t) Foreign Corrupt Practices Act. There have been no actual or alleged material
violations of the Foreign Corrupt Practices Act of 1977, as amended, nor any
applicable anti-corruption or anti-bribery laws in any jurisdiction other than
the United States, by the Company and its subsidiaries or any of their
respective officers, directors, agents, distributors, employees or any other
Person acting on behalf of the Company or any of its subsidiaries.

(u) Taxes. Except in each case as to matters that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,

(i) the Company, and each of its subsidiaries, has paid, or caused to be paid,
all Taxes (as defined below) imposed on it or its assets, business, or
properties or, to the extent such Taxes are not yet due, has made adequate
provision (to the extent required in accordance with generally accepted
accounting principles) for the payment of such Taxes;

(ii) the Company and each of its subsidiaries has timely filed, or caused to be
filed, all income and other returns, information statements, or reports required
to be filed with any governmental authority with respect to Taxes;

(iii) as of the date hereof, with respect to the Company and its subsidiaries,
other than in connection with (A) the Chapter 11 Cases, or (B) Taxes being
contested in good faith by appropriate proceedings for which adequate provisions
has been made (to the extent required in accordance with generally accepted
accounting principles): (I) there is no outstanding audit, assessment, dispute
or claim concerning any Tax liability of the Company or its subsidiaries,
(II) neither the Company nor its subsidiaries have received from any
governmental authority any written notice regarding any contemplated or pending
audit, examination or other administrative proceeding or court proceeding
concerning any material amount of Taxes imposed thereon, and (III) there are no
Liens for Taxes on any asset of the Company or its subsidiaries (other than
Liens for Taxes not yet delinquent);

(iv) none of the Company or any of its subsidiaries has been either a
“distributing corporation” or a “controlled corporation” in a distribution
occurring during the last five years in which the parties to such distribution
treated the distribution as one to which Section 355 of the Internal Revenue
Code of 1986, as amended, is applicable; and

(v) none of the Company and any of its subsidiaries has received a written claim
to pay any liability for Taxes of any Person (other than the Company or its
subsidiaries) arising from the application of Treasury Regulation
Section 1.1502-6 or any analogous provision of state, local or foreign law, by
contract or as a transferee or successor;

 

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For purposes of this Agreement, “Taxes” shall mean all income, gross receipts,
license, payroll, employment, excise, severance, occupation, premium, windfall
profits, customs, duties, capital stock, franchise, profits, withholding,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, and
estimated taxes levied by a governmental authority, including any interest and
penalties thereon, and “Lien” shall mean any lien (statutory, judicial or
other), adverse claim, charge, option, right of first refusal, servitude,
security interest, mortgage, pledge, hypothecation, assignment, deposit
arrangement, deed of trust, easement, right of way, encumbrance, charge,
restriction on transfer, conditional sale or other title retention agreement,
defect in title, other security interest or preferential arrangement in the
nature of a security interest of any kind or nature whatsoever, any financing
lease having substantially the same economic effect as any of the foregoing or
other restrictions of a similar kind.

(v) Title to Property.

(i) Personal Property. Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (A) the Company and
its subsidiaries have good title to, free and clear of any and all Liens, or a
valid leasehold interest in, all personal properties, machinery, equipment and
other tangible assets of the business necessary for the conduct of the business
as presently conducted by the Company and its subsidiaries and (B) such
properties (x) are in the possession or control of the Company or its
subsidiaries and (y) are in good and operable condition and repair, reasonable
wear and tear excepted.

(ii) Leased Real Property. The Company and its subsidiaries have complied with
all obligations under all leases to which they are parties that have not been
rejected in the Chapter 11 Cases, except where the failure to comply would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and all such leases are in full force and effect, except leases
in respect of which the failure to be in full force and effect would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The Company and its subsidiaries enjoy peaceful and undisturbed
possession under all such leases, other than leases in respect of which the
failure to enjoy peaceful and undisturbed possession would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

(w) Labor Relations. There is no labor or employment-related legal proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries, by or on behalf of any of their respective employees or
such employees’ labor organization, works council, workers’ committee, union
representatives or any other type of employees’ representatives appointed for
collective bargaining purposes, or by any Governmental Entity, that has had or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

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(x) Licenses and Permits. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all
declarations and filings with, the appropriate Governmental Entities that are
necessary for the ownership or lease of their respective properties and the
conduct of the business as presently conducted by the Company and its
subsidiaries after the Plan Effective Date, in each case, except as would not
have and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as would not have and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, the Company and its subsidiaries (i) have not received notice of
any revocation or modification of any such license, certificate, permit or
authorization or (ii) have no reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary course.

(y) Material Contracts.

(i) All Material Contracts are valid, binding and enforceable by and against the
Company and its subsidiaries, as applicable, except where the failure to be
valid, binding or enforceable would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and no notice to
terminate, in whole or part, any Material Contract has been delivered to the
Company and its subsidiaries except where such termination would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. Other than as a result of the filing of the Chapter 11 proceedings,
neither the Company and its subsidiaries nor, to the knowledge of the Company,
any other party to any Material Contract, is in default or breach under the
terms thereof except, in each case, for such instances of default or breach that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. For purposes of this Agreement, “Material Contract”
means any contract necessary for the operation of the business of the Company
and its subsidiaries after the Plan Effective Date that is a “material contract”
(as such term is defined in Item 601(b)(10) of Regulation S-K or required to be
disclosed on a current report on Form 8-K).

(ii) Except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, neither the Company
nor any of its subsidiaries are a party to any contract, agreement, arrangement
or understanding containing any provision or covenant limiting in any material
respect the ability of the Company or any of its subsidiaries to (1) sell any
products or services of or to any other Person or in any geographic region,
(2) engage in any line of business or (3) compete with or to obtain products or
services from any Person or limiting the ability of any Person to provide
products or services to the Company or any of its subsidiaries.

(z) Exemption from Registration. Assuming the accuracy of the Commitment
Parties’ representations set forth in Section 6 hereof, the issuance of
Commitment Securities (as defined below) under this Agreement (including as part
of the Backstop Commitment Fee and Management Commitment Fee) will be exempt
from the registration and prospectus delivery requirements of the Securities
Act.

 

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(aa) No General Solicitation; Solicitation. None of the Company or any of its
Affiliates or any other Person acting on its or their behalf has solicited
offers for or offered to sell any Convertible Bonds or Special Voting Stock by
means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D promulgated under the Securities Act or
in any manner involving a public offering within the meaning of Section 4(a)(2)
of the Securities Act. None of the Company or any of its Affiliates have any
contract, arrangement, or understanding relating to, and will not, directly or
indirectly, pay any commission or other remuneration to any broker, dealer,
salesperson, agent, or any other person for soliciting votes to accept or reject
the Plan.

(bb) Volcker Rule. Neither the Company nor the Issuer is a “covered fund” as
such term is defined in the final regulations promulgated under Section 13 of
the U.S. Bank Holding Company Act of 1956, as amended, 12 C.F.R. section
248.10(b)(1) (the “Volcker Rule”).

Section 6. REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTIES. Each of the
Commitment Parties severally and not jointly represents and warrants to the
Company as set forth below. Each representation, warranty and agreement is made
as of the date hereof.

(a) Formation. Such Commitment Party that is not an individual has been duly
organized or formed, as applicable, and is validly existing as a corporation or
other entity in good standing under the applicable laws of its jurisdiction of
organization or formation.

(b) Power and Authority. Such Commitment Party has the requisite power and
authority to enter into, execute and deliver this Agreement and to perform its
obligations hereunder and has taken all necessary action required for the due
authorization, execution, delivery and performance by it of this Agreement.

(c) Execution and Delivery. This Agreement has been duly and validly executed
and delivered by such Commitment Party and constitutes its valid and binding
obligation, enforceable against such Commitment Party in accordance with its
terms.

(d) Securities Laws Compliance. The Rights Offering Securities subscribed for by
the Backstop Parties in the Rights Offering, the Management Commitment
Securities subscribed for by the Management Commitment Parties, the Unsubscribed
Securities to be purchased by the Backstop Parties, and any securities issued
pursuant to the Backstop Commitment Premium and the Management Commitment
Premium (collectively, the “Commitment Party Securities”) that have not been
registered under the Securities Act will not be offered for sale, sold or
otherwise transferred by such Commitment Party except pursuant to an effective
registration statement under the Securities Act of 1933 and the rules and
regulations of the SEC thereunder (the “Securities Act”) or in a transaction
exempt from or not subject to registration under the Securities Act and any
applicable state securities laws.

 

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(e) Purchase Intent. Such Commitment Party is acquiring the Commitment Party
Securities for its own account or for the accounts for which it is acting as
investment advisors or manager, and not with a view to distributing or reselling
such Commitment Party Securities or any part thereof. Such Commitment Party
understands that such Commitment Party must bear the economic risk of this
investment indefinitely, unless the Commitment Party Securities are registered
pursuant to the Securities Act and any applicable state securities or “blue sky”
Laws or an exemption from such registration is available, and further
understands that it is not currently contemplated that any Commitment Party
Securities will be registered at the time of issuance.

(f) Investor Status. Such Commitment Party is either (i) an “accredited
investor” as defined in Rule 501(a) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A under the Securities
Act.

(g) Independent Investigation. Such Commitment Party has such knowledge and
experience in financial and business matters such that it is capable of
evaluating the merits and risks of its investment in the applicable Commitment
Party Securities. Such Commitment Party understands and accepts that its
investment in the Commitment Party Securities involves risks. Such Commitment
Party has received such documentation as it has deemed necessary to make an
informed investment decision in connection with its investment in the Commitment
Party Securities, has had adequate time to review such documents prior to making
its decision to invest, has had a full opportunity to ask questions of and
receive answers from the Issuer or any person or persons acting on behalf of the
Issuer concerning the terms and conditions of an investment in the Issuer and
has made an independent decision to invest in the Commitment Party Securities
based upon the foregoing and other information available to it, which it has
deemed adequate for this purpose. With the assistance of each Commitment Party’s
own professional advisors, to the extent that such Commitment Party has deemed
appropriate, such Commitment Party has made its own legal, tax, accounting and
financial evaluation of the merits and risks of an investment in the Commitment
Party Securities. Such Commitment Party understands and is able to bear any
economic risks associated with such investment (including the necessity of
holding such securities for an indefinite period of time). Except for the
representations and warranties expressly set forth in this Agreement or any
other transaction agreement, such Commitment Party has independently evaluated
the merits and risks of its decision to enter into this Agreement and disclaims
reliance on any representations or warranties, either express or implied, by or
on behalf of the Company or the Issuer. Notwithstanding the foregoing or any
other provision of this Agreement, nothing in this Section 6(g) shall constitute
a waiver of claims of fraud.

(h) Consents and Approvals. Assuming the accuracy of the Company’s
representations and warranties in Section 5, no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body having jurisdiction over such Commitment Party or
any of its properties is required for the purchase of the Commitment Party
Securities by the Commitment Parties hereunder and the execution and delivery by
such Commitment Party of this Agreement and performance of and compliance by it
with all of the provisions hereof and thereof (and the consummation of the
transactions contemplated hereby and thereby), except (i) the entry

 

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of the Confirmation Order, (ii) filings, if any, pursuant to the HSR Act and the
expiration or termination of all applicable waiting periods thereunder or any
applicable notification, authorization, approval or consent under any other
Antitrust Laws in connection with the transactions contemplated by this
Agreement, (iii) the filing of any other corporate documents in connection with
the transactions contemplated by this Agreement with applicable state filing
agencies, (iv) such consents, approvals, authorizations, registrations or
qualifications as may be required under foreign securities laws, federal
securities laws or state securities or “blue sky” Laws in connection with the
offer and sale of the Rights Offering Securities, Unsubscribed Securities and
the Backstop Commitment Premium and (v) such consents, approvals,
authorizations, registrations or qualifications the absence of which would not,
individually or in the aggregate, reasonably be expected to result in a material
adverse effect on the ability of such Commitment Party to perform its
obligations under this Agreement.

(i) Sufficiency of Funds. Such Commitment Party will have sufficient immediately
available funds to make and complete the payment of the aggregate purchase price
for its applicable Commitment on the Plan Effective Date or the Management
Funding Deadline, as applicable.

(j) No Brokers Fee. Such Commitment Party is not a party to any contract with
any Person that would give rise to a valid claim against any of the Debtors for
a brokerage commission, finder’s fee or like payment in connection with the
Rights Offering or the sale of the Rights Offering Securities, the Unsubscribed
Securities or the Management Commitment Securities.

Section 7. ADDITIONAL COVENANTS OF THE COMPANY. The Company agrees with the
Commitment Parties as follows:

(a) Plan and Disclosure Statement. The Company shall file, no later than one
(1) calendar day after the Petition Date, the Plan and the Disclosure Statement
(as defined in the RSA), each in form and substance acceptable to the Required
Commitment Parties and the Company, it being understood that the Plan and
Disclosure Statement distributed to creditors on February 28, 2020 are
acceptable to the Required Commitment Parties. The Company will provide advance
initial draft copies of all Definitive Documents (as defined in the RSA) to
counsel to the Backstop Parties at least three (3) Business Days prior to the
date when the Company intends to file the applicable Definitive Documents with
the Bankruptcy Court; provided, that if three (3) Business Days in advance is
not reasonably practicable, such initial draft Definitive Document shall be
provided as soon as reasonably practicable prior to filing, but in no event
later than twenty-four (24) hours in advance of any filing thereof.

(b) Support of the Plan. The Company shall do all things reasonably necessary
and proper to (i) support and consummate the Restructuring Transactions (as
defined in the RSA) in accordance with the RSA, and (ii) prosecute and defend
any appeals relating to the Confirmation Order and the BCA Approval Order (as
defined below) and (iii) comply with each Milestone (as defined in the RSA) set
forth in the RSA. None of the Company or any of its Affiliates have any
contract, arrangement, or understanding relating to, and will not, directly or
indirectly, pay any commission or other remuneration to any broker, dealer,
salesperson, agent, or any other Person for soliciting votes to accept or reject
the Plan.

 

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(c) Rights Offering. Subject to the terms and conditions of this Agreement and
the RSA, the Company shall, and shall cause the Issuer to, effectuate the Rights
Offering in accordance with the Plan and the Rights Offering Procedures.

(d) Form D and Blue Sky. The Company shall cause the Issuer to timely file a
Form D with the SEC with respect to the Commitment Party Securities, to the
extent required under Regulation D of the Securities Act and shall provide, upon
request, a copy thereof to each Commitment Party. The Company shall, or shall
cause the Issuer to, on or before the Plan Effective Date, take such action as
the Company or the Issuer shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify for sale or issuance to the Commitment
Parties, the Commitment Party Securities under applicable securities and “blue
sky” Laws of the states of the United States (or to obtain an exemption from
such qualification) and any applicable foreign jurisdictions, and shall provide
evidence of any such action so taken to the Commitment Parties on or prior to
the Plan Effective Date. The Company shall, or shall cause the Issuer to, timely
make all filings and reports relating to the offer and sale of the Commitment
Party Securities required under applicable securities and “blue sky” Laws of the
states of the United States following the Plan Effective Date. The Company
shall, or shall cause the Issuer to, pay all fees and expenses in connection
with satisfying its obligations under this Section 7(d).

(e) Security Legend. Each certificate evidencing Convertible Bonds and/or
Special Voting Stock issued hereunder, including any Convertible Bonds and/or
shares of Special Voting Stock that may be issued in satisfaction of the
Backstop Commitment Premium or Management Commitment Premium, and each
certificate issued in exchange for or upon the transfer of any such securities,
shall be stamped or otherwise imprinted with a legend (the “Legend”) in
substantially the following form:

“THIS SECURITY [AND THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE] [HAS] NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:

(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED
INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT)
AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH
ACCOUNT, AND

(2) AGREES FOR THE BENEFIT OF [PIONEER ENERGY SERVICES CORP.] (THE “COMPANY”)
THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY
BENEFICIAL INTEREST HEREIN PRIOR TO THE APPLICABLE RESALE RESTRICTION
TERMINATION DATE, EXCEPT:

 

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(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR

(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR

(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR

(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D)
ABOVE, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF
SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE
REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN
COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”

In the event that any such securities are uncertificated, such securities shall
be subject to a restrictive notation substantially similar to the Legend in the
stock ledger or other appropriate records maintained by the Issuer or agent, and
the term “Legend” shall include such restrictive notation. The Issuer shall
remove the Legend (or restrictive notation, as applicable) set forth above from
the certificates evidencing any such securities (or the share register or other
appropriate Issuer records, in the case of uncertified securities), upon
request, at any time after the restrictions described in such Legend cease to be
applicable, including, as applicable, when such securities may be sold under
Rule 144 of the Securities Act without conditions. The Issuer may reasonably
request such opinions, certificates or other evidence that such restrictions no
longer apply as a condition to removing the Legend.

(f) Unsubscribed Securities. The Company, in consultation with counsel for the
Backstop Parties, shall determine the amount of Unsubscribed Securities, if any,
and, in good faith, provide a Funding Notice that accurately reflects the amount
of Unsubscribed Securities as so determined and to provide to the Backstop
Parties a certification by the Subscription Agent of the Unsubscribed Securities
or, if such certification is not available, such written backup to the
determination of the Unsubscribed Securities as the Backstop Parties may
reasonably request.

 

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(g) Approvals. Except as set forth in this Agreement or with the prior written
consent of the Required Commitment Parties, during the period from the date of
this Agreement to the earlier of the Plan Effective Date and the date on which
this Agreement is terminated in accordance with its terms, the Company shall
use, and shall cause its subsidiaries to use, commercially reasonable efforts to
reasonably promptly take all actions and prepare and file all necessary
documentation (including by reasonably cooperating with the Backstop Parties as
to the appropriate time of filing such documentation and its content) and to
effect all applications that are reasonably necessary or advisable in connection
with seeking any governmental approval, exemption or authorization from any
governmental authority, including under any Antitrust Laws, that are reasonably
necessary to consummate and make effective the transactions contemplated by this
Agreement. To the extent permitted by applicable law, the Company and each of
its subsidiaries shall reasonably promptly notify the Backstop Parties (and
furnish to them copies of, if requested) of any communications from any
antitrust or other regulatory authority and shall not participate in any meeting
with any such antitrust or regulatory authority unless they consult with the
Backstop Parties in advance to the extent permitted by applicable law and give
the Backstop Parties a reasonable opportunity to attend and participate thereat.
The Company and each of its subsidiaries shall not take any action that is
intended or would reasonably be expected to materially impede or delay the
ability of the parties hereto to obtain any necessary approvals required for the
transactions contemplated by this Agreement. For purposes of this Agreement,
“Antitrust Laws” means the Hart Scott Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder (the “HSR Act”)
and any similar law enforced by any governmental antitrust entity of any
jurisdiction regarding pre-acquisition notifications for the purpose of
competition reviews of mergers and acquisitions, the Sherman Act, as amended,
the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and
all other applicable laws that are designed or intended to prohibit, restrict or
regulate actions or transactions having the purpose or effect of monopolization
or restraint of trade or lessening of competition through merger or acquisition
or effectuating foreign investment.

(h) Conduct of Business. Before and through the Plan Effective Date, except as
set forth in the Plan, the RSA, herein or with the express written consent of
the Required Commitment Parties, the Company shall, and shall cause its
subsidiaries to, (A) except to the extent inconsistent with the Bankruptcy Code
or the DIP Credit Agreement (as defined in the RSA), operate its business in the
ordinary course of business in a manner consistent with past practices, (B) use
commercially reasonably efforts to preserve intact their material business
organization, (C) use commercially reasonably efforts to keep available the
services of their officers and employees and (D) use commercially reasonably
efforts to preserve their material relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with the
Company or its subsidiaries in connection with its business. Before and through
the Plan Effective Date, except (1) as set forth in Section 7(h) of the Company
Disclosure Letter, (2) with the prior written approval of the Required
Commitment Parties or (3) as expressly provided in the Plan, the RSA or herein,
the Company shall not, and shall cause its subsidiaries not to:

 

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(i) enter into any acquisition, merger with or other change of control of
another business not permitted under the DIP Facility (as defined in the RSA) as
set forth in the DIP-to-Exit Commitment Letter (as defined in the RSA) or the
Term Loan Agreement as in effect on the date hereof, without giving effect to
any amendments or waivers thereto and regardless of whether or not such DIP
Facility is in effect;

(ii) dispose of any material asset not permitted under the DIP Facility as set
forth in the DIP-to-Exit Commitment Letter or the Term Loan Agreement as in
effect on the date hereof, without giving effect to any amendments or waivers
thereto and regardless of whether or not such DIP Facility is in effect;

(iii) [reserved];

(iv) [reserved];

(v) [reserved];

(vi) enter into any agreement for new employee compensation, new deferred
compensation or severance arrangements unless required by contract or for
non-executives in the ordinary course of business, other than as contemplated by
or agreed in connection with the RSA;

(vii) make any material capital expenditure contracted for following the date
hereof in an amount greater than $1 million (for any individual transaction)
that is not expressly contemplated in the business plan included in the
Disclosure Statement or is not permitted under the DIP Facility as set forth in
the DIP-to-Exit Commitment Letter or the Term Loan Agreement as in effect on the
date hereof, without giving effect to any amendments or waivers thereto and
whether or not such DIP Facility or the Term Loan Agreement is in effect;

(viii) enter into any Affiliate Agreements, except as permitted by the DIP
Facility as set forth in the DIP-to-Exit Commitment Letter and the Term Loan
Agreement as in effect on the date hereof, whether or not such DIP Facility is
in effect;

(ix) declare, set aside or pay any dividends or purchase, redeem, or otherwise
acquire, except in connection with the Plan, any securities of its capital
stock, except as permitted by the DIP Facility as set forth in the DIP-to-Exit
Commitment Letter and the Term Loan Agreement as in effect on the date hereof,
without giving effect to any amendments or waivers thereto and whether or not
such DIP Facility is in effect;

(x) issue, deliver, grant, sell, pledge or otherwise encumber any of its capital
stock or any convertible securities into its capital stock or any of its assets,
except as permitted by the DIP Facility as set forth in the DIP-to-Exit
Commitment Letter and the Term Loan Agreement as in effect on the date hereof,
without giving effect to any amendments or waivers thereto and whether or not
such DIP Facility is in effect;

 

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(xi) make, change or rescind any material election relating to Taxes, except any
elections as are consistent with past practice or as otherwise specifically
permitted or required under the Plan, the Rights Offering, or in connection with
the DIP Facility as set forth in the DIP-to-Exit Commitment Letter and the Term
Loan Agreement as in effect on the date hereof, without giving effect to any
amendments or waivers thereto and whether or not such DIP Facility is in effect;

(xii) become a party to, establish, adopt, amend or terminate any collective
bargaining agreement or other agreement with a labor union, works council or
similar organization;

(xiii) amend its or any of its subsidiaries’ articles of incorporation, bylaws
or other similar organizational documents (whether by merger, consolidation or
otherwise), other than as contemplated by this Agreement, the Plan, the RSA or
the other transactions contemplated thereby;

(xiv) make any loans, advances or capital contributions to, or investments in,
any other Person, other than in the ordinary course of business, except as
permitted by the DIP Facility as set forth in the DIP-to-Exit Commitment Letter
and the Term Loan Agreement as in effect on the date hereof, without giving
effect to any amendments or waivers thereto and whether or not such DIP Facility
is in effect;

(xv) settle, or offer or propose to settle, any material litigation,
investigation, arbitration, proceeding or other claim involving or against the
Company or any of its subsidiaries, except as permitted by the DIP Facility as
set forth in the DIP-to-Exit Commitment Letter and the Term Loan Agreement as in
effect on the date hereof, without giving effect to any amendments or waivers
thereto and whether or not such DIP Facility is in effect; or

(xvi) agree, resolve, commit or enter into any binding agreement to do any of
the foregoing.

(i) Access to Information. Subject in each case to confidentiality agreements
reasonably acceptable to the Company, the Company shall, and shall cause each of
its subsidiaries to, (i) afford the Backstop Parties and their respective
representatives upon request and reasonable notice, from the period commencing
on the date hereof and through the Plan Effective Date, reasonable access,
during normal business hours and without unreasonable disruption or interference
with the Company and its subsidiaries’ business or operations, to the Company
and its subsidiaries’ employees, properties, books, contracts and records and
(ii) during such period, furnish promptly to such parties all reasonable
information concerning the Company and its subsidiaries’ business, properties
and personnel as may reasonably be requested by any such party, provided that
the

 

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foregoing shall not require the Company to permit any inspection, or to disclose
any information, that in the good-faith judgment of the Company (which may be
based on the advice of counsel) would be reasonably likely to (x) cause the
Company to violate any of its obligations with respect to confidentiality to a
third party, (y) disclose any legally privileged information of the Company or
(z) violate any applicable laws or orders. Nothing in this clause (i) shall
require the Company or any of its subsidiaries to issue any “cleansing letter”
or otherwise publicly disclose information for the purpose of enabling a
Backstop Party to transfer any security of, or claim or interest in, the Company
or any of its subsidiaries.

(j) DTC Eligibility. To the extent permitted by The Depository Trust Company,
the Company shall use commercially reasonable efforts to promptly make all
Rights Offering Securities, Unsubscribed Securities and Management Commitment
Securities deliverable to the Commitment Parties eligible for deposit with The
Depository Trust Company, except to the extent the Required Commitment Parties
request such Rights Offering Securities, Unsubscribed Securities or Management
Commitment Securities not be made eligible.

(k) [Reserved].

(l) Further Assurances. Without in any way limiting any other obligation of the
Company and its subsidiaries in this Agreement, the Company and its subsidiaries
shall use commercially reasonable efforts to take or cause to be taken all
actions, and do or cause to be done all things, reasonably necessary, and as any
Backstop Party may reasonably request, in order to consummate and make effective
the transactions contemplated by this Agreement, subject to the terms and
conditions of the RSA and this Agreement.

(m) Alternate Transactions.

(1) From the date of this Agreement until the earlier of the termination of this
Agreement in accordance with its terms and the Plan Effective Date, the Company
and its subsidiaries agree not to seek, solicit, or propose any Alternative
Restructuring Proposal (as defined in the RSA).

(2) Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement shall require the Company, any of its subsidiaries, or the board of
directors, board of managers, or similar governing body of any of them, in such
person’s capacity as a director, officer, or member of the Company or any of its
subsidiaries, to take any action or to refrain from taking any action to the
extent the Company, such subsidiary, or such board of directors, board of
managers, or similar governing body believes in good faith, based on advice of
counsel, that the taking or failing to take such action would be inconsistent
with applicable law or its fiduciary obligations under applicable law, and any
such action or inaction pursuant to this Section 7(m)(2) shall not be deemed to
constitute a breach of this Agreement; provided, however, that nothing in this
Section 7(m)(2) shall be deemed to amend, supplement, or otherwise modify, or
constitute a waiver of, any termination right that may arise as a result of any
such action or omission; provided further, it is agreed that any such action
that results in a termination of this Agreement in accordance with the terms
hereof shall be subject to the provisions set forth in Section 14(d) hereof.

 

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(3) Notwithstanding anything to the contrary in this Agreement, but subject to
the terms of Section 7(m)(1) and Section 7(m)(2), the Company, each of its
subsidiaries, and each of their respective directors, officers, employees,
investment bankers, attorneys, accountants, consultants, and other advisors or
representatives shall have the rights to: (a) consider, respond to, facilitate,
and negotiate in connection with any Alternative Restructuring Proposal received
by the Company or any of its subsidiaries that is a Superior Proposal (as
defined in the RSA) and (b) enter into or continue discussions or negotiations
with holders of Company Claims/Interests (as defined in the RSA) (including any
Backstop Party), any other party in interest in the Chapter 11 Cases (including
any official committee and the United States Trustee), or any other Person
regarding the Restructuring Transactions (as defined in the RSA). If the Company
or any of its subsidiaries receives a written or oral proposal or expression of
interest regarding any Alternative Restructuring Proposal, within two
(2) Business Days, the Company or such subsidiary shall notify (with email being
sufficient) Davis Polk, counsel to the Backstop Parties of any such proposal or
expression of interest, with such notice to include a copy of such proposal, if
it is in writing, or otherwise a summary of the material terms thereof. If the
board of directors of the Company or any of its subsidiaries decides, in the
exercise of its fiduciary duties, to pursue a Superior Proposal, the Company and
its subsidiaries shall notify Davis Polk within two (2) Business Days of such
determination.

(n) Volcker Rule. Neither the Company nor the Issuer will become a “covered
fund” as such term is defined in the Volcker Rule.

Section 8. ADDITIONAL COVENANTS OF THE COMMITMENT PARTIES. Each of the
Commitment Parties agrees, severally and not jointly, with the Company: Except
as set forth in this Agreement or with the prior written consent of the Company,
during the period from the date of this Agreement to the earlier of the Plan
Effective Date and the date on which this Agreement is terminated in accordance
with its terms, the Required Commitment Parties shall use commercially
reasonable efforts to promptly take all actions and prepare and file all
necessary documentation (including by reasonably cooperating with the Company as
to the appropriate time of filing such documentation and its content) and to
effect all applications that are necessary or advisable in connection with
seeking any governmental approval, exemption or authorization from any
governmental authority, including under any Antitrust Laws that are necessary to
consummate and make effective the transactions contemplated by this Agreement.

Section 9. ADDITIONAL COVENANTS OF THE COMPANY AND THE COMMITMENT PARTIES. If
the Parties determine that it would be necessary or desirable, for legal, tax
structuring or other reasons, for the Issuer to be (x) formed in a certain
jurisdiction, (y) formed by an entity other than the Company, or (z) be the
ultimate parent of some, but not all, of the Reorganized Debtors, and such
jurisdiction of formation or change in ownership of the Issuer would require
this Agreement to be amended for legal, tax structuring or other reasons, the
Parties shall cooperate in good faith to amend this Agreement to reflect any
changes reasonably necessary to allow for Issuer to be formed in such
jurisdiction or for Issuer to be formed by such other entity, in each case while
preserving to the maximum extent possible all other provisions of this
Agreement.

 

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Section 10. TAX TREATMENT. The Parties agree that for U.S. federal, and
applicable state and local, income tax purposes each of the Backstop Commitment
Premium and the Management Commitment Premium is intended to be treated as a
payment by the Company to the respective Commitment Parties of the premium for a
put option sold by the Commitment Parties to the Company hereunder, except as
otherwise required by a final “determination” (within the meaning of
Section 1313 of the Code).

Section 11. CONDITIONS TO THE OBLIGATIONS OF THE COMMITMENT PARTIES. The
obligations of the Commitment Parties to purchase Rights Offering Securities,
Unsubscribed Securities and Management Commitment Securities, as applicable,
pursuant to their respective Commitments on the Plan Effective Date are subject
to the satisfaction of the following conditions (unless waived by the Required
Commitment Parties), except where the failure to satisfy any such condition
results solely from the failure by any Commitment Party to comply with this
Agreement:

(a) Plan and Confirmation Order. The Plan, as approved, and the Confirmation
Order, as entered by the Bankruptcy Court (and which shall have become a Final
Order), shall be in form and substance consistent with the RSA or otherwise be
acceptable to the Required Commitment Parties and the Company.

(b) Conditions to the Plan. The conditions to the occurrence of the Plan
Effective Date set forth in the Plan and the Confirmation Order shall have been
satisfied or waived in accordance with the terms of the Plan and consistent with
the RSA, and the Plan Effective Date shall have occurred.

(c) Rights Offering. The Issuer shall have commenced the Rights Offering, the
Rights Offering shall have been conducted in all material respects in accordance
with this Agreement and the Rights Offering Procedures, and the Subscription
Instruction Deadline shall have occurred.

(d) Approvals. All terminations or expirations of waiting periods imposed by any
Governmental Entity necessary for the consummation of the transactions
contemplated by this Agreement, including under the HSR Act or any other
Antitrust Laws, shall have occurred, and all other notifications, consents,
authorizations and approvals required to be made or obtained from any
Governmental Entity, including under any Antitrust Law, shall have been made or
obtained for the transactions contemplated by this Agreement.

(e) Funding Notice. The Backstop Parties shall have received a Funding Notice in
accordance with Section 1(g).

(f) Registration Rights Agreement. The Registration Rights Agreement shall have
been executed and delivered by the Company, shall otherwise have become
effective with respect to the Backstop Parties and the other parties thereto,
and shall be in full force and effect.

 

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(g) Valid Issuance. The Convertible Bonds and Special Voting Stock to be issued
pursuant to the Rights Offering and this Agreement shall be, upon (i) payment of
the aggregate purchase price as provided herein and (ii) the Plan Effective
Date, validly issued and outstanding, and free and clear of all Taxes, Liens,
pre-emptive rights, rights of first refusal, subscription and similar rights.

(h) No Restraint. No judgment, injunction, decree or other legal restraint shall
prohibit the consummation of the Plan, the Rights Offering or the transactions
contemplated hereby.

(i) Representations and Warranties. The representations and warranties of the
Company set forth in this Agreement qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in all
material respects, in each case, on and as of the Plan Effective Date as if made
on and as of the Plan Effective Date (or, to the extent given as of a specified
date, as of such date).

(j) Covenants. The Company shall have performed and complied in all material
respects with all obligations and agreements required in this Agreement to be
performed or complied with by it prior to the Plan Effective Date.

(k) Backstop Commitment Premium. All fees and other amounts, including the
Backstop Commitment Premium and the Management Commitment Premium, required to
be paid or reimbursed by the Company or the Issuer, as applicable, to the
Commitment Parties pursuant to this Agreement as of or on the Plan Effective
Date shall have been so paid or reimbursed, or shall be paid substantially
concurrently upon the fulfilment of the obligations of the applicable Commitment
Party.

(l) Material Adverse Effect. Since the date hereof, there shall not have
occurred, and there shall not exist, any change, event, circumstance, effect,
development, occurrence or state of facts that constitutes, individually or in
the aggregate, a Material Adverse Effect.

(m) Officer’s Certificate. The Backstop Parties shall have received on and as of
the Plan Effective Date a certificate of the chief executive officer or chief
financial officer of the Company, in his or her capacity as such and not in his
or her individual capacity, confirming that the conditions set forth in
Section 11(i), Section 11(j) and Section 11(l) have been satisfied.

Section 12. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company pursuant to this Agreement are subject to satisfaction of the following
conditions (unless waived by the Company), except where the failure to satisfy
any such condition is the result of a failure by the Company to comply with this
Agreement:

 

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(a) Plan and Confirmation Order. The Plan, as approved, and the Confirmation
Order, as entered by the Bankruptcy Court and which shall have become a Final
Order, shall be in form and substance consistent with the RSA and be otherwise
reasonably acceptable to the Required Commitment Parties and the Company.

(b) Conditions to the Plan. The conditions to the occurrence of the Plan
Effective Date set forth in the Plan and the Confirmation Order shall have been
satisfied or waived in accordance with the terms of the Plan, and the Plan
Effective Date shall have occurred or be deemed to have occurred.

(c) Rights Offering. The Issuer shall have commenced the Rights Offering, the
Rights Offering shall have been conducted in all material respects in accordance
with this Agreement and the Rights Offering Procedures, and the Subscription
Instruction Deadline shall have occurred.

(d) Funding Amount. Subject to Section 3 and Section 4, each Backstop Party
shall have delivered and paid its Funding Amount in accordance with
Section 1(g).

(e) Approvals. All terminations or expirations of waiting periods imposed by any
Governmental Entity necessary for the consummation of the transactions
contemplated by this Agreement under the HSR Act or any other Antitrust Laws,
shall have occurred and all other notifications, consents, authorizations and
approvals required to be made or obtained from any Governmental Entity under any
Antitrust Law, shall have been made or obtained for the transactions
contemplated by this Agreement.

(f) No Restraint. No judgment, injunction, decree or other legal restraint shall
prohibit the consummation of the Plan, the Rights Offering or the transactions
contemplated hereby.

(g) Representations and Warranties. The representations and warranties of the
Backstop Parties set forth in this Agreement qualified as to materiality shall
be true and correct, and those not so qualified shall be true and correct in all
material respects, in each case, on and as of the Plan Effective Date as if made
on and as of the Plan Effective Date (or, to the extent given as of a specified
date, as of such date).

(h) Covenants. The Backstop Parties shall have performed and complied in all
material respects with all obligations and agreements required by this Agreement
to be performed or complied with by the Backstop Parties on or prior to the Plan
Effective Date.

Section 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in this Agreement will not survive the Plan Effective Date.
Covenants and agreements that by their terms are to be satisfied after the Plan
Effective Date shall survive until satisfied in accordance with their terms,
subject to termination pursuant to Section 14.

 

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Section 14. TERMINATION.

(a) Termination. This Agreement may be terminated by (i) the mutual written
consent of the Company and the Required Commitment Parties; (ii) the Required
Commitment Parties, if the Plan Effective Date has not occurred on or prior to
the date that is 59 days after the Petition Date (the “Outside Date”), subject
to the extension of such Outside Date by the agreement of the Company and the
Required Commitment Parties; (iii) the Company, if the Plan Effective Date has
not occurred on or prior to the Outside Date, subject to the extension of such
Outside Date by the agreement of the Company and the Required Commitment
Parties; or (iv) the Company if (x) the Outside Date is extended pursuant to
subclause (ii), (y) one or more Backstop Party objects to such extension in
writing to the Company and the Required Commitment Parties within 5 Business
Days of the extension and (z) the non-objecting Backstop Parties fail to assume
the objecting Backstop Party’s Commitment within 10 Business Days of receipt of
the written objection.

(b) Termination by the Company. The Company may terminate this Agreement by
written notice in accordance with Section 16 (with such termination being
effective three (3) Business Days following delivery of such written notice,
except as otherwise set forth below) to each Commitment Party upon the
occurrence of any of the following:

(i) any Backstop Party shall have breached any representation, warranty,
covenant or other agreement made by such Backstop Party in this Agreement, and
such breach or inaccuracy would, individually or in the aggregate, result in a
failure of a condition set forth in Section 12(g) or Section 12(h), if
continuing on the Plan Effective Date, being satisfied and such breach or
inaccuracy is not cured by such Backstop Party by the earlier of (1) the seventh
(7th) Business Day after the giving of notice thereof to such Backstop Party by
the Company and (2) the third (3rd) Business Day prior to the Outside Date;
provided that the Company shall not have the right to terminate this Agreement
pursuant to this clause (i) based upon a breach arising out of the actions or
omissions of the Company in breach of this Agreement; and provided further that
such termination under this Section shall not be effective if, prior to the
expiration of such cure period, one or more non-breaching Backstop Parties
assume such breaching Backstop Party’s Commitment;

(ii) the board of directors, board of managers, or such similar governing body
of the Company or any of its subsidiaries determines in good faith, based on
advice of counsel, that proceeding with any of the Restructuring Transactions
would be inconsistent with the exercise of its fiduciary duties;

(iii) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling or order that would reasonably be expected to prevent the consummation of
a material portion of the Restructuring Transactions; provided, that
notwithstanding the foregoing, this termination right shall not apply to or be
exercised by the Company or any of its subsidiaries that sought or requested
such ruling or order or in contravention of any obligation or restriction set
out in this Agreement or the RSA; provided further, that a ruling by the
Bankruptcy Court that the Plan is not confirmable as a result of the terms
included therein and contemplated by one or more provisions of the Term Sheet
shall not, by itself, constitute a termination event pursuant to this
Section 14(b)(iii); or

 

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(iv) the Bankruptcy Court enters an order denying confirmation of the Plan.

(c) Termination by the Required Commitment Parties. The Required Commitment
Parties may terminate this Agreement by written notice in accordance with
Section 16 (with such termination being effective three (3) Business Days
following delivery of such written notice, except as otherwise set forth below)
upon the occurrence of any of the following:

(i) the breach in any material respect by the Company of any of the
representations, warranties, undertakings, commitments or covenants of the
Company set forth in this Agreement that remains uncured (to the extent curable)
by the earlier of (1) the fifth (5th) Business Day after the giving of notice
thereof to the Company or any of its subsidiaries (as applicable) by any
Backstop Party and (2) the third (3rd) Business Day prior to the Outside Date;
provided, that the Required Commitment Parties shall not have the right to
terminate this Agreement pursuant to this clause (i) based upon a breach arising
out of the actions or omissions of any Backstop Party in breach of this
Agreement;

(ii) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling or order that (i) would reasonably be expected to prevent the
consummation of a material portion of the Restructuring Transactions and
(ii) remains in effect for ten (10) Business Days after such terminating
Backstop Parties transmit a written notice in accordance with Section 16
detailing any such issuance; notwithstanding the foregoing, this termination
right may not be exercised by any Party that sought or requested such ruling or
order in contravention of any obligation set out in this Agreement;

(iii) the entry of an order by the Bankruptcy Court, or the filing of a motion
or application by the Company or any other Debtor seeking an order (without the
prior written consent of the Required Commitment Parties), (i) converting one or
more of the Chapter 11 Cases of the Company or any other Debtor to a case under
chapter 7 of the Bankruptcy Code, (ii) appointing an examiner with expanded
powers beyond those set forth in sections 1106(a)(3) and (4) of the Bankruptcy
Code or a trustee in one or more of the Chapter 11 Cases of the Company or any
other Debtor, or (iii) rejecting this Agreement;

(iv) the failure to meet a Milestone, which has not been waived or extended in a
manner consistent with the RSA, unless such failure is the result of any act,
omission, or delay on the part of the terminating Backstop Parties in violation
of its obligations under the RSA or this Agreement;

 

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(v) the Bankruptcy Court grants relief that is inconsistent in any material
respect with the RSA, the Definitive Documents or the Restructuring Transactions
and such inconsistent relief is not dismissed, vacated or modified to be
consistent with the RSA and the Restructuring Transactions within five
(5) Business Days following written notice thereof to the Company and its
subsidiaries by the Required Commitment Parties;

(vi) the occurrence of an “Event of Default” under the DIP Credit Agreement (as
defined in the RSA) that has not been waived or timely cured in accordance
therewith;

(vii) on or after the date hereof, the Company or any of its subsidiaries
consummates or enters into a definitive agreement evidencing any merger,
consolidation, disposition of material assets, acquisition of material assets,
or similar transaction, pays any dividend, or incurs any indebtedness for
borrowed money, in each case outside the ordinary course of business, in each
case other than: (i) the Restructuring Transactions or (ii) with the prior
consent of the Required Commitment Parties;

(viii) if the Company and its subsidiaries (i) notify Backstop Parties pursuant
to Section 7(m) and/or make a public announcement that they intend to pursue a
Superior Proposal or (ii) enter into a definitive agreement with respect to a
Superior Proposal;

(ix) the filing by the Company of any Definitive Document (as defined in the
RSA), amendments, modifications or supplements thereto, motion or pleading with
the Bankruptcy Court that is not consistent in all material respects with the
RSA and the Term Sheet, and such filing is not withdrawn (or, in the case of a
motion that has already been approved by an order of the Bankruptcy Court at the
time the Company and its subsidiaries are provided with such notice, such order
is not stayed, reversed or vacated) within five (5) Business Days following
written notice thereof to the Company and its subsidiaries by the Required
Commitment Parties;

(x) any of the following shall have occurred: (i) the Company and its
subsidiaries or any affiliate thereof shall have filed any motion, application,
adversary proceeding or Cause of Action (as defined in the RSA) (A) challenging
the validity, enforceability, or priority of, or seek avoidance or subordination
of the Notes Claims or (B) otherwise seeking to impose liability upon or enjoin
the Backstop Parties (in each case, other than with respect to a breach of the
RSA) or (ii) the Company and its subsidiaries or any affiliate thereof shall
have supported any application, adversary proceeding or Cause of Action referred
to in this clause (x) filed by another person, or consents (without the consent
of the Required Commitment Parties) to the standing of any such person to bring
such application, adversary proceeding or Cause of Action;

 

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(xi) the Bankruptcy Court grants relief terminating, annulling or modifying the
automatic stay (as set forth in Section 362 of the Bankruptcy Code) with regard
to any assets of the Company and its subsidiaries having an aggregate fair
market value in excess of $5 million without the consent of the Required
Commitment Parties;

(xii) the Company and its subsidiaries lose the exclusive right to file and
solicit acceptances of a chapter 11 plan;

(xiii) the failure of the Company to pay the reasonable fees and expenses of the
Backstop Parties in accordance with Section 2(e) of this Agreement;

(xiv) the Company or any other Debtor withdraws or revokes the Plan or files,
proposes or otherwise supports any (i) Alternative Restructuring Proposal or
(ii) amendment or modification to the Restructuring Transactions containing any
terms that are materially inconsistent with the implementation of, and the terms
set forth in, the Term Sheet, without the prior written consent of the Required
Commitment Parties, which remains uncured (to the extent curable) for five
(5) Business Days after such terminating Backstop Parties transmit a written
notice in accordance with Section 16 detailing any such breach;

(xv) the Company or any of its subsidiaries enters into a definitive agreement
with respect to an Alternative Restructuring Proposal;

(xvi) the entry of an order by the Bankruptcy Court approving this Agreement
(the “BCA Approval Order”) shall not have occurred prior to the date that is 45
days after the Petition Date or if such order shall be reversed, stayed,
dismissed, vacated, reconsidered, modified or amended without the acquiescence
or written consent (not to be unreasonably withheld, conditioned or delayed) of
the Required Commitment Parties;

(xvii) the Petition Date shall not have occurred on or prior to March 3, 2020;
or

(xviii) the RSA has been terminated in accordance with its terms.

(d) Effect of Termination. Subject to Section 17, upon the effective date of the
termination of this Agreement as to a Party (the “Termination Date”), this
Agreement shall be of no further force and effect as to such Party and each
Party subject to such termination shall be immediately released from its or
their respective liabilities, obligations, commitments, undertakings, and
agreements under or related to this Agreement, shall have no further rights,
benefits or privileges hereunder and shall have all the rights and remedies that
it would have had, had it not entered into this Agreement, and no such rights or
remedies shall be deemed waived pursuant to a claim of laches or estoppel, and
shall be entitled to take all actions, whether with respect to the Restructuring
Transactions or otherwise, that it would have been entitled to take had it not
entered into this Agreement, including with respect to any and all Claims (as
defined in the RSA) or Causes of Action (as defined in the RSA); provided, that
in no event shall

 

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any such termination relieve a Party from liability for its breach or
non-performance of its obligations hereunder before the Termination Date.
Nothing in this Agreement shall be construed as prohibiting the Company, any of
its subsidiaries or any of the Backstop Parties from contesting whether any such
termination is in accordance with its terms or to seek enforcement of any rights
under this Agreement that arose or existed before a Termination Date. Except as
expressly provided in this Agreement, nothing in this Agreement is intended to,
or does, in any manner waive, limit, impair, or restrict (a) any right of the
Company or the ability of the Company to protect and reserve its rights
(including rights under this Agreement), remedies, and interests, including its
claims against any Backstop Party, and (b) any right of any Backstop Party, or
the ability of any Backstop Party, to protect and preserve its rights (including
rights under this Agreement), remedies, and interests, including its claims
against the Company or any other Backstop Party. Notwithstanding any provision
to the contrary in this Section 14, no Party may exercise any of its respective
termination rights as set forth herein if such Party has failed to perform or
comply in all material respects with the terms and conditions of this Agreement
(unless such failure to perform or comply arises as a result of another Party’s
actions or inactions), with such failure to perform or comply causing, or
resulting in, the occurrence of the applicable termination event giving rise to
such termination right. Nothing in this Section 14(d) shall restrict the right
of the Company or any of its subsidiaries to terminate this Agreement in
accordance with Section 14(b)(ii).

(e) Termination Fee. To the extent this Agreement is validly terminated in
accordance with this Section 14 (other than Section 14(b)(i) or
Section 14(c)(iv)), the Company shall, within three (3) Business Days of such
termination, pay or cause to be paid to the Commitment Parties that are not
Defaulting Commitment Parties a non-refundable cash payment in an aggregate
amount equal to (x) $9,440,000 payable to the Backstop Parties that are not
Defaulting Commitment Parties, allocated pro rata based on each such Backstop
Party’s Backstop Commitment Percentage (excluding the Backstop Commitment
Percentage of any Defaulting Commitment Party), plus (y) $143,000 payable to the
Management Commitment Parties that are not Defaulting Commitment Parties,
allocated pro rata based on each such Management Commitment Party’s percentage
(its “Management Commitment Percentage”), as set forth on Schedule 1 opposite
such Management Commitment Party’s name (excluding the Management Commitment
Percentage of any Defaulting Commitment Party); provided that in the event that
(1) this Agreement is validly terminated in accordance with Section 14(c)(xviii)
because the RSA was validly terminated in accordance with Section 13.03(a) of
the RSA or (2) this Agreement is validly terminated in accordance with
Section 14(a)(ii) or Section 14(a)(iii) due to a failure of a condition to
closing set forth in Section 11 of this Agreement to be satisfied by the Outside
Date and (w) such failure is a result of the breach of the RSA by a Consenting
Noteholder(s) (as defined in the RSA), (x) the Company has given notice of such
breach to such Consenting Noteholder(s), (y) within ten (10) Business Days
following the giving of such notice, either such Consenting Noteholder(s) have
failed to cure such breach or this Agreement has been terminated in accordance
with Section 14(a)(ii), and (z) such ten (10) Business Day period has elapsed
prior to such termination pursuant to Section 14(c)(xviii) or
Section 14(a)(iii), then any such breaching Consenting Noteholder who is also a
Commitment Party hereunder shall not be entitled to their pro rata share of any
payment to be paid to the Commitment

 

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Parties pursuant to this Section. To the extent that all amounts due pursuant to
this Section 14(e) shall have been paid by the Company or the applicable
Commitment Parties in connection with a termination of this Agreement, the
Commitment Parties shall not have any additional recourse against the Company
for any obligations or liabilities relating to or arising from this
Agreement. Absent a change in Law, the Company does not expect to have an
obligation to withhold any Taxes on any required payment of the termination fee.

Section 15. INDEMNIFICATION OBLIGATIONS.

(a) Company Indemnity. The Company and the Issuer (the “Indemnifying Parties”)
shall indemnify and hold harmless each Backstop Party and its Affiliates, equity
holders, members, partners, general partners, managers and its and their
respective representatives and controlling persons (each, an “Indemnified
Person”) from and against any and all losses, claims, damages, liabilities and
costs and expenses (other than Taxes of the Backstop Parties except to the
extent otherwise provided for in this Agreement) (collectively, “Losses”) that
any such Indemnified Person may incur or to which any such Indemnified Person
may become subject arising out of or in connection with this Agreement, the Plan
and the transactions contemplated hereby and thereby, including the Commitments,
the Rights Offering, the payment of the Backstop Commitment Premium or the use
of the proceeds of the Rights Offering, the Transaction Expenses or any claim,
challenge, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether any Indemnified Person is a party thereto,
whether or not such proceedings are brought by the Company, the Issuer, their
equity holders, Affiliates, creditors or any other Person, and reimburse each
Indemnified Person upon demand for reasonable documented (with such
documentation subject to redaction to preserve attorney-client and work product
privileges) out-of-pocket legal or other third party expenses incurred in
connection with investigating, preparing to defend or defending, or providing
evidence in or preparing to serve or serving as a witness with respect to, any
lawsuit, investigation, claim or other proceeding relating to any of the
foregoing (including in connection with the enforcement of the indemnification
obligations set forth herein), irrespective of whether or not the transactions
contemplated by this Agreement or the Plan are consummated or whether or not
this Agreement is terminated; provided that the foregoing indemnity will not, as
to any Indemnified Person, apply to Losses (i) as to any Defaulting Commitment
Party or any Indemnified Person related thereto, caused by such default by such
Commitment Party or (ii) to the extent they are found by a final, non-appealable
judgment of a court of competent jurisdiction to arise from the bad faith,
willful misconduct or gross negligence of such Indemnified Person or any of its
Affiliates, equity holders, members, partners, general partners, managers, or
their respective representatives and controlling persons.

(b) Indemnification Procedure. Promptly after receipt by an Indemnified Person
of notice of the commencement of any claim, challenge, litigation, investigation
or proceeding (an “Indemnified Claim”), such Indemnified Person will, if a claim
is to be made hereunder against the Indemnified Person in respect thereof,
notify the Indemnifying Party in writing of the commencement thereof; provided
that (A) the omission to so notify the Indemnifying Party will not relieve the
Indemnifying Party from

 

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any liability that it may have hereunder except to the extent it has been
materially prejudiced by such failure and (B) the omission to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability
that it may have to such Indemnified Person otherwise than on account of this
Section 15. In case any such Indemnified Claims are brought against any
Indemnified Person and it notifies the Indemnifying Party of the commencement
thereof, the Indemnifying Party will be entitled to participate therein, and, at
its election by providing written notice to such Indemnified Person, the
Indemnifying Party will be entitled to assume the defense thereof, with counsel
reasonably acceptable to such Indemnified Person; provided, (X) that the
Indemnifying Party shall not be entitled to assume or maintain control of the
defense of any Indemnified Claim and shall pay the fees and expenses of counsel
retained by the Indemnified Person to the extent provided in Section 15(a) if
the Indemnifying Party has failed or is failing to prosecute or defend
vigorously the Indemnified Claim, and such failure is not reasonably cured
within ten (10) Business Days of receipt of written notice from the applicable
Indemnified Person, and (Y) if the parties (including any impleaded parties) to
any such Indemnified Claims include both such Indemnified Person and the
Indemnifying Party and based on advice of such Indemnified Person’s counsel,
there are legal defenses available to such Indemnified Person that are different
from or additional to those available to the Indemnifying Party, such
Indemnified Person shall have the right to select separate counsel to assert
such legal defenses and to otherwise participate in the defense of such
Indemnified Claims (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel
representing the Indemnified Persons who are parties to such Indemnified Claims
(in addition to one local counsel in each jurisdiction in which local counsel is
required)). Upon receipt of notice from the Indemnifying Party to such
Indemnified Person of its election to so assume the defense of such Indemnified
Claims with counsel reasonably acceptable to the Indemnified Person, the
Indemnifying Party shall not be liable to such Indemnified Person for expenses
incurred by such Indemnified Person in connection with the defense thereof or
participation therein (other than reasonable and documented out-of-pocket costs
of investigation) unless (i) such Indemnified Person shall have employed
separate counsel (in addition to any local counsel) in connection with the
assertion of legal defenses in accordance with the proviso to the immediately
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel
representing the Indemnified Persons who are parties to such Indemnified Claims
(in addition to one local counsel in each jurisdiction in which local counsel is
required)), (ii) the Indemnifying Party shall not have employed counsel
reasonably acceptable to such Indemnified Person to represent such Indemnified
Person within a reasonable time after the Indemnifying Party has received notice
of commencement of the Indemnified Claims from, or delivered on behalf of, the
Indemnified Person, (iii) after the Indemnifying Party assumes the defense of
the Indemnified Claims, the Indemnified Person determines in good faith that the
Indemnifying Party has failed or is failing to defend such claim and provides
written notice of such determination, and such failure is not reasonably cured
within ten (10) Business Days of receipt of such notice, or (iv) the
Indemnifying Party shall have authorized in writing the employment of counsel
for such Indemnified Person.

 

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(c) Settlement of Indemnified Claims. The Indemnifying Party shall not be liable
for any settlement of any Indemnified Claims effected by such Indemnified Person
without the written consent of the Indemnifying Party (which consent shall not
be unreasonably withheld, conditioned or delayed). If any settlement of any
Indemnified Claims is consummated with the written consent of the Indemnifying
Party or if there is a final judgment for the plaintiff in any such Indemnified
Claims, the Indemnifying Party agrees to indemnify and hold harmless each
Indemnified Person from and against any and all Losses by reason of such
settlement or judgment to the extent such Losses are otherwise subject to
indemnification by the Indemnifying Party hereunder in accordance with, and
subject to the limitations of, this Section 15. The Indemnifying Party shall
not, without the prior written consent of an Indemnified Person (which consent
shall be granted or withheld, conditioned or delayed in the Indemnified Person’s
sole discretion), effect any settlement of any pending or threatened Indemnified
Claims in respect of which indemnity or contribution has been sought hereunder
by such Indemnified Person unless (i) such settlement includes an unconditional
release of such Indemnified Person in form and substance satisfactory to such
Indemnified Person from all liability on the claims that are the subject matter
of such Indemnified Claims and (ii) such settlement does not include any
statement as to or any admission of fault, culpability or a failure to act by or
on behalf of any Indemnified Person.

(d) Contribution. If for any reason the foregoing indemnification is unavailable
to any Indemnified Person or insufficient to hold it harmless from Losses that
are subject to indemnification pursuant to Section 15(a), then the Indemnifying
Party shall contribute to the amount paid or payable by such Indemnified Person
as a result of such Loss in such proportion as is appropriate to reflect not
only the relative benefits received by the Indemnifying Party, on the one hand,
and such Indemnified Person, on the other hand, but also the relative fault of
the Indemnifying Party, on the one hand, and such Indemnified Person, on the
other hand, as well as any relevant equitable considerations. It is hereby
agreed that the relative benefits to the Indemnifying Party, on the one hand,
and all Indemnified Persons, on the other hand, shall be deemed to be in the
same proportion as (i) the total value received or proposed to be received by
the Company pursuant to the issuance and sale of the Convertible Bonds in the
Rights Offering contemplated by this Agreement and the Plan bears to (ii) the
Backstop Commitment Premium paid or proposed to be paid to the Backstop Parties.
The Indemnifying Parties also agree that no Indemnified Person shall have any
liability based on their comparative or contributory negligence to the
Indemnifying Parties, any Person asserting claims on behalf of or in right of
any of the Indemnifying Parties, or any other Person in connection with an
Indemnified Claim.

(e) Treatment of Indemnification Payments. All amounts paid by an Indemnifying
Party to an Indemnified Person under this Section 15 shall, to the extent
permitted by applicable law, be treated for all Tax purposes as adjustments to
the purchase price for the Convertible Bonds subscribed for or purchased by such
Indemnified Person. The provisions of this Section 15 are an integral part of
the transactions contemplated by this Agreement, and without these provisions,
the Backstop Parties would not have entered into this Agreement, and subject to
entry of the BCA Approval Order, the obligations of the Company under this
Section 15 shall constitute allowed administrative expenses of the Debtors’
estate under Sections 503(b) and 507 of the Bankruptcy Code and shall be payable
without further order of the Bankruptcy Court, and the Company may comply with
the requirements of this Section 15 without further order of the Bankruptcy
Court.

 

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Section 16. NOTICES. All notices hereunder shall be deemed given if in writing
and delivered, by electronic mail, courier, or registered or certified mail
(return receipt requested), to the following addresses (or at such other
addresses as shall be specified by like notice):

 

  (i)

if to the Company or a Management Commitment Party, to:

Pioneer Energy Services Corp.

1250 N.E. Loop 410, Suite 1000

San Antonio, Texas 78209

Attention:     Bryce Seki, VP - General Counsel

E-mail:         BSeki@pioneeres.com

with copies to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attention:     Brian S. Hermann,

                      Elizabeth R. McColm,

                      Brian Bolin

                      Eugene Y. Park

E-mail:         bhermann@paulweiss.com

                      emccolm@paulweiss.com

                      bbolin@paulweiss.com

                      epark@paulweiss.com

 

  (ii)

if to a Backstop Party, to:

each Backstop Party at the addresses or e-mail addresses set forth below the
Backstop Party’s signature in its signature page to this Agreement

with copies (which shall not constitute notice) to:

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Attention:     Damian S. Schaible

                      Natasha Tsiouris

                      Erik Jerrard

E-mail:         damian.schaible@davispolk.com,

                      natasha.tsiouris@davispolk.com

                      erik.jerrard@davispolk.com

 

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Any notice given by delivery, mail, or courier shall be effective when received.

Section 17. SURVIVAL. Notwithstanding the termination of this Agreement, the
agreements and obligations of the parties hereto in Section 14(d) and Sections
15 through 23 shall survive such termination and shall continue in full force
and effect for the benefit of the parties hereto in accordance with the terms
hereof.

Section 18. ASSIGNMENT; THIRD PARTY BENEFICIARIES. This Agreement is intended to
bind and inure to the benefit of the Parties and their respective successors and
permitted assigns, as applicable. There are no third-party beneficiaries under
this Agreement, and, except as set forth in Section 3, the rights or obligations
of any Party under this Agreement may not be assigned, delegated, or transferred
to any other Person or entity.

Section 19. COMPLETE AGREEMENT. Except as otherwise explicitly provided in this
Agreement, this Agreement constitutes the entire agreement among the Parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, oral or written, among the Parties with respect thereto, other than
any Confidentiality Agreement (as defined in the RSA). The Parties acknowledge
and agree that they are not relying on any representations or warranties other
than as set forth in this Agreement.

Section 20. GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM;
WAIVER OF TRIAL BY JURY. THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THE CHOSEN STATE, WITHOUT GIVING EFFECT TO ITS CONFLICT
OF LAWS PRINCIPLES. Each Party to this Agreement agrees that it shall bring any
action or proceeding in respect of any claim arising out of or related to this
Agreement, to the extent possible, in the Bankruptcy Court, and solely in
connection with claims arising under this Agreement: (a) irrevocably submits to
the exclusive jurisdiction of the Bankruptcy Court; (b) waives any objection to
laying venue in any such action or proceeding in the Bankruptcy Court; and
(c) waives any objection that the Bankruptcy Court is an inconvenient forum or
does not have jurisdiction over any Party to this Agreement. EACH PARTY TO THIS
AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

Section 21. COUNTERPARTS. This Agreement may be executed and delivered in any
number of counterparts and by way of electronic signature and delivery, each
such counterpart, when executed and delivered, shall be deemed an original, and
all of which together shall constitute the same agreement. Except as expressly
provided in this Agreement, each individual executing this Agreement on behalf
of a Party has been duly authorized and empowered to execute and deliver this
Agreement on behalf of said Party.

 

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Section 22. ACTION BY, OR CONSENT OR APPROVAL OF, THE COMMITMENT PARTIES.
Whenever this Agreement refers to any action to be taken by, or any consent or
approval to be given by, the Commitment Parties, unless otherwise expressly
provided in any particular instance, such reference shall be deemed to require
the action, consent or approval of the Required Commitment Parties.

Section 23. AMENDMENTS AND WAIVERS.

(a) This Agreement may not be modified, amended or supplemented, and no
condition or requirement of this Agreement may be waived, in any manner except
in accordance with this Section 23.

(b) This Agreement may be modified, amended or supplemented in a writing signed
by the Company and the Required Commitment Parties; provided that amendments to
this Section 23 shall require the consent of each Backstop Party.
Notwithstanding the foregoing, if the proposed modification, amendment, waiver,
or supplement has a (1) disproportionate and adverse effect on any of the rights
or obligations under this Agreement of any Backstop Party or
(2) disproportionate and material adverse effect on any of the rights or
obligations under this Agreement of any Management Commitment Party, then the
consent of each such affected Commitment Party shall also be required to
effectuate such modification, amendment, waiver or supplement.

(c) Any proposed modification, amendment, waiver or supplement that does not
comply with this Section 23 shall be ineffective and void ab initio.

(d) The waiver by any Party of a breach of any provision of this Agreement shall
not operate or be construed as a further or continuing waiver of such breach or
as a waiver of any other or subsequent breach. No failure on the part of any
Party to exercise, and no delay in exercising, any right, power, or remedy under
this Agreement shall operate as a waiver of, any such right, power, or remedy or
any provision of this Agreement, nor shall any single or partial exercise of
such right, power, or remedy by such Party preclude any other or further
exercise of such right, power, or remedy or the exercise of any other right,
power, or remedy. All remedies under this Agreement are cumulative and are not
exclusive of any other remedies provided by Law.

Section 24. SPECIFIC PERFORMANCE. It is understood and agreed by the Parties
that money damages would be an insufficient remedy for any breach of this
Agreement by any Party, and each non-breaching Party shall be entitled to
specific performance and injunctive or other equitable relief (without the
posting of any bond and without proof of actual damages) as a remedy of any such
breach, including an order of the Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder.

Section 25. RULES OF CONSTRUCTION. This Agreement is the product of negotiations
among the Company and the Commitment Parties, and in the enforcement or
interpretation of this Agreement, is to be interpreted in a neutral manner, and
any presumption with regard to interpretation for or against any Party by reason
of that Party having drafted or caused to be drafted this Agreement, or any
portion of this Agreement, shall not be effective in regard to the
interpretation of this Agreement. The Company and its subsidiaries and the
Commitment Parties were each represented by counsel during the negotiations and
drafting of this Agreement and continue to be represented by counsel.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

PIONEER ENERGY SERVICES CORP. By:  

/s/ Bryce Seki

  Name: Bryce Seki   Title:   General Counsel

[Signature Page to Commitment Agreement]

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[BACKSTOP SIGNATORIES] By:  

 

  Name:   Title:

[Signature Page to Commitment Agreement]

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Schedule 1

Management Commitment Parties

 

Management Commitment Party

   Principal
Amount of
Management
Commitment
Securities    Management
Commitment
Premium

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Schedule 2

Backstop Parties

 

Backstop Party

   Backstop
Commitment
Percentage    Backstop Cap

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Schedule 3

Debtors

 

Name of Entity

  

Jurisdiction

Pioneer Energy Services Corp.

   Texas

Pioneer Coiled Tubing Services, LLC

   Delaware

Pioneer Drilling Services, Ltd.

   Texas

Pioneer Fishing & Rental Services, LLC

   Delaware

Pioneer Global Holdings, Inc.

   Delaware

Pioneer Production Services, Inc.

   Delaware

Pioneer Services Holdings, LLC

   Delaware

Pioneer Well Services, LLC

   Delaware

Pioneer Wireline Services Holdings, Inc.

   Delaware

Pioneer Wireline Services, LLC

   Delaware