Document:

crr-ex101_8.htm

Exhibit 10.1

SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT 
AND JOINDER

SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND JOINDER dated as of June 20, 2019 (this “Amendment”), with respect to the Credit Agreement referred to below, by and among CARBO Ceramics Inc., a Delaware corporation, as borrower (“Borrower”), the guarantors party hereto (collectively, the “Guarantors”), the lenders party hereto (collectively, the “Lenders”), and Wilks Brothers, LLC, a Texas limited liability company, as administrative agent (the “Administrative Agent”).

RECITALS

WHEREAS, Borrower, Administrative Agent, and the lenders party thereto from time to time are parties to that certain Amended and Restated Credit Agreement dated as of March 2, 2017, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of June 7, 2018 (as the same now exists and as it may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

WHEREAS, following the completion of a disposition of certain assets of Borrower, Borrower prepaid the Term Loans in an amount equal to $14,533,000 (the “Prepayment Amount”) pursuant to that certain Waiver to Credit Agreement dated as of May 28, 2019 among Borrower, Administrative Agent, and the lenders party thereto;

WHEREAS, the Borrower has requested that, notwithstanding anything in the Credit Agreement to the contrary, the Administrative Agent and the lenders signatory hereto agree to permit Borrower to re-borrow the Prepayment Amount as an incremental term loan tranche under the existing Term Loan Facility such that after funding of such Incremental Term Loan (as hereinafter defined) by the Incremental Term Loan Lender (as hereinafter defined) on the Second Amendment Effective Date (as hereinafter defined), the aggregate outstanding principal amount of the Term Loans will be equal to $65,000,000;

WHEREAS, Equify Financial LLC (“Equify”) is willing to become a Lender under and pursuant to the Credit Agreement to (i) provide the Incremental Term Loan to Borrower under the existing Term Loan Facility, and (ii) pursuant to that certain Assignment and Acceptance effective as of the date hereof (the “Assignment and Acceptance”), between Equify and Wilks Brothers, LLC, as existing lender (“Existing Lender”), purchase and assume from Existing Lender a portion of the Existing Lender’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto; and

WHEREAS, in order to effect the foregoing and modify and amend certain other terms of the Credit Agreement, the parties hereto desire to modify and amend the Credit Agreement on the terms and subject to the conditions as set forth herein.

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NOW THEREFORE, in consideration of the premises and of the mutual covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

	
 
	
Section 1.
	
Defined Terms.

Unless otherwise defined herein, all capitalized terms used herein (including, without limitation, in the recitals to this Amendment) have the meanings assigned to such terms in the Credit Agreement, as amended hereby.

Section 2.Joinder of Incremental Term Loan Lender.

By its execution of this Amendment, from and after the Second Amendment Effective Date, the Incremental Term Loan Lender shall become a party to the Credit Agreement and have the rights and obligations of a “Lender” for all purposes under the Credit Agreement and the other Credit Documents and shall be joined, and shall have bound itself to the Credit Agreement and to all other Credit Documents to which the lenders are bound generally as of the Second Amendment Effective Date.  The Incremental Term Loan Lender hereby assumes all of the obligations of a “Lender” under the Credit Agreement and the other Credit Documents and shall be entitled to all of the rights and benefits of a “Lender” under the Credit Documents.  The Incremental Term Loan Lender hereby agrees to furnish the Administrative Agent with all agreements, documents or instruments that the Administrative Agent or lenders are required or reasonably requested by the Administrative Agent, the lenders or the Borrower to deliver to the Administrative Agent, the lenders or to the Borrower pursuant to the Credit Agreement.

	
 
	
Section 3.
	
Incremental Term Loan Commitment.

By its execution of this Amendment, effective as of the Second Amendment Effective Date, the Incremental Term Loan Lender shall be a Lender for all purposes under the Credit Agreement and shall fund the Incremental Term Loan in accordance with the Credit Agreement and this Amendment.  Following the Incremental Term Loan Lender’s funding of the Incremental Term Loan Commitment pursuant to the Credit Agreement and this Amendment, the Incremental Term Loan Lender’s commitment shall irrevocably terminate and the Borrower will have no further right to request any Term Loans from any Lender under the Credit Agreement.

	
 
	
Section 4.
	
Amendments to Credit Agreement.

The Credit Agreement is, effective as of the Second Amendment Effective Date (as hereinafter defined), hereby amended as follows:

(a)The following new terms are hereby added to Section 1.1 (Certain Defined Terms) of the Credit Agreement in the appropriate alphabetical order:

“Incremental Term Loan” has the meaning set forth in Section 2.3.

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“Incremental Term Loan Commitment” means the commitment of the Incremental Term Loan Lender to make the Incremental Term Loan in accordance with Section 2.3.

“Incremental Term Loan Lender” mean Equify Financial LLC.

“Second Amendment to Credit Agreement and Joinder” means that certain Second Amendment to Amended and Restated Credit Agreement and Joinder dated as of the Second Amendment Effective Date by and among Borrower, the guarantors party thereto, the lenders party thereto and the Administrative Agent.

“Second Amendment Effective Date” means June 20, 2019, the date on which the conditions precedent to the effectiveness of the Second Amendment to Credit Agreement and Joinder were satisfied.

(b)The following terms as set forth in Section 1.1 (Certain Defined Terms) of the Credit Agreement are hereby amended and restated in their entirety as follows:

“Majority Lenders” means (a) other than as provided in clause (b) and (c) below, two or more Lenders holding at least fifty-one-percent (51%) of the sum of the aggregate unpaid principal amount of the Term Loan, (b) other than as provided in clause (c) below at any time when there is only one Lender, such Lender, and (c) at any time when the Wilks Brothers, LLC or its Affiliate is a Lender, Wilks Brothers, LLC or its Affiliate.

“Make-Whole Payment” means, with respect to any optional prepayment of Term Loans under Section 2.5(b) and any mandatory prepayment under Section 2.5(c)(i), or any prepayment or repayment of Term Loans following an Event of Default and the acceleration of the Term Loans as a result of such Event of Default (provided, however, that with respect to any such acceleration resulting from an Event of Default arising under Sections 7.1(c) (only with respect to a breach of Section 5.3(a), 6.1, 6.2, 6.3, 6.5, 6.9, 6.10, 6.14) and 7.1(k), no Make-Whole Payment shall be due unless Borrower (x) has received written notice of such Default or Event of Default from the Administrative Agent and (y) has failed to cure or remedy such Default or Event of Default within thirty (30) days after receipt of such written notice; provided further, that with respect to Defaults or Events of Default as a result of violations of (i) Sections 6.1, 6.3, 6.9 and 6.10, the Borrower shall only have the ability to cure such Event of Default in the event the cost of such cure for any single Default or single Event of Default, if any, does not exceed the greater of (A) ten-percent (10%) of the value of the transaction giving rise to such Default or Event of Default, and (B) $500,000 (provided that in no event shall the aggregate costs associated with all cures pursuant to the foregoing clauses (A) and (B) exceed $1,000,000 prior to the payment in full of all Obligations relating to the Term Loans), and (ii) Sections 6.2, 6.5, 6.14 and 7.1(k) the Borrower shall only have the ability to cure such Event of Default in the event the cost to cure such Default or Event of Default is de minimis and with respect to any cure of Section 7.1(k) such cure must also restore the security interest of the Administrative Agent on the relevant Property to an Acceptable Security Interest), in each case solely to the extent such prepayment or repayment of Term Loans is made or is required to be made, as applicable, at any time prior to March 31, 2021, a cash amount equal to the excess, if any, of (1) the sum of the present values of (i) one hundred-percent (100%) of the principal amount of Term Loans being prepaid or repaid 

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and (ii) the remaining scheduled payments of interest with respect to such Term Loans being prepaid or repaid from the actual date of prepayment or repayment through December 31, 2022, not including any portion of such payments of interest accrued as of the date of prepayment or repayment, discounted back to the day of prepayment or repayment on a semi-annual basis (assuming a 360-day year consisting of twelve thirty (30)-day months) at the Treasury Rate plus fifty (50) basis points, over (2) one hundred-percent (100%) of the principal amount of Term Loans being prepaid or repaid.  Any required payment of a Make-Whole Payment under this Agreement is in addition to, and not in replacement of, any amount paid pursuant to Section 2.8.  For the avoidance of doubt, provisions relating to Make-Whole Payment are for the benefit of the Lenders only (and the Administrative Agent for the ratable benefit of the Lenders).  The Borrower acknowledges that (i) the Lenders have bargained for the right to maintain their investment in the Term Loans free from repayment until the Maturity Date, with certain limited exceptions as specified in this Agreement, (ii) such limited exceptions, and the repayment price applicable to such exceptions, are the result of negotiations among the Borrower and the Lenders, (iii) the Borrower does not have the right to directly or indirectly optionally repay the Term Loans other than pursuant to Section 2.5(b), (iv) except as specifically provided in this Agreement, any voluntary repayment of Term Loans at any time prior to March 31, 2021 is required to be at a price including the Make-Whole Payment, and (v) the Make-Whole Payment (A) is intended to provide compensation to the Lenders for the repayment of the Term Loans prior to the Maturity Date, (B) constitutes reasonable compensation to the Lenders for the deprivation of their right to hold the Term Loans free from such early repayment, and (C) is not a penalty.

“Term Loans” means any and all (i) “Tranche B Term Advances” (as defined in the Existing Agreement) outstanding on the Effective Date immediately before giving effect to this Agreement, (ii) Additional Term Loans outstanding on the Second Amendment Effective Date immediately before giving effect to the Second Amendment to Credit Agreement and Joinder, and (iii) Incremental Term Loans made pursuant to Section 2.3.

(c)Schedule I (Commitments, Contact Information) to the Credit Agreement is hereby amended and restated in its entirety to read in full as set forth on Schedule I hereto and each Lender’s Pro Rata Share of the Term Loans on the Second Amendment Effective Date, immediately after giving effect to the Second Amendment to Credit and the Assignment and Acceptance, is set forth on Schedule I hereto.

(d)Section 2.3 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“2.3Incremental Term Loan.  The Incremental Term Loan Lender agreed, subject to the terms and conditions set forth in the Second Amendment to Credit Agreement and Joinder, to make an incremental term loan in the principal amount of $14,533,000 (the “Incremental Term Loan”) to the Borrower on the Second Amendment Effective Date.  The Incremental Term Loan Commitment shall irrevocably terminate upon the Incremental Term Loan Lender funding the Incremental Term Loan.  Once prepaid or repaid, the Borrower may not re-borrow any Term Loan (including without limitation, the Incremental Term Loan) or any portion thereof.”

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(e)The first sentence of Section 6.6 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“No Credit Party shall, nor shall it permit any of its Subsidiaries to, use the proceeds of the Additional Term Loan or the Incremental Term Loan other than for working capital purposes, general corporate purposes and to fund Acquisitions permitted hereunder.”

	
 
	
Section 5.
	
Representations and Warranties.

Each Credit Party hereby represents and warrants (which representations and warranties survive the execution and delivery hereof) to each of the Lenders and the Administrative Agent that:

(a)the representations and warranties contained in the Credit Agreement and the other Credit Documents are true and correct in all material respects at and as of the date hereof as though made on and as of the date hereof, except (x) to the extent such representation or warranty was specifically made with regard to an earlier date in which case such representation or warranty shall be true and correct as of such earlier date; and (y) for such changes as a result of any act or omission specifically permitted under the Credit Agreement or any other Credit Document;

(b)the execution, delivery and performance of this Amendment have been duly authorized by all necessary action on the part of, and duly executed and delivered by such Credit Party, and this Amendment is a legal, valid and binding obligation of each Credit Party, enforceable against such Credit Party, in accordance with its terms, except as the enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law);

(c)immediately prior to and after giving effect to this Amendment, no Default and no Event of Default exists and each Credit Party is in full compliance with the Credit Agreement and each of the other Credit Documents to which such Credit Party is a party;

(d)the borrowing of the Incremental Term Loan and the use of proceeds thereof are within Borrower’s corporate power, have been duly authorized by all necessary action, do not contravene (i) the Borrower’s certificate or articles of incorporation or bylaws, or (ii) any Legal Requirement or any material contractual restriction binding on or affecting the Borrower, will not result in or require the creation or imposition of any Lien prohibited by the Credit Agreement and do not require any authorization or approval or other action by, or any notice or filing with any Governmental Authority; and

(e)as of the date hereof, all Liens, security interests, assignments and pledges encumbering the Collateral, created pursuant to and/or referred to in the Credit Agreement or the other Credit Documents, are valid, enforceable, duly perfected to the extent required by the Credit Agreement and the other Credit Documents, non-avoidable, first priority liens, security interests, assignments and pledges (subject only to Permitted Liens), continue unimpaired, are in full force and effect and secure and shall continue to secure all of the obligations purported to be secured in the respective Security Document pursuant to which such Liens were granted.

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Section 6.
	
Conditions Precedent.

The obligation of the Incremental Term Loan Lender to extend the Incremental Term Loan as provided for in this Amendment and the effectiveness of this Amendment is subject to prior or concurrent satisfaction of each of the following conditions precedent:

(a)Documentation.  The Administrative Agent or its counsel shall have received (including by way of electronic transmission) the following, duly executed by all the parties thereto, each in form and substance reasonably satisfactory to the Administrative Agent and the Lenders:

(i)an Amendment to the Stockholder’s Agreement, an Amendment to the Warrant Agreement, the Assignment and Acceptance, this Amendment, to the extent requested by a Lender, a Note payable to the order of each Lender, and all other applicable Credit Documents;

(ii)a certificate from an authorized officer of each of the Credit Parties dated as of the Second Amendment Effective Date stating that as of such date (A) all representations and warranties of such Credit Party set forth in this Amendment, the Credit Agreement and the other Credit Documents are true and correct, (B) such Credit Party shall have performed and complied with all covenants and conditions required herein to be performed or complied with by it prior to the Second Amendment Effective Date and (C) no Default then exists;

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

(iv)certificates of good standing for each Credit Party in the state in which each such Credit Party is incorporated or organized, which certificates shall be dated a date not earlier than ten (10) days prior to the Second Amendment Effective Date;

(v)legal opinion of Vinson & Elkins LLP, as special counsel to the Credit Parties with respect to the Amendment to the Stockholder’s Agreement, the Amendment to the Warrant Agreement, this Amendment, the Credit Agreement and the other Credit Documents, similar in scope and substance to the opinion addressed and delivered to the Administrative Agent in connection with the of the Credit Agreement;

(vi)security documentation, reaffirmation agreements or ratifications as the Administrative Agent or any Lender may reasonably request; and

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

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

(c)Representations and Warranties.  The representations and warranties contained in Section 5 of this Amendment shall be true and correct on and as of the Second Amendment Effective Date before and after giving effect to the making of the Incremental Term Loan and to the application of the proceeds therefrom.

(d)Payment of Fees and Expenses.

(i)Borrower shall have paid in full to the Incremental Term Loan Lender an amendment fee equal to $217,995.00 in good and immediately available funds (the “Amendment Fee”).  The Amendment Fee shall be fully earned and nonrefundable as of the date of this Amendment; and

(ii)Borrower shall have paid in full to the Administrative Agent and its counsel all other fees and expenses related to this Amendment, the Credit Agreement or any other Credit Document.

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

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

(g)No Default.  No Default then exists and the making of the Incremental Term Loan would not cause a Default to occur.

(h)Solvency.  The Administrative Agent shall have received a certificate in form and substance reasonably satisfactory to the Administrative Agent from a senior financial officer 

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of the Borrower and each Guarantor certifying that, both before and after giving effect to the Incremental Term Loan to be made on the Second Amendment Effective Date, the Borrower and each such other Guarantor is and shall be Solvent.

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

	
 
	
Section 7.
	
Waiver of Claims.

	

	
Each Credit Party hereby waives, releases, remises and forever discharges the Administrative Agent and the Lenders from any and all claims, suits, actions, investigations, proceedings or demands arising out of or in connection with this Amendment, the Credit Agreement and any other Credit Document (collectively, “Claims”), whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which such Credit Party ever had, now has or might hereafter have against the Administrative Agent or any Lender which relate, directly or indirectly, to any acts or omissions of the Administrative Agent or any Lender on or prior to the date hereof.

	
 
	
Section 8.
	
Reference to and Effect on the Credit Agreement and the Credit Documents.

(a)Except as expressly provided herein (i) the Credit Agreement and the other Credit Documents shall be unmodified and shall continue to be in full force and effect in accordance with their terms and are hereby in all respects ratified and confirmed, (ii) the agreements of the Administrative Agent and the Lenders set forth herein shall be limited strictly as written, and (iii) this Amendment shall not be deemed a waiver of any term or condition of the Credit Agreement or any other Credit Document and shall not be deemed to limit, impair, constitute a waiver of, or otherwise affect or prejudice any right or rights which the Administrative Agent or any Lender may now have or may have in the future under or in connection with the Credit Agreement or any other Credit Document or any of the instruments or agreements referred to therein, as the same may be amended from time to time.

(b)Each Credit Party hereby affirms its obligations under the Credit Agreement (as amended hereby) and the other Credit Documents and confirms its grant of a security interest in and the Administrative Agent’s Lien on its assets as Collateral for the Obligations and acknowledges and affirms that such guarantee and/or grant is and shall remain in full force and effect in respect of, and to secure, the Obligations, in each case, in accordance with and subject to the terms of the Credit Agreement and the other Credit Documents, as applicable.

(c)Upon and after the date hereof, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the “Credit Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended by this Agreement.

(d)This Amendment shall constitute a Credit Document.

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Section 9.
	
Execution in Counterparts.

This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  Delivery by electronic transmission (including .pdf) of an executed counterpart of a signature page to this Amendment shall be effective as delivery of an original executed counterpart of this Amendment.

	
 
	
Section 10.
	
Costs and Expenses.

Borrower hereby affirms its obligation under the Credit Agreement to reimburse the Administrative Agent for all costs and expenses paid or incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment and all other documents and instruments delivered in connection herewith, including but not limited to the attorneys’ fees and time charges of attorneys for the Administrative Agent with respect thereto.

	
 
	
Section 11.
	
Further Assurances.

Pursuant to the Credit Agreement and the other Credit Documents, each Credit Party hereby authorizes the Administrative Agent to file any (x) financing statements to the extent permitted by applicable Legal Requirements in order to perfect or maintain the perfection of any security interest granted under any of the Credit Documents and/or (y) amendments to the existing financing statements to reflect the terms of the Credit Documents as amended by this Amendment.  The Borrower at its expense will, and will cause each Subsidiary to, promptly execute and deliver to the Administrative Agent upon reasonable request by the Administrative Agent all such other documents, agreements and instruments to comply with or accomplish the covenants and agreements of any other Credit Party or Subsidiary, as the case may be, in the Credit Documents, or to further evidence and more fully describe the Collateral intended as security for the Obligations, or to correct any omissions in the Security Documents, or to state more fully the security obligations set out herein or in any of the Security Documents, or to perfect, protect or preserve any Liens created pursuant to any of the Security Documents, or to make any recordings, to file any notices or obtain any consents, all as may be necessary or appropriate in connection therewith or to enable the Administrative Agent to exercise and enforce its rights and remedies with respect to any Collateral, the Credit Agreement, the other Credit Documents and this Amendment.

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Section 12.
	
Guarantors Consent and Acknowledgement.

The Guarantors, for value received, hereby consent to the Borrower’s execution and delivery of this Amendment, and the performance by the Borrower of its agreements and obligations hereunder (including without limitation the borrowing of the Incremental Term Loan by the Borrower hereunder).  This Amendment and the performance or consummation of any transaction that may be contemplated under this Amendment, shall not limit, restrict, extinguish or otherwise impair the Guarantors’ liabilities and obligations to the Administrative Agent and/or the lenders under the Credit Documents (including without limitation the Guaranteed Obligations, as defined in the Guaranty).  Each of the Guarantors acknowledges and agrees that (i) the Guaranty to which such Guarantor is a party remains in full force and effect and is fully enforceable against such Guarantor in accordance with its terms and (ii) it has no offsets, claims or defenses to or in connection with the Guaranteed Obligations, all of such offsets, claims and/or defenses are hereby waived.

	
 
	
Section 13.
	
Governing Law; Submission to Jurisdiction; Waiver of Jury.

The terms of Section 9.13 (Governing Law), Section 9.16 (Submission to Jurisdiction) and Section 9.18 (Waiver of Jury) of the Credit Agreement with respect to governing law, submission to jurisdiction, venue and waiver of jury trial (and, where applicable, judicial reference) are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.

 

[Signature page follows]

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In Witness Whereof, the parties hereto have caused this Amendment to be executed and delivered as of the date first above written.

BORROWER:

CARBO CERAMICS INC.

 

 

By: /s/ Gary Kolstad

	
 
	

	
Name: Gary Kolstad

	
 
	

	
Title: President

 

GUARANTORS:

CARBO CERAMICS INC.

 

 

By: /s/ Gary Kolstad

	
 
	

	
Name: Gary Kolstad

	
 
	

	
Title: President

 

 

ASSET GUARD INC.

 

 

By: /s/ Gary Kolstad

	
 
	

	
Name: Gary Kolstad

	
 
	

	
Title: President

 

STRATAGEN, INC.

 

 

By: /s/ Gary Kolstad

	
 
	

	
Name: Gary Kolstad

	
 
	

	
Title: President

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ADMINISTRATIVE AGENT:

 

WILKS BROTHERS, LLC,

as Administrative Agent

 

 

By: /s/ Morgan D. Neff

	
 
	

	
Name: Morgan D. Neff

	
 
	

	
Title: Authorized Representative

 

 

LENDERS:

 

WILKS BROTHERS, LLC

 

 

By: /s/ Morgan D. Neff

	
 
	

	
Name: Morgan D. Neff

	
 
	

	
Title: Authorized Representative

 

EQUIFY FINANCIAL LLC

 

 

By: /s/ Pat Hoiby

	
 
	

	
Name: Pay Hoiby

	
 
	

	
Title: President

 

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SCHEDULE I

Commitments, Contact Information

		
	
ADMINISTRATIVE AGENT
	
 

	
Wilks Brothers, LLC,
as Administrative Agent
	
Address: 17010 IH-20

Cisco, Texas 76437

Attn: Morgan Neff

Matthew Wilks

Facsimile:(817) 850-3698

Email:Mneff@wilksbrothers.com

Mwilks@ie-llc.net

	
CREDIT PARTIES
	
 

	
Borrower/Guarantors
	
Address:Energy Center II

575 N. Dairy Ashford Rd., Ste 300
Houston, TX 77079

Attn: Ernesto Bautista III

Chief Financial Officer

Telephone:(281) 931-8884

Facsimile:  (281) 931-8302

Email:ernesto.bautista@carboceramics.com

	
LENDERS
	
 

	
Wilks Brothers, LLC

 

Additional Term Loan Commitment: $12,349,000.00

 

Term Loans Outstanding: $33,150,000.001
	
Address: Wilks Brothers, LLC

17010 IH-20

Cisco, Texas 76437

Attn: Morgan Neff

Matthew Wilks

Facsimile:(817) 850-3698

Email:Mneff@wilksbrothers.com

Mwilks@ie-llc.net

	
Equify Financial LLC

 

Incremental Term Loan Commitment: $14,533,000.00

 

Term Loans Outstanding: $31,850,000.002
	
Address:777 Main Street, Suite 3900

Fort Worth, TX 76102

Attn: Bill Baker

Telephone:(817) 490-6800

Email:bill.baker@equifyllc.com

 

	
	 

	
1 
	
 After giving effect to Assignment and Acceptance effective as of June 20, 2019 between Wilks Brothers, LLC, as assignor, and Equify Financial LLC, as assignee.

	
2 
	
 After giving effect to (x) Assignment and Acceptance effective as of June 20, 2019 between Wilks Brothers, LLC, as assignor, and Equify Financial LLC, as assignee, and (y) Equify’s funding of its entire commitment pursuant to the Second Amendment to Credit Agreement and Joinder.crr-ex102_90.htm

Exhibit 10.2

FIRST AMENDMENT TO

STOCKHOLDER AGREEMENT

This FIRST AMENDMENT TO STOCKHOLDER AGREEMENT (this “First Amendment”) is made and entered into as of June 20, 2019, by and between CARBO Ceramics Inc., a Delaware corporation (the “Company”), and Wilks Brothers, LLC, a Texas limited liability company (the “Stockholder”).

RECITALS

	
A.
	
The Company and certain holders of the Common Stock of the Company (the “Stockholders”) are parties to that certain Stockholder Agreement dated as of March 2, 2017 (the “Original Agreement,” collectively with and as amended by this First Amendment, the “Agreement”). 

	
B.
	
The Company and the Stockholder, in accordance with Section 7(j) of the Original Agreement desire to amend the Original Agreement to reflect certain modifications to the rights and obligations of the Stockholder, including, without limitation, with respect to the composition of the Board of Directors of the Company (the “Board”).

	
C.
	
Capitalized terms used, but not defined herein shall have the meaning ascribed to such terms in the Original Agreement.

In consideration of good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

1.Amendments to Original Agreement. Section 1(b)(i) of the Original Agreement is deleted in its entirety and the following shall be inserted in lieu thereof:

“acquire, offer to acquire or agree to acquire Beneficial Ownership of any Voting Securities or Convertible Securities that would result in the Stockholder, together with the Stockholder’s Affiliates, Beneficially Owning Voting Securities and Convertible Securities in excess of twenty-nine and one-half percent (29.5%) of the Voting Securities outstanding at such time (the “Ownership Limit”);”

2.Additions to Original Agreement.

(a)Section 6 of the Original Agreement is amended to add the following definitions in the appropriate alphabetical order:

“Business” means the business of manufacturing, distributing, marketing or selling (i) ceramic proppants, beads, particles, fines and any other ceramic media for use in oilfield or industrial applications, (ii) silica-based products for use in residential and commercial roofing applications and/or (iii) heat treated silica based mineral products composed of greater than seventy percent (70%) silica sand for interior surfaces and foundry applications.

“Convertible Securities” means securities or other interests that are exchangeable for or convertible into Voting Securities, including the Amended Warrant.

“Competitor” means any Person that is engaged, directly or indirectly, in the Business.

 

 

 

“Independent Director” means a director that meets the qualifications contained in clauses (y) and (z) in Section 8(a)(ii).

“NYSE” means the New York Stock Exchange.

(b)A new Section 8 (“Board of Directors”) shall be inserted immediately following Section 7(q) as follows:

“8.Board of Directors.

	
 
	
(a)
	
Board Representation.

	
 
	
(i)
	
Until such time as the rights of the Stockholder are terminated or reduced in accordance with Section 8(f), (A) the Stockholder shall be entitled to designate one (1) person for the Board to nominate for election to the Board as provided in Section 8(b) hereof and (B) at any time the Stockholder is the Beneficial Owner of at least twenty-five percent (25%) of the Voting Securities outstanding at such time, the Stockholder shall be entitled to designate for nomination for election to the Board an aggregate of two (2) members of the Board (each such person so designated, a “Board Designee” and, in connection with (B), together such designated persons, the “Board Designees”); provided, however, that any Board Designee must also be subject to the approval of the Board’s nominating and corporate governance committee, such approval not to be unreasonably withheld; provided, further, that notwithstanding any term to the contrary in this Stockholder Agreement, in no circumstances may the Stockholder appoint, recommend, or designate any person other than the Board Designee or Board Designees, as applicable, designated by the Stockholder pursuant to this Section 8(a) or appointed to fill a vacancy by the Stockholder as provided in Section 8(e) to serve on the Board.

 

	
 
	
(ii)
	
Any Board Designee must, as evaluated and determined by the Board in its good faith discretion, (A) not be prohibited from serving as a director pursuant to any rule or regulation promulgated by the SEC or any national securities exchange on which the Voting Securities are listed; (B) not be, by any order, judgment, or decree, enjoined from or otherwise limited with respect to serving as a director of a public company; (C) not be an employee, officer or director of a Competitor of the Company; and (D) be and remain in compliance with all of the same policies, procedures, codes, rules, standards and guidelines applicable to all of the other members of the Board, including the Company’s certificate of incorporation and by-laws, each as then in effect, corporate governance guidelines, insider trading policy (including pre-clearance policies and procedures), and policies on stock ownership, public disclosures and confidentiality. In addition, at least one (1) Board Designee designated pursuant to Section 8(a)(i)(B) must (A) qualify as independent within the meaning of (I) NYSE Listed Company Manual Rule 303A.02 (or as required by any other exchange on which shares of Common Stock may be listed) for the purposes of Board service, including service as an audit committee member on the Board’s audit committee and service as a compensation committee member on the Board’s compensation committee; (II) Rule 10A-3 under the Exchange Act for the purposes of audit committee service on the Board’s audit committee; (III) Rule 16b-3 under the Exchange Act for the purposes of service on the Board 

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committee charged with approving transactions in Company securities between the Company and its directors and officers (for the purposes of which, “independent” shall have the same meaning as “non-employee” director); and (IV) the Company’s corporate governance and independence policies and guidelines; and (B) not be an employee, officer or director of, or otherwise be an Affiliate of, the Stockholder.

 

	
 
	
(b)
	
Initial and Subsequent Board Appointments.

	
 
	
(i)
	
Within three (3) business days of the execution and delivery of this First Amendment, the Board shall expand the maximum number of directors serving on the Board to seven (7) members and act to elect the Board Designee identified by the Stockholder pursuant to Section 8(a)(i)(A); provided, that the Stockholder has identified Justin Wilks as its initial Board Designee and the Company’s nominating and corporate governance committee has approved such designation.  Promptly following such time as the Stockholder shall have provided written notice to the Company that it is entitled to nominate a second member to the Board pursuant to Section 8(a)(i)(B), the Board shall promptly expand the maximum number of directors serving on the Board to eight (8) members and act to elect to the Board such second nominee identified by the Stockholder in such notice.

 

	
 
	
(ii)
	
Each notice from the Stockholder designating a Board Designee, whether pursuant to Section 8(b)(i), Section 8(c)(ii) or Section 8(e) shall be in writing, shall be signed by a duly authorized representative of the Stockholder, shall certify as of the date of such notice (y) the number of shares of Voting Securities owned by the Stockholder, and (x) that, in the reasonable judgment of the Stockholder, each Board Designee designated in such notice meets the requirements contained in Section 8(a)(ii) as applicable, and shall be accompanied by written evidence of the number of shares of Voting Securities then owned by the Stockholder and its Affiliates. 

 

	
 
	
(c)
	
Annual Meeting. 

	
 
	
(i)
	
At each annual meeting of the Company’s stockholders or any special meeting in lieu thereof at which the term of any Board Designee is to expire or at the date on which proxy materials for such meeting are mailed to the Company’s stockholders there shall be less than the maximum number of Board Designees that the Stockholder is then entitled to designate pursuant to Section 8(a)(i) serving on the Board, the Stockholder shall be entitled to designate the number of persons necessary for the Board to nominate so that, if each such Board Designee is elected to the Board at such annual meeting or any special meeting in lieu thereof, the maximum number of Board Designees pursuant to Section 8(a)(i) shall be serving on the Board. In accordance with Section 8(a)(i), each such Board Designee shall be subject to the approval of the Board’s nominating and corporate governance committee, which such approval shall not be unreasonably withheld. The Company and the Board shall, subject to and consistent with the Board’s fiduciary duties and applicable law, take such actions as are necessary to cause each Board Designee so designated by the Stockholder to be nominated for election to the Board at each annual meeting of the Company’s stockholders or any special meeting in lieu thereof. To the extent 

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the Company’s proxy statement for any annual meeting of stockholders, or any special meeting in lieu thereof, includes a recommendation regarding the election of any other nominees to the Board, the Company and the Board shall, subject to and consistent with the Board’s fiduciary duties and applicable law, include a recommendation of its Board that the stockholders also vote in favor of each Board Designee standing for election at such meeting.

 

	
 
	
(ii)
	
Except as provided in Section 8(b)(i) or Section 8(e), any action by the Stockholder to designate a person for nomination for election to the Board pursuant to this Section 8 shall be evidenced by a written notice complying with Section 8(b)(ii) and furnished to the Board not later than January 10th of the year in which the annual meeting of the Company’s stockholders for the election of such designated person is to be held, or in the case of a special meeting, within a reasonable time in advance of such meeting in order to allow the Board to determine compliance with the qualifications required in this Agreement (and otherwise to comply with its proxy solicitation and disclosure obligations in connection with such meeting).  The Stockholder shall provide (x) the information regarding each Board Designee as would be required to be included in solicitations of proxies for the election of directors in an election context or is otherwise required pursuant to the federal securities laws and regulations, had the nominee been nominated, or intended to be nominated, by the Board and (y) the consent of each such Board Designee to serve as a director of the Company if so elected.

 

	
 
	
(d)
	
Size of Board.  For as long as the Stockholder has the right to designate one (1) person for the Board to nominate for election to the Board, the maximum number of directors on the Board shall not be increased to greater than seven (7).  For as long as the Stockholder has the right to designate two (2) persons for the Board to nominate for election to the Board, the maximum number of directors on the Board shall not be increased to greater than eight (8).  

	
 
	
(e)
	
Vacancies. If, prior to his or her election or appointment to the Board pursuant to this Section 8, any Board Designee shall be unable or unwilling to serve as a director of the Company, then the Stockholder shall be entitled to designate a replacement Board Designee. Such replacement Board Designee shall be subject to the approval of the Board’s nominating and corporate governance committee, such approval not to be unreasonably withheld. The Company and the Board shall, subject to and consistent with the Board’s fiduciary duties and applicable law, take such actions as are necessary to cause such replacement Board Designee to be appointed to the Board or nominated and submitted to the stockholders, as applicable, pursuant to this Section 8. If, following an election or appointment to the Board pursuant to this Section 8, any Board Designee shall resign or be removed or be unable to serve for any reason prior to the expiration of his or her term as a director of the Company, then the Stockholder shall, within thirty (30) days of such event, notify the Board in writing of a replacement Board Designee, and the Company and the Board shall, subject to and consistent with the Board’s fiduciary duties and applicable law, take such actions as are necessary to cause such replacement Board Designee to be appointed to the Board to fill the unexpired term of the Board Designee who such new Board Designee is replacing. Any action by the Stockholder to designate a replacement director pursuant to this Section 8(e) shall be evidenced by a written notice complying with Section 8(b)(ii) and furnished to the Board within a reasonable time following the creation of a related vacancy.

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(f)
	
Reduction; Termination of Rights.  The right of the Stockholder to designate directors under this Section 8 shall be reduced and terminated as follows:

	
 
	
(i)
	
In the event that the Stockholder’ (together with its Affiliates’) Beneficial Ownership of Voting Securities is reduced to less than twenty-five percent (25%), the Stockholder’s right to designate members to the Board pursuant to Section 8(a) shall be reduced to the right to designate one (1) member of the Board; provided, that the then current term of the Board Designees then serving on the Board shall not be affected solely by the loss of such right.

 

	
 
	
(ii)
	
In the event that the Stockholder’s (together with its Affiliates’) Beneficial Ownership of Voting Securities is reduced to less than five percent (5%), the Stockholder’s right to designate members to the Board pursuant to Section 8(a) shall immediately expire; provided, that the then current term of the Board Designees then serving on the Board shall not be affected solely by the loss of such right.

 

	
 
	
(g)
	
Company Policies; Fees; Costs and Expenses.  The parties hereto acknowledge that each Board Designee, upon election to the Board, will serve as a member of the Board and will be governed by the same protections and obligations regarding confidentiality, conflicts of interest, related party transactions, fiduciary duties, codes of conduct, trading and disclosure policies, director resignation policies, and other governance guidelines and policies of the Company as other directors, and shall be required to preserve the confidentiality of Company business and information, including discussions or matters considered in meetings of the Board or committees of the Board, and shall have the same rights and benefits, including with respect to insurance, indemnification and compensation that are applicable to all Directors of the Company.  The Company will pay and reimburse each Board Designee for all reasonable out-of-pocket expenses incurred by such Board Designee in connection with his or her participation in (or attendance at) meetings of the Board (and committees thereof) and the boards of directors (and committees thereof) of the subsidiaries of the Company to the same extent as the Company reimburses all other directors of the Company.”

	
 
	
3.
	
Representations and Warranties of the Stockholder.  

(a)The Stockholder and its Affiliates are the sole record and Beneficial Owners of the Voting Securities set forth on Annex A opposite the Stockholder or such Affiliate’s name and such securities constitute all of the securities of the Company owned of record or Beneficially Owned by the Stockholder and its Affiliates.

(b)The Stockholder is duly organized, validly existing and in good standing under the Laws of the State of Texas.  The Stockholder has full power and authority to execute and deliver this First Amendment, to perform its obligations under this First Amendment and to consummate the transactions contemplated hereby.

(c)Neither the execution and delivery of this First Amendment by the Stockholder, nor the consummation of the transactions contemplated hereby, nor compliance by the Stockholder with any of the terms or provisions hereof and thereof will (i) violate any provision of the Stockholder’s organizational documents or (ii) conflict with, violate any provision of, or require the consent or approval of any Person under applicable Law or any contract or agreement to which the Stockholder is a party, except for any such conflicts or violations, or consents or approvals the failure to receive which will not, individually or in the 

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aggregate, be reasonably be expected to prevent or materially delay the closing of the transactions contemplated by this First Amendment or the performance by the Stockholder of any of its obligations under this First Amendment.

(d)The execution, delivery and performance of this First Amendment by the Stockholder have been duly authorized by all necessary action on the part of the Stockholder.  This First Amendment have been duly executed and delivered by the Stockholder and, assuming the due authorization, execution and delivery by each of the other parties hereto, constitutes valid and binding obligations of the Stockholder, enforceable against the Stockholder in accordance with its terms, except as may be limited by bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the rights of creditors generally and the availability of equitable remedies.

4.Representations and Warranties of the Company.  

(a)The Company is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization.  The Company has full power and authority to execute and deliver this First Amendment and the amended Warrant, dated as of the date hereof (the “Amended Warrant”), to perform its obligations under the First Amendment and the Amended Warrant and to consummate the transactions contemplated hereby and thereby.

(b)Neither the execution and delivery of this First Amendment or the Amended Warrant by the Company, nor the consummation of the transactions contemplated hereby and thereby, nor compliance by the Company with any of the terms or provisions hereof and thereof will (i) violate any provision of the organizational documents of the Company or (ii) conflict with, violate any provision of, or require the consent or approval of any Person under applicable Law or any contract or agreement to which the Company is a party, except for any such conflicts or violations, or consents or approvals the failure to receive which will not, individually or in the aggregate, be reasonably be expected to prevent or materially delay the closing of the transactions contemplated by this First Amendment or the performance by the Company of any of its obligations under this First Amendment or the Amended Warrant.

(c)The execution, delivery and performance of this First Amendment and the Amended Warrant by the Company have been duly authorized by all necessary action on the part of the Company.  This First Amendment and the Amended Warrant have been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the Stockholder, constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as may be limited by bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the rights of creditors generally and the availability of equitable remedies.

(d)There is no pending action, suit, claim, inquiry, investigation, audit or proceeding by or before any governmental authority, or any arbitration, mediation or other similar proceeding (each of the foregoing, a “Proceeding”), and to the knowledge of the Company, there is no Proceeding threatened in writing against the Company or any of its subsidiaries, that seeks to prevent, delay or impair the transactions contemplated hereby or any action taken or to be taken pursuant hereto.

5.Further Actions.  The Company and the Board shall, subject to and consistent with the Board’s fiduciary duties and applicable law, take such actions as are necessary (including amending the certificate of incorporation and by-laws of the Company, if applicable) to (i) cause Board Designees to be nominated and submitted to the stockholders of the Company for election to the Board, or appointed to the Board by the remaining members of the Board, as provided in Section 8(b) and Section 8(c), and (ii) ensure that the Company complies with and implements the provisions of the Agreement, as amended by this First Amendment.

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6.Effect of First Amendment.  This First Amendment constitutes the entire agreement of the parties with respect to the subject matter hereof, and supersedes all prior oral or written communications, memoranda, proposals, negotiations, discussions, term sheets and commitments with respect to the subject matter hereof.  Except as expressly provided herein, no other changes or modifications to the Original Agreement, are intended or implied by this First Amendment, and in all other respects the Original Agreement is specifically ratified, restated and confirmed by the parties hereto as of the effective date of this First Amendment.  No provision or term of this First Amendment may be modified, altered, waived, discharged or terminated orally, but only by an instrument in writing executed by the party against whom such modification, alteration, waiver, discharge or termination is sought to be enforced.  The applicable provisions of this First Amendment and the Original Agreement shall be read and interpreted as one agreement. To the extent that any provision of the Original Agreement conflicts with any provision of this First Amendment, the provision of this First Amendment shall control.

7.Governing Law.  This First Amendment will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law principles.  

8.Severability.  The provisions of this First Amendment will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this First Amendment, as applied to any party or to any circumstance, is judicially determined not to be enforceable in accordance with its terms, the parties agree that the court judicially making such determination may modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its modified form, such provision will then be enforceable and will be enforced.

9.Counterparts.  This First Amendment may be executed in two or more counterparts (including by facsimile or other electronic means), each of which will be deemed an original but all of which together will constitute one and the same instrument.  This First Amendment will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

10.Construction of Terms.  This First Amendment has been freely and fairly negotiated among the parties.  If an ambiguity or question of intent or interpretation arises, this First Amendment will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this First Amendment.  Any reference to any law will be deemed also to refer to such law as may be amended from time to time and all rules and regulations promulgated thereunder, unless the context requires otherwise.  The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this First Amendment,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this First Amendment as a whole and not to any particular subdivision unless expressly so limited. The parties intend that each representation, warranty, and covenant contained herein will have independent significance. If any party has breached any covenant contained herein in any respect, the fact that there exists another covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached will not detract from or mitigate the fact that the party is in breach of the first covenant.  

11.Headings.  The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this First Amendment.

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12.Termination.  The Agreement shall terminate automatically upon the earlier to occur of: (i) the Stockholder’s (together with its Affiliates’) Beneficial Ownership being reduced to less than five percent (5%); and (ii) the three (3) year anniversary of this First Amendment.

[SIGNATURE PAGES FOLLOW]

 

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

 

COMPANY:

 

 

CARBO CERAMICS INC.

 

 

By: /s/ Gary Kolstad

Name: Gary Kolstad

Title: President

 

 

 

WILKS BROTHERS, LLC

 

 

By: /s/ Morgan D. Neff

Name: Morgan D. Neff

Title: Authorized Representative

 

 

 

 

 

[signature page to First Amendment to Stockholder Agreement]

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