Exhibit 10.2

SECOND LIEN TERM LOAN CREDIT AGREEMENT

by and among

WILMINGTON SAVINGS FUND SOCIETY, FSB,

as Agent,

THE LENDERS THAT ARE PARTIES HERETO

as the Lenders,

and

NUVERRA ENVIRONMENTAL SOLUTIONS, INC.

as Borrower

Dated as of August 7, 2017

 

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1.    DEFINITIONS AND CONSTRUCTION    2    1.1    Definitions    2    1.2   
Accounting Terms    2    1.3    Code    2    1.4    Construction    3    1.5   
Time References    3    1.6    Schedules and Exhibits    4 2.    LOANS AND TERMS
OF PAYMENT    4    2.1    [Reserved].    4    2.2    Term Loan    4    2.3   
Borrowing Procedures    5    2.4    Payments; Reductions of Term Commitments;
Prepayments    8    2.5    Promise to Pay    12    2.6    Interest Rate: Rates,
Payments, and Calculations    12    2.7    Crediting Payments    14    2.8   
Designated Account    14    2.9    Maintenance of Loan Account; Statements of
Obligations    14    2.10    Fees    15    2.11    [Reserved]    15    2.12   
[Reserved]    15    2.13    Capital Requirements    15    2.14    Collections   
17 3.    CONDITIONS; TERM OF AGREEMENT
   18    3.1    Conditions Precedent to the Initial Extension of Credit    18   
3.2    Conditions Precedent to all Extensions of Credit    18    3.3   
[Reserved    19    3.4    Effect of Maturity    19    3.5    Reserved    19   
3.6    Conditions Subsequent    19 4.    REPRESENTATIONS AND WARRANTIES
   19    4.1    Due Organization and Qualification; Subsidiaries    20    4.2   
Due Authorization; No Conflict    20

 

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   4.3    Governmental Consents    21    4.4    Binding Obligations; Perfected
Liens    21    4.5    Title to Assets; No Encumbrances    21    4.6   
Litigation    22    4.7    Compliance with Laws    22    4.8    No Material
Adverse Effect    22    4.9    Solvency    22    4.10    Employee Benefits    23
   4.11    Environmental Condition    23    4.12    Complete Disclosure    23   
4.13    Patriot Act    24    4.14    Indebtedness    24    4.15    Payment of
Taxes    24    4.16    Margin Stock    24    4.17    Governmental Regulation   
24    4.18    OFAC    25    4.19    Employee and Labor Matters    25    4.20   
Material Contracts    25    4.21    Leases    25    4.22    [Reserved.]    25   
4.23    [Reserved.]    25    4.24    Location of Equipment    26    4.25   
[Reserved    26    4.26    Immaterial Subsidiaries    26    4.27    Name and
Address; Properties    26    4.28    Existing Business Relationships    26   
4.29    O.S.H.A.    26    4.30    First Lien Loan Documents    26 5.   
AFFIRMATIVE COVENANTS    27    5.1    Financial Statements, Reports,
Certificates    27    5.2    [Reserved]    27

 

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   5.3    Existence    27    5.4    Maintenance of Properties    27    5.5   
Taxes    27    5.6    Insurance    27    5.7    Inspection    28    5.8   
Compliance with Laws    28    5.9    Environmental    28    5.10    Disclosure
Updates    29    5.11    Formation of Subsidiaries    29    5.12    Further
Assurances    30    5.13    Lender Meetings    31    5.14    Location of
Collateral; Offices    31    5.15    Bank Products    31    5.16    Material
Contracts    31    5.17    Name Change; Organizational Change; Creation of
Affiliates    31    5.18    [Reserved]    31    5.19    [Reserved]    32    5.20
   Financial Advisor    32 6.    NEGATIVE COVENANTS    32    6.1    Indebtedness
   32    6.2    Liens    32    6.3    Restrictions on Fundamental Changes    32
   6.4    Disposal of Assets    33    6.5    Nature of Business    33    6.6   
Prepayments; Amendments; Settlements    33    6.7    Restricted Payments    34
   6.8    Accounting Methods    34    6.9    Investments    34    6.10   
Transactions with Affiliates    34    6.11    Use of Proceeds    35    6.12   
Limitation on Issuance of Equity Interests    35

 

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   6.13    Immaterial Subsidiaries    35    6.14    [Holding Company    36   
6.15    Removal of Collateral    36    6.16    Burdensome Agreement    36   
6.17    Capital Expenditures    36 7.    FINANCIAL COVENANTS
   37 8.    EVENTS OF DEFAULT    38    8.1    Payments    38    8.2    Covenants
   38    8.3    Judgments    39    8.4    Voluntary Bankruptcy, etc.    39   
8.5    Involuntary Bankruptcy, etc.    39    8.6    Default Under Other
Agreements    39    8.7    Representations, etc.    40    8.8    Guaranty    40
   8.9    Security Documents    40    8.10    Loan Documents    40    8.11   
Change of Control    40    8.12    Subordination Provisions    40    8.13   
Settlement Payments    41 9.    RIGHTS AND REMEDIES    41    9.1    Rights and
Remedies    41    9.2    Remedies Cumulative    41 10.    WAIVERS;
INDEMNIFICATION    42    10.1    Demand; Protest; etc.    42    10.2    The
Lender Group’s Liability for Collateral    42    10.3    Indemnification    42
11.    NOTICES       43 12.    CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER;
JUDICIAL REFERENCE PROVISION    44 13.    ASSIGNMENTS AND PARTICIPATIONS;
SUCCESSORS    46    13.1    Assignments and Participations    46

 

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   13.2    Successors    50 14.    AMENDMENTS; WAIVERS    50    14.1   
Amendments and Waivers    50    14.2    Replacement of Certain Lenders    52   
14.3    No Waivers; Cumulative Remedies    53 15.    AGENT; THE LENDER GROUP   
53    15.1    Appointment and Authorization of Agent    53    15.2    Delegation
of Duties    54    15.3    Liability of Agent    54    15.4    Reliance by Agent
   54    15.5    Notice of Default or Event of Default    55    15.6    Credit
Decision    55    15.7    Costs and Expenses; Indemnification    56    15.8   
Agent in Individual Capacity    57    15.9    Successor Agent    57    15.10   
Lender in Individual Capacity    57    15.11    Collateral Matters    58   
15.12    Restrictions on Actions by Lenders; Sharing of Payments    59    15.13
   Agency for Perfection    60    15.14    Payments by Agent to the Lenders   
60    15.15    Concerning the Collateral and Related Loan Documents    60   
15.16    [Reserved]    60    15.17    Several Obligations; No Liability    60
16.    WITHHOLDING TAXES    61    16.1    Payments    61    16.2    Exemptions
   61    16.3    Reductions    63    16.4    Refunds    63 17.    GENERAL
PROVISIONS    64    17.1    Effectiveness    64    17.2    Section Headings   
64

 

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17.3    Interpretation    64 17.4    Severability of Provisions    64 17.5   
[Reserved]    64 17.6    Debtor-Creditor Relationship    64 17.7   
Counterparts; Electronic Execution    64 17.8    Revival and Reinstatement of
Obligations; Certain Waivers    65 17.9    Confidentiality    65 17.10   
Survival    67 17.11    Patriot Act    67 17.12    Integration    67 17.13    No
Setoff    68 17.14    Intercreditor Agreement    68

 

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EXHIBITS AND SCHEDULES

 

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

 

 

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SECOND LIEN TERM LOAN CREDIT AGREEMENT

THIS SECOND LIEN TERM LOAN CREDIT AGREEMENT (this “Agreement”), is entered into
as of August 7, 2017, by and among the lenders identified on the signature pages
hereof (each of such lenders, together with its successors and permitted
assigns, is referred to hereinafter as a “Lender”, as that term is hereinafter
further defined), WILMINGTON SAVINGS FUND SOCIETY, FSB, as administrative agent
for each member of the Lender Group (in such capacity, together with its
successors and assigns in such capacity, “Agent”), and NUVERRA ENVIRONMENTAL
SOLUTIONS, INC., a Delaware corporation (“Borrower”).

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

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

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

WHEREAS, each of the Debtors is party to that certain Term Loan Credit
Agreement, dated as of April 15, 2016 (as amended, modified or supplemented
prior to the date hereof, the “Prepetition Term Credit Agreement”), among
Borrower, the lenders party thereto from time to time and Wilmington Savings
Fund Society, FSB, as administrative agent;

WHEREAS, each of the Debtors is party to that certain Debtor-in-Possession Term
Loan Credit Agreement, dated as of April 30, 2017 (as amended, modified or
supplemented prior to the date hereof, the “DIP Term Credit Agreement”), among
such Debtors, the lenders party thereto from time to time and Wilmington Savings
Fund Society, FSB, as administrative agent;

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

WHEREAS, Borrower has requested, following the end of the stay period as
described in the Order and subject to the conditions set forth herein, the
Lenders extend to Borrower a $26,790,000 senior second lien term loan facility
(i) to repay obligations outstanding under the

 

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Prepetition ABL Credit Agreement and the DIP ABL Credit Agreement, (ii) to pay
settlement amounts, costs, fees and expenses incurred in connection with the
dismissal or settling of any appeals of the Order (including, without
limitation, the Hargreaves Appeal (as defined below)) (iii) to make certain
payments as provided in the Approved Plan, (iv) to pay costs and expenses
incurred in connection with the Approved Plan, and (v) for working capital,
transaction expenses and other general corporate purposes.

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

1. DEFINITIONS AND CONSTRUCTION.

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

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

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

 

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1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). The words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties. Any reference herein or in
any other Loan Document to the satisfaction, repayment, or payment in full of
the Obligations shall mean (a) the payment or repayment in full in immediately
available funds of (i) the principal amount of, and interest accrued and unpaid
with respect to, all outstanding Term Loans, together with the payment of any
premium applicable to the repayment of the Term Loans, (ii) all Lender Group
Expenses that have accrued and are unpaid regardless of whether demand has been
made therefor, (iii) all fees or charges that have accrued hereunder or under
any other Loan Document and are unpaid, (b) the receipt by Agent of cash
collateral in order to secure any other contingent Obligations for which a claim
or demand for payment has been made on or prior to such time or in respect of
matters or circumstances known to Agent or a Lender at such time that are
reasonably expected to result in any loss, cost, damage, or expense (including
attorneys’ fees and legal expenses), such cash collateral to be in such amount
as Agent reasonably determines is appropriate to secure such contingent
Obligations, (c) the payment or repayment in full in immediately available funds
of all other outstanding Obligations other than unasserted contingent
indemnification Obligations, and (d) the termination of all of the Term
Commitments of the Lenders. Any reference herein to any Person shall be
construed to include such Person’s successors and assigns. Any requirement of a
writing contained herein or in any other Loan Document shall be satisfied by the
transmission of a Record.

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

 

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

2. LOANS AND TERMS OF PAYMENT.

2.1 [Reserved].

2.2 Term Loans.

(a) Closing Date Term Loan. Subject to the terms and conditions of this
Agreement, on the Closing Date, each Lender with a Closing Date Term Loan
Commitment agrees (severally, not jointly or jointly and severally) to make a
term loan (the “Closing Date Term Loan”) to Borrower in an aggregate principal
amount equal to such Lender’s Pro Rata Share of the Closing Date Term Loan
Commitment. The aggregate Closing Date Term Loan Commitment of all Lenders as of
the Closing Date is $21,053,000.

(b) Special Delayed Draw Term Loan. Subject to the terms and conditions of this
Agreement, on a single Business Day selected by Borrower on or before the
Special Delayed Draw Term Loan Commitment Termination Date, each Lender with a
Special Delayed Draw Term Loan Commitment agrees (severally, not jointly or
jointly and severally) to make a term loan (the “Special Delayed Draw Term
Loan”) to Borrower in an aggregate principal amount not to exceed such Lender’s
Pro Rata Share of the Special Delayed Draw Term Loan Commitment. The aggregate
Special Delayed Draw Term Loan Commitment of all Lenders as of the Closing Date
is $474,000.

(c) Additional Delayed Draw Term Loan. Subject to the terms and conditions of
this Agreement, on a single Business Day selected by Borrower on or before the
Additional Delayed Draw Term Loan Commitment Termination Date, each Lender with
an Additional Delayed Draw Term Loan Commitment agrees (severally, not jointly
or jointly and severally) to make a term loan (the “Additional Delayed Draw Term
Loan”) to Borrower in an aggregate principal amount not to exceed such Lender’s
Pro Rata Share of the Additional Delayed Draw Term Loan Commitment. The
aggregate Delayed Draw Term Loan Commitment of all Lenders as of the Closing
Date is $5,263,000.

(d) Repayment of Term Loans. The outstanding principal of the Term Loan shall be
repaid on the following dates and in the following amounts (which amounts shall
be increased proportionally as a result of the incurrence of a Delayed Draw Term
Loan pursuant to Section 2.2(b) and/or (c)):

 

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Date

   Installment Amount  

October 1, 2017, and on the first day of every fiscal quarter thereafter prior
to the Maturity Date (or, if such day is not a Business Day, on the immediately
preceding Business Day)

   $ 263,162.50  

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

2.3 Borrowing Procedures.

(a) Procedure for Borrowing Term Loans. Each Borrowing shall be made by a
written request by an Authorized Person delivered to Agent and received by Agent
no later than 12:00 p.m. Eastern on the Business Day that is three (3) Business
Days prior to the requested Funding Date, specifying (A) the amount of such
Borrowing, and (B) the requested Funding Date (which shall be a Business Day);
provided, that Agent may, in its sole discretion, elect to accept as timely
requests that are received later than 12:00 p.m. Eastern on the applicable
Business Day.

(b) [Reserved.]

(c) Making of Term Loans.

(i) After receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent
shall notify the Lenders by telecopy, telephone, email, or other electronic form
of transmission, of the requested Borrowing; such notification to be sent by
4:00 p.m. Eastern on the Business Day that is two (2) Business Days prior to the
requested Funding Date. If Agent has notified the Lenders of a requested
Borrowing on the Business Day that is one (1) Business Day prior to the Funding
Date, then each Lender shall make the amount of such Lender’s Pro Rata Share of
the requested Borrowing available to Agent in immediately available funds, to
Agent’s Account, not later than 10:00 a.m. on the Business Day that is the
requested Funding Date. After Agent’s receipt of the proceeds of such Term Loans
from the Lenders, Agent shall make the proceeds thereof available to Borrower on
the applicable Funding Date by transferring immediately available funds equal to
such proceeds received by Agent to the Designated Account; provided, that,
subject to the provisions of Section 2.3(d)(ii), no Lender shall have an
obligation to make any Term Loan, if one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the requested Funding
Date for the applicable Borrowing unless such condition has been waived. Agent
shall charge to the Loan Account usual and customary fees for the wire transfer
of each Borrowing.

 

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

(d) [Reserved].

(e) [Reserved].

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

(g) Defaulting Lenders. Notwithstanding the provisions of Section 2.4(b)(ii),
Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by Borrower to Agent for the Defaulting Lender’s benefit or any proceeds of
Collateral that would otherwise be remitted hereunder to the Defaulting Lender,
and, in the absence of such transfer to the Defaulting Lender, Agent shall
transfer any such payments (A) first, to each Non-Defaulting Lender ratably in
accordance with their Term Commitments (but, in each case, only to the extent
that such Defaulting Lender’s portion of a Term Loan (or other funding
obligation) was funded by such other Non-Defaulting Lender), (B) second, in
Agent’s sole discretion, to a suspense

 

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account maintained by Agent, the proceeds of which shall be retained by Agent
and may be made available to be re-advanced to or for the benefit of Borrower
(upon the request of Borrower and subject to the conditions set forth in
Section 3.2) as if such Defaulting Lender had made its portion of Term Loans (or
other funding obligations) hereunder, and (C) third, from and after the date on
which all other Obligations have been paid in full, to such Defaulting Lender in
accordance with tier (H) of Section 2.4(b)(ii). Subject to the foregoing, Agent
may hold and, in its discretion, re-lend to Borrower for the account of such
Defaulting Lender the amount of all such payments received and retained by Agent
for the account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents (including the
calculation of Pro Rata Share in connection therewith) and for the purpose of
calculating the fee payable under Sections 2.10(b) or (c), such Defaulting
Lender shall be deemed not to be a “Lender” and such Lender’s Term Commitment
shall be deemed to be zero; provided, that the foregoing shall not apply to any
of the matters governed by Section 14.1(a)(i) through (iii). The provisions of
this Section 2.3(g) shall remain effective with respect to such Defaulting
Lender until the earlier of (x) the date on which all of the Non-Defaulting
Lenders, Agent, and Borrower shall have waived, in writing, the application of
this Section 2.3(g) to such Defaulting Lender, or (y) the date on which such
Defaulting Lender makes payment of all amounts that it was obligated to fund
hereunder, pays to Agent all amounts owing by Defaulting Lender in respect of
the amounts that it was obligated to fund hereunder, and, if requested by Agent,
provides adequate assurance of its ability to perform its future obligations
hereunder. The operation of this Section 2.3(g) shall not be construed to
increase or otherwise affect the Term Commitment of any Lender, to relieve or
excuse the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the performance by
Borrower of its duties and obligations hereunder to Agent, or to the Lenders
other than such Defaulting Lender. Any failure by a Defaulting Lender to fund
amounts that it was obligated to fund hereunder shall constitute a material
breach by such Defaulting Lender of this Agreement and shall entitle Borrower,
at its option, upon written notice to Agent, to arrange for a substitute Lender
to assume the Term Commitment of such Defaulting Lender, such substitute Lender
to be reasonably acceptable to the Required Lenders. In connection with the
arrangement of such a substitute Lender, the Defaulting Lender shall have no
right to refuse to be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered such document
if it fails to do so) subject only to being paid its share of the outstanding
Obligations (including all interest, fees, and other amounts that may be due and
payable in respect thereof); provided, that any such assumption of the Term
Commitment of such Defaulting Lender shall not be deemed to constitute a waiver
of any of the Lender Groups’ or Borrower’s rights or remedies against any such
Defaulting Lender arising out of or in relation to such failure to fund. In the
event of a direct conflict between the priority provisions of this
Section 2.3(g) and any other provision contained in this Agreement or any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this Section 2.3(g) shall
control and govern.

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

 

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2.4 Payments; Reductions of Term Commitments; Prepayments.

(a) Payments by Borrower.

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

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

(b) Apportionment and Application.

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

 

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

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

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

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

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

(E) fifth, ratably, to pay interest accrued in respect of the Term Loans until
paid in full,

(F) sixth, ratably, to pay the principal of all Term Loans until paid in full,

(G) seventh, to pay any other Obligations other than Obligations owed to
Defaulting Lenders,

(H) eighth, ratably to pay any Obligations owed to Defaulting Lenders; and

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

(iii) Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be
entitled to receive.

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

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

 

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

(c) Reduction of Term Loan Commitments.

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

(ii) Special Delayed Draw Term Loan Commitments. The Special Delayed Draw Term
Loan Commitments shall terminate upon the earlier of (A) the making of the
Special Delayed Draw Term Loan on the applicable Funding Date and (B) the
Special Delayed Draw Term Loan Commitment Termination Date.

(iii) Additional Delayed Draw Term Loan Commitments. The Additional Delayed Draw
Term Loan Commitments shall terminate upon the earlier of (A) the making of the
Additional Delayed Draw Term Loan on the applicable Funding Date and (B) the
Additional Delayed Draw Term Loan Commitment Termination Date.

(d) Optional Prepayments. Borrower may prepay the Term Loans at any time, in
whole or in part, plus accrued and unpaid interest on the principal amount being
prepaid to the prepayment date and all fees, costs, expenses and other amounts
related thereto. Each prepayment of the Term Loan shall be applied to the
remaining installments of principal due on the Term Loan pro rata among such
remaining installments.

(e) Mandatory Prepayments.

(i) [Reserved].

(ii) Dispositions. Subject to Section 2.4(f)(ii), within three (3) Business Days
of the date of receipt (or if an Event of Default has occurred and is continuing
and Agent or First Lien Agent has exercised dominion over the Loan Parties’
Deposit Accounts, concurrently with receipt) by Borrower or any of its
Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale or
disposition by Borrower or any of its Subsidiaries of assets (including casualty
losses or condemnations but excluding sales or dispositions which qualify as
Permitted Dispositions under clauses (b), (c), (d), (e), (j), (k), (l), (m), or
(n) of the definition of Permitted Dispositions), Borrower shall prepay the
outstanding principal amount of the Obligations in accordance with
Section 2.4(f)(i) in an amount equal to 100% of such Net Cash

 

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Proceeds (including condemnation awards and payments in lieu thereof) received
by such Person in connection with such sales or dispositions; provided that, so
long as (A) no Default or Event of Default shall have occurred and is continuing
or would result therefrom, (B) Borrower shall have given Agent written notice of
Borrower’s intention to apply such monies to the costs of replacement of the
properties or assets that are the subject of such sale or disposition or the
cost of purchase or construction of other assets useful in the business of
Borrower or its Subsidiaries within 180 days after the initial receipt of such
monies (or to enter into a binding commitment thereof within said 180 day
period), (C) the monies are held in a Deposit Account in which Agent has a
perfected first-priority security interest, and (D) Borrower or its
Subsidiaries, as applicable, complete such replacement, purchase, or
construction within 180 days after the initial receipt of such monies (or, in
the case of such binding commitment, subsequently complete such replacement,
purchase, or construction within an additional 90 days thereafter), then the
Loan Party whose assets were the subject of such disposition shall have the
option to apply such monies to the costs of replacement of the assets that are
the subject of such sale or disposition or the costs of purchase or construction
of other assets useful in the business of such Loan Party unless and to the
extent that such applicable period shall have expired without such replacement,
purchase, or construction being made or completed, in which case, any amounts
remaining in the Deposit Account referred to in clause (C) above shall be paid
to Agent and applied in accordance with Section 2.4(f)(i); provided, however,
that Borrower shall not have the right to use any Net Cash Proceeds in excess of
$10,000,000 in the aggregate to make such replacements, purchases or
construction in any given fiscal year. Nothing contained in this
Section 2.4(e)(ii) shall permit Borrower or any of its Subsidiaries to sell or
otherwise dispose of any assets other than in accordance with Section 6.4.

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

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

(v) [Reserved.]

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

 

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(f) Application of Payments.

(i) Each prepayment pursuant to Section 2.4(e) shall, (A) so long as no
Application Event shall have occurred and be continuing, be applied to the
remaining installments of principal due on the Term Loan pro rata among such
remaining installments, and (B) if an Application Event shall have occurred and
be continuing, be applied in the manner set forth in Section 2.4(b)(ii).

(ii) Notwithstanding anything to the contrary herein, Borrower shall have no
obligations under, and no payments shall be required or made pursuant to,
Section 2.4(e) except to the extent that as of the due date of such prepayment
the Discharge of the Senior Obligations shall have occurred.

2.5 Promise to Pay.

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

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

2.6 Interest Rate: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in Section 2.6(c), the Term Loan shall
bear interest at both (i) a per annum rate equal to the Cash Interest Rate,
payable in cash on the dates set forth in Section 2.6(d), and (ii) prior to the
PIK Termination Date, a per annum rate equal to the PIK Interest Rate, which
interest shall be capitalized and added to the principal amount of the Term
Loans monthly, in arrears, and shall be charged to the Loan Account on the

 

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first day of each month; provided that such interest may, at Borrower’s
election, be paid in cash on the dates set forth in Section 2.6(c), but only if
Borrower shall have notified Agent in writing of Borrower’s intent to pay such
interest in cash no later than three (3) Business Days prior to the applicable
interest payment date (in which case, to the extent paid in cash, such interest
shall not be capitalized or added to the principal amount of the Term Loan in
respect of the applicable calendar month). For purposes of this Agreement, “PIK
Termination Date” means February 7, 2018; provided that Borrower shall be
permitted to extend such PIK Termination Date in its discretion if, on or prior
to the date that is thirty (30) days prior to such original PIK Termination Date
(or such later date as shall be agreed to by the Required Lenders in their
discretion), Borrower shall have (i) notified Agent in writing of its intent to
extend such PIK Termination Date (which notice shall specify the new date on
which such PIK Termination Date shall occur) and (ii) delivered to Agent a PIK
extension fee (the “PIK Extension Fee”) in an amount equal to 2.00% of the
aggregate amount of Term Loans outstanding as of the original PIK Termination
Date.

(b) [Reserved].

(c) Default Rate. Upon the occurrence and during the continuation of (A) an
Event of Default described in Section 8.4 or Section 8.5, automatically, and
(B) any other Event of Default, at the election of the Required Lenders in their
sole discretion, all Term Loans, and Obligations that have been charged to the
Loan Account pursuant to the terms hereof, shall bear interest at a per annum
rate equal to three (3) percentage points above the per annum rate otherwise
applicable thereunder.

(d) Payment. Except to the extent provided to the contrary in Section 2.6(a)(ii)
or Section 2.10, (i) all interest and all other fees payable hereunder or under
any of the other Loan Documents shall be due and payable in cash, in arrears, on
the first day of each month and (ii) all costs and expenses payable hereunder or
under any of the other Loan Documents, and all Lender Group Expenses shall be
due and payable on the earlier of (x) the first day of the month following the
date on which the applicable costs, expenses, or Lender Group Expenses were
first incurred or (y) the date on which demand therefor is made by Agent (it
being acknowledged and agreed that any charging of such costs, expenses or
Lender Group Expenses to the Loan Account pursuant to the provisions of the
following sentence shall be deemed to constitute a demand for payment thereof
for the purposes of this subclause (y)). Borrower hereby authorizes Agent, from
time to time without prior notice to Borrower, to charge to the Loan Account
(A) on the first day of each month, all interest accrued during the prior month
on the Term Loans hereunder, (B) as and when incurred or accrued, all fees and
costs provided for in Section 2.10, (C) as and when due and payable, all other
fees payable hereunder or under any of the other Loan Documents, (D) as and when
incurred or accrued, all other Lender Group Expenses, and (E) as and when due
and payable, all other payment obligations payable under any Loan Document. All
amounts (including interest, fees, costs, expenses, Lender Group Expenses, or
other amounts payable hereunder or under any other Loan Document) charged to the
Loan Account shall thereupon constitute Obligations hereunder and shall accrue
interest at the rate(s) then applicable to Term Loans.

 

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

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

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

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

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

 

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2.10 Fees.

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

(b) Closing Fee. Borrower shall pay to Agent, on the Closing Date, for the
ratable account of the Lenders party hereto on the Closing Date, in respect of
their respective Closing Date Term Loan Commitments, a closing fee in an
aggregate amount equal to $1,052,650 (which closing fee may be netted from the
aggregate Closing Date Term Loan funded by the Lenders on the Closing Date in
their discretion).

(c) Delayed Draw Funding Fees. Borrower shall pay to Agent, on the Funding Date
of any Delayed Draw Term Loan, for the ratable account of the Lenders holding
the applicable Delayed Draw Term Loan Commitments, in respect of their
respective Delayed Draw Term Loan Commitments, a delayed draw funding fee in an
amount equal to 5.00% of the principal of amount of the Delayed Draw Term Loan
that is extended on the applicable Funding Date (which delayed draw funding fee
may be netted from the aggregate Delayed Draw Term Loan funded by the applicable
Lenders on the applicable Funding Date in their discretion).

(d) PIK Extension Fee. Borrower shall pay to Agent, on or prior to the
applicable date set forth in Section 2.6(a), for the ratable account of the
Lenders in respect of their aggregate Term Commitments, the PIK Extension Fee
that shall be payable in connection with any extension of the PIK Termination
Date.

2.11 [Reserved].

2.12 [Reserved].

2.13 Capital Requirements.

(a) If, after the date hereof, any Lender determines that (i) any Change in Law
regarding capital or reserve requirements for banks or bank holding companies or
(ii) compliance by such Lender, or their respective parent bank holding
companies, with any guideline, request or directive of any Governmental
Authority regarding capital adequacy (whether or not having the force of law),
has the effect of reducing the return on such Lender’s, or such holding
companies’ capital as a consequence of such Lender’s commitments, Term Loans,
participations or other obligations hereunder to a level below that which such
Lender, or such holding companies could have achieved but for such Change in Law
or compliance (taking into consideration such Lender’s, or such holding
companies’ then existing policies with respect to capital adequacy and assuming
the full utilization of such entity’s capital) by any

 

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amount deemed by such Lender to be material, then such Lender may notify
Borrower and Agent thereof. Following receipt of such notice, Borrower agrees to
pay such Lender on demand the amount of such reduction of return of capital as
and when such reduction is determined, payable within 30 days after presentation
by such Lender of a statement in the amount and setting forth in reasonable
detail such Lender’s calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct absent
manifest error). In determining such amount, such Lender may use any reasonable
averaging and attribution methods. Failure or delay on the part of any Lender to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s right to demand such compensation; provided that Borrower shall
not be required to compensate a Lender pursuant to this Section for any
reductions in return incurred more than 180 days prior to the date that such
Lender notifies Borrower of such Change in Law giving rise to such reductions
and of such Lender’s intention to claim compensation therefor; provided further
that if such claim arises by reason of the Change in Law that is retroactive,
then the 180-day period referred to above shall be extended to include the
period of retroactive effect thereof.

(b) If any Lender requests additional or increased costs referred to in
Section 2.13(a) (such Lender, an “Affected Lender”), then such Affected Lender
shall use reasonable efforts to promptly designate a different one of its
lending offices or to assign its rights and obligations hereunder to another of
its offices or branches, if (i) in the reasonable judgment of such Affected
Lender, such designation or assignment would eliminate or reduce amounts payable
pursuant to Section 2.13(a) and (ii) in the reasonable judgment of such Affected
Lender, such designation or assignment would not subject it to any material
unreimbursed cost or expense and would not otherwise be materially
disadvantageous to it. Borrower agrees to pay all reasonable out-of-pocket costs
and expenses incurred by such Affected Lender in connection with any such
designation or assignment. If, after such reasonable efforts, such Affected
Lender does not so designate a different one of its lending offices or assign
its rights to another of its offices or branches so as to eliminate Borrower’s
obligation to pay any future amounts to such Affected Lender pursuant to
Section 2.13(a), then Borrower (without prejudice to any amounts then due to
such Affected Lender under Section 2.13(a)) may, unless prior to the effective
date of any such assignment the Affected Lender withdraws its request for such
additional amounts under Section 2.13(a), substitute a Lender, in each case,
reasonably acceptable to Agent to purchase the Obligations owed to such Affected
Lender and such Affected Lender’s commitments hereunder (a “Replacement
Lender”), and if such Replacement Lender agrees to such purchase, such Affected
Lender shall assign to the Replacement Lender its Obligations and commitments,
and upon such purchase by the Replacement Lender, which such Replacement Lender
shall be deemed to be a “Lender” for purposes of this Agreement and such
Affected Lender shall cease to be a “Lender” for purposes of this Agreement.

(c) Notwithstanding anything herein to the contrary, the protection of
Section 2.13 shall be available to each Lender regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
judicial ruling, judgment, guideline, treaty or other change or condition which
shall have occurred or been imposed, so long as it shall be customary for
issuing banks or lenders affected thereby to comply therewith. Notwithstanding
any other provision herein, no Lender shall demand compensation pursuant to this
Section 2.13 if it shall not at the time be the general policy or practice of
such Lender to demand such compensation in similar circumstances under
comparable provisions of other credit agreements, if any.

 

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2.14 Collections.

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

(b) Each Control Agreement shall provide, among other things, that (A) the
applicable bank or securities intermediary will comply with any instructions
originated by First Lien Agent (or, following the Discharge of the Senior
Obligations, Agent) directing the disposition of the funds in the applicable
Deposit Account or Securities Account subject to such Control Agreement, without
further consent by the applicable Loan Party, (B) the applicable bank or
securities intermediary waives, subordinates, or agrees not to exercise any
rights of setoff or recoupment or any other claim against the applicable Deposit
Account or Securities Account other than for payment of its service fees and
other charges directly related to the administration of such account and for
returned checks or other items of payment, (C) with respect to each Collection
Account and each Blocked Account, the applicable bank will forward (or initiate
a bank wire transfer for the forwarding of), by daily sweep, all amounts in such
Collection Account and Blocked Account to an account of the First Lien Agent
(or, following the Discharge of the Senior Obligations, Agent’s Account), (D)
with respect to the Collection Accounts and the Blocked Accounts, such accounts
shall be subject to First Lien Agent’s (or, following the Discharge of the
Senior Obligations, Agent’s) sole dominion and control (including, but not
limited to the sole power of withdrawal), and (E) with respect to each Deposit
Account (other than an Excluded Account, Collection Account or Blocked Account)
or

 

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Securities Account, upon written notice from First Lien Agent (or, following the
Discharge of the Senior Obligations, Agent) to the applicable bank or securities
intermediary after the occurrence and during the continuance of an Event of
Default, the applicable bank or securities intermediary will forward, by daily
sweep, all amounts in such account to an account of the First Lien Agent (or,
following the Discharge of the Senior Obligations, Agent’s Account).

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

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

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

3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
each Lender to make its initial Term Loan is subject to the fulfillment, to the
satisfaction of Agent and each Lender, of each of the conditions precedent set
forth on Schedule 3.1.

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

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

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

(c) the receipt by Agent from Borrower of a request for Borrowing pursuant to
the requirements of Section 2.3(a); and

 

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(d) in the case of the Special Delayed Draw Term Loan, the Hargreaves Appeal
shall have become subject to a binding consent decree satisfactory to the
Lenders, and Agent shall have received evidence, satisfactory to the Lenders in
their sole discretion, demonstrating that the proceeds of the Special Delayed
Draw Term Loan will be used solely to satisfy settlement amounts payable
pursuant to such consent decree.

3.3 [Reserved.]

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

3.5 Reserved.

3.6 Conditions Subsequent. The obligation of the Lender Group (or any member
thereof) to continue to make Term Loans is subject to the fulfillment, on or
before the date applicable thereto, of the conditions subsequent set forth on
Schedule 3.6 (the failure by Borrower to so perform or cause to be performed
such conditions subsequent as and when required by the terms thereof (unless
such date is extended, in writing, by the Required Lenders), shall constitute an
Event of Default).

4. REPRESENTATIONS AND WARRANTIES.

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

 

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4.1 Due Organization and Qualification; Subsidiaries.

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

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

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

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

4.2 Due Authorization; No Conflict.

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

(b) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to any Loan Party or its Subsidiaries, the Governing Documents of any
Loan Party or its Subsidiaries, or any order, judgment, or decree of any court
or other Governmental Authority binding on any Loan Party or

 

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its Subsidiaries, (ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any material agreement of
any Loan Party or its Subsidiaries where any such conflict, breach or default
could individually or in the aggregate reasonably be expected to have a Material
Adverse Effect, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any assets of any Loan Party, other than
Permitted Liens, or (iv) require any approval of any holder of Equity Interests
of a Loan Party or any approval or consent of any Person under any material
agreement of any Loan Party, other than consents or approvals that have been
obtained and that are still in force and effect and except, in the case of
material agreements, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Effect.

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

4.4 Binding Obligations; Perfected Liens.

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

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

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

 

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4.6 Litigation.

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

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

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

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

4.9 Solvency.

(a) Each Loan Party is Solvent.

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

 

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

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

4.12 Complete Disclosure. All factual information taken as a whole (other than
forward-looking information and projections and information of a general
economic nature and general information about Borrower’s industry) furnished by
or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement or
the other Loan Documents, and all other such factual information taken as a
whole (other than forward-looking information and projections and information of
a general economic nature and general information about Borrower’s industry)
hereafter furnished by or on behalf of a Loan Party or its Subsidiaries in
writing to Agent or any Lender will be, true and accurate, in all material
respects, on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. The Projections
delivered to Agent on July 5, 2017 and July 17, 2017 represent, and as of the
date on which any other Projections are delivered to Agent, such additional
Projections represent, Borrower’s good faith estimate, on the date such
Projections are delivered, of the Loan Parties’ and their Subsidiaries’ future
performance for the periods covered thereby based upon assumptions believed by
Borrower to be reasonable at the time of the delivery thereof to Agent (it being
understood that such Projections are subject to significant uncertainties and
contingencies, many of which are beyond the control of the Loan Parties and
their Subsidiaries, and no assurances can be given that such Projections will be
realized, and although reflecting Borrower’s good faith estimate, projections or
forecasts based on methods and assumptions which Borrower believed to be
reasonable at the time such Projections were prepared, are not to be viewed as
facts, and that actual results during the period or periods covered by the
Projections may differ materially from projected or estimated results).

 

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

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

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

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

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

 

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4.18 OFAC. No Loan Party nor any of its Subsidiaries is in violation of any of
the country or list based economic and trade sanctions administered and enforced
by OFAC. No Loan Party nor any of its Subsidiaries (a) is a Sanctioned Person or
a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or
(c) derives revenues from investments in, or transactions with Sanctioned
Persons or Sanctioned Entities. No proceeds of any loan made hereunder will be
used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity.

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

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

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

4.22 [Reserved.]

4.23 [Reserved.]

 

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

4.25 [Reserved.]

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

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

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

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

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

 

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5. AFFIRMATIVE COVENANTS.

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

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

5.2 [Reserved].

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

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

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

5.6 Insurance. Borrower will, and will cause each of its Subsidiaries to, at
Borrower’s expense, (a) maintain insurance respecting each of Borrower’s and its
Subsidiaries’ assets wherever located, covering liabilities, losses or damages
as are customarily are insured against by other Persons engaged in same or
similar businesses and similarly situated and located, and (b) with respect to
all Real Property Collateral located in any area that has been designated by the
Federal Emergency Management Agency as a “Special Flood Hazard Area”, maintain
flood insurance with respect to such Real Property Collateral (including any
personal property which is located thereon) complying with the Flood Disaster
Protection Act of 1973, as amended from time to time, in an amount satisfactory
to all Lenders and otherwise satisfactory to the Required Lenders. All such
policies of insurance shall be with financially sound and reputable insurance
companies acceptable to the Required Lenders and in such amounts as is

 

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carried generally in accordance with sound business practice by companies in
similar businesses similarly situated and located and, in any event, in amount,
adequacy, and scope reasonably satisfactory to the Required Lenders (it being
agreed that the amount, adequacy and scope of the policies of insurance of
Borrower in effect as of the Closing Date are acceptable to the Required Lenders
as of the Closing Date). All property insurance policies covering the Collateral
are to be made payable to Agent for the benefit of the Lender Group, as their
interests may appear, in case of loss, pursuant to a standard loss payable
endorsement with a standard non-contributory “lender” or “secured party” clause
and are to contain such other provisions as the Required Lenders may reasonably
require to fully protect the Lenders’ interest in the Collateral and to any
payments to be made under such policies. All certificates of property and
general liability insurance are to be delivered to Agent, with the loss payable
(but only in respect of Collateral) and additional insured endorsements in favor
of Agent and shall provide for not less than 30 days (10 days in the case of
non-payment) prior written notice to Agent of the exercise of any right of
cancellation. If Borrower or its Subsidiaries fail to maintain such insurance,
the Required Lenders may arrange for such insurance, but at Borrower’s expense
and without any responsibility on the Required Lenders’ part for obtaining the
insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims. Borrower shall give Agent prompt notice
of any loss exceeding $250,000 covered by its or its Subsidiaries’ casualty or
business interruption insurance. Upon the occurrence and the continuance of an
Event of Default, Agent shall have the sole right to file claims under any
property and general liability insurance policies in respect of the Collateral,
to receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.

5.7 Inspection. Borrower will, and will cause each of its Subsidiaries to,
permit Agent, any Lender, and each of their respective duly authorized
representatives or agents to visit any of its properties and inspect any of its
assets or books and records, to examine and make copies of its books and
records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees (provided an authorized
representative of Borrower shall be allowed to be present) at such reasonable
times and intervals as Agent or any Lender, as applicable, may designate and, so
long as no Default or Event of Default has occurred and is continuing, with
reasonable prior notice to Borrower and during regular business hours.

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

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

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

 

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

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

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

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

5.11 Formation of Subsidiaries. Borrower will, at the time that any Loan Party
forms any direct or indirect Subsidiary (other than an Immaterial Subsidiary) or
acquires any direct or indirect Subsidiary (other than an Immaterial Subsidiary)
after the Closing Date, within 10 Business Days of such formation or acquisition
(or such later date as permitted by Agent in its sole discretion) (a) cause such
new Subsidiary to provide to Agent a joinder to the Guaranty and Security
Agreement, together with such other security agreements (including mortgages
with respect to any Real Property owned in fee of such new Subsidiary with a
fair market value greater than $2,500,000), as well as appropriate financing
statements (and with respect to all property subject to a mortgage, fixture
filings), all in form and substance reasonably satisfactory to Agent (including
being sufficient to grant Agent a first priority Lien (subject to Permitted
Liens) in and to the assets of such newly formed or acquired Subsidiary);
provided, that the joinder to the Guaranty and Security Agreement, and such
other security agreements shall not be required to be provided to Agent with
respect to any Subsidiary of Borrower that is a CFC if providing such agreements
would result in adverse tax consequences or the costs to the Loan Parties of
providing such guaranty or such security agreements are unreasonably excessive
(as determined by the Required Lenders in consultation with Borrower) in
relation to the benefits to the Lender Group of the security or guarantee
afforded thereby, (b) provide, or cause the applicable Loan Party to provide, to
Agent a pledge agreement (or an addendum to the Guaranty and Security Agreement)
and appropriate certificates and powers or financing statements, pledging all of
the direct or beneficial ownership interest in such new Subsidiary in form and

 

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substance reasonably satisfactory to Agent; provided, that only 65% of the total
outstanding voting Equity Interests of any first tier Subsidiary of Borrower
that is a CFC (and none of the Equity Interests of any Subsidiary of such CFC)
shall be required to be pledged if pledging a greater amount would result in
adverse tax consequences or the costs to the Loan Parties of providing such
pledge are unreasonably excessive (as determined by the Required Lenders in
consultation with Borrower) in relation to the benefits to the Lender Group of
the security afforded thereby (which pledge, if reasonably requested by Agent,
shall be governed by the laws of the jurisdiction of such Subsidiary), and
(c) provide to Agent all other documentation, including one or more opinions of
counsel reasonably satisfactory to Agent, which, in its opinion, is appropriate
with respect to the execution and delivery of the applicable documentation
referred to above (including policies of title insurance, flood certification
documentation, or other documentation with respect to all Real Property owned in
fee and subject to a mortgage). Any document, agreement, or instrument executed
or issued pursuant to this Section 5.11 shall constitute a Loan Document.

5.12 Further Assurances. Borrower will, and will cause each of the other Loan
Parties to, at any time upon the reasonable request of Agent, execute or deliver
to Agent any and all financing statements, fixture filings, security agreements,
pledges, assignments, mortgages, deeds of trust, opinions of counsel, and all
other documents, including, if applicable, completion of all flood insurance
documentation and diligence and coverage in accordance with the Flood Disaster
Protection Act of 1973, as amended (the “Additional Documents”) that Agent may
reasonably request in form and substance reasonably satisfactory to Agent, to
create, perfect, and continue perfected or to better perfect Agent’s Liens in
all of the assets of Borrower and its Subsidiaries (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Agent in any Real Property acquired by
Borrower or any other Loan Party, and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents; provided
that the foregoing shall not apply to any Subsidiary of Borrower that is a CFC
if providing such documents would result in adverse tax consequences or the
costs to the Loan Parties of providing such documents are unreasonably excessive
(as determined by the Required Lenders in consultation with Borrower) in
relation to the benefits to the Lender Group of the security afforded thereby.
To the maximum extent permitted by applicable law, if Borrower or any other Loan
Party refuses or fails to execute or deliver any reasonably requested Additional
Documents within a reasonable period of time following the request to do so,
Borrower and each other Loan Party hereby authorizes Agent to execute any such
Additional Documents in the applicable Loan Party’s name and authorizes Agent to
file such executed Additional Documents in any appropriate filing office. In
furtherance of, and not in limitation of, the foregoing, each Loan Party shall
take such actions as Agent may reasonably request from time to time to ensure
that the Obligations are guaranteed by the Guarantors and are secured by
substantially all of the assets of Borrower and its Subsidiaries, including all
of the outstanding capital Equity Interests of Borrower’s Subsidiaries (subject
to exceptions and limitations contained in the Loan Documents with respect to
CFCs). With respect to any Real Property acquired by Borrower or any other Loan
Party on which Agent will be taking a Lien, (x) Borrower will give Agent no less
than forty five (45) days’ prior written notice of such acquisition,
(y) Borrower or such other Loan Party, as applicable, may not grant a Lien on
such Real Property in favor of Agent until the completion of all flood insurance
documentation and diligence and coverage in accordance with the Flood Disaster
Protection Act

 

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of 1973, as amended, by all Lenders and (z) in the event that any such Real
Property is located in any area that has been designated by the Federal
Emergency Management Agency as a “Special Flood Hazard Area”, Borrower and Loan
Parties will maintain flood insurance with respect to such Real Property
Collateral (including any personal property which is located thereon) complying
with the Flood Disaster Protection Act of 1973, as amended from time to time, in
an amount satisfactory to all Lenders and otherwise satisfactory to all Lenders.

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

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

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

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

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

5.18 [Reserved].

 

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5.19 [Reserved].

5.20 Financial Advisor.

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

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

6. NEGATIVE COVENANTS.

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

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

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

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

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

(b) liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of Borrower with nominal assets and nominal liabilities, (ii) the
liquidation or dissolution of a Loan Party (other than Borrower) or any of its
wholly-owned Subsidiaries so long as all of the assets (including any interest
in any Equity Interests) of such liquidating or dissolving Loan Party or

 

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Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, or (iii) the liquidation or dissolution of a Subsidiary of Borrower
that is not a Loan Party (other than any such Subsidiary the Equity Interests of
which (or any portion thereof) are subject to a Lien in favor of Agent) so long
as all of the assets of such liquidating or dissolving Subsidiary are
transferred to a Subsidiary of Borrower that is not liquidating or dissolving,
or

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

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

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

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

(a) do any of the following:

(i) except in connection with Refinancing Indebtedness permitted by Section 6.1,
optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness (other than the First Lien Indebtedness) of Borrower or its
Subsidiaries, other than (A) the Obligations in accordance with this Agreement
and (B) Permitted Intercompany Advances,

(ii) [reserved], or

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

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

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

 

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

(c) subject to the conditions set forth in Section 3.2, make any payment of any
settlement amounts, costs, fees and expenses incurred in connection with the
dismissal or settling of any appeals of the Order (including, without
limitation, the Hargreaves Appeal), except solely with the proceeds of the Term
Loans.

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

(a) Borrower may make distributions to former employees, officers, or directors
of Borrower (or any spouses, ex-spouses, or estates of any of the foregoing) on
account of redemptions of Equity Interests of Borrower held by such Persons,
provided, that the aggregate amount of such redemptions made by Borrower during
the term of this Agreement plus the amount of Indebtedness outstanding under
clause (l) of the definition of Permitted Indebtedness, does not exceed $575,000
in the aggregate, and

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

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

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

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

(a) transactions (other than the payment of management, consulting, monitoring,
or advisory fees) between Borrower or its Subsidiaries, on the one hand, and any
Affiliate of Borrower or its Subsidiaries, on the other hand, so long as such
transactions (i) are fully disclosed to Agent prior to the consummation thereof,
if they involve one or more payments by Borrower or its Subsidiaries in excess
of $575,000 for any single transaction or series of related transactions, and
(ii) are no less favorable, taken as a whole, to Borrower or its Subsidiaries,
as applicable, than would be obtained in an arm’s length transaction with a
non-Affiliate,

 

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

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

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

6.11 Use of Proceeds. Borrower will not, and will not permit any of its
Subsidiaries to use the proceeds of any Term Loan or other extension of credit
made hereunder for any purpose other than as described in the recitals hereto
and, in the case of any Special Delayed Draw Term Loan, for any purpose other
than the payment of settlement amounts pursuant to a consent decree satisfactory
to the Lenders providing for the settlement of the Hargreaves Appeal; provided,
however, that no part of the proceeds of the Term Loans made to Borrower will be
used to purchase or carry any such Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any such Margin Stock or for any
purpose that violates the provisions of Regulation T, U or X of the Board of
Governors. Additionally, Borrower shall not, directly or indirectly, use the
proceeds of the Term Loans, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other Person, (a) to fund
any activities or business of or with any Person, or in any country or
territory, that, at the time of such funding, is, or whose government is, the
subject of sanctions pursuant to any Anti-Terrorism Laws, (b) in any other
manner that would result in a violation of sanctions under any Anti-Terrorism
Laws by any Person (including any Person participating in the Term Loans,
whether as underwriter, advisor, investor, or otherwise), or (c) in any manner
which would violate Anti-Corruption Laws or applicable Sanctions.

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

6.13 Immaterial Subsidiaries. Borrower will not permit any Immaterial Subsidiary
to (a) own any assets (other than assets of a de minimis nature), (b) have any
liabilities (other than liabilities of a de minimis nature), or (c) engage in
any business activity. Notwithstanding anything contained in the Loan Documents
to the contrary, no Loan Party shall make an Investment in, sell, lease,
license, assign, contribute or otherwise transfer any assets to, make any
distributions or payments to, or otherwise engage in, or enter into, any
transaction with, any Immaterial Subsidiary, which involves in excess of
$115,000 in any fiscal year for all such Investments, transfers, distributions,
payments and transactions with all Immaterial Subsidiaries.

 

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

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

6.16 Burdensome Agreement. Borrower will not, and will not permit any of its
Subsidiaries to, enter into or permit to exist any contractual obligation (other
than the Loan Documents or the First Lien Loan Documents) that (a) limits the
ability (i) of any Subsidiary to make Restricted Payments to any Loan Party or
to otherwise transfer property to or invest in any Loan Party, except for any
agreement in effect (A) on the date hereof and set forth on Schedule 6.16 or
(B) at the time any Subsidiary becomes a Subsidiary of Borrower, so long as such
agreement was not entered into solely in contemplation of such Person becoming a
Subsidiary of Borrower, (ii) of any Subsidiary to guarantee the Indebtedness of
any Loan Party or (iii) of Borrower or any Subsidiary to create, incur, assume
or suffer to exist Liens on property of such Person; provided, however, that
this clause (iii) shall not prohibit any negative pledge incurred or provided in
favor of any holder of Indebtedness permitted under clause (c) of the definition
of “Permitted Indebtedness” solely to the extent any such negative pledge
relates to the property financed by or the subject of such Indebtedness; or
(b) requires the grant of a Lien to secure an obligation of such Person if a
Lien is granted to secure another obligation of such Person.

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

 

Fiscal Year

   Amount  

2017

   $ 19,765,000  

2018 and each fiscal year thereafter

   $ 29,647,000  

 

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

7. FINANCIAL COVENANTS.

(a) Fixed Charge Coverage Ratio. Borrower covenants and agrees that, until
termination of all of the Term Commitments and payment in full of the
Obligations, Borrower will not permit the Fixed Charge Coverage Ratio,
determined as of the last day of each fiscal quarter for each period of four
fiscal quarters ending on the dates indicated below, to be less than the ratio
set forth below opposite such measurement date:

 

Fiscal Quarter Date

   Fixed Charge Coverage Ratio  

Closing Date through December 31, 2017

     -1.58 to 1.00  

March 31, 2018

     -0.63 to 1.00  

June 30, 2018

     -0.03 to 1.00  

September 30, 2018

     0.87 to 1.00  

December 31, 2018

     0.97 to 1.00  

March 31, 2019 and each fiscal quarter thereafter

     1.02 to 1.00  

(b) Specified Contributions. In the event Borrower fails to comply with the
Fixed Charge Coverage Ratio covenant set forth in Section 7(a) as of the last
day of any fiscal quarter, any cash equity contribution to Borrower (funded with
proceeds of common Equity Interests or other Equity Interests having terms
reasonably acceptable to Agent and in any case, not constituting Disqualified
Equity Interests) or proceeds of any Subordinated Indebtedness received after
the last day of such fiscal quarter and on or prior to the day that is ten
(10) days after the day on which financial statements are required to be
delivered for such fiscal quarter will, at the irrevocable election of Borrower,
be included in the calculation of EBITDA solely for the purposes of determining
compliance with the Fixed Charge Coverage Ratio covenant at the end of such
fiscal quarter (each, a “Cure Quarter”) and any subsequent period that includes
such Cure Quarter (any such equity contribution or proceeds of Subordinated
Indebtedness so included in the calculation of EBITDA, a “Specified
Contribution”); provided that (i) notice of Borrower’s intent to accept a
Specified Contribution shall be delivered to Agent by Borrower no later than the
day on which financial statements are required to be delivered for the
applicable fiscal quarter, (ii) in each consecutive four (4) fiscal quarter
period there will be at least two (2) fiscal quarters in which no Specified
Contribution is made, (iii) the amount of any Specified Contribution will be no
greater than the amount required to cause Borrower to be in compliance

 

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with the fixed charge coverage ratio covenant under the First Lien Credit
Agreement (the “Cure Amount”), (iv) all Specified Contributions will be
disregarded for purposes of the calculation of EBITDA for all other purposes,
including calculating basket levels, pricing, determining compliance with
incurrence based or pro forma calculations or conditions and any other items
governed by reference to EBITDA, (v) there shall be no more than four
(4) Specified Contributions made in the aggregate after the Closing Date,
(vi) the proceeds received by Borrower from all Specified Contributions shall be
promptly used by Borrower to prepay the First Lien Indebtedness until paid in
full and then to prepay the Term Loan and (vii) there shall be no reduction in
the amount of Fixed Charges as a result of the prepayment of Indebtedness in
connection with any Specified Contribution (or the application of the proceeds
thereof) for determining compliance with the Fixed Charge Coverage Ratio
covenant for the period ending on the last day of the applicable Cure Quarter
and any subsequent period that includes such Cure Quarter. Upon Agent’s receipt
of notice from Borrower of its intention to make a Specified Contribution
pursuant to this Section 7(b) no later than the day on which financial
statements are required to be delivered for the applicable fiscal quarter, then,
until the day that is ten (10) days after such date, neither Agent nor any
Lender shall exercise the right to accelerate the Term Loans or terminate the
Term Commitments and neither Agent nor any Lender shall exercise any right to
foreclose on or take possession of the Collateral solely on the basis of an
Event of Default having occurred and continuing under Section 7(a) in respect of
the period ending on the last day of such fiscal quarter.

8. EVENTS OF DEFAULT.

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

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

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

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

 

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

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

8.3 Judgments. If one or more judgments, orders, or awards for the payment of
money involving an aggregate amount of $1,725,000, or more (except to the extent
covered (other than to the extent of customary deductibles) by insurance
pursuant to which the insurer has not denied coverage) is entered or filed
against a Loan Party or any of its Subsidiaries, or with respect to any of their
respective assets, and either (a) there is a period of 30 consecutive days at
any time after the entry of any such judgment, order, or award during which
(1) the same is not discharged, satisfied, vacated, or bonded pending appeal, or
(2) a stay of enforcement thereof is not in effect, or (b) enforcement
proceedings are commenced upon such judgment, order, or award;

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

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

8.6 Default Under Other Agreements. If there is (a) a default under one or more
agreements (other than the Loan Documents or the First Lien Loan Documents) to
which a Loan Party or any of its Subsidiaries is a party with one or more third
Persons relative to a Loan Party’s or any of its Subsidiaries’ Indebtedness
involving an aggregate amount of $1,150,000 or more, and such default (i) occurs
at the final maturity of the obligations thereunder, or (ii) results in a right
by such third Person, irrespective of whether exercised, to accelerate the
maturity of such Loan Party’s or its Subsidiary’s obligations thereunder; (b) a
default in or an involuntary early termination of one or more Hedge Agreements
to which a Loan Party or any of its Subsidiaries is a party involving an
aggregate amount of $1,150,000 or more; or (c) a default

 

39

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under the First Lien Credit Agreement as a result of the failure to make any
payment of any principal, interest, fees or other amount in respect of the First
Lien Obligations on the final maturity date of any term loans in respect of the
First Lien Indebtedness, and such default shall continue (and shall not be cured
or waived) for a period of ten (10) days; or (d) a default under the First Lien
Credit Agreement as a result of the failure to perform or observe any other
condition or covenant (after the expiration of any applicable grace or cure
periods), or any other event shall occur or condition exist (after the
expiration of all applicable grace periods) under the First Lien Loan Documents,
if as a result of such failure, event or condition the maturity of the First
Lien Obligations (or any refinancing thereof) has been accelerated.

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

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

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

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

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

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

 

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

9. RIGHTS AND REMEDIES.

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

(a) declare the principal of, and any and all accrued and unpaid interest and
fees in respect of, the Term Loans and all other Obligations, whether evidenced
by this Agreement or by any of the other Loan Documents to be immediately due
and payable, whereupon the same shall become and be immediately due and payable
and Borrower shall be obligated to repay all of such Obligations in full,
without presentment, demand, protest, or further notice or other requirements of
any kind, all of which are hereby expressly waived by Borrower;

(b) declare the Term Commitments terminated, whereupon the Term Commitments
shall immediately be terminated together with any obligation of any Lender to
make Term Loans; and

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

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrower or any other Person or any act
by the Lender Group, the Term Commitments shall automatically terminate and the
Obligations, inclusive of the principal of, and any and all accrued and unpaid
interest and fees in respect of, the Term Loans and all other Obligations,
whether evidenced by this Agreement or by any of the other Loan Documents, shall
automatically become and be immediately due and payable and Borrower shall
automatically be obligated to repay all of such Obligations in full, without
presentment, demand, protest, or notice or other requirements of any kind, all
of which are expressly waived by Borrower.

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

 

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10. WAIVERS; INDEMNIFICATION.

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

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

10.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all losses, claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses, joint and several, actually incurred in connection
therewith or in connection with the enforcement of this indemnification (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution and delivery, enforcement,
performance, or administration (including any restructuring or workout with
respect hereto) of this Agreement, any of the other Loan Documents, or any
claim, litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any Indemnified Person is a party thereto, whether or not
such claim, litigation, investigation or proceeding are brought by Borrower or
its equity holders, affiliates, creditors or any other person, or the
transactions contemplated hereby or thereby or the monitoring of Borrower’s and
its Subsidiaries’ compliance with the terms of the Loan Documents, and to
reimburse each Indemnified Person within 30 days of written demand for any
reasonable actual documented out of pocket expenses incurred in connection with
investigating or defending any of the foregoing (provided, that the
indemnification in this clause (a) shall not extend to any proceeding (other
than a proceeding against Agent acting pursuant to the Loan Documents in its
capacity as Agent or any of its Affiliates or its or their respective officers,
directors, employees, controlling persons or members) solely between or among
Indemnified Persons that does not arise from any acts or omissions by Borrower
or any of its Subsidiaries; it being understood and agreed that the
indemnification in this clause (a) shall extend to the Agent-Related Persons and
their successors (but not the Lenders) relative to disputes between or among
Agent on the one hand, and one or more Lenders, or one or more of their
Affiliates, on the other hand, or any Taxes or any costs attributable to Taxes,
which shall be governed by Section 16), (b) with respect to any actual or

 

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prospective investigation, litigation, or proceeding related to this Agreement,
any other Loan Document, the making of any Term Loans hereunder, or the use of
the proceeds of the Term Loans provided hereunder (irrespective of whether any
Loan Party or Indemnified Person is a party thereto), or any act, omission,
event, or circumstance in any manner related thereto, and (c) in connection with
or arising out of any presence or release of Hazardous Materials at, on, under,
to or from any assets or properties owned, leased or operated by Borrower or any
of its Subsidiaries or any Environmental Actions, Environmental Liabilities or
Remedial Actions related in any way to Borrower, any of its Subsidiaries or any
assets, properties, operations or actions of Borrower or any of its Subsidiaries
or any other violations of or liabilities arising under Environmental Law or
Environmental Permits by or relating to Borrower or any of its Subsidiaries or
any assets or properties owned, leased or operated by Borrower or any of its
Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this Section 10.3 with respect to (1) any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from (A) the gross negligence, bad faith or willful misconduct
of such Indemnified Person or its officers, directors, employees, controlling
persons or members or (B) a material breach in bad faith by any Indemnified
Person of its obligations under this Agreement or the other Loan Documents. This
provision shall survive the termination of this Agreement and the repayment in
full of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
THE PROVISIONS OF THIS SECTION 10.3 SHALL SURVIVE THE RESIGNATION OR TERMINATION
OF ANY AGENT AND TERMINATION OF THIS AGREEMENT.

11. NOTICES.

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

 

  If to Borrower:   

NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Attn: Chief Legal Officer

Tel: (602) 903-7802

Fax No.: (602) 903-7806

 

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  with copies to:   

SQUIRE PATTON BOGGS (US) LLP

1 E. Washington Street, Suite 2700

Phoenix, Arizona 85004

Attn: Matthew Holman, Esq.

Tel: (602) 528-4083

Fax No.: (602) 253-8129

  If to Agent:   

WILMINGTON SAVINGS FUND SOCIETY, FSB

500 Delaware Avenue

Wilmington, DE 19801

Attention: Corporate Trust

Reference: Nuverra Environmental Solutions, Inc. Term Loan Credit Agreement

Fax No.: 302-421-9137

  with copies to:   

MORRISON & FOERSTER LLP

250 West 55th Street

New York, NY 10019-9601

Attn: Jon Levine, Esq.

Fax No.: 212-468-7900

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

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

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

 

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

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

(d) BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK
AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

 

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(e) NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST AGENT, ANY LENDER, ISSUING
BANK, OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE,
AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF ANY CLAIM
FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
EACH LOAN PARTY HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM
FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED
TO EXIST IN ITS FAVOR.

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1 Assignments and Participations.

(a) (i) Subject to the conditions set forth in clause (a)(ii) below, any Lender
may assign and delegate all or any portion of its rights and duties under the
Loan Documents (including the Obligations owed to it and its Term Commitments)
to one or more assignees (each, an “Assignee”).

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

(A) no assignment may be made (x) to a natural person that is not a “qualified
purchaser” within the meaning of Section 2(a)(51) of the Investment Company Act
of 1940, (y) to a Loan Party or a Subsidiary of a Loan Party or (z) to any
Competitor;

(B) the amount of the Term Loans, Term Commitments and the other rights and
obligations of the assigning Lender hereunder and under the other Loan Documents
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to Agent) shall be in a
minimum amount (unless waived by Agent) of $100,000 (except such minimum amount
shall not apply to (I) an assignment or delegation by any Lender to any other
Lender, an Affiliate of any Lender, or a Related Fund of such Lender or (II) a
group of new Lenders, each of which is an Affiliate of each other or a Related
Fund of such new Lender to the extent that the aggregate amount to be assigned
to all such new Lenders is at least $100,000);

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

(D) the parties to each assignment shall execute and deliver to Agent an
Assignment and Acceptance; provided, that Borrower and Agent may continue to
deal solely and directly with the assigning Lender in connection with the
interest so assigned to an Assignee until (1) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Borrower

 

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and Agent by such Lender and the Assignee, (2) such Lender and the Assignee have
delivered to Borrower and Agent an Assignment and Acceptance and Agent has
notified the assigning Lender of its receipt thereof and (3) unless waived by
Agent, the assigning Lender or Assignee has paid to Agent, for Agent’s separate
account, a processing fee in the amount of $3,500; and

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

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

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(iv) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (v) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to
Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

 

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

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

 

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

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

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

(i) Agent (as a non-fiduciary agent on behalf of Borrower) shall maintain, or
cause to be maintained, a register (the “Register”) on which it enters the name
and address of each Lender as the registered owner of the Term Commitments and
Term Loans (and the principal amount thereof and stated interest thereon) held
by such Lender (each, a “Registered Loan”). Other than in connection with an
assignment by a Lender of all or any portion of its portion of the Term
Commitments and Term Loans to an Affiliate of such Lender or a Related Fund of
such Lender (i) a Registered Loan (and the registered note, if any, evidencing
the same) may be assigned or sold in whole or in part only by registration of
such assignment or sale on the Register (and each registered note shall
expressly so provide) and (ii) any assignment or sale of all or part of such
Registered Loan (and the registered note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the registered note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such registered note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new registered notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the registered note, if any evidencing the same),
Borrower shall treat the Person in whose name such Registered Loan (and the
registered note, if any, evidencing the same) is registered as the owner thereof
for the purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary. In the case of any assignment by a
Lender of all or any portion of its Term Commitments and Term Loans to an
Affiliate of such Lender or a Related Fund of such Lender, and which assignment
is not recorded in the Register, the assigning Lender, on behalf of Borrower,
shall maintain a register comparable to the Register.

 

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

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

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

14. AMENDMENTS; WAIVERS.

14.1 Amendments and Waivers.

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

(c) Anything in this Section 14.1 to the contrary notwithstanding, (i) any
amendment, modification, elimination, waiver, consent, termination, or release
of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the

 

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

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

14.2 Replacement of Certain Lenders.

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

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

 

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

15. AGENT; THE LENDER GROUP.

15.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints Agent as its agent under this Agreement and the other Loan Documents
and each Lender hereby irrevocably authorizes Agent to execute and deliver each
of the other Loan Documents on its behalf and to take such other action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Agent agrees to act as agent
for and on behalf of the Lenders on the conditions contained in this Section 15.
The provisions of this Section 15 are solely for the benefit of Agent and the
Lenders, and neither Borrower nor any other party shall have rights as a
third-party beneficiary of any of such provisions. Any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein or in the other Loan Documents, nor shall Agent
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent. Without limiting the generality of the foregoing,
the use of the term “agent” in this Agreement or the other Loan Documents with
reference to Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only a representative relationship between independent
contracting parties. Each Lender hereby further authorizes Agent to act as the
secured party under each of the Loan Documents that create a Lien on any item of
Collateral. Except as expressly otherwise provided in this Agreement, Lenders
agree that Agent shall act upon the written instruction of the Required Lenders
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting

 

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the status of the Obligations, the Collateral, payments and proceeds of
Collateral, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) exclusively receive, apply, and distribute payments
and proceeds of the Collateral as provided in the Loan Documents, (d) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes, (e) perform, exercise, and enforce any and all other rights
and remedies of the Lender Group with respect to Borrower or its Subsidiaries,
the Obligations, the Collateral, or otherwise related to any of same as provided
in the Loan Documents, and (f) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.

15.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact except to the extent
that a court of competent jurisdiction determines in a final and nonappealable
order that Agent acted with gross negligence or willful misconduct in the
selection of such agent(s) or attorney(s) in fact.

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

15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are

 

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received, Agent shall act, or refrain from acting, as it deems advisable. Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Agent is required to
exercise as directed in writing by the Required Lenders. If Agent so requests,
it shall first be indemnified to its reasonable satisfaction by the Lenders
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action. Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders. In determining compliance with any
condition hereunder to the making of a Loan, that by its terms must be fulfilled
to the satisfaction of the Lenders, Agent may presume that such condition is
satisfactory to the Lenders unless Agent shall have received notice to the
contrary from the Lenders prior to the making of such Loan.

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

15.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Borrower and its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such due diligence, documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower or any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrower. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower or any
other

 

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Person party to a Loan Document. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by Agent,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrower or any
other Person party to a Loan Document that may come into the possession of any
of the Agent-Related Persons. Each Lender acknowledges that Agent does not have
any duty or responsibility, either initially or on a continuing basis (except to
the extent, if any, that is expressly specified herein) to provide such Lender
with any credit or other information with respect to Borrower, its Affiliates or
any of their respective business, legal, financial or other affairs, and
irrespective of whether such information came into Agent’s or its Affiliates’ or
representatives’ possession before or after the date on which such Lender became
a party to this Agreement.

15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys’ fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not Borrower is obligated to reimburse Agent or
Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from payments or
proceeds of the Collateral received by Agent to reimburse Agent for such
out-of-pocket costs and expenses prior to the distribution of any amounts to
Lenders. In the event Agent is not reimbursed for such costs and expenses by
Borrower or its Subsidiaries, each Lender hereby agrees that it is and shall be
obligated to pay to Agent such Lender’s ratable portion thereof. Whether or not
the transactions contemplated hereby are consummated, each of the Lenders, on a
ratable basis, shall indemnify and defend the Agent-Related Persons (to the
extent not reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so) from and against any and all Indemnified
Liabilities; provided, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities resulting
solely from such Person’s gross negligence or willful misconduct nor shall any
Lender be liable for the obligations of any Defaulting Lender in failing to make
a Term Loan or other extension of credit hereunder. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for such Lender’s
ratable share of any costs or out of pocket expenses (including attorneys,
accountants, advisors, and consultants fees and expenses) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any other Loan Document to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrower,
including, for the avoidance of doubt, any compensation, expenses,
disbursements, and advances incurred or owed by Agent pursuant to any demand for
indemnity made by a depository bank under any account control agreement entered
into by Agent in connection with its duties under this Agreement. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.

 

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

15.9 Successor Agent. Agent may resign as Agent upon 30 days (10 days if an
Event of Default has occurred and is continuing) prior written notice to the
Lenders (unless such notice is waived by the Required Lenders) and Borrower
(unless such notice is waived by Borrower or an Event of Default exists). In
addition, the Required Lenders may agree in writing to remove and replace Agent.
If Agent resigns or is terminated, as the case may be, under this Agreement, the
Required Lenders shall be entitled to appoint a successor Agent for the Lenders
from among the Lenders or otherwise. If no successor Agent is appointed prior to
the effective date of the resignation or termination, as the case may be, of
Agent, the Required Lenders may appoint a successor Agent from among the Lenders
or such other Person as the Required Lenders shall select. In any such event,
upon the acceptance of its appointment as successor Agent hereunder, such
successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term “Agent” shall mean such successor Agent and the
retiring Agent’s appointment, powers, and duties as Agent shall be terminated.
After any retiring Agent’s resignation hereunder as Agent, the provisions of
this Section 15 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 30 days following a
retiring Agent’s notice of resignation, the retiring Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.

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

 

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15.11 Collateral Matters.

(a) The Lenders hereby irrevocably authorize Agent to release any Lien on any
Collateral (i) upon the termination of the Term Commitments and payment and
satisfaction in full by Borrower of all of the Obligations, (ii) constituting
property being sold or disposed of if a release is required or desirable in
connection therewith and if Borrower certifies to Agent that the sale or
disposition is permitted under Section 6.4 (and Agent may rely conclusively on
any such certificate, without further inquiry), (iii) constituting property in
which neither Borrower nor its Subsidiaries owned any interest at the time
Agent’s Lien was granted nor at any time thereafter, (iv) constituting property
leased or licensed to Borrower or its Subsidiaries under a lease or license that
has expired or is terminated in a transaction permitted under this Agreement, or
(v) in connection with a credit bid or purchase authorized under this
Section 15.11. The Loan Parties and the Lenders hereby irrevocably authorize
Agent, based upon the instruction of the Required Lenders, to (a) consent to,
credit bid or purchase (either directly or indirectly through one or more
entities) all or any portion of the Collateral at any sale thereof conducted
under the provisions of the Bankruptcy Code, including Section 363 of the
Bankruptcy Code, (b) credit bid or purchase (either directly or indirectly
through one or more entities) all or any portion of the Collateral at any sale
or other disposition thereof conducted under the provisions of the Code,
including pursuant to Sections 9-610 or 9-620 of the Code, or (c) credit bid or
purchase (either directly or indirectly through one or more entities) all or any
portion of the Collateral at any other sale or foreclosure conducted or
consented to by Agent in accordance with applicable law in any judicial action
or proceeding or by the exercise of any legal or equitable remedy. In connection
with any such credit bid or purchase, (i) the Obligations owed to the Lenders
shall be entitled to be, and shall be, credit bid on a ratable basis (with
Obligations with respect to contingent or unliquidated claims being estimated
for such purpose if the fixing or liquidation thereof would not impair or unduly
delay the ability of Agent to credit bid or purchase at such sale or other
disposition of the Collateral and, if such contingent or unliquidated claims
cannot be estimated without impairing or unduly delaying the ability of Agent to
credit bid at such sale or other disposition, then such claims shall be
disregarded, not credit bid, and not entitled to any interest in the Collateral
that is the subject of such credit bid or purchase) and the Lenders whose
Obligations are credit bid shall be entitled to receive interests (ratably based
upon the proportion of their Obligations credit bid in relation to the aggregate
amount of Obligations so credit bid) in the Collateral that is the subject of
such credit bid or purchase (or in the Equity Interests of the any entities that
are used to consummate such credit bid or purchase), and (ii) Agent, based upon
the instruction of the Required Lenders, may accept non-cash consideration,
including debt and equity securities issued by any entities used to consummate
such credit bid or purchase and in connection therewith Agent may reduce the
Obligations owed to the Lenders (ratably based upon the proportion of their
Obligations credit bid in relation to the aggregate amount of Obligations so
credit bid) based upon the value of such non-cash consideration. Except as
provided above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (x) if the release is of
all or substantially all of the Collateral, all of the Lenders, or
(y) otherwise, the Required Lenders. Upon request by Agent or Borrower at any
time, the Lenders will confirm in writing Agent’s authority to release any such
Liens on particular types or items of Collateral pursuant to this Section 15.11;
provided, that (1) anything to the contrary contained in any of the Loan
Documents notwithstanding, Agent shall not be required to execute any document
or take any

 

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action necessary to evidence such release on terms that, in Agent’s opinion,
could expose Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly released) upon (or obligations of Borrower in respect of) any and all
interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral. Each Lender further
hereby irrevocably authorizes Agent, at its option and in its sole discretion,
to subordinate any Lien granted to or held by Agent under any Loan Document to
the holder of any Permitted Lien on such property if such Permitted Lien secures
Permitted Purchase Money Indebtedness.

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

15.12 Restrictions on Actions by Lenders; Sharing of Payments.

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

(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and

 

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participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, that to the extent that such excess
payment received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.

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

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

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

15.16 [Reserved].

15.17 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations to make any credit available hereunder shall constitute
the several (and not joint) obligations of the respective Lenders on a ratable
basis, according to their respective Term Commitments, to make an amount of such
credit not to exceed, in principal amount, at any one time outstanding, the
amount of their respective Term Commitments. Nothing contained herein shall
confer upon any Lender any interest in, or subject any Lender to any liability
for, or in respect of, the business, assets, profits, losses, or liabilities of
any other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in
Section 15.7, no member of the Lender Group shall have any liability for the
acts of any other member of the Lender Group. No Lender shall be responsible to
Borrower or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for such Lender
or on its behalf, nor to take any other action on behalf of such Lender
hereunder or in connection with the financing contemplated herein.

 

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16. WITHHOLDING TAXES.

16.1 Payments. All payments by or on account of any obligation of any Loan Party
under any Loan Document will be made free and clear of, and without deduction or
withholding for, any present or future Indemnified Taxes, and in the event any
deduction or withholding of Indemnified Taxes is required, Borrower shall comply
with the next sentence of this Section 16.1. If any Indemnified Taxes are so
levied or imposed, Borrower agrees to pay the full amount of such Indemnified
Taxes and such additional amounts as may be necessary so that every payment of
all amounts due under this Agreement, any note, or Loan Document, including any
amount paid pursuant to this Section 16.1 after withholding or deduction for or
on account of any Indemnified Taxes, will not be less than the amount provided
for herein. Borrower shall indemnify Agent and each Lender and Participant,
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes (including Indemnified Taxes imposed or asserted on or attributable to
amounts payable under this Section 16.1) payable or paid by such Agent, Lender
or Participant or required to be withheld or deducted from a payment to such
Agent, Lender or Participant and any reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. Borrower
will furnish to Agent as promptly as possible after the date the payment of any
Indemnified Tax is due pursuant to applicable law, certified copies of tax
receipts evidencing such payment by Borrower. Borrower agrees to pay any present
or future stamp, value added or documentary taxes or any other excise or
property taxes, charges, or similar levies that arise from any payment made
hereunder or from the execution, delivery, performance, recordation, or filing
of, or otherwise with respect to this Agreement or any other Loan Document.

16.2 Exemptions.

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

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

 

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

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

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

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

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

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

(d) If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrower, such Lender or Participant agrees to notify Agent (or, in the case of
a sale of a participation interest, to the Lender granting the participation
only) of the percentage amount in which it is no longer the beneficial owner of

 

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Obligations of Borrower. To the extent of such percentage amount, Agent will
treat such Lender’s or such Participant’s documentation provided pursuant to
Section 16.2(a) or 16.2(c) as no longer valid. With respect to such percentage
amount, such Assignee (or assignee Participant) may provide new documentation,
pursuant to Section 16.2(a) or 16.2(c), if applicable. Borrower agrees that each
Participant shall be entitled to the benefits of this Section 16 with respect to
its participation in any portion of the Term Commitments and the Obligations so
long as such Participant complies with the obligations set forth in this
Section 16 with respect thereto.

16.3 Reductions.

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

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

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

 

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paid over to Borrower (plus any penalties, interest or other charges, imposed by
the applicable Governmental Authority, other than such penalties, interest or
other charges imposed as a result of the willful misconduct or gross negligence
of Agent hereunder) to Agent or such Lender in the event Agent or such Lender is
required to repay such refund to such Governmental Authority. Notwithstanding
anything in this Agreement to the contrary, this Section 16 shall not be
construed to require Agent or any Lender to make available its tax returns (or
any other information which it deems confidential) to Borrower or any other
Person.

17. GENERAL PROVISIONS.

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

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

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

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

17.5 [Reserved].

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

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

 

64

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

17.9 Confidentiality.

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

 

65

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

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

(c) The Loan Parties hereby acknowledge that Agent or its Affiliates may make
available to the Lenders materials or information provided by or on behalf of
Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on IntraLinks,

 

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SyndTrak or another similar electronic system (the “Platform”) and certain of
the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to the Loan Parties or
their securities) (each, a “Public Lender”). The Loan Parties shall be deemed to
have authorized Agent and its Affiliates and the Lenders to treat Borrower
Materials marked “PUBLIC” or otherwise at any time filed with the SEC as not
containing any material non-public information with respect to the Loan Parties
or their securities for purposes of United States federal and state securities
laws. All Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated as “Public Investor” (or another
similar term). Agent and its Affiliates and the Lenders shall be entitled to
treat any Borrower Materials that are not marked “PUBLIC” or that are not at any
time filed with the SEC as being suitable only for posting on a portion of the
Platform not marked as “Public Investor” (or such other similar term).

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

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

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

 

67

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

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

[Signature pages to follow.]

 

 

68

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

 

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

/s/ Joseph M. Crabb

    Name:   Joseph M. Crabb     Title:   Executive Vice President

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

WILMINGTON SAVINGS FUND SOCIETY, FSB, as Agent By:  

/s/ Geoffrey J. Lewis

Name:   Geoffrey J. Lewis Title:   Vice President

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

ASCRIBE II INVESTMENTS LLC, as a Lender By:  

/s/ Lawrence First

Name:   Lawrence First Title:   Managing Director ASCRIBE III INVESTMENTS LLC,
as a Lender By:  

/s/ Lawrence First

Name:   Lawrence First Title:   Managing Director ECF VALUE FUND, LP, as a
Lender By:  

/s/ Jeffrey Gates

Name:   Jeffrey Gates Title:   President ECF VALUE FUND II, LP, as a Lender By:
 

/s/ Jeffrey Gates

Name:   Jeffrey Gates Title:   President ECF VALUE FUND INTERNATIONAL MASTER,
LP, as a Lender By:  

/s/ Jeffrey Gates

Name:   Jeffrey Gates Title:   President

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

EXHIBIT A-1

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

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

 

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

 

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

 

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

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

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

 

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

 

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

 

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

 

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

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

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

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

 

[NAME OF ASSIGNOR] as Assignor By  

 

  Name:   Title [NAME OF ASSIGNOR] as Assignor By  

 

  Name:   Title

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

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

 

1.    Borrower: Nuverra Environmental Solutions, Inc., a Delaware corporation   
2.    Name and Date of Credit Agreement:       Second Lien Term Loan Credit
Agreement dated as of August [        ], 2017 (as amended, restated,
supplemented, or otherwise modified from time to time, the “Credit Agreement”)
by and among Borrower, the lenders party thereto as “Lenders”, and Wilmington
Savings Fund Society, FSB, as administrative agent for each member of the Lender
Group (in such capacity, together with its successors and assigns in such
capacity, “Agent”).   

3.

   Date of Assignment Agreement:      ___________   4.    Amounts:   

(a)

   Assigned Amount of Term Commitment    $ ___________  

(c)

   Assigned Amount of Term Loan    $ ___________  

5.

   Settlement Date:      ___________  

6.

   Purchase Price    $ ___________   7.    Notice and Payment Instructions, etc.
  

 

Assignee:

  

Assignor:

 

  

 

 

  

 

 

  

 

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EXHIBIT C-1

FORM OF COMPLIANCE CERTIFICATE

[on Borrower’s letterhead]

 

To: WILMINGTON SAVINGS FUND SOCIETY, FSB

500 Delaware Avenue

Wilmington, DE 19801

Attention: Corporate Trust

 

  Re: Compliance Certificate dated ______, 20__

Ladies and Gentlemen:

Reference is made to that certain Second Lien Term Loan Credit Agreement dated
as of August 7, 2017 (as amended, restated, supplemented, or otherwise modified
from time to time, the “Credit Agreement”) by and among NUVERRA ENVIRONMENTAL
SOLUTIONS, INC., a Delaware corporation, as borrower (“Borrower”), the lenders
party thereto as “Lenders” (each of such Lenders, together with its successors
and permitted assigns, is referred to hereinafter as a “Lender”), and WILMINGTON
SAVINGS FUND SOCIETY, FSB, as administrative agent for each member of the Lender
Group (in such capacity, together with its successors and assigns in such
capacity, “Agent”). Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.

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

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

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

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

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

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

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

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

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

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

 

NUVERRA ENVIRONMENTAL SOLUTIONS, INC., a Delaware corporation, as Borrower

By:  

 

Name:  

 

Title:  

 

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EXHIBIT P-1

FORM OF PERFECTION CERTIFICATE

FOR

Nuverra Environmental Solutions, Inc.1

To: Wilmington Savings Fund Society, FSB, in its capacity as administrative
agent

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

1. THE COMPANY

 

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

 

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

 

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

 

Name    Date Used

 

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

 

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

 

 

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

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

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

 

Name and Address   

Type of

Operation

  

Ownership Percentage

or Relationship

 

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

 

Type of Transaction    Date Concluded

2. LOCATIONS OF COMPANY

 

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

 

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

 

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

 

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

 

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

3. SPECIAL TYPES OF COLLATERAL

 

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

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

Patents:

 

Description    Application / Patent No.       Issue Dates

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

  

 

  

 

  

 

Trademarks and Servicemarks:

 

Description    Application / Registration No.       Issue Dates

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

  

 

  

 

  

 

Copyrights:

 

Description    Application / Registration No.       Issue Dates

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

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

 

c. The Company owns the following kinds of assets:

 

  Franchises, marketing agreements, or similar agreements:    Yes ____ No ____  
Stocks, bonds, or other securities:    Yes ____ No ____   Promissory notes, or
other instruments or evidence of indebtedness in favor of such person:    Yes
____ No ____   Leases of equipment, security agreements naming such person as
secured party, or other chattel paper:    Yes ____ No ____   Aircraft:    Yes
____ No ____   Vessels, boats or ships:    Yes ____ No ____   Railroad rolling
stock:    Yes ____ No ____   Motor Vehicles or similar certificated collateral:
   Yes ___ No ____

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

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

 

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

 

Name of

Institutions

  

Account

Number

  

Branch

Address

  

Description

of Account

 

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

4. OWNERSHIP OF THE COMPANY

 

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

 

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

 

Name    Ownership Percentage

5. OFFICERS OF THE COMPANY

 

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

 

b. Additional members of the Board are:

 

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

6. ADDITIONAL INFORMATION

 

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

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

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

 

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

 

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

Name of Firm:

Address:

Phone Number:

Partner Handling Relationship:

 

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

Name of Firm:

Address:

Phone Number:

Partner Handling Relationship:

Were statements uncertified for any fiscal year?:

 

f. The Insurance Broker for the Company is:

 

g. The Company’s fiscal year end is:

 

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

 

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

 

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

[Remainder of page intentionally left blank]

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

 

Very truly yours, [___________________] ____________________________________ By:
Title:

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Schedule 1.1

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

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

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

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

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

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

“Additional Delayed Draw Term Loan” has the meaning specified therefor in
Section 2.2(c) of the Agreement.

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

“Additional Delayed Draw Term Loan Commitment Termination Date” means the later
of (a) the date of the Discharge of the Senior Obligations and (b) August 7,
2019.

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

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

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

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Equity Interests, by contract, or
otherwise; provided, that, for purposes of Section 6.10 of the Agreement:
(a) any Person which owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of directors or other
members of the governing body of a Person or 10% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed an Affiliate of such Person, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such
Person, and (c) each partnership in which a Person is a general partner shall be
deemed an Affiliate of such Person. Notwithstanding the foregoing, no Lender
shall be deemed to be an Affiliate of a Loan Party.

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

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

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

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

“Agreement” means the Second Lien Term Loan Credit Agreement to which this
Schedule 1.1 is attached.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Borrowing” means a borrowing consisting of Term Loans made on the same day by
the Lenders.

“Business Day” means any day excluding Saturday, Sunday, and any day which is a
legal holiday under the laws of the State of New York or which is a day on which
Agent is otherwise closed for transacting business with the public.

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

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

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

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

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“Cash Interest Rate” means (i) prior to the PIK Termination Date, 5.5% per
annum, and (ii) on or after the PIK Termination Date, 11.0% per annum.

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

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

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

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

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

“Change of Control” means that:

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

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

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

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

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

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

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

“Closing Date Term Loan” has the meaning specified therefor in Section 2.2(a) of
the Agreement.

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

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

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

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

“Competitor” means any Person which is a direct competitor of Borrower or its
Subsidiaries if, at the time of a proposed assignment, the assigning Lender has
actual knowledge that such Person is a direct competitor of Borrower or its
Subsidiaries; provided, that in connection with any assignment or participation,
the Assignee or Participant with respect to such proposed assignment or
participation that is an investment bank, a commercial bank, a finance company,
a fund, or other Person which merely has an economic interest in any such direct
competitor, and is not itself such a direct competitor of Borrower or its
Subsidiaries, shall not be deemed to be a direct competitor for the purposes of
this definition.

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

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

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

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

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

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

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

“Defaulting Lender” means any Lender that (a) has failed to fund any amounts
required to be funded by it under the Agreement within 2 Business Days of the
date that it is required to do so under the Agreement, (b) notified Borrower,
Agent, or any Lender in writing that it does not intend to comply with all or
any portion of its funding obligations under the Agreement, (c) has made a
public statement to the effect that it does not intend to comply with its
funding obligations under the Agreement or under other agreements generally (as
reasonably determined by Agent) under which it has committed to extend credit,
(d) failed, within 1

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Business Day after written request by Agent, to confirm that it will comply with
the terms of the Agreement relating to its obligations to fund any amounts
required to be funded by it under the Agreement, (e) otherwise failed to pay
over to Agent or any other Lender any other amount required to be paid by it
under the Agreement within 2 Business Days of the date that it is required to do
so under the Agreement, or (f) (i) becomes or is insolvent or has a parent
company that has become or is insolvent or (ii) becomes the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, or custodian or appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment.

“Defaulting Lender Rate” means the interest rate(s) then applicable to Term
Loans.

“Delayed Draw Term Loan” means a Special Delayed Draw Term Loan or an Additional
Delayed Draw Term Loan, or both, as the context may require.

“Delayed Draw Term Loan Commitment” means a Special Delayed Draw Term Loan
Commitment or an Additional Delayed Draw Term Loan Commitment, or both, as the
context may require.

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

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

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

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

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

“Discharge of the Senior Obligations” has the meaning specified therefor in the
Intercreditor Agreement.

“Disqualified Equity Interests” means any Equity Interests that, by their terms
(or by the terms of any security or other Equity Interests into which they are
convertible or for which they are exchangeable), or upon the happening of any
event or condition (a) mature or are mandatorily redeemable (other than solely
for Qualified Equity Interests), pursuant to a sinking fund obligation or
otherwise (except as a result of a change of control or asset sale so long as
any

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rights of the holders thereof upon the occurrence of a change of control or
asset sale event shall be subject to the prior repayment in full of the Term
Loans and all other Obligations that are accrued and payable and the termination
of the Term Commitments), (b) are redeemable at the option of the holder thereof
(other than solely for Qualified Equity Interests), in whole or in part,
(c) provide for the scheduled payments of dividends in cash, or (d) are or
become convertible into or exchangeable for Indebtedness or any other Equity
Interests that would constitute Disqualified Equity Interests, in each case,
prior to the date that is 180 days after the Maturity Date.

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

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

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

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

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

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

(ii) interest income,

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

(iv) non-cash gains,

plus

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

(i) non-cash extraordinary losses,

(ii) Interest Expense,

(iii) income taxes,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Fee Letter” means, collectively, that certain fee letter, dated as of even date
with the Agreement, between Borrower and Agent.

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

“First Lien Agent” means the “Agent” under and as defined in the First Lien
Credit Agreement.

“First Lien Credit Agreement” means that certain First Lien Credit Agreement,
dated as of the date hereof, by and among ACF FinCo I LP, the First Lien Agent,
the First Lien Lenders, Borrower and each other Person party thereto from time
to time as a loan party thereunder, as amended and in effect from time to time
to the extent permitted herein and in the Intercreditor Agreement.

“First Lien Indebtedness” means the Indebtedness evidenced by the First Lien
Loan Documents.

“First Lien Lenders” means each of the “Lenders” under and as defined in the
First Lien Credit Agreement.

“First Lien Loan Documents” means the First Lien Credit Agreement and each other
agreement, document and instrument executed and delivered in connection
therewith, as amended and in effect from time to time to the extent permitted
herein and in the Intercreditor Agreement.

“First Lien Obligations” means the “Obligations” as defined in the First Lien
Credit Agreement.

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

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

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

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

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

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

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

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

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

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

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”,

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(b) oil, petroleum, or petroleum derived substances, natural gas, natural gas
liquids, synthetic gas, drilling fluids, produced waters, and other wastes
associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

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

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

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices and, for the
avoidance of doubt, other than royalty payments payable in the ordinary course
of business in respect of non-exclusive licenses) and any Earn Out required to
be paid in cash or similar obligation, (f) all monetary obligations of such
Person owing under Hedge Agreements (which amount shall be calculated based on
the amount that would be payable by such Person if the Hedge Agreement were
terminated on the date of determination), (g) any Disqualified Equity Interests
of such Person, and (h) any obligation of such Person guaranteeing or intended
to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (g) above. For
purposes of this definition, (i) the amount of any Indebtedness represented by a
guaranty or other similar instrument shall be the lesser of the principal amount
of the obligations guaranteed and still outstanding and the maximum amount for
which the guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Indebtedness, and (ii) the amount of any Indebtedness
which is limited or is non-recourse to a Person or for which recourse is limited
to an identified asset shall be valued at the lesser of (A) if applicable, the
limited amount of such obligations, and (B) if applicable, the fair market value
of such assets securing such obligation.

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

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

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

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

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

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

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

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

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide accounts receivable arising in the ordinary course
of business), or acquisitions of Indebtedness, Equity Interests, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustment for increases or
decreases in value, or write-ups, write-downs, or write-offs with respect to
such Investment.

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

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

“Lender Group” means each of the Lenders and Agent, or any one or more of them.

“Lender Group Expenses” means all (a) costs or expenses (including taxes and
insurance premiums) required to be paid by Borrower or its Subsidiaries under
any of the Loan Documents that are paid, advanced, or incurred by the Lender
Group, (b) documented out-of-

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pocket fees or charges paid or incurred by Agent in connection with the Lender
Group’s transactions with Borrower or its Subsidiaries under any of the Loan
Documents, including, without limitation, the reasonable out-of-pocket fees and
expenses of Agent’s outside counsel (limited, in the case of the fees and
disbursements of counsel, to the fees, disbursements and other out-of-pocket
charges of one primary counsel and, if reasonably necessary or advisable, any
special counsel, one local counsel in any relevant jurisdiction, and special
Delaware bankruptcy counsel) and out-of-pocket costs incurred in connection with
travel and due diligence, photocopying, notarization, couriers and messengers,
telecommunication, public record searches, filing fees, recording fees,
publication, real estate surveys, real estate title policies and endorsements,
and environmental audits, (c) Agent’s customary fees and charges imposed or
incurred in connection with any background checks or OFAC/PEP searches related
to Borrower or its Subsidiaries, (d) Agent’s customary fees and charges (as
adjusted from time to time) with respect to the disbursement of funds (or the
receipt of funds) to or for the account of Borrower (whether by wire transfer or
otherwise), together with any out-of-pocket costs and expenses incurred in
connection therewith, (e) customary charges imposed or incurred by Agent
resulting from the dishonor of checks payable by or to any Loan Party,
(f) reasonable documented out-of-pocket costs and expenses paid or incurred by
the Lender Group to correct any default or enforce any provision of the Loan
Documents, or during the continuance of an Event of Default, in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (g) consulting or
advisory fees and expenses of Agent and fees and expenses related to any field
examinations, appraisals, or valuation, (h) Agent’s and Lenders’ reasonable
costs and expenses (including reasonable documented attorneys’ fees and
expenses) relative to third party subpoenas, claims or any other lawsuit or
adverse proceeding paid or incurred, whether in enforcing or defending the Loan
Documents or otherwise in connection with the transactions contemplated by the
Loan Documents, Agent’s Liens in and to the Collateral, or the Lender Group’s
relationship with Borrower or any of its Subsidiaries, (i) Agent’s reasonable
documented costs and expenses (including reasonable documented attorneys’ fees
and due diligence expenses) incurred in advising, structuring, drafting,
reviewing, administering (including travel, meals, and lodging), syndicating
(including reasonable costs and expenses relative to the CUSIP, DXSyndicate™,
SyndTrak or other communication costs incurred in connection with a syndication
of the loan facilities), or amending, waiving, or modifying the Loan Documents,
and (j) Agent’s and each Lender’s reasonable documented costs and expenses
(including reasonable documented attorneys, accountants, consultants, and other
advisors fees and expenses) incurred in terminating, enforcing (including
attorneys, accountants, consultants, and other advisors fees and expenses
incurred in connection with a “workout,” a “restructuring,” or an Insolvency
Proceeding concerning Borrower or any of its Subsidiaries or in exercising
rights or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether a lawsuit or other adverse proceeding is brought, or in
taking any enforcement action or any Remedial Action with respect to the
Collateral.

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

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

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

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

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

“Loan Party” means Borrower or any Guarantor.

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

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

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

“Maturity Date” means February 7, 2021.

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

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

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“Net Cash Proceeds” means:

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

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

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

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

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

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

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

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

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

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

“Participant Register” has the meaning set forth in Section 13.1(j) of the
Agreement.

“Patent Security Agreement” has the meaning specified therefor in the Guaranty
and Security Agreement.

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“Patriot Act” has the meaning specified therefor in Section 4.13 of the
Agreement.

“Perfection Certificate” means a certificate in the form of Exhibit P-1 to the
Agreement.

“Permitted Acquisition” means any Acquisition so long as:

(a) no Default or Event of Default shall have occurred and be continuing or
would result from the consummation of the proposed Acquisition and the proposed
Acquisition is consensual,

(b) no Indebtedness will be incurred, assumed, or would exist with respect to
Borrower or its Subsidiaries as a result of such Acquisition, other than
Indebtedness permitted under clause (f) or (g) of the definition of Permitted
Indebtedness and no Liens will be incurred, assumed, or would exist with respect
to the assets of Borrower or its Subsidiaries as a result of such Acquisition
other than Permitted Liens,

(c) Borrower has provided Agent with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such
proposed Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case, determined as if the combination had been
accomplished at the beginning of the relevant period; such eliminations and
inclusions to be mutually and reasonably agreed upon by Borrower and the
Required Lenders) created by adding the historical combined financial statements
of Borrower (including the combined financial statements of any other Person or
assets that were the subject of a prior Permitted Acquisition during the
relevant period) to the historical consolidated financial statements of the
Person to be acquired (or the historical financial statements related to the
assets to be acquired) pursuant to the proposed Acquisition, Borrower and its
Subsidiaries (i) would have been in compliance with the financial covenant in
Section 7 of the Agreement for the 4 fiscal quarter period ended immediately
prior to the proposed date of consummation of such proposed Acquisition, and
(ii) are projected to be in compliance with the financial covenant in Section 7
of the Agreement for the 4 fiscal quarter period ended one year after the
proposed date of consummation of such proposed Acquisition,

(d) for Acquisitions with aggregate consideration in excess of $500,000,
Borrower has provided Agent with its due diligence package relative to the
proposed Acquisition, including forecasted balance sheets, profit and loss
statements, and cash flow statements of the Person or assets to be acquired, all
prepared on a basis consistent with such Person’s (or assets’) historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions for the 1 year period following the date of
the proposed Acquisition, on a quarter by quarter basis, in form and substance
(including as to scope and underlying assumptions) reasonably satisfactory to
the Required Lenders,

(e) [reserved],

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(f) the assets being acquired or the Person whose Equity Interests are being
acquired did not have negative EBITDA (calculated on an annualized basis) for
the most recently ended three (3) consecutive month period prior to the date of
the proposed Acquisition,

(g) Borrower has provided Agent with written notice of the proposed Acquisition
at least 15 Business Days prior to the anticipated closing date of the proposed
Acquisition and, not later than 5 Business Days prior to the anticipated closing
date of the proposed Acquisition, copies of the acquisition agreement and other
material documents relative to the proposed Acquisition,

(h) the assets being acquired (other than a de minimis amount of assets in
relation to Borrower’s and its Subsidiaries’ total assets), or the Person whose
Equity Interests are being acquired, are useful in or engaged in, as applicable,
the business of Borrower and its Subsidiaries or a business reasonably related
thereto,

(i) the assets being acquired (other than a de minimis amount of assets in
relation to the assets being acquired) are located within the United States or
the Person whose Equity Interests are being acquired is organized in a
jurisdiction located within the United States,

(j) the subject assets or Equity Interests, as applicable, are being acquired
directly by Borrower or one of its Subsidiaries that is a Loan Party, and, in
connection therewith, Borrower or the applicable Loan Party shall have complied
with Section 5.11 or 5.12 of the Agreement, as applicable, of the Agreement and,
in the case of an acquisition of Equity Interests, Borrower or the applicable
Loan Party shall have demonstrated to the Required Lenders that the new Loan
Parties have received consideration sufficient to make the joinder documents
binding and enforceable against such new Loan Parties,

(k) the consideration payable (including deferred payment obligations, earn-outs
or other similar contingent considerations) in connection with such Acquisition
does not exceed $2,300,000, and, when combined with all other Acquisitions,
$5,750,000 in any eighteen (18) consecutive month period,

(l) after giving effect to such Acquisition the Borrower is in pro forma
compliance with covenant set forth in Section 7(a)(i), and

(m) Agent shall have received prior to the proposed Acquisition, a certificate,
in form and substance satisfactory to the Required Lenders, signed by an officer
of Borrower certifying compliance with the foregoing conditions.

“Permitted Dispositions” means:

(a) sales, abandonment, or other dispositions of Equipment that is substantially
worn, damaged, or obsolete or no longer used or useful in the ordinary course of
business and leases or subleases of Real Property not useful in the conduct of
the business of Borrower and its Subsidiaries,

(b) sales of Inventory to buyers in the ordinary course of business,

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(c) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents,

(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business,

(e) the granting of Permitted Liens,

(f) the sale or discount, in each case without recourse, of accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof,

(g) any involuntary loss, damage or destruction of property,

(h) any involuntary condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property,

(i) the leasing or subleasing of assets of Borrower or its Subsidiaries in the
ordinary course of business,

(j) the sale or issuance of Equity Interests (other than Disqualified Equity
Interests) of Borrower,

(k) (i) the lapse of registered patents, trademarks, copyrights and other
intellectual property of Borrower and its Subsidiaries to the extent not
economically desirable in the conduct of their business or (ii) the abandonment
of patents, trademarks, copyrights, or other intellectual property rights in the
ordinary course of business so long as (in each case under clauses (i) and
(ii)), (A) with respect to copyrights, such copyrights are not material revenue
generating copyrights, and (B) such lapse is not materially adverse to the
interests of the Lender Group,

(l) the making of Restricted Payments that are expressly permitted to be made
pursuant to the Agreement,

(m) the making of Permitted Investments,

(n) so long as no Event of Default has occurred and is continuing or would
immediately result therefrom, transfers of assets (i) from Borrower or any of
its Subsidiaries to a Loan Party, and (ii) from any Subsidiary of Borrower that
is not a Loan Party to any other Subsidiary of Borrower,

(o) the transfer or sale of assets and dissolution of Appalachian Water
Services, LLC as contemplated pursuant to, and in accordance with, that certain
Order Approving Motion for Authorization for Debtors to Enter into Stipulation
Resolving Contract Rights, Claims and Objections of the Shallenberger Parties,
entered by the Bankruptcy Court on July 21, 2017,

(p) the disposition of assets set forth on Schedule P-1 to the Agreement, and

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(q) sales or dispositions of fixed assets not otherwise permitted in clauses
(a) through (o) above so long as (1) no Default or Event of Default then exists
or would arise therefrom, (2) made at fair market value, (3) if such sales or
dispositions are to an Affiliate of Borrower or its Subsidiaries, they are
(x) on terms that no less favorable, taken as a whole, to Borrower or its
Subsidiaries, as applicable, than would be obtained in an arm’s length
transaction with a non-Affiliate, and (y) not prohibited by Section 6.10 of the
Agreement, and (4) the aggregate fair market value of all assets disposed of
(including the proposed disposition) would not exceed $13,800,000 per year (or
such greater amount as agreed to by the Required Lenders in writing in their
sole discretion).

“Permitted Indebtedness” means:

(a) Indebtedness evidenced by the Agreement or the other Loan Documents,

(b) Indebtedness set forth on Schedule 4.14 to the Agreement and any Refinancing
Indebtedness in respect of such Indebtedness,

(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness,

(d) endorsement of instruments or other payment items for deposit,

(e) Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary
course of business with respect to surety and appeal bonds, performance bonds,
bid bonds, appeal bonds, completion guarantee and similar obligations;
(ii) unsecured guarantees arising with respect to customary indemnification
obligations to purchasers in connection with Permitted Dispositions; and
(iii) unsecured guarantees with respect to Indebtedness of Borrower or one of
its Subsidiaries, to the extent that the Person that is obligated under such
guaranty could have incurred such underlying Indebtedness,

(f) Subordinated Indebtedness (including Earn-Outs) incurred solely for purposes
of Permitted Acquisitions in an amount not to exceed $3,737,500 per year,

(g) Acquired Indebtedness in an amount not to exceed $2,875,000 outstanding at
any one time,

(h) Indebtedness incurred in the ordinary course of business under performance,
surety, statutory, or appeal bonds,

(i) Indebtedness owed to any Person providing property, casualty, liability, or
other insurance to Borrower or any of its Subsidiaries, so long as the amount of
such Indebtedness is not in excess of the amount of the unpaid cost of, and
shall be incurred only to defer the cost of, such insurance for the year in
which such Indebtedness is incurred and such Indebtedness is outstanding only
during such year,

(j) the incurrence by Borrower or its Subsidiaries of Indebtedness under Hedge
Agreements that are incurred for the bona fide purpose of hedging the interest
rate, commodity, or foreign currency risks associated with Borrower’s and its
Subsidiaries’ operations and not for speculative purposes,

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(k) Indebtedness incurred in the ordinary course of business in respect of
credit cards, credit card processing services, debit cards, stored value cards,
commercial cards (including so-called “commercial cards”, “procurement cards” or
“p-cards”), or Cash Management Services, in an aggregate amount not to exceed
$287,500,

(l) unsecured Indebtedness of Borrower owing to former employees, officers, or
directors (or any spouses, ex-spouses, or estates of any of the foregoing)
incurred in connection with the repurchase by Borrower of the Equity Interests
of Borrower that have been issued to such Persons, so long as (i) no Default or
Event of Default has occurred and is continuing or would result from the
incurrence of such Indebtedness, (ii) the aggregate amount of all such
Indebtedness outstanding at any one time does not exceed $575,000, and
(iii) such Indebtedness is subordinated to the Obligations on terms and
conditions reasonably acceptable to Agent,

(m) contingent liabilities in respect of any indemnification obligation,
adjustment or purchase price of Borrower or the applicable Loan Party incurred
in connection with the consummation of one or more Permitted Acquisitions,

(n) to the extent constituting Indebtedness, Permitted Investments,

(o) unsecured Indebtedness incurred in respect of netting services, overdraft
protection, and other like services, in each case, incurred in the ordinary
course of business,

(p) accrual of interest, accretion or amortization of original issue discount,
or the payment of interest in kind, in each case, on Indebtedness that otherwise
constitutes Permitted Indebtedness,

(q) Subordinated Indebtedness, solely for purposes of a Specified Contribution,
in an aggregate amount not to exceed the amount required for such Specified
Contribution,

(r) Indebtedness in an aggregate principal amount not to exceed $4,160,378.25 in
respect of the Existing Letters of Credit (as defined in the First Lien Credit
Agreement), so long as such Existing Letters of Credit are cancelled and
returned to the issuer thereof within ninety (90) days from the Closing Date,

(s) First Lien Indebtedness pursuant to the First Lien Loan Documents, so long
as such Indebtedness is subject to the terms and conditions of the Intercreditor
Agreement, and

(t) any other unsecured Indebtedness incurred by Borrower or any of its
Subsidiaries in an aggregate outstanding amount not to exceed $575,000 at any
one time.

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“Permitted Intercompany Advances” means loans and other Investments made by
(a) a Loan Party to another Loan Party, (b) a Subsidiary of Borrower that is not
a Loan Party to another Subsidiary of Borrower that is not a Loan Party, (c) a
Subsidiary of Borrower that is not a Loan Party to a Loan Party, so long as the
parties thereto are party to the Intercompany Subordination Agreement, and (d) a
Loan Party to a Subsidiary of Borrower that is not a Loan Party so long as
(i) the aggregate amount of all such loans and other Investments (by type, not
by the borrower) does not exceed $287,500 outstanding at any one time, and
(ii) at the time of the making of such loan and other Investments, no Event of
Default has occurred and is continuing or would result therefrom.

“Permitted Investments” means:

(a) Investments in cash and Cash Equivalents,

(b) Investments in negotiable instruments deposited or to be deposited for
collection in the ordinary course of business,

(c) advances made in connection with purchases of goods or services in the
ordinary course of business,

(d) Investments received in settlement of amounts due to any Loan Party or any
of its Subsidiaries effected in the ordinary course of business or owing to any
Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings
involving an account debtor or upon the foreclosure or enforcement of any Lien
in favor of a Loan Party or its Subsidiaries,

(e) Investments owned by any Loan Party or any of its Subsidiaries on the
Closing Date and set forth on Schedule P-2 to the Agreement,

(f) guarantees permitted under the definition of Permitted Indebtedness,

(g) Permitted Intercompany Advances,

(h) Equity Interests or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to a Loan
Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise
outside the ordinary course of business) or as security for any such
Indebtedness or claims,

(i) deposits of cash made in the ordinary course of business to secure
performance of operating leases,

(j) (i) non-cash loans and advances to employees, officers, and directors of
Borrower or any of its Subsidiaries for the purpose of purchasing Equity
Interests in Borrower so long as the proceeds of such loans are used in their
entirety to purchase such Equity Interests in Borrower, and (ii) loans and
advances to employees and officers of Borrower or any of its Subsidiaries in the
ordinary course of business for any other business purpose and in an aggregate
amount not to exceed $287,500 at any one time,

(k) Permitted Acquisitions,

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(l) Investments resulting from entering into agreements relative to Indebtedness
that is permitted under clause (j) of the definition of Permitted Indebtedness,

(m) equity Investments by any Loan Party in any Subsidiary of such Loan Party
which is required by law to maintain a minimum net capital requirement or as may
be otherwise required by applicable law,

(n) Investments consisting of non-cash consideration received in connection with
Permitted Dispositions, so long as the non-cash consideration received in
connection with any Permitted Disposition does not exceed 20% of the total
consideration received in connection with such Permitted Disposition, and

(o) so long as no Event of Default has occurred and is continuing or would
result therefrom, any other Investments in an aggregate amount not to exceed
$1,150,000 during the term of the Agreement.

“Permitted Liens” means

(a) Liens granted to, or for the benefit of, Agent to secure the Obligations,

(b) Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) do not have priority over
Agent’s Liens and the underlying taxes, assessments, or charges or levies are
the subject of Permitted Protests,

(c) judgment Liens arising solely as a result of the existence of judgments,
orders, or awards that do not constitute an Event of Default under Section 8.3
of the Agreement,

(d) Liens set forth on Schedule P-3 to the Agreement; provided, that to qualify
as a Permitted Lien, any such Lien described on Schedule P-3 to the Agreement
shall only secure the Indebtedness that it secures on the Closing Date and any
Refinancing Indebtedness in respect thereof,

(e) the interests of lessors under operating leases and non-exclusive licensors
under license agreements,

(f) purchase money Liens on fixed assets or the interests of lessors under
Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as (i) such Lien attaches only to the
fixed asset purchased or acquired and the proceeds thereof, and (ii) such Lien
only secures the Indebtedness that was incurred to acquire the fixed asset
purchased or acquired or any Refinancing Indebtedness in respect thereof,

(g) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests,

(h) Liens on amounts deposited to secure Borrower’s and its Subsidiaries
obligations in connection with worker’s compensation or other unemployment
insurance,

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(i) Liens on amounts deposited to secure Borrower’s and its Subsidiaries
obligations in connection with the making or entering into of bids, tenders, or
leases in the ordinary course of business and not in connection with the
borrowing of money,

(j) Liens on amounts deposited to secure Borrower’s and its Subsidiaries
reimbursement obligations with respect to surety or appeal bonds obtained in the
ordinary course of business,

(k) with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof,

(l) non-exclusive licenses of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business,

(m) Liens that are replacements of Permitted Liens to the extent that the
original Indebtedness is the subject of permitted Refinancing Indebtedness and
so long as the replacement Liens only encumber those assets that secured the
original Indebtedness,

(n) rights of setoff or bankers’ liens upon deposits of funds in favor of banks
or other depository institutions, solely to the extent incurred in connection
with the maintenance of such Deposit Accounts in the ordinary course of
business,

(o) Liens granted in the ordinary course of business on the unearned portion of
insurance premiums securing the financing of insurance premiums to the extent
the financing is permitted under the definition of Permitted Indebtedness,

(p) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods,

(q) Liens solely on any cash earnest money deposits made by Borrower or any of
its Subsidiaries in connection with any letter of intent or purchase agreement
with respect to a Permitted Acquisition,

(r) Liens assumed by Borrower or its Subsidiaries in connection with a Permitted
Acquisition that secure Acquired Indebtedness that is Permitted Indebtedness to
the extent such Liens are on the Equipment and Real Property acquired with such
Acquired Indebtedness,

(s) Liens securing First Lien Indebtedness, so long as such Liens are subject to
the Intercreditor Agreement,

(t) Liens securing Indebtedness permitted pursuant to clause (r) of the
definition of Permitted Indebtedness,

(u) subject to the terms of the Intercreditor Agreement, Liens securing
Indebtedness permitted pursuant to clause (s) of the definition of Permitted
Indebtedness,

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(v) Liens solely in cash deposits in an aggregate amount not to exceed $123,500
made by Borrower pursuant to the payoff arrangements in respect of the
Prepetition ABL Credit Agreement and the DIP ABL Credit Agreement, and

(w) other Liens which do not secure Indebtedness for borrowed money or letters
of credit and as to which the aggregate amount of the obligations secured
thereby does not exceed $862,500.

“Permitted Protest” means the right of Borrower or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on Borrower’s or its Subsidiaries’ books and
records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Borrower or its Subsidiary, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of Agent’s Liens.

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Indebtedness (other than the Obligations, but including Capitalized Lease
Obligations), incurred after the Closing Date and at the time of, or within 20
days after, the acquisition of any fixed assets for the purpose of financing all
or any part of the acquisition cost thereof, in an aggregate principal amount
outstanding at any one time not in excess of $9,775,000.

“PIK Extension Fee” has the meaning specified therefor in Section 2.6(a) of this
Agreement.

“PIK Interest Rate” means, as of any date, 5.5% per annum.

“PIK Termination Date” has the meaning specified therefor in Section 2.6(a) of
the Agreement.

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

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

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

“Prepetition Term Credit Agreement” has the meaning set forth in the recitals to
the Agreement.

“Professional Fee Account” means that certain deposit account ending in 7118
established with Wells Fargo Bank, N.A., established solely for purposes of the
payment of certain professional fees accrued during the pendency of, and in
connection with, the Bankruptcy Cases with an aggregate amount on deposit not to
exceed $8,500,000.

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“Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.

“Pro Rata Share” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make all or a portion of the Term
Loans, with respect to such Lender’s right to receive payments of interest,
fees, and principal with respect to the Term Loans, and with respect to all
other computations and other matters related to the Term Commitments or the Term
Loans, the percentage obtained by dividing (i) the Term Loan Exposure of such
Lender by (ii) the aggregate Term Loan Exposure of all Lenders, and

(b) with respect to all other matters and for all other matters as to a
particular Lender (including the indemnification obligations arising under
Section 15.7 of the Agreement), the percentage obtained by dividing (i) the Term
Loan Exposure of such Lender by (ii) the aggregate Term Loan Exposure of all
Lenders, in any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to Section 13.1; provided, that if all of the
Term Loans have been repaid in full and all Term Commitments have been
terminated, Pro Rata Share under this clause shall be determined as if the Term
Loans had not been repaid, collateralized, or terminated and shall be based upon
the Term Loan Exposures as they existed immediately prior to their repayment,
collateralization, or termination.

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

“Qualified Equity Interests” means and refers to any Equity Interests issued by
Borrower (and not by one or more of its Subsidiaries) that is not a Disqualified
Equity Interest.

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by Borrower or its Subsidiaries and the improvements thereto.

“Real Property Collateral” means (a) the Real Property identified on Schedule
R-1 to the Agreement and (b) any Real Property hereafter acquired by Borrower or
its Subsidiaries with a fair market value in excess of $2,500,000.

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

(a) such refinancings, renewals, or extensions do not result in an increase in
the principal amount of the Indebtedness so refinanced, renewed, or extended,
other than by the amount of premiums paid thereon and the fees and expenses
incurred in connection therewith and by the amount of unfunded commitments with
respect thereto,

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(b) such refinancings, renewals, or extensions do not result in a shortening of
the average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be
expected to be materially adverse to the interests of the Lenders,

(c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and

(d) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.

“Register” has the meaning set forth in Section 13.1(i) of the Agreement.

“Registered Loan” has the meaning set forth in Section 13.1(i) of the Agreement.

“Related Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course and that is administered, advised or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers, advises or manages a Lender.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

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

“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

“Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (d) of the definition of Pro Rata Shares) exceed 50%;
provided, that the Term Loan Exposure of any Defaulting Lender shall be
disregarded in the determination of the Required Lenders.

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“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Person or any of its Subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to any Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment.

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

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

“Sanctions” means all economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by OFAC or the U.S. Department of State, or (b) the
United Nations Security Council, the European Union or Her Majesty’s Treasury of
the United Kingdom.

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

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

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Securitization” has the meaning specified therefor in Section 13.1(h) of the
Agreement.

“Security Documents” means, collectively, the Guaranty and Security Agreement,
the Mortgages, the Trademark Security Agreement, the Patent Security Agreement
and each other security agreement or other instrument or document executed and
delivered pursuant to terms of the Agreement or pursuant to any of the Security
Documents to secure any of the Obligations.

“Solvent” means, with respect to any Person as of any date of determination,
that (a) such Person is not engaged or about to engage in a business or
transaction for which the remaining assets of such Person are unreasonably small
in relation to the business or transaction or for which the property remaining
with such Person is an unreasonably small capital, and (b) such Person has not
incurred and does not intend to incur, or reasonably believe that it will incur,
debts beyond its ability to pay such debts as they become due (whether at
maturity or

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otherwise), and (c) such Person is “solvent” or not “insolvent”, as applicable
within the meaning given those terms and similar terms under applicable laws
relating to fraudulent transfers and conveyances (provided, that this clause
(c) shall exclude any definition of “solvent” or “insolvent” which is defined as
at fair valuations, the sum of such Person’s debts and liabilities (including
contingent liabilities) is less than all of such Person’s assets). For purposes
of this definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability (irrespective of whether such contingent
liabilities meet the criteria for accrual under Statement of Financial
Accounting Standard No. 5).

“Special Delayed Draw Term Loan” has the meaning specified therefor in
Section 2.2(b) of the Agreement.

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

“Special Delayed Draw Term Loan Commitment Termination Date” means the later of
(a) the date of the Discharge of the Senior Obligations and (b) the earlier of
(i) August 7, 2019 and (ii) the date on which the Hargreaves Appeal shall have
become subject to a binding consent decree or otherwise dismissed.

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

“Subject Holder” has the meaning specified therefor in Section 2.4(e)(v) of the
Agreement.

“Subordinated Indebtedness” means any unsecured Indebtedness of Borrower or its
Subsidiaries incurred from time to time that is subordinated in right of payment
(which, for the avoidance of doubt, shall include a restriction on all cash
payments with respect to such Indebtedness) to the Obligations and (a) that is
only guaranteed by the Guarantors, (b) that is not subject to scheduled
amortization, redemption, sinking fund or similar payment and does not have a
final maturity, in each case, on or before the date that is six months after the
Maturity Date, (c) that does not include any financial covenants or any covenant
or agreement that is more restrictive or onerous on any Loan Party in any
material respect than any comparable covenant in the Agreement and is otherwise
on terms and conditions reasonably acceptable to Agent, (d) shall be limited to
cross-payment default and cross-acceleration to designated “senior debt”
(including the Obligations), and (e) the terms and conditions of such
subordination and any such Indebtedness shall be acceptable to Agent in its sole
discretion.

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“Subordination Provisions” has the meaning specified therefor in Section 8.12 of
the Agreement.

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Equity Interests having ordinary voting power to elect a majority
of the Board of Directors of such corporation, partnership, limited liability
company, or other entity.

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein, and all
interest, penalties or similar liabilities with respect thereto.

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

“Term Commitment” means a Closing Date Term Loan Commitment or a Delayed Draw
Term Loan Commitment, or both, as the context may require.

“Term Loan” means a Closing Date Term Loan or a Delayed Draw Term Loan, or both,
as the context may require.

“Term Loan Exposure” means, with respect to any Lender, as of any date of
determination (a) prior to the termination of the Term Commitments, the amount
of such Lender’s Term Commitment, and (b) after the termination of the Term
Commitments, the aggregate outstanding principal amount of the Term Loans of
such Lender.

“Trademark Security Agreement” has the meaning specified therefor in the
Guaranty and Security Agreement.

“United States” means the United States of America.

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the
Agreement.

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Schedule 3.1

The effectiveness of this Agreement is subject to the fulfillment, to the
satisfaction of Agent and each Lender, of each of the following conditions
precedent:

(a) the Closing Date shall occur on or before August 7, 2017;

(b) Agent shall have received appropriate financing statements on Form UCC-1
duly filed in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect Agent’s Liens in and to the Collateral, and Agent
shall have received searches reflecting the filing of all such financing
statements;

(c) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent, duly executed and delivered, and each such
document shall be in full force and effect:

(i) this Agreement;

(ii) the Intercreditor Agreement;

(iii) the Control Agreements required to be delivered on the Closing Date
pursuant to the Agreement,

(iv) the Fee Letter,

(v) the Guaranty and Security Agreement,

(vi) the Intercompany Subordination Agreement,

(vii) a Perfection Certificate, and

(viii) the Trademark Security Agreement;

(d) Agent shall have received a certificate from a responsible officer of each
Loan Party:

(i) attesting to the resolutions of such Loan Party’s board of directors
authorizing its execution, delivery, and performance of the Loan Documents to
which it is a party,

(ii) authorizing specific officers of such Loan Party to execute the same,
attesting to the incumbency and signatures of such specific officers of such
Loan Party,

(iii) attesting to copies of each Loan Party’s Governing Documents, as amended,
modified, or supplemented to the Closing Date, which Governing Documents shall
be (A) certified by the responsible officer of such Loan Party, and (B) with
respect to Governing Documents that are charter documents, certified as of a
recent date (not more than 30 days prior to the Closing Date) by the appropriate
governmental official,

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(iv) attesting to certificates of status with respect to each Loan Party, dated
within 14 days of the Closing Date, such certificates to be issued by the
appropriate officer of the jurisdiction of organization of such Loan Party,
which certificates shall indicate that such Loan Party is in good standing in
such jurisdiction, and

(v) attesting to certificates of status with respect to each Loan Party, each
dated within 30 days of the Closing Date, such certificates to be issued by the
appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such Loan Party) in which such Loan Party’s failure to be duly
qualified or licensed would constitute a Material Adverse Effect, which
certificates shall indicate that such Loan Party is in good standing in such
jurisdictions;

(e) [reserved];

(f) since the date the Loan Parties filed the Bankruptcy Cases, there shall not
have occurred a Material Adverse Effect, other than (i) as customarily resulting
from the commencement of petitions for relief similar to the Bankruptcy Cases
and (ii) as contemplated in Borrower’s business plan delivered to the Lenders
prior to July 28, 2017;

(g) the Order shall be in full force and effect and shall not be stayed pending
appeal or otherwise, and no amendments, supplements or other modifications
thereto shall have been effected without the consent of Agent;

(h) the transactions contemplated by this Agreement and the other Loan
Documents, including, without limitation, the funding under the First Lien
Credit Agreement, shall have been consummated (i) on terms consistent with those
outlined in the Approved Plan, (ii) in compliance with applicable law, court and
regulatory approvals and (iii) satisfactory to Agent;

(i) Agent shall have received executed copies of the material First Lien Loan
Documents, certified by a responsible officer of Borrower as being true, correct
and complete, and Agent shall be satisfied with the terms and conditions of the
First Lien Loan Documents;

(j) all Indebtedness and obligations of the Loan Parties and their subsidiaries,
and the Liens securing same, (a) that are outstanding immediately after
consummation of the Approved Plan shall not exceed the amount contemplated
thereby and (b) contemplated by the Approved Plan to be converted to equity or
extinguished prior to or substantially contemporaneously with the Closing Date
shall have been so converted or extinguished;

(k) [reserved];

(l) Agent shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 5.6 of this Agreement, the form
and substance of which shall be satisfactory to Agent;

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(m) Agent shall have received satisfactory evidence (including a certificate of
the chief executive officer of Borrower) that all tax returns required to be
filed by Borrower and its Subsidiaries have been timely filed and all taxes,
including, but not limited to, sales tax, upon Borrower and its Subsidiaries or
their properties, assets, income, and franchises (including real property taxes,
sales taxes, and payroll taxes) have been paid prior to delinquency;

(n) Agent shall have received an opinion of the Loan Parties’ counsel in form
and substance satisfactory to Agent;

(o) The Lenders shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of Borrower’s and its
Subsidiaries books and records and verification of Borrower’s representations
and warranties to Agent and the Lenders, the results of which shall be
satisfactory to the Lenders, (ii) satisfactory review by the Lenders of all
contracts with Federal, state, municipal and governmental agencies, (iii) a
review of Borrower’s and its Subsidiaries’ insurance and (iv) a review of (A) a
quality of earnings report of Borrower and its Subsidiaries, (B) all Material
Contracts, and (C) all surety bonds, licenses and permits, each of which shall
be satisfactory to the Lenders;

(p) The Lenders shall have received completed reference and background checks
with respect to Borrower’s senior management, the results of which are
satisfactory to the Lenders in their sole discretion;

(q) [reserved];

(r) The Lenders shall have received (i) monthly financial statements of Borrower
and its Subsidiaries as of the date ending at least 30 days prior to the Closing
Date, (ii) audited financial statements for the fiscal year ended December 31,
2016, and (iii) monthly financial projections for the fiscal year ending
December 31, 2017, in form and substance reasonably satisfactory to the Lenders;

(s) Borrower shall have paid all Lender Group Expenses incurred in connection
with the transactions contemplated by this Agreement and the other Loan
Documents;

(t) Borrower and each of its Subsidiaries shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrower or its Subsidiaries of
the Loan Documents or with the consummation of the transactions contemplated
thereby; and

(u) all other documents and legal matters in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Agent.

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Schedule 3.6

Post-Closing Items

1. No later than 5:00 p.m. (New York time) on August 8, 2017, Borrower shall
deliver to First Lien Agent:

(a) undated stock powers or other appropriate instruments of transfer executed
and delivered in blank by a duly authorized officer of the holder(s) of the
shares evidencing the Pledged Interests (as defined in the Guaranty and Security
Agreement);

(b) (i) the Deposit Account Control Agreement (Access Restricted Immediately –
Two Secured Parties) by and among the First Lien Agent, the Agent, the Borrower
and Wells Fargo Bank, N.A., (ii) the Deposit Account Control Agreement (Access
Restricted After Notice – Two Secured Parties) by and among the First Lien
Agent, the Agent, the Borrower and Wells Fargo Bank, N.A., (iii) the Collection
Account Agreement (Lender Collection Account) by and among the First Lien Agent,
the Borrower and Wells Fargo Bank, N.A., and (iv) letter regarding the Transfer
of Rights to Use Lockbox, executed by the Borrower and the First Lien Agent;
provided, that no Lender shall be obligated to make its Revolving Loans and no
Issuing Bank shall cause to be issued any Letters of Credit until such time as
Borrower delivers the foregoing to First Lien Agent, each in form and substance
satisfactory to First Lien Agent; and

(c) an executed legal opinion of Crowley Fleck PLLP, local North Dakota counsel
to the Loan Parties, in form and substance satisfactory to Agent.

2. Within 30 days following the Closing Date, Borrower shall:

(a) (i) deliver to Agent a duly executed copy of a Collateral Agency Agreement
(the “Collateral Agency Agreement”), among the Borrower, First Lien Agent,
Agent, and Corporation Service Company, a Delaware corporation (“CSC”), as
custodian thereunder, which shall be satisfactory in form and substance to
Agent, and (ii) deliver to CSC, with respect to each Vehicle, the certificate of
title or equivalent certificate or document, issued by the relevant
Jurisdiction, evidencing ownership of the Vehicle (each as defined in the
Collateral Agency Agreement); and

(b) provide evidence to Agent satisfactory to Agent that the utility account
ending in #8551 held at Wells Fargo Bank, N.A., has been closed.

3. Within 60 days following the Closing Date, Borrower shall deliver to Agent
evidence satisfactory to the Agent that the Loan Parties have caused all the
collection accounts maintained at Wells Fargo Bank, National Association on the
Closing Date to be closed.

4. Within 90 days following the Closing Date, Borrower shall deliver to the
Agent duly executed copies of the Mortgages encumbering the Real Property
identified on Schedule R-1 to the Agreement, each of which shall be satisfactory
in form and substance to Agent.

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Schedule 5.1

Deliver to Agent (and if so requested by Agent, with copies to each Lender) each
of the financial statements, reports, or other items set forth below at the
following times in form satisfactory to Agent:

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as soon as available, but in any event within 30 days after the end of each
month during each of Borrower’s fiscal years,   

(a) an unaudited consolidated and consolidating balance sheet, income statement,
statement of cash flow, and statement of shareholder’s equity covering
Borrower’s and its Subsidiaries’ operations during such period and compared to
the prior period and plan, together with a corresponding discussion and analysis
of results from management to the extent prepared by Borrower (and, to the
extent not so prepared by Borrower, an e-mail summary with performance
highlights and other detail reasonably requested by Agent), and

 

(b) a Compliance Certificate.

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as soon as available, but in any event within 120 days after the end of each of
Borrower’s fiscal years,   

(c) consolidated financial statements of Borrower and its Subsidiaries for each
such fiscal year, audited by independent certified public accountants reasonably
acceptable to Agent and certified, without any qualifications (including any
(A) qualification or exception as to the scope of such audit or
(B) qualification which relates to the treatment or classification of any item
and which, as a condition to the removal of such qualification, would require an
adjustment to such item, the effect of which would be to cause any noncompliance
with the provisions of Section 7 of the Agreement), by such accountants to have
been prepared in accordance with GAAP (such audited financial statements to
include a balance sheet, income statement, statement of cash flow, and statement
of shareholder’s equity, and, if prepared, such accountants’ letter to
management); provided that such audited annual consolidated financial statements
for the fiscal year ending December 31, 2017 shall only cover the portion of
such year commencing with the Closing Date and ending December 31, 2017. If
Borrower’s independent certified public accountant has prepared footnotes to
accompany any such financial statements, Borrower shall deliver such footnotes
to Agent contemporaneously with Borrower’s delivery of the associated financial
statements to Agent,

 

(d) a Compliance Certificate, and

 

(e) a detailed calculation demonstrating whether or not each Subsidiary that has
been excluded as a Loan Party by virtue of being an Immaterial Subsidiary
remains an Immaterial Subsidiary.

as soon as available, but in any event within 60 days after the end of each of
Borrower’s fiscal years,    (f) copies of Borrower’s Projections, in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent, in its reasonable discretion, for the forthcoming fiscal year, month by
month, certified by a responsible officer of Borrower as being such officer’s
good faith estimate of the financial performance of Borrower during the period
covered thereby.

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if and when filed by Borrower, provided, however, that Borrower shall be deemed
to have furnished the information required if it shall have timely filed such
information for public availability with the SEC and/or on its internet home
page,   

(g) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports,

 

(h) any other filings made by Borrower with the SEC, and

 

(i) any other information that is provided by Borrower to its shareholders
generally.

promptly, but in any event within 2 days after Borrower has knowledge of any
event or condition that constitutes a Default or an Event of Default,    (j)
notice of such event or condition and a statement of the curative action that
Borrower proposes to take with respect thereto. promptly after the commencement
thereof, but in any event within 5 days after the service of process with
respect thereto on Borrower or any of its Subsidiaries,    (k) notice of all
actions, suits, or proceedings brought by or against Borrower or any of its
Subsidiaries before any Governmental Authority which reasonably could be
expected to result in a Material Adverse Effect. promptly, but in any event
within three (3) Business Days, after entering into a change, modification,
amendment, revision, waiver or consent to the First Lien Loan Documents,    (l)
written notice (together with copies of all executed instruments relating
thereto) of any such change, modification, amendment, revision, waiver or
consent to the First Lien Loan Documents.

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promptly, but in any event within three (3) Business Days, after the furnishing
thereof pursuant to the First Lien Loan Documents or the documents relating to
such Subordinated Indebtedness,    (m) copies of any statement or report
furnished to First Lien Agent, any First Lien Lender or any holder of
Subordinated Indebtedness, in First Lien Agent’s, such First Lien Lender’s or
such holder’s capacity as creditor to such Person, pursuant to the terms of the
First Lien Loan Documents or the documentation relating to such Subordinated
Indebtedness and not otherwise required to be furnished to the Lenders pursuant
to this Schedule 5.1. upon the request of Agent,    (n) any other information
reasonably requested relating to the financial condition of Borrower or its
Subsidiaries.

Documents required to be delivered pursuant to this Schedule 5.1 (to the extent
any such documents are included in materials otherwise filed with the SEC) may
be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which Borrower posts such documents, or provides a
link thereto on Borrower’s website on the Internet at www.nuverra.com and
notifies Agent that such documents are available; or (ii) on which such
documents are posted on Borrower’s behalf on an Internet or intranet website, if
any, to which each Lender and Agent have access (whether a commercial,
third-party website or whether sponsored by Agent) and Agent receives
notification from Borrower that such documents are available; provided, that
Borrower shall deliver paper copies of such documents to Agent or any Lender
upon its request to Borrower to deliver such paper copies. Notwithstanding
anything contained in this paragraph to the contrary, in every instance Borrower
shall be required to provide copies of the Compliance Certificates
electronically or otherwise in a manner reasonably satisfactory to Agent. Agent
shall have no obligation to request the delivery of or to maintain paper copies
of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by Borrower with any such request for
delivery by a Lender, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.

Compliance with the requirements set forth in this Schedule 5.1 does not relieve
Borrower of the other reporting requirements set forth in the Agreement,
including but not limited to Section 5.1.