Document:

crr-ex101_6.htm

Exhibit 10.1

 

Confidential portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission under a confidential treatment request. The redacted terms have been marked in this exhibit at the appropriate place with “XXX”.

 

September 17, 2018

 

Ascent Resources – Utica, LLC

3501 NW 63rd Street

Oklahoma City, OK 73116

 

Re: Purchase of Sand from CARBO Ceramics Inc.

 

Ladies and Gentlemen:

 

The purpose of this letter agreement (this “Agreement”) is to set forth the terms and conditions governing the sale of sand for hydraulic fracturing (“Sand”) by CARBO Ceramics Inc. (“Seller”) to Ascent Resources – Utica, LLC (“Buyer”).  The Buyer and Seller may be referred to herein collectively as the “Parties” and each individually, as a “Party”.

 

	
 
	
1.
	
Available Sand.  During the term of this Agreement, Seller agrees to make available for purchase by Buyer the types of Sand, and quantities of each, specified on Exhibit A attached hereto.  

 

	
 
	
2.
	
Purchase and Sale.  Buyer will provide Seller with a forward looking sixty (60) day estimated volume forecast within five (5) Business Days of the first day of each calendar month (each a “Volume Forecast”).  Each Volume Forecast will include the type(s) and quantity of Sand requested by Buyer and the estimated delivery date(s) for such Sand.  Following the Parties review of each Volume Forecast, the Parties will work in good faith to revise, if necessary, any purchase orders and sales order confirmations, so that such documents conform to the most recent Volume Forecast delivered by Buyer.  Buyer will provide Seller with an initial Volume Forecast on the Effective Date (as defined herein).  If, at any time, Seller does not reasonably believe it will be able to meet the then current Volume Forecast, Seller will provide immediate written notice to Buyer.

 

	
 
	
3.
	
Price and Payment.

 

	
 
	
(a)
	
The initial price per ton for each type of Sand sold hereunder is set forth on Exhibit A.  The prices set forth on Exhibit A will be valid through October 31, 2020.  The prices set forth on Exhibit A, as may be modified by other provisions in this Agreement, will continue for each Renewal Term (as defined herein) unless the Seller provides Buyer with new proposed pricing at least ninety (90) days prior to the expiration of the Initial Term (as defined herein) or Renewal Term, as applicable.  The Parties must agree in writing to any modifications to Exhibit A.

 

	
 
	
(b)
	
The prices set forth on Exhibit A do not include sales or use taxes now or hereafter imposed, directly or indirectly, by any governmental authority or agency with respect to the sale, delivery, consumption or use of Sand. Buyer shall pay such taxes directly or reimburse Seller for any such taxes which it may be required to pay.  

 

	
 
	
(c)
	
In accordance with Section 6, all prices for Sand are F.O.B. from Seller’s transload facility in XXX (the “Primary Facility”).

1

 

Exhibit 10.1

 

 

	
 
	
(d)
	
Contracted rail freight rates and/or associated fuel surcharges (FSC) incurred by Seller in connection with the delivery of Sand to the Primary Facility may vary during the life of this Agreement due to market conditions beyond Seller’s control.  The Parties agree to review, negotiate and revise (if necessary) the prices set forth on Exhibit A every May 1st and November 1st to capture any increases or decreases to contracted rail freight rates and/or associated fuel surcharges (FSC) incurred by Seller in connection with the delivery of Sand to the Primary Facility.  

 

	
 
	
(e)
	
All undisputed amounts for Sand purchased from Seller pursuant to this Agreement are due and payable, and shall be paid by Buyer, within (i) in the case of payments made using the Account (as defined herein), fifteen (15) days of receipt of an invoice from Seller setting forth the amount due and a description of Sand delivered to Buyer (including quantity, sieve size, delivery date(s) and price of the Sand; each an “Invoice”); or (ii) in the case of payments made using any other payment method, thirty (30) days of receipt of an Invoice.  Invoices must be received by 12:00pm (noon) Central Standard Time to be effectively received on a Business Day (as defined herein).  Invoices received after 12:00pm (noon) Central Standard Time are deemed received the following Business Day.  If the day on which any payment on an Invoice is due is not a Business Day, the relevant payment shall be due upon the Business Day immediately prior to the due date.   “Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday.  A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. Central Standard Time.  All Prices hereunder are in U.S. Dollars, and all payments shall be made in such currency.

 

	
 
	
(f)
	
In addition to other payment methods, the Parties may mutually agree, in writing, that Seller will accept payments from Buyer’s proposed electronic payment account or card (the “Account”) with MUFG Union Bank, N.A. (the “Bank”).  For each payment from the Account, the Bank will either, at the election of Seller, (i) withhold a portion of each payment as a transaction cost in accordance with the Banks in accordance with the Banks CPA rates which can be located at any time on https://www.mastercard.us/content/dam/mccom/en-us/documents/merchant-interchange-rates.pdf under the heading “Large Ticket MPG/Commercial Payments Account” (the “Fee”); or (ii) invoice Seller monthly for all Fees related to the payments during the preceding month.  If Seller elects to have the Fee withheld pursuant to (d)(i) above, Buyer will pay the face value of each Invoice from the Account, and Seller agrees to accept, in full satisfaction of each Invoice, the amount deposited into Seller’s account by Bank.  If Seller elects to have the Bank bill the Seller monthly for the Fee, Seller agrees to pay the Fee to Bank in full each month.  The Parties agree to review, negotiate and revise (if necessary) the prices set forth on Exhibit A every May 1st and November 1st to capture any increases in the Fee charged by the Bank.

 

	
 
	
(g)
	
If Buyer, in good faith, disputes the amount of any Invoice, or any part thereof, Buyer will pay Seller such amount, if any, which is not in dispute in accordance with this Section 3 and will provide Seller written notice of the disputed amount, accompanied by supporting documentation to support the disputed amount, on or before the Invoice due date.  Upon ultimate resolution of the disputed portion of the Invoice, Buyer will pay Seller the amount owed, if any.  If the Parties are unable to resolve such dispute within thirty (30) days of notice provide hereunder, either Buyer or Seller may pursue any remedy available 

2

 

Exhibit 10.1

 

	
 
		
at law or in equity to enforce its rights under this Agreement.

 

	
 
	
4.
	
General Terms of Sale.  The sale of all Sand pursuant to this Agreement shall be governed by those general terms of sale as set forth on Exhibit C attached to this Agreement; provided, in the event of a conflict or inconsistency between the terms set forth on Exhibit C and the terms of this Agreement, the terms of this Agreement shall govern and control.

 

	
 
	
5.
	
Working Capital Prepayment.  Upon the Parties execution of the first Purchase Order for Sand from the Primary Facility, Buyer will make an initial payment to Seller equal to (a) 50,000, multiplied by (b) the price set forth on Exhibit A for the type of Sand initially requested by Buyer, in writing, for delivery at the Primary Facility (the “Prepayment Amount”).  Seller will use the Prepayment Amount for the acquisition of Sand for the Primary Facility.  Seller will provide Buyer with accurate Invoices for all Sand purchased pursuant to this Agreement, however, Buyer will not be obligated to pay Seller (in accordance with Section 3) for any Sand delivered to Buyer until such time as the U.S. Dollar value of Buyer’s Sand purchases exceed the Prepayment Amount. 

 

	
 
	
6.
	
Delivery.  Unless otherwise agreed to in writing by the Parties, delivery of Sand to Buyer shall be F.O.B. from the Primary Facility.  Title and risk of loss for Sand shall pass from Seller to Buyer upon loading the Sand into the truck or other mode of transportation designated by Buyer for delivery at the Primary Facility.

 

	
 
	
7.
	
Exclusivity.

 

	
 
	
(a)
	
Seller.  Except as otherwise set forth in Section 10, during the term of this Agreement the Primary Facility will be solely dedicated to the delivery of Sand to Buyer and Seller will not, without the express written consent of the Buyer, utilize the Primary Facility to sell or otherwise distribute Sand or any similar products to third-parties.

 

	
 
	
(b)
	
Buyer.  Seller hereby acknowledges that nothing in this agreement will limit or restrict, in any way, Buyer or its affiliate’s ability to purchase or sell Sand, including the negotiation, execution and performance of definitive transaction documents related thereto.

 

	
 
	
8.
	
Term of Agreement.  The term of this Agreement shall become effective upon the earlier of (i) November 1, 2018; or (ii) the date the first Purchase Order for Sand from the Primary Facility is executed by the Parties (the “Effective Date”) and, unless earlier terminated as provided elsewhere in this Agreement or by the mutual written agreement of the Parties, continue until 11:59pm Central Standard Time on October 31, 2020 (the “Initial Term”).   On each anniversary of the Effective date, this Agreement will automatically be extended for an additional twelve (12) month period (each a “Renewal Term”); provided however, either Party may terminate this Agreement in its sole discretion at the end of the Initial Term or Renewal Term, if applicable, by providing the other Party with at least sixty (60) days written notice prior to the end of the applicable term.  In the event Seller is holding funds on account for Buyer at the time this Agreement is terminated, Seller will return all such funds (less any amounts owed to Seller hereunder) to Buyer within three (3) Business Days.

 

	
 
	
9.
	
Volume.

 

	
 
	
(a)
	
XXX worth of Sand from Seller during the Initial Term.  XXX Buyer will purchase all Sand 

3

 

Exhibit 10.1

 

	
 
		
required by its frac crew(s) operating in XXX from Seller in accordance with the terms of this Agreement.   

 

	
 
	
(b)
	
In the event Buyer purchases less Sand from Seller than reflected on the then applicable Volume Forecast, and such failure to purchase directly results in demurrage charges at the Primary Facility associated with the delivery of Sand to the Primary Facility, the Buyer agrees to pay demurrage charges of $55/day/railcar.  Upon Buyer’s written request, Seller agrees to use reasonable efforts to find an alternative buyer for any Sand delivered to the Primary Facility in accordance with the then applicable Volume Forecast but not ultimately purchased by Buyer (“Excess Sand”).  Seller will receive a 5% commission from Buyer on the sale of Excess Sand.

 

	
 
	
(c)
	
Seller will use its best efforts to source all Sand delivered to Buyer at the Primary Facility from Seller’s existing facility in Marshfield, Wisconsin.  In the event Seller is unable to deliver enough Sand from Marshfield, Wisconsin to the Primary Facility to meet the applicable Volume Forecast, Seller has the right to:

 

	
 
	
i.
	
XXX (the “Secondary Facility”) at the prices set forth on Exhibit A.  In order to offset increased final mile delivery charges related to Buyer taking delivery of Sand at the Secondary Facility, Seller will subtract from the prices set forth on Exhibit A the applicable trucking freight differential (per ton) set forth on Exhibit B based upon Buyer’s final delivery location.  Trucking freight rates may vary during the life of this Agreement due to market conditions beyond the Parties control.  The Parties agree to review, negotiate and revise (if necessary) the trucking freight differentials set forth on Exhibit B every May 1st and November 1st to capture any increases or decreases in trucking freight rates. 

 

	
 
	
ii.
	
Supply Buyer with Sand (commonly known as “Northern White” and which meets the specifications requested by Buyer in the applicable Volume Forecast) acquired by Seller in region to cover any shortfall, if, in the good faith belief of Seller, it better meets the needs of the Parties.  Seller will be responsible for all transportation charges to the Primary Facility for Sand acquired by Seller pursuant to this Section 9(c)(ii).  The prices for Sand pursuant to this Section 9(c)(ii) will be the prices (per sieve size) for Sand at the Primary Facility as set forth on Exhibit A.     

 

	
 
	
10.
	
Seller Shortfall Remedies.  

 

	
 
	
(a)
	
For a period of ten (10) days after any sixty (60) day period in which Buyer fails to take delivery of a quantity of Sand sufficient, in the good faith estimate of the Parties, XXX sixty (60) day time period, Seller shall have the right to do one or more of the following: (1) begin selling Sand to third parties, which sales will not violate Section 7(a); (2) immediately terminate this Agreement upon written notice to Buyer; or (3) proceed with invoicing any fees due to Seller under Section 9(b).

 

	
 
	
(b)
	
In the event Buyer fails to take delivery of a quantity of Sand sufficient, in the good faith estimate of the Parties, XXX, then either Party will have the right to terminate this contract immediately upon written notice to the other Party.

 

4

 

Exhibit 10.1

 

	
 
	
11.
	
Buyer Shortfall Remedies.  

 

	
 
	
(a)
	
If Buyer is running XXX, then for a period of ten (10) days after any sixty (60) day period that Seller fails to supply Buyer with the type, quality and quantity of Sand required, in the good faith estimate of the Buyer, XXX, Buyer shall have the right to immediately terminate this Agreement upon written notice to Seller.

 

	
 
	
(b)
	
If Buyer is running XXX, then for a period of ten (10) days after any sixty (60) day period that Seller fails to supply Buyer with the type, quality and quantity of Sand required, in the good faith estimate of the Buyer, to run all of Buyers frac crews during such period, Buyer shall have the right to immediately terminate this Agreement upon written notice to Seller.

 

	
 
	
(c)
	
In the event Seller fails to supply Buyer with the type, quality and quantity of Sand required, in the good faith estimate of the Buyer, XXX, if Buyer is XXX or (ii) all of Buyers frac crews, if Buyer is running fewer XXX, each for a period of one hundred and twenty (120) consecutive days, then either Party will have the right to terminate this contract immediately upon written notice to the other Party.

 

	
 
	
12.
	
Miscellaneous.

 

	
 
	
(a)
	
Force Majeure.  Either Party may suspend performance under this Agreement (other than Buyer’s payment obligations for Sand actually delivered) due to acts of God or of the public enemy; natural disasters, including, but not limited to, fires, floods, and other weather related incidents; riots; strikes; freight embargoes; any existing or future laws, or acts of the Federal or of any State Government (including any orders, rules or regulations issued by any official or agency of any such government) affecting the conduct of the Party’s business; and any cause beyond the reasonable control of a Party.  If a force majeure event occurs and prevails for a continuous period in excess of thirty (30) days, then the Parties shall enter into good faith discussions with a view to alleviating its effects, or agreeing upon alternative arrangements.  If the Parties are unable to agree upon alternative arrangements within thirty (30) days of entering discussions, either Party may terminate this Agreement by providing written notice to the other Party.

 

	
 
	
(b)
	
Assignment. This Agreement shall inure for the benefit of and be binding on the respective heirs, successors and permitted assigns of each Party, provided that no Party shall assign or transfer or purport to assign or transfer any of its rights or obligations hereunder except with the written consent of the other Party.

 

	
 
	
(c)
	
Entire Agreement; Amendment.  This Agreement, which includes all exhibits and schedules, constitutes the entire agreement between the Parties with regard to the purchase and sale of Sand, superseding all prior agreements or provisions agreed to by the Parties, whether written or oral.  Notwithstanding the foregoing, nothing in this Agreement will supersede the confidentiality obligations contained in that certain Confidentiality Agreement, dated September 12, 2018, by and between Seller and Buyer.  This Agreement may not be amended, changed, modified, waived or discharged, and no change, modification, waiver or amendment of any provision will be effective, except by written instrument executed by an authorized officer of each Party hereto. 

5

 

Exhibit 10.1

 

 

	
 
	
(d)
	
Governing Law; Waiver of Jury Trial. This Agreement shall be interpreted, construed and governed by the laws of the State of Texas, without reference to choice of law principles thereof that might apply the laws of another jurisdiction.  Each Party irrevocably consents to the exclusive jurisdiction to the state and federal courts sitting in Harris County, Texas in any proceeding arising out of or in connection with this Agreement.  THE PARTIES HEREBY WAIVE, TO THE MAXIMUM EXTENT ALLOWABLE UNDER APPLICABLE LAW, ALL RIGHTS TO A TRIAL BY JURY FOR ANY CLAIM OR CONTROVERSY ARISING FROM OR RELATING TO THIS AGREEMENT. 

 

	
 
	
(e)
	
Waiver of Damages.  NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREIN, NEITHER PARTY SHALL BE LIABLE IN AN ACTION INITIATED BY ONE AGAINST THE OTHER FOR PUNITIVE, EXEMPLARY, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RESULTING FROM OR ARISING OUT OF THIS AGREEMENT, OR DEFAULT IN THE PERFORMANCE HEREOF, WHETHER BASED UPON CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY), WARRANTY OR ANY OTHER LEGAL THEORY, REGARDLESS OF WHETHER ANY SUCH DAMAGES WERE FORESEEABLE, WHETHER SUCH PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.

 

	
 
	
(f)
	
Attorney’s Fees.  If any dispute arises between the Parties with respect to the matters covered by this Agreement which leads to a proceeding to resolve such dispute, the prevailing party in such proceeding will be entitled to receive its reasonable attorneys’ fees, expert witness fees and out-of-pocket costs incurred in connection with such proceeding, in addition to any other relief it may be awarded.

 

	
 
	
(g)
	
Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, and such counterparts together shall constitute one instrument. The execution and delivery of this Agreement by each party hereto may be evidenced by facsimile or other electronic transmission (including scanned documents delivered by email in pdf format), which will be binding upon all parties hereto.

 

	
 
	
(h)
	
Headings.  The headings of the sections of this Agreement are for convenience only and shall not be considered in construing or interpreting any of the terms or provisions hereof.

 

	
 
	
(i)
	
Notices.  All notices, requests, consents, waivers and other communications given or made pursuant to this Agreement will be in writing and will be deemed effectively given upon the earlier of actual receipt or:  (a) personal delivery to the Party to be notified; (b) when sent, if sent by electronic mail to the recipient’s electronic mail address during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next Business Day (provided any notice sent by electronic mail shall be confirmed promptly by U.S. mail); (c) three (3) Business Days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) Business Day after the Business Day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next Business Day delivery, with written verification of receipt.  All communications will be sent to the respective Parties at their address as set forth below:

 

If to Buyer, addressed to:

6

 

Exhibit 10.1

 

 

Ascent Resources – Utica, LLC

Attn: Vice President – Operations

3501 NW 63rd Street

Oklahoma City, OK 73116

Email: john.adcock@ascentresources.com

 

With a copy (which shall not constitute notice) to:

 

Ascent Resources – Utica, LLC

Attn: General Counsel

3501 NW 63rd Street

Oklahoma City, OK 73116

Email: legalnotices@ascentresources.com

 

If to Seller, addressed to:

 

CARBO Ceramics Inc.

575 North Dairy Ashford, Suite 300

Houston, Texas  77079

Attn: Tim Kriegshauser

Email: Tim.Kriegshauser@carboceramics.com

Fax: ______________________

 

With a copy (which shall not constitute notice) to:

 

CARBO Ceramics Inc.

575 North Dairy Ashford, Suite 300

Houston, Texas  77079

Attn: General Counsel

Email: Robert.Willette@carboceramics.com

Fax: 281-921-6491

 

Very truly yours,

 

CARBO CERAMICS INC.

 

By: /s/ Don P Conkle

Name: Don P Conkle

Title: Vice President

 

 

ACKNOWLEDGED and AGREED this 26 day of September, 2018.

 

ASCENT RESOURCES – UTICA, LLC

 

By: /s/ Keith Yankowsky

Name: Keith Yankowsky

Title: EUP/COO

7

 

Exhibit 10.1

 

EXHIBIT A

 

Sand Types, Pricing and Quantity

 

Primary Facility; XXX

 

				
	
Sieve Size
	
Pricing (per ton)
	
Estimated Monthly Quantity (tons)
	
Estimated Contract Quantity (tons)

	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
XXX
	
XXX
	
XXX

 

Secondary Facility; XXX

 

				
	
Sieve Size
	
Pricing (per ton)
	
Estimated Monthly Quantity (tons)
	
Estimated Contract Quantity (tons)

	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
XXX
	
XXX
	
XXX

 

 

 

8

 

Exhibit 10.1

 

EXHIBIT B

 

Trucking Rate Differentials

					
	
Miles

	
Terminal
	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
XXX
	
XXX
	
XXX
	
XXX

	
 
	
 
	
 
	
 
	
 

	
Rate/Mile - 42,000 lbs

	
Terminal
	
XXX
	
XXX
	
XXX
	
XXX

	
XXX
	
 $         XXX 
	
 $   XXX 
	
 $   XXX 
	
 $   XXX 

	
XXX
	
 $         XXX 
	
 $   XXX 
	
 $   XXX 
	
 $   XXX 

	
 
	
 
	
 
	
 
	
 

	
Differential
	
 $           XXX 
	
 $     XXX 
	
 $     XXX 
	
 $     XXX 

	
 
	
 
	
 
	
 
	
 

	
XXX
	
2 Year Term
	
 
	
 
	
 

	
XXX
	
 $            XXX 
	
 
	
 
	
 

	
XXX
	
 $            XXX 
	
 
	
 
	
 

	
XXX
	
 $            XXX 
	
 
	
 
	
 

	
XXX
	
 $            XXX 
	
 
	
 
	
 

	
XXX
	
 $            XXX 
	
 
	
 
	
 

	
XXX
	
 $            XXX 
	
 
	
 
	
 

 

9

 

Exhibit 10.1

 

EXHIBIT C

 

General Terms and Conditions

 

CARBO CERAMICS INC.

TERMS AND CONDITIONS OF SALE

 

Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the letter agreement between CARBO Ceramics Inc. and Ascent Resources – Utica, LLC, dated September 17, 2018.

 

	
 
	
1.
	
AGREEMENT OF SALE, ACCEPTANCE:  Any acceptance contained herein is expressly made conditional on Buyer's assent to any terms contained herein that are additional to or different from those proposed by Buyer in its purchase order and, hence, any terms and provisions Buyer's purchase order which are inconsistent with the terms and conditions hereof shall not be binding on the Seller. Terms contained herein that are additional to or different from those in the Agreement will be interpreted in accordance with Section 4 of the Agreement to which these General Terms and Conditions are attached as Exhibit C.  Unless Buyer shall notify Seller in writing to the contrary as soon as practicable after receipt hereof, acceptance of the terms and conditions hereof by Buyer shall be deemed made and, in the absence of such notification, the sale and shipment by the Seller of the goods covered hereby shall be conclusively deemed to be subject to the terms and conditions hereof.

 

	
 
	
2.
	
WARRANTY: Seller warrants that Sand supplied by the Seller are free from defects in materials and workmanship, provided, however, Seller shall have no obligation or liability under this warranty unless it shall have received prompt written notice specifying any such defect no later than five (5) business days from the date of delivery to Buyer. Buyer’s sole and exclusive remedy shall be for Seller to replace such portion of nonconforming goods, at no charge to Buyer, at the Primary Facility by such reasonable date as Buyer may request and to reimburse Buyer for any transportation, transloading or other costs incurred with respect to such Sand excluding charges for non-productive time on the well site. No Sand shall be returned to Seller without Seller's prior written consent and will be returned at Seller’s expense. THE WARRANTY SPECIFIED IN THIS PARAGRAPH IS THE SOLE AND EXCLUSIVE WARRANTY RELATING TO THE SAND AND IS IN SUBSTITUTION FOR AND IN LIEU OF ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED OR STATUTORY, INCLUDING THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, AS WELL AS ANY WARRANTY ARISING FROM COURSE OF DEALING, PERFORMANCE OR USAGE OF TRADE. 

 

	
 
	
3.
	
LAWS, CODES, REGULATIONS, SAFETY DEVICES:  Compliance with laws, codes and regulations relating to Sand and its use is the sole responsibility of Buyer, and Seller makes no additional warranty or representation with respect thereto. Buyer assumes the responsibility for providing and installing any and all devices at the well site for protection, of safety, health and the environment and shall indemnify and hold harmless Seller against any portion of expense, loss, or damage which Seller may incur or sustain as a result of Buyer's failure to do so, including reasonable legal costs and expenses.  Buyer will not export or re-export the goods from the country of destination listed on Buyer’s initial order form without Seller’s express prior and express written permission.

 

	
 
	
4.
	
WARNING FOR SALES INVOLVING SAND.  For sales of goods that involve Sand or Sand-based products, the following statement shall apply:

 

WARNING:  This product contains crystalline silica - quartz, which can cause silicosis (an occupational lung disease) and lung cancer if inhaled.  Avoid breathing dust from this product.  FOR FURTHER INFORMATION, SEE PRODUCT SAFETY DATA SHEET.

 

10EX-4.1

 Exhibit 4.1 

EXECUTION 
 AGREEMENT OF
RESIGNATION, APPOINTMENT AND ACCEPTANCE 
 INDENTURE, DATED AS OF FEBRUARY 8, 2017 

relating to the Company’s 

13.75% SENIOR SECURED NOTES DUE 2022 

AGREEMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE (this “Agreement”), dated as of March 29, 2019 by and among Hexion
Inc., a corporation duly organized and existing under the laws of the State of New Jersey and having its principal office at 180 East Broad St., Columbus, OH 43215 (the “Company”), Wilmington Savings Fund Society, FSB (“WSFS”), a
federal savings bank organized and existing under the laws of the United States of America and having a corporate trust office at 500 Delaware Avenue, Wilmington, Delaware 19801 (“Successor Trustee”), and Wilmington Trust, National
Association (“Wilmington Trust”), a national banking association duly organized and existing under the laws of the United States of America and having a corporate trust office at 50 South Sixth Street, Suite 1290, Minneapolis, MN 55402
(“Predecessor Trustee”). 
 RECITALS: 

WHEREAS, there are currently $225,000,000 aggregate principal amount of the Company’s 13.75% Senior Secured Notes due 2022 (the
“Notes”) outstanding under an Indenture, dated as of February 8, 2017 (as amended, supplemented or otherwise modified from time to time, the “Indenture”), by and among the Company, as issuer, each of the guarantors
named therein, and Predecessor Trustee, as trustee; 
 WHEREAS, the Company previously appointed Predecessor Trustee as the trustee (the
“Trustee”), registrar (the “Registrar”) and paying agent (the “Paying Agent”) under the Indenture; 
 WHEREAS,
the Company previously appointed Predecessor Trustee as the collateral agent (the “Collateral Agent”) under the Collateral Agreement, dated and effective as of February 8, 2017 (the “Collateral Agreement”), among the Company, as
issuer, each subsidiary of the Company identified therein, Predecessor Trustee, as authorized representative under the Indenture, each additional authorized representative from time to time party thereto, and Predecessor Trustee, as Collateral
Agent; 
 WHEREAS, Section 2.04(c) of the Indenture provides that the Registrar and Paying Agent may resign at any time upon written notice
to the Company and the Trustee; 
 WHEREAS, Section 7.08(a) of the Indenture provides that Holders of a majority in principal amount
of the Notes may remove the Trustee and appoint a successor Trustee at any time by notifying the Trustee; 
 WHEREAS,
Section 7.08(c) of the Indenture provides that any successor Trustee appointed in accordance with the Indenture shall deliver a written acceptance of such appointment to the Company and to its predecessor Trustee, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and such successor Trustee shall have all rights, powers, and duties of the predecessor Trustee under the Indenture; 

 WHEREAS, Section 11.11(g) of the Indenture and Section 7.06(d) of
the Collateral Agreement provide that in acting as Collateral Agent, the Collateral Agent may rely upon and enforce each and all of the rights, protections, privileges, powers, immunities, indemnities and benefits of the Trustee under Article 7 of
the Indenture; 
 WHEREAS, pursuant to the Agreement of Appointment and Acceptance, dated as of March 7, 2019, by and among
beneficial owners of over 50% of the outstanding amount of the Notes (the “Appointing Holders”) and WSFS, the Appointing Holders took action to remove Predecessor Trustee as Trustee and appoint Successor Trustee as Trustee under the
Indenture; 
 WHEREAS, pursuant to written notice from the Appointing Holders provided to Predecessor Trustee and the Company on
March 7, 2019, Predecessor Trustee’s removal as Trustee and Successor Trustee’s appointment as Trustee became effective upon Successor Trustee’s delivery of a written acceptance of such appointment to the Company and to
Predecessor Trustee on March 7, 2019; 
 WHEREAS, the Company desires to appoint Successor Trustee as Collateral Agent,
Registrar and Paying Agent to succeed Predecessor Trustee in such capacities under the Indenture and the Security Documents; 
 WHEREAS,
Predecessor Trustee hereby gives written notice to the Company of its resignation as Collateral Agent, Registrar and Paying Agent under the Indenture and as Collateral Agent under the Security Documents; 

WHEREAS, Successor Trustee is willing to accept such appointment as successor Collateral Agent, Registrar and Paying Agent under the Indenture
and the Security Documents; and 
 WHEREAS, the Company, Predecessor Trustee and Successor Trustee desire to confirm and further evidence
Successor Trustee’s appointment as Successor Trustee under the Indenture and the Security Documents. 
 NOW, THEREFORE, the Company,
Predecessor Trustee and Successor Trustee, for and in consideration of the premises and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby consent and agree as follows: 

 

	1.	 PREDECESSOR TRUSTEE 

1.1.    Pursuant to Sections 2.04(c), 7.08(a) and 11.11(g) of the Indenture and Section 7.06(d) of the Collateral
Agreement, Predecessor Trustee hereby gives notice to the Company and Successor Trustee that Predecessor Trustee is resigning as Collateral Agent, Registrar and Paying Agent under the Indenture and the Security Documents. 

1.2.    Predecessor Trustee hereby represents and warrants to Successor Trustee that: 

 

	 	(a)	 Predecessor Trustee duly authorized, executed and delivered the Indenture and each amendment and supplemental
indenture, if any, to the Indenture. Assuming each such document was validly and lawfully executed and 

  
 2 

	 	
delivered by the Company and is in full force and effect as to the Company, each such document remains in full force and effect as to Predecessor Trustee. 

 

	 	(b)	 No covenant or condition contained in the Indenture of the Collateral Agreement has been waived by Predecessor
Trustee or, to the best knowledge of responsible officers of Predecessor Trustee’s corporate trust department, by the Holders of the percentage in aggregate principal amount of the Notes required by the Indenture to effect any such waiver.

  

	 	(c)	 To the best knowledge of responsible officers of Predecessor Trustee’s corporate trust department, there
is no action, suit or proceeding pending or threatened against Predecessor Trustee before any court or any governmental authority arising out of any act or omission of Predecessor Trustee as Trustee under the Indenture or the Collateral Agreement.

  

	 	(d)	 As of the Effective Date (as defined below) of this Agreement, Predecessor Trustee will hold no moneys or
property under the Indenture. 

  

	 	(e)	 Pursuant to Section 2.03 of the Indenture, Predecessor Trustee has duly authenticated and delivered
$225,000,000 aggregate principal amount of the Notes, $225,000,000 in aggregate principal amount of which are outstanding as of the Effective Date hereof. 

  

	 	(f)	 The registers in which Predecessor Trustee has registered and transferred registered Notes accurately reflect
the amount of Notes issued and outstanding and the amounts payable thereon. 

  

	 	(g)	 Each person who so authenticated the Notes was duly elected, qualified and acting as an officer or authorized
signatory of Predecessor Trustee and empowered to authenticate the Notes at the respective times of such authentication and the signature of such person or persons appearing on such Notes is each such person’s genuine signature.

  

	 	(h)	 This Agreement has been duly authorized, executed and delivered on behalf of Predecessor Trustee and
constitutes its legal, valid and binding obligation, enforceable in accordance with its terms. 

1.3.    Predecessor Trustee hereby assigns, transfers, delivers and confirms to Successor Trustee all right, title and
interest of Predecessor Trustee in and to the trust under the Indenture and all the rights, powers, and duties of the Trustee, Collateral Agent, Registrar and Paying Agent under the Indenture and the Security Documents, including, without
limitation, all of its rights to, and all of its security interests in and liens upon, the collateral, if any, and all other rights of Predecessor Trustee with respect to the collateral, if any, pursuant to any and all transaction documents relating
to the Indenture, the Security Documents or the Notes. Predecessor Trustee shall execute and deliver all documents and instruments as may be reasonably requested by the Company and Successor Trustee so as to fully and certainly vest and confirm in
Successor Trustee all the rights, powers, privileges and duties of Predecessor Trustee under the Indenture and the Security Documents hereby assigned, transferred, delivered and confirmed to Successor Trustee as the Trustee, Collateral Agent,
Registrar and Paying Agent. 

  
 3 

 1.4.    Predecessor Trustee shall deliver to Successor Trustee, as of or
promptly after the Effective Date hereof, all of the documents listed on Exhibit A hereto. 
 2.    THE COMPANY 

2.1    The Company hereby accepts the resignation of Predecessor Trustee as the Collateral Agent, Registrar and Paying
Agent under the Indenture and the Security Documents. 
 2.2    The Company hereby appoints Successor Trustee as the
Collateral Agent, Registrar and Paying Agent under the Indenture and the Collateral Agreement to succeed to, and hereby vests Successor Trustee with, all the rights, powers, and duties of Predecessor Trustee under the Indenture and the Security
Documents with like effect as if originally named as the Collateral Agent, Registrar and Paying Agent in the Indenture and the Security Documents. 

2.3    The Company hereby represents and warrants to Predecessor Trustee and Successor Trustee that: 

 

	 	(a)	 The Company is a corporation duly and validly organized and existing pursuant to the laws of the State of New
Jersey. 

  

	 	(b)	 The Indenture, and each amendment or supplemental indenture thereto, if any, was validly and lawfully executed
and delivered by the Company and is in full force and effect and the Notes were validly issued by the Company. 

  

	 	(c)	 No covenant or condition contained in the Indenture has been waived by the Company or the guarantors party
thereto or, to the best of the Company’s knowledge, by the Holders of the percentage in aggregate principal amount of the Notes required by the Indenture to effect any such waiver. 

 

	 	(d)	 There is no action, suit or proceeding pending or, to the best of the Company’s knowledge, threatened
against the Company or the guarantors party to the Indenture before any court or any governmental authority arising out of any act or omission of the Company or the guarantors under the Indenture or the Collateral Agreement. 

 

	 	(e)	 This Agreement has been duly authorized, executed and delivered on behalf of the Company and constitutes its
legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent transfer, fraudulent conveyance or other similar
laws affecting the enforcement of creditors’ rights generally, and by general principles of equity. 

  
 4 

 2.4    The Company affirms that all liens and security interests granted
to Predecessor Trustee under the Indenture and the Security Documents in the Collateral shall in all respects be continuing and in effect and are hereby reaffirmed by the Company. 

2.5    In connection with maintaining the validity, perfection and priority of the liens and security interests afforded
the Collateral Agent under the Security Documents, the Company: (a) agrees to execute, acknowledge, deliver and cause to be duly filed (x) all Uniform Commercial Code financing statements and U.S. Patent and Trademark Office filings
necessary to evidence and assure, preserve, protect and perfect the Security Interest in favor of WSFS, in its capacity as successor Collateral Agent and (y) such other instruments and documents necessary to evidence and assure, preserve,
protect and perfect the Security Interest in favor of WSFS, in its capacity as successor Collateral Agent, as promptly as practicable as may be reasonably requested by Successor Trustee following the Effective Date, and/or (b) authorizes
Successor Trustee to file any Uniform Commercial Code financing statements or similar documents, assignments or amendments that Successor Trustee deems reasonably necessary to evidence Successor Trustee’s succession as Collateral Agent under
the Security Documents. All such filings shall be at the sole expense of the Company. 
 2.6    Nothing in this
Agreement shall operate as or be deemed a waiver by the Company of any right, power, privilege, claim or argument under or in connection with the Indenture, the Collateral Agreement or applicable law or an admission in connection therewith, and all
rights, powers, privileges, claims or arguments of the Company in connection with the Indenture and the Collateral Agreement are expressly reserved in all respects. 
  

	3.	 SUCCESSOR TRUSTEE 

3.1    Successor Trustee hereby represents and warrants to Predecessor Trustee and to the Company that: 

 

	 	(a)	 Successor Trustee is not disqualified under the provisions of Section 7.10 of the Indenture and is
eligible under the provisions of Section 7.10 of the Indenture to act as Trustee under the Indenture. 

  

	 	(b)	 This Agreement has been duly authorized, executed and delivered on behalf of Successor Trustee and constitutes
its legal, valid and binding obligation, enforceable in accordance with its terms. 

 3.2    Successor
Trustee hereby accepts its appointment as successor Collateral Agent, Registrar and Paying Agent under the Indenture and the Collateral Agreement and accepts the rights, powers, and duties of Predecessor Trustee as the Collateral Agent, Registrar
and Paying Agent under the Indenture and the Security Documents, upon the terms and conditions set forth therein, with like effect as if originally named as the Collateral Agent, Registrar and Paying Agent under the Indenture and the Security
Documents. 
 3.3    References in the Indenture to “corporate trust office” or other similar terms shall be
deemed to refer to the designated corporate trust office of Successor Trustee, which is presently located at 500 Delaware Avenue, Wilmington, Delaware 19801. 

  
 5 

 3.4    Promptly after the Effective Date of this Agreement, the Company
shall cause a notice, substantially in the form of Exhibit B annexed hereto, to be sent to the Holders of the Notes. 
  

	4.	 MISCELLANEOUS 

4.1    Except as otherwise expressly provided herein or unless the context otherwise requires, all terms used herein which
are defined in the Indenture shall have the meanings assigned to them in the Indenture. 
 4.2    This Agreement and the
resignation, appointment and acceptance effected hereby shall be effective as of the opening of business on April 8, 2019 (the “Effective Date”). 

4.3    This Agreement does not constitute a waiver by any of the parties hereto of any obligation or liability which
Predecessor Trustee may have incurred in connection with its serving as the Collateral Agent, Paying Agent or Registrar under the Indenture or the Collateral Agreement or an assumption by Successor Trustee of any liability of Predecessor Trustee
arising out of a breach by Predecessor Trustee prior to its resignation of its duties under the Indenture and the Collateral Agreement. The parties hereto agree that WSFS, in its individual capacity and in its capacity as Successor Trustee, shall
bear no responsibility or liability for (i) any actions taken or omitted to be taken by Wilmington Trust while it served as the Collateral Agent, Paying Agent and Registrar under the Indenture and the Collateral Agreement or
(ii) any event, circumstance, condition or action existing prior to the Effective Date, with respect to the Collateral, the Indenture (other than actions of WSFS in its capacity as Successor Trustee that precede the Effective Date), and the
Security Documents, or the transactions contemplated thereby. The parties hereto agree that Wilmington Trust, in its individual capacity and in its capacity as Predecessor Trustee, shall bear no responsibility or liability for any actions taken or
omitted to be taken by WSFS as Collateral Agent, Paying Agent, and Registrar under the Indenture and the Collateral Agreement or for any event, circumstance, condition or action existing on or after the Effective Date, or such earlier date as WSFS
was appointed as Trustee, with respect to the Collateral, the Indenture, and the Security Documents, or the transactions contemplated thereby. 

4.4    Notwithstanding the resignation of Predecessor Trustee effected hereby, the Company shall remain obligated under
Section 7.07 of the Indenture and Section 7.06 of the Collateral Agreement to compensate, reimburse and indemnify Predecessor Trustee for its prior trusteeship and collateral agency under the Indenture and the Security Documents, and to
hold Predecessor Trustee (x) in its capacities as the Trustee, Paying Agent and Registrar, harmless against, any loss, liability or expense incurred without negligence or willful misconduct on the part of Predecessor Trustee, and (y) in
its capacity as the Collateral Agent, harmless against, any loss, liability or expense incurred without gross negligence or willful misconduct on the part of Predecessor Trustee, and arising out of or in connection with the acceptance or
administration of the trust evidenced by the Indenture (which obligation shall survive the execution hereof). The Company acknowledges that Predecessor Trustee and its agents and counsel have accrued but unpaid (i) compensation for
services rendered by Predecessor Trustee and its agents and counsel and (ii) disbursements, advances and expenses incurred or made by Predecessor Trustee and its agents and counsel, for which the Company remains obligated under
Section 7.07 of the 

  
 6 

 
Indenture and Section 7.06 of the Collateral Agreement. This Agreement does not constitute a waiver or assignment by Predecessor Trustee of any compensation, reimbursement, expenses or
indemnity to which it is or may be entitled pursuant to the Indenture or the Collateral Agreement. 
 4.5    The parties
hereto agree to take reasonable action to confirm, evidence and perfect Successor Trustee’s rights in, or with respect to, the collateral, if any, pursuant to the Indenture, the Security Documents and all transaction documents relating thereto.

 4.6    This Agreement shall be governed by and construed in accordance with the laws of the State of New York,
without regard to conflicts of laws principles thereof. 
 4.7    This Agreement may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile or PDF transmission by the
parties hereto shall constitute (i) effective execution and delivery of this Agreement as to the parties hereto and may be used in lieu of the original Agreement for all purposes and (ii) compliance by the respective parties hereto
with the notice requirements of Section 12.02 of the Indenture and the execution and delivery requirements of Sections 2.04 and 7.08 of the Indenture. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their
original signatures for all purposes. 
 4.8    The Company acknowledges that, in accordance with
Section 326 of the USA Patriot Act, Successor Trustee, in order to help fight the funding of terrorism and prevent money laundering, is required to obtain, verify and record information that identifies each person or legal entity that
establishes a relationship or opens an account with Successor Trustee. The Company agrees that it will provide Successor Trustee with such information as it may reasonably request in order for Successor Trustee to satisfy the requirements of the USA
Patriot Act. 
 4.9    This Agreement sets forth the entire agreement of the parties with respect to its subject matter,
and supersedes and replaces any and all prior contemporaneous warranties, representations or agreements, whether oral or written, with respect to the subject matter of this Agreement other than those contained in this Agreement. 

4.10    The Company, Predecessor Trustee and Successor Trustee hereby acknowledge receipt of an executed counterpart of
this Agreement and the effectiveness thereof. 
 4.11    Unless otherwise provided herein, all notices, requests and
other communications to any party hereunder shall be in writing (including facsimile and electronic transmission in PDF format) and shall be given to such party, addressed to it, as set forth below: 

If to the Company: 
 Hexion Inc.

 180 East Broad St. 

Columbus, OH 43215 
 Attention:
Douglas A. Johns 
 Facsimile: (614) 225-3354 

Email: douglas.johns@hexion.com 

  
 7 

 If to Predecessor Trustee: 

Wilmington Trust, National Association 

50 South Sixth Street, Suite 1290 

Minneapolis, MN 55402 
 Attention:
GCM-Hexion Inc. Administrator 
 Facsimile: 612-217-5651 
 Email: jschweiger@wilmingtontrust.com 

If to Successor Trustee: 

Wilmington Savings Fund Society, FSB 

500 Delaware Avenue 
 Wilmington,
DE 19801 
 Attention: Patrick Healy 

Facsimile: 302-421-9137 

Email: phealy@wsfsbank.com 

[Signature pages to follow] 

  
 8 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement of Appointment and
Acceptance to be duly executed, all as of the day and year first above written. 
  

			
	 Hexion Inc.,
 as the
Company

		
	By:	 	 /s/ George F. Knight

	Name:	 	George F. Knight
	Title:	 	Executive VP and CFO
	
	 Wilmington Trust, National Association,

as Predecessor Trustee

		
	By:	 	 /s/ Jane Y. Schweiger

	Name:	 	Jane Y. Schweiger
	Title:	 	Vice President
	
	 Wilmington Savings Fund Society, FSB,

as Successor Trustee

		
	By:	 	 /s/ Haley A. Harris

	Name:	 	Haley A. Harris
	Title:	 	Trust Officer

 [Signature Page to Agreement of Resignation, Appointment and Acceptance] 

 EXHIBIT A 

(Documents, to the extent available, to be delivered to Successor Trustee)1 

 

	1.	 Executed copy of the Indenture and each amendment and supplemental indenture thereto. 

 

	2.	 Executed copies of the Security Documents (including, without limitation, any
UCC-1 or other financing statements, mortgages and intellectual property security agreements and control agreements in favor of Predecessor Trustee). 

 

	3.	 File of closing documents. 

 

	4.	 Copy of the most recent compliance certificate, if any, delivered pursuant to Section 4.09 of the
Indenture. 

  

	5.	 Most recent certified list of Holders, including certificate detail and all “stop transfers” and the
reason for such “stop transfers” (or, alternatively, if there are a substantial number of registered Holders, the computer tape reflecting the identity of such Holders), under the Indenture. 

 

	6.	 Copies of any official notices sent by Predecessor Trustee to Holders of the Notes pursuant to the terms of the
Indenture during the past twelve months. 

  

	7.	 Copies of any notices, certificates, or other documents sent by any Holder to Predecessor Trustee pursuant to
the terms of the Indenture; provided, however, that nothing herein shall require Predecessor Trustee to conduct a search for electronic mail communications or correspondence. 

 

	8.	 All global notes. 

 

	1 	 Other than with respect to Global Notes and physical collateral, if any, all documents and other deliverables
may be delivered in electronic format. 

 EXHIBIT B 

[LETTERHEAD OF SUCCESSOR TRUSTEE] 

NOTICE TO HOLDERS OF HEXION, INC. 

13.75% Senior Secured Notes due 2022 (the “Notes”) 

CUSIP Nos. [42829L AE4 and U4321L AC8]1 

 

	1 	 No representation is made as to the correctness of the CUSIP numbers either as printed on the Notes or as
contained in this Notice. 

 NOTICE OF APPOINTMENT AND ACCEPTANCE 

We refer to the Indenture, dated as of February 8, 2017 (as amended, restated, supplemented, or otherwise modified from time to time, the
“Indenture”), with Hexion Inc., as issuer (the “Issuer”), and Wilmington Savings Fund Society, FSB (“WSFS”), as successor to Wilmington Trust, National Association (“Wilmington Trust”) as trustee (the
“Trustee”), pursuant to which the Notes were issued. Capitalized terms used but not defined herein have the meanings assigned to such terms in the Indenture. 

You are hereby notified that pursuant to Sections 2.04(c) and 7.08 of the Indenture, WSFS has accepted appointment as the Paying Agent, Registrar and
Collateral Agent under the Indenture. The address of the corporate trust office of WSFS is: 
 Wilmington Savings Fund Society, FSB 

500 Delaware Avenue 
 Wilmington, DE
19801 
 Attn: 
 Wilmington Trust’s
resignation as the Paying Agent, Registrar and Collateral Agent and WSFS’s appointment as successor Paying Agent, Registrar and Collateral Agent became effective as of the opening of business on April [    ], 2019. 

Dated: [                ], 2019 

 

			
	Very truly yours,
	 WILMINGTON SAVINGS FUND SOCIETY, FSB,

	as successor Trustee, Paying Agent, Registrar and Collateral Agent

 
			
		
	By:	 	  

	Name:	 	
	Title:

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