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As filed with the Securities and Exchange Commission on August 22, 2014
Registration No. 333-            
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FMSA HOLDINGS INC.
(Exact Name of Registrant as Specified in its Charter) 

Delaware	 	1400	 	34-1831554	
(State or other jurisdiction of
incorporation or organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification Number)	
8834 Mayfield Road
Chesterland, Ohio 44026
(800) 255-7263
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Jenniffer D. Deckard
President and Chief Executive Officer
FMSA Holdings Inc.
8834 Mayfield Road
Chesterland, Ohio 44026
(800) 255-7263
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

David P. Oelman	 	J. Michael Chambers	
Alan Beck	 	Sean T. Wheeler	
Vinson & Elkins L.L.P.	 	Latham & Watkins LLP	
1001 Fannin Street, Suite 2500	 	811 Main Street, Suite 3700	
Houston, Texas 77002	 	Houston, Texas 77002	
(713) 758-2222	 	(713) 546-5400	

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:   ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   ¨	 	Accelerated filer   ¨	  	Non-accelerated filer   þ	 	Smaller reporting company   ¨	
	 		  	(Do not check if a smaller reporting company)	 		
CALCULATION OF REGISTRATION FEE

 	
Title of Each Class of Securities
to be Registered	 	Proposed Maximum
Aggregate Offering
Price(1)(2)	 	Amount of
Registration Fee	
Common stock, par value $0.01 per share	 	$100,000,000	 	$12,880	

(1)	Includes shares issuable upon exercise of the underwriters’ option to purchase additional shares of common stock.	
(2)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.	
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
PRELIMINARY PROSPECTUS
(Subject to Completion, dated                     , 2014)
            Shares

FMSA Holdings Inc.
COMMON STOCK

This is the initial public offering of the common stock of FMSA Holdings Inc., a Delaware corporation. We are not offering any shares of our common stock. The selling stockholders identified in this prospectus are offering             shares of our common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. No public market currently exists for our common stock. We are an “emerging growth company” and are eligible for reduced reporting requirements. Please see “Prospectus Summary—Emerging Growth Company Status.”
We intend to apply to list our common stock on the New York Stock Exchange under the symbol “FMSA.”
We anticipate that the initial public offering price will be between $         and $         per share.
Investing in our common stock involves risks. Please see “ Risk Factors ” beginning on page 13 of this prospectus.

 
									
 	    	Per share	 	    	Total	 	
Price to the public	    	 	$            	  	    	 	$            	  	
Underwriting discounts and commissions (1)	    	 	$            	  	    	 	$            	  	
Proceeds to the selling stockholders (before expenses)	    	 	$            	  	    	 	$            	  	

(1)	Please see “Underwriting” for a description of all underwriting compensation payable in connection with this offering.	
The selling stockholders have granted the underwriters the option to purchase up to             additional shares of common stock on the same terms and conditions set forth above if the underwriters sell more than             shares of common stock in this offering.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares on or about                     , 2014.

 
											
Morgan Stanley	 	Wells Fargo Securities	 	Barclays	

Goldman, Sachs & Co.	 	Jefferies	 	J.P. Morgan	
KeyBanc Capital Markets	 		 	RBC Capital Markets	

Baird	 	Cowen and Company	
PNC Capital Markets LLC	 	Raymond James	
Scotiabank / Howard Weil	 	Simmons & Company
International            	
Tudor, Pickering, Holt & Co.	
Prospectus dated                     , 2014

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Table of Contents
 TABLE OF CONTENTS

PROSPECTUS SUMMARY	  	 	1	  	
RISK FACTORS	  	 	13	  	
FORWARD-LOOKING STATEMENTS	  	 	34	  	
USE OF PROCEEDS	  	 	36	  	
STOCK SPLIT	  	 	37	  	
DIVIDEND POLICY	  	 	37	  	
DILUTION	  	 	38	  	
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA	  	 	39	  	
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	  	 	41	  	
INDUSTRY	  	 	60	  	
BUSINESS	  	 	69	  	
MANAGEMENT	  	 	97	  	
EXECUTIVE COMPENSATION	  	 	101	  	
PRINCIPAL AND SELLING STOCKHOLDERS	  	 	111	  	
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	  	 	113	  	
DESCRIPTION OF CAPITAL STOCK	  	 	114	  	
SHARES ELIGIBLE FOR FUTURE SALE	  	 	118	  	
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS	  	 	120	  	
UNDERWRITING	  	 	124	  	
LEGAL MATTERS	  	 	130	  	
EXPERTS	  	 	130	  	
WHERE YOU CAN FIND MORE INFORMATION	  	 	130	  	
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	  	 	F-1	  	
APPENDIX A—GLOSSARY OF TERMS	  	 	A-1	  	

You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on behalf of us or to the information which we have referred you. Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus and any free writing prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We, the selling stockholders and the underwriters are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common stock. Our business, financial condition, results of operations and prospects may have changed since that date.
This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See “Risk Factors” and “Forward-Looking Statements.”
 
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INDUSTRY AND MARKET DATA
The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications and other published independent sources. The industry data sourced from The Freedonia Group is from their Industry Study #3160, “Well Stimulation Materials,” published in June 2014. The industry data sourced from PacWest Consulting Partners is from their “Proppant Market Analysis: 13Q4 Release,” published in March 2014. Investors are cautioned not to place undue reliance on the market related research statistics. The market data regarding supply and demand is difficult to quantify as the proppant industry continues to evolve and many market participants are privately held, making accurate estimates of supply capacity and market demand difficult to qualify. Some data is also based on our good faith estimates. Although these are third-party sources, we acknowledge our responsibility for all disclosures in this prospectus. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications.
TRADEMARKS AND TRADE NAMES
We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ® , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, service marks and trade names.
 
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 PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. For a more complete understanding of us and this offering, you should read and carefully consider the entire prospectus, including the more detailed information set forth under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes. Some of the statements in this prospectus are forward-looking statements. See “Forward-Looking Statements.” Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our,” “Fairmount Santrol,” “our business” and “our company” refer to FMSA Holdings Inc. and its consolidated subsidiaries and predecessor companies. On August 15, 2014, FML Holdings, Inc. changed its name to “FMSA Holdings Inc.” We include a glossary of some of the terms used in this prospectus as Appendix A. Unless otherwise indicated, information in this prospectus is adjusted to reflect the          for          stock split to be effected prior to the effective date of the registration statement of which this prospectus forms a part.
Our Company
We are one of the world’s largest providers of sand-based proppant solutions and for over 30 years have been a pioneer in the development of high performance proppants used by oilfield service and exploration and production (“E&P”) companies to enhance the productivity of their oil and gas wells. Fairmount Santrol offers the broadest range of proppants available in the market today, including high quality sand and a spectrum of resin coated products, all of which exceed American Petroleum Institute (“API”) specifications. Additionally, for more than 120 years, we and our predecessor companies have provided high quality sand-based products, strong technical leadership and applications knowledge to end users in the foundry, glass, building products, and sports and recreation markets (collectively the Industrial and Recreational, or the “I&R” markets). We believe our two primary market segments are complementary. Our ability to sell to a wide range of customers across multiple end markets allows us to maximize the economic recovery of our reserve base.
As one of the nation’s longest continuously operating mining organizations, we have developed a strong commitment to environmental stewardship and to the three pillars of Sustainable Development: People, Planet and Prosperity. Our strong commitment to safety is reflected in the health and safety of our employees and is illustrated by having achieved a lost-time incident rate that is less than half the industry average. From 2011 through June 30, 2014, our employees have demonstrated our commitment to our communities by donating approximately 36,000 hours of company-paid volunteer time, as well as significant personal volunteer time, into the communities in which we live and operate. We are focused on environmental stewardship, and ten of our facilities now generate zero waste to landfills. Additionally, we have successfully executed annual initiatives to reduce our carbon emissions and have planted over 225,000 trees since 2011 in order to offset our Tier I and Tier II carbon emissions. We believe adhering to sustainable development principles is not only the right thing to do, but also results in a higher level of engagement and commitment from our employees, better relationships with our communities and, as a result, a stronger base from which to pursue profitable growth over the long-term. Abiding by these guiding principles, our corporate motto is “Do Good. Do Well.”
We began investing in large scale proppant production capacity in the early 1980s, leveraging our early industry relationships with Halliburton and a predecessor company to Baker Hughes. Since then, our business, and particularly our Proppant Solutions segment, has grown significantly. Today we have vertically integrated operations that combine mining, sand processing, and resin manufacturing and coating operations with a broad logistics network and state-of-the-art research and development capabilities. Our ability to leverage our integrated asset base to provide comprehensive proppant solutions has allowed us to become a long-term, trusted partner to our customers.
 
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Our primary attributes include:
 
•	 	Sand Reserves and Processing Assets. We have one of the largest sand reserves and processing asset bases in the industry, including, as of December 31, 2013, 798.2 million tons of proven mineral reserves, 11 active sand processing facilities with 12.3 million tons of annual sand processing capacity, a resin manufacturing facility and 11 coating facilities with 2.4 million tons of annual coating capacity. From 2009 to 2013, we expanded our annual raw frac sand and coating capacities by approximately 6.0 million and 1.5 million tons, respectively, through a combination of organic growth and acquisitions. Our coating facilities include operations in Mexico, Denmark and China, through which we serve international oil and gas markets.	
 
•	 	Product Delivery. We are capable of Class I railroad deliveries to each of North America’s major oil and gas producing basins and we also have the flexibility to ship our product via barge and trucks to reach our customers in certain basins. We operate an integrated logistics platform consisting of 46 proppant distribution terminals with significant associated storage, 32 of which exclusively handle our products. Since 2011, we have developed or acquired 24 distribution terminals, providing significant additional annual transloading capacity. We also service I&R end markets through seven additional terminals. As of August 15, 2014, we had a fleet of over 8,500 railcars and expect this fleet to grow to over 13,000 through 2016. By the end of the third quarter of 2014, we also expect to have expanded our unit train capabilities to three production facilities and three in-basin terminals, which we expect to reduce freight costs and improve cycle times for our railcar fleet.	
 
•	 	Customers. We currently have approximately 80 proppant customers, including the largest U.S. pressure pumping companies, and a total of nearly 850 customers across all end markets. Our contracting goal is to create long-term, partnering relationships with our customers. Accordingly, we have structured the majority of our long-term proppant contracts with market-based pricing and volumetric provisions based on our customer’s requirements, which we believe has strengthened our customer relationships over multiple market cycles.	
 
•	 	Innovation. We have an established history of proppant innovation and we continue to make substantial investments in engineering, research and development and technical marketing. We pioneered the manufacturing and use of resin coated proppant and continue to introduce new and innovative products. For example PowerProp, our coated product with the greatest crush resistance, has characteristics competitive with lightweight ceramics. We are currently field testing a brand new technology, Propel SSP. This proppant transport technology is a new proppant category in which a polymer, wrapped around sand or ceramic, swells upon contact with water. The shear-stable polymer suspends the proppant in water, transporting each grain farther and higher into fractures. Polymer breaking occurs with conventional chemistry. This better transport expands the hydrocarbon drainage radius with a maximized propped fracture area to increase ultimate recovery.	
We are experiencing high demand for our products and our business is currently experiencing significant growth. Our revenues have grown at a compound annual growth rate of approximately 19% and 25% since 2004 and 2009, respectively, and our Adjusted EBITDA margins have averaged more than 30% since 2004 and 2009. For the year ended December 31, 2013, we sold over 7.5 million tons, generated $988 million in revenues, $293 million of Adjusted EBITDA and $105 million of net income. We cannot provide any assurance that we will achieve these growth rates or margins in the future. For a definition of “Adjusted EBITDA” and a reconciliation of Adjusted EBITDA to its most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (“GAAP”), please read “—Summary Historical Consolidated Financial and Operating Data—Non-GAAP Financial Measures” beginning on page 10.
 
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Our Competitive Strengths
We believe that we are well positioned to execute our strategy based on the following competitive strengths:
A Leading Proppant Producer; Broadest Product Suite.  We have a broad suite of products that address more than 90% of the proppant market. According to PacWest Consulting Partners, we were the second largest supplier of raw frac sand and the largest supplier of resin coated sand in 2013, based on our production capacity and coating capacity, respectively. Our raw sand product suite includes all mesh sizes of high performing API-spec Northern White frac sand and our branded API-spec Texas Gold brown frac sand, which enjoys a delivered cost advantage to certain basins, including the Eagle Ford Shale and Permian Basin. Our portfolio of resin coated products provides a range of strength, flowback and conductivity characteristics. Our product breadth allows us to offer a comprehensive proppant solution across a broad range of well characteristics and our scale provides us with the flexibility to fill large individual orders, often on short notice. As proppant consumption per well has increased, and completion solutions are increasingly tailored, we believe that our scale and product breadth provide us with a competitive advantage.
Industry’s Largest Captive Terminal Footprint and Broadest Logistics Capabilities. In recent years, oilfield service companies have increasingly sought proppant suppliers with logistics capabilities to deliver product in-basin. We sell our proppants directly to customers in all of North America’s major oil and gas producing basins through our 46 proppant distribution terminals, the largest logistics network in the industry. In 2013, approximately 80% of our proppant volume was sold in-basin at one of our distribution terminals, compared to approximately 65% in 2012. We ship our products via North America’s Class I railroads in our fleet of more than 8,500 railcars as of August 15, 2014, which includes approximately 790 railcars made available to us by our customers. By the third quarter of 2014, we expect to have expanded our unit train capabilities to three of our processing facilities and three of our in-basin terminals. We expect these unit train capabilities will reduce our freight costs and improve cycle times for our railcar fleet. We also have the flexibility to ship our product via barge and truck to multiple basins. Importantly, over 70% of our terminal capacity exclusively handles our products. In contrast to commingled terminals, which support proppant logistics for multiple vendors, our captive terminals enable us to better assure timely delivery of proppants to our customers and position us to capture incremental spot demand at the terminal site. Taken together, we believe the significant scale our distribution network, its geographic scope, and our captive terminal strategy provide us with a competitive advantage.
Focus on Innovation and New Product Development. We have a history of collaborating with our customers to develop innovative solutions to enhance the effectiveness of well completions, from conventional wells to the most complex, multi-stage, horizontal wells. Our vertically integrated model allows us to participate in each phase of proppant development, manufacturing and delivery and provides us a unique perspective into the current and future needs of our customers. Our technical sales team works closely with market participants to demonstrate the value proposition of our performance proppants in order to stimulate market demand. In 1976, our predecessor pioneered the development of resin coated proppants and we have been issued numerous related patents. Our product developments include OptiProp, SLC, THS, PowerProp and CoolSet, each with uniquely tailored down-hole performance characteristics. After acquiring the technology that underlies Propel SSP in May 2013, our team worked to further refine the product’s technology and manufacturing technique. We have successfully produced and shipped Propel SSP in commercial quantities to several key customers who are currently testing the product in field trials.
Trusted Partner to Our Customers. We are a trusted partner and have significant long-term relationships with each of the four largest U.S. pressure pumping companies, who together represent approximately 65% of the market, as well as many small and mid-sized oilfield service companies. These customer relationships are driven by our ability to enhance our customers’ operations and profitability by delivering a full suite of high-quality proppant products, where, when and as-needed. These benefits also extend to the E&P companies serviced by our
 
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service company customers, who directly benefit from the enhanced well productivity that our products offer. We believe our customers value the ability of our substantial scale, product diversity and extensive logistics network to meet their evolving proppant needs.
Efficient Operations and Economies of Scale Support Strong Cash Flow Generation . Our vertically integrated operations, low production costs and low maintenance capital expenditures have enabled us to be profitable and generate positive cash flows over an extended period. We own a substantial majority of our reserves, and our processing plants are located on or in close proximity to rail access, reducing the need for on-road transportation and minimizing product movement costs. Our integrated logistics management expertise and geographically advantaged facility network enables us to reliably ship products by the most cost-effective method available. As a result, our Adjusted EBITDA margin was approximately 29% in 2013 (see our discussion of the use of non-GAAP measures of profitability on page 10 of this prospectus. We believe our significant and growing cash flow will enable us to continue to invest in additional sand production, processing, coating and terminal facilities as well as research and development for new products. 
Experienced Management Team Aligned with Stockholders. We have an experienced leadership team with extensive industry knowledge and a proven track record of profitable growth. Our executive management team has developed new product offerings and process technologies, and has grown our business through greenfield mine development, capacity expansions, acquisitions and investments in logistics infrastructure. Most of our executive management team has been at Fairmount Santrol for 20 years or more, and as of December 31, 2013 our revenue had grown at a compound annual growth rate of approximately 14% and 25% since 1994 and 2009, respectively. Our founders remain active advisors to our management and are members of our board of directors. Pro forma for this offering, our management, employees and founders will own approximately     % of our outstanding common stock. Accordingly, our executive management team and our employees are aligned with our investors and highly incentivized to pursue long-term, profitable growth and a high return on capital deployed.
Our Strategy
Our objective is to create long-term and sustainable value for our stakeholders. We intend to pursue this objective through the execution of the following strategies:
Increase Reserves and Processing Capacity. We have historically grown our reserves and mining and processing capacities by developing greenfield sites, expanding existing facilities and acquiring operating assets and reserves. From 2009 to 2013, we expanded our annual raw frac sand capacity by approximately 6.0 million tons and our annual coating capacity by 1.5 million tons. Currently, we believe our customers’ demand for our products exceeds our production capacity. Accordingly, we expect to continue to invest in production capacity and new reserves. In 2013, we acquired an idled 1.0 million ton per year frac sand processing facility in Brewer, Missouri from FTS International Services, LLC (“FTSI”) and expect to resume operations at this facility within the next six months. We also expect to increase annual frac sand production capacity at a current facility by 1.5 million tons by the end of the first quarter of 2016. In addition to these expansions, we control, or have an option to control, additional reserves on four properties (three with Northern White reserves, one with Texas Gold) and expect to develop one or two frac sand facilities on these greenfield sites by mid-2016. In order to ensure that we have adequate capacities and reserves to meet future demand, we have an active pipeline of expansion opportunities in varying stages of development. We currently have 2.4 million tons of annual coating capacity and are in the process of expanding these capacities by an additional 0.8 million tons per year by the fourth quarter of 2015. We will continue to evaluate the opportunity to expand coating capacity based on market demand for coated products.
Expand Logistics Capabilities. Since 2011, we have developed or acquired 24 distribution terminals, providing 13.1 million tons of additional annual transloading capacity. We will continue to invest in terminals, storage and rail infrastructure as our customers continue to demand more product delivered closer to producing
 
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basins. We will also continue to enhance our unit train capabilities to reduce freight costs and improve cycle times for our railcar fleet. Since 2009, we have increased our railcar fleet by approximately 140% and expect to increase the size of our railcar fleet by over 35% through the second half of 2015 to accommodate our growing customer demands.
Increase Market Penetration of Our Resin Coated Proppants.  We believe that resin coated proppants offer compelling performance advantages relative to other proppants. Our field data indicates that high quality resin coated proppants enhance oil and gas reservoir conductivity compared to raw sand and are a cost-effective alternative to lightweight ceramic proppants. Field data also indicate that resin coated proppants reduce proppant flowback. Our resin coating capacity is the largest in the industry, providing our customers enhanced assurance of supply. Due to superior performance and value added formulation and manufacturing processes, sales of our resin coated products generate a higher per ton profit as compared to our raw frac sand. We will continue to work with market participants by hosting technical sales meetings, obtaining field data, and producing scientific papers which highlight the value proposition of resin coated proppant. Through these efforts, we will seek to increase overall market penetration of our resin coated proppant.
Develop and Commercialize High Performance Proprietary Proppants. We pioneered the manufacturing and use of resin coated proppants and have a history of developing innovative technologies that increase the effectiveness of downhole completions, from conventional wells to the most complex, multi-stage horizontal wells. In 2012, we made a significant investment in a new state-of-the-art research and development facility and strengthened our team of scientists, material engineers and process engineers focused on developing innovative and proprietary proppants. As a result of our commitment, our new product development record is strong. For example, we successfully developed and commercialized PowerProp, a patented resin coated sand proppant with characteristics competitive with lightweight ceramic proppants, and CoolSet, a resin coated sand proppant that works at low temperatures with no chemical activators. Additionally, we are currently conducting field trials for Propel SSP after developing a commercialized processing capability and expect full commercial launch by early 2015. We are in constant dialogue with our customers regarding evolving product needs and have a number of new products in various stages of development.
Execute all of our Corporate Initiatives with a Commitment to Customers, Employees and Communities. Our corporate culture emphasizes People, Planet and Prosperity, and our sustainability strategy defines our approach to operations and community engagement. We work to minimize our environmental impact and continue to find ways to reduce waste while also reducing operating costs. We are honored to receive recognition from our communities for our focus on sustainable mining practices, reclamation and community investment. We believe that positive community engagement is both a privilege and a responsibility, and that it enhances our ability to recruit and retain employees, obtain mining and other operating permits and strengthen relationships with our customers. Our corporate motto is “Do Good. Do Well” and we intend to continue to execute our growth strategy with a focus on sustainable development.
Industry Trends
Over the past decade, E&P companies have increasingly focused on exploiting the vast hydrocarbon reserves contained in North America’s oil and gas reservoirs. Using advanced techniques, such as horizontal drilling and hydraulic fracturing, North American production of oil and gas has grown rapidly as the development of horizontal drilling technologies has evolved. More recently, E&P companies are increasing their focus on optimizing the use of proppant as a critical component of these efforts to improve well productivity and maximize their returns on invested capital.
This focus on efficiency and profitability has led to new development techniques, such as increased use of pad drilling which results in a greater number of wells drilled per rig, and incorporating longer lateral lengths and
 
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shorter intervals between frac stages, which results in more fracturing stages per well. In addition, the amount of proppant used per stage has increased dramatically, compounding the increase in total demand for proppant. In recent months, individual wells have been completed with more than 6,000 tons of proppant, which is the equivalent of 60 railcars or 240 truckloads. This represents a several fold increase in large scale completions from just a few years ago.
Both E&P companies as well as oilfield service providers with whom they contract, are more precisely selecting the type and volume of proppants employed to optimize conductivity and improve well productivity. Specifications for proppant type and quantity can be made by the E&P companies, the oilfield service providers or collaboratively. These specifications are resulting in not only the use of increasing amounts of proppant per well, they are also incorporating a broader selection of proppant types, a wider range of mesh sizes, and a selection of high performance proppants to tailor the proppant solution to the specific geologic characteristics of the well. Furthermore, both E&P companies and oilfield service providers are investing in value-added proppants when the improvement in well production and efficiencies justifies the increased proppant investment. These recent trends are resulting in increased demand for resin coated proppants, which provides enhanced performance characteristics relative to raw sand but at a lower cost than ceramic proppants.
As a result of these trends, according to The Freedonia Group, an international business research company, U.S. demand for all proppants has increased rapidly, growing at an average annual rate of 26% from 2008 to 2013, when proppant sales reached more than 31 million tons. The Freedonia Group estimates that total annual proppant sales will exceed 49 million tons in 2018 and 74 million tons by 2023. They also estimate that resin coated sands and other value added products will comprise a growing share of the overall proppant market. The market for resin coated sand is expected to grow 10.5% annually through 2018 as compared to 9.3% for raw frac sand and 9.0% for ceramic proppants according to the Freedonia Group’s estimates.
As demand for sand-based proppants has increased dramatically in recent years, the supply of quality API-spec raw frac sand has struggled to keep pace, resulting, at times, in a supply-demand disparity. While a number of existing and new proppant vendors have announced supply expansions and greenfield projects, we do not expect the magnitude of these supply expansions to fully meet the expected growth in demand. There are numerous key constraints to increasing raw frac sand production on an industry-wide basis, including:
 
•	 	the difficulty of finding frac sand deposits that meet API specifications;	
 
•	 	the difficulty of securing contiguous frac sand reserves large enough to justify the capital investment required to develop a processing facility;	
 
•	 	the challenges of identifying reserves with the above characteristics that are either located in close proximity to oil and gas reservoirs or have rail access needed for low-cost transportation to major shale basins;	
 
•	 	the hurdles of securing mining, production, water, air, refuse and other federal, state and local operating permits from the proper authorities;	
 
•	 	local opposition to the development of mining facilities, especially those that require the use of on-road transportation, including moratoria on raw frac sand facilities in multiple counties in Wisconsin and Minnesota which hold potential sand reserves; and	
 
•	 	proximity to logistics infrastructure and the ability to develop comprehensive logistics capabilities.	
E&P companies’ and oilfield service providers’ preferences and expectations have also been evolving in recent years. A proppant vendor’s logistics capabilities have become an important differentiating factor when competing for business, on both a spot and contract basis. Proppant consumers have an increasing preference for convenient in-basin proppant delivery capability. We believe that, over time, the largest proppant customers will prefer to consolidate their purchases across a smaller group of suppliers with robust logistics capabilities and a broad offering of high performance proppants.
 
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Risk Factors
Investing in our common stock involves risks that include the demand for sand-based proppants and other risks. For a discussion of these risks and other considerations that could negatively affect us, including risks related to this offering and our common stock, see “Risk Factors” and “Forward-Looking Statements.”
Ownership
We have a long history of employee ownership as well as ownership by financial sponsors. Our current ownership is comprised of employees, including members of our management team and our employee stock bonus plan, our founders, other non-employee stockholders and ASP FML Holdings, LLC (“ASP FML”), an affiliate of American Securities LLC (“American Securities”). American Securities is a leading U.S. middle-market private equity firm that invests in market-leading North American companies. American Securities currently has over $10 billion of assets under management and is investing from its sixth fund. American Securities focuses its core investments in the industrial sector including general industrial, aerospace and defense, agriculture, environmental, recycling paper and packaging, power and energy, and specialty chemicals. American Securities has a proven track record of successfully working with management teams to develop and implement strategies for sustained profitability.
Emerging Growth Company Status
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or “JOBS Act.” For as long as we are an emerging growth company, unlike other public companies, we will not be required to:
 
•	 	provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002;	
 
•	 	comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;	
 
•	 	comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the Securities and Exchange Commission determines otherwise;	
 
•	 	provide certain disclosure regarding executive compensation required of larger public companies; or	
 
•	 	obtain stockholder approval of any golden parachute payments not previously approved.	
We will cease to be an “emerging growth company” upon the earliest of:
 
•	 	when we have $1.0 billion or more in annual revenues;	
 
•	 	when we have at least $700 million in market value of our common stock held by non-affiliates;	
 
•	 	when we issue more than $1.0 billion of non-convertible debt over a three-year period; or	
 
•	 	the last day of the fiscal year following the fifth anniversary of our initial public offering.	
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period and, as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
 
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Stock Split
On                     , 2014, we amended and restated our Second Amended and Restated Certificate of Incorporation to effect a          for          stock split of our issued and outstanding common stock. For additional information, see “Stock Split.”
Corporate History Information
We were incorporated as a Delaware corporation in 1986. Our predecessor companies began operations over 120 years ago. In August 2010, we partnered with American Securities when affiliated funds managed by American Securities (collectively with American Securities, the “AS Group”) acquired indirect control over ASP FML, who acquired 51% of our stock (the “AS Group Acquisition”). Our corporate headquarters is located at 8834 Mayfield Road, Chesterland, Ohio 44026. Our telephone number is (800) 255-7263. Following the completion of this offering, our website will be located at www.fairmountsantrol.com . The information on our website is not deemed to be part of this prospectus.
 
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The Offering
 
Common stock offered by the selling stockholders	            shares (or             shares, if the underwriters exercise in full their option to purchase additional shares)	
 
Common stock to be outstanding after the offering	            shares	
 
Common stock owned by the selling stockholders after the offering	            shares (or             shares, if the underwriters exercise in full their option to purchase additional shares)	
 
Over-allotment option	The selling stockholders have granted the underwriters a 30-day option to purchase up to an aggregate of             additional shares of our common stock to cover over-allotments.	
 
Use of proceeds	We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders.	
 
Dividend policy	We do not anticipate paying any cash dividends on our common stock. In addition, our revolving credit facility and term loans place certain restrictions on our ability to pay cash dividends.	
 
Listing and trading symbol	We intend to apply to list our common stock on the New York Stock Exchange (“NYSE”) under the symbol “FMSA.”	
The information above excludes 519,113 shares (             shares after giving effect to our proposed stock split) of common stock issuable upon the exercise of stock options outstanding as of June 30, 2014 under our existing equity incentive plan, as well as              shares of common stock reserved for issuance under our new 2014 Long-Term Incentive Plan, or the LTIP, that we intend to adopt in connection with the completion of this offering.
Unless otherwise indicated, all information in this prospectus reflects and assumes the              for              stock split of our common stock to be effected prior to the effective date of the registration statement of which this prospectus forms a part.
 
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Summary Historical Consolidated Financial and Operating Data
The following table sets forth our summary historical consolidated financial and operating data as of the dates and for the periods indicated. We have derived the summary historical consolidated financial and operating data as of and for the years ended December 31, 2009, 2010 and 2011 from our unaudited consolidated financial statements, which are not included in this prospectus. We have derived the summary historical consolidated financial and operating data as of, and for the years ended December 31, 2012 and 2013 from our audited consolidated financial statements, which are included elsewhere in this prospectus. We have derived the summary historical consolidated financial and operating data for the six months ended June 30, 2013 and as of and for the six months ended June 30, 2014 from our unaudited condensed consolidated financial statements that are included elsewhere in this prospectus. We have derived the financial data as of June 30, 2013 from our unaudited condensed consolidated financial statements that are not included in this prospectus. Our unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in our opinion, include all adjustments, consisting of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position, results of operations and cash flows for such periods. Historical results are not necessarily indicative of future results.
The summary historical consolidated data presented below should be read in conjunction with “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes and other financial data included elsewhere in this prospectus.

 	 	Year Ended December 31,	 	 	Six Months Ended
June 30,	 	
 	 	2009	 	 	2010	 	 	2011	 	 	2012	 	 	2013	 	 	2013	 	 	2014	 	
 	 	(In thousands)	 	
Statement of Income Data:	 				 				 				 				 				 				 				
Revenue	 	$	398,660	  	 	$	667,089	  	 	$	909,742	  	 	$	885,190	  	 	$	988,386	  	 	$	448,241	  	 	$	629,223	  	
Income from operations	 	 	78,711	  	 	 	173,034	  	 	 	296,903	  	 	 	278,426	  	 	 	227,956	  	 	 	125,621	  	 	 	146,246	  	
Income before provision for income taxes	 	 	69,526	  	 	 	146,602	  	 	 	217,855	  	 	 	219,842	  	 	 	149,876	  	 	 	98,510	  	 	 	111,227	  	
Net income	 	 	49,506	  	 	 	100,494	  	 	 	146,098	  	 	 	149,473	  	 	 	104,657	  	 	 	68,816	  	 	 	78,815	  	
Net income attributable to FML Holdings, Inc.	 	 	48,901	  	 	 	99,454	  	 	 	145,183	  	 	 	148,886	  	 	 	103,961	  	 	 	68,564	  	 	 	78,460	  	
Earnings per share:	 				 				 				 				 				 				 				
Basic(1)	 	 	n/a	  	 	 	n/a	  	 	$	32.28	  	 	$	32.49	  	 	$	22.66	  	 	$	14.95	  	 	$	17.04	  	
Diluted(1)	 	 	n/a	  	 	 	n/a	  	 	$	30.70	  	 	$	30.80	  	 	$	21.47	  	 	$	14.17	  	 	$	16.11	  	
Statement of Cash Flows Data:	 				 				 				 				 				 				 				
Net cash provided by (used in):	 				 				 				 				 				 				 				
Operating activities	 	$	96,566	  	 	$	75,722	  	 	$	167,861	  	 	$	186,433	  	 	$	174,635	  	 	$	93,657	  	 	$	49,982	  	
Investing activities	 	 	(13,156	) 	 	 	(45,165	) 	 	 	(102,572	) 	 	 	(107,366	) 	 	 	(579,517	) 	 	 	(161,575	) 	 	 	(60,613	) 	
Financing activities	 	 	(82,076	) 	 	 	3,783	  	 	 	(49,202	) 	 	 	(119,070	) 	 	 	410,515	  	 	 	70,901	  	 	 	5,347	  	
Other Financial Data:	 				 				 				 				 				 				 				
Capital expenditures	 	$	20,158	  	 	$	41,928	  	 	$	77,827	  	 	$	109,016	  	 	$	111,514	  	 	$	41,276	  	 	$	61,827	  	
EBITDA(2)	 	 	96,522	  	 	 	192,820	  	 	 	303,227	  	 	 	303,659	  	 	 	248,877	  	 	 	140,352	  	 	 	172,872	  	
Adjusted EBITDA(2)	 	 	102,854	  	 	 	239,144	  	 	 	335,110	  	 	 	318,650	  	 	 	292,584	  	 	 	146,330	  	 	 	179,984	  	
Adjusted EBITDA margin(2)	 	 	26	% 	 	 	36	% 	 	 	37	% 	 	 	36	% 	 	 	30	% 	 	 	33	% 	 	 	29	% 	
Operating Data:	 				 				 				 				 				 				 				
Proppant Solutions:	 				 				 				 				 				 				 				
Total tons sold	 	 	1,730	  	 	 	2,609	  	 	 	3,402	  	 	 	3,765	  	 	 	5,117	  	 	 	2,134	  	 	 	3,352	  	
Revenue	 	$	325,542	  	 	$	580,117	  	 	$	807,849	  	 	$	757,851	  	 	$	856,212	  	 	$	378,286	  	 	$	567,185	  	
Average selling price (per ton)	 	$	188	  	 	$	222	  	 	$	237	  	 	$	201	  	 	$	167	  	 	$	177	  	 	$	169	  	
Segment contribution margin(3)	 	 	n/a	  	 	 	248,187	  	 	 	339,050	  	 	 	316,251	  	 	 	296,320	  	 	 	150,267	  	 	 	192,928	  	
Industrial & Recreational Products:	 				 				 				 				 				 				 				
Total tons sold	 	 	1,918	  	 	 	2,228	  	 	 	2,296	  	 	 	2,375	  	 	 	2,462	  	 	 	1,261	  	 	 	1,193	  	
Revenue	 	$	73,118	  	 	$	86,972	  	 	$	101,893	  	 	$	127,339	  	 	$	132,174	  	 	$	69,955	  	 	$	62,038	  	
Average selling price (per ton)	 	$	38	  	 	$	39	  	 	$	44	  	 	$	53	  	 	$	54	  	 	$	55	  	 	$	52	  	
Segment contribution margin(3)	 	 	n/a	  	 	 	20,904	  	 	 	29,142	  	 	 	37,837	  	 	 	34,765	  	 	 	17,002	  	 	 	16,835	  	
 
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 	 	Year Ended December 31,	 	 	Six Months Ended
June 30,	 	
 	 	2009	 	 	2010	 	 	2011	 	 	2012	 	 	2013	 	 	2013	 	 	2014	 	
 	 	(In thousands)	 	
Balance Sheet Data (at period end):	 				 				 				 				 				 				 				
Cash and cash equivalents	 	$	3,841	  	 	$	38,788	  	 	$	51,765	  	 	$	11,866	  	 	$	17,815	  	 	$	14,934	  	 	$	12,514	  	
Total assets	 	 	340,521	  	 	 	522,179	  	 	 	646,176	  	 	 	679,601	  	 	 	1,283,431	  	 	 	860,400	  	 	 	1,375,488	  	
Long term debt (including current portion)	 	 	235,409	  	 	 	709,925	  	 	 	947,447	  	 	 	831,195	  	 	 	1,262,146	  	 	 	906,010	  	 	 	1,264,972	  	
Total liabilities	 	 	314,458	  	 	 	857,475	  	 	 	1,094,168	  	 	 	965,529	  	 	 	1,448,789	  	 	 	1,073,788	  	 	 	1,457,461	  	
Total equity (deficit)(4)	 	 	26,063	  	 	 	(335,296	) 	 	 	(447,992	) 	 	 	(285,928	) 	 	 	(165,358	) 	 	 	(213,388	) 	 	 	(81,973	) 	

(1)	Basic and diluted earnings per share are not disclosed for 2009 and 2010 since they are not considered meaningful for the periods prior to the AS Group Acquisition.	
(2)	EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. For a definition of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation to net income, see “—Non GAAP Financial Measures” below.	
(3)	Segment contribution margin is not available for the year ended December 31, 2009.	
(4)	The reduction in equity in 2010 resulted from our purchase of treasury stock in connection with the AS Group Acquisition.	
Non-GAAP Financial Measures
We define EBITDA as net income before interest expense, income tax expense, depreciation, depletion, and amortization. We define Adjusted EBITDA as EBITDA before non-cash stock-based compensation, management fees and reimbursement of expenses to sponsor, transaction expenses, impairment of assets, loss on extinguishment of debt, gain or loss on disposal of assets, and other non-cash income or expenses. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Management believes EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are useful because they allow management to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure.
Disclosure in this prospectus of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, which are “non-GAAP financial measures,” as defined under the rules of the SEC, are intended as supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, cash flow provided by operating activities or any other performance measure derived in accordance with GAAP. Our presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by unusual or non-recurring items. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are included in this prospectus because they are key metrics used by management to assess our operating performance. Adjusted EBITDA is also used by our lenders to evaluate our compliance with covenants. Additionally, performance targets associated with our annual incentive plans and stock-based compensation vesting targets are tied to our Adjusted EBITDA.
We believe these measures are meaningful to our investors to enhance their understanding of our financial performance. Although EBITDA and Adjusted EBITDA are not necessarily measures of our ability to fund our cash needs, we understand that they are frequently used by securities analysts, investors and other interested parties as measures of financial performance. Our calculation of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures reported by other companies.
 
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The following tables set forth a reconciliation of net income, the most directly comparable GAAP financial measure, to EBITDA and Adjusted EBITDA.

 	 	Year Ended December 31,	 	 	Six Months Ended
June 30,	 	
 	 	2009	 	 	2010	 	 	2011	 	 	2012	 	 	2013	 	 	2013	 	 	2014	 	
 	 	(In thousands)	 	
Net income attributable to FML Holdings, Inc.	 	$	48,901	  	 	$	99,454	  	 	$	145,183	  	 	$	148,886	  	 	$	103,961	  	 	$	68,564	  	 	$	78,460	  	
Interest expense, net	 	 	8,539	  	 	 	22,927	  	 	 	64,665	  	 	 	56,714	  	 	 	61,926	  	 	 	26,541	  	 	 	34,478	  	
Income taxes	 	 	20,020	  	 	 	46,108	  	 	 	71,757	  	 	 	70,369	  	 	 	45,219	  	 	 	29,694	  	 	 	32,412	  	
Depreciation, depletion, and amortization	 	 	19,062	  	 	 	24,331	  	 	 	21,622	  	 	 	27,690	  	 	 	37,771	  	 	 	15,553	  	 	 	27,522	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA	 	 	96,522	  	 	 	192,820	  	 	 	303,227	  	 	 	303,659	  	 	 	248,877	  	 	 	140,352	  	 	 	172,872	  	
Non-cash stock based compensation(1)	 	 	3,906	  	 	 	23,278	  	 	 	17,539	  	 	 	11,434	  	 	 	10,133	  	 	 	3,709	  	 	 	4,313	  	
Management fees and reimbursement of expenses paid to sponsor(2)	 	 	—  	  	 	 	503	  	 	 	1,119	  	 	 	1,274	  	 	 	2,928	  	 	 	570	  	 	 	541	  	
Transaction expenses(3)	 	 	580	  	 	 	17,536	  	 	 	—  	  	 	 	1,414	  	 	 	12,462	  	 	 	1,699	  	 	 	637	  	
Impairment of long-lived assets(4)	 	 	1,846	  	 	 	2,100	  	 	 	—  	  	 	 	273	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Loss on extinguishment of debt(5)	 	 	—  	  	 	 	—  	  	 	 	12,682	  	 	 	—  	  	 	 	11,760	  	 	 	—  	  	 	 	—  	  	
(Gain) / Loss on disposal of assets(6)	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	596	  	 	 	6,424	  	 	 	—  	  	 	 	—  	  	
IPO-related fees	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1,621	  	
Non-recurring payments relating to sponsor buyout(7)	 	 	—  	  	 	 	2,907	  	 	 	543	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	$	102,854	  	 	$	239,144	  	 	$	335,110	  	 	$	318,650	  	 	$	292,584	  	 	$	146,330	  	 	$	179,984	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA margin	 	 	26	% 	 	 	36	% 	 	 	37	% 	 	 	36	% 	 	 	30	% 	 	 	33	% 	 	 	29	% 	

(1)	Represents cost of stock-based awards issued to our employees attributable to each year presented.	
(2)	Includes fees and expenses paid to American Securities for ongoing consulting and management services provided pursuant to a management consulting agreement. In connection with the completion of this offering, the management consulting agreement will be terminated. See “Certain Relationships and Related Party Transactions—American Securities.”	
(3)	These expenses are associated with the evaluation of potential acquisitions of assets or businesses, some of which were completed. Expenses in 2010 are associated with the AS Group Acquisition.	
(4)	Represents the impairment charges related to certain closed facilities.	
(5)	Upon entering into new credit facilities, we were required to write-off a portion of the remaining unamortized deferred financing fees related to the previous credit facilities.	
(6)	Includes the non-cash loss related to the sale and disposal of certain assets, including property, plant and equipment, discontinued inventory and an investment in foreign operations.	
(7)	Represents the employer portion of income taxes on options that were exercised in connection with the AS Group Acquisition.	
 
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 RISK FACTORS
This offering and an investment in our common stock involve a high degree of risk. You should carefully consider the risks described below, together with the financial and other information contained in this prospectus, before you decide to purchase shares of our common stock. If any of the following risks actually occurs, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected. As a result, the trading price of our common stock could decline and you could lose all or part of your investment in our common stock.
Risks Related to Our Business
Our business and financial performance depend on the level of activity in the oil and gas industries.
Approximately 87% of our revenues for the year ended December 31, 2013 were derived from sales to companies in the oil and gas industry. As a result, our operations are materially dependent on the levels of activity in oil and gas exploration, development and production. More specifically, the demand for the proppants we produce is closely related to the number of oil and gas wells completed in geological formations where sand-based proppants are used in fracturing activities. These activity levels are affected by both short- and long-term trends in oil and gas prices, among other factors.
In recent years, oil and gas prices and, therefore, the level of exploration, development and production activity, have experienced significant fluctuations. Worldwide economic, political and military events, including war, terrorist activity, events in the Middle East and initiatives by the Organization of the Petroleum Exporting Countries (“OPEC”), have contributed, and are likely to continue to contribute, to price and volume volatility. Furthermore, the availability of key resources that impact drilling activity have experienced significant fluctuations and could impact product demand.
A prolonged reduction in oil and gas prices would generally depress the level of oil and gas exploration, development, production and well completion activity and result in a corresponding decline in the demand for the proppants we produce. Such a decline would likely have a material adverse effect on our business, results of operations and financial condition. In addition, certain U.S. federal income tax deductions currently available with respect to oil and gas exploration and development, including the repeal of the percentage depletion allowance for oil and gas properties, may be eliminated as a result of proposed legislation. Any future decreases in the rate at which oil and gas reserves are discovered or developed, whether due to the passage of legislation, increased governmental regulation leading to limitations or prohibitions on exploration and drilling activity, including hydraulic fracturing, or other factors, could have a material adverse effect on our business, even in a stronger oil natural gas price environment.
Increasing logistics costs, a lack of dependability or availability of transportation services or infrastructure and geographic shifts in demand could have a material adverse effect on our business.
Transportation and handling costs are a significant component of the total delivered cost of our products. In many instances, transportation costs can represent 70 to 80% of the delivered cost of frac sand. The high relative cost of transportation could favor suppliers located in close proximity to the customer. In addition, as we continue to expand our sand-based proppant production, we will need increased investment in transportation infrastructure, including terminals and railcars. We contract with truck, rail, ship and barge services to move sand-based proppants from our production facilities to distribution terminals. Labor disputes, derailments, adverse weather conditions or other environmental events, an increasingly tight railcar leasing market, increased railcar congestion and other changes to rail freight systems could interrupt or limit available transportation services or result in a significant increase in transportation service rates. Increased costs resulting from these types of events that we are not able to pass on to our customers could impair our ability to deliver our products economically to our customers or to expand our markets. Accordingly, because we are so dependent on rail
 
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infrastructure, if there are disruptions of the rail transportation services utilized by us or our customers, and we or our customers are unable to find alternative transportation providers to transport our products, our business and results of operations could be adversely affected.
A significant portion of our distribution infrastructure is located in or near oil and gas producing areas. A shift in demand away from areas where we have significant distribution infrastructure or relocation of our customers’ businesses to areas farther from our plants or distribution infrastructure could have a material adverse effect on our business, financial condition and results of operations.
Our operations are dependent on timely securing and maintaining various permits and approvals from governmental authorities and other third parties.
We hold numerous governmental, environmental, mining and other permits, water rights and approvals authorizing operations at each of our facilities. A decision by a governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to continue operations at the affected facility. Furthermore, state and local governments could impose a moratorium on mining operations in certain areas. Expansion of our existing operations is also predicated on securing the necessary environmental or other permits, including air permits for our resin coated manufacturing, and water rights or approvals, which we may not receive in a timely manner or at all. In addition, our facilities are located near existing and proposed third-party industrial operations that could affect our ability to fully extract, or the manner in which we extract, the mineral reserves to which we have mining rights.
We may be adversely affected by decreased or shifted demand for sand-based proppants or the development of either effective alternative proppants or new processes to replace hydraulic fracturing.
Frac sand and resin coated sand are proppants used in the completion and re-completion of oil and gas wells through the process of hydraulic fracturing. A significant shift in demand from sand-based proppants to other proppants, or a shift in demand from higher-margin sand-based proppants to lower-margin sand-based proppants, could have a material adverse effect on our business, financial condition and results of operations. The development and use of new technology for effective alternative proppants, or the development of new processes to replace hydraulic fracturing altogether, could also cause a decline in demand for the sand-based proppants we produce and could have a material adverse effect on our business, financial condition and results of operations.
Our proppant sales are subject to fluctuations in market pricing.
Substantially all of our long-term supply contracts involving the sale of sand-based proppants have market-based pricing mechanisms. Accordingly, in periods with decreasing prices, our results of operations may be lower than if our agreements had fixed prices. In periods with increasing prices, our agreements permit us to increase prices; however, our customers may elect to cease purchasing our sand-based proppants if they do not agree with our price increases or are able to find alternative, cheaper sources of supply. Furthermore, certain of our supply agreements contain most favored nation clauses that may prevent us from capturing current market prices in an increasing price environment. Our contracting structure may result in significant variability in our results of operations and cash flows from period to period.
Changes in supply and demand dynamics could also impact market pricing for proppants. A number of existing frac sand providers and new market entrants have recently announced reserve acquisitions, processing capacity expansions and greenfield projects. In periods where sources of supply of raw frac sand exceed market demand, market prices for frac sand may decline and our results of operations and cash flows may decline or be volatile or otherwise be adversely affected.
 
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We may not be able to complete greenfield development or expansion projects or, if we do, we may not realize the expected benefits.
Any greenfield development or expansion project requires us to raise substantial capital and obtain numerous state and local permits. A decision by any governmental agency not to issue a required permit or substantial delays in the permitting process could prevent us from pursuing the development or expansion project. In addition, if the demand for our products declines during the period we experience delays in raising capital or completing the permitting process, we may not realize the expected benefits from our greenfield facility or expansion project. Furthermore, our new or modified facilities may not operate at designed capacity or may cost more to operate than we expect. The inability to complete greenfield development or expansion projects or to complete them on a timely basis and in turn grow our business could adversely affect our business and results of operations.
We rely upon trade secrets, contractual restrictions and patents to protect our proprietary rights. Failure to protect our intellectual property rights may undermine our competitive position, and protecting our rights or defending against third-party allegations of infringement may be costly.
Our commercial success depends on our proprietary information and technologies, know-how and other intellectual property. Because of the technical nature of our business, we rely on patents, trade secrets, trademarks and contractual restrictions to protect our intellectual property rights, particularly with respect to our resin coated products. The measures we take to protect our trade secrets and other intellectual property rights may be insufficient. Failure to protect, monitor and control the use of our existing intellectual property rights could cause us to lose our competitive advantage and incur significant expenses. It is possible that our competitors or others could independently develop the same or similar technologies or otherwise obtain access to our unpatented technologies. In such case, our trade secrets would not prevent third parties from competing with us. As a result, our results of operations may be adversely affected. Furthermore, third parties or our employees may infringe or misappropriate our proprietary technologies or other intellectual property rights, which could also harm our business and results of operations. Policing unauthorized use of intellectual property rights can be difficult and expensive, and adequate remedies may not be available.
In addition, third parties may claim that our products infringe or otherwise violate their patents or other proprietary rights and seek corresponding damages or injunctive relief. Defending ourselves against such claims, with or without merit, could be time-consuming and result in costly litigation. An adverse outcome in any such litigation could subject us to significant liability to third parties (potentially including treble damages) or temporary or permanent injunctions prohibiting the manufacture or sale of our products, the use of our technologies or the conduct of our business. Any adverse outcome could also require us to seek licenses from third parties (which may not be available on acceptable terms, or at all) or to make substantial one-time or ongoing royalty payments. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase or use of our products until resolution of such litigation. In addition, we may not have insurance coverage in connection with such litigation and may have to bear all costs arising from any such litigation to the extent we are unable to recover them from other parties. Any of these outcomes could have a material adverse effect on our business, financial condition and results of operations.
The development and marketing of Propel SSP may prove to be unsuccessful.
In April 2013, we acquired intellectual property rights to self-suspending proppant technology which led to the development of Propel SSP. We are currently conducting field trials on Propel SSP and are attempting to secure a patent for this technology. The technology supporting Propel SSP is still unproven. Although the results of initial field trials have been encouraging, additional testing ultimately may demonstrate that the product is ineffective or not commercially viable. A failure to successfully develop Propel SSP for commercial application would result in a significant unrecouped investment and the failure to realize certain anticipated benefits from this product launch, each of which could have a material adverse effect on our business, financial condition and results of operations. For more information on Propel SSP, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Acquisitions.”
 
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Our future performance will depend on our ability to succeed in competitive markets, and on our ability to appropriately react to potential fluctuations in demand for and supply of sand-based proppants.
We operate in a highly competitive market that is characterized by several large, national producers and a larger number of small, regional or local producers. Competition in the industry is based on price, consistency and quality of product, site location, distribution capability, customer service, reliability of supply, breadth of product offering and technical support. In the proppant business, we compete with producers such as Badger Mining Corporation, CARBO Ceramics Inc., Emerge Energy Services LP, Hi-Crush Partners, LP, Momentive Performance Materials Inc., Preferred Sands LLC, Unimin Corporation and U.S. Silica Holdings, Inc. Certain of our large competitors may have greater financial and other resources than we do, may develop technology superior to ours or may have production facilities that are located closer to key customers than ours.
We also compete with smaller, regional or local producers. In recent years there has been an increase in the number of small producers servicing the sand-based proppants market which could result in increased competition and pricing pressure in certain market conditions. In addition, oil and gas exploration and production companies and other providers of hydraulic fracturing services could acquire their own sand reserves, expand their existing sand-based proppant production capacity or otherwise fulfill their own proppant requirements and existing or new sand-based proppant producers could add to or expand their sand-based proppants production capacity, which could increase competition in the proppant industry. We may not be able to compete successfully against either our larger or smaller competitors in the future, and competition could have a material adverse effect on our business, financial condition and results of operations.
A large portion of our sales is generated by a limited number of customers, and the loss of, or a significant reduction in purchases by, our largest customers could adversely affect our operations.
For the year ended December 31, 2013 and the six months ended June 30, 2014, our top two proppant customers, Halliburton and FTSI, collectively accounted for approximately 30% and 36% of our sales, respectively. These customers may not continue to purchase the same levels of our sand-based proppants in the future due to a variety of reasons. If any of our major customers substantially reduces or altogether ceases purchasing our sand-based proppants and we are not able to recontract any lost volumes or generate replacement sales of sand-based proppants into the market, we could suffer a material adverse effect on our business, financial condition and results of operations.
We are exposed to the credit risk of our customers, and any material nonpayment or nonperformance by our customers could adversely affect our financial results.
We are subject to the risk of loss resulting from nonpayment or nonperformance by our customers, many of whose operations are concentrated in a single industry, the global oilfield services industry. Our credit procedures and policies may not be adequate to fully reduce customer credit risk. If we fail to adequately assess the creditworthiness of existing or future customers or unanticipated deterioration in their creditworthiness, any resulting increase in nonpayment or nonperformance by them and our inability to re-market or otherwise use the production could have a material adverse effect on our business, financial condition and results of operations.
The demand for industrial and recreational sand fluctuates, which could adversely affect our results of operations.
A portion of our sales are to customers in industries that have historically been cyclical, such as glassmaking, building products and foundry. During periods of economic slowdown, our customers often reduce their production rates and also reduce capital expenditures and defer or cancel pending projects. Such developments occur even among customers that are not experiencing financial difficulties.
 
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Demand in many of the end markets for industrial and recreational sand is driven by the construction and automotive industries. For example, the flat glass market depends on the automotive and commercial and residential construction and remodeling markets. The market for industrial and recreational sand used to manufacture building products is driven primarily by demand in the construction markets. The demand for foundry silica substantially depends on the rate of automobile, light truck and heavy equipment production. Other factors influencing the demand for industrial and recreational sand include (i) the substitution of plastic or other materials for glass, (ii) competition from offshore producers of glass products, (iii) changes in demand for our products due to technological innovations and (iv) prices, availability and other factors relating to our products.
We cannot predict or control the factors that affect demand for our products. Negative developments in the above factors, among others, could cause the demand for industrial and recreational sand to decline, which could adversely affect our business, financial condition, results of operations, cash flows and prospects.
Our operations are subject to operating risks that are often beyond our control and could adversely affect production levels and costs, and such risks may not be covered by insurance.
Our mining, processing and production facilities are subject to risks normally encountered in the proppant and industrial and recreational sand industries. These risks include:
 
•	 	changes in the price and availability of transportation;	
 
•	 	changes in the price and availability of natural gas or electricity;	
 
•	 	unusual or unexpected geological formations or pressures;	
 
•	 	cave-ins, pit wall failures or rock falls, particularly in underground mines;	
 
•	 	unanticipated ground, grade or water conditions;	
 
•	 	extreme seasonal weather conditions;	
 
•	 	hazardous or catastrophic weather conditions or events, including flooding, tornadoes and hurricanes, and the physical impacts of climate change;	
 
•	 	environmental hazards;	
 
•	 	industrial accidents;	
 
•	 	changes in laws and regulations (or the interpretation thereof) or increased public scrutiny related to the mining and the drilling and well completion industries, silica dust exposure or the environment;	
 
•	 	inability to acquire or maintain necessary permits or mining or water rights;	
 
•	 	restrictions on blasting and mining operations, including potential moratoriums on mining as result of local activism or complaints;	
 
•	 	inability to obtain necessary production equipment or replacement parts;	
 
•	 	reduction in the amount of water available for processing;	
 
•	 	labor disputes;	
 
•	 	late delivery of supplies;	
 
•	 	fires, explosions or other accidents; and	
 
•	 	facility shutdowns in response to environmental regulatory actions.	
Any of these risks could result in damage to, or destruction of, our mining properties or production facilities, personal injury, environmental damage, delays in mining or processing, losses or possible legal liability. Any prolonged downtime or shutdowns at our mining properties or production facilities could have a material adverse effect on us.
 
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Not all of these risks are reasonably insurable, and our insurance coverage contains limits, deductibles, exclusions and endorsements. Our insurance coverage may not be sufficient to meet our needs in the event of loss and any such loss may have a material adverse effect on us.
A significant portion of our sales is generated at our Wedron Silica facility. Any adverse developments at this plant could have a material adverse effect on our business, financial condition and results of operations.
For the year ended December 31, 2013, approximately 49% of our total volumes were produced at our Wedron Silica Facility and this percentage may increase in the future. Considering capacities acquired in 2013 on a full-year basis, this facility accounts for approximately 35% of our annual sand processing capacity and approximately 24% of our annual coating capacity. A casualty event or other adverse event affecting the production at this plant, including adverse developments due to catastrophic events or weather (including floods), adverse government regulatory impacts, private actions by residents of Wedron or surrounding communities, decreased demand for the products this plant produces, adverse developments affecting this plant’s customers or transportation-related constraints, could have a material adverse effect on our business, financial condition and results of operations.
The manufacture of resin coated proppants is an important process for us and is dependent on the availability of raw materials.
If we are unable to secure adequate, cost effective supply commitments for the raw materials associated with resin coated proppants our ability to sell this product to the marketplace at profitable margins may be adversely impacted. Decreased sales of resin coated proppants or the inability to control the costs associated with manufacturing and distribution of these products could have a material adverse effect on our business, financial condition and results from operations.
Diminished access to water may adversely affect our operations or the operations of our customers.
Our operations require the use of significant quantities of water. The mining and processing activities in which we engage at a number of our facilities require significant amounts of water, and some of our facilities are located in areas that are water-constrained. Additionally, the development of oil and gas properties through fracture stimulation likewise requires significant water use. We have obtained water rights that we currently use to service the activities on our various properties, and we plan to obtain all required water rights to service other properties we may develop or acquire in the future. However, the amount of water that we and our customers are entitled to use pursuant to our water rights must be determined by the appropriate regulatory authorities in the jurisdictions in which we and our customers operate. Such regulatory authorities may amend the regulations regarding such water rights, increase the cost of maintaining such water rights or eliminate our current water rights, and we and our customers may be unable to retain all or a portion of such water rights. These new regulations, which could also affect local municipalities and other industrial operations, could have a material adverse effect on our operating costs and effectiveness if implemented. Such changes in laws, regulations or government policy and related interpretations pertaining to water rights may alter the environment in which we and our customers do business, which may negatively affect our financial condition and results of operations.
Title to our mineral properties and water rights, and royalties related to our production of sand may be disputed.
Title to, and the area of, mineral properties and water rights, and royalties related to our production of sand, may be disputed. A successful claim that we lack appropriate mineral and water rights on one or more of our properties could cause us to lose any rights to explore, develop and operate mines on that property. Any decrease or disruption in our mineral rights may adversely affect our operations. In some instances, we have received access rights or easements from third parties, which allow for a more efficient operation than would exist without the access or easement. A third party could take action to suspend the access or easement, and any such action could be materially adverse to our results of operations or financial condition.
 
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If we cannot successfully complete acquisitions or integrate acquired businesses, our growth may be limited and our financial condition may be adversely affected.
Our business strategy includes supplementing internal growth by pursuing acquisitions. Any acquisition may involve potential risks, including, among other things:
 
•	 	the validity of our assumptions about mineral reserves and future production, sales, capital expenditures, operating expenses and costs, including synergies;	
 
•	 	an inability to successfully integrate the businesses we acquire;	
 
•	 	the use of a significant portion of our available cash or borrowing capacity to finance acquisitions and the subsequent decrease in our liquidity;	
 
•	 	a significant increase in our interest expense or financial leverage if we incur additional debt to finance acquisitions;	
 
•	 	the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate;	
 
•	 	the diversion of management’s attention from other business concerns;	
 
•	 	an inability to hire, train or retain qualified personnel both to manage and to operate our growing business and assets;	
 
•	 	the incurrence of other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges;	
 
•	 	unforeseen difficulties encountered in operating in new geographic areas;	
 
•	 	customer or key employee losses at the acquired businesses; and	
 
•	 	the accuracy of data obtained from production reports and engineering studies, geophysical and geological analyses and other information used when deciding to acquire a property, the results of which are often inconclusive and subject to various interpretations.	
If we cannot successfully complete acquisitions or integrate acquired businesses, our growth may be limited and our financial condition may be adversely affected.
We will be required to make substantial capital expenditures to maintain, develop and increase our asset base. The inability to obtain needed capital or financing on satisfactory terms, or at all, could have a material adverse effect on our growth and profitability.
Although we currently use a significant amount of our cash reserves and cash generated from our operations to fund the maintenance and development of our existing mineral reserves and our acquisitions of new mineral reserves, we may depend on the availability of credit to fund future capital expenditures. Our ability to obtain bank financing or to access the capital markets for future equity or debt offerings may be limited by our financial condition at the time of any such financing or offering, the covenants contained in our existing credit facility, term loans or future debt agreements, adverse market conditions or other contingencies and uncertainties that are beyond our control. Our failure to obtain the funds necessary to maintain, develop and increase our asset base could adversely impact our growth and profitability.
Even if we are able to obtain financing or access the capital markets, incurring additional debt may significantly increase our interest expense and financial leverage, and our level of indebtedness could restrict our ability to fund future development and acquisition activities. In addition, the issuance of additional common stock in an equity offering may result in significant stockholder dilution.
 
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Our substantial indebtedness could adversely affect our financial flexibility and our competitive position.
Our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. As of June 30, 2014, we had approximately $1.26 billion of outstanding long-term debt (including the current portion of long-term debt). Our substantial indebtedness could have other important consequences to you and significant effects on our business. For example, it could:
 
•	 	increase our vulnerability to adverse changes in general economic, industry and competitive conditions;	
 
•	 	require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;	
 
•	 	limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;	
 
•	 	restrict us from exploiting business opportunities;	
 
•	 	make it more difficult to satisfy our financial obligations, including payments on our indebtedness;	
 
•	 	place us at a disadvantage compared to our competitors that have less debt; and	
 
•	 	limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general corporate purposes.	
Our revolving credit facility and term loans contain substantial restrictions and financial covenants that may restrict our business and financing activities.
Our revolving credit facility and term loans contain, and any future financing agreements that we may enter into will likely contain, operating and financial restrictions and covenants that may restrict our ability to finance future operations or capital needs or to engage in, expand or pursue our business activities.
Our ability to comply with these restrictions and covenants is uncertain and will be affected by the levels of cash flow from our operations and events or circumstances beyond our control. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we violate any of the restrictions, covenants, ratios or tests in our debt agreements, a significant portion of our indebtedness may become immediately due and payable and our lenders’ commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, our obligations under our debt agreements are secured by substantially all of our assets, and if we are unable to repay our indebtedness under these agreements, the lenders could seek to foreclose on our assets.
We may incur substantial debt in the future to enable us to maintain or increase our production levels and to otherwise pursue our business plan. This debt may impair our ability to operate our business.
Our business plan requires a significant amount of capital expenditures to maintain and grow our production levels. If prices for the products we produce were to decline for an extended period of time, if the costs of our acquisition and development operations were to increase substantially or if other events were to occur which reduced our sales or increased our costs, we may be required to borrow in the future to enable us to finance the expenditures necessary to replace the reserves we produce. The cost of the borrowings and our obligations to repay the borrowings could have important consequences to us, including:
 
•	 	our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms, or at all;	
 
•	 	covenants contained in our existing and future credit and debt arrangements will require us to meet financial tests that may affect our flexibility in planning for, and reacting to, changes in our business, including possible acquisition opportunities;	
 
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•	 	we will need a substantial portion of our cash flow to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operations and future business opportunities; and	
 
•	 	our debt level will make us more vulnerable than our less leveraged competitors to competitive pressures or a downturn in our business or the economy generally.	
Our ability to service our indebtedness will depend on, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or delaying business activities, acquisitions, investments and/or capital expenditures; selling assets; restructuring or refinancing our indebtedness; or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms or at all.
Inaccuracies in our estimates of mineral reserves could result in lower than expected sales and higher than expected costs.
We base our mineral reserve estimates on engineering, economic and geological data assembled and analyzed by our engineers and geologists, which are reviewed by outside firms. However, sand reserve estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from available drilling data, which may prove unreliable. There are numerous uncertainties inherent in estimating quantities and qualities of mineral reserves and costs to mine recoverable reserves, including many factors beyond our control. Estimates of economically recoverable mineral reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as:
 
•	 	geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience;	
 
•	 	assumptions concerning future prices of sand-based products, operating costs, mining technology improvements, development costs and reclamation costs; and	
 
•	 	assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies.	
Any inaccuracy in our estimates related to our mineral reserves could result in lower than expected sales and higher than expected costs.
Mine closures entail substantial costs, and if we close one or more of our mines sooner than anticipated, our results of operations may be adversely affected.
We base our assumptions regarding the life of our mines on detailed studies that we perform from time to time, but our studies and assumptions do not always prove to be accurate. If we close any of our mines sooner than expected, sales will decline unless we are able to increase production at any of our other mines, which may not be possible. The closure of an open pit mine also involves significant fixed closure costs, including accelerated employment legacy costs, severance-related obligations, reclamation and other environmental costs and the costs of terminating long-term obligations, including energy contracts and equipment leases. We accrue for the costs of reclaiming open pits, stockpiles, tailings ponds, roads and other mining support areas over the estimated mining life of our property. If we were to reduce the estimated life of any of our mines, the fixed mine closure costs would be applied to a shorter period of production, which would increase production costs per ton produced and could materially and adversely affect our results of operations and financial condition.
Applicable statutes and regulations require that mining property be reclaimed following a mine closure in accordance with specified standards and an approved reclamation plan. The plan addresses matters such as
 
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removal of facilities and equipment, regrading, prevention of erosion and other forms of water pollution, re-vegetation and post-mining land use. We may be required to post a surety bond or other form of financial assurance equal to the cost of reclamation as set forth in the approved reclamation plan. The establishment of the final mine closure reclamation liability is based on permit requirements and requires various estimates and assumptions, principally associated with reclamation costs and production levels. If our accruals for expected reclamation and other costs associated with mine closures for which we will be responsible were later determined to be insufficient, our business, results of operations and financial condition would be adversely affected.
A shortage of skilled labor together with rising labor costs in the mining industry may further increase operating costs, which could adversely affect our results of operations.
Efficient mining using modern techniques and equipment requires skilled laborers, preferably with several years of experience and proficiency in multiple mining tasks, including processing of mined minerals. If the shortage of experienced labor continues or worsens or if we are unable to train the necessary number of skilled laborers, there could be an adverse impact on our labor productivity and costs and our ability to expand production.
As a result of current market conditions and the high demand for skilled labor in certain regions in which we operate, we are experiencing a record level of labor costs, and we expect the cost of labor to increase in the future. The continued increase in labor costs could adversely affect our profitability.
Our production process consumes large amounts of natural gas and electricity. An increase in the price or a significant interruption in the supply of these or any other significant raw material costs could have a material adverse effect on our business, financial condition or results of operations.
Natural gas is the primary fuel source used for drying in the sand production process and, as such, our profitability is impacted by the price and availability of natural gas we purchase from third parties. The price and supply of natural gas are unpredictable and can fluctuate significantly based on international, political and economic circumstances, as well as other events outside our control, such as changes in supply and demand due to weather conditions, actions by OPEC and other oil and gas producers, regional production patterns and environmental concerns. Furthermore, utility companies could enforce natural gas curtailments which affect our operations. In addition, potential climate change regulations or carbon or emissions taxes could result in higher production costs for energy, which may be passed on to us in whole or in part. In the past, the price of natural gas has been extremely volatile, and we expect this volatility to continue. For example, during the year ended December 31, 2013, the monthly closing price of natural gas on the New York Mercantile Exchange ranged from a high of $4.15 per million British Thermal Units (“BTUs”) to a low of $3.23 per million BTUs.
Phenol is the primary component of the resins we buy, and our resin supply agreements contain market based pricing provisions based on the cost of phenol. As a result, we are exposed to fluctuations in the prices for phenol.
We have not historically hedged natural gas prices through the use of derivative financial instruments, such as forwards, swaps and futures. Furthermore, a significant increase in the price of phenol or of energy that is not recovered through an increase in the price of our products or an extended interruption in the supply of natural gas or electricity to our production facilities could have a material adverse effect on our business, financial condition and results of operations.
Our business may suffer if we lose, or are unable to attract and retain, key personnel.
We depend to a large extent on the services of our senior management team and other key personnel. Members of our senior management and other key employees have extensive experience and expertise in evaluating and analyzing industrial mineral properties, maximizing production from such properties, marketing
 
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industrial mineral production and developing and executing financing and hedging strategies. Competition for management and key personnel is intense, and the pool of qualified candidates is limited. Further, we have not entered into employment agreements with any of our named executive officers. The loss of any of these individuals or the failure to attract additional personnel, as needed, could have a material adverse effect on our operations and could lead to higher labor costs or the use of less-qualified personnel. In addition, due to the broad base of shares and options owned by our current employee base, a significant amount of wealth and liquidity could be generated as a result of this offering. If any of our executives or other key employees were to retire as a result of this wealth creation, join a competitor or form a competing company, we could lose customers, suppliers, know-how and key personnel. We do not maintain key-man life insurance with respect to any of our employees. Our success is dependent on our ability to continue to attract, employ and retain highly skilled personnel.
Our profitability could be negatively affected if we fail to maintain satisfactory labor relations.
As of December 31, 2013, various labor unions represented 14% of our domestic employees. If we are unable to renegotiate acceptable collective bargaining agreements with these labor unions in the future, we could experience, among other things, strikes, work stoppages or other slowdowns by our workers and increased operating costs as a result of higher wages, health care costs or benefits paid to our employees. An inability to maintain good relations with our workforce could cause a material adverse effect on our business, financial condition and results of operations.
Silica-related health issues and litigation could have a material adverse effect on our business, reputation or results of operations.
The inhalation of respirable crystalline silica can lead to the lung disease silicosis. There is disputed evidence of an association between respirable silica exposure and lung cancer as well as a possible association with other diseases, including immune system disorders such as scleroderma. These health risks have been, and may continue to be, a significant issue confronting the silica industry. Concerns over silicosis and other potential adverse health effects, as well as concerns regarding potential liability from the use of silica, may have the effect of discouraging our customers’ use of our silica products. The actual or perceived health risks of mining, processing and handling silica could materially and adversely affect silica producers, including us, through reduced use of silica products, the threat of product liability or employee lawsuits, increased scrutiny by federal, state and local regulatory authorities of us and our customers or reduced financing sources available to the silica industry.
We and/or our predecessors have been named as a defendant, usually among many defendants, in numerous products liability lawsuits brought by or on behalf of current or former employees of our customers alleging damages caused by silica exposure. As of June 30, 2014, we were subject to approximately 46 active silica exposure claims. Almost all of the claims pending against us arise out of the alleged use of our silica products in foundries or as an abrasive blast media and have been filed in the states of Texas, Mississippi, Kentucky and Illinois, although cases have been brought in many other jurisdictions over the years. In accordance with our insurance obligations, these claims are being defended by our subsidiaries’ insurance carriers, subject to our payment of approximately 7% of the defense costs. If our insurance coverage or indemnities prove to be insufficient or unavailable, it could have a material adverse effect on our business, financial condition and results of operation.
Failure to maintain effective quality control systems at our mining, processing and production facilities could have a material adverse effect on our business, financial condition and operations.
The performance, quality and safety of our products are critical to the success of our business. These factors depend significantly on the effectiveness of our quality control systems, which, in turn, depends on a number of factors, including the design of our quality control systems, our quality-training program and our ability to ensure that our employees adhere to the quality control policies and guidelines. Any significant failure or deterioration
 
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of our quality control systems could have a material adverse effect on our business, financial condition, results of operations and reputation.
Seasonal impacts may impact our ability to process sand and our customers’ demand for our products.
Because raw sand cannot be wet-processed during extremely cold temperatures, frac sand is typically washed only eight months out of the year at our surface mines in Wisconsin and our Minnesota and Ohio operations. Our inability to mine and process frac sand year round in our surface mines in Wisconsin and our Minnesota and Ohio operations results in a seasonal build-up of inventory as we excavate excess sand to build a stockpile that will feed our drying facilities during the winter months. Unexpected winter weather conditions may result in our having an insufficient sand stockpile to supply feedstock for our drying plants for the winter months and result in our being unable to satisfy customer requirements during these periods. As a result of these seasonal supply impacts, the cash flows of our North American operations can fluctuate if plant operations must remain shut down due to harsh winter weather conditions.
In addition to supply considerations, severe weather conditions may curtail our customers’ drilling activities and impair rail shipment and transportation services and, as a result, our sales volumes to customers may similarly be adversely affected. Unexpected winter weather conditions may compound these seasonal impacts, and could result in a material adverse effect on our business, financial condition and results of operation.
We may be subject to interruptions or failures in our information technology systems.
We rely on sophisticated information technology systems and infrastructure to support our business, including process control technology. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures and similar events. The failure of any of our information technology systems may cause disruptions in our operations, which could adversely affect our sales and profitability.
Our international operations expose us to risks inherent in doing business abroad . 
We conduct business in many parts of the world, including Argentina, Mexico, China, northern Europe and the Middle East. Our ability to comply with the Foreign Corrupt Practices Act (“FCPA”) is dependent on the success of our ongoing compliance program, including our ability to continue to manage our agents and business partners, and supervise, train and retain competent employees. We could be subject to sanctions and civil and criminal prosecution as well as fines and penalties in the event of a finding of a violation of the FCPA by us or any of our employees.
In addition, our international operations are subject to the various laws and regulations of those respective countries as well as various risks peculiar to each country, which may include, but are not limited to:
 
•	 	global economic conditions;	
 
•	 	political actions and requirements of national governments including trade restrictions, embargoes, seizure, detention, nationalization and expropriations of assets;	
 
•	 	interpretation of tax statutes and requirements of taxing authorities worldwide, routine examination by taxing authorities and assessment of additional taxes, penalties and/or interest;	
 
•	 	civil unrest;	
 
•	 	acts of terrorism;	
 
•	 	fluctuations and changes in currency exchange rates;	
 
•	 	the impact of inflation; and	
 
•	 	difficulty in repatriating foreign currency received in excess of the local currency requirements.	
 
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Significant impairment losses related to goodwill and intangibles could have a material adverse effect on our business, financial condition and results of operation.
We recorded approximately $161 million of goodwill and intangibles in connection with our acquisition activity in 2013. We assess the impairment of goodwill and intangibles at least annually and also whenever events or changes in circumstances indicate that goodwill may be impaired. Any significant impairment of the goodwill or intangibles from these acquisitions could have a material adverse effect on our business, financial condition and results of operations.
A terrorist attack or armed conflict could harm our business.
Terrorist activities, anti-terrorist efforts and other armed conflicts involving the United States could adversely affect the U.S. and global economies and could prevent us from meeting financial and other obligations. We could experience loss of business, delays or defaults in payments from payors or disruptions of fuel supplies and markets if pipelines, production facilities, processing plants or refineries are direct targets or indirect casualties of an act of terror or war. Such activities could reduce the overall demand for oil and gas, which, in turn, could also reduce the demand for our products and services. Terrorist activities and the threat of potential terrorist activities and any resulting economic downturn could adversely affect our results of operations, impair our ability to raise capital or otherwise adversely impact our ability to realize certain business strategies.
Risks Related to Environmental, Mining and Other Regulation
Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing and the potential for related litigation could result in increased costs and additional operating restrictions or delays for our customers, which could cause a decline in the demand for our sand-based proppants and negatively impact our business, financial condition and results of operations.
We supply proppants to oilfield service companies. Hydraulic fracturing is a widely used industry production technique that is used to stimulate production of natural gas and/or oil from dense subsurface rock formations. The process involves the injection of water, sand and chemicals, under pressure, into the formation to fracture the surrounding rock and stimulate production. The hydraulic fracturing process is typically regulated by state or local governmental authorities. However, the practice of hydraulic fracturing has become controversial in some areas and is undergoing increased scrutiny. Several federal agencies, regulatory authorities, and legislative entities are investigating the potential environmental impacts of hydraulic fracturing and whether additional regulation may be necessary. The U.S. Environmental Protection Agency (“EPA”) has asserted limited federal regulatory authority over hydraulic fracturing and has indicated it may seek to further expand its regulation of hydraulic fracturing. The Bureau of Land Management has proposed regulations applicable to hydraulic fracturing conducted on federal and Indian oil and gas leases. Congress has from time to time considered the adoption of legislation to provide for federal regulation of hydraulic fracturing. In addition, various state, local and foreign governments have implemented, or are considering, increased regulatory oversight of hydraulic fracturing through additional permitting requirements, operational restrictions, disclosure requirements and temporary or permanent bans on hydraulic fracturing in certain areas such as environmentally sensitive watersheds. For example, many states—including the major oil and gas producing states of North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, and West Virginia—have imposed disclosure requirements on hydraulic fracturing well owners and operators. Some local governments have adopted and others may seek to adopt ordinances prohibiting or regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities within their jurisdictions.
Although we do not conduct hydraulic fracturing, the adoption of new laws or regulations at the federal, state, local or foreign levels imposing reporting obligations on, or otherwise limiting or delaying, the hydraulic fracturing process could make it more difficult to complete oil and gas wells, increase our customers’ costs of compliance and doing business, and otherwise adversely affect the hydraulic fracturing services they perform, which could negatively impact demand for our sand-based proppants. In addition, heightened political, regulatory
 
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and public scrutiny of hydraulic fracturing practices, including nuisance lawsuits, could expose us or our customers to increased legal and regulatory proceedings, which could be time-consuming, costly or result in substantial legal liability or significant reputational harm. We could be directly affected by adverse litigation involving us, or indirectly affected if the cost of compliance limits the ability of our customers to operate. Such costs and scrutiny could directly or indirectly, through reduced demand for our sand-based proppants, have a material adverse effect on our business, financial condition and results of operations.
We and our customers are subject to extensive environmental and health and safety regulations that impose, and will continue to impose, significant costs and liabilities. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect our results of operations.
We are subject to a variety of federal, state and local regulatory environmental requirements affecting the mining and mineral processing industry, including among others, those relating to employee health and safety, environmental permitting and licensing, air and water emissions, greenhouse gas emissions, water pollution, waste management, remediation of soil and groundwater contamination, land use, reclamation and restoration of properties, hazardous materials and natural resources. Some environmental laws impose substantial penalties for noncompliance, and others, such as the federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), impose strict, retroactive and joint and several liability for the remediation of releases of hazardous substances. Liability under CERCLA, or similar state and local laws, may be imposed as a result of conduct that was lawful at the time it occurred or for the conduct of, or conditions caused by, prior operators or other third parties. Failure to properly handle, transport, store or dispose of hazardous materials or otherwise conduct our operations in compliance with environmental laws could expose us to liability for governmental penalties, cleanup costs and civil or criminal liability associated with releases of such materials into the environment, damages to property or natural resources and other damages, as well as potentially impair our ability to conduct our operations. In addition, future environmental laws and regulations could restrict our ability to expand our facilities or extract our mineral reserves or could require us to acquire costly equipment or to incur other significant expenses in connection with our business. These laws, regulations and permits have had, and will continue to have, a significant effect on our business.
We may not be able to comply with any new laws and regulations that are adopted, and any new laws and regulations could have a material adverse effect on our operating results by requiring us to modify our operations or equipment or shut down some or all of our facilities. Additionally, our customers may not be able to comply with any new laws and regulations, which could cause our customers to curtail or cease operations. We cannot at this time reasonably estimate our costs of compliance or the timing of any costs associated with any new laws and regulations, or any material adverse effect that any new standards will have on our customers and, consequently, on our operations.
We are subject to the Federal Mine Safety and Health Act of 1977, which imposes stringent health and safety standards on numerous aspects of our operations.
Our operations are subject to the Federal Mine Safety and Health Act of 1977, as amended by the Mine Improvement and New Emergency Response Act of 2006, which imposes stringent health and safety standards on numerous aspects of mineral extraction and processing operations, including the training of personnel, operating procedures, operating equipment and other matters. Our failure to comply with such standards, or changes in such standards or the interpretation or enforcement thereof, could have a material adverse effect on our business, financial condition and results of operation or otherwise impose significant restrictions on our ability to conduct mineral extraction and processing operations.
 
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We and our customers are subject to other extensive regulations, including licensing, plant and wildlife protection and reclamation regulation, that impose, and will continue to impose, significant costs and liabilities. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect our results of operations.
In addition to the regulatory matters described above, we and our customers are subject to extensive governmental regulation on matters such as permitting and licensing requirements, plant and wildlife protection, wetlands protection, reclamation and restoration of mining properties after mining is completed. Our future success depends, among other things, on the quantity of our mineral reserves and our ability to extract these reserves profitably, and our customers being able to operate their businesses as they currently do.
In order to obtain permits and renewals of permits in the future, we may be required to prepare and present data to governmental authorities pertaining to the impact that any proposed exploration or production activities, individually or in the aggregate, may have on the environment. Certain approval procedures may require preparation of archaeological surveys, endangered species studies and other studies to assess the environmental impact of new sites or the expansion of existing sites. Compliance with these regulatory requirements is expensive and significantly lengthens the time needed to develop a site. Finally, obtaining or renewing required permits is sometimes delayed or prevented due to community opposition, including nuisance lawsuits, and other factors beyond our control. The denial of a permit essential to our operations or the imposition of conditions with which it is not practicable or feasible to comply could impair or prevent our ability to develop or expand a site. New legal requirements, including those related to the protection of the environment, could be adopted that could materially adversely affect our mining operations (including our ability to extract mineral reserves), our cost structure or our customers’ ability to use our sand-based proppants. Such current or future regulations could have a material adverse effect on our business and we may not be able to obtain or renew permits in the future.
Our inability to acquire, maintain or renew financial assurances related to the reclamation and restoration of mining property could have a material adverse effect on our business, financial condition and results of operations.
We are generally obligated to restore property in accordance with regulatory standards and our approved reclamation plan after it has been mined. We are required under federal, state and local laws to maintain financial assurances, such as surety bonds, to secure such obligations. The inability to acquire, maintain or renew such assurances, as required by federal, state and local laws, could subject us to fines and penalties as well as the revocation of our operating permits. Such inability could result from a variety of factors, including:
 
•	 	the lack of availability, higher expense or unreasonable terms of such financial assurances;	
 
•	 	the ability of current and future financial assurance counterparties to increase required collateral; and	
 
•	 	the exercise by financial assurance counterparties of any rights to refuse to renew the financial assurance instruments.	
Our inability to acquire, maintain or renew necessary financial assurances related to the reclamation and restoration of mining property could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to This Offering and Ownership of Our Common Stock
The requirements of being a public company, including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
As a public company, we will need to comply with new laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the
 
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requirements of the NYSE, with which we are not required to comply as a private company. Complying with these statutes, regulations and requirements will occupy a significant amount of time of our board of directors and management and will significantly increase our costs and expenses. We will need to:
 
•	 	institute a more comprehensive compliance function;	
 
•	 	comply with rules promulgated by the NYSE;	
 
•	 	continue to prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;	
 
•	 	establish new internal policies, such as those relating to insider trading; and	
 
•	 	involve and retain to a greater degree outside counsel and accountants in the above activities.	
Furthermore, while we generally must comply with Section 404 of the Sarbanes Oxley Act of 2002 for our second annual report on Form 10-K, which will be for our year ending December 31, 2015, we will not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until the later of our second annual report on Form 10-K or our first annual report subsequent to our ceasing to be an “emerging growth company” within the meaning of Section 2(a)(19) of the Securities Act. Accordingly, we may not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until as late as our annual report for the year ending December 31, 2019. Once it is required to do so, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, operated or reviewed. Compliance with these requirements may strain our resources, increase our costs and distract management; and we may be unable to comply with these requirements in a timely or cost-effective manner.
In addition, we expect that being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
There is no existing market for our common stock, and we do not know if one will develop to provide you with adequate liquidity to sell our common stock at prices equal to or greater than the price you paid in this offering.
Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on the stock exchange on which we list our common stock or otherwise or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy.
The concentration of our capital stock ownership among our largest stockholders and their affiliates will limit your ability to influence corporate matters.
Upon completion of this offering (assuming no exercise of the underwriters’ option to purchase additional shares), the AS Group will indirectly own approximately         % of our outstanding common stock. Consequently, the AS Group will continue to have significant influence over all matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. This concentration of ownership will limit your ability to influence corporate matters, and as a result, actions may be taken that you may not view as beneficial.
Furthermore, conflicts of interest could arise in the future between us, on the one hand, and American Securities and its affiliates, including its portfolio companies, on the other hand, concerning among other things,
 
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potential competitive business activities or business opportunities. American Securities is a private equity firm in the business of making investments in entities in a variety of industries. As a result, American Securities’ existing and future portfolio companies which it controls may compete with us for investment or business opportunities. These conflicts of interest may not be resolved in our favor.
We have also renounced our interest in certain business opportunities. See “— Our amended and restated certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities, which could adversely affect our business or prospects.”
The initial public offering price of our common stock may not be indicative of the market price of our common stock after this offering. In addition, an active, liquid and orderly trading market for our common stock may not develop or be maintained, and our stock price may be volatile.
Prior to this offering, our common stock was not traded on any market. An active, liquid and orderly trading market for our common stock may not develop or be maintained after this offering. Active, liquid and orderly trading markets usually result in less price volatility and more efficiency in carrying out investors’ purchase and sale orders. The market price of our common stock could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our common stock, you could lose a substantial part or all of your investment in our common stock. The initial public offering price was determined by negotiations between us, the selling stockholder and representatives of the underwriters, based on numerous factors which we discuss in “Underwriting,” and may not be indicative of the market price of our common stock after this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price paid by you in this offering.
The following factors could affect our stock price:
 
•	 	our operating and financial performance;	
 
•	 	quarterly variations in the rate of growth of our financial indicators, such as net income per share, net income and revenues;	
 
•	 	the public reaction to our press releases, our other public announcements and our filings with the SEC;	
 
•	 	strategic actions by our competitors;	
 
•	 	our failure to meet revenue or earnings estimates by research analysts or other investors;	
 
•	 	changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;	
 
•	 	speculation in the press or investment community;	
 
•	 	the failure of research analysts to cover our common stock;	
 
•	 	sales of our common stock by us, the selling stockholders or other stockholders, or the perception that such sales may occur;	
 
•	 	changes in accounting principles, policies, guidance, interpretations or standards;	
 
•	 	additions or departures of key management personnel;	
 
•	 	actions by our stockholders;	
 
•	 	general market conditions, including fluctuations in commodity prices, sand-based proppants or industrial and recreational sand-based products;	
 
•	 	domestic and international economic, legal and regulatory factors unrelated to our performance; and	
 
•	 	the realization of any risks describes under this “Risk Factors” section.	
 
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The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and harm our business, operating results and financial condition.
Our amended and restated certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities.
Our amended and restated certificate of incorporation provides for the allocation of certain corporate opportunities between us and American Securities. Under these provisions, neither American Securities, its affiliates and subsidiaries, nor any of their officers, directors, agents, stockholders, members or partners will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate, other than opportunities related to hydraulic fracturing proppants. For instance, a director of our company who also serves as a director, officer or employee of American Securities or any of its subsidiaries or affiliates may pursue certain acquisitions or other opportunities that may be complementary to our business and, as a result, such acquisition or other opportunities may not be available to us. These potential conflicts of interest could have a material adverse effect on our business, financial condition and results of operations if attractive corporate opportunities are allocated by American Securities to itself or its subsidiaries or affiliates instead of to us. The terms of our certificate of incorporation are more fully described in “Description of Capital Stock.”
Our amended and restated certificate of incorporation and amended and restated bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.
Our amended and restated certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us. In addition, some provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:
 
•	 	a classified board of directors;	
 
•	 	limitations on the removal of directors;	
 
•	 	limitations on the ability of our stockholders to call special meetings;	
 
•	 	advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders;	
 
•	 	providing that the board of directors is expressly authorized to adopt, or to alter or repeal our bylaws; and	
 
•	 	establishing advance notice and certain information requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.	
Investors in this offering will experience immediate and substantial dilution of $         per share.
Based on an assumed initial public offering price of $         per share (the midpoint of the price range set forth on the cover of this prospectus), purchasers of our common stock in this offering will experience an immediate and substantial dilution of $         per share in the net tangible book value per share of common stock from the initial public offering price, and our as adjusted net tangible book value as of June 30, 2014 would be $         per share. This dilution is due in large part to earlier investors having paid substantially less than the initial public offering price when they purchased their shares. Please see “Dilution.”
 
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We do not intend to pay dividends on our common stock, and our debt agreements place certain restrictions on our ability to do so. Consequently, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.
We do not plan to declare dividends on shares of our common stock in the foreseeable future. Additionally, our existing revolving credit facility and our term loan both place certain restrictions on our ability to pay cash dividends. Consequently, unless we revise our dividend policy, your only opportunity to achieve a return on your investment in us will be if you sell your common stock at a price greater than you paid for it. There is no guarantee that the price of our common stock that will prevail in the market will ever exceed the price that you pay in this offering.
Future sales of our common stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.
We may sell additional shares of common stock in subsequent public offerings. We may also issue additional shares of common stock or convertible securities. After the completion of this offering, we will have outstanding              shares of common stock. This number includes              shares that the selling stockholders are selling in this offering and              shares that the selling stockholders may sell in this offering if the underwriters’ option to purchase additional shares is fully exercised, which may be resold immediately in the public market. Following the completion of this offering, assuming no exercise of the underwriters’ option to purchase additional shares, the AS Group will indirectly own              shares of our common stock, or approximately     % of our total outstanding shares, all of which are restricted from immediate resale under the federal securities laws and are subject to the lock-up agreements with the underwriters described in “Underwriting,” but may be sold into the market in the future. The Stockholders’ Agreement of the Company will be amended to provide for certain revised registration rights which will require us to effect the registration of shares in certain circumstances. Please see “Shares Eligible for Future Sale” and “Certain Relationships and Related Party Transactions—Stockholders’ Agreement.”
In connection with this offering, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of          shares of our common stock issued or reserved for issuance under our equity incentive plans. Subject to the satisfaction of vesting conditions, the expiration of lock-up agreements and the requirements of Rule 144, shares registered under the registration statement on Form S-8 will be available for resale immediately in the public market without restriction.
We cannot predict the size of future issuances of our common stock or securities convertible into common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our common stock.
The underwriters of this offering may waive or release parties to the lock-up agreements entered into in connection with this offering, which could adversely affect the price of our common stock.
We, ASP FML, all of our directors and executive officers and certain of our principal stockholders and the selling stockholders will enter into lock-up agreements with respect to their common stock, pursuant to which they are subject to certain resale restrictions for a period of 180 days following the effectiveness date of the registration statement of which this prospectus forms a part. At least two of the representatives of the underwriters, consisting of Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and Barclays Capital Inc., may, at any time and without notice, release all or any portion of the common stock subject to the foregoing lock-up agreements. If the restrictions under the lock-up agreements are waived, then common stock will be available for sale into the public markets, which could cause the market price of our common stock to decline and impair our ability to raise capital.
 
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For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.
We are classified as an “emerging growth company” under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things, (1) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, (2) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (3) provide certain disclosure regarding executive compensation required of larger public companies or (4) hold nonbinding advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.0 billion of revenues in a fiscal year, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.
We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
Our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the common stock.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock or if our operating results do not meet their expectations, our stock price could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrades our common stock or if our operating results do not meet their expectations, our stock price could decline.
Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our amended and restated certificate of incorporation will provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (the “DGCL”), our amended and restated certificate of incorporation or our bylaws, or (iv) any action asserting a claim against us that is governed by the internal affairs
 
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doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our amended and restated certificate of incorporation described in the preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.
 
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 FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:
 
•	 	the level of activity in the oil and gas industries;	
 
•	 	increasing costs or a lack of dependability or availability of transportation services or infrastructure and geographic shifts in demand;	
 
•	 	our rights and ability to mine our properties and our renewal or receipt of the required permits and approvals from governmental authorities and other third parties;	
 
•	 	decreased demand for sand-based proppants or the development of either effective alternative proppants or new processes to replace hydraulic fracturing;	
 
•	 	fluctuations in market based pricing;	
 
•	 	our ability to complete greenfield development or expansion projects, or our ability to realize the benefits if we do complete them;	
 
•	 	our ability to protect our intellectual property rights;	
 
•	 	our ability to successfully develop and market Propel SSP;	
 
•	 	our ability to succeed in competitive markets;	
 
•	 	loss of, or reduction in, business from our largest customers;	
 
•	 	our exposure to the credit risk of our customers and any potential material nonpayment or nonperformance by our customers;	
 
•	 	fluctuations in demand for industrial and recreational sand;	
 
•	 	operating risks that are beyond our control, such as changes in the price and availability of transportation, natural gas or electricity; unusual or unexpected geological formations or pressures; cave-ins, pit wall failures or rock falls; or unanticipated ground, grade or water conditions;	
 
•	 	our dependence on our Wedron Silica sand-mining facility for a significant portion of our sales;	
 
•	 	the availability of raw materials to support our manufacturing of resin coated proppants;	
 
•	 	diminished access to water;	
 
•	 	challenges to our title to our mineral properties and water rights;	
 
•	 	our ability to successfully complete acquisitions or integrate acquired businesses;	
 
•	 	our ability to make capital expenditures to maintain, develop and increase our asset base and our ability to obtain needed capital or financing on satisfactory terms;	
 
•	 	substantial indebtedness and pension obligations;	
 
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•	 	restrictions imposed by our indebtedness on our current and future operations;	
 
•	 	the accuracy of our estimates of our mineral reserves;	
 
•	 	substantial costs of mine closures;	
 
•	 	a shortage of skilled labor and rising labor costs in the mining industry;	
 
•	 	increases in the prices of, or interruptions in the supply of, natural gas and electricity, or any other energy sources;	
 
•	 	our ability to attract and retain key personnel;	
 
•	 	our ability to maintain satisfactory labor relations;	
 
•	 	silica-related health issues and corresponding litigation;	
 
•	 	our ability to maintain effective quality control systems at our mining, processing and production facilities;	
 
•	 	fluctuations in our sales and results of operations due to seasonality and other factors;	
 
•	 	interruptions or failures in our information technology systems;	
 
•	 	failure to comply with the FCPA;	
 
•	 	significant impairment losses related to goodwill in relation to our acquisition of assets from FTSI;	
 
•	 	the impact of a terrorist attack or armed conflict;	
 
•	 	our failure to maintain adequate internal controls;	
 
•	 	extensive and evolving environmental, mining, health and safety, licensing, reclamation and other regulation (and changes in their enforcement or interpretation);	
 
•	 	our ability to acquire, maintain or renew financial assurances related to the reclamation and restoration of mining property; and	
 
•	 	other factors disclosed in the section entitled “Risk Factors” and elsewhere in this prospectus.	
We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this prospectus are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
 
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 USE OF PROCEEDS
The common stock being offered by this prospectus, including the common stock offered if the underwriters’ option to purchase additional shares is exercised in full, is solely for the account of the selling stockholders. We will not receive any proceeds from the sale of common stock by the selling stockholders. We will pay all expenses related to this offering, other than underwriting discounts and commissions related to the shares sold by the selling stockholders.
The selling stockholders have granted to the underwriters a 30-day over-allotment option to purchase up to                      additional shares of common stock. The exercise of this underwriters’ over-allotment option will not affect the total number of shares outstanding.
 
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 STOCK SPLIT
On             , 2014, we amended and restated our Second Amended and Restated Certificate of Incorporation to effect a stock split on a          for          basis to be effected prior to the effective date of the registration statement of which this prospectus forms a part. The stock split will be effected simultaneously for all our then-existing common stock and common stock options and the exchange ratio will be the same for all of our shares of issued and outstanding common stock. The stock split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests in us. Unless otherwise indicated, information presented in this prospectus is adjusted to reflect the          for          stock split.
 DIVIDEND POLICY
We do not anticipate declaring or paying any cash dividends to holders of our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the growth of our business. Our future dividend policy is within the discretion of our board of directors and will depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, statutory restrictions on our ability to pay dividends and other factors our board of directors may deem relevant. In addition, our revolving credit facility and term loans place restrictions on our ability to pay cash dividends.
 
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 DILUTION
Purchasers of the common stock in this offering will experience immediate and substantial dilution in the net tangible book value per share of the common stock. Assuming an initial public offering price of $         per share (which is the midpoint of the price range set forth on the cover page of this prospectus), after giving effect to the sale of the shares in this offering and after deducting estimated underwriting discounts and commissions and estimated offering expenses, our as adjusted net tangible book value as of June 30, 2014 would have been approximately $         million, or $         per share. This represents an immediate increase in the net tangible book value of $         per share to our existing stockholders and an immediate dilution (i.e., the difference between the offering price and the as adjusted net tangible book value after this offering) to new investors purchasing shares in this offering of $         per share. The following table illustrates the per share dilution to new investors purchasing shares in this offering:

Assumed initial public offering price per share	  				  	$	            	  	
Net tangible book value per share as of June 30, 2014	  	$	            	  	  				
Increase in net tangible book value per share attributable to new investors in this offering	  				  				
	  	 	 	 	  				
As adjusted net tangible book value per share after giving effect to this offering	  				  				
	  				  	 	 	 	
Dilution in net tangible book value per share to new investors in this offering	  				  	$	            	  	
	  	 	 	 	  	 	 	 	
A $1.00 increase (decrease) in the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our as adjusted net tangible book value per share after the offering by $         and increase (decrease) the dilution to new investors in this offering by $         per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The following table summarizes, on an as adjusted basis as of June 30, 2014, the total number of shares of common stock owned by existing stockholders and to be owned by new investors, the total consideration paid, and the average price per share paid by our existing stockholders and to be paid by new investors in this offering at our initial public offering price of $         per share, calculated before deduction of estimated underwriting discounts and commissions:

 	  	Shares Purchased	 	 	Total Consideration	 	 	Average
Price
Per Share	 	
 	  	Number	  	Percent	 	 	Amount
(in  thousands)	 	  	Percent	 	 			
Existing stockholders	  		  	 	    	% 	 	$	            	  	  	 	    	% 	 	$	            	  	
New investors in this offering	  		  				 				  				 				
Total	  		  	 	    	% 	 	$	            	  	  	 	    	% 	 	$	            	  	
The above tables and discussion are based on the number of shares of our common stock to be outstanding as of the effective date of this registration statement. The table does not reflect 519,113 shares (             shares after giving effect to our proposed stock split) of common stock issuable upon the exercise of stock options outstanding as of June 30, 2014 under our existing equity incentive plan or             shares of common stock reserved for issuance under our new 2014 Long-Term Incentive Plan, which we plan to adopt in connection with this offering. If the underwriters’ option to purchase additional shares is exercised in full, the number of shares held by new investors will be increased to             , or approximately     % of the total number of shares of common stock.
 
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 SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table sets forth our selected historical consolidated financial and operating data as of the dates and for the periods indicated. We have derived the selected historical consolidated financial and operating data as of and for the years ended December 31, 2009, 2010 and 2011 from our unaudited consolidated financial statements, which are not included in this prospectus. We have derived the selected historical consolidated financial and operating data as of, and for the years ended December 31, 2012 and 2013 from our audited consolidated financial statements, which are included elsewhere in this prospectus. We have derived the selected historical consolidated financial and operating data for the six months ended June 30, 2013 and as of and for the six months ended June 30, 2014 from our unaudited condensed consolidated financial statements that are included elsewhere in this prospectus. We have derived the financial data as of June 30, 2013 from our unaudited condensed consolidated financial statements that are not included in this prospectus. Our unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in our opinion, include all adjustments, consisting of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position, results of operations and cash flows for such periods. Historical results are not necessarily indicative of future results.
The selected historical consolidated data presented below should be read in conjunction with “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes and other financial data included elsewhere in this prospectus.

 	 	Year Ended December 31,	 	 	Six Months Ended
June 30,	 	
 	 	2009	 	 	2010	 	 	2011	 	 	2012	 	 	2013	 	 	2013	 	 	2014	 	
 	 	(In thousands)	 	
Statement of Income Data:	 				 				 				 				 				 				 				
Revenue	 	$	398,660	  	 	$	667,089	  	 	$	909,742	  	 	$	885,190	  	 	$	988,386	  	 	$	448,241	  	 	$	629,223	  	
Income from operations	 	 	78,711	  	 	 	173,034	  	 	 	296,903	  	 	 	278,426	  	 	 	227,956	  	 	 	125,621	  	 	 	146,246	  	
Income before provision for income taxes	 	 	69,526	  	 	 	146,602	  	 	 	217,855	  	 	 	219,842	  	 	 	149,876	  	 	 	98,510	  	 	 	111,227	  	
Net income	 	 	49,506	  	 	 	100,494	  	 	 	146,098	  	 	 	149,473	  	 	 	104,657	  	 	 	68,816	  	 	 	78,815	  	
Net income attributable to FML Holdings, Inc. 	 	 	48,901	  	 	 	99,454	  	 	 	145,183	  	 	 	148,886	  	 	 	103,961	  	 	 	68,564	  	 	 	78,460	  	
Earnings per share:	 				 				 				 				 				 				 				
Basic(1)	 	 	n/a	  	 	 	n/a	  	 	$	32.28	  	 	$	32.49	  	 	$	22.66	  	 	$	14.95	  	 	$	17.04	  	
Diluted(1)	 	 	n/a	  	 	 	n/a	  	 	$	30.70	  	 	$	30.80	  	 	$	21.47	  	 	$	14.17	  	 	$	16.11	  	
Statement of Cash Flows Data:	 				 				 				 				 				 				 				
Net cash provided by (used in):	 				 				 				 				 				 				 				
Operating activities	 	$	96,566	  	 	$	75,722	  	 	$	167,861	  	 	$	186,433	  	 	$	174,635	  	 	$	93,657	  	 	$	49,982	  	
Investing activities	 	 	(13,156	) 	 	 	(45,165	) 	 	 	(102,572	) 	 	 	(107,366	) 	 	 	(579,517	) 	 	 	(161,575	) 	 	 	(60,613	) 	
Financing activities	 	 	(82,076	) 	 	 	3,783	  	 	 	(49,202	) 	 	 	(119,070	) 	 	 	410,515	  	 	 	70,901	  	 	 	5,347	  	
Other Financial Data:	 				 				 				 				 				 				 				
Capital expenditures	 	$	20,158	  	 	$	41,928	  	 	$	77,827	  	 	$	109,016	  	 	$	111,514	  	 	$	41,276	  	 	$	61,827	  	
EBITDA(2)	 	 	96,522	  	 	 	192,820	  	 	 	303,227	  	 	 	303,659	  	 	 	248,877	  	 	 	140,352	  	 	 	172,872	  	
Adjusted EBITDA(2)	 	 	102,854	  	 	 	239,144	  	 	 	335,110	  	 	 	318,650	  	 	 	292,584	  	 	 	146,330	  	 	 	179,984	  	
Adjusted EBITDA margin(2)	 	 	26	% 	 	 	36	% 	 	 	37	% 	 	 	36	% 	 	 	30	% 	 	 	33	% 	 	 	29	% 	
Operating Data:	 				 				 				 				 				 				 				
Proppant Solutions:	 				 				 				 				 				 				 				
Total tons sold	 	 	1,730	  	 	 	2,609	  	 	 	3,402	  	 	 	3,765	  	 	 	5,117	  	 	 	2,134	  	 	 	3,352	  	
Revenue	 	$	325,542	  	 	$	580,117	  	 	$	807,849	  	 	$	757,851	  	 	$	856,212	  	 	$	378,286	  	 	$	567,185	  	
Average selling price (per ton)	 	$	188	  	 	$	222	  	 	$	237	  	 	$	201	  	 	$	167	  	 	$	177	  	 	$	169	  	
Segment contribution margin(3)	 	 	n/a	  	 	 	248,187	  	 	 	339,050	  	 	 	316,251	  	 	 	296,320	  	 	 	150,267	  	 	 	192,928	  	
Industrial & Recreational Products:	 				 				 				 				 				 				 				
Total tons sold	 	 	1,918	  	 	 	2,228	  	 	 	2,296	  	 	 	2,375	  	 	 	2,462	  	 	 	1,261	  	 	 	1,193	  	
Revenue	 	$	73,118	  	 	$	86,972	  	 	$	101,893	  	 	$	127,339	  	 	$	132,174	  	 	$	69,955	  	 	$	62,038	  	
Average selling price (per ton)	 	$	38	  	 	$	39	  	 	$	44	  	 	$	53	  	 	$	54	  	 	$	55	  	 	$	52	  	
Segment contribution margin(3)	 	 	n/a	  	 	 	20,904	  	 	 	29,142	  	 	 	37,837	  	 	 	34,765	  	 	 	17,002	  	 	 	16,835	  	
Balance Sheet Data (at period end):	 				 				 				 				 				 				 				
Cash and cash equivalents	 	$	3,841	  	 	$	38,788	  	 	$	51,765	  	 	$	11,866	  	 	$	17,815	  	 	$	14,934	  	 	$	12,514	  	
Total assets	 	 	340,521	  	 	 	522,179	  	 	 	646,176	  	 	 	679,601	  	 	 	1,283,431	  	 	 	860,400	  	 	 	1,375,488	  	
Long term debt (including current portion)	 	 	235,409	  	 	 	709,925	  	 	 	947,447	  	 	 	831,195	  	 	 	1,262,146	  	 	 	906,010	  	 	 	1,264,972	  	
Total liabilities	 	 	314,458	  	 	 	857,475	  	 	 	1,094,168	  	 	 	965,529	  	 	 	1,448,789	  	 	 	1,073,788	  	 	 	1,457,461	  	
Total equity (deficit)(4)	 	 	26,063	  	 	 	(335,296	) 	 	 	(447,992	) 	 	 	(285,928	) 	 	 	(165,358	) 	 	 	(213,338	) 	 	 	(81,973	) 	
 
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(1)	Basic and diluted earnings per share are not disclosed for 2009 and 2010 since they are not considered meaningful for the periods prior to the AS Group Acquisition.	
(2)	EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. For a definition of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin and a reconciliation to net income, please see “—Summary Historical Consolidated Financial and Operating Data—Non-GAAP Financial Measures” beginning on page 10.	
(3)	Segment contribution margin is not available for the year ended December 31, 2009.	
(4)	The reduction in equity in 2010 resulted from our purchase of treasury stock in connection with the AS Group Acquisition.	
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly in the section entitled “Risk Factors.”
Overview
We are one of the world’s largest providers of sand-based proppant solutions and for over 30 years have been a pioneer in the development of high performance proppants used by oilfield service and E&P companies to enhance the productivity of their oil and gas wells. Fairmount Santrol offers the broadest range of proppants available in the market today, including high quality sand and a spectrum of resin coated products, all of which exceed API specifications. Additionally, for more than 120 years, we and our predecessor companies have provided high quality sand-based products, strong technical leadership and applications knowledge to end users in the I&R markets. We believe our two primary market segments are complementary. Our ability to sell to a wide range of customers across multiple end markets allows us to maximize the economic recovery of our reserve base.
We have one of the largest sand reserves and processing asset bases in the industry, including, as of December 31, 2013, 798.2 million tons of proven mineral reserves, 11 active sand processing facilities with 12.3 million tons of annual sand processing capacity, a resin manufacturing facility and 11 coating facilities with 2.4 million tons of annual coating capacity. From 2009 to 2013, we expanded our annual raw frac sand and coating capacities by approximately 6.0 million and 1.5 million tons, respectively, through a combination of organic growth and acquisitions. Our coating facilities include operations in Mexico, Denmark and China, through which we serve international oil and gas markets.
We are capable of Class I railroad deliveries to each of North America’s major oil and gas producing basins and we also have the flexibility to ship our product via barge and trucks to reach our customers in certain basins. We operate an integrated logistics platform consisting of 46 proppant distribution terminals with significant associated storage, 32 of which exclusively handle our products. Since 2011, we have developed or acquired 24 distribution terminals, providing significant additional annual transloading capacity. We also service I&R end markets through seven additional terminals. As of August 15, 2014, we had a fleet of over 8,500 railcars and expect this fleet to grow to over 13,000 through 2016. By the end of the third quarter of 2014, we also expect to have expanded our unit train capabilities to three production facilities and three in-basin terminals, which we expect to significantly reduce freight costs and improve cycle times for our railcar fleet.
As one of the nation’s longest continuously operating mining organizations, we have developed a strong commitment to environmental stewardship and to the three pillars of Sustainable Development: People, Planet and Prosperity. Our strong commitment to safety is reflected in the health and safety of our employees and is illustrated by achieving a lost-time incident rate that is less than half the industry average. From 2011 through June 30, 2014, our employees have demonstrated our commitment to our communities by donating approximately 36,000 hours of company-paid volunteer time, as well as significant personal volunteer time, into the communities in which we live and operate. We are focused on environmental stewardship, and ten of our facilities now generate zero waste to landfills. Additionally, we have successfully executed annual initiatives to reduce our carbon emissions and have planted over 225,000 trees since 2011 in order to offset our Tier I and Tier II carbon emissions. We believe adhering to sustainable development principles is not only the right thing to do, but also results in a higher level of engagement and commitment from our employees, better relationships
 
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with our communities and, as a result, a stronger base from which to pursue profitable growth over the long-term. Abiding by these guiding principles, our corporate motto is “Do Good. Do Well.”
Our period-to-period results will be materially impacted by, among other market factors, the volumes of products we sell, the relative segment mix comprising our revenues, the mix of products we sell within each segment, prevailing market prices for the products we offer, transportation costs, operational cost factors, and the resulting margins we earn on products sold. The relatively higher per unit margins generated within our Proppant Solutions segment largely reflect the demand for their specific product performance characteristics and qualities, the higher investments required to develop and distribute these products, and the more constricted and geographically limited product supply available to these markets. Our average I&R selling prices trend below those generated within our Proppant Solutions segment, reflecting local or regional supply and demand dynamics and the relative economics of the I&R end markets.
For the year ended December 31, 2013, we sold over 7.5 million tons, generating approximately $988 million of revenues, $293 million of Adjusted EBITDA and $105 million of net income (see our discussion of the use of non-GAAP measures of profitability on page 10 of this prospectus).
Recent Trends and Outlook
Recent trends driving demand for our proppants and commercial silica include:
 
•	 	Increasing activity in the oil and gas market . The growth in the use of horizontal drilling utilizing hydraulic fracturing as a means to extract hydrocarbons from shale formations has resulted in increases in the number of new wells drilled and completed in North America. This increased completion activity has contributed to the growth in the demand for proppants, and we expect this trend to continue.	
 
•	 	Evolving completion techniques that favor increased proppant use . E&P companies, in partnership with oilfield service companies, continue to refine their well design and hydraulic fracturing techniques to maximize hydrocarbon recovery from each well. These techniques vary based on formation and well geology, but some of the more pervasive recent trends include longer lateral drilling lengths coupled with an increased number of hydraulic fracturing stages per well. E&P and oilfield service companies have also been increasing the amount of proppant used per frac stage and, together, these techniques have greatly increased the volume of proppant used in the completion of each well, which we expect will continue to drive growth in our volumes sold.	
 
•	 	Shift in drilling activity and demand mix . Following declines in the price of natural gas in late 2011 and early 2012, E&P companies generally moved their primary operating activity away from dry gas-focused regions like the Haynesville and Barnett Shales towards liquids-rich plays like the Eagle Ford Shale and the Williston and Permian Basins. Rigs drilling for natural gas in the U.S. declined from 64% of the total rig count in the beginning of 2010 to 21% by the end of 2013. This shift away from natural gas production negatively impacted the demand for certain types of proppant products. During this period, sales of our resin coated proppants used in deep, high pressure wells in the Haynesville Shale declined significantly. However, also during this period, E&P companies increased their drilling activity directed towards oil and natural gas liquids rich acreage. In addition, many E&P companies found improved well production results as a result of using greater quantities of proppant per well. As a consequence of these trends, we experienced a significant increase in demand for raw frac sand, which generally carries a lower margin per ton and a lower margin as a percentage of selling price than our resin coated products. Accordingly, a shift in sales mix toward raw frac sand will reduce our overall margin and results of operations.	
 
•	 	Increased demand for in-basin delivery of proppant . From 2010 to 2012, when demand for proppant significantly outstripped available supply and distribution infrastructure across the industry was largely underdeveloped, a larger portion of our volumes was provided to customers at our processing site (i.e., our customers would arrange for the transportation and storage logistics of our products). Increasingly,	
 
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 	customers seek to outsource proppant logistics and obtain in-basin product delivery. In 2013, approximately 80% of our proppant volume was sold in-basin at one of our distribution terminals, compared to approximately 65% in 2012. While the resulting profit per ton is roughly in-line across the industry for minegate or delivered proppant, we believe this shift will favor the larger, integrated providers and have a favorable impact on our demand.	
 
•	 	Continued stable demand in industrial end markets . Sales in our I&R Products segment are driven by macroeconomic factors such as housing starts, light vehicle sales, repair and remodel activity and industrial production. To the extent these demand drivers continue on their current trends, we expect to experience relatively stable demand for commercial silica.	
We expect many of the recent trends in the oil and gas industry to continue to drive increased proppant demand into the future. In its 2014 report, The Freedonia Group’s research indicates that total proppant volumes in the U.S. increased at an annual rate of approximately 26% since 2008. Looking forward, The Freedonia Group projects that raw frac sand sales will increase at an annual growth rate of approximately 9% between 2013 and 2018, and that resin coated sand volumes will increase at a nearly 11% rate over the same period.
Acquisitions
Our 2013 results may not be comparable to past or future results because of the impact of these acquisitions. We completed three acquisitions in 2013, each of which is described below.
In April 2013, we acquired Self-Suspending Proppant LLC (“SSP LLC”) for $55 million. Under the term of the acquisition agreement, we are required to make contingent payments based on our sales of Propel SSP or products incorporating similar proprietary technology during a five-year period commencing on October 1, 2015. Pursuant to the contingent payment provisions, we are generally required to pay the former owner of SSP LLC a portion of the cumulative product margin we earn from such sales during the pay-out period, less certain adjustments. The contingent obligation will be recorded as an increase in acquired assets and a corresponding contingent liability, and the payments are required to be made on an annual basis, within 60 days of each anniversary of the commencement of the pay-out period. In the event that the contingent payments for the first and second annual pay-out periods do not exceed $45 million (less certain adjustments) and we do not make up any shortfall in such minimum payment amount, the former owner of SSP LLC will have the right to reacquire a 51% interest in SSP LLC. In the event that the aggregate amount of all contingent payments does not exceed $195 million (less certain adjustments) and we do not make up any shortfall in such minimum payment amount, the former owner of SSP LLC will have the right to reacquire an 80% interest in SSP LLC. As the owner of SSP LLC, we own intellectual property related to providing proppants with enhanced performance attributes through proprietary coating technology.
In June 2013, we acquired Great Plains Sands, LLC (“Great Plains”) located in Minnesota for total consideration of $74 million including $10 million of contingent consideration. This transaction provided us with approximately 15.3 million tons of API-spec Northern White frac sand reserves and 700,000 tons of annual production capacity.
In September 2013, we purchased certain assets and assumed certain liabilities from FTSI and its affiliates. We acquired 353 million tons of sand reserves; 2.7 million tons per year of frac sand production capacity; 0.6 million tons per year of resin coating capacity; and logistics assets consisting of 13 terminals and 2,798 railcars. We recorded the acquired assets and assumed liabilities at fair value on the date of the acquisition, including $95.5 million of sand reserves, $127.7 million of property, plant and equipment, $26.0 million of inventory, $50.1 million of goodwill and other intangibles, and $2.3 million of assumed liabilities. We also have an option to purchase 33 million tons of API-spec Northern White sand reserves and an additional 1.0 million tons per year of frac sand production capacity. In connection with this acquisition, we also entered into a ten-year supply agreement with FTSI (“FTSI Supply Agreement”). The fair value of the FTSI Supply Agreement was
 
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determined to be $50.7 million. The total consideration for the FTSI transaction of $350 million, including $2.3 million of assumed liabilities, was financed with long-term debt.
After completing the FTSI transaction, we integrated the acquired production facilities, terminals and railcars into our existing network, such that we do not distinguish assets and operations acquired from FTSI from our legacy assets and operations when optimizing the efficiency of product delivery to our customers. The operations acquired from FTSI are being operated and managed similar to our legacy operations. Volumes sold to FTSI under the FTSI Supply Agreement are being supplied from both legacy and acquired assets as the capacity that we acquired from FTSI was not adequate to satisfy the contracted volumes. Additionally, volumes sold to other customers are being supplied from both legacy assets and assets acquired from FTSI.
How We Generate Our Sales
We derive our sales by mining, processing and transporting sand-based proppants and silica sand products that our customers purchase for use in a wide variety of applications. We maintain long-term contracts with many of the largest North American hydraulic fracturing service providers, and currently have approximately 80 customers for our proppant products. Our collaborative approach to product development and innovation, reputation for high-quality products and expansive logistics network have solidified us as a critical component within our customers’ supply chains. Certain of our top customer relationships date back over 30 years.
In our Proppant Solutions business, we sell over 80% of our volume through our network of terminals at selling prices that are set by local market dynamics. The remaining volume in the Proppant Solutions business is sold to customers directly from our production facilities. The average selling prices for products sold through our terminals is higher than the average selling prices for comparable product sold from our production facilities due to costs incurred to handle and transport the products from the production facilities to the terminals. Generally, logistics costs can comprise 70-80% of the delivered cost of Northern White frac sand, depending on the basin into which the product is delivered. Due to the closer proximity of distribution terminals to our production facility, the amount of logistics costs included in the total delivered cost of our Texas Gold brown sand generally will be lower than that for our Northern White frac sand.
Our Proppant Solutions segment represented 87% of our revenues in 2013. During 2012 and 2013, our top ten proppant customers represented 65% and 64% of our revenues, respectively. Our I&R Products segment has approximately 770 customers and represented 13% of our revenues in 2013.
The duration, volume provisions and other terms of our proppant supply contracts vary by customer, although the majority are long-term contracts. Our proppant supply contracts generally have initial terms between two and ten years, and typically require our customers to purchase a fixed minimum volume or a specified percentage of their product requirements. Those with fixed volumes typically include penalty provisions which apply where our customer fails to purchase the required minimum volume. Our proppant supply contracts typically include market pricing mechanisms. Under many of our proppant sales contracts we are able to propose price increases to our customers, with such price increases to take effect after a notice period of 30 to 45 days. If the customer does not accept the proposed increase, we have the option to maintain the contract under its existing terms or to terminate it. In addition, many of our proppant supply contracts also include pricing protection provisions for the benefit of our customers where, after providing us with notice, they are able to obtain product from another source at a price that is materially less than the price at which we are willing to provide the product.
In September 2013, in connection with the purchase of FTSI assets, we entered into a ten-year supply contract with FTSI. During the period ending December 31, 2018, FTSI is required to purchase stated minimum amounts of product from us at fixed prices (subject to adjustment for transportation charges). A make-whole payment applies if FTSI does not purchase the minimum amounts required by the contract. During the remainder
 
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of the term of the contract FTSI is required to purchase a percentage of its proppant requirements based on market pricing. Neither party can terminate the agreement except in connection with a breach by the other party.
The Costs of Conducting Our Business
The principal costs involved in operating our business are logistics costs associated with transporting products from our production facilities to our terminals; payroll costs for personnel at our production, terminal and administrative facilities; resin and other raw materials used in the production of our products; and maintenance and supply costs at our production facilities. We own, or pay modest royalties on, the majority of our sand reserves, which we believe helps us maintain a competitive cost position.
Logistics costs, including freight, railcar leases, demurrage and handling, were our largest expense category in 2013, representing 31% of our revenues over the same period. Freight costs primarily represent charges to transport our product by rail, but we also ship product by truck and barge. In order to move product by rail, we lease a substantial number of railcars under operating leases with durations ranging from three to seven years. As of August 15, 2014, we had 7,720 railcars under lease and 787 railcars made available to us from our customers giving us a total fleet of over 8,500 railcars. Demurrage costs are charged by the railroads based on the time a railcar spends on the rail in excess of the allotted time. These costs can vary significantly from period to period driven by high levels of rail activity at a terminal and changes in the timing of fulfilling customer orders. Handling costs are incurred at our distribution and terminal facilities to move product from one mode of transportation to another (e.g., truck to railcar) and to move product into storage facilities.
Labor costs, including wages and benefits, represented 9% of revenues in 2013. Approximately 14% of our domestic workforce was party to collective bargaining contracts as of December 31, 2013.
We use a significant amount of resins and additives in the production of our coated products in both our Proppant Solutions and I&R businesses. We purchase these resins and additives under supply agreements that contain annual pricing adjustments based on the cost of phenol, the primary component of the resins we buy. We also supply a portion of our resin requirements from our resin manufacturing facility located in Michigan. The cost of resins and additives represented 9% of revenues in 2013.
Our selling, general and administrative costs were 8% of our revenues in 2013 and include the wages and benefits costs noted above. These costs are related to our corporate operations, including costs for the sales and marketing; research and development; finance; legal; and environmental, health and safety functions of our organization. We anticipate that as a public company we will incur additional legal, accounting, insurance and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. These requirements include compliance with the Sarbanes-Oxley Act as well as other rules implemented by the SEC, and applicable stock exchange rules. We expect these rules and regulations to substantially increase our legal and financial compliance costs and to make certain financial reporting and other activities more time-consuming and costly.
We capitalize the costs of our mining and processing equipment and depreciate it over its expected useful life. We also capitalize the pre-production costs to remove overburden on our sand reserves and amortize them based on the actual tons mined. Depreciation, depletion and amortization costs represented 3.8% of our revenues for 2013. Repair and maintenance costs that do not involve the replacement of major components of our equipment and facilities are expensed as incurred. These repair and maintenance costs can be significant due to the abrasive nature of our products and represented 2% of our revenues in 2013.
How We Evaluate Our Business
Our management uses a variety of financial and operational metrics to analyze our performance across our Proppant Solutions and I&R Products segments. This segmentation is based on the primary end markets we
 
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serve, our management structure and the financial information that is reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance. We evaluate the performance of these segments based on their volumes sold, average selling price and segment contribution margin. We do not evaluate the performance of the segments on a margin percentage basis, as that is a function of the manner in which a given product is sold (for example in-basin sales generate higher selling price but comparable per ton margin, resulting in a reduced margin percentage) and product mix. Additionally, we consider a number of factors in evaluating the performance of the business as a whole, including total volumes sold and Adjusted EBITDA. We view these metrics as important factors in evaluating our profitability and review these measurements frequently to analyze trends and make decisions.
Segment Contribution Margin
Segment contribution margin is a key metric that management uses to evaluate our operating performance and to determine resource allocation between segments. We define segment contribution margin as segment revenues less cost of goods sold less selling, general and administrative expenses directly attributable to that segment. These selling, general and administrative expenses exclude costs related to corporate functional areas such as administration, accounting, information technology, human resources, research and development, business development and sustainable development.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are supplemental non-GAAP financial measures that are used by management and external users of our financial statements, such as lenders and rating agencies.
We define EBITDA as net income before interest expense, income tax expense, depreciation, depletion and amortization. We define Adjusted EBITDA as EBITDA before non-cash stock-based compensation, management fees and reimbursement of expenses to sponsor, transaction expenses, impairment of assets, loss on extinguishment of debt, gain or loss on disposal of assets, and other non-cash income or expenses. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.
Management believes EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are useful because they allow us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods, capital structure or non-recurring or non-operating expenses. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered as alternatives to, or more meaningful than, net income or cash flows from operating activities as determined in accordance with GAAP or as indicators of our operating performance or liquidity. Certain items excluded from EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of EBITDA, Adjusted EBITDA or Adjusted EBITDA margin. Our computations of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to other similarly titled measures of other companies. We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are widely followed measures of operating performance and may also be used by investors to measure our ability to meet debt service requirements.
For a reconciliation of Adjusted EBITDA to its most directly comparable financial measures calculated and presented in accordance with GAAP, please read “—Summary Historical Consolidated Financial and Operating Data—Non-GAAP Financial Measures” beginning on page 10.
 
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Results of Operations
The following table presents our consolidated statement of operations and certain operating data. The results of operations by segment are discussed in further detail following the consolidated overview.

 	  	Year ended December 31,	 	  	Six months ended June 30,	 	
 	  	        2012        	 	 	        2013        	 	  	        2013        	 	  	        2014        	 	
 	  	(In thousands, except selling data)	 	
Statement of Income Data:	  				 				  				  				
Revenues	  	$	885,190	  	 	$	988,386	  	  	$	448,241	  	  	$	629,223	  	
Cost of sales (excluding depreciation, depletion, amortization and stock compensation expense)	  	 	502,417	  	 	 	627,842	  	  	 	266,406	  	  	 	402,302	  	
Selling, general and administrative expenses	  	 	65,430	  	 	 	81,858	  	  	 	36,280	  	  	 	49,168	  	
Depreciation, depletion and amortization expense	  	 	27,690	  	 	 	37,771	  	  	 	15,553	  	  	 	27,522	  	
Stock compensation expense	  	 	11,434	  	 	 	10,133	  	  	 	3,709	  	  	 	4,313	  	
Other operating expense (income)	  	 	(207	) 	 	 	2,826	  	  	 	672	  	  	 	(328	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Income from operations	  	 	278,426	  	 	 	227,956	  	  	 	125,621	  	  	 	146,246	  	
Interest expense, net	  	 	56,714	  	 	 	61,926	  	  	 	26,541	  	  	 	34,478	  	
Loss on extinguishment of debt	  	 	—  	  	 	 	11,760	  	  	 	—  	  	  	 	—  	  	
Other non-operating expense	  	 	1,870	  	 	 	4,394	  	  	 	570	  	  	 	541	  	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Income before provision for income taxes	  	 	219,842	  	 	 	149,876	  	  	 	98,510	  	  	 	111,227	  	
Provision for income taxes	  	 	70,369	  	 	 	45,219	  	  	 	29,694	  	  	 	32,412	  	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Net income	  	$	149,473	  	 	$	104,657	  	  	$	68,816	  	  	$	78,815	  	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Other Financial Data:	  				 				  				  				
EBITDA	  	$	303,659	  	 	$	248,877	  	  	$	140,352	  	  	$	172,872	  	
Adjusted EBITDA	  	 	318,650	  	 	 	292,584	  	  	 	146,330	  	  	 	179,984	  	
Operating Data:	  				 				  				  				
Proppant Solutions:	  				 				  				  				
Total tons sold	  	 	3,765	  	 	 	5,117	  	  	 	2,134	  	  	 	3,352	  	
Revenue	  	$	757,851	  	 	$	856,212	  	  	$	378,286	  	  	$	567,185	  	
Average selling price (per ton)	  	$	201	  	 	$	167	  	  	$	177	  	  	$	169	  	
Segment contribution margin	  	$	316,251	  	 	$	296,320	  	  	$	150,267	  	  	$	192,928	  	
Industrial & Recreational Products:	  				 				  				  				
Total tons sold	  	 	2,375	  	 	 	2,462	  	  	 	1,261	  	  	 	1,193	  	
Revenue	  	$	127,339	  	 	$	132,174	  	  	$	69,955	  	  	$	62,038	  	
Average selling price (per ton)	  	$	53	  	 	$	54	  	  	$	55	  	  	$	52	  	
Segment contribution margin	  	$	37,837	  	 	$	34,765	  	  	$	17,002	  	  	$	16,835	  	
Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013
Revenues
Revenues increased $181.0 million, or 40%, from $448.2 million for the six months ended June 30, 2013 to $629.2 million for the six months ended June 30, 2014, primarily due to increased sales volumes in our Proppant Solutions segment.
Revenues in the Proppant Solutions segment increased $188.9 million, or 50%, from $378.3 million for the six months ended June 30, 2013 to $567.2 million for the six months ended June 30, 2014. Total volumes increased 57% from 2.1 million tons in the six months ended June 30, 2013 to 3.4 million tons in the six months ended June 30, 2014. Raw sand volumes increased by 63% from 1.6 million tons in the first half of 2013 to 2.7 million tons in the first half of 2014. Volumes sold under the FTSI Supply Agreement accounted for 86% of the increase in raw sand volumes. Additional volume growth for raw sand was limited by adverse weather conditions and logistical constraints (primarily rail) in the first half of 2014. The average selling price for raw sand increased 8% from the first half of 2013 to the first half of 2014, which was primarily the result of an increase in
 
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the proportion of raw sand sold through our terminal network and an increase in the market price of certain grades of sand, partially offset by a shift in volumes sold towards finer grades of raw sand and the volume of Texas Gold brown sand sold under the FTSI Supply Agreement in the six months ended June 30, 2014. Resin coated proppant volumes increased 37% from 501,000 tons in the six months ended June 30, 2013 to 687,000 tons in the six months ended June 30, 2014. Volumes sold under the FTSI Supply Agreement accounted for 21% of the increase in resin coated proppant volumes. The average selling price for resin coated proppant decreased 5% from the first half of 2013 to the first half of 2014, which was primarily the result of a decline in the market price of resin coated proppant products.
Revenues in the I&R Products segment decreased $7.9 million, or 11%, from $69.9 million for the six months ended June 30, 2013 to $62.0 million for the six months ended June 30, 2014. Volumes decreased 67,000 tons, or 5%, from 1.3 million tons in the first half of 2013 to 1.2 million tons in the first half of 2014, primarily due to a decrease in volume sold into the specialty and foundry end markets. The average selling price decreased 6%, from $55 per ton in the first half of 2013 to $52 per ton in the first half of 2014 which was primarily due to us no longer paying and billing for freight for a customer in our glass end market.
Segment Contribution Margin
Contribution margin in the Proppant Solutions segment increased $42.7 million, or 28%, from $150.3 million for the six months ended June 30, 2013 to $193.0 million for the six months ended June 30, 2014. The increase was primarily due to additional raw sand and resin coated volumes, most notably those associated with the FTSI Supply Agreement, partially offset by reduced selling prices on resin coated products and a shift to lower-margin coated products for the six months ended June 30, 2014 compared to the six months ended June 30, 2013.
Contribution margin in the I&R Products segment decreased $0.2 million, or 1%, from $17.0 million for the six months ended June 30, 2013 to $16.8 million for the six months ended June 30, 2014 primarily due to decreased volumes and a mix shift to lower-margin glass products, partially offset by increases in the prices of foundry products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $12.9 million, or 36%, from $36.3 million for the six months ended June 30, 2013 to $49.2 million for the six months ended June 30, 2014. The increase was primarily due to increased sale and marketing costs for our Proppant Solutions segment (included in Segment Contribution Margin noted above) and increased corporate costs to support the growth of the business.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization increased $12.0 million, or 77%, from $15.5 million for the six months ended June 30, 2013 to $27.5 million for the six months ended June 30, 2014 due to the increase in fixed and intangible assets arising from the FTSI transaction and capital expenditures primarily due to increased production and logistics capacities.
Income from Operations
Income from operations increased $20.6 million, or 16%, from $125.6 million for the six months ended June 30, 2013 to $146.2 million for the six months ended June 30, 2014.
Interest Expense
Interest expense increased $8.0 million, or 30%, from $26.5 million for the six months ended June 30, 2013 to $34.5 million for the six months ended June 30, 2014, primarily due to additional borrowings to fund the FTSI transaction.
 
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Provision for Income Taxes
Provision for income taxes increased $2.7 million, or 9%, from $29.7 million for the six months ended June 30, 2013 to $32.4 million for the six months ended June 30, 2014. Our effective tax rate was 30.1% for the six months ended June 30, 2013 compared to the 29.1% for the six months ended June 30, 2014.
Net Income
Net income increased $9.9 million, or 14%, from $68.9 million for the six months ended June 30, 2013 to $78.8 million for the six months ended June 30, 2014. The increase was due to the factors noted above.
Adjusted EBITDA
Adjusted EBITDA increased from $146.3 million for the six months ended June 30, 2013 to $180.0 million for the same period in 2014, due primarily to an increase in segment contribution margin.
Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Revenues
Revenues increased $103.2 million, or 12%, from $885.2 million for the year ended December 31, 2012 to $988.4 million for the year ended December 31, 2013, primarily due to increased sand volumes in our Proppant Solutions segment.
Revenues in the Proppant Solutions segment increased $98.3 million, or 13%, from $757.9 million for the year ended December 31, 2012 to $856.2 million for the year ended December 31, 2013. Total volumes increased 36% from 3.8 million tons in 2012 to 5.1 million tons in 2013. Raw sand volumes increased 1.4 million tons, or 52%, from 2.7 million tons in the year ended December 31, 2012 to 4.1 million tons in the year ended December 31, 2013, 49% of which resulted from the FTSI transaction. The average selling price for raw sand increased 2% from 2012 to 2013. The proportion of raw sand sold through our terminal network increased from 57% in 2012 to 78% in 2013, which offset a decline in the market price of raw sand from 2012 to 2013, a mix shift toward finer grades of raw sand and sales of Texas Gold brown sand. Resin coated proppant volumes decreased 4% from 1.1 million tons in the year ended December 31, 2012 to 1.0 million tons in the year ended December 31, 2013. Resin coated proppants sold as a result of the FTSI transaction accounted for 4% of the total resin coated proppant volumes in the year ended December 31, 2013. The average selling price for resin coated sand decreased 4% from 2012 to 2013, which was primarily due to declines in market prices.
Revenues in the I&R Products segment increased $4.9 million, or 4%, from $127.3 million for the year ended December 31, 2012 to $132.2 million for the year ended December 31, 2013. Volume increased 87,000 tons or 4% from 2.4 million tons in the year ended December 31, 2012 to 2.5 million tons in the year ended December 31, 2013, primarily due to an increase in volumes sold into our glass end market. The average selling price remained relatively constant, increasing from $53 per ton in 2012 to $54 per ton in 2013.
Segment Contribution Margin
Contribution margin in the Proppant Solutions segment decreased $20.0 million, or 6%, from $316.3 million for the year ended December 31, 2012 to $296.3 million for the year ended December 31, 2013. The decrease was driven by the decline in volume and selling prices for resin coated proppants, the shift in sales mix for raw sand toward finer grade sands which carry a lower margin profile and a non-recurring charge associated with the disposition of obsolete ceramic product. Incremental margin resulting from additional raw sand volume was partially offset by increased logistical and integration expenses to service volumes under the FTSI Supply Agreement.
 
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Contribution margin in the I&R Products segment decreased $3.0 million, or 8%, from $37.8 million for the year ended December 31, 2012 to $34.8 million for the year ended December 31, 2013, primarily due to a decline in volumes and profitability in our resin coated foundry business.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $16.5 million, or 25%, from $65.4 million for the year ended December 31, 2012 to $81.9 million for the year ended December 31, 2013. The increase was primarily due to non-recurring diligence, transaction and integration costs associated with our acquisition activity in 2013, increased sales and marketing costs for our Proppant Solutions segment and increased corporate costs to support the growth of our business.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization increased $10.1 million, or 36%, from $27.7 million for the year ended December 31, 2012 to $37.8 million for the year ended December 31, 2013. Approximately $4.4 million of the increase in depreciation, depletion and amortization was associated with assets acquired in the FTSI transaction. The remaining increase was the result of capital expenditures, primarily to increase production and logistics capacities.
Income from Operations
Income from operations decreased $50.4 million, or 18%, from $278.4 million for the year ended December 31, 2012 to $228.0 million for the year ended December 31, 2013, primarily as a result of decreased gross margins and increased selling, general and administrative expenses described above.
Interest Expense
Interest expense increased $5.2 million, or 9%, from $56.7 million for the year ended December 31, 2012 to $61.9 million for the year ended December 31, 2013. The increase was primarily due to additional borrowings to finance the Great Plains and FTSI transactions.
Provision for Income Taxes
Provision for income taxes decreased $25.1 million, or 36%, from $70.3 million for the year ended December 31, 2012 to $45.2 million for the year ended December 31, 2013. Income before provision for income taxes decreased $69.9 million or 32%, from $219.8 million for the year ended December 31, 2012 to $149.9 million for the year ended December 31, 2013. The effective tax rate for the year ended December 31, 2013 was 30% compared to 32% for the year ended December 31, 2012. The decrease in the effective tax rate was primarily due to larger depletion allowances in 2013 due to increased production.
Net Income
Net income decreased $44.8 million, or 30%, from $149.5 million for the year ended December 31, 2012 to $104.7 million for the year ended December 31, 2013 due to the factors noted above.
Adjusted EBITDA
Adjusted EBITDA decreased $26.1 million, or 8% from $318.7 million for the year ended December 31, 2012 to $292.6 million for the year ended December 31, 2013 due primarily to a decrease in segment contribution margin.
 
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Liquidity and Capital Resources
Overview
Our principal liquidity requirements historically have been to service our debt, to meet our working capital and capital expenditure needs, to finance acquisitions and to occasionally pay dividends to our stockholders. We have met our liquidity and capital investment needs with funds generated through operations and through incremental borrowings.
We believe that cash generated through operations and our financing arrangements will be sufficient to meet working capital requirements, anticipated capital expenditures and scheduled debt payments for at least the next 12 months. As of June 30, 2014 we had $52.2 million of availability under our revolving credit facility. See “—Credit Facilities” for more information regarding our revolving credit facility.
Working Capital
Working capital is the amount by which current assets exceed current liabilities and is a measure of our ability to pay our liabilities as they become due. Our working capital was $170.9 million at December 31, 2013 and $232.3 million at June 30, 2014. The following table presents the components of our working capital as of December 31, 2012 and 2013 and June 30, 2014:

 	  	December 31,	 	  	June  30,
2014	 	
 	  	2012	 	  	2013	 	  			
 	  	(In thousands)	 	
Current assets	  				  				  				
Cash and cash equivalents	  	$	11,866	  	  	$	17,815	  	  	$	12,514	  	
Accounts receivable, net	  	 	123,388	  	  	 	146,851	  	  	 	209,766	  	
Inventories	  	 	91,432	  	  	 	118,349	  	  	 	127,355	  	
Deferred income tax benefit	  	 	5,315	  	  	 	11,748	  	  	 	9,363	  	
Prepaid expenses and other assets	  	 	4,975	  	  	 	10,575	  	  	 	7,209	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total current assets	  	 	236,976	  	  	 	305,338	  	  	 	366,207	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Current liabilities	  				  				  				
Current portion of long-term debt	  	 	3,332	  	  	 	15,687	  	  	 	15,687	  	
Accounts payable	  	 	43,456	  	  	 	89,998	  	  	 	89,047	  	
Accrued expenses	  	 	28,277	  	  	 	28,706	  	  	 	29,153	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total current liabilities	  	 	75,065	  	  	 	134,391	  	  	 	133,887	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net working capital	  	$	161,911	  	  	$	170,947	  	  	$	232,320	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Accounts receivable
Accounts receivable increased $23.5 million from $123.4 million at December 31, 2012 to $146.9 million at December 31, 2013, primarily due to sales under the FTSI Supply Agreement. Accounts receivable increased $62.9 million from $146.9 million at December 31, 2013 to $209.8 million at June 30, 2014. December sales and accounts receivable are typically lower than at other points in the year due to seasonal weather conditions. However, weather conditions during December 2013 were unusually severe, causing significant logistics challenges that limited our ability to fulfill customer orders. Further, revenues increased each month during the first half of 2014, also contributing to the increase in accounts receivable since December 31, 2013.
Inventory
Inventory consists of raw materials, work-in-process and finished goods. The cost of finished goods includes processing costs and transportation costs to terminals. The increase in inventory from December 31, 2012 to December 31, 2013 was primarily driven by a $25.5 million increase in finished goods, primarily due to
 
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inventory held at terminals acquired in the FTSI transaction. The increase in inventory from $118.1 million at December 31, 2013 to $127.4 million at June 30, 2014 was primarily due to a general increase in sales volume and an increase in the number of distribution terminals to support customer needs.
Accounts Payable
The increase in accounts payable from $43.5 million at December 31, 2012 to $90.0 million at December 31, 2013 was primarily due to increased operating expenses related to the FTSI transaction and increased production volumes from 2012 to 2013. There was no significant change in accounts payable from December 31, 2013 to June 30, 2014.
Accrued Expenses
Accrued expenses stayed relatively constant from $28.3 million at December 31, 2012 to $28.7 million at December 31, 2013 to $29.2 million at June 30, 2014.
Cash Flow Analysis

 	  	(amounts in millions)	 	
 	  	Year ended December 31,	 	 	Six months ended June 30,	 	
 	  	      2012      	 	 	      2013      	 	 	      2013      	 	 	      2014      	 	
Net cash provided by (used in):	  				 				 				 				
Operating activities	  	$	186.4	  	 	$	174.6	  	 	$	93.7	  	 	$	50.0	  	
Investing activities	  	 	(107.4	) 	 	 	(579.5	) 	 	 	(161.6	) 	 	 	(60.6	) 	
Financing activities	  	 	(119.1	) 	 	 	410.5	  	 	 	70.9	  	 	 	5.3	  	
Net Cash Provided by Operating Activities
Net cash provided by operating activities consist primarily of net income adjusted for non-cash items, including depreciation, depletion and amortization and the effect of working capital changes.
Net cash provided by operating activities was $50.0 million for the six months ended June 30, 2014 compared to $93.7 million in the six months ended June 30, 2013. This $43.7 million decrease was primarily the result of accounts receivable increasing $62.9 million in the six months ended June 30, 2014 compared to an increase of $13.7 million in the six months ended June 30, 2013.
Net cash provided by operating activities was $174.6 million in the year ended December 31, 2013 compared to $186.4 million in the year ended December 31, 2012. The $11.8 million decrease in cash provided by operating activities was due primarily to a $44.8 million decrease in net income, partially offset by a decrease in working capital for 2013 compared to 2012.
Net Cash Used in Investing Activities
Investing activities consist primarily of capital expenditures for growth and maintenance, and in certain periods, investments to acquire strategic assets or businesses. Growth capital expenditures generally are for expansions of production or terminal capacities or new greenfield development. Maintenance capital expenditures generally are for asset replacement and health, safety and quality improvements.
Net cash used in investing activities was $60.6 million in the six months ended June 30, 2014, compared to $161.6 million for the six months ended June 30, 2013. In the six months ended June 30, 2013, $120.3 million was used for the Great Plains acquisition and the purchase of SSP LLC. The increase in capital expenditures of $20.6 million from the first half of 2013 to the first half of 2014 was primarily due to investments in production capacity for Propel SSP and distribution terminals.
 
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Net cash used in investing activities was $579.5 million in the year ended December 31, 2013. Investing activities in the year ended December 31, 2013 included $347.7 million for the acquisition of the FTSI assets, which significantly expanded our sand reserves and production capacity, $64.0 million for the Great Plains acquisition and $56.3 million (including capitalized transaction costs of $1.3 million) for the acquisition of SSP LLC. Capital expenditures for 2012 and 2013 were relatively unchanged at $109.0 million and $111.5 million, respectively. Maintenance capital spending was $12.3 million in 2012 and $17.5 million in 2013.
Capital investments in 2012 focused on expansion of our sand processing capacity and expansion of our terminal network. Spending in 2013 focused on accelerating the expansion of our terminal infrastructure and enhancing our unit train capabilities.
We anticipate that our capital expenditures in 2014 will be approximately $150 million, which is primarily associated with the continued development of self-suspending proppant production facilities, construction of distribution terminals, continued expansion of rail logistics, acquisition of mineral reserves and various maintenance projects. The increase in capital expenditures from 2013 to 2014 resulted primarily from increased spending on sand processing capacity, production capacity for Propel SSP and unit train capabilities. The anticipated capital expenditures for the year may increase as we continue to evaluate opportunities to expand our production capacities. We believe that cash flows from operations will be sufficient to fund our anticipated capital expenditures, but additional borrowings may be required to fund larger expansion opportunities.
Net Cash Provided by (Used in) Financing Activities
Financing activities consist primarily of borrowings and repayments under our term loans and revolving credit facility.
Net cash provided by financing activities was $5.3 million in the six months ended June 30, 2014 compared to $70.9 million in the six months ended June 30, 2013. Net cash provided by financing activities in the six months ended June 30, 2013 primarily relate to borrowings used to acquire Great Plains and purchase SSP LLC. In order to improve liquidity, we borrowed $41.0 million under our term loans in February 2014 to repay a similar amount outstanding under our revolving credit facility. We also made payments of approximately $2.3 million against capital lease obligations.
Net cash provided by financing activities was $410.5 million in the year ended December 31, 2013. This primarily relates to borrowings under our revolving credit facility to fund the acquisitions of Great Plains and the FTSI assets. The cash provided by financing activities is net of $14.2 million of financing costs.
Net cash used in financing activities was $119.1 million in the year ended December 31, 2012, primarily related to prepayments of long term debt.
Credit Facilities
On September 5, 2013, we entered into the Second Amended and Restated Credit Agreement (our “Credit Agreement”) with Barclays Bank plc, as administrative agent. Our Credit Agreement contains a revolving credit facility with a commitment amount of $75 million (“Revolving Credit Facility”) and two tranches of term loans, pursuant to which we have borrowed $325 million in aggregate principal amount under the term B-1 facility (such loans, “Term B-1 Loans”) and $885 million in aggregate principal amount under a term B-2 facility (such loans, “Term B-2 Loans”). The proceeds of the borrowings under our Credit Agreement were used to repay amounts outstanding under the previous credit facility and to fund the acquisition of the proppant assets of FTSI.
The Term B-1 Loans mature on March 15, 2017 and requires quarterly principal repayments of $0.8 million (1% annually) with the balance due at maturity. The Term B-2 Loans mature on September 5, 2019 and requires quarterly principal repayments of $2.2 million (1% annually) with the balance due at maturity. Borrowings under the Revolving Credit Facility mature on September 5, 2018. Until they were repriced in March 2014, the Term B-1 Loans, the Term B-2 Loans and borrowings under the Revolving Credit Facility bore interest, at our discretion, at either the base rate (the greater of prime rate, federal funds rate (subject to a 1.0% flow) plus 0.5%, 2%, or
 
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one-month LIBOR plus 1.0%) plus 3.0% or the adjusted Eurodollar Rate (subject to a 1.0% floor) plus 4.0%. With respect to borrowings under the Term B-1 Loans and Revolving Credit Facility, the 2% minimum for Base Rate borrowings and 1% for Eurodollar Rate borrowings did not apply. The applicable margin on the loans could be reduced by 0.25% if our leverage ratio fell below 2.75.
The terms of our Credit Agreement provide for customary representations and warranties and affirmative covenants. The credit facility also contains customary negative covenants setting forth limitations on further indebtedness, liens, investments, disposition of assets, acquisitions, junior payments and restrictions on subsidiary distributions. We must maintain a pro forma leverage ratio as of the end of each quarter of no more than 4.75 if the aggregate revolver borrowing is equal to or greater than 25% of the total revolver commitment. As of June 30, 2014, our pro forma leverage ratio was 3.7.
In February 2014 we executed a joinder agreement to borrow $41 million in aggregate principal amount of additional Term B-2 Loans. The proceeds of this borrowing were used to repay then outstanding amounts under the Revolving Credit Facility. The additional borrowings mature on the same date as the then existing Term B-2 Loans (September 5, 2019) and the required quarterly principal repayments for the Term B-2 Loans were increased by one-quarter of 1% of the amount borrowed with the balance due at maturity. There were no other changes in the terms, interest rates or covenants of our Credit Agreement.
In March 2014 we further amended our Credit Agreement to reduce the applicable margin for Term B-1 and B-2 Base Rate loans to 2.50% and for Term B-1 and B-2 Eurodollar Rate loans to 3.50%. As of June 30, 2014, Term B-1 Loans, Term B-2 Loans and the borrowings under Revolving Credit Facility bore interest at 3.75%, 4.5% and 4.25%, respectively.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are likely to have a current or future material effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.
Contractual Obligations
A summary of our contractual obligations as of December 31, 2013 is provided in the following table:

 	  	Payments Due by Period	 	
 	  	(In thousands)	 	
Contractual Obligations	  	Total	 	  	Less than
1 year	 	  	1-3 years	 	  	3-5 years	 	  	More than
5 years	 	
Long-term debt obligations (including interest and interest rate swaps)(1)	  	$	1,595,490	  	  	$	75,548	  	  	$	152,897	  	  	$	494,317	  	  	$	872,728	  	
Capital lease obligations	  	 	8,469	  	  	 	3,768	  	  	 	4,515	  	  	 	186	  	  	 	—  	  	
Operating lease obligations	  	 	6,159	  	  	 	1,560	  	  	 	2,397	  	  	 	1,147	  	  	 	1,055	  	
Retirement plans(2)	  	 	8,107	  	  	 	595	  	  	 	1,364	  	  	 	1,578	  	  	 	4,570	  	
Asset retirement obligations	  	 	2,680	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	2,680	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total contractual cash obligations	  	$	1,620,905	  	  	$	81,471	  	  	$	161,173	  	  	$	497,228	  	  	$	881,033	  	

(1)	Payments are based on debt balances and interest rate swaps outstanding at December 31, 2013, and are based on the interest rates in effect as of that date.	
(2)	Excludes plan assets.	
 
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Environmental Matters
We are subject to various federal, state and local laws and regulations governing, among other things, hazardous materials, air and water emissions, environmental contamination and reclamation and the protection of the environment and natural resources. We have made, and expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. We may also from time to time incur fines and penalties associated with noncompliance with such laws and regulations. As of December 31, 2013, we had $2.7 million accrued for future reclamation costs.
We discuss certain environmental matters relating to our various production and other facilities, certain regulatory requirements relating to human exposure to crystalline silica and our mining activity and how such matters may affect our business in the future under “Business—Regulation and Legislation.”
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported revenues and expenses during the reporting periods. We evaluate these estimates and assumptions on an ongoing basis and base our estimates on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates.
Listed below are the accounting policies we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved, and that we believe are critical to the understanding of our operations.
Inventory Valuation
Certain subsidiaries value sand inventory at the lower of cost or market using the last-in, first-out method. All other sand inventory is stated at the lower of cost or market using the first-in, first-out method. Costs applied to inventory include direct excavation costs, processing costs, overhead allocation, depreciation and depletion. Stockpile tonnages are calculated by measuring the number of tons added and removed from the stockpile. Tonnages are verified periodically by an independent surveyor. Costs are calculated on a per ton basis and are applied to the stockpiles based on the number of tons in the stockpile.
Depletion
We amortize the cost to acquire land and mineral rights using a units of production method, based on the total estimated reserves and tonnage extracted each period.
Asset Retirement Obligations
We estimate the future cost of dismantling, restoring and reclaiming operating excavation sites and related facilities in accordance with federal, state and local regulatory requirements. We record the initial estimated present value of reclamation costs as an asset retirement obligation and increase the carrying amount of the related asset by a corresponding amount. We allocate reclamation costs to expense over the life of the related assets and adjust the related liability for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate. If the asset retirement obligation is settled for more or less than the carrying amount of the liability, a loss or gain will be recognized, respectively.
 
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Impairment of Long-Lived Assets
We periodically evaluate whether current events or circumstances indicate that the carrying value of our property, plant and equipment and definite-lived intangible assets may not be recoverable. If circumstances indicate that the carrying value may not be recoverable, we estimate future undiscounted net cash flows using estimates of proven sand reserves, estimated future sales prices (considering historical and current prices, price trends and related factors) and operating costs and anticipated capital expenditures. If the undiscounted cash flows are less than the carrying value of the assets, we recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the assets.
Our estimates of prices, recoverable proven reserves and operating and capital costs are subject to certain risks and uncertainties which may affect the recoverability of our long lived assets. Although we have made our best estimate of these factors based on current conditions, it is reasonably possible that changes could occur, which could adversely affect our estimate of the net cash flows expected to be generated from our operating property. No impairment charges were recorded during the years ended December 31, 2013 or 2012, or the six-month period ended June 30, 2014.
Employee Benefit Plans
We provide a range of benefits to our employees and retired employees, including pensions. We record annual amounts relating to these plans based on calculations specified by generally accepted accounting principles, which include various actuarial assumptions, including discount rates, assumed rates of returns, compensation increases, turnover rates and healthcare cost trend rates. We review the actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so. The effect of the modifications is generally recorded or amortized over future periods. We believe that the assumptions utilized in recording our obligations under the plans, which are presented in note 16 to our audited consolidated financial statements included elsewhere in this prospectus, are reasonable based on advice from our actuaries and information as to assumptions used by other employers.
Equity-Based Awards
Equity-based compensation expense is recorded based upon the fair value of the award at grant date. Such costs are recognized as expense over the corresponding requisite service period. The fair value of the awards granted was calculated based on a Black-Scholes valuation model. The application of this valuation model involves inputs and assumptions that are judgmental and highly sensitive in the valuation of incentive awards, which affects compensation expense related to these awards. These inputs and assumptions include the value of a share of Fairmount Holdings, Inc. Class B common stock, the expected life of the option, volatility and risk free rate over a period of time corresponding to the expected life of the option.
Value of underlying share —We use a combination of the guideline company approach and a discounted cash flow analysis to determine the fair value of our stock. The key assumptions in this estimate include our projections of future cash flows, company-specific cost of capital used as a discount rate, lack of marketability discount, and qualitative factors to compare the company to comparable guideline companies. During 2013, factors that contributed to changes in the underlying value of our stock included the continued recovery of the oil and gas fracking market, changes to future cash flows projected from the recent acquisitions, increases in operating leverage due to increased debt, product mix including mix of raw versus resin coated proppant, and other factors. As our operations are highly dependent on sales to the oil and gas industry, the market conditions for this industry have a high degree of impact on the company’s value.
Expected volatility —This is a measure of the amount by which the price of various comparable companies’ common stock has fluctuated or is expected to fluctuate, as the company’s common stock is not publicly traded. The comparable companies were selected by analyzing public companies in the industry based on various factors including, but not limited to, company size, financial data availability, active trading volume, and capital structure.
 
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Risk free interest rate —This is an interpolated rate from the U.S. constant maturity treasury rate for a term corresponding to the time to the expected option life, as described below.
Expected option life —This is the period of time over which the options are expected to remain outstanding before being exercised. Because we did not have sufficient historical data to provide a reasonable basis to estimate the expected life of the options, we used the simplified method, which assumes the expected life is the mid-point between the vesting date and the end of the contractual term.
Dividend yield —we have no current plans to declare a dividend that would require a dividend yield assumption other than zero.
We will continue to use judgment in evaluating the risk-free interest rate, expected volatility and expected lives related to our equity-based compensation on a prospective basis and incorporating these factors into our pricing model. However, once our shares are publicly traded, we will use the actual market price as an input in the Black Scholes model, and will no longer estimate the value of the shares underlying the options.
The following is a summary of the inputs and assumptions used in estimating the fair value of stock options granted in the years ended December 31, 2013 and 2012.

 	  	Six Months Ended
June 30, 2014	 	 	2013	 	 	2012	 	
Fair value of underlying share	  	$	396.51	  	 	$	355.40 – $379.05	  	 	$	371.20 – $381.05	  	
Expected volatility	  	 	41.36	% 	 	 	46.38	% 	 	 	49.66	% 	
Risk free interest rate	  	 	1.96	% 	 	 	1.12 – 2.00	% 	 	 	0.97 – 1.25	% 	
Expected option life	  	 	6.5 years	  	 	 	6.5 years	  	 	 	6.5 years	  	
As of June 30, 2014 and December 31, 2013, the aggregate intrinsic value of vested and unvested stock options was $259.2 million and $136.1 million, respectively. The amount of unearned stock-based compensation related to unvested stock options at December 31, 2013 and June 30, 2014 was $16.0 million and $14.7 million, respectively. As of each of December 31, 2013 and June 30, 2014, the weighted-average period over which the unearned stock based compensation expense related to stock options is expected to be recognized was 2.4 years.
Taxes
Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. This approach requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based upon the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the expenses are expected to reverse. Valuation allowances are provided if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
We recognize a tax benefit associated with an uncertain tax position when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we initially and subsequently measure the tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management.
 
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We evaluate quarterly the realizability of our deferred tax assets by assessing the need for a valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are our forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income might affect the ultimate realization of the net deferred tax assets. Factors that may affect our ability to achieve sufficient forecasted taxable income include, but are not limited to, a decline in sales or margins, increased competition or loss of market share. In addition, we operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which may require an extended time to resolve. We believe that adequate provisions for income taxes have been made for all years.
The largest permanent item in computing both our effective tax rate and taxable income is the deduction allowed for U.S. statutory depletion. The impact of statutory depletion on the effective tax rate is presented in note 14 to our audited consolidated financial statements included elsewhere in this prospectus.
Recent Accounting Pronouncements
New accounting guidance that has been recently issued but not yet adopted by us, is included in note 1 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus.
Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Swaps
Due to our variable-rate indebtedness, we are exposed to fluctuations in interest rates. We use interest rate swaps to manage this exposure. These derivative instruments are recorded on the balance sheet at their fair values. Changes in the fair value of derivatives are recorded each period in current earnings or in other comprehensive income, depending on whether a derivative is designated as part of a hedging relationship and, if it is, depending on the type of hedging relationship. For cash flow hedges in which we are hedging the variability of cash flows related to a variable-rate liability, the effective portion of the gain or loss on the derivative instrument is reported in other comprehensive income in the periods during which earnings are impacted by the variability of the cash flows of the hedged item. The ineffective portion of all hedges is recognized in current period earnings.
We do not use derivative financial instruments for trading or speculative purposes. By their nature, all such instruments involve risk, including the possibility that a loss may occur from the failure of another party to perform according to the terms of a contract (credit risk) or the possibility that future changes in market price may make a financial instrument less valuable or more onerous (market risk). As is customary for these types of instruments, we do not require collateral or other security from other parties to these instruments. In management’s opinion, there is no significant risk of loss in the event of nonperformance of the counterparties to these financial instruments.
We formally designate and document instruments at inception that qualify for hedge accounting of underlying exposures in accordance with GAAP. We assess, both at inception and for each reporting period, whether the financial instruments used in hedging transactions are effective in offsetting changes in cash flows of the related underlying exposure.
 
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The following is a summary of our outstanding derivative financial instruments:

 	 	 	 	 	(In thousands)	 	
 	 	 	 	 	December 31, 2012	 	 	December 31, 2013	 	
 	 	Maturity
Date	 	 	Contract /
Notional
Amount	 	 	Carrying
Amount	 	 	Fair
Value	 	 	Contract/
Notional
Amount	 	 	Carrying
Amount	 	 	Fair
Value	 	
Interest rate swap agreements	 	 	2013	  	 	$	20,000	  	 	$	(33	) 	 	$	(33	) 	 	$	—  	  	 	$	—  	  	 	$	—  	  	
Interest rate swap agreements	 	 	2014	  	 	 	55,000	  	 	 	(295	) 	 	 	(295	) 	 	$	55,000	  	 	 	(59	) 	 	 	(59	) 	
Interest rate swap agreements	 	 	2015	  	 	 	340,000	  	 	 	(4,981	) 	 	 	(4,981	) 	 	$	340,000	  	 	 	(3,280	) 	 	 	(3,280	) 	
Interest rate swap agreements	 	 	2017	  	 	 	70,000	  	 	 	(3,429	) 	 	 	(3,429	) 	 	$	165,550	  	 	 	(1,659	) 	 	 	(1,659	) 	
Interest rate swap agreements	 	 	2019	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	 	(a) 	 	 	2,067	  	 	 	2,067	  	

(a)	The interest rate swap agreements that mature in 2019 currently do not provide an offset to cash flows. In 2015 these agreements will have a notional value of $275 million increasing to $420 million between 2017 and 2019.	
A hypothetical increase in interest rates by 1.0% would have increased our interest expense by $2.9 million for the year ended December 31, 2013.
Market Risk
We are exposed to various market risks, including changes in interest rates. Market risk related to interest rates is the potential loss arising from adverse changes in interest rates. We do not believe that inflation has a material impact on our financial position or results of operations during periods covered by the financial statements included in this prospectus.
Credit Risk
We are subject to risks of loss resulting from nonpayment or nonperformance by our customers. For the year ended December 31, 2013, our top two proppant customers, Halliburton and FTSI, accounted for approximately 30% of our sales. Approximately 39% and 38% of our accounts receivable balance at December 31, 2013 and 2012, respectively, was outstanding from just three customers. We examine the creditworthiness of third-party customers to whom we extend credit and manage our exposure to credit risk through credit analysis, credit approval, credit limits and monitoring procedures, and for certain transactions, we may request letters of credit, prepayments or guarantees, although collateral is generally not required.
Internal Control Over Financial Reporting
If we fail to maintain effective internal controls in the future, it could result in a material misstatement of our financial statements that would not be prevented or detected on a timely basis, which could cause investors to lose confidence in our financial information or cause our stock price to decline.
 
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 INDUSTRY
Overview
The silica sand industry consists of businesses that are involved in the mining, processing and sale of silica sand and silica sand-based products. Monocrystalline silica, also referred to as “silica,” “industrial sand and gravel,” “silica sand” and “quartz sand,” is a term applied to sands and gravels containing a high percentage of silica (also known as silicon dioxide or SiO 2 ) in the form of quartz. Monocrystalline silica deposits with widely varying physical characteristics occur throughout the United States, but mines and processing facilities are typically located near developed rail infrastructure, which facilitates access to markets. Other factors affecting the feasibility of monocrystalline silica production include deposit composition, product quality specifications, land-use, environmental regulation, permitting requirements, access to electricity, gas and water and a producer’s expertise and know-how.
The low relative cost and special properties of monocrystalline silica—chemistry, purity, grain size, color, inertness, hardness and resistance to high temperatures—make it critical to a variety of industries and end-use markets, the production of molds and cores for metal castings, glass production and the manufacturing of building products. In particular, monocrystalline silica is a key input in the hydraulic fracturing techniques used in the development of oil and gas resource basins.
Oil and Gas Proppant End Market Dynamics
Advances in oil and gas extraction techniques, such as horizontal drilling and hydraulic fracturing, have allowed for significantly greater extraction of oil and gas trapped within shale formations. The hydraulic fracturing process consists of pumping fluids down a well at pressures sufficient to create fractures in the targeted hydrocarbon-bearing rock formation in order to increase the flow rate of hydrocarbons from the well. A granular material, called proppant, is suspended and transported in the fluid and fills the fracture, “propping” it open once high-pressure pumping stops. The proppant-filled fracture creates a conductive channel through which the hydrocarbons can flow more freely from the formation into the wellbore and then to the surface. Proppants therefore perform the vital function of promoting the flow, or conductivity, of hydrocarbons over a well’s productive life. In fracturing a well, operators select a proppant that is transportable into the fracture, is compatible with frac and wellbore fluids, permits acceptable cleanup of frac fluids and can resist proppant flowback. In addition, the proppant must be resistant to crushing under the earth’s closure stress and reservoir temperature.
 
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There are three primary types of proppant that are utilized in the hydraulic fracturing process: raw frac sand, resin coated sand and manufactured ceramic beads. Current in-basin delivered prices for proppant range between $80 to $120 per ton for raw frac sand, $350 to $550 per ton for resin coated sand and $500 to $900 per ton for ceramics. Customers choose among these proppant types based on the geology of the reservoir, expected well pressures, proppant flowback concerns and product cost. Given these price differences and well specific considerations, E&P companies are continually evaluating the optimal mix of lower cost, lower conductivity frac sand and higher cost, higher conductivity resin coated sand and ceramics in order to best address the geology of the well and to maximize well productivity and economic returns. The following chart illustrates the composition of the U.S. market for proppant by type:
2013 Proppant Demand by Type (volumes in millions of tons)

 
Source : The Freedonia Group, study #3160 Well Stimulation Materials, June 2014.
Proppant Characteristics
API specification proppants must meet stringent technical specifications set forth by the API including, among others, coarseness, crush resistance, sphericity, roundness, acid solubility, purity and turbidity. These characteristics are of particular importance because they have a significant impact on hydrocarbon conductivity, and ultimately the production rate and profitability of a well. Conductivity is a function of the permeability of the proppant and the width of the fracture, which dictates the proppant’s ability to prop open a fracture and allow hydrocarbons to flow. Some of the key characteristics impacting conductivity are:
Coarseness . Proppant grain size is critical to hydraulic fracturing operations in order to satisfy down-hole conditions and well completion design. Mesh size is used to describe proppant grain size and is determined by sieving the proppant through screens with uniform openings corresponding to the desired grain size. The vast majority of products range from 12 to 100 mesh (representing the number of openings per linear inch on a sizing screen) and include standard sizes, such as 12/20, 16/30, 20/40, 30/50 and 40/70. To receive a standard size designation, 90% of a particular batch of product must fall within the designated sieve sizes. For example, for a proppant to be designated as 12/20 mesh, 90% of that proppant must pass through a 12 mesh sieve and be retained by a 20 mesh sieve. Larger, coarser proppants (such as 16/30, 20/40 and 30/50 mesh) are typically used in hydraulic fracturing processes targeting oil and liquids-rich natural gas recovery, while smaller, finer proppants (such as 40/70 and higher mesh) are used primarily in dry gas drilling applications. In general, notwithstanding strength characteristics, a larger and more uniformly distributed proppant size will result in higher permeability and conductivity.
Crush Resistance.  Crush resistance is an important factor in fracturing applications where downhole pressures intensify. Proppant crush results in finer particles, or “fines,” which reduce permeability in the
 
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proppant pack and narrow the fracture width, all leading to reduced conductivity. Technical research suggests that the crushing of just five percent of the frac sand in a fracture can reduce hydrocarbon flow conductivity by 60%. Generally, the more pure the grain and the smaller its size, the better the proppant’s crush resistance. Ideally, raw frac sand proppants should be nearly pure quartz, spherical, round and have a resistance to crush sufficient to withstand the closure stress of lower to intermediate-pressure wells. Resin coated sand proppants have a higher resistance to crush and are suitable for intermediate to high closure stress of up to 10,000 psi (12,000 psi in the case of PowerProp), and high strength ceramics have the greatest resistance to crush and are suitable for intermediate to the highest closure stresses of up to 15,000 psi.
Proppant Shape and Uniformity. Proppant shape influences proppant pack space, permeability and conductivity. For optimal long-term conductivity, the proppant particles should have an optimized spherical shape and roundness (roundness is a measure of the relative sharpness of corners and curvatures), as well as uniform size and shape distribution.
Low Acid Solubility . Proppant acid solubility is an indication of the amount of soluble materials (i.e., carbonates, feldspars, iron oxides and clays) present in the proppant which can potentially react with acid. There are various frac related applications wherein the proppant may come into contact with acid. Therefore, proppant stability in acidic environments can be an important attribute.
Purity . Purity is a measure of the content of monocrystalline silica within each grain of silica sand. The greater the monocrystalline silica composition in a grain of silica sand, the stronger the grain and the lower instances of chemical reactions.
Turbidity . Turbidity is a measure of the level of particles or fines in the proppant, such as silt and clay. High turbidity can be an indication of poor proppant manufacturing, transportation or handling practices, or inherent geological characteristics of the ultimate sand reserves. High-turbidity proppants can interfere with fractures, negatively impacting conductivity.
Proppant Types
Comparison of Key Proppant Characteristics
The following table sets forth what we believe to be the key comparative characteristics of our products and the three primary types of proppant.

 	  	Raw Frac Sand	  	Resin Coated Sand	  	Ceramics	
Product and Characteristics	  	•       Natural resource
•       Primary types include Northern White, Brown
•       Quality of sand varies widely depending on source	  	•       Raw frac sand substrate with resin coating
•       Coating increases crush resistance
•       Bond together to prevent proppant flowback	  	•       Manufactured product
•       Typically highest crush resistance	
				
Relative Crush Resistance(1)	  	Up to 6,000 psi	  	Up to 10,000 psi	  	Up to 15,000 psi	
Fairmount Santrol Products(2)	  	Yes	  	Yes	  	No(2)	
2013 Total Proppant Market by Volume(3)	  	25.4	  	3.6	  	2.3	
Current Delivered In-Basin Pricing Per Ton	  	$80-$120	  	$350-$550	  	$500-$900	

(1)	Crush resistance within a product category will vary by differing proppant characteristics including, size, roundness, purity, type of coating, etc. For purposes of relative comparability, we are showing recommended well pressures for	
 
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 	20/40 Northern White raw frac sand, 20/40 THS and OptiProp (two of Fairmount Santrol’s resin coated sand products), and 20/40 high strength ceramics.	
(2)	Fairmount Santrol’s PowerProp product competes with lightweight ceramics offered by competitors up to 12,000 psi.	
(3)	Source: The Freedonia Group: presented in million tons; total proppant market size of 31.3 million tons (excludes 0.1 million tons classified as “other”).	
Raw Frac Sand
Of the three primary types of proppant, raw frac sand represents the lowest cost and largest volume of proppant supplied to oilfield service providers and E&P companies. Raw frac sand is ideally suited for wells with relatively lower levels of closure pressure. Generally, raw frac sand is produced and sold in whole grain (unground) form. There are two broad types of API spec raw frac sand: Northern White and brown, both of which are produced by Fairmount Santrol.
Northern White frac sand is considered to be the highest quality raw frac sand available and is known for its high crush resistance, roundness and sphericity and monocrystalline grain structure. Northern White frac sand exists predominantly in the upper Midwest region of the United States (including Wisconsin, Illinois and Minnesota). Fairmount Santrol’s Northern White sand is a spherical monocrystalline that is 99.8%+ pure-quartz and has superior conductivity and crush resistance compared to other types of raw frac sand.
Brown sand is less monocrystalline in nature and more angular than Northern White sand. Brown sand consists of both API and non API-spec material. API-spec brown sand, such as Fairmount Santrol’s Texas Gold sand, is mined from the Hickory Formation near Brady, Texas. Brown sand typically has lower crush resistance than Northern White, but is often sufficient for lower pressure wells. Due to its proximity to the well, Fairmount’s Texas Gold has a meaningful delivered cost advantage into key basins in South and West Texas, including the Eagle Ford Shale and the Permian Basin.
Resin Coated Sand
Resin coated frac sand consists of raw frac sand that is coated with a resin that increases the sand’s crush resistance and reduces the likelihood of crushed sand dispersing throughout the fracture. Resin coated sand withstands significant reservoir pressures and results in higher conductivity than raw frac sand. Consequently, resin coated sand is ideally suited for wells with intermediate to high levels of closure stress, or for wells where reducing proppant flowback is a key consideration. By reducing proppant flowback, resin coated sand reduces the potential downtime and cost of a well as well as increasing long term productivity of the well.
The strength and shape of resin coated product is largely influenced by the material science underlying the resin coating and the process technology in how the resins are applied. Tempered (or precured) resin coated sand primarily enhances crush resistance, thermal stability and chemical resistance, allowing the sand to perform under harsh downhole conditions, including withstanding medium to high closure pressures of up to 10,000 psi (12,000 psi in the case of PowerProp) and encapsulating fines which are inherently created downhole. In addition to the value-added characteristics of tempered resin coated proppant, curable (or bonding) resin coated frac sand uses a resin that is designed to bond together under closure stress and high temperatures, preventing proppant flowback and reducing imbedment.
Manufactured Ceramic Proppant
Manufactured ceramic proppant is a product of comparatively consistent size and spherical shape that typically offers the highest crush resistance relative to other types of proppants. As a result, ceramic proppant is most often used in the medium to highest pressure (up to 15,000 psi in the case of high strength ceramics) and temperature drilling environments. Ceramic proppant derives its product strength from the molecular structure of its underlying raw material and is designed to withstand extreme heat, depth and pressure environments. The deepest, highest temperature and highest pressure wells typically require heavy weight ceramics with high alumina/bauxite content and coarser mesh sizes. The lower crush resistant ceramic proppants are lighter weight and derived from kaolin clay, with densities closer to raw frac sand.
 
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Proppant Selection
The selection of proppant to maximize hydrocarbon productivity in a well involves a multi-variant optimization decision, driven by drilling factors and challenges, which include hydrocarbon type, geologic attributes, well depth and lateral lengths, heat, and pressure, among others. As fracture lengths and pressures increase, fracturing challenges multiply. Well engineers today are rapidly accelerating their ability to utilize mixes of proppant in order to address the challenges, while also balancing the tradeoff of cost.

Challenges	  	Proppant Selection Considerations	
Ability to Resist Pressure	  	•        Stronger, proppants such as resin coated sand and ceramics are less likely to crush under higher pressures in each case, providing better conductivity	
		
Optimizing Size and Shape	  	•        Larger proppant grains typically offer greater conductivity, as does sphericity, roundness and uniformity of size
 
•        Smaller, lighter grains typically can be carried deeper into the formation, enhancing the overall surface area of the fracture	
		
Minimizing Flowback	  	•        Resin coating provides a seal to the proppant pack, reducing flowback	
		
Minimizing Proppant Fines	  	•        Proppant fines, and their resulting migration in the fractures, contribute to reduced permeability and well performance
 
•        Resin coated proppants, and particularly curable resin coated proppants, generate more uniform stress distribution throughout the pack and are less likely to create fines
 
•        Resin coating also encapsulates fines that are generated under pressure	
		
Maintaining Width of Fracture	  	•        Under closure stress, proppant grains and particularly ceramic proppant grains embed into the surrounding rock, especially in soft shale formations	
	  	 
•        This embedment reduces the width of the fracture and the overall surface area of the fracture, as well as reduces the permeability of the proppant pack
 
•        Resin coating reduces proppant embedment by providing a broader point of contact between the proppant and the reservoir as well as proppant to proppant contact	
		
Minimizing Chemical Reactions	  	•        Proppant diagenesis occurs as the proppant, under heat and pressure, reacts with the fracturing fluids and/or formation face to degrade the proppant
 
•        Improved coating technologies and sand with a high monocrystalline silica composition experience lower diagenesis	
		
Reduced Proppant Scaling	  	•        Minerals from the water and the formation can attach to the surface of the proppant grains, forming deposits (“scaling”) and reducing proppant pack permeability
 
•        Resin coating improves resistance to scaling	
 
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Proppant Industry-Demand Trends
The following trends have favorably influenced proppant demand growth.
Increasing drilling activity and wells per rig
Over the past decade, E&P companies have increasingly focused on exploiting the vast hydrocarbon reserves contained in North America’s oil and gas reservoirs. While the well counts have remained relatively stable, drilling activity and the number of wells per rig has increased dramatically through the increased use of pad drilling. With the establishment of advanced techniques such as horizontal drilling and hydraulic fracturing, E&P companies initially focused on establishing and delineating their large acreage positions. Using these advanced techniques, their development plans were largely driven by a desire to grow production quickly, but were not yet optimized for maximum efficiency and economic returns.
Increasing proppant intensity
In recent years, with their acreage positions largely established, E&P companies have evolved their capital plans to focus on full-scale, long term development, with the underlying goals of increased efficiencies and optimizing their returns on invested capital. This has led to new development techniques, such as longer lateral lengths and shorter intervals between frac stages, which results in more fracturing stages per well. In addition, the amount of proppant used per stage has increased dramatically, compounding the increase in total demand for proppant.
In recent months, individual wells have been completed with more than 6,000 tons of proppant, which is the equivalent of 60 railcars or 240 truckloads. This represents a several fold increase in large scale completions from just a few years ago. Given all of the factors above, we believe that demand for proppant will continue to grow.
Opportunity for more resin coated proppant use to improve well economics
In addition to evolving well construction techniques, E&P companies are increasingly focused on proppant selection as a means to improve recovery rates and return on investment. Optimized proppant selection can enable them to increase fracture surface areas and contact with the reservoir, while improving the permeability and porosity of the proppant pack, both of which provide improved well recoveries.
Specifications for proppant type and quantity can be made by E&P companies, oilfield service companies, or collaboratively. These specifications often call for increasing amounts of proppant per well, but also the incorporation of a broader selection of proppant types, a wider range of mesh sizes, and a selection of high performance proppants to tailor the proppant solution to specific geologic characteristics of the well. Furthermore, both E&P companies and oilfield service companies are investing in value-added proppants when the improvement in well production and efficiencies justifies the increased proppant investment. These recent trends are resulting in increased demand for resin coated proppants which provide enhanced performance characteristics relative to raw sand but at a lower cost than ceramic proppants.
As a result of the trends described above, the global proppant market has increased rapidly over the past 10 years, with the U.S. being the single largest consumer of proppants. The Freedonia Group estimates that in 2013 the U.S. sand proppant market was approximately 31.4 million tons with annual sales of $3.3 billion. This represented an average annual volume growth rate of 27% from 2008 to 2013. The Freedonia Group also estimates that total annual proppant sales will exceed 49 million tons in 2018 and 74 million tons by 2023, representing average annual growth rates of 9.4% and 9.0% over 2013 volumes, respectively. Raw frac sand and resin coated sand are expected to drive a growth in overall proppant demand with annual growth rates from 2013 to 2018 of 9.3% and 10.5%, respectively.
 
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The Freedonia Group Estimates of Proppant Demand by Type

Source : The Freedonia Group, study #3160 Well Stimulation Materials, June 2014
PropTester, Inc. & KELRIK, LLC, market research firms specializing in the proppant sector, estimate 2013 market supply (based on capacity) of raw frac sand and resin coated sand as reflected in the charts. As indicated, based on their relative share of capacity, the six largest frac sand suppliers represent approximately 50% of supply capacity and the six largest resin coated sand suppliers represent over 80% of supply capacity.
PropTester, Inc. & KELRIK, LLC Estimated Market Share Based on Capacity

 
Source : PropTester, Inc. & KELRIK, LLC, Proppant Market Report, February 14, 2014
 
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Proppant Industry – Supply Trends
As demand for proppants has increased dramatically in recent years, the supply of quality API-spec raw frac sand has struggled to keep pace, resulting, at times, in a market with limited, if any, excess capacity. While a number of existing and new proppant vendors have announced supply expansions and greenfield projects, we do not expect the magnitude of these supply expansions to fully meet the expected growth in demand. There are numerous key constraints to increasing raw frac sand production on an industry-wide basis, including:
 
•	 	the difficulty of finding frac sand deposits that meet API specifications;	
 
•	 	the difficulty of securing contiguous frac sand reserves large enough to justify the capital investment required to develop a processing facility;	
 
•	 	the challenges of identifying reserves with the above characteristics that are either located in close proximity to oil and gas reservoirs or have rail access needed for low-cost transportation to major shale basins;	
 
•	 	the hurdles of securing mining, production, water, air, refuse and other federal, state and local operating permits from the proper authorities;	
 
•	 	local opposition to the development of mining facilities, especially those that require the use of on-road transportation, including moratoria on raw frac sand facilities in multiple counties in Wisconsin and Minnesota which hold potential sand reserves; and	
 
•	 	proximity to logistics infrastructure and the ability to develop comprehensive logistics capabilities.	
 
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Proppant Industry – Logistics Trends
E&P companies’ and oilfield service providers’ preferences and expectations have been evolving in recent years. A proppant vendor’s logistics capabilities have become an important differentiating factor when competing for business, on both a spot and contract basis. Many of our customers increasingly seek convenient in-basin proppant delivery capability from their proppant supplier. We believe that, over time, proppant customers will prefer to consolidate their purchases across a smaller group of suppliers with robust logistics capabilities and a broad offering of high performance proppants.
I&R Industry Trends
Demand in the I&R end markets is relatively stable and is primarily influenced by key macroeconomic drivers such as housing starts, light vehicle sales, repair and remodel activity and industrial production. The economic downturn beginning in 2008 decreased demand in the foundry, building products and glassmaking end markets, however, the recent economic recovery has significantly increased demand in these same end markets. The primary end markets served by our I&R Products segment are foundry, building products, sports and recreation, glassmaking and filtration.
 
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 BUSINESS
Our Company
We are one of the world’s largest providers of sand-based proppant solutions and for over 30 years have been a pioneer in the development of high performance proppants used by oilfield service and E&P companies to enhance the productivity of their oil and gas wells. Fairmount Santrol offers the broadest range of proppants available in the market today, including high quality sand and a spectrum of resin coated products, all of which exceed API specifications. Additionally, for more than 120 years, we and our predecessor companies have provided high quality sand-based products, strong technical leadership and applications knowledge to end users in the I&R markets. We believe our two primary market segments are complementary. Our ability to sell to a wide range of customers across multiple end markets allows us to maximize the economic recovery of our reserve base.
As one of the nation’s longest continuously operating mining organizations, we have developed a strong commitment to environmental stewardship and to the three pillars of Sustainable Development: People, Planet and Prosperity. Our strong commitment to safety is reflected in the health and safety of our employees and is illustrated by having achieved a lost-time incident rate that is less than half the industry average. From 2011 through June 30, 2004, our employees have demonstrated our commitment to our communities by donating approximately 36,000 hours of company-paid volunteer time, as well as significant personal volunteer time, into the communities in which we live and operate. We are focused on environmental stewardship, and ten of our facilities now generate zero waste to landfills. Additionally, we have successfully executed annual initiatives to reduce our carbon emissions and have planted over 225,000 trees since 2011 in order to offset our Tier I and Tier II carbon emissions. We believe adhering to sustainable development principles is not only the right thing to do, but also results in a higher level of engagement and commitment from our employees, better relationships with our communities and, as a result, a stronger base from which to pursue profitable growth over the long-term. Abiding by these guiding principles, our corporate motto is “Do Good. Do Well.”
We began investing in large scale proppant production capacity in the early 1980s, leveraging our early industry relationships with Halliburton and a predecessor company to Baker Hughes. Since then, our business, and particularly our Proppant Solutions segment, has grown significantly. Today we have vertically integrated operations that combine mining, sand processing, and resin manufacturing and coating operations with a broad logistics network and state-of-the-art research and development capabilities. Our ability to leverage our integrated asset base to provide comprehensive proppant solutions has allowed us to become a long-term, trusted partner to our customers.
Our primary attributes include:
 
•	 	Sand Reserves and Processing Assets. We have one of the largest sand reserves and processing asset bases in the industry, including, as of December 31, 2013, 798.2 million tons of proven mineral reserves, 11 active sand processing facilities with 12.3 million tons of annual sand processing capacity, a resin manufacturing facility and 11 coating facilities with 2.4 million tons of annual coating capacity. From 2009 to 2013, we expanded our annual raw frac sand and coating capacities by approximately 6.0 million and 1.5 million tons, respectively, through a combination of organic growth and acquisitions. Our coating facilities include operations in Mexico, Denmark and China, through which we serve international oil and gas markets.	
 
•	 	Product Delivery. We are capable of Class I railroad deliveries to each of North America’s major oil and gas producing basins and we also have the flexibility to ship our product via barge and trucks to reach our customers in certain basins. We operate an integrated logistics platform consisting of 46 proppant distribution terminals with significant associated storage, 32 of which exclusively handle our products. Since 2011, we have developed or acquired 24 distribution terminals, providing significant additional annual transloading capacity. We also service I&R end markets through seven additional terminals. As of August 15, 2014, we currently have a private fleet of over 8,500 railcars and expect this fleet to grow to	
 
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 	over 13,000 through 2016. By the end of the third quarter of 2014, we also expect to have expanded our unit train capabilities to three production facilities and three in-basin terminals, which we expect to reduce freight costs and improve cycle times for our railcar fleet.	
 
•	 	Customers. We currently have approximately 80 proppant customers, including the largest U.S. pressure pumping companies, and a total of nearly 850 customers across all end markets. Our contracting goal is to create long-term, partnering relationships with our customers. Accordingly, we have structured the majority of our long-term proppant contracts with market-based pricing and volumetric provisions based on our customer’s requirements, which we believe has strengthened our customer relationships over multiple market cycles.	
 
•	 	Innovation. We have an established history of proppant innovation and we continue to make substantial investments in engineering, research and development and technical marketing. We pioneered the manufacturing and use of resin coated proppant and continue to introduce new and innovative products. For example, PowerProp, our coated product with the greatest crush resistance has characteristics competitive with lightweight ceramics. We are currently field testing a brand new technology, Propel SSP. This proppant transport technology is a new proppant category in which a polymer, wrapped around sand or ceramic, swells upon contact with water. The shear-stable polymer suspends the proppant in water, transporting each grain farther and higher into fractures. Polymer breaking occurs with conventional chemistry. This better transport expands the hydrocarbon drainage radius with a maximized propped fracture area to increase ultimate recovery.	
We are experiencing high demand for our products and our business is currently experiencing significant growth. Our revenues have grown at a compound annual growth rate of approximately 19% and 25% since 2004 and 2009, respectively, and our Adjusted EBITDA margins have averaged more than 30% since 2004 and 2009. For the year ended December 31, 2013, we sold over 7.5 million tons, generated $988 million in revenues, $293 million of Adjusted EBITDA and $105 million of net income. We cannot provide any assurance that we will achieve these growth rates or margins in the future. For a definition of “Adjusted EBITDA” and a reconciliation of Adjusted EBITDA to its most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (“GAAP”), please read “—Prospectus Summary—Summary Historical Consolidated Financial and Operating Data—Non-GAAP Financial Measures” beginning on page 10.
Our Competitive Strengths
We believe that we are well positioned to execute our strategy based on the following competitive strengths:
A Leading Proppant Producer; Broadest Product Suite.  We have a broad suite of products that address more than 90% of the proppant market. We are one of the largest producers of API spec raw frac sand and according to PacWest Consulting Partners, we were the second largest supplier of raw frac sand, and the largest supplier of resin coated sand in 2013 based on our production capacity and coating capacity, respectively. Our raw sand product suite includes all mesh sizes of high performing API-spec Northern White frac sand and our branded API-spec Texas Gold brown frac sand, which enjoys a delivered cost advantage to certain basins, including the Eagle Ford shale and Permian Basin. Our portfolio of resin coated products provides a range of strength, flowback and conductivity characteristics. Our product breadth allows us to offer a comprehensive proppant solution across a broad range of well characteristics and our scale provides us with the flexibility to fill large individual orders, often on short notice. As proppant consumption per well has increased, and completion solutions are increasingly tailored, we believe that our scale and product breadth provide us with a competitive advantage.
Industry’s Largest Captive Terminal Footprint and Broadest Logistics Capabilities. In recent years, oilfield service companies have increasingly sought proppant suppliers with logistics capabilities to deliver product in-basin. We sell our proppants directly to customers in North America’s major oil and gas producing basins through our 46 proppant distribution terminals, the largest logistics network in the industry. In 2013,
 
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approximately 80% of our proppant volume was sold in-basin at one of our distribution terminals, compared to approximately 65% in 2012. We ship our products via all of North America’s Class I railroads in our fleet of more than 8,500 railcars as of August 15, 2014, which includes approximately 790 railcars made available to us by our customers. By the third quarter of 2014, we expect to have expanded our unit train capabilities to three of our processing facilities and three of our in-basin terminals. We expect these unit train capabilities will reduce our freight costs and improve cycle times for our railcar fleet. We also have the flexibility to ship our product via barge and truck to multiple basins. Importantly, over 70% of our terminal capacity exclusively handles our products. In contrast to commingled terminals, which support proppant logistics for multiple vendors, our captive terminals enable us to better assure timely delivery of proppants to our customers and position us to capture incremental spot demand at the terminal site. Taken together, we believe the significant scale our distribution network, its geographic scope, and our captive terminal strategy provide us with a competitive advantage.
Focus on Innovation and New Product Development. We have a history of collaborating with our customers to develop innovative solutions to enhance the effectiveness of well completions, from conventional wells to the most complex, multi-stage, horizontal wells. Our vertically integrated model allows us to participate in each phase of proppant development, manufacturing and delivery and provides us a unique perspective into the current and future needs of our customers. Our technical sales team works closely with market participants to demonstrate the value proposition of our performance proppants in order to stimulate market demand. In 1976, our predecessor pioneered the development of resin coated proppants and we have been issued numerous related patents. Our product developments include OptiProp, SLC, THS, PowerProp and CoolSet, each with uniquely tailored down-hole performance characteristics. After acquiring the technology that underlies Propel SSP in May 2013, our team worked to further refine the product’s technology and manufacturing techniques. We have successfully produced and shipped Propel SSP product in commercial quantities to several key customers who are currently testing the product in field trials.
Trusted Partner to Our Customers. We are a trusted partner and have significant long-term relationships with each of the four largest U.S. pressure pumping companies, who together represent approximately 65% of the market, as well as many small and mid-sized oilfield service companies. These customer relationships are driven by our ability to enhance our customers’ operations and profitability by delivering a full suite of high-quality proppant products, where, when and as-needed. These benefits also extend to the E&P companies serviced by our service company customers, who directly benefit from the enhanced well productivity that our products offer. We believe our customers value the ability of our substantial scale, product diversity and extensive logistics network to meet their evolving proppant needs.
Efficient Operations and Economies of Scale Support Strong Cash Flow Generation . Our vertically integrated operations, low production costs and low maintenance capital expenditures have enabled us to be profitable and generate positive cash flows over an extended period. We own a substantial majority of our reserves, and our processing plants are located on or in close proximity to rail access, reducing the need for on-road transportation and minimizing product movement costs. Our integrated logistics management expertise and geographically advantaged facility network enables us to reliably ship products by the most cost-effective method available. As a result, our Adjusted EBITDA margin was approximately 29% in 2013 (see our discussion of the use of non-GAAP measures of profitability on page 10 of this prospectus.) We believe our significant and growing cash flow will enable us to continue to invest in additional sand production, processing, coating and terminal facilities as well as research and development for new products. 
Experienced Management Team Aligned with Stockholders. We have an experienced leadership team with extensive industry knowledge and a proven track record of profitable growth. Our executive management team has developed new product offerings and process technologies, and has grown our business through greenfield mine development, capacity expansions, acquisitions and investments in logistics infrastructure. Most of our executive management team has been at Fairmount Santrol for 20 years or more, and as of December 31, 2013 our revenue had grown at a compound annual growth rate of approximately 14% and 25% since 1994 and 2009, respectively. Our founders remain active advisors to our management and are members of our board of directors.
 
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Pro forma for this offering, our management, employees and founders will own approximately     % of our outstanding common stock. Accordingly, our executive management team and our employees are aligned with our investors and highly incentivized to pursue long-term, profitable growth and a high return on capital deployed.
Our Strategy
Our objective is to create long-term and sustainable value for our stakeholders. We intend to pursue this objective through the execution of the following strategies:
Increase Reserves and Processing Capacity. We have historically grown our reserves and mining and processing capacities by developing greenfield sites, expanding existing facilities and acquiring operating assets and reserves. From 2009 to 2013, we expanded our annual raw frac sand capacity by approximately 6.0 million tons and our annual coating capacity by 1.3 million tons. Currently, we believe our customers’ demand for our products exceeds our production capacity. Accordingly, we expect to continue to invest in production capacity and new reserves. In 2013, we acquired an idled 1.0 million ton per year frac sand processing facility in Brewer, Missouri from FTSI and expect to resume operations at this facility within the next six months. We also expect to increase annual frac sand production capacity at a current facility by 1.5 million tons by the end of the first quarter of 2016. In addition to these expansions, we control, or have an option to control, additional reserves on four properties (three with Northern White reserves, one with Texas Gold) and expect to develop one or two frac sand facilities or these greenfield sites by mid-2016. In order to ensure that we have adequate capacities and reserves to meet future demand, we have an active pipeline of expansion opportunities in varying stages of development. We currently have 2.4 million tons of annual coating capacity and are in the process of expanding these capacities by an additional 0.8 million tons per year by the fourth quarter of 2015. We will continue to evaluate the opportunity to expand coating capacity based on market demand for coated products.
Expand Logistics Capabilities. Since 2011, we have developed or acquired 24 distribution terminals, providing 13.1 million tons of additional annual transloading capacity. We will continue to invest in terminals, storage and rail infrastructure as our customers continue to demand more product delivered closer to producing basins. We will also continue to enhance our unit train capabilities to reduce freight costs and improve cycle times for our railcar fleet. Since 2009, we have increased our railcar fleet by approximately 140% and we expect to increase the size of our railcar fleet by over 35% through the second half of 2015 to accommodate our growing asset base and evolving customer demands.
Increase Market Penetration of Our Resin Coated Proppants.  We believe that resin coated proppants offer compelling performance advantages relative to other proppants. Our field data indicates that high quality resin coated proppants enhance oil and gas reservoir conductivity compared to raw sand and are a cost-effective alternative to lightweight ceramic proppants. Field data also indicate that resin coated proppants reduce proppant flowback. Our resin coating capacity is the largest in the industry, providing our customers enhanced assurance of supply. Due to superior performance and value added formulation and manufacturing processes, sales of our resin coated products generate a higher per ton profit as compared to our raw frac sand. We will continue to work with market participants by hosting technical sales meetings, obtaining field data, and producing scientific papers which highlight the value proposition of resin coated proppant. Through these efforts, we will seek to increase overall market penetration of our resin coated proppant.
Develop and Commercialize High Performance Proprietary Proppants. We pioneered the manufacturing and use of resin coated proppants and have a history of developing innovative technologies that increase the effectiveness of downhole completions, from conventional wells to the most complex, multi-stage horizontal wells. In 2012, we made a significant investment in a new state-of-the-art research and development facility and strengthened our team of scientists, material engineers and process engineers focused on developing innovative and proprietary proppants. As a result of our commitment, our new product development record is strong. For example, we successfully developed and commercialized PowerProp, a patented resin coated sand proppant with characteristics competitive with lightweight ceramic proppants, and CoolSet, a resin coated sand proppant that
 
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works at low temperatures with no chemical activators. Additionally, we are currently conducting field trials for Propel SSP after developing a commercialized processing capability and we expect full commercial launch by early 2015. We are in constant dialogue with our customers regarding evolving product needs and have a number of new products in various stages of development.
Execute All of Our Corporate Initiatives with a Commitment to Customers, Employees and Communities. Our corporate culture emphasizes People, Planet and Prosperity, and our sustainability strategy defines our approach to operations and community engagement. We work to minimize our environmental impact and continue to find ways to reduce waste while also reducing operating costs. We are honored to receive recognition from our communities for our focus on sustainable mining practices, reclamation and community investment. We believe that positive community engagement is both a privilege and a responsibility, and that it enhances our ability to recruit and retain employees, obtain mining and other operating permits and strengthen relationships with our customers. Our corporate motto is “Do Good. Do Well.” and we intend to continue to execute our growth strategy with a focus on sustainable development.
Our Products
We provide a wide range of high quality silica sands to various industries, including oil and gas and I&R end markets. We believe our two primary business segments are complementary. Our ability to sell to a wide range of customers across multiple end markets allows us to maximize the recovery of our reserve base within our mining operations and to reduce the cyclicality of our earnings.
Proppant Solutions Segment
We offer proppant products in each of the most common API specified proppant categories, which we believe address more than 90% of the proppant market. In 2013, The Freedonia Group estimated that raw frac sand comprised approximately 81% of the proppant market, resin coated sand comprised approximately 11% of the market and ceramic comprise approximately 7% of the market. We offer a resin coated ceramic product that competes in this segment of the ceramic market. The following chart demonstrates the proppant markets segments that our sand-based proppants address:
2013 Proppant Demand by Type (volume in millions of tons)

Source: The Freedonia Group, study #3160 Well Stimulation Materials, June 2014
 
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API-Spec Northern White Frac Sand. Our Northern White frac sand is mined from deposits located in our Illinois, Wisconsin and Minnesota facilities. These reserves are generally characterized by high purity, significant roundness and sphericity and low turbidity. These reserves are referred to as “Northern White” sands and are produced in all standard mesh sizes, including 12/20, 16/30, 20/40, 30/50, 40/70 and 100 mesh. All of our Northern White raw sand proppant products meet the standards set by the API.
API-Spec Brown Frac Sand. Our API-spec brown sand reserves are located in Texas and are sourced from the Hickory Formation. We market this sand under the name “Texas Gold” and sell it in standard mesh sizes consistent with our Northern White frac sand. Our Texas Gold frac sand has lower crush resistance than our Northern White frac sand, but it is an effective solution for low pressure wells. These reserves are in close proximity to major oil and gas producing basins in Texas, including the Eagle Ford Shale and the Permian Basin, which provides them with a significant transportation cost advantage relative to API spec frac sand sourced from more distant locations.
Resin Coated Proppant. We coat a portion of our API-spec sand with resin to enhance its performance as a proppant using proprietary resin formulations and coating technologies. Our resin coated proppants are generally used in higher temperature and higher pressure well environments and are marketed to end users who require increased conductivity in higher pressure wells, high crush resistance and/or enhanced flowback control in order to enhance the productivity of their wells. Independent technical research has quantified the conductivity advantage from resin coated sand and our resin coated proppant, PowerProp versus raw sand as depicted in the chart below.
Relative Conductivity Over a Range of Closure Pressures

Source: Company data
Our resin coated sand products are sold as both tempered (or precured) and curable (or bonding) products. Curable proppants help to prevent flowback by distributing stress in the fracture and by reducing crushing and the generation of crushed sand grains, commonly known as “fines.” For certain resin products, the resin’s chemical properties are triggered by the introduction of an activator into the frac fluid. Tempered products do not
 
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require activation as their chemical properties are already active. We formulate, manufacture and sell activators which work with the specific chemistry of our resins.
We manufacture proprietary coatings designed to address the evolving needs of our customers, and have recently invested significantly in our research and development and technical marketing capabilities to maximize the sales of our coated products. We also coat ceramic proppant purchased from third-party suppliers. This product is marketed as HyperProp and has the strength characteristics of ceramic and the flowback performance characteristics of resin coated sand.
Recent Proprietary Performance Products
PowerProp. Our PowerProp product was introduced in late 2010 as a unique resin coated sand product with higher crush resistance and conductivity than any other sand-based proppant available on the market. PowerProp utilizes our existing resin coating facilities and proprietarily developed resin chemistry to create substantially increased product performance.
During in-house testing, PowerProp exhibited performance characteristics similar to or better than lightweight ceramics which allows us to compete in that market segment. Based on further in-house testing, in an API dry crush comparison, our PowerProp product exhibited less than 3% crush at 10,000 psi as compared to greater than 10% crush for a competing lightweight ceramic product. PowerProp also performed more favorably than lightweight ceramics at other pressures between 6,000 psi and 12,000 psi. Similarly, in alternative testing designed to better simulate downhole pressure, temperature and chemical conditions, PowerProp exhibited approximately 2% crush at 10,000 psi as compared to approximately 10% crush for a competing lightweight ceramic product.
Propel SSP. Our Propel SSP product utilizes a polymer coating applied to a proppant substrate. Upon contact with water, the coating hydrates and swells rapidly to create a hydrogel around the proppant substrate. The hydrogel layer, which is primarily water, is attached to the proppant particle and provides a nearly threefold increase in the hydrostatic radius of the proppant. Initial test results indicate that the lower specific gravity allows greater volumes of proppant and/or coarser mesh sizes coated with Propel SSP to be carried deep into the fracture, which in turn allow more hydrocarbons to escape into the wellbore. This technology reduces or eliminates the need for certain frac fluid additives, including guar, which are used to enhance the transport of proppants into the geologic formation.
 
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The graphic below illustrates, as a guideline, up to what closure pressures different raw sand and resin coated proppant products perform efficiently. A proppant’s actual performance (crush rate, flow back control, etc.) is subject to a range of factors beyond closure pressure, including temperature, pressure, well depth and other geological and engineering characteristics.
Fairmount Santrol Proppants vs. Closure Pressure (1)

I&R Products
We provide high quality sand and coated products, strong technical leadership and applications knowledge to the following primary end markets served by our I&R Products segment: foundry, building products, sports and recreation, glassmaking and filtration.
Foundry. We currently supply the foundry industry with multiple grades of high purity, round, angular and sub-angular sands for molding and core making applications, with products sold primarily in the U.S., Canada, Mexico, Japan and China. Foundry sands are characterized by high purity, round and sub-angular sands precisely screened to perform under a variety of metal casting conditions. These factors dictate the refractory level and physical characteristics of the mold and core, which have a significant effect on the quality of the castings produced in the foundry. Our resin binders provide the necessary bonding of molds and cores in casting applications and are designed to improve overall productivity and environment conditions in the workplace.
Our extensive production experience and technical knowledge of the foundry industry have driven several industry advances. For example, we have developed our Signature Series of low smoke, low odor resin coated sands that provide lower overall emissions while providing a safer and more favorable work environment. Our expertise with resin coated sands enables us to provide coated sand for molds and cores where exceptional dimensional accuracy and surface finish are required.
 
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We believe we were the first sand operator to blend sands, which has proven a successful product for use in specialty iron and aluminum applications. As foundries continue to utilize higher cost binders to improve the quality of their castings and minimize the use of binders (which also reduces overall environmental impact), the industry continues to demand higher quality sands to realize the value of these binders. Our chemists and technicians support these applications with customized products that minimize binder usage, resulting in lower costs to foundries and higher prices for our products.
Glass. We provide a wide variety of high purity, low iron silica sands to the glass market.
Building Products. Various grades and types of our sands are used for roofing shingles, asphalt, industrial flooring ballast sand, bridge decking, pipe lining and tank underlayment. We also work with our customers to blend minerals and chemicals to create colored flooring aggregates, concrete countertops, grout and plaster.
Sports and Recreation. We are a leading supplier of various turf and landscape infill products to contractors, municipalities, nurseries and mass merchandisers. Our turf products are used in multiple major sporting venues, including Cleveland Browns Stadium, PNC Park, Notre Dame Stadium and Progressive Field. In addition, we are a significant supplier of bunker sand, top dressing sands and all-purpose sands to golf clubs and landscape contractors throughout North America. The sub angular shape of our sands provides for excellent drainage and resistance to crushing and allows the grains to hold well to bunker sides and slopes. Our sands are also supplied to horse tracks and training facilities. We also provide colored and private labeled sand directly to a variety of major retailers for use as play sand and arts and crafts.
Filtration. We provide high-quality industrial sands and gravels in a wide variety of water and wastewater filtration applications. Over the past several years, we increased our focus on the filtration market. Our full range of products are monitored with an active statistical process control program to ensure compliance with all government and customer specifications, including the American Water Works and National Sanitation Foundation standards. Due to our efforts, we have emerged as a leader in sand and gravel products for private, public and institutional water filtration systems.
Our Customers
Since our inception, we have remained focused on developing and sustaining a loyal, diversified customer base. Currently, we maintain long-term supply agreements with many of the largest North American oilfield service companies. We believe the strength of our customer base is driven by our collaborative approach to product innovation and development, reputation for high-quality products and extensive logistics network. Certain of our top customer relationships date back over 30 years. We have approximately 80 customers for our oil and gas proppants and nearly 850 customers across all our end markets. For the year ended December 31, 2013 and the six-month period ending June 30, 2014, our top two proppant customers, Halliburton and FTSI, accounted for approximately 30% and 36% of our sales, respectively. For a description of our contracts, please read “—Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Generate Our Sales”.
Our Reserves
We control one of the largest bases of silica sand reserves in the United States. From our reserves, we are able to produce a large selection of high-purity silica sand, lake sand, resin-coated sand, silica gravel and other specialty sands. According to the Securities and Exchange Commission (SEC) Industry Guide 7, reserves are defined as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves are categorized into proven (measured) reserves and probable (indicated) reserves which are defined as follows:
 
•	 	Proven (measured) reserves. Reserves for which (1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed	
 
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 	sampling and (2) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.	
 
•	 	Probable (indicated) reserves. Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.	
Our reserves meet the definition of proven reserves in accordance with SEC Industry Guide 7. We estimate that the company has approximately 798.2 million tons of proven recoverable mineral reserves as of December 31, 2013. Mineral reserve estimated quantities and characteristics at our properties were developed by an independent third party consulting company, GZA GeoEnvironmental Inc. Our reserve estimates are based on in-place material. Our recovery rates are estimated internally. Prospective properties are surveyed, drilled, and analyzed to determine the quality and quantity of the reserve. Reserve estimates were generally determined based on a full reserve evaluation rather than an audit of previous work. Process and methods were deterministic with methods ranging from simple calculations of area times thickness to obtain cubic feet, multiplied times a sand density in pounds per cubic feet to obtain tons; to more complex methods utilizing three dimensional modelling.
The following map identifies the location of our reserves and the associated mining or processing facilities:

 
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Summary of Reserves
The following table provides information on each of our sand mining and processing facilities. Included is the location and area of the facility; the type, amount and ownership status of its reserves and whether or not they meet API standards; and the primary end markets that it serves.

Facilities/Mines	 	Acres Owned /
Leased *	 	Meets API
RC 19C
(1)	 	Proven Reserves
(Thousand
Tons)	 	 	2013 Sales
Volume
(Thousand
Tons)
(2)	 	 	Primary End Markets
Served	
API White	
Wedron, IL	 	 
 	1,818
0	  
  	 	O
L	 	API White	 	 	230,716	  	 	 	3,677	  	 	proppant, glass, foundry, specialty products	
Maiden Rock, WI	 	 
 
 	987
576
377	  
  
  	 	O
OM
L	 	API White	 	 	29,140	  	 	 	1,209	  	 	proppant, glass, foundry	
Menomonie, WI	 	 
 	2
366	  
  	 	O
L	 	API White	 	 	25,548	  	 	 	635	  	 	proppant, glass, foundry, specialty products	
Bay City, WI	 	 
 
 	40
322
1,131	  
  
  	 	O
OM
L	 	API White	 	 	20,751	  	 	 	682	  	 	proppant, glass, foundry	
Shakopee, MN	 	 
 	93
115	  
  	 	O
L	 	API White	 	 	15,346	  	 	 	146	  	 	proppant, glass, foundry, specialty products	
API Brown	
Voca, TX(3)	 	 	1,962	  	 	O	 	API Brown	 	 	195,978	  	 	 	252	  	 	proppant, glass, foundry	
Non-API	
Chardon, OH(4)	 	 	617	  	 	O	 	Non-API	 	 	16,089	  	 	 	638	  	 	glass, turf, landscaping, construction, filler & extender, foundry, industrial, proppant, filtration	
Beaver, OH	 	 
 	91
216	  
  	 	O
L	 	Non-API	 	 	12,718	  	 	 	54	  	 	turf, landscaping, industrial	
Harrietta, MI	 	 
 	284
80	  
  	 	O
L	 	Non-API	 	 	11,087	  	 	 	157	  	 	foundry, construction	
Development	
Katemcy, TX(3)	 	 	848	  	 	O	 	API Brown	 	 	113,278	  	 	 	N/A	  	 	potential to serve proppant, glass, foundry	
Diamond Bluff, WI	 	 
 	10
2,674	  
  	 	O
L	 	API White	 	 	44,539	  	 	 	N/A	  	 	potential to serve proppant, glass, foundry	
Arcadia, WI(3)	 	 	438	  	 	O	 	API White	 	 	43,770	  	 	 	N/A	  	 	potential to serve proppant, glass, foundry	
Inactive	 				 		 		 				 				 		
Grand Haven, MI	 	 
 	134
0	  
  	 	O
L	 	Non-API	 	 	6,555	  	 	 	N/A	  	 	N/A	
Brewer, MO(3)	 	 	353	  	 	O	 	API White	 	 	32,680	  	 	 	N/A	  	 	potential to serve proppant, glass, foundry	
	 				 		 		 	 	 	 	 	 	 	 	 		
Total (5)	 				 		 		 	 	798,195	  	 	 	7,450	  	 		
	 				 		 		 	 	 	 	 	 	 	 	 		
*	OM = Owned Mineral Acreage	
O = Owned Acreage
L = Leased Acreage

1.	API RC 19C Recommended Practice for Measurement of Proppants Used in Hydraulic Fracturing and Gravel-packing Operations, First Edition (ISO 13503-2:2006, Identical).	
2.	Sales volumes for facilities/mines purchased from FTSI only include a portion of FTSI’s 2013 results and are not pro forma for a full year of FTSI Integration.	
3.	Facility/mine was acquired from FTSI.	
4.	Chardon estimate includes 2,201,349 tons not permitted.	
5.	Our 2013 sales volume does not include sales of coated ceramics.	
 
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We have developed a customized approach to both our mining activities and our reclamation philosophy. Our Wedron, Illinois facility utilizes hydraulic mining techniques, which provide access to sands that can be blended from different parts of the quarry. In Wisconsin, we utilize underground mining at our Bay City and Maiden Rock facilities, and plan to do the same at our Diamond Bluff facility, thereby minimizing surface disruption. In addition, we maintain certification with the Wildlife Habitat Counsel for our reclamation methodology and have won numerous awards for our approach to restoring mined properties. For example, we recently completed reclamation activities at a former mine in Michigan. At that site, which was donated back to the state of Michigan, we worked with environmental consultants to harvest region-specific plants and berries which were raised in a nursery and planted back on-site to ensure biological continuity with an adjacent state park. We develop reclamation plans for each quarry for implementation concurrently with the depletion of the mineral reserves.
Descriptions of Sand Facilities
The following is a detailed description of our nine active sand mining and processing operations facilities, our currently undeveloped mines in Katemcy, Texas, Diamond Bluff, Wisconsin and Arcadia, Wisconsin and our inactive Brewer, Missouri mine. We also have an inactive mine at Grand Haven, Michigan and two sand processing facilities located in Readfield, Wisconsin and Hamilton, Ontario, Canada that do not have any sand reserves but together have an annual processing capacity of approximately 625,000 tons per year.
The mineral rights and access to mineral reserves for the majority of our facilities are secured through land that is owned in fee. There are no underlying agreements and/or royalties associated with these properties. Where there are agreements and/or royalties associated with our properties, we have provided more information in the facility descriptions below. We are required to pay production royalties on a per ton basis pursuant to our mineral reserve leases. For the year ended December 31, 2013, we paid $2.1 million in royalty payments representing approximately 0.2% of our total revenues. We generally perform comprehensive title and survey due diligence prior to entering into leases.
API White
Wedron, Illinois. Our Wedron, IL facility is located in Wedron, LaSalle County, IL and consists of owned real property. The facility, which is approximately 6 miles northeast of Ottawa, Illinois, is accessible via County Highway 21 off of State Highway 71 and State Highway 23. The site utilizes natural gas and electricity to process sand. Mining methods include mechanical removal of glacial overburden followed by drilling, blasting and hydraulic mining. Hydraulically mined sand is pumped to the wash plant to be hydraulically sized, and sent to the dry plant where it is dried and screened.
Our Wedron facility was originally opened in 1890 by the Garden City Sand Co and was sold in 1894 to the Wedron White Sand Co. which became Wedron Silica Co. in 1916. Martin Marietta acquired the company in 1979. In 1984 Best Sand and the Wedron management group purchased the operation. Our company was formed from the merger of Wedron Silica and Best Sand in 1986. The washing and drying operations at our Wedron facility were upgraded in 2012 and 2013 in conjunction with significant capacity and reserve base increases. Processed sand is shipped from the facility via truck or rail on the Burlington Northern Santa Fe (“BNSF”) and CSX Railroads via the Illinois Railnet. Our Wedron facility utilizes approximately 15,000 linear feet of rail, enlarged in 2013, to accommodate unit trains. A portion of the sand is transferred by conveyor or trucked from Wedron facility and is resin-coated at the Technisand Wedron, Troy Grove and/or Cutler, Illinois resin coating facilities. Future plans for this facility include increasing mining capacity, adding an additional wash plant and dry plant and bringing a new SSP facility online in 2015. The total net book value of the Wedron facility’s real property and fixed assets as of June 30, 2014 was $64.5 million.
The sand reserve mined from the open-pit mine at the Wedron facility is the St. Peter Sandstone formation. The Wedron facility produces high purity, round grain silica sand that meets the API requirements for proppant application. The Wedron facility capacity is approximately 4.4 million tons per year. This facility sold 3.7 million tons in 2013.
 
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The surface deposit at the Wedron facility is a high purity, round grain sand with a minimum silica content of 99% which meets API requirements for proppant application. The controlling attributes are iron grain size. Iron is concentrated near the surface, where orange iron staining is evident and also increases where the bottom contact becomes concentrated in iron pyrite. Maximum average full face iron content is 0.020%. The deposit tends to exhibit a coarser grain size distribution in top half of deposit. The grain size distribution averages greater than 45% plus 50 mesh. Fine and coarse areas are blended to meet the grain size average.
Maiden Rock, Wisconsin. Our Maiden Rock, WI facility is located in Maiden Rock, Pierce County, WI and consists of owned and leased real property. The mineral reserves at the Maiden Rock facility are secured under mineral leases that, with the exercise of renewal options, expire between 2021 and 2046. The facility is within the Village and Town of Maiden Rock along State Highway 35. The Maiden Rock facility utilizes natural gas and electricity to process sand. This is an underground mine and mining methods include drilling and blasting. The reserves are located at a depth of 230 feet. The sand is removed from the face of the tunnels with a front end loader and deposited into a container where it is combined with water to form a slurry. The slurry is pumped to the surface wash plant to be hydraulically sized and sent to the dry plant where it is dried and screened.
The Maiden Rock facility was originally developed in the 1920s. We acquired a 50% equity interest in the facility from Wisconsin Industrial Sand in 1997, and acquired the remaining equity interest in 1999. The washing and drying operations at the Maiden Rock facility were upgraded in 2012 in conjunction with a significant capacity increase. Processed sand is shipped from the Maiden Rock facility via truck or rail on the BNSF Railroad. The Maiden Rock facility utilizes a new rail loadout facility and approximately 5,000 linear feet of rail constructed in 2012. The total net book value of the Maiden Rock facility’s real property and fixed assets as of June 30, 2014 was $40.0 million.
The sand reserve mined from the underground mine at the Maiden Rock facility is the Jordan Sandstone formation. The Maiden Rock facility produces high purity, round grain silica that meets API requirements for proppant application. The mining capacity is approximately 1.3 million tons per year. The Maiden Rock facility sold 1.2 million tons in 2013.
The underground deposit at this facility is a high purity, round grain sand with a minimum silica content of 99% which meets API requirements for proppant application. The controlling attributes are turbidity, acid solubility, and grain size. The deposit tends to exhibit a coarser grain size distribution near the top of the deposit. Grain size distribution is maintained through control of mine horizon. Turbidity and acid solubility are controlled though the use of hydrosizers during wet processing. The grain size distribution averages greater than 80% plus 50 mesh.
Menomonie, Wisconsin. Our Menomonie, WI facility is located in Menomonie, Dunn County, WI and consists of owned and leased real property. The mineral reserves at our Menomonie facility are secured under mineral subleases that expire in 2044. We constructed the Menomonie facility in 2007 approximately 2 miles east of Menomonie and it is accessible via US Highway 12 / State Highway 16. The Menomonie facility utilizes natural gas and electricity to process sand. Mining methods include the mechanical removal of glacial overburden followed by drilling, blasting and mechanical mining. The sand is removed from the mine face with a front end loader and deposited into a container where it is combined with water to form a slurry. The slurry is pumped to the wash plant to be hydraulically sized and then sent to the dry plant where it is dried and screened. Mined sand is processed and shipped by truck or rail. A remote transload facility adjacent to the Union Pacific (UP) Railroad is located approximately one mile north of the site. The total net book value of the Menomonie facility’s real property and fixed assets as of June 30, 2014 was $13.2 million.
The sand reserve mined from the open-pit at the Menomonie facility is the Wonewoc Sandstone formation. The Menomonie facility produces high purity, round grain silica sand that meets the API requirements for proppant application. The mining capacity is approximately 750,000 tons per year. The Menomonie facility sold 635,000 tons in 2013.
 
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The surface deposit at the Menomonie facility is a high purity, round grain sand with a minimum silica content of 99% which meets API requirements for proppant application. The controlling attributes are turbidity, iron, and grain size. Maximum average full face iron content is 0.080%. The deposit tends to exhibit a coarser grain size distribution in top half of deposit. Turbidity is controlled though the use of attrition scrubbers during wet processing. Iron is controlled during processing through the use of magnetic separators. Fine and coarse areas are blended to meet the grain size average. The grain size distribution averages greater than 55% plus 50 mesh.
Bay City, Wisconsin. Our Bay City, WI facility is located in Isabelle and Hartland Township, Pierce County, WI and consists of owned and leased real property. The mineral reserves at the Bay City facility are secured under mineral leases that, with the exercise of renewal terms, expire between 2045 and 2106. The Bay City facility was opened in 1919 and operated continuously until 1989. We acquired the mine through the acquisition of Wisconsin Specialty Sand and constructed the associated Hager City processing (drying) plant in 2007. This underground mine is approximately 1.5 miles northeast of Bay City on State Highway 35. The reserves are located at a depth of 230 feet. The mine utilizes electricity to process sand. Mining methods include drilling and blasting. The sand is removed from the face of the tunnels with a front end loader and deposited into a container where it is combined with water to form a slurry. The slurry is then pumped to the wash plant to be hydraulically sized and allowed to drain.
Mined sand washed at the facility is shipped approximately five miles to the Hager City plant for further processing and eventual shipment via truck or rail on the BNSF Railroad. The Hager City plant, constructed by Wisconsin Industrial Sand Company, LLC in 2007, was expanded in 2013 and 2014 with the addition of a new rail yard containing approximately 17,000 linear feet of rail for assembling unit trains. The expansion is expected to be operational during the third quarter of 2014. The total net book value of the Bay City facility’s real property and fixed assets as of June 30, 2014 was $12.8 million.
The sand reserve mined from the underground mine at the Bay City facility is the Jordan Sandstone formation. The Bay City facility produces high purity, round grain silica that meets API requirements for proppant application. The mining capacity is approximately 780,000 tons per year. The Bay City facility sold 682,000 tons in 2013.
The underground deposit at the Bay City facility is a high purity, round grain sand with a minimum silica content of 99% which meets API requirements for proppant application. The controlling attributes are turbidity, acid solubility, and grain size. The deposit tends to exhibit a coarser grain size distribution near the top of the deposit. Grain size distributions are maintained through control of mine horizon. Turbidity and acid solubility are controlled though the use of hydrosizers during wet processing. The grain size distribution averages greater than 75% plus 50 mesh.
Shakopee, Minnesota. Our Shakopee, MN facility is located in Shakopee, Scott County, MN and consists of owned and leased real property. The mineral reserves at our mine are secured by fee ownership and a lease agreement that, with the exercise of renewal options, expires in 2030. The facility is approximately four miles south of Shakopee, Minnesota and is accessible via US Highway 169. The Shakopee facility utilizes natural gas and electricity to process sand. Mining methods include the mechanical removal of glacial overburden followed by drilling, blasting and mechanical mining. Mined sand is transported to the wash plant to be hydraulically sized, and sent to the dry plant where it is dried and screened.
Mining occurred at the Shakopee facility for a short time in the 1980s by others until the property was reclaimed. The mine was permitted by Great Plains Sand in 2012 and acquired by us in 2013, at which time we changed the name to Shakopee Sand LLC. We upgraded the washing and drying operations at the facility following the acquisition. Processed sand is shipped from the Shakopee facility via truck or by rail on the Union Pacific Railroad. Future plans for the Shakopee facility include expansion of the railyard into an approximately 50 acre parcel to the north of the site and the construction of approximately 10,000 linear feet of rail to assemble
 
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unit trains. The total net book value of the Shakopee facility’s real property and fixed assets as of June 30, 2014 was $25.2 million.
The sand reserve mined from the open-pit mine at the Shakopee facility is the Jordan Sandstone formation. The deposit produces high purity, round grain silica sand which meets API requirements for proppant application. The mining capacity is approximately 720,000 tons per year with estimated annual products shipped at approximately 680,000 tons per year. The Shakopee facility sold 146,000 tons in 2013.
This surface deposit at the Shakopee facility is a high purity, round grain sand with a minimum silica content of 99% which meets API requirements for proppant application. The controlling attributes are turbidity and grain size. The deposit tends to exhibit a coarser grain size distribution in the top half of deposit. Turbidity is controlled through the use of hydrosizers and attrition scrubbers during wet processing. Fine and coarse areas are blended to meet the grain size average. The grain size distribution averages greater than 50% plus 50 mesh.
API Brown
Voca, Texas. Our Voca, TX facility is located in Voca, Mason and McCulloch Counties, Texas and consists of owned real property. The facility, which is approximately 1.5 miles southeast of Voca, is accessible via County Highway 1851, south of State Highway 71. Sand mining and processing operations were developed at the facility during 2008, with the construction of existing plants completed in 2012. We acquired the operations in 2013. The Voca facility utilizes propane and electricity to process sand. Mining methods include the mechanical removal of thin overburden followed by drilling, blasting and mechanical mining. Sand is transferred by conveyor to the wash plant to be hydraulically sized, and sent to the dry plant where it is dried and screened. Processed sand is shipped from the facility via truck. A portion of the sand is trucked from the Voca facility and is resin-coated at the co-located FML Resin, LLC. The total net book value of the Voca facility’s real property and fixed assets as of June 30, 2014 was $33.4 million.
The sand reserve mined at our Voca property is the Hickory Sandstone Member of the Riley formation. The Voca facility produces high purity, round grain silica which meets API requirements for proppant application. The mining capacity is approximately 1.8 million tons per year with the estimated annual products shipped at approximately 1.2 million tons per year. The Voca facility sold 252,000 tons in 2013.
The surface deposit at the Voca facility is a high purity, round grain sand with a minimum silica content of 98% which meets API requirements for proppant application. The controlling attributes are turbidity and grain size. Turbidity is controlled through the use of hydrosizers and attrition scrubbers during wet processing. Grain size is controlled through the use of hydrosizers and wet screening. The grain size distribution averages greater than 65% plus 50 mesh.
Non-API
Chardon, Ohio. Our Chardon, OH facility is located in Geauga County, Ohio and consists of owned real property. The facility, which is approximately two miles south of Chardon, is accessible via State Route 44. The site utilizes natural gas and electricity to process sand. Mining methods include the mechanical removal of glacial overburden followed by drilling, blasting and mechanical mining. Sand is hauled to a crusher, then transferred by conveyor to a wash plant to be hydraulically sized, crushed and sent to the dry plant where it is dried and screened. Mined sand is processed and shipped by truck.
The mine was opened in 1938 and acquired by Best Sand in 1978. We acquired the mine as a result of the merger of Wedron Silica and Best Sand in 1986. Upgrades were made to the wash plant in 2009, the fluid bed dryer in 2012 and the rotary dryer circuit in 2012. Our future plans include continued expansion of the reserve
 
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base. The total net book value of the Chardon facility’s real property and fixed assets as of June 30, 2014 was $7.3 million.
The sand reserve mined from the open-pit mine at the Chardon facility is the Sharon Conglomerate formation. This plant produces high purity, sub-angular grain silica sand and gravel used for industrial and recreational markets. The mining capacity is approximately 1.1 million tons per year. The Chardon facility sold 638,000 tons in 2013.
The surface deposit at the Chardon facility is a high purity, sub-round grain silica sand/gravel. The deposit has a minimum silica content of 99% ideal for glass and foundry applications. The contributing attributes are iron and grain size distribution. The mine’s iron averages 0.084%. Iron is controlled during processing through the use of magnetic separators. The grain size distribution averages greater than 60% plus 50 mesh. Fine and coarse areas are blended to meet the grain size average.
Beaver, Ohio. Our Beaver, OH facility, acquired in 1994 from Schrader Sand and Gravel, is located in Jackson Township, Pike County, Ohio and consists of owned and leased real property. The mineral reserves at this facility are secured under mineral leases that, with the exercise of renewal options, expire in 2024. The facility, which is approximately six miles northeast of Beaver, Ohio, is accessible via County Road 521. The facility utilizes electricity to process sand. Mining methods include the mechanical removal of glacial overburden followed by drilling, blasting and mechanical mining. Mechanically mined sand is hauled to the wash plant to be hydraulically sized and stockpiled. The finished product is shipped by truck. The total net book value of the Beaver facility’s real property and fixed assets as of June 30, 2014 was $0.2 million.
The sand reserve mined from the open-pit mine at the Beaver facility is the Sharon Conglomerate formation. The Beaver facility produces high purity, sub-angular grain silica sand and gravel. The mining capacity is approximately 260,000 tons per year. The Beaver facility sold 54,000 tons in 2013.
The surface deposit at the Beaver facility is a high purity, sub-angular grain silica sand/gravel. The deposit has a minimum silica content of 99% and is ideal for turf/landscaping and industrial. The controlling attribute is cleanliness. Cleanliness is controlled through wet processing. The grain size distribution averages greater than 60% plus 50 mesh.
Harrietta, Michigan. Our Harrietta, MI facility is located in Slagle Township, Wexford County, MI and consists of owned and leased real property. The facility, which is approximately three miles northeast of Harrietta, Michigan, is accessible via West 28 th Road and State Highway 37. The facility utilizes recycled oil and electricity to process sand. Mining methods include mechanical removal of overburden and excavation of sand. The sand is transferred by conveyor to the wash plant to be hydraulically sized, and sent to the dry plant where it is dried and screened. The finished product is shipped by truck or rail.
We acquired Wexford Sand from Sargent Sand in 1998. A new screen plant was installed in 2008. The processed sand is shipped from the Harrietta facility by bulk via truck or rail on the Great Lakes Central Railroad. Future plans for the mine include a recently secured permit to develop a dredge pond and dredge mine to access sub-aqueous reserves. The total net book value of the Harrietta facility’s real property and fixed assets as of June 30, 2014 was $4.8 million.
The sand reserve mined from the open-pit mine at the Harrietta facility is a glacial outwash sand deposit that does not meet API requirements for proppant application. Glacial outwash is glacial sediments deposited by melting glacial ice at the terminus of a glacier. The mining capacity is approximately 593,000 tons per year. The Harrietta facility sold 157,000 tons in 2013.
This surface deposit at the Harrietta is sub-round grain sand with minimum silica content of 96% ideal for foundry applications. The controlling attributes are Acid Demand Value (ADV) and grain size distribution. The
 
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mine’s ADV ranges from 40-100. ADV is controlled through floatation during wet processing. The grain size distribution averages greater than 45% plus 50 mesh.
Development
Katemcy, Texas. Our Katemcy, TX reserves are located in Katemcy, Mason County, TX and consist of owned real property. The mine property was purchased in September 2013 and is accessed via County Road 1222 and State Highway 87. The mine has not yet been developed and the property is currently used as agricultural land. This deposit is capable of producing high purity, round grain silica sand that meets API requirements for proppant application. Plans to develop the mine property are under review. The sand reserve at this proposed open-pit mine is the Hickory Sandstone Member of the Riley formation.
The surface reserve is a high purity, round grain sand with a minimum silica content of 98% which meets API requirements for proppant application. The controlling attributes will be turbidity and grain size. Turbidity will be controlled through the use of hydrosizers and attrition scrubbers during wet processing. Grain size will be controlled through the use of hydrosizers and wet screening. The grain size distribution averages greater than 49% plus 50 mesh.
Diamond Bluff, Wisconsin. Our Diamond Bluff, WI reserves are located in Diamond Bluff and Oak Grove Townships, Pierce County, WI and consist of owned and leased real property. The mineral reserves are secured under mineral leases that expire between 2063 and 2064. The mine property was purchased in 2014 and is undeveloped. The mine was permitted by the Diamond Bluff Township in 2012 and by the Oak Grove Township in 2014. The facility, which is located approximately one mile northwest of the unincorporated community of Diamond Bluff, is accessible off of 1005 th Street via State Highway 35. The proposed underground mine site will be at a depth of 230 feet and will utilize electricity to process sand through drilling, blasting, mechanical and hydraulic mining methods. Mined sand will be shipped approximately eight miles to the Hager City plant for further processing and eventual shipment via truck or rail on the BNSF Railroad. The total net book value of the facility’s real property as of June 30, 2014 was approximately $997,000.
The sand reserve at this proposed underground mine is the Jordan Sandstone formation. This deposit is capable of producing high purity, round grain silica sand which meets API requirements for proppant application. This underground reserve is a high purity, round grain sand with a minimum silica content of 99% which meets API requirements for proppant application. The controlling attributes are turbidity, acid solubility, and grain size. The deposit tends to exhibit a coarser grain size distribution near the top of the deposit. Grain size distribution will be maintained through control of mine horizon. Turbidity and acid solubility will be controlled though the use of hydrosizers during wet processing. The grain size distribution averages greater than 75% plus 50 mesh.
Arcadia, Wisconsin. Our Arcadia, WI reserves are located in Arcadia, Trempealeau County, WI and consist of owned real property. The mine property, which was purchased in September 2013, is located approximately 1.5 miles northeast of Arcadia and is accessed via State Highway 95. This deposit is capable of producing high purity, round grain silica sand that meets API requirements for proppant application. The mine has not been developed and is utilized as agricultural land. Plans to develop the mine property are under review. The sand reserve at this proposed open-pit mine at the facility is the Wonewoc Sandstone formation.
The surface reserve is a high purity, round grain sand with a minimum silica content of 99% which meets API requirements for proppant application. The controlling attributes are turbidity and grain size. The deposit tends to exhibit a coarser grain size distribution in the top half of deposit. Turbidity will be controlled though the use of attrition scrubbers during wet processing. Fine and coarse areas will be blended to meet the grain size average. The grain size distribution averages greater than 55% plus 50 mesh.
 
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Inactive
Brewer, Missouri. Our inactive Brewer, MO mine is located in Brewer Perry County, MO. The facility, approximately one-half mile northwest of Brewer, Missouri, is accessible via State Highway M. We acquired the mine in August 2014. Mining methods include the mechanical removal of overburden followed by drilling, blasting and mechanical mining. Sand is pumped to the wash plant to be hydraulically sized, and sent to the dry plant where it is dried and screened. The total net book value of the facility’s real property and fixed assets as of June 30, 2014 was $12.9 million.
The sand reserve mined from the open-pit mine at the Brewer facility is the St. Peter Sandstone formation. The Brewer facility is capable of producing high purity, round grain silica that meets API requirements for proppant application. The mining capacity is approximately 1.0 million tons per year.
The surface deposit at the Brewer facility is a high purity, round grain sand with a minimum silica content of 99% which meets API requirements for proppant application. The controlling attributes are turbidity and grain size. The deposit tends to exhibit a coarser grain size distribution in top half of deposit. Turbidity is controlled through the use of hydrosizers and attrition scrubbers during wet processing. The grain size distribution averages greater than 90 percent minus 50 mesh.
Coating, Resin Manufacturing, Specialty Blending and Research and Development Facilities
We have 11 strategically located coating facilities in Wisconsin, Illinois, Michigan, Oklahoma and Texas, as well as Mexico, Denmark and China, with a combined annual production capacity of 2.4 million tons. In over 30 years of coating experience, we have developed significant know-how and proprietary processes to apply resin to sand and, in some instances, ceramic substrates destined for both the proppant and I&R end markets. Our customers require uniform products with their desired characteristics, and we use our know-how to meet these required customer specifications.
We also have a phenolic resin manufacturing facility located in Michigan that we acquired from Alpha Resins in 2011. This operation collaborates with our research and development group and our strategic marketing group to develop and manufacture our own proprietary resins. We expanded our own resin manufacturing capabilities in order to ensure the reliability of resin supply to our coating operations and to protect the confidentiality of our resin formulations.
To complement our sand processing capabilities, we have three specialty blending facilities, located in Ohio, Illinois and Texas. These operations make custom blends of aggregates for use in industrial and commercial flooring, polymer cements, grouts and performance mortars. An additional specialty facility, Mineral Visions, located in Illinois, produces specialty colored quartz for use in pools and colored play sand.
Furthermore, our research and development facilities are also strategically located near these facilities to enhance new product development.
 
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The following map reflects the location of our mining and processing, resin manufacturing, coating, specialty blending and R&D facilities and our administrative offices:

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Product Delivery
We have established an oil and gas logistics network that we believe is highly responsive to our customers’ needs. Among the most important purchasing criteria of our proppant customer relates to our ability to deliver the products our customers demand at their desired time and location. Our oil and gas logistics network includes 46 terminals and approximately over 8,500 railcars, including approximately 790 railcars provided by customers. The following map reflects the location of our destination terminals:

We believe we have the largest private fleet in the industry, enabling us to maximize efficiency and reduce demurrage costs. We are one of the few proppant producers capable of Class I railroad deliveries in each of North America’s major oil and gas producing basins. We generally ship sand to either a terminal location, where it is stored until utilized by a customer, or to one of our processing facilities for value-added processing. For the year ended December 31, 2013, approximately 81% of our North American oil and gas proppant volumes were transported through our terminal network. The direct rail access of our processing and distribution facilities
 
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significantly reduces handling costs and lead-times while enhancing production throughput, resulting in improved responsiveness to our customers.
As industry dynamics evolve to multi-well pads and the proppant market matures, customers and railroads are increasingly requesting proppant to be shipped via unit trains. Currently, we have one outbound site which is unit train capable and has shipped 32 unit trains in the first five months of 2014. We expect to add an additional three outbound and three inbound unit train sites within the next twelve months and believe this enhanced infrastructure should provide us with a competitive advantage. We also ship our product via barge to basins where this is an option. 32 of our 46 proppant terminals are captive to our needs, providing long-term, secure access. In contrast to commingled terminals, which support proppant logistics for multiple vendors, we believe our captive terminals enable us to better assure timely delivery of proppants to our customers and position us to capture incremental, spot demand at the terminal site.
Research and Development and Technical Innovation
We have a history of partnering with our customers to develop innovative solutions to enhance the effectiveness of well completions, from conventional shallow wells to the most complex, multi-stage, horizontal wells. The nature of our vertically integrated model allows us to participate in each phase of proppant manufacturing and delivery and provides us a unique perspective into the current and future needs of our customers. Our technical sales team works closely with market participants to demonstrate the value proposition our proppants offer and stimulate market demand using data indicating enhanced hydrocarbon recoveries.
The table below summarizes some of our most significant product innovations.

Innovation	 	Year	 	  	Result	
Self-Suspending Proppant	 	 	2014	  	  	•         Improves hydraulic fracturing efficiency by allowing proppant to transport further into the fracture, substantially increasing fracture length and improving productivity of well
•         Applicable to all forms of proppant (white, brown, resin coated, ceramic)	
PowerProp	 	 	2010	  	  	•         Technology that delivers strength and performance characteristics similar to a lightweight ceramic (patent-pending)	
Bio-based Binder System	 	 	2010	  	  	•         Technology for use in metal casting industry (patent-pending)	
BioBalls	 	 	2006	  	  	•         Water soluble ball sealers that are environmentally safe and do not require retrieval after treatment	
Encapsulated Curable Proppant	 	 	1997	  	  	•         High performance resin coated proppant used in flowback control	
Dual Coat Technology	 	 	1995	  	  	•         Dual coat curable resin coated sand for enhanced conductivity and flowback control	
Our research and development team consists of 24 professionals (scientists, engineers, technicians), with eight of them holding Ph.Ds, located at three locations in Sugar Land, TX, Ottawa, IL and Detroit, MI. After acquiring Propel SSP in May 2013, our team has worked to further refine the technology and manufacturing techniques of our Propel SSP product in order to successfully launch the product in commercial quantities. Propel SSP is currently undergoing field trials with several key customers. Propel SSP relies on a polymer coating applied to a proppant substrate. Upon contact with water, the coating hydrates and swells rapidly to create a hydrogel around the proppant substrate. The hydrogel layer, which is primarily water, is attached to the proppant particle and provides a nearly threefold increase in the hydrostatic radius of the proppant. This reduces the effective specific gravity to about 1.3, compared to 2.6 for a typical uncoated sand grain. Initial test results indicate that the lower specific gravity allows greater volumes of proppant and/or coarser mesh sizes coated with Propel SSP to be carried deep into the fracture, which in turn allow more hydrocarbons to escape into the
 
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wellbore. This technology reduces or eliminates the need for certain frac fluid additives, including guar, which are used to enhance the transport of proppants into the geologic formation. Lab testing shows that original proppant substrate crush resistance and conductivity are not affected by the coating process, which suggests that a broad range of proppant types, including resin coated sand and ceramics, could benefit from this transport technology. Propel SSP is stable over a wide range of temperatures.
Acquisitions
Throughout our history, we have made and successfully integrated strategic acquisitions in order to strengthen our market leadership position. For example, in 2013 we acquired FTSI, SSP LLC and Great Plains and have completed over 20 acquisitions over the past 20 years.
Competition
There are numerous large and small producers in all sand producing regions of the United States with whom we compete. Our main competitors in the raw frac sand market include Badger Mining Corporation, Ceramics Inc., Emerge Energy Services LP, Hi-Crush Partners, LP, Preferred Sands LLC, Unimin Corporation and U.S. Silica Holdings, Inc. Many new entrants to the raw frac sand market primarily compete on an FOB-plant basis and lack comparable transportation infrastructure to meet customer demands in-basin. Our main competitors in the coated products market include Momentive Performance Materials Inc., Unimin Corporation, Atlas Resin Proppants LLC, Preferred Sands LLC and CARBO Ceramics Inc. The most important factors on which we compete in both markets are product quality, performance and sand and proppant characteristics, transportation capabilities, proximity of supply to well site, reliability of supply and price. Our only substantial competitors across both markets are Unimin Corporation and Badger Mining Corporation (which owns Atlas Resin Proppants LLC). We believe we are uniquely positioned to utilize our scale of raw sand production to supply high-quality substrate for coated products and leverage our transportation infrastructure for reliable delivery in-basin.
Due to increased demand for sand based proppants in recent years, there has been an increase in the number of frac sand producers. Moreover, as a result of this increased demand, existing frac sand producers have added to or expanded their frac sand production capacity, thereby increasing competition.
Competitors in the I&R markets include some of our larger proppant competitors such as Unimin Corporation and U.S. Silica Holdings, Inc. but also typically include smaller, local or regional producers of sand and gravel.
Intellectual Property
Our intellectual property primarily consists of patents, trade secrets, know-how, trademarks, including our name “Fairmount Santrol”, and products such as “PowerProp”, “Propel SSP” (patent pending), “HyperProp” and “CoolSet.” The Company holds numerous U.S. and foreign granted patents that are still in force as well as many U.S. and foreign patent applications that are still pending. We own and have not granted any third-party rights with respect to our patents. The majority of our patents have an expiration date after 2025. We have not yet filed a patent for CoolSet and our patents for HyperProp have recently expired. With respect to trade secrets and know how, our extensive experience with a variety of different products enables us to offer our customers a wide range of proppants for their particular application.
Employees
As of June 30, 2014, we employed a workforce of 1,113 employees. We believe our culture of “People, Planet and Prosperity” has enabled us to achieve a long-tenured workforce and good relations with our workforce.
 
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We maintain an active dialogue with employees and provide salaried and hourly employees a comprehensive benefits package including medical, life and accidental insurance, as well as educational assistance and incentive bonus programs. We offer an employee stock bonus plan and a 401(k) plan, covering substantially all non-union employees. Additionally, we maintain various other forms of retirement plans, including an employee supplemental executive retirement plan.
As of June 30, 2014, approximately 136 of our 1,018 domestic employees are parties to collective bargaining contracts. We believe we have strong relationships with and maintain an active dialogue with union representatives. We have historically been able to successfully extend and renegotiate collective bargaining agreements as they expire.
Seasonality
Our business is affected to some extent by seasonal fluctuations in weather that impact our production levels and our customers’ business needs. For example, our proppant sales levels are lower in the first and fourth quarters due to lower market demand as adverse weather tends to slow oil and gas operations to varying degrees depending on the severity of the weather. Our inability to mine and process frac sand year round in our surface mines in Wisconsin and our Minnesota and Ohio operations results in a seasonal build-up of inventory as we excavate excess sand to build a stockpile that will feed our drying facilities during the winter months. Additionally, in the second and third quarters, we sell more sand to our customers in the I&R end markets due to the seasonal rise in demand driven by more favorable weather conditions.
Legal Proceedings
We and/or our predecessors have been named as a defendant, usually among many defendants, in numerous products liability lawsuits brought by or on behalf of current or former employees of our customers alleging damages caused by silica exposure. As of June 30, 2014, we were the subject to approximately 46 active silica exposure claims. Almost all of the claims pending against us arise out of the alleged use of our silica products in foundries or as an abrasive blast media and have been filed in the states of Texas, Mississippi, Kentucky and Illinois, although some cases have been brought in many other jurisdictions over the years. In accordance with our insurance obligations, these claims are being defended by our subsidiaries’ insurance carriers, subject to our payment of approximately 7% of the defense costs. We believe that our level of existing and available insurance coverage combined with various open indemnities is sufficient to cover any exposure to silicosis-related expenses. Should our insurance coverage or indemnities prove to be insufficient or unavailable, it could have an adverse effect on our business, reputation, financial condition, cash flows and prospects.
Regulation and Legislation
Mining and Workplace Safety
Federal Regulation
The U.S. Mine Safety and Health Administration (“MSHA”) is the primary regulatory organization governing the commercial silica industry. Accordingly, MSHA regulates quarries, surface mines, underground mines and the industrial mineral processing facilities associated with quarries and mines. The mission of MSHA is to administer the provisions of the Federal Mine Safety and Health Act of 1977 and to enforce compliance with mandatory safety and health standards. MSHA works closely with the Industrial Minerals Association, a trade association, in pursuing this mission. As part of MSHA’s oversight, representatives perform at least two unannounced inspections annually for each above-ground facility. To date these inspections have not resulted in any citations for material violations of MSHA standards.
 
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We also are subject to the requirements of the U.S. Occupational Safety and Health Act (“OSHA”) and comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA Hazard Communication Standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities and the public. OSHA regulates users of commercial silica and provides detailed regulations requiring employers to protect employees from overexposure to silica through the enforcement of permissible exposure limits.
Internal Controls
We adhere to a strict occupational health program aimed at controlling exposure to silica dust, which includes dust sampling, a respiratory protection program, medical surveillance, training and other components. Our safety program is designed to ensure compliance with the standards of our Occupational Health and Safety Manual and MSHA regulations. For both health and safety issues, extensive training is provided to employees. We have safety committees at our plants made up of salaried and hourly employees. We perform annual internal health and safety audits and conduct semi-annual crisis management drills to test our plants’ abilities to respond to various situations. Health and safety programs are administered by our corporate health and safety department with the assistance of plant Environmental, Health and Safety Coordinators.
Environmental Matters
We and the proppant industry are subject to extensive governmental regulation on, among other things, matters such as permitting and licensing requirements, plant and wildlife protection, hazardous materials, air and water emissions and environmental contamination and reclamation. A variety of federal, state, and local agencies implement and enforce these regulations.
Federal Regulation
At the federal level, we may be required to obtain permits under Section 404 of the Clean Water Act from the U.S. Army Corps of Engineers for the discharge of dredged or fill material into waters of the United States, including wetlands and streams, in connection with our operations. We also may be required to obtain permits under Section 402 of the Clean Water Act from the EPA (or the relevant state environmental agency in states where the permit program has been delegated to the state) for discharges of pollutants into waters of the United States, including discharges of wastewater or storm water runoff associated with construction activities. Failure to obtain these required permits or to comply with their terms could subject us to administrative, civil and criminal penalties as well as injunctive relief.
The U.S. Clean Air Act and comparable state laws regulate emissions of various air pollutants through air emissions permitting programs and the imposition of other requirements, such as monitoring and reporting requirements. These regulatory programs may require us to install expensive emissions abatement equipment, modify our operational practices and obtain permits for our existing operations, and before commencing construction on a new or modified source of air emissions, such laws may require us to obtain pre-approval for the construction or modification of certain projects or facilities extended to produce or significantly increase air emissions. In addition, air permits are required for our processing and terminal operations, and our frac sand mining operations that result in the emission of regulated air contaminants. Obtaining air emissions permits has the potential to delay the development or continued performance of our operations. As a result, we may be required to incur increased capital and operating costs because of these regulations. We could be subject to administrative, civil and criminal penalties as well as injunctive relief for noncompliance with air permits or other requirements of the U.S. Clean Air Act and comparable state laws and regulations.
Methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of natural gas, are examples of greenhouse gases (“GHGs”). In recent years, the U.S. Congress has considered legislation to
 
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reduce emissions of GHGs. It presently appears unlikely that comprehensive climate legislation will be passed by either house of Congress in the near future, although energy legislation and other regulatory initiatives are expected to be proposed that may be relevant to GHG emissions issues.
Independent of Congress, the EPA has adopted regulations controlling GHG emissions under its existing authority under the CAA. In 2009, the EPA officially published its findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to human health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes. These findings by the EPA allow the agency to proceed with the adoption and implementation of regulations that would restrict emissions of GHGs under existing provisions of the CAA. For example, in 2009, the EPA issued a final rule requiring the annual reporting of GHG emissions from specified large GHG emission sources. In 2010, the EPA published a final rule expanding its existing GHG emissions reporting rule for certain petroleum and natural gas facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year. The rule requires reporting of GHG emissions by such regulated facilities to the EPA annually. The EPA also requires certain large stationary sources that are already subject to permitting requirements under the CAA to obtain permits for GHG emissions as well.
Although it is not currently possible to predict how any proposed or future GHG legislation or regulation by Congress, the EPA, the states or multi-state regions will impact our business, any legislation or regulation of GHG emissions that may be imposed in areas in which we conduct business could result in increased compliance costs or additional operating restrictions or reduced demand for our services, and could have a material adverse effect on our business, financial condition and results of operations.
As part of our operations, we utilize or store petroleum products and other substances such as diesel fuel, lubricating oils and hydraulic fluid. We are subject to regulatory programs pertaining to the storage, use, transportation and disposal of these substances, including Spill Prevention, Control and Countermeasure planning requirements. Spills or releases may occur in the course of our operations, and we could incur substantial costs and liabilities as a result of such spills or releases, including those relating to claims for damage or injury to property and persons. Additionally, some of our operations are located on properties that historically have been used in ways that resulted in the release of contaminants, including hazardous substances, into the environment, and we could be held liable for the remediation of such historical contamination. The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA,” also known as the Superfund law) and comparable state laws impose joint and several liability, without regard to fault or legality of conduct, on classes of persons who are considered to be responsible for the release of hazardous substances into the environment. These persons include the owner or operator of the site where the release occurred and anyone who disposed or arranged for the disposal of a hazardous substance released at the site. Under CERCLA, such persons may be subject to liability for the costs of cleaning up the hazardous substances, for damages to natural resources, and for the costs of certain health studies. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.
In the course of our operations, we generate industrial solid wastes that may be regulated as hazardous wastes. The Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. The EPA and the individual states to which the EPA has delegated portions of the RCRA program for local implementation, administer the RCRA program.
In September 2013, the EPA issued RCRA consent orders to several companies, including us, in connection with historic contamination of residential drinking water wells near the Wedron, Illinois facility. The EPA identified benzene and other volatile organic compounds in some drinking water wells, some (including benzene) in excess of established standards. The consent orders required the companies to analyze soil conditions at their sites to determine whether operations at their sites are potential sources of groundwater contamination. We completed the
 
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study for our site, and our consultant submitted a site conditions report to the EPA in August 2014, which report concluded that our operations at the site are not a source of groundwater impacts in the Wedron community. The report recommended that no further work should be required under the consent order. We have also submitted a work plan to the Illinois Environmental Protection Agency to perform additional investigation of potential releases of petroleum at the Wedron facility south of the residential areas of the community. If the government agencies do require us to conduct any additional work or remediation that could increase our costs, and depending on the scope of any such additional work (if any), could be material.
Although we do not directly engage in hydraulic fracturing activities, we supply sand-based proppants to hydraulic fracturing operators in the oil and natural gas industry. Hydraulic fracturing involves the injection of water, sand and chemicals, under pressure, into the formation to fracture the surrounding rock and stimulate production. The hydraulic fracturing process is typically regulated by state or local governmental authorities. However, the practice of hydraulic fracturing has become controversial in some areas and is undergoing increased scrutiny. Several federal agencies and regulatory authorities are investigating the potential environmental impacts of hydraulic fracturing and whether additional regulation may be necessary. The U.S. Environmental Protection Agency has asserted limited federal regulatory authority over hydraulic fracturing and has indicated it may seek to further expand its regulation of hydraulic fracturing. The Bureau of Land Management has proposed regulations applicable to hydraulic fracturing conducted on federal and Indian oil and gas leases. Congress has from time to time considered the adoption of legislation to provide for federal regulation of hydraulic fracturing. In addition, various state, local and foreign governments have implemented, or are considering, increased regulatory oversight of hydraulic fracturing through additional permitting requirements, operational restrictions, disclosure requirements and temporary or permanent bans on hydraulic fracturing in certain areas such as environmentally sensitive watersheds. Numerous states have imposed disclosure requirements on hydraulic fracturing well owners and operators. Some local governments have adopted and others may seek to adopt ordinances prohibiting or regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities within their jurisdictions.
The adoption of new laws or regulations at the federal, state, local or foreign levels imposing reporting obligations on, or otherwise limiting or delaying, the hydraulic fracturing process could make it more difficult to complete oil and natural gas wells, increase our customers’ costs of compliance and doing business, and otherwise adversely affect the hydraulic fracturing services they perform, which could negatively impact demand for our sand-based proppants.
Our operations may also be subject to broad environmental review under the National Environmental Policy Act (“NEPA”). NEPA requires federal agencies to evaluate the environmental impact of all “major federal actions” significantly affecting the quality of the human environment. The granting of a federal permit for a major development project, such as a mining operation, may be considered a “major federal action” that requires review under NEPA. Therefore, our projects may require review and evaluation under NEPA. As part of this evaluation, the federal agency considers a broad array of environmental impacts, including, among other things, impacts on air quality, water quality, wildlife (including threatened and endangered species), historical and archeological resources, geology, socioeconomics and aesthetics. NEPA also requires the consideration of alternatives to the project. The NEPA review process, especially the preparation of a full environmental impact statement, can be time consuming and expensive. The purpose of the NEPA review process is to inform federal agencies’ decision-making on whether federal approval should be granted for a project and to provide the public with an opportunity to comment on the environmental impacts of a proposed project. Though NEPA requires only that an environmental evaluation be conducted and does not mandate a result, a federal agency could decide to deny a permit, or impose certain conditions on its approval, based on its environmental review under NEPA, or a third party may challenge the adequacy of a NEPA review and thereby delay the issuance of a federal permit or approval.
Federal agencies granting permits for our operations also must consider impacts to endangered and threatened species and their habitat under the Endangered Species Act. We also must comply with and are subject to liability under the Endangered Species Act, which prohibits and imposes stringent penalties for the harming of endangered or threatened species and their habitat. Some of our operations are conducted in areas where protected species or their habitats are known to exist. In these areas, we may be obligated to develop and
 
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implement plans to avoid potential adverse effects to protected species and their habitats, and we may be prohibited from conducting operations in certain locations or during certain times, such as breeding and nesting seasons, when our operations could have an adverse effect on the species. Federal agencies also must consider a project’s impacts on historic or archeological resources under the National Historic Preservation Act, and we may be required to conduct archeological surveys of project sites and to avoid or preserve historical areas or artifacts.
State and Local Regulation
Because our operations are located in numerous states, we are also subject to a variety of different state and local environmental review and permitting requirements. Some states in which our projects are located or are being developed have state laws similar to NEPA; thus our development of new sites or the expansion of existing sites may be subject to comprehensive state environmental reviews even if it is not subject to NEPA. In some cases, the state environmental review may be more stringent than the federal review. Our operations may require state-law based permits in addition to federal permits, requiring state agencies to consider a range of issues, many the same as federal agencies, including, among other things, a project’s impact on wildlife and their habitats, historic and archaeological sites, aesthetics, agricultural operations and scenic areas. Some states also have specific permitting and review processes for commercial silica mining operations, and states may impose different or additional monitoring or mitigation requirements than federal agencies. The development of new sites and our existing operations also are subject to a variety of local environmental and regulatory requirements, including land use, zoning, building and transportation requirements.
As demand for sand-based proppants in the oil and natural gas industry has driven a significant increase in current and expected future production of silica sand, some local communities have expressed concern regarding silica sand mining operations. These concerns have generally included exposure to ambient silica sand dust, truck traffic, water usage and blasting. In response, certain state and local communities have developed or are in the process of developing regulations or zoning restrictions intended to minimize dust from getting airborne, control the flow of truck traffic, significantly curtail the amount of practicable area for mining activities, require compensation to local residents for potential impacts of mining activities and, in some cases, ban issuance of new permits for mining activities. To date, we have not experienced any material impact to our existing mining operations or planned capacity expansions as a result of these types of concerns. We are not aware of any proposals for significant increased scrutiny on the part of state or local regulators in the jurisdictions in which we operate or community concerns with respect to our operations that would reasonably be expected to have a material adverse effect on our business, financial condition or results of operations going forward.
Planned expansion of our mining and production capacity or construction and operation of related facilities in new communities could be more significantly impacted by increased regulatory activity. Difficulty or delays in obtaining or inability to obtain new mining permits or increased costs of compliance with future state and local regulatory requirements could have a material negative impact on our ability to grow our business. In an effort to minimize these risks, we continue to be engaged with local communities in order to grow and maintain strong relationships with residents and regulators.
Costs of Compliance
We may incur significant costs and liabilities as a result of environmental, health and safety requirements applicable to our activities. Failure to comply with environmental laws and regulations may result in the assessment of administrative, civil and criminal penalties, imposition of investigatory, cleanup and site restoration costs and liens, the denial or revocation of permits or other authorizations and the issuance of injunctions to limit or cease operations. Compliance with these laws and regulations may also increase the cost of the development, construction and operation of our projects and may prevent or delay the commencement or continuance of a given project. In addition, claims for damages to persons or property may result from environmental and other impacts of our activities. In addition, the clear trend in environmental regulation is to place more restrictions on activities that may
 
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affect the environment, and thus, any changes in, or more stringent enforcement of, these laws and regulations that result in more stringent and costly pollution control equipment, waste handling, storage, transport, disposal or remediation requirements could have a material adverse effect on our operations and financial position.
The process for performing environmental impact studies and reviews for federal, state and local permits for our operations involves a significant investment of time and monetary resources. We cannot control the permit approval process. We cannot predict whether all permits required for a given project will be granted or whether such permits will be the subject of significant opposition. The denial of a permit essential to a project or the imposition of conditions with which it is not practicable or feasible to comply could impair or prevent our ability to develop a project. Significant opposition by neighboring property owners, members of the public or other third parties, as well as any delay in the environmental review and permitting process, could impair or delay our ability to develop or expand a project. Additionally, the passage of more stringent environmental laws could impair our ability to develop new operations and have an adverse effect on our financial condition and results of operations.
 
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 MANAGEMENT
Directors and Executive Officers
The following table sets forth the names, ages and titles of our directors and executive officers as of June 30, 2014:

Name	 	Age	 	  	Title	
Jenniffer D. Deckard	 	 	48	  	  	President and Chief Executive Officer and Director	
Christopher L. Nagel	 	 	52	  	  	Chief Financial Officer and Vice President of Finance	
Joseph D. Fodo	 	 	57	  	  	Executive Vice President and Chief Operating Officer	
Van T. Smith	 	 	45	  	  	Executive Vice President	
Gerald L. Clancey	 	 	44	  	  	Executive Vice President	
William E. Conway	 	 	86	  	  	Director	
Charles D. Fowler	 	 	68	  	  	Director	
William P. Kelly	 	 	64	  	  	Director	
Matthew F. LeBaron	 	 	43	  	  	Director	
Michael E. Sand	 	 	32	  	  	Director	
Lawrence N. Schultz	 	 	66	  	  	Director	
Set forth below is the description of the backgrounds of our directors and executive officers.
Jenniffer D. Deckard. Ms. Deckard has served as our President and Chief Executive Officer since 2013. Previously, Ms. Deckard served as our President from January 2011 until May 2013, our Vice President of Finance and Chief Financial Officer from 1999 until 2011, our Corporate Controller from 1996 to 1999 and our Accounting Manager from 1994 until 1996. In her local community, Ms. Deckard serves on the Boards of Directors for the Cleveland Foundation, the Greater Cleveland Partnership, the Chardon Healing Fund, and the First Tee of Cleveland. She also serves on the Case Western Weatherhead School of Management’s Visiting Committee and the Board of Directors for the Fairmount Santrol Foundation. Ms. Deckard received a B.S. from the University of Tulsa and an MBA from Case Western Reserve University. We believe that Ms. Deckard’s experience in a variety of roles in the Company, and her contributions to its continued growth, qualify her to serve on our board of directors.
Christopher L. Nagel . Mr. Nagel has served as the Chief Financial Officer of Fairmount Santrol since joining the Company in June 2011. Prior to joining Fairmount, Mr. Nagel was the Chief Financial Officer of Enesco, Inc. from 2010 until May 2011. He was the Chief Financial Officer of FreightCar America from 2009 until 2010. Mr. Nagel has previously held management positions at Wallick Companies and Scotts MiracleGro. Mr. Nagel received a B.S. from Ohio State University and holds a CPA (inactive).
Joseph D. Fodo . Mr. Fodo has served as our Executive Vice President and Chief Operating Officer since January 2011. Previously, Mr. Fodo served as our Vice President of Operations from January 2002 until January 2011 and Director of Operations and Vice President of Operations within the Industrial Sand Division, from October 1999 until January 2002. Prior to joining the company, Mr. Fodo was Vice President of Operations for Oglebay Norton. He currently serves as the Chairman of the Sustainable Development Task Force for The Industrial Minerals Association of North America. Mr. Fodo received a B.S. in Mining Engineering from Ohio State University.
Van T. Smith . Mr. Smith has served as our Executive Vice President of Santrol since 2012. Previously, Mr. Smith served as Vice President of Santrol from 2010 until 2012 and Corporate Account Manager of Santrol from 2007 until 2010. Prior to 2007, Mr. Smith served in a variety of technical and sales roles since joining the company in 1991. He is as an active member of the Society of Petroleum Engineers and currently serves on Fairmount Santrol’s advisory committee for sustainable development. Mr. Smith received a B.S. from the University of Virginia and an Executive M.B.A. from Rice University.
 
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Gerald L. Clancey . Mr. Clancey has served as our Executive Vice President of Supply Chain and I&R since 2011. Mr. Clancey previously served as Vice President of Sales for the Industrial and Recreational Markets from 2002 to 2011 and as General Sales Manager for our TechniSand resin coated foundry division from 1998 to 2002. He has served on the Board of Directors for the Foundry Educational Foundation and was the President of the foundation for the 2009 to 2010 term. Mr. Clancey received a B.S. from Kent State University and an M.B.A. from the University of Notre Dame.
William E. Conway . Mr. Conway has served as Chairman of the Board (emeritus) since 2010. Mr. Conway acquired Best Sand in 1978 and invested in Wedron Silica in 1984 (along with Chuck Fowler and the Wedron Silica management team). Best Sand and Wedron Silica then merged to form Fairmount Santrol in 1986, Mr. Conway served as Chairman of the Board and Chief Executive Officer from 1978 until 1996. From 1996 until 2011, he served as Chairman of the Board. Prior to entering the industrial minerals business in 1978, Mr. Conway held management positions with Pickands Mather & Co., Diamond Shamrock Corporation and Midland-Ross Corporation. Mr. Conway serves on the Board of Directors for the Cleveland Clinic Foundation, University School and Cleveland Botanical Garden, He received a B.S. from Yale University and completed the Executive M.B.A. Program at the University of California, Berkeley. We believe that Mr. Conway’s experience as a founder, President and Chief Executive Officer of the Company, as well as his broad knowledge of the proppant industry, qualify him for service on our board of directors.
Charles D. Fowler . Mr. Fowler has served as a director since 1984 and is chairman of the Executive Committee of the Board. Mr. Fowler and the Wedron Silica management team partnered with Mr. Conway in 1984 to acquire Wedron Silica Company, and ultimately to merge the two sand companies to create Fairmount Minerals in 1986. Mr. Fowler served as the President and Chief Executive Officer of Fairmount from 1996 until his retirement in 2013. Mr. Fowler serves as Chairman of the Board of Trustees of Case Western Reserve University and serves on the Board of Directors for Flying Horse Farms, DDC Clinic and the Greater Cleveland Water Alliance. He received a B.S. from Purdue University and completed the Executive M.B.A. program at Case Western University. We believe that Mr. Fowler’s experience as a founder, President and Chief Executive Officer of the Company, and his broad knowledge of the proppant industry, qualify him for service on our board of directors.
William P. Kelly. Mr. Kelly has been a member of the Board since 2005. Mr. Kelly served as Chairman and Chief Executive Officer of Unifrax Corporation from 1996 to 2006 and is currently a Board member. Mr. Kelly also sits on the Board of Smart Source computer and AV Rentals. In 2010, Mr. Kelly joined the Executive Council of American Securities. He received a B.S. degree from Alfred University and an M.B.A. from Duquesne University. He also attended the Tuck Executive Program at Dartmouth. We believe that Mr. Kelly’s executive and boardroom experience qualify him for service on our board of directors.
Matthew F. LeBaron. Mr. LeBaron has served as Chairman of the Board since 2010. Mr. LeBaron joined American Securities in 1999 and currently serves as a Managing Director. Previously, Mr. LeBaron was a private equity investor at Bain Capital, Inc. and a consultant at The Boston Consulting Group. Mr. LeBaron is Chairman of the Board of FiberMark, GT Technologies, Lakeside Energy, Liberty Tire Recycling and The United Distribution Group. He received a B.A. from Amherst College and an M.B.A. from the Harvard Business School. We believe that Mr. LeBaron’s background in finance and private equity investing and as his extensive boardroom experience qualify him to serve on our board of directors.
Michael E. Sand . Mr. Sand has served as a director since 2010. Mr. Sand joined American Securities in 2005 and currently serves as a Principal at the firm. Previously, Mr. Sand worked at Goldman Sachs, where he focused on mergers and acquisitions and strategic advisory assignments. Mr. Sand is a member of the Board of Directors of Unison Site Management. He received a B.S. from the University of Pennsylvania and an M.B.A. from Columbia University. We believe that Mr. Sand’s background in finance, private equity investing and mergers and acquisitions qualify him to serve on our board of directors.
 
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Lawrence N. Schultz . Mr. Schultz has been a member of the Board since 2010 and currently serves as chairman of the Audit Committee of the Board. Until June of 1978, Mr. Schultz served as an officer of Central National Bank of Cleveland, now a part of KeyBank N.A., while attending the M.B.A. and J.D. programs at Cleveland State University. He joined Calfee, Halter & Griswold L.P. in 1978 after receiving his J.D. degree from Cleveland State University. Mr. Schultz served on Calfee’s Executive Committee (from 1995) and its Management Committee (from 2005), in each case through his retirement. He served as principal outside counsel and Secretary to Agilysys, Inc., a NASDAQ listed company, from 1999 until his retirement in 2010 and serves on the Advisory Boards of L.D. Kichler Company and Austin Powder Holding Co., Inc. Mr. Schultz received his B.A. degree from Ohio Northern University in 1970. At the time of his retirement, Mr. Schultz served on the Boards and Executive Committees of University Circle Inc. and The Deaconess Foundation, including as chair of their Audit Committees, and was chairman of the Board of The Gordon Square Arts District. We believe that Mr. Schultz’s legal background and boardroom experience qualify him to serve on our board of directors.
Board of Directors
Our board of directors currently consists of seven members, Ms. Deckard and Messrs. Conway, Fowler, Kelly, LeBaron, Sand and Schultz. We anticipate that our board will determine that each of Messrs.                     ,                     ,                      and                      are independent under the independence standards of the NYSE.
In evaluating director candidates, we will assess whether a candidate possesses the integrity, judgment, knowledge, experience, skills and expertise that are likely to enhance the board’s ability to manage and direct our affairs and business, including, when applicable, to enhance the ability of the committees of the board to fulfill their duties. We currently are in the process of identifying individuals who meet these standards and the relevant independence requirements. Our directors hold office until the earlier of their death, resignation, retirement, disqualification or removal or until their successors have been duly elected and qualified.
In connection with the completion of this offering, our directors will be divided into three classes serving staggered three-year terms. Class I, Class II and Class III directors will serve until our annual meetings of stockholders in 2015, 2016 and 2017, respectively. We anticipate that Messrs.                      and                      will be assigned to Class I, Messrs.                      and                      will be assigned to Class II and Messrs. LeBaron, Sand and                      will be assigned to Class III. At each annual meeting of stockholders held after the initial classification, directors will be elected to succeed the class of directors whose terms have expired. This classification of our board of directors could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors.
Committees of the Board of Directors
Upon the completion of this offering, we intend to have an audit committee, a compensation committee and a nominating and governance committee of our board of directors, and may have such other committees as the board of directors shall determine from time to time. We anticipate that each of the standing committees of the board of directors will have the composition and responsibilities described below.
Audit Committee
Our audit committee currently consists of                      and                     , each of whom is independent under the rules of the SEC. As required by the rules of the SEC and listing standards of the NYSE, the audit committee consists solely of independent directors. SEC rules also require that a public company disclose whether or not its audit committee has an “audit committee financial expert” as a member. An “audit committee financial expert” is defined as a person who, based on his or her experience, possesses the attributes outlined in such rules. At least one of our independent directors satisfies the definition of “audit committee financial expert.”
 
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This committee will oversee, review, act on and report on various auditing and accounting matters to our board of directors, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. In addition, the audit committee will oversee our compliance programs relating to legal and regulatory requirements. We expect to adopt an audit committee charter defining the committee’s primary duties in a manner consistent with the rules of the SEC and applicable stock exchange or market standards.
Compensation Committee
Our compensation committee currently consists of                      ,                      and                      all of whom are “independent” under the rules of the SEC. This committee will establish salaries, incentives and other forms of compensation for officers and other employees. Our compensation committee will also administer our incentive compensation and benefit plans. We expect to adopt a compensation committee charter defining the committee’s primary duties in a manner consistent with the rules of the SEC and applicable stock exchange or market standards.
Nominating and Corporate Governance Committee
We will establish a nominating and corporate governance committee shortly after the completion of this offering. We anticipate that the nominating and corporate governance committee will consist of three directors who will be “independent” under the rules of the SEC. This committee will identify, evaluate and recommend qualified nominees to serve on our board of directors, develop and oversee our internal corporate governance processes and maintain a management succession plan. We expect to adopt a nominating and corporate governance committee charter defining the committee’s primary duties in a manner consistent with the rules of the SEC and applicable stock exchange or market standards.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serve on the board of directors or compensation committee of a company that has an executive officer that serves on our board or compensation committee. No member of our board is an executive officer of a company in which one of our executive officers serves as a member of the board of directors or compensation committee of that company.
Code of Business Conduct and Ethics
Prior to the completion of this offering, our board of directors will adopt a code of business conduct and ethics applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of this code may be made only by our board of directors and will be promptly disclosed as required by applicable U.S. federal securities laws and the corporate governance rules of the NYSE.
Corporate Governance Guidelines
Prior to the completion of this offering, our board of directors will adopt corporate governance guidelines in accordance with the corporate governance rules of the NYSE.
 
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 EXECUTIVE COMPENSATION
2013 Summary Compensation Table
The following table summarizes the compensation awarded to, earned by, or paid to our principal executive officer and our next two most highly-compensated executive officers (our “Named Executive Officers”) for the year ended December 31, 2013. All numbers included in this Executive Compensation disclosure below are represented without reflecting our stock split.

Name and Principal Position	  	Year	 	  	Salary	 	  	Option
Awards
(1)	 	  	Non-Equity
Incentive Plan
Compensation
(2)	 	  	All Other
Compensation
(3)	 	  	Total	 	
Jenniffer D. Deckard,
President and
Chief Executive Officer	  	 	2013	  	  	$	360,500	  	  	$	473,050	  	  	$	173,490	  	  	$	39,909	  	  	$	1,046,949	  	
							
Christopher L. Nagel,
Executive Vice President and
Chief Financial Officer	  	 	2013	  	  	$	318,270	  	  	$	473,050	  	  	$	153,321	  	  	$	28,641	  	  	$	973,282	  	
							
Joseph D. Fodo,
Executive Vice President,
Chief of Operations	  	 	2013	  	  	$	275,834	  	  	$	473,050	  	  	$	133,053	  	  	$	39,362	  	  	$	921,299	  	

(1)	Amounts reported in this column reflect the aggregate grant date fair value of stock options that vest based on either time or performance metrics, computed in accordance with FASB ASC Topic 718, for awards made to each Named Executive Officer during 2013. See Note 15 to our consolidated financial statements for the year ended December 31, 2013 for additional detail regarding assumptions underlying the value of these equity awards.	
(2)	Reflects amounts earned for services performed in 2013 pursuant to our annual cash incentive program, which amounts were paid during the first quarter of 2014. This amount also includes a safety bonus payment received by each Named Executive Officer for 2013. Ms. Deckard, Mr. Nagel, and Mr. Fodo each received a safety bonus payment in the amount of $1,315.	
(3)	Amounts reported in the “All Other Compensation” column include company contributions on the Named Executive Officers’ behalf to our 401(k) retirement plan, employee stock bonus plan, and supplemental executive retirement plan, as well as the cost of providing supplemental life insurance, supplemental disability insurance, car allowance amounts and club dues, as shown in the following table:	

Name	 	401(k) Plan
Contributions(1)	 	 	Employee
Stock
Bonus
Plan(2)	 	 	Supplemental
Executive
Retirement
Plan(3)	 	 	Life
Insurance(4)	 	 	Disability
Insurance(5)	 	 	Car
Allowance(6)	 	 	Club
Dues(7)	 	 	Total	 	
Jenniffer D. Deckard	 	$	6,375	  	 	$	11,705	  	 	$	5,936	  	 	$	4,453	  	 	$	271	  	 	 	—  	  	 	$	11,169	  	 	$	39,909	  	
Christopher L. Nagel	 	 	—  	  	 	$	11,705	  	 	$	3,876	  	 	$	961	  	 	 	—  	  	 	 	—  	  	 	$	12,099	  	 	$	28,641	  	
Joseph D. Fodo	 	$	6,375	  	 	$	11,705	  	 	$	1,807	  	 	$	7,341	  	 	$	842	  	 	$	11,292	  	 	 	—  	  	 	$	39,362	  	

(1)	Amounts included in this column represent the value of our match of the Named Executive Officers’ contributions in 2013 to the Fairmount Minerals Retirement Savings Trust and Plan, which we refer to as our “401(k) plan.”	
(2)	Amounts included in this column represent the value of our contributions on behalf of each Named Executive Officer to the Fairmount Minerals Employee Stock Bonus Trust and Plan for services provided during 2013, which we refer to as our “stock bonus plan.”	
(3)	Amounts included in this column represent the value of company contributions on behalf of each Named Executive Officer under the Fairmount Minerals Supplemental Executive Retirement Plan for services provided during 2013, which we refer to as the “supplemental executive retirement plan.”	
 
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(4)	Amounts included in this column represent the cost of supplemental life insurance premiums paid by us in 2013 on behalf of each Named Executive Officer.	
(5)	Amounts included in this column represent the cost of supplemental disability insurance premiums paid by us in 2013 on behalf of each Named Executive Officer.	
(6)	The amount included in this column represents the full car allowance paid by us in 2013 to Mr. Fodo.	
(7)	Amounts included in this column represent the full amount of the club dues and associated initiation fee, if applicable, paid by us on behalf of Ms. Deckard and Mr. Nagel.	
Base Salary
Each Named Executive Officer’s base salary is a fixed component of compensation each year for performing specific job duties and functions. Historically, our compensation committee established the annual base salary rate for our Chief Executive Officer. As for the other Named Executive Officers, the compensation committee of our board of directors has established the annual base salary rate at a level necessary to retain the individual’s services, and reviews base salaries on an annual basis in consultation with the Chief Executive Officer, as well as at the time of any promotion or significant change in job responsibility. The compensation committee has historically made adjustments to the base salary rates of the Named Executive Officers upon consideration of any factors that it deems relevant, including but not limited to: (a) any increase or decrease in the executive’s responsibilities, (b) the executive’s job performance, and (c) the level of compensation paid to executives of other companies with which we compete for executive talent, as estimated based on publicly available information and the experience of members of our board of directors and our Chief Executive Officer. The base salary paid to each Named Executive Officer in the 2013 fiscal year is reported in the Summary Compensation Table above.
Annual Bonus
The goal of our annual bonus program is to incentivize our employees and executives to achieve certain performance objectives. Our compensation committee works with our Chief Executive Officer to establish a target bonus for each of our Named Executive Officers. Our compensation committee establishes the target bonus level for our Chief Executive Officer. For 2013 the target bonus for each of our Named Executive Officers was 60% of base salary. The amount of that target bonus actually paid to each Named Executive Officer in any given year is dependent upon the extent to which we achieve the performance objectives established under the annual bonus program for that year.
In an effort to create a set of clear, concise, effective and measurable performance indicators which are most directly correlated to value creation and sustainable corporate growth, we carefully selected two performance metric categories to make up the annual cash bonus program for 2013: (i) sustainable development, and (ii) EBITDA. The relative weighting of these performance metrics is established by the compensation committee after reviewing recommendations from the management team. In 2013, each was weighted equally.
Sustainable development objectives are set at the beginning of the year by each of our thirteen sustainable development teams and approved by the Sustainable Development Advisory Committee. Following the end of the year, each of those teams calculates the percentage of their sustainable development objective that was achieved during the year and submits that analysis to our Sustainable Development Advisory Committee, which reviews and analyzes the performance of each sustainable development team. Once the performance percentages have been reviewed and approved, all thirteen team performance percentages are averaged to calculate the total sustainable development performance percentage. Each of the thirteen sustainable development performance percentages are capped at 125% of objective, with a floor of 0% of each objective, as is the overall sustainable development performance percentage. The overall sustainable development performance percentage is then presented to and approved by the compensation committee. Examples of sustainable development objectives established by our sustainable development teams and used during the 2013 Fiscal Year include the development
 
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of a five year water management and reduction plan and the reduction of year-end solid waste volume by 50% compared to the 2012 fiscal year.
Before the beginning of each year, the board of directors works with our management team to establish a budget for our company for the next year. Once the budget has been approved, our compensation committee approves the threshold level of EBITDA that will result in any payment with respect to the EBITDA performance metric as well as the performance percentage applicable to varying levels of EBITDA performance above and below that threshold level for the upcoming year. At the end of each year the compensation committee works with management to approve their recommendation as to the performance percentage achieved based on our actual EBITDA performance as compared to budget. The chart below outlines the levels of achievement of budgeted EBITDA and correlating performance percentages established by the compensation committee for years after 2013. Performance between the levels outlined below will be calculated using straight line interpolation.

Percentage of Budgeted
EBITDA Achieved	  	Performance Percentage for  EBITDA
Performance Metric	
85.0%	  	0.0%	
86.6%	  	10.8%	
88.0%	  	19.7%	
89.3%	  	28.6%	
90.6%	  	37.6%	
92.0%	  	46.5%	
93.3%	  	55.4%	
94.6%	  	64.3%	
96.0%	  	73.2%	
97.3%	  	82.2%	
98.7%	  	91.1%	
100.0%	  	100.0%	
101.3%	  	116.4%	
102.7%	  	132.8%	
104.0%	  	149.2%	
105.4%	  	165.6%	
106.7%	  	182.0%	
In order to calculate the amount of the annual bonus payable to each of our Named Executive Officers under the annual bonus plan, the average of the performance percentage for sustainable development is multiplied by one-half of the Named Executive Officer’s target bonus amount, and the performance percentage for EBITDA is multiplied by one-half of each Named Executive Officer’s target bonus amount. The sum of these two amounts is equivalent to the actual bonus earned. Notwithstanding the above, the compensation committee retains the authority to increase or decrease the amount of the actual bonuses paid under the annual bonus program. The Named Executive Officers must generally be employed on the date the awards are actually paid in order to receive payment.
In 2013, the board of directors adopted a pro forma budget as a result of certain acquisitions, and the compensation committee used its discretion to apply the performance percentages and EBITDA achievement levels established earlier in the year to the EBITDA level used in the pro forma budget rather than the original budgeted EBITDA levels. The final EBITDA performance percentage was 67% of the pro forma EBITDA target and the overall sustainable development performance percentage was approximately 92%, resulting in a total payout of 80% of target bonus. As a result, each Named Executive Officer was eligible for approximately 80% (the average of the EBITDA and sustainable development performance percentages) of his or her target bonus subject to the discretion of the compensation committee.
 
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Safety Bonus
Additionally, our Named Executive Officers are eligible for a safety bonus payment of up to $1,800 per year. Such bonus payments are payable in equal monthly installments and calculated based on three equally weighted categories: 1) individual safety, 2) facility safety, and 3) overall safety record of the company. Each monthly installment is decreased if an incident/accident occurs. The amount of the decrease is dependent on how many of the aforementioned categories are applicable to the accident, with each category reducing the payment by one-third.
The total amount paid under the annual bonus program and the safety bonus program to each of our Named Executive Officers is enumerated in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table, above.
Option Awards
On December 7, 2010, in order to incentivize our management, employees, and directors to continue to grow and develop our business, the board of directors adopted our current LTIP, the FML Holdings, Inc. Stock Option Plan (the “2010 Plan”), for the officers, employees, and consultants of our company and its subsidiaries who perform services for us. Unless earlier terminated, the term of the 2010 Plan will continue for a period of ten years after adoption. There are 350,000 shares of our common stock reserved for issuance under the 2010 Plan. As of June 30, 2014, 21,550 shares remain available for issuance under the plan and 328,450 shares are subject to outstanding stock options. The 2010 Plan allows for the issuance of either nonqualified stock options or incentive stock options; however, all options granted under the 2010 Plan as of December 31, 2013 have been nonqualified stock options.
In December 2013, our Chief Executive Officer evaluated the performance of each Named Executive Officer (other than herself) in order to make recommendations to the compensation committee regarding the number of stock options to be granted to each of the Named Executive Officers under the 2010 Plan for the 2013 fiscal year. When determining the size and terms of the stock option awards granted to our Named Executive Officers in December 2013, our compensation committee considered our Chief Executive Officer’s recommendations along with other factors that include, but are not limited to, overall company performance, each executive’s level and scope of responsibility, and the compensation paid to similarly situated executives of companies with which we compete for executive talent (to the extent such information is publically available).
The option awards granted to our Named Executive Officers under the 2010 Plan during 2013 will be fully vested and exercisable on the seventh anniversary of the grant date, provided that the Named Executive Officers continue to provide services to us through that date. However, if EBITDA for a year prior to the seventh anniversary equals or exceeds the annual or cumulative target enumerated in the option agreement, all or a portion of the option may become vested and exercisable prior to the seven year anniversary. All stock options granted under the 2010 Plan expire on the tenth anniversary of the grant date. For additional information regarding the terms of the 2010 Plan and award agreements issued to our Named Executive Officers thereunder please see the section below entitled “—Additional Narrative Disclosure—Stock Options.
Other Compensation Elements
We offer participation in broad-based retirement, health and welfare plans to all of our employees. We currently maintain a retirement plan intended to provide benefits under Section 401(k) of the Internal Revenue Code (the “Code”) where employees, including our Named Executive Officers, are allowed to contribute portions of their base compensation and bonus payments to a tax-qualified retirement account. We also maintain a defined contribution profit sharing plan for the benefit of all of our employees as well as a separate supplemental executive retirement plan. See “Additional Narrative Disclosure—Retirement Benefits” for more information. In addition, minimal perquisites have historically been provided to our Named Executive Officers, including a car
 
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allowance and club dues. Details regarding these perquisites and the value of all such benefits provided during 2013 are available in the notes to the column of the Summary Compensation Table entitled “All Other Compensation”.
Outstanding Equity Awards at Fiscal Year-End
The following table reflects information regarding outstanding equity-based awards held by our Named Executive Officers as of December 31, 2013.

 	  	Option Awards	 	
Name
(a)     	  	Number of Securities
Underlying
Unexercised Options
(#) Exercisable
(b)	 	 	Equity Incentive Plan
Awards: Number of
Securities Underlying
Unexercised Unearned
Options (#)
(d) (2)	 	  	Option
Exercise
Price ($)
(e)	 	  	Option
Expiration
Date
(f)	 	
Jenniffer Deckard	  	 	12,000	(1) 	 	 	—  	  	  	$	48.40	  	  	 	10/22/2019	  	
	  	 	4,500	  	 	 	3,000	  	  	$	121.05	  	  	 	12/7/2020	  	
	  	 	—   	  	 	 	2,500	  	  	$	355.40	  	  	 	12/10/2023	  	
					
Christopher Nagel	  	 	4,500	  	 	 	3,000	  	  	$	193.10	  	  	 	5/31/2021	  	
	  	 	—  	  	 	 	2,500	  	  	$	355.40	  	  	 	12/10/2023	  	
					
Joseph Fodo	  	 	5,660	(1) 	 	 	—  	  	  	$	29.20	  	  	 	6/23/2016	  	
	  	 	40,000	(1) 	 	 	—  	  	  	$	48.40	  	  	 	6/1/2017	  	
	  	 	25,000	(1) 	 	 	—  	  	  	$	48.40	  	  	 	5/1/2018	  	
	  	 	15,000	(1) 	 	 	—  	  	  	$	48.40	  	  	 	10/22/2019	  	
	  	 	4,500	  	 	 	3,000	  	  	$	121.05	  	  	 	12/7/2020	  	
	  	 	—  	  	 	 	2,500	  	  	$	355.40	  	  	 	12/10/2023	  	

(1)	These stock option awards were granted to our Named Executive Officers under the 2006 Plan. All options granted under the 2006 Plan were granted with respect to Class A Common Stock. All other stock options enumerated above were granted under the 2010 Plan with respect to Class B Non-Voting Common Stock.	
(2)	The option awards in this column were granted to our Named Executive Officers under the 2010 Plan and will be fully vested and exercisable on the seventh anniversary of the grant date, provided that the Named Executive Officers continue to provide services to us through that date. However, if EBITDA for the year equals or exceeds the annual or cumulative target enumerated in the option agreement, all or a portion of the option may become exercisable prior to the seven year anniversary.	
Stock Options
2006 Plan . On April 20, 2006, our company adopted a new stock option plan (the “2006 Plan”) and reserved 2,000,000 shares of common stock for issuance thereunder. Only 930,716 stock options were actually issued under the 2006 Plan before it was frozen on October 29, 2009. No stock options have been granted under the 2006 Plan since October 29, 2010 and no stock options will be granted thereunder in the future. 730,732 shares have been purchased pursuant to the exercise of awards granted under the 2006 Plan and, as of June 30, 2014, 199,984 shares are subject to outstanding stock options.
To the extent not already vested, all option awards granted under the 2006 Plan fully vested upon the AS Group Acquisition, which was considered a “change in control” under our 2006 Plan. Named Executive Officers are able to exercise such options at any time, or from time to time, prior to expiration, provided they continue to provide services to us.
Additionally, pursuant to the applicable award agreement, all options granted under the 2006 Plan, if not previously exercised, generally expire on (i) the ten year anniversary of the option grant date, (ii) the one year
 
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anniversary of the Named Executive Officer’s death, (iii) the expiration of thirty days from the Named Executive Officer’s separation of services within one year of change of control or (iv) immediately on the date the Named Executive Officer ceases to be an employee, officer, or member of the board of directors, unless by reason of death or separation of services within one year of change in control.
2010 Plan . Pursuant to the terms of the 2010 Plan, in the event a corporate event occurs that affects the common stock in such a way that an adjustment is required in order to preserve the benefits intended to be made available under the 2010 Plan, the board of directors will adjust any or all of (i) the number and kind of common stock subject to outstanding stock options and (ii) the exercise price with respect to any outstanding stock option or, if deemed appropriate, make a cash payment to an option holder.
The 2010 Plan also provides that in the event of a transaction (as defined in the 2010 Plan), we may, in our sole discretion and without the consent of the participants, provide for (i) the assumption of the 2010 Plan by the surviving company, (ii) substitute new options at the surviving company with substantially the same terms for options in us, (iii) require the exercise of outstanding options and terminate all unexercised or unexercisable options, or (iv) settle outstanding vested stock options in cash or equity and cancel all such stock options. The following events typically constitute a “transaction” under the 2010 Plan: (a) the sale of all or substantially all of our consolidated assets in any single transaction or series of related transactions, (b) the acquisition by a person or group (other than by us, our subsidiaries or our benefit plans) in one or more transactions of our voting securities representing the majority of the outstanding voting power to elect our directors, (c) any merger or consolidation of us with or into another company unless the holders of our voting securities own voting securities of the surviving company representing a majority of the voting power to elect directors in the same proportions that they held their shares prior to the merger.
Unless otherwise provided in the option agreement or another agreement between the individual and us, the 2010 Plan provides that in the event a payment or right accruing to the recipient would constitute a “parachute payment” (as defined in Section 280G of the Code and the regulations issued thereunder) such payment or right will be reduced to the largest amount or greatest right that will result in no portion of the amount payable or right accruing under the 2010 Plan to be subject to an excise tax under Section 4999 of the Code or being disallowed as a deduction under Section 280G of the Code.
Pursuant to the applicable award agreement, and except as provided below, the Named Executive Officers will forfeit any stock option that is not vested and exercisable as of the date they cease performing services for us, for any reason. If the executive’s employment is terminated for cause (as defined in the 2010 Plan) then the Named Executive Officer will forfeit any outstanding stock options, whether vested or unvested, as of the date of his or her termination of employment. The Named Executive Officer or his or her estate, as applicable, will generally be able to exercise all outstanding and vested stock options until the earlier of (i) the expiration of the option term and (ii) (a) the 12 month anniversary of the executive’s termination of employment due to death or disability (as defined in the 2010 Plan) or (b) the three month anniversary of the date of termination for any reason other than cause, death, or disability.
The award agreements used to grant stock options to the Named Executive Officers under the 2010 Plan further provide that if a Named Executive Officer ceases to provide services to us due to his or her death or disability, and we achieve a level of EBITDA performance for the year of his or her termination of employment that would have caused some or all of his or her stock option award to vest, then the Named Executive Officer or the officer’s estate, as applicable, shall vest in that portion of the stock option award that would have vested had his employment not terminated due to death or disability for that year.
The award agreements also provide that all unvested stock options will vest in the event of a transaction (as defined under the 2010 Plan and summarized above) provided that the Named Executive Officer has continuously provided services to us through the date of the transaction. The award agreements do not provide for any accelerated vesting in connection with any other events or termination of employment.
 
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Retirement Plans Generally
We currently maintain two defined benefit pension plans, but Named Executive Officers are not eligible to participate in such plans. Additionally, we maintain a retirement plan intended to provide benefits under Section 401(k) of the Code which allows employees, including our Named Executive Officers, to contribute portions of their base compensation and bonus payments to a tax-qualified retirement account. We provide matching contributions equal to 50% of the first 5% of employees’ eligible compensation contributed to the plan. Amounts deposited in our 401(k) plan, including matching amounts, are fully vested upon deposit. Because of their higher compensation levels, our Named Executive Officers are generally prevented from receiving what would otherwise be their full employer match under the 401(k) plan. Once the maximum employer match allowable under the 401(k) plan has been made, the remainder of the match is contributed on behalf of the executive to the supplemental executive retirement plan (if the executive elected to participate in that plan).
We may also make contributions under a defined contribution stock bonus plan on behalf of all eligible employees, including the Named Executive Officers. Our compensation committee has full control and discretion over the annual contribution rate which is consistent for every eligible participant, and such amounts are subject to the limits established in the Code. Named Executive Officers’ accounts fully vest after three years of service.
Additionally, under our supplemental executive retirement plan, certain employees, including our Named Executive Officers, may elect to defer up to 15% of their base compensation and bonus compensation. The deferral amount under such plan is equal to the base compensation and bonus deferral elected by the employee minus salary and bonus deferrals credited to their 401(k) plan. We provide contributions under this plan, as well, equal to the excess, if any, of the full intended stock bonus contribution, without regard to limitations under the Code, and the actual stock bonus contribution credited to the Named Executive Officer’s stock bonus plan account. Any amount that would have been contributed under the 401(k) plan but could not be contributed due to limitations under the Code, and is instead contributed to the supplemental executive retirement plan on the Named Executive Officers behalf, is fully vested on deposit. Amounts that would have been contributed under the stock bonus plan but could not be contributed due to limitations under the Code, vest in full after three years of service.
Retirement Plans Upon Retirement, Termination or Change in Control
Amounts in a Named Executive Officer’s 401(k) plan account are fully vested upon deposit and, therefore, no acceleration of vesting occurs on termination of employment, retirement, or change of control.
A Named Executive Officer’s account under the stock bonus plan will become 100% vested (i) upon the Named Executive Officer’s termination of employment due to death or “disability,” or (ii) upon the Named Executive Officer’s involuntary termination of employment following the occurrence of a restructuring. Any amount that would have been contributed under the stock bonus plan but could not be contributed due to limitations under the Code, and was contributed to the supplemental executive retirement plan on the Named Executive Officers behalf, shall vest in the event in the change of control so long as the Named Executive Officer is employed by us on the date of such event. Amounts distributed to the Named Executive Officers under the stock bonus plan are paid in one lump sum payment and may generally be paid upon death, disability, normal retirement, late retirement, or, at the employee’s election, upon any other termination of employment. Amounts under the supplemental executive retirement plan are distributed as soon as possible on or after January 1 coincident with or immediately following the Named Executive Officer’s termination of employment, retirement, death or disability.
Actions Taken After 2013 Fiscal Year
2014 Long Term Incentive Plan
Prior to the completion of this offering, we expect and intend that our board of directors will adopt, and our stockholders will approve, a Long-Term Incentive Plan, or LTIP, to attract and retain employees, directors, and
 
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other service providers. The description of the LTIP set forth below is a summary of the material features of the LTIP. This summary, however, does not purport to be a complete description of all of the provisions of the LTIP and is qualified in its entirety by reference to the LTIP, a copy of which is filed as an exhibit to this registration statement. The LTIP provides for the grant of cash and equity-based awards, including options to purchase shares of our common stock, stock appreciation rights, restricted stock, restricted stock units, bonus stock, dividend equivalents, other stock-based awards, performance awards and annual incentive awards.
Share Limits . Subject to adjustment in accordance with the LTIP,             shares of our common stock will initially be reserved for issuance pursuant to awards under the LTIP, and more specifically, that total amount will be available for issuance of incentive stock options. Shares subject to an award under the LTIP that are canceled, forfeited, exchanged, settled in cash or otherwise terminated, including withheld to satisfy exercise prices or tax withholding obligations, will be available for delivery pursuant to other awards. The shares of our common stock to be delivered under the LTIP will be made available from authorized but unissued shares, shares held in treasury, or previously issued shares reacquired by us, including by purchase on the open market.
In each calendar year, during any part of which the LTIP is in effect, an employee who is a “Covered Employee” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) may not be granted (a) awards (other than awards designated to be paid only in cash or the settlement of which is not based on a number of shares) relating to more than             shares of our common stock, subject to adjustment as provided in the LTIP and (b) awards designated to be paid only in cash, or the settlement of which is not based on a number of shares of our common stock, having a value determined on the date of grant in excess of $        .
Administration . The LTIP will be administered by the compensation committee of our board of directors, which is referred to herein as the “committee,” except in the event our full board of directors chooses to administer the LTIP. Unless otherwise determined by our board of directors, the committee will be comprised of two or more individuals, each of whom qualifies as an “outside director” as defined in Section 162(m) of the Code and a “nonemployee director” as defined in Rule 16b-3 under the Exchange Act. Subject to the terms and conditions of the LTIP and applicable law, the committee has broad discretion to administer the LTIP, including the power to determine the employees, directors and other service providers to whom awards will be granted, to determine the type of awards to be granted and the number of shares of our common stock to be subject to awards and the terms and conditions of awards, to determine and interpret the terms and provisions of each award agreement, to accelerate the vesting or exercise of any award and to make all other determinations and to take all other actions necessary or advisable for the administration of the LTIP.
Eligibility . Officers, directors, employees, and other individuals who provide services to us may be eligible to receive awards under the LTIP. However, the committee has the sole discretion to determine which eligible individuals receive awards under the LTIP.
Stock Options . The committee may grant incentive stock options and options that do not qualify as incentive stock options, except that incentive stock options may only be granted to persons who are our employees or employees of one of our subsidiaries, in accordance with Section 422 of the Code. Except with respect to substitute awards granted in connection with a transaction, the exercise price of a stock option cannot be less than the fair market value of a share of our common stock on the date on which the option is granted and the option must not be exercisable more than ten years from the date of grant. In the case of an incentive stock option granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our capital stock, the exercise price of the stock option must be at least 110% of the fair market value of a share of our common stock on the date of grant and the option must not be exercisable more than five years from the date of grant.
Stock Appreciation Rights . Stock appreciation rights, or SARs, may be granted in connection with, or independent of, a stock option. A SAR is the right to receive an amount equal to the excess of the fair market
 
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value of one share of our common stock on the date of exercise over the grant price of the SAR. SARs will be exercisable on such terms as the committee determines. The term of a SAR will be for a period determined by the committee but will not exceed ten years. SARs may be paid in cash, common stock or a combination of cash and common stock, as determined by the committee in the relevant award agreement.
Restricted Stock . Restricted stock is a grant of shares of our common stock subject to a substantial risk of forfeiture, restrictions on transferability and any other restrictions determined by the committee. Common stock distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, may be subject to the same restrictions and risk of forfeiture as the restricted stock with respect to which the distribution was made.
Restricted Stock Units . Restricted stock units are rights to receive cash, common stock or a combination of cash and common stock at the end of a specified period. Restricted stock units may be subject to restrictions, including a risk of forfeiture, as determined by the committee. The committee may, in its sole discretion, grant dividend equivalents with respect to restricted stock units.
Other Awards . Subject to limitations under applicable law and the terms of the LTIP, the committee may grant other awards including, without limitation, common stock awarded as a bonus, dividend equivalents, convertible or exchangeable debt securities, other rights convertible or exchangeable into common stock, purchase rights for common stock, awards with value and payment contingent upon our performance or any other factors designated by the committee, and awards valued by reference to the book value of our common stock or the value of securities of the securities or the performance of specified subsidiaries. The committee will determine the terms and conditions of all such awards. Cash awards may granted as an element of, or a supplement to, any awards permitted under the LTIP. Awards may also be granted in lieu of obligations to pay cash or deliver other property under the LTIP or under other plans or compensatory arrangements, subject to the terms of the LTIP and applicable law.
Performance and Annual Incentive Awards . The LTIP will also permit the committee to designate certain awards as performance awards or annual incentive awards. Performance and annual incentive awards represent awards with respect to which a participant’s right to receive cash, shares of our common stock, or a combination of both, is contingent upon the attainment of one or more specified performance measures within a specified period. The committee will determine the applicable performance period, the performance goals and such other conditions that apply to each performance and annual incentive award.
Termination of Employment and Non-Competition Agreements . The treatment of an award under the LTIP upon a termination of employment or service to us will be specified in the agreement controlling such award. Additionally, each participant to whom an award is granted under the LTIP may be required to agree in writing as a condition of the granting of such award not to engage in conduct in competition with us or our affiliates after the termination of such participant’s employment or service with us.
Change in Control . Subject to the terms of the applicable award agreement, upon a “change in control” (as defined in the LTIP), the committee may, in its discretion, (i) accelerate the time of exercisability of an award, (ii) require awards to be surrendered in exchange for a cash payment (or no payment if awards are unvested or the price paid in the change of control is equal to or less than the exercise price), (iii) provide for the assumption or substitution or continuation of awards by the successor company or a parent or subsidiary of the successor, or (iv) make other adjustments to awards as the committee deems appropriate to reflect the applicable transaction or event.
Amendment and Termination . The LTIP will automatically expire on the tenth anniversary of its effective date. Our board of directors may amend or terminate the LTIP at any time, subject to any requirement of stockholder approval required by applicable law, rule or regulation. The committee may generally amend the
 
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terms of any outstanding award under the LTIP at any time. However, no action may be taken by our board of directors or the committee under the LTIP that would materially and adversely affect the rights of a participant under a previously granted award without the participant’s consent.
Director Compensation
The following individuals served as members of our board of directors during 2013: Ms. Jenniffer D. Deckard and Messrs. William E. Conway, Charles D. Fowler, William P. Kelly, Matthew E. LeBaron, Michael E. Sand, and Lawrence N. Schultz.
Directors who are our employees or employees of American Securities do not receive any compensation from us for their service on our board of directors. In 2013, Messrs. LeBaron and Sand were each employed by American Securities and Ms. Deckard was employed by us. As such, neither Ms. Deckard nor Messrs. LeBaron and Sand received compensation from us for their service on our board of directors.
Mr. Fowler served as our acting Chief Executive Officer in years prior to 2013. Through May 24, 2013, Mr. Fowler provided transitional advisory services to Ms. Deckard, as his successor to the office of Chief Executive. During this period, Mr. Fowler received payments of base salary, was eligible to receive a monthly safety bonus, and received other benefits available to similarly situated executives, including the provision of supplemental life insurance and supplemental disability insurance, as well as our match of amounts contributed by him to his 401(k) account. On May 24, 2013, Mr. Fowler, retired from employment with us but continued to serve as a member of our board of directors.
Messrs. Conway, Fowler, Kelly, and Schultz were compensated for the 2013 fiscal year as outlined below.

Name	  	Fees Earned or
Paid in Cash
(1)	 	  	Non-Equity
Incentive Plan
Compensation
(2)	 	  	All Other
Compensation
(3)	 	  	Total	 	
William E. Conway	  	$	200,000	  	  	 	—  	  	  	 	—  	  	  	$	200,000	  	
Charles D. Fowler	  	$	20,000	  	  	$	685	  	  	$	185,669	  	  	$	206,354	  	
William P. Kelly	  	$	20,000	  	  	 	—  	  	  	 	—  	  	  	$	20,000	  	
Lawrence N. Schultz	  	$	20,000	  	  	 	—  	  	  	 	—  	  	  	$	20,000	  	

(1)	This column includes all amounts paid for service on our board of directors.	
(2)	For the period of time during which Mr. Fowler was an employee, he received a safety bonus payment in the amount of $685.	
(3)	Mr. Fowler received payments in the amount of $164,011 as compensation for the provision of transitional advisory services. Additionally, we paid supplement life and supplemental disability insurance premiums on his behalf in the amounts of $14,090 and $1,193, respectively, and matched his 401(k) contributions in the amount of $6,375.	
As of December 31, 2013, Messrs. William Kelly and Lawrence Schultz each held 700 unvested stock options and 1,050 vested stock options. These options will be fully vested and exercisable on the seventh anniversary of the grant date, which is December 7, 2017, provided that the directors continue to provide services to us through that date. However, if EBITDA for the year equals or exceeds the annual or cumulative target enumerated in the option agreement, all or a portion of the option may become exercisable prior to the seven year anniversary. As of December 31, 2013, Messrs. Fowler and Conway held no outstanding stock options.
Following the closing of this initial public offering, we plan to implement a new director compensation program to reflect the increased time and responsibility that being the director of a publicly traded company entails. Once that program has been determined it will be disclosed herein.
 
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 PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock that, in connection with the completion of this offering, will be owned by:
 
•	 	the selling stockholders;	
 
•	 	each member of our board of directors;	
 
•	 	each of our Named Executive Officers;	
 
•	 	all of our directors and executive officers as a group; and	
 
•	 	each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock.	
Except as otherwise noted, the person or entities listed below have sole voting and investment power with respect to all shares of our common stock beneficially owned by them, except to the extent this power may be shared with a spouse. All information with respect to beneficial ownership has been furnished by the selling stockholders, directors or named executive officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is c/o FMSA Holdings Inc., 8834 Mayfield Road, Chesterland, Ohio 44026.
To the extent that the underwriters sell more than            shares of common stock, the underwriters have the option to purchase up to an additional            shares from the selling stockholders. The number of shares being offered by the selling stockholders in the table below assumes a full exercise of the underwriters’ option to purchase additional shares of common stock.

 	  	Shares Beneficially Owned
Before this Offering	  	Shares
Offered
Hereby	  	Shares Beneficially Owned
After this Offering	  	Shares Beneficially Owned
After Full Exercise of
Over-Allotment Option	
Name of Beneficial Owner	  	Number	  	Percentage	  		  	Number	  	Percentage	  	Number	  	Percentage	
ASP FML Holdings, LLC(1)	  		  		  		  		  		  		  		
William E. Conway	  		  		  		  		  		  		  		
Charles D. Fowler	  		  		  		  		  		  		  		
Jenniffer D. Deckard	  		  		  		  		  		  		  		
Christopher L. Nagel	  		  		  		  		  		  		  		
Joseph D. Fodo	  		  		  		  		  		  		  		
William P. Kelly	  		  		  		  		  		  		  		
Matthew E. LeBaron(2)	  		  		  		  		  		  		  		
Michael E. Sand(3)	  		  		  		  		  		  		  		
Lawrence N. Schultz	  		  		  		  		  		  		  		
Directors and executive officers as a group (     persons)	  		  		  		  		  		  		  		

*	Less than 1%.	
 
(1)	Represents shares held by ASP FML Holdings, LLC, a Delaware limited liability company referred to as ASP FML Holdings. American Securities Partners V, L.P., American Securities Partners V(B), L.P. and American Securities Partners V(C), L.P., collectively referred to as the ASP Sponsors, are owners of approximately 74% of the limited liability company interests of ASP FML Investco, LLC, a Delaware limited liability company, referred to as ASP FML Investco. ASP FML Co-Invest I, LLC, a Delaware limited liability company referred to as ASP FML Co-Invest I, is the owner of approximately 26% of the limited liability company interests of ASP FML Investco. ASP FML Investco is the owner of approximately 89% of the limited liability company interests of ASP FML Holdings. American Securities Associates V, LLC, a Delaware limited liability company referred to as ASA V, is the general partner of each ASP Sponsor. American Securities LLC, a New York limited liability company referred to as American Securities, provides investment advisory services to each ASP Sponsor and to ASA V, and is the owner of 100% of the issued and outstanding	
 
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 	shares of ASP Manager Corp., the manager of each of ASP FML Holdings, ASP FML Investco and ASP FML Co-Invest I. As such, American Securities may be deemed to have indirect beneficial ownership of the shares held by ASP FML Holdings. The address for ASP FML Holdings is c/o American Securities LLC, 299 Park Avenue, 34th Floor, New York, NY 10171. As referenced in footnotes (2) and (3) below, each of Messrs. LeBaron and Sand may be deemed to have shared voted and investment power over the shares held by ASP FML Holdings. Such individuals disclaim beneficial ownership of the shares of common stock held by ASP FML Holdings, except to the extent of their pecuniary interests therein. Additionally, (a) David L. Horing and Michael G. Fisch, in their capacities as the managing members of ASA V, and (b) Michael G. Fisch, in his capacity as trustee of The Michael G. Fisch 2006 Revocable Trust, which is the manager of ASCP, LLC, which is the managing member of American Securities, may be deemed to have shared voting and investment power over the shares held by ASP FML Holdings. Such individuals disclaim beneficial ownership of the shares of common stock held by ASP FML Holdings, except to the extent of their pecuniary interests therein.	
 
(2)	Mr. LeBaron may be deemed to have shared voting and investment power of the shares held by ASP FML Holdings in his capacity as a Managing Director of American Securities, and as a designee of ASP FML Holdings on our board of directors. Mr. LeBaron disclaims beneficial ownership of the shares of common stock owned by ASP FML Holdings, except to the extent of his pecuniary interest therein, as such shares are owned and held by the ASP Sponsors referenced in footnote (1) above.	
 
(3)	Mr. Sand may be deemed to have shared voting and investment power of the shares held by ASP FML Holdings in his capacity as a Principal of American Securities, and as a designee of ASP FML Holdings on our board of directors. Mr. Sand disclaims beneficial ownership of the shares of common stock owned by ASP FML Holdings, except to the extent of his pecuniary interest therein, as such shares are owned and held by the ASP Sponsors referenced in footnote (1) above.	
 
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 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Procedures for Approval of Related Party Transactions
Prior to the closing of this offering, we have not maintained a policy for approval of Related Party Transactions. A “Related Party Transaction” is a transaction, arrangement or relationship in which we or any of our subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest. A “Related Person” means:
 
•	 	any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors;	
 
•	 	any person who is known by us to be the beneficial owner of more than 5% of our common stock;	
 
•	 	any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our common stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our common stock; and	
 
•	 	any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.	
We anticipate that our board of directors will adopt a written related party transactions policy prior to the completion of this offering. Pursuant to this policy, we expect that our audit committee will review all material facts of all Related Party Transactions.
American Securities
American Securities is a leading U.S. middle-market private equity firm that currently has over $10 billion of assets under management. In August 2010, affiliated funds managed by American Securities acquired control over ASP FML, which owns 53.5% of the outstanding common stock of the Company. Upon completion of this offering (assuming no exercise of the underwriters’ over-allotment option), affiliated funds managed by American Securities will own approximately     % of our outstanding common stock.
In 2013, we paid American Securities $1 million for management and consulting fees provided pursuant to a management consulting agreement, in addition to approximately $1.9 million in separate transaction fees for mergers and acquisitions by the Company and out of pocket expenses. In connection with the completion of this offering, the management consulting agreement, and any obligation to pay transaction fees, will be terminated.
Stockholders’ Agreement
In connection with the investment in our common stock by ASP FML, certain of our stockholders, including ASP FML entered into an amended and restated stockholders’ agreement on April 28, 2009 between certain stockholders and previous equity sponsors. The stockholders’ agreement provides, among other things, that ASP FML is currently entitled to elect (or cause to be elected) three of our directors. The stockholders’ agreement will be amended and restated (the “Fourth Amended and Restated Stockholders’ Agreement”) contingent upon, and effective at the time of, consummation of this offering to, among certain other things, revise certain registration rights.
The registration rights provisions in the Fourth Amended and Restated Stockholders’ Agreement will grant to certain of our stockholders, including ASP FML, the right to cause us, generally at our own expense, to use our reasonable best efforts to register certain of our securities held by ASP FML and other shareholders for public resale, subject to certain limitations. In the event we register any of our common stock following our initial public offering, certain of our stockholders, including ASP FML, require us to use our reasonable best efforts to include in such registration statement shares of our common stock held by them, subject to certain limitations, including as determined by the underwriters. The registration rights provisions will also provide for us to indemnify certain of our stockholders and their affiliates in connection with the registration of our common stock.
 
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 DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, after giving effect to the          for          stock split of our common stock to be effected prior to the effective date of the registration statement of which this prospectus forms a part, the authorized capital stock of FMSA Holdings Inc., will consist of shares of common stock, $0.01 par value per share, of which            shares will be issued and outstanding, and shares of preferred stock, $0.01 par value per share, of which no shares will be issued and outstanding.
The following summary of the capital stock and amended and restated certificate of incorporation and amended and restated bylaws of FMSA Holdings Inc., does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to our amended and restated certificate of incorporation and amended and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.
Common Stock
Except as provided by law or in a preferred stock designation, holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, will have the exclusive right to vote for the election of directors and do not have cumulative voting rights. Except as otherwise required by law, holders of common stock, are not entitled to vote on any amendment to the amended and restated certificate of incorporation (including any certificate of designations relating to any series of preferred stock) that relates solely to the terms of any outstanding series of preferred stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the amended and restated certificate of incorporation (including any certificate of designations relating to any series of preferred stock) or pursuant to the DGCL. Subject to prior rights and preferences that may be applicable to any outstanding shares or series of preferred stock, holders of common stock are entitled to receive ratably in proportion to the shares of common stock held by them such dividends (payable in cash, stock or otherwise), if any, as may be declared from time to time by our board of directors out of funds legally available for dividend payments. All outstanding shares of common stock are fully paid and non-assessable. The holders of common stock have no preferences or rights of conversion, exchange, pre-emption or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in our assets in proportion to the shares of common stock held by then that are remaining after payment or provision for payment of all of our debts and obligations and after distribution in full of preferential amounts to be distributed to holders of outstanding shares of preferred stock, if any.
Preferred Stock
Our amended and restated certificate of incorporation authorizes our board of directors, subject to any limitations prescribed by law, without further stockholder approval, to establish and to issue from time to time one or more classes or series of preferred stock, par value $0.01 per share, covering up to an aggregate of shares of preferred stock. Each class or series of preferred stock will cover the number of shares and will have the powers, preferences, rights, qualifications, limitations and restrictions determined by the board of directors, which may include, among others, dividend rights, liquidation preferences, voting rights, conversion rights, preemptive rights and redemption rights. Except as provided by law or in a preferred stock designation, the holders of preferred stock will not be entitled to vote at or receive notice of any meeting of stockholders.
Anti-Takeover Effects of Provisions of Our Amended and Restated Certificate of Incorporation, our Amended and Restated Bylaws and Delaware Law
Some provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws will contain provisions that could make the following transactions more difficult: acquisitions of us by means of a tender offer, a proxy contest or otherwise; or removal of our incumbent officers
 
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and directors. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares.
These provisions are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.
Delaware Law
Section 203 of the DGCL prohibits a Delaware corporation, including those whose securities are listed for trading on the NYSE, from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder, unless:
 
•	 	the transaction is approved by the board of directors before the date the interested stockholder attained that status;	
 
•	 	upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or	
 
•	 	on or after such time the business combination is approved by the board of directors and authorized at a meeting of stockholders by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.	
We will elect to not be subject to the provisions of Section 203 of the DGCL.
Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws
Provisions of our amended and restated certificate of incorporation and amended and restated bylaws, which will become effective upon the closing of this offering, may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock.
Among other things, upon the completion of this offering, our amended and restated certificate of incorporation and amended and restated bylaws will:
 
•	 	establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. Our amended and restated bylaws specify the requirements as to form and content of all stockholders’ notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting;	
 
•	 	provide our board of directors the ability to authorize undesignated preferred stock. This ability makes it possible for our board of directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company;	
 
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•	 	provide that the authorized number of directors may be changed only by resolution of the board of directors;	
 
•	 	provide that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;	
 
•	 	at any time after American Securities and its affiliates no longer collectively beneficially own more than 35% of the outstanding shares of our common stock,	
 
 	•	 	provide that any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders, subject to the rights of the holders of any series of preferred stock with respect to such series (prior to such time, such actions may be taken without a meeting by written consent of holders of common stock having not less than the minimum number of votes that would be necessary to authorize such action at a meeting);	
 
 	•	 	provide that our certificate of incorporation and bylaws may be amended by the affirmative vote of the holders of at least two-thirds of our then outstanding common stock (prior to such time, our certificate of incorporation and bylaws may be amended by the affirmative vote of the holders of a majority of our then outstanding common stock); and	
 
 	•	 	provide that special meetings of our stockholders may only be called by the board of directors, the chief executive officer or the chairman of the board (prior to such time, a special meeting may also be called at the request of stockholders holding a majority of the outstanding shares entitled to vote);	
 
•	 	provide for our board of directors to be divided into three classes of directors, with each class as nearly equal in number as possible, serving staggered three year terms, other than directors which may be elected by holders of preferred stock, if any. This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors;	
 
•	 	provide that we renounce any interest in the business opportunities of American Securities or any of their officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries (other than our directors that are presented business opportunities in their capacity as our directors) and that they have no obligation to offer us those investments or opportunities in each case, other than opportunities relating to hydraulic fracturing proppants; and	
 
•	 	provide that our bylaws can be amended or repealed by the board of directors.	
Forum Selection
Our amended and restated certificate of incorporation will provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for:
 
•	 	any derivative action or proceeding brought on our behalf;	
 
•	 	any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders;	
 
•	 	any action asserting a claim against us arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our bylaws; or	
 
•	 	any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.	
 
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Our amended and restated certificate of incorporation will also provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented to this forum selection provision. However, it is possible that a court could find our forum selection provision to be inapplicable or unenforceable.
Limitation of Liability and Indemnification Matters
Our amended and restated certificate of incorporation limits the liability of our directors for monetary damages for breach of their fiduciary duty as directors, except for liability that cannot be eliminated under the DGCL. Delaware law provides that directors of a company will not be personally liable for monetary damages for breach of their fiduciary duty as directors, except for liabilities:
 
•	 	for any breach of their duty of loyalty to us or our stockholders;	
 
•	 	for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;	
 
•	 	for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174 of the DGCL; or	
 
•	 	for any transaction from which the director derived an improper personal benefit.	
Any amendment, repeal or modification of these provisions will be prospective only and would not affect any limitation on liability of a director for acts or omissions that occurred prior to any such amendment, repeal or modification.
Our amended and restated certificate of incorporation and amended and restated bylaws also provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. Our amended and restated certificate of incorporation and amended and restated bylaws also permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would permit indemnification. We intend to enter into indemnification agreements with each of our current and future directors and officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under Delaware law against liability that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We believe that the limitation of liability provision in our amended and restated certificate of incorporation and the indemnification agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is                                                                              .
Listing
We intend to apply to list our common stock on the NYSE under the symbol “FMSA.”
 
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 SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect the market price of our common stock prevailing from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of a substantial number of shares of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price of our common stock at such time and our ability to raise equity-related capital at a time and price we deem appropriate.
Sales of Restricted Shares
Upon completion of this offering, we will have outstanding an aggregate of             shares of common stock, after giving effect to the          for          stock split of our common stock to be effected prior to the effective date of the registration statement of which this prospectus forms a part. Of these shares, all of the             shares of common stock to be sold in this offering (or              shares assuming the underwriters exercise the option to purchase additional shares in full) will be freely tradable without restriction or further registration under the Securities Act, unless the shares are held by any of our “affiliates” as such term is defined in Rule 144 under the Securities Act. All remaining shares of common stock will be deemed “restricted securities” as such term is defined under Rule 144. The restricted securities were, or will be, issued and sold by us in private transactions and are eligible for public sale only if registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are summarized below.
As a result of the lock-up agreements described below and the provisions of Rule 144 and Rule 701 under the Securities Act, all of the shares of our common stock (excluding the shares to be sold in this offering) will be available for sale in the public market upon the expiration of the lock-up agreements, beginning 180 days after the date of this prospectus (subject to extension) and when permitted under Rule 144 or Rule 701.
Lock-up Agreements
We, ASP FML, all of our directors and executive officers and certain of our principal stockholders and the selling stockholders will agree not to sell any common stock or securities convertible into or exchangeable for shares of common stock for a period of 180 days from the date of this prospectus, subject to certain exceptions. Please see “Underwriting” for a description of these lock-up provisions.
Rule 144
In general, under Rule 144 under the Securities Act as currently in effect, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for a least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.
A person (or persons whose shares are aggregated) who is deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of one percent of the then outstanding shares of our common stock or the average weekly trading volume of our common stock reported through the NYSE during the four calendar weeks preceding the filing of notice of the sale. Such sales are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.
 
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Rule 701
In general, under Rule 701 under the Securities Act, any of our employees, directors, officers, consultants or advisors who purchases shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering is entitled to sell such shares 90 days after the effective date of this offering in reliance on Rule 144, without having to comply with the holding period requirement of Rule 144 and, in the case of non-affiliates, without having to comply with the public information, volume limitation or notice filing provisions of Rule 144. The SEC has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after the date of this prospectus.
Stock Issued Under Employee Plans
We intend to file a registration statement on Form S-8 under the Securities Act to register stock issuable under our LTIP. This registration statement on Form S-8 is expected to be filed following the effective date of the registration statement of which this prospectus is a part and will be effective upon filing. Accordingly, shares registered under such registration statement will be available for sale in the open market following the effective date, unless such shares are subject to vesting restrictions with us, Rule 144 restrictions applicable to our affiliates or the lock-up restrictions described above.
 
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 MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
The following is a summary of the material U.S. federal income tax consequences related to the purchase, ownership and disposition of our common stock by a non-U.S. holder (as defined below), that holds our common stock as a “capital asset” (generally property held for investment). This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations and administrative rulings and judicial decisions, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. We have not sought any ruling from the U.S. Internal Revenue Service (the “IRS”) with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS or a court will agree with such statements and conclusions.
This summary does not address all aspects of U.S. federal income taxation that may be relevant to non-U.S. holders in light of their personal circumstances. In addition, this summary does not address the Medicare contribution tax on certain investment income, any U.S. federal estate and gift tax laws, any state, local or foreign tax laws or any tax treaties. This summary also does not address tax considerations applicable to investors that may be subject to special treatment under the U.S. federal income tax laws, such as (without limitation):
 
•	 	banks, insurance companies or other financial institutions;	
 
•	 	tax-exempt or governmental organizations;	
 
•	 	dealers in securities or foreign currencies;	
 
•	 	traders in securities that use the mark-to-market method of accounting for U.S. federal income tax purposes;	
 
•	 	persons subject to the alternative minimum tax;	
 
•	 	partnerships or other pass-through entities for U.S. federal income tax purposes or holders of interests therein;	
 
•	 	persons deemed to sell our common stock under the constructive sale provisions of the Code;	
 
•	 	persons that acquired our common stock through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan;	
 
•	 	certain former citizens or long-term residents of the United States; and	
 
•	 	persons that hold our common stock as part of a straddle, appreciated financial position, synthetic security, hedge, conversion transaction or other integrated investment or risk reduction transaction.	
PROSPECTIVE INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE AND GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, NON-U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
Non-U.S. Holder Defined
For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of our common stock that for U.S. federal income tax purposes is neither a partnership nor any of the following:
 
•	 	an individual who is a citizen or resident of the United States;	
 
•	 	a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;	
 
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•	 	an estate, the income of which is subject to U.S. federal income tax regardless of its source; or	
 
•	 	a trust (i) whose administration is subject to the primary supervision of a U.S. court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (ii) which has made a valid election under applicable U.S. Treasury regulations to be treated as a United States person.	
If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and upon the activities of the partnership. Accordingly, we urge partners in partnerships (including entities treated as partnerships for U.S. federal income tax purposes) considering the purchase of our common stock to consult their tax advisors regarding the U.S. federal income tax considerations of the purchase, ownership and disposition of our common stock by such partnership.
Distributions
As described in the section entitled “Dividend Policy,” we do not plan to make any distributions on our common stock for the foreseeable future. However, if we do make distributions of cash or property on our common stock, those payments will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed our current and accumulated earnings and profits, the distributions will be treated as a non-taxable return of capital to the extent of the non-U.S. holder’s tax basis in our common stock and thereafter as capital gain from the sale or exchange of such common stock. See “—Gain on Disposition of Common Stock.” Subject to the discussion below on backup withholding and FATCA withholding, distribution made to a non-U.S. holder on our common stock generally will be subject to U.S. withholding tax at a rate of 30% of the gross amount of the distribution unless an applicable income tax treaty provides for a lower rate. To receive the benefit of a reduced treaty rate, a non-U.S. holder must provide the withholding agent with an IRS Form W-8BEN or W-8BEN-E (or other appropriate form) certifying qualification for the reduced rate. A non-U.S. holder that does not timely furnish the applicable withholding agent with the required certification, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.
Dividends paid to a non-U.S. holder that are effectively connected with a trade or business conducted by the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, are treated as attributable to a permanent establishment maintained by the non-U.S. holder in the United States) generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code). Such effectively connected dividends will not be subject to U.S. withholding tax if the non-U.S. holder satisfies certain certification requirements by providing the withholding agent a properly executed IRS Form W-8ECI certifying eligibility for exemption. If the non-U.S. holder is a foreign corporation, it may also be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items).
Gain on Disposition of Common Stock
Subject to the discussion below on backup withholding and FATCA withholding, a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:
 
•	 	the non-U.S. holder is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met;	
 
•	 	the gain is effectively connected with a trade or business conducted by the non-U.S. holder in the United States (and, if required by an applicable tax treaty, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States); or	
 
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•	 	our common stock constitutes a U.S. real property interest by reason of our status as a United States real property holding corporation (“USRPHC”) for U.S. federal income tax purposes.	
A non-U.S. holder described in the first bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate as specified by an applicable income tax treaty) on the amount of such gain, which generally may be offset by U.S. source capital losses.
A non-U.S. holder whose gain is described in the second bullet point above generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code) unless an applicable income tax treaty provides otherwise. If the non-U.S. holder is a corporation, it may also be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items) which will include such gain.
Generally, a corporation is a USRPHC if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. We believe that we currently are, and expect to remain for the foreseeable future, a USRPHC for U.S. federal income tax purposes. However, as long as our common stock is considered to be regularly traded on an established securities market, within the meaning of applicable Treasury Regulations, only a non-U.S. holder that actually or constructively owns or owned at any time during the shorter of the five-year period ending on the date of the disposition or the non-U.S. holder’s holding period for the common stock, more than 5% of our common stock will be taxable on gain recognized on the disposition of our common stock as a result of our status as a USRPHC. If our common stock were not considered to be regularly traded on an established securities market, all non-U.S. holders generally would be subject to U.S. federal income tax on a taxable disposition of our common stock, and a 10% withholding tax would apply to the gross proceeds from the sale of our common stock by such non-U.S. holders.
Non-U.S. holders should consult their tax advisors with respect to the application of the foregoing rules to their ownership and disposition of our common stock.
Backup Withholding and Information Reporting
Any dividends paid to a non-U.S. holder must be reported annually to the IRS and to the non-U.S. holder. Copies of these information returns may be made available to the tax authorities in the country in which the non-U.S. holder resides or is established. Payments of dividends to a non-U.S. holder generally will not be subject to backup withholding if the non-U.S. holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN or W-8BEN-E or other appropriate version of IRS Form W-8.
Payments of the proceeds from a sale or other disposition by a non-U.S. holder of our common stock effected by or through a U.S. office of a broker generally will be subject to information reporting and backup withholding (at the applicable rate) unless the non-U.S. holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN or W-8BEN-E or other appropriate version of IRS Form W-8 and certain other conditions are met. Information reporting and backup withholding generally will not apply to any payment of the proceeds from a sale or other disposition of our common stock effected outside the United States by a foreign office of a broker. However, unless such broker has documentary evidence in its records that the holder is a non-U.S. holder and certain other conditions are met, or the non-U.S. holder otherwise establishes an exemption, information reporting will apply to a payment of the proceeds of the disposition of our common stock effected outside the United States by such a broker if it has certain relationships within the United States.
Backup withholding is not an additional tax. Rather, the U.S. income tax liability (if any) of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.
 
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Additional Withholding Requirements
Sections 1471 through 1474 of the Code, and the Treasury regulations and administrative guidance issued thereunder (“FATCA”), impose a 30% withholding tax on any dividends on our common stock and on the gross proceeds from a disposition of our common stock in each case if paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code) (including, in some cases, when such foreign financial institution or entity is acting as an intermediary), unless (i) in the case of a foreign financial institution, such institution enters into an agreement with the U.S. government to withhold on certain payments, and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners), (ii) in the case of a non-financial foreign entity, such entity certifies that it does not have any “substantial United States owners” (as defined in the Code) or provides the withholding agent with a certification identifying the direct and indirect substantial United States owners of the entity, or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these rules may be subject to different rules. Under certain circumstances, a holder might be eligible for refunds or credits of such taxes.
Payments subject to FATCA withholding generally include dividends paid on common stock of a U.S. corporation after June 30, 2014, and gross proceeds from sales or other dispositions of such common stock after December 31, 2016. Non-U.S. holders are encouraged to consult their tax advisors regarding the possible implications of the FATCA withholding rules.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND SHOULD NOT BE VIEWED AS TAX ADVICE. INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE APPLICABILITY AND EFFECT OF U.S. FEDERAL ESTATE AND GIFT TAX LAWS AND ANY STATE, LOCAL OR FOREIGN TAX LAWS AND TAX TREATIES.
 
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 UNDERWRITING
Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and Barclays Capital Inc. are acting as representatives of the underwriters. Under the terms of an underwriting agreement, which will be filed as an exhibit to the registration statement, each of the underwriters named below has severally agreed to purchase from the selling stockholders the respective number of common stock shown opposite its name below:

Underwriters	  	Number of Shares	
Morgan Stanley & Co. LLC	  		
Wells Fargo Securities, LLC	  		
Barclays Capital Inc.	  		
Goldman, Sachs & Co.	  		
Jefferies LLC	  		
J.P. Morgan Securities LLC	  		
KeyBanc Capital Markets Inc.	  		
RBC Capital Markets, LLC	  		
Robert W. Baird & Co. Incorporated	  		
Cowen and Company, LLC	  		
PNC Capital Markets LLC	  		
Raymond James & Associates, Inc.	  		
Scotia Capital (USA) Inc.	  		
Simmons & Company International	  		
Tudor, Pickering, Holt & Co. Securities, Inc.	  		
	  	 	
Total	  		
	  	 	
The underwriting agreement provides that the underwriters’ obligation to purchase shares of common stock depends on the satisfaction of the conditions contained in the underwriting agreement including:
 
•	 	the obligation to purchase all of the shares of common stock offered hereby (other than those shares of common stock covered by their option to purchase additional shares as described below), if any of the shares are purchased;	
 
•	 	the representations and warranties made by us and the selling stockholders to the underwriters are true;	
 
•	 	there is no material change in our business or the financial markets; and	
 
•	 	we and the selling stockholders deliver customary closing documents to the underwriters.	
Commissions and Expenses
The following table summarizes the underwriting discounts and commissions the selling stockholders will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares. The underwriting fee is the difference between the initial price to the public and the amount the underwriters pay to the selling stockholders for the shares.

 	  	No Exercise	 	  	Full Exercise	 	
Per Share	  	$	            	  	  	$	            	  	
Total	  	$	 	  	  	$	 	  	
The representatives have advised us that the underwriters propose to offer the shares of common stock directly to the public at the public offering price on the cover of this prospectus and to selected dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $         per share. After the offering, the representatives may change the offering price and other selling terms.
 
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The expenses of the offering that are payable by us are estimated to be approximately $         (excluding underwriting discounts and commissions). We have agreed to pay expenses incurred by the selling stockholders in connection with the offering, other than the underwriting discounts and commissions. We have also agreed to reimburse the underwriters for certain of their expenses in an amount up to $        .
The management team may elect to cause the underwriters to direct a portion of the gross underwriting discounts and commissions to the Fairmount Foundation. If elected, the contribution will be treated as a shared expense amongst the underwriters.
Option to Purchase Additional Shares
The selling stockholders have granted the underwriters an option exercisable for 30 days after the date of this prospectus to purchase, from time to time, in whole or in part, up to an aggregate of             shares from the selling stockholders at the public offering price less underwriting discounts and commissions. This option may be exercised to the extent the underwriters sell more than             shares in connection with this offering. To the extent that this option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase its pro rata portion of these additional shares based on the underwriter’s percentage underwriting commitment in the offering as indicated in the table at the beginning of this Underwriting Section.
Lock-Up Agreements
We, ASP FML, all of our directors and executive officers and certain of our principal stockholders and the selling stockholders will agree that, for a period of 180 days after the date of this prospectus, we and they will not directly or indirectly, without the prior written consent of at least two of the representatives consisting of Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and Barclays Capital Inc. and subject to certain exceptions (1) offer, pledge, sell, pledge, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock (including, without limitation, shares of common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for common stock (other than the stock and shares issued pursuant to employee benefit plans, qualified stock option plans, or other employee compensation plans existing on the date of this prospectus or pursuant to currently outstanding options, warrants or rights not issued under one of those plans), (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of common stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or other securities, in cash or otherwise, or (3) file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock.
Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and Barclays Capital Inc., in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time. When determining whether or not to release common stock and other securities from lock-up agreements, Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and Barclays Capital Inc. will consider, among other factors, the holder’s reasons for requesting the release, the number of shares of common stock and other securities for which the release is being requested and market conditions at the time. At least three business days before the effectiveness of any release or waiver of any of the restrictions described above with respect to an officer or director of the Company, of at least two of the representatives consisting of Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and Barclays Capital Inc. will notify us of the impending release or waiver and we have agreed to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver, except where the release or waiver is effected solely to permit a transfer of common stock that is not for consideration and where the transferee has agreed in writing to be bound by the same terms as the lock-up agreements described above to the extent and for the duration that such terms remain in effect at the time of transfer.
 
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Offering Price Determination
Prior to this offering, there has been no public market for our common stock. The initial public offering price was negotiated between the representatives and the selling stockholders. In determining the initial public offering price of our common stock, the representatives considered:
 
•	 	the history and prospects for the industry in which we compete;	
 
•	 	our financial information;	
 
•	 	the ability of our management and our business potential and earning prospects;	
 
•	 	the prevailing securities markets at the time of this offering; and	
 
•	 	the recent market prices of, and the demand for, publicly traded shares of generally comparable companies.	
Indemnification
We and the selling stockholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.
Stabilization, Short Positions and Penalty Bids
The representative may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Exchange Act:
 
•	 	Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.	
 
•	 	A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriters in excess of the number of shares they are obligated to purchase is not greater than the number of shares that they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares and/or purchasing shares in the open market. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through their option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.	
 
•	 	Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions.	
 
•	 	Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.	
These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise and, if commenced, may be discontinued at any time.
 
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Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters make any representation that the representative will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.
Listing on the New York Stock Exchange
We intend to apply to list our common stock on the NYSE under the symbol “FMSA.”
Stamp Taxes
If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.
Other Relationships
The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for the issuer and its affiliates, for which they received or may in the future receive customary fees and expenses.
In the ordinary course of their various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer or its affiliates. If the underwriters or their affiliates have a lending relationship with us, certain of those underwriters or their affiliates routinely hedge, and certain other of those underwriters or their affiliates may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, the underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the shares of common stock offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the shares of common stock offered hereby. The underwriters and certain of their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Selling Restrictions
This prospectus does not constitute an offer to sell to, or a solicitation of an offer to buy from, anyone in any country or jurisdiction (i) in which such an offer or solicitation is not authorized, (ii) in which any person making such offer or solicitation is not qualified to do so or (iii) in which any such offer or solicitation would otherwise be unlawful. No action has been taken that would, or is intended to, permit a public offer of the shares of common stock or possession or distribution of this prospectus or any other offering or publicity material relating to the shares of common stock in any country or jurisdiction (other than the United States) where any such action for that purpose is required. Accordingly, each underwriter has undertaken that it will not, directly or indirectly, offer or sell any shares of common stock or have in its possession, distribute or publish any prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales of shares of common stock by it will be made on the same terms.
 
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European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any common stock which are the subject of the offering contemplated herein may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
 
•	 	to legal entities which are qualified investors as defined under the Prospectus Directive;	
 
•	 	by the underwriters to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representative of the underwriters for any such offer; or	
 
•	 	in any other circumstances falling within Article 3(2) of the Prospectus Directive,	
provided that no such offer of common stock shall result in a requirement for us, the selling stockholders or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
Each person in a Relevant Member State who receives any communication in respect of, or who acquires any common stock under, the offers contemplated here in this prospectus will be deemed to have represented, warranted and agreed to and with each underwriter, the selling stockholders and us that:
 
•	 	it is a qualified investor as defined under the Prospectus Directive; and	
 
•	 	in the case of any common stock acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the common stock acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in the circumstances in which the prior consent of the representative of the underwriters has been given to the offer or resale or (ii) where common stock have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of such common stock to it is not treated under the Prospectus Directive as having been made to such persons.	
For the purposes of this representation and the provision above, the expression an “offer of common stock to the public” in relation to any common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any common stock to be offered so as to enable an investor to decide to purchase or subscribe for the common stock, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United Kingdom
This prospectus has only been communicated or caused to have been communicated and will only be communicated or caused to be communicated as an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act of 2000 (the “FSMA”)) as received in connection with the issue or sale of the common stock in circumstances in which Section 21(1) of the FSMA does not apply to us. All applicable provisions of the FSMA will be complied with in respect to anything done in relation to the common stock in, from or otherwise involving the United Kingdom.
 
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Notice to Residents of Canada
The common stock may be sold only to purchasers purchasing as principal that are both “accredited investors” as defined in National Instrument 45-106 Prospectus and Registration Exemptions and “permitted clients” as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the common stock must be made in accordance with an exemption from the prospectus requirements and in compliance with the registration requirements of applicable securities laws.
 
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 LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us by Vinson & Elkins, LLP, Houston, Texas. Certain legal matters will be passed upon for the underwriters by Latham  & Watkins LLP, Houston, TX.
 EXPERTS
The consolidated financial statements as of December 31, 2013 and 2012 and for each of the two years in the period ended December 31, 2013 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The information appearing in this prospectus concerning estimates of our proven mineral reserves was derived from the report of GZA GeoEnvironmental, Inc., independent mining engineers and geologists, and has been included herein under the authority of said firm as experts with respect to the matters covered by such report and in giving such report.
 WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act to register our common stock being offered in this prospectus. This prospectus, which forms part of the registration statement, does not contain all of the information included in the registration statement and the attached exhibits. You will find additional information about us and our common stock in the registration statement. References in this prospectus to any of our contracts, agreements or other documents are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contracts, agreements or documents.
You may read and copy the registration statement, the related exhibits and other information we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Room at prescribed rates. You may obtain information regarding the operation of the Public Reference Room by calling 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy statements and other information about companies like us, who file electronically with the SEC. The address of that website is http://www.sec.gov. This reference to the SEC’s website is an inactive textual reference only and is not a hyperlink.
Upon the effectiveness of the registration statement, we will be subject to the reporting, proxy and information requirements of the Exchange Act, and will be required to file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s Public Reference Room and the website of the SEC referred to above, as well as on our website, http://www.fairmountminerals.com . This reference to our website is an inactive textual reference only and is not a hyperlink. The contents of our website are not part of this prospectus, and you should not consider the contents of our website in making an investment decision with respect to our common stock. We will furnish our stockholders with annual reports containing audited financial statements and quarterly reports containing unaudited interim financial statements for each of the first three quarters of each year.
 
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 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 	  	Page
Number	 	
Audited Consolidated Financial Statements	  				
Report of Independent Registered Public Accounting Firm	  	 	F-2	  	
Consolidated Statements of Income for the years ended December 31, 2013 and 2012	  	 	F-3	  	
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013 and 2012	  	 	F-4	  	
Consolidated Balance Sheets as of December 31, 2013 and 2012	  	 	F-5	  	
Consolidated Statements of Equity for the years ended December 31, 2013 and 2012	  	 	F-6	  	
Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012	  	 	F-7	  	
Notes to Consolidated Financial Statements	  	 	F-8	  	
		
Unaudited Condensed Consolidated Financial Statements	  				
Condensed Consolidated Statements of Income for the six months ended June 30, 2014 and 2013	  	 	F-34	  	
Condensed Consolidated Statements of Comprehensive Income for the six months ended June 30, 2014 and 2013	  	 	F-35	  	
Condensed Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013	  	 	F-36	  	
Condensed Consolidated Statements of Equity for the six months ended June 30, 2014 and 2013	  	 	F-37	  	
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013	  	 	F-38	  	
Notes to Condensed Consolidated Financial Statements	  	 	F-39	  	
 
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of FML Holdings, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive income, equity and cash flows present fairly, in all material respects, the financial position of FML Holdings, Inc. and its subsidiaries (the “Company”) at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Cleveland, OH
July 11, 2014
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Consolidated Statements of Income
Years Ended December 31, 2013 and 2012

 	  	Year Ended December 31,	 	
 	  	2013	 	  	2012	 	
 	  	(in thousands,
except share and per share amounts)	 	
Revenue	  	$	988,386	  	  	$	885,190	  	
Cost of sales (excluding depreciation, depletion, amortization, and stock compensation expense shown separately)	  	 	627,842	  	  	 	502,417	  	
Operating expenses	  				  				
Selling, general, and administrative expenses	  	 	81,858	  	  	 	65,430	  	
Depreciation, depletion, and amortization expense	  	 	37,771	  	  	 	27,690	  	
Stock compensation expense	  	 	10,133	  	  	 	11,434	  	
Other operating expense (income)	  	 	2,826	  	  	 	(207	) 	
	  	 	 	 	  	 	 	 	
Income from operations	  	 	227,956	  	  	 	278,426	  	
Interest expense, net	  	 	61,926	  	  	 	56,714	  	
Loss on extinguishment of debt	  	 	11,760	  	  	 	—  	  	
Other non-operating expense	  	 	4,394	  	  	 	1,870	  	
	  	 	 	 	  	 	 	 	
Income before provision for income taxes	  	 	149,876	  	  	 	219,842	  	
Provision for income taxes	  	 	45,219	  	  	 	70,369	  	
	  	 	 	 	  	 	 	 	
Net income	  	 	104,657	  	  	 	149,473	  	
Less: Net income attributable to the noncontrolling interest	  	 	696	  	  	 	587	  	
	  	 	 	 	  	 	 	 	
Net income attributable to FML Holdings, Inc.	  	$	103,961	  	  	$	148,886	  	
	  	 	 	 	  	 	 	 	
Earnings per share	  				  				
Basic	  	$	22.66	  	  	$	32.49	  	
Diluted	  	$	21.47	  	  	$	30.80	  	
Weighted average shares outstanding	  				  				
Basic	  	 	4,588,477	  	  	 	4,583,141	  	
Diluted	  	 	4,842,281	  	  	 	4,833,186	  	
The accompanying notes are an integral part of these consolidated financial statements.
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2013 and 2012

 	  	Year Ended December 31,	 	
 	  	      2013      	 	 	      2012      	 	
 	  	(in thousands)	 	
Net income	  	$	104,657	  	 	$	149,473	  	
Other comprehensive income (loss), net of tax:	  				 				
Foreign currency translation adjustment	  	 	(2	) 	 	 	308	  	
Pension obligations	  	 	914	  	 	 	166	  	
Change in fair value of derivative swap agreements	  	 	4,751	  	 	 	(643	) 	
	  	 	 	 	 	 	 	 	
Total other comprehensive income (loss), net of tax	  	 	5,663	  	 	 	(169	) 	
	  	 	 	 	 	 	 	 	
Comprehensive income	  	 	110,320	  	 	 	149,304	  	
Comprehensive income (loss) attributable to the noncontrolling interest	  	 	696	  	 	 	791	  	
	  	 	 	 	 	 	 	 	
Comprehensive income attributable to FML Holdings, Inc.	  	$	109,624	  	 	$	148,513	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2013 and 2012

 	  	December 31,	 	
 	  	        2013        	 	 	        2012        	 	
 	  	(in thousands,
except share and per share amounts)	 	
Assets	  				 				
Current assets	  				 				
Cash and cash equivalents	  	$	17,815	  	 	$	11,866	  	
Accounts receivable, net	  	 	146,851	  	 	 	123,388	  	
Inventories	  	 	118,349	  	 	 	91,432	  	
Deferred income taxes	  	 	11,748	  	 	 	5,315	  	
Prepaid expenses and other assets	  	 	10,575	  	 	 	4,975	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	305,338	  	 	 	236,976	  	
Property, plant and equipment, net	  	 	748,838	  	 	 	375,162	  	
Goodwill	  	 	87,452	  	 	 	35,137	  	
Intangibles, net	  	 	106,236	  	 	 	383	  	
Other assets	  	 	35,567	  	 	 	31,943	  	
	  	 	 	 	 	 	 	 	
Total assets	  	$	1,283,431	  	 	$	679,601	  	
	  	 	 	 	 	 	 	 	
Liabilities and Equity	  				 				
Current liabilities	  				 				
Current portion of long-term debt	  	 	15,687	  	 	 	3,332	  	
Accounts payable	  	 	89,998	  	 	 	43,456	  	
Accrued expenses	  	 	28,706	  	 	 	28,277	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	134,391	  	 	 	75,065	  	
Long-term debt	  	 	1,246,459	  	 	 	827,863	  	
Deferred income taxes	  	 	46,851	  	 	 	36,472	  	
Other long-term liabilities	  	 	21,088	  	 	 	26,129	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	1,448,789	  	 	 	965,529	  	
	  	 	 	 	 	 	 	 	
Commitments and contingencies (Note 19)	  				 				
Equity	  				 				
Class A common stock: $0.01 par value, 8,000,000 authorized shares	  				 				
Shares outstanding: 4,594,501 and 4,580,726 at December 31, 2013 and 2012, respectively	  	 	69	  	 	 	69	  	
Class B common stock: $0.01 par value, 2,000,000 authorized shares	  				 				
Shares outstanding: 7,333 and 3,901 at December 31, 2013 and 2012, respectively	  	 	—  	  	 	 	—  	  	
Additional paid-in capital	  	 	735,360	  	 	 	722,123	  	
Retained earnings	  	 	326,729	  	 	 	222,768	  	
Accumulated other comprehensive income (loss)	  	 	(3,536	) 	 	 	(9,199	) 	
	  	 	 	 	 	 	 	 	
Total equity attributable to FML Holdings, Inc. before treasury stock	  	 	1,058,622	  	 	 	935,761	  	
Less: Treasury stock at cost	  				 				
Shares in treasury: 2,285,475 and 2,280,824 at December 31, 2013 and 2012, respectively	  	 	(1,227,001	) 	 	 	(1,225,299	) 	
	  	 	 	 	 	 	 	 	
Total equity (deficit) attributable to FML Holdings, Inc.	  	 	(168,379	) 	 	 	(289,538	) 	
Noncontrolling interest	  	 	3,021	  	 	 	3,610	  	
	  	 	 	 	 	 	 	 	
Total equity (deficit)	  	 	(165,358	) 	 	 	(285,928	) 	
	  	 	 	 	 	 	 	 	
Total liabilities and equity	  	$	1,283,431	  	 	$	679,601	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Consolidated Statements of Equity
Years Ended December 31, 2013 and 2012

 	 	Equity (deficit) attributable to FML Holdings, Inc.	 	 	Non
Controlling
Interest	 	 	Total
Equity
(Deficit)	 	
 	 	Common
Stock	 	 	Additional
Paid-in
Capital	 	 	Retained
Earnings	 	 	Other
Comprehensive
Income (Loss)	 	 	Treasury
Stock	 	 	Subtotal	 	 			 			
 	 	(in thousands)	 	
Balances at December 31, 2011	 	$	69	  	 	$	708,111	  	 	$	73,882	  	 	$	(8,826	) 	 	$	(1,224,285	) 	 	$	(451,049	) 	 	$	3,057	  	 	$	(447,992	) 	
Purchase of treasury stock	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,014	) 	 	 	(1,014	) 	 	 	—  	  	 	 	(1,014	) 	
Stock options exercised	 	 	—  	  	 	 	716	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	716	  	 	 	—  	  	 	 	716	  	
Stock compensation expense	 	 	—  	  	 	 	11,434	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	11,434	  	 	 	—  	  	 	 	11,434	  	
Tax effect of stock options exercised	 	 	—  	  	 	 	901	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	901	  	 	 	—  	  	 	 	901	  	
Tax effect for deferred stockholder payments	 	 	—  	  	 	 	961	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	961	  	 	 	—  	  	 	 	961	  	
Purchase of noncontrolling interest	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(238	) 	 	 	(238	) 	
Net income	 	 	—  	  	 	 	—  	  	 	 	148,886	  	 	 	—  	  	 	 	—  	  	 	 	148,886	  	 	 	587	  	 	 	149,473	  	
Other comprehensive income (loss)	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(373	) 	 	 	—  	  	 	 	(373	) 	 	 	204	  	 	 	(169	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at December 31, 2012	 	 	69	  	 	 	722,123	  	 	 	222,768	  	 	 	(9,199	) 	 	 	(1,225,299	) 	 	 	(289,538	) 	 	 	3,610	  	 	 	(285,928	) 	
Purchase of treasury stock	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,702	) 	 	 	(1,702	) 	 	 	—  	  	 	 	(1,702	) 	
Stock options exercised	 	 	—  	  	 	 	1,277	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1,277	  	 	 	—  	  	 	 	1,277	  	
Stock compensation expense	 	 	—  	  	 	 	10,133	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	10,133	  	 	 	—  	  	 	 	10,133	  	
Tax effect of stock options exercised	 	 	—  	  	 	 	1,827	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1,827	  	 	 	—  	  	 	 	1,827	  	
Transactions with noncontrolling interest	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,285	) 	 	 	(1,285	) 	
Net income	 	 	—  	  	 	 	—  	  	 	 	103,961	  	 	 	—  	  	 	 	—  	  	 	 	103,961	  	 	 	696	  	 	 	104,657	  	
Other comprehensive income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	5,663	  	 	 	—  	  	 	 	5,663	  	 	 	—  	  	 	 	5,663	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at December 31, 2013	 	$	69	  	 	$	735,360	  	 	$	326,729	  	 	$	(3,536	) 	 	$	(1,277,001	) 	 	$	(168,379	) 	 	$	3,021	  	 	$	(165,358	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
F-6

Table of Contents
 FML Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 2013 and 2012

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	
 	  	(in thousands)	 	
Net income	  	$	104,657	  	 	$	149,473	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  				 				
Depreciation and depletion	  	 	35,917	  	 	 	27,562	  	
Amortization of deferred financing costs	  	 	6,199	  	 	 	6,615	  	
Amortization of original issue discount	  	 	393	  	 	 	—  	  	
Amortization of intangible assets	  	 	1,854	  	 	 	128	  	
Non-cash portion of loss on extinguishment of debt	  	 	11,358	  	 	 	—  	  	
Impairment of long-lived assets	  	 	—  	  	 	 	273	  	
Unrealized loss (gain) on interest rate swaps	  	 	3,009	  	 	 	(123	) 	
Deferred income taxes	  	 	826	  	 	 	10,085	  	
Stock compensation expense	  	 	10,133	  	 	 	11,434	  	
Change in operating assets and liabilities, net of acquired balances:	  				 				
Accounts receivable	  	 	(23,463	) 	 	 	(3,504	) 	
Inventories	  	 	158	  	 	 	4,502	  	
Prepaid expenses and other assets	  	 	(10,332	) 	 	 	(2,735	) 	
Accounts payable	  	 	46,542	  	 	 	(14,263	) 	
Accrued expenses	  	 	(12,616	) 	 	 	(3,014	) 	
	  	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	174,635	  	 	 	186,433	  	
	  	 	 	 	 	 	 	 	
Cash flows from investing activities	  				 				
Proceeds from sale of fixed assets	  	 	—  	  	 	 	1,650	  	
Capital expenditures	  	 	(111,514	) 	 	 	(109,016	) 	
Purchase of companies and asset acquisitions	  	 	(468,003	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(579,517	) 	 	 	(107,366	) 	
	  	 	 	 	 	 	 	 	
Cash flows from financing activities	  				 				
Proceeds from issuance of term loans	  	 	1,226,950	  	 	 	—  	  	
Payments on term debt	  	 	(841,025	) 	 	 	(115,000	) 	
Change in other long-term debt and capital leases	  	 	(2,356	) 	 	 	(5,634	) 	
Proceeds from revolving credit facility	  	 	148,100	  	 	 	—  	  	
Payments on revolving credit facility	  	 	(107,100	) 	 	 	—  	  	
Proceeds from issuance of common stock pursuant to option exercises	  	 	1,277	  	 	 	716	  	
Purchase of treasury stock	  	 	(1,702	) 	 	 	(1,014	) 	
Tax effect of stock options exercised and dividend equivalents	  	 	1,827	  	 	 	901	  	
Transactions with noncontrolling interest	  	 	(1,285	) 	 	 	—  	  	
Tax effect for deferred stockholder payments	  	 	—  	  	 	 	961	  	
Financing costs	  	 	(14,171	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	 	410,515	  	 	 	(119,070	) 	
	  	 	 	 	 	 	 	 	
Foreign currency adjustment	  	 	316	  	 	 	104	  	
	  	 	 	 	 	 	 	 	
Increase (decrease) in cash and cash equivalents	  	 	5,949	  	 	 	(39,899	) 	
Cash and cash equivalents:	  				 				
Beginning of year	  	 	11,866	  	 	 	51,765	  	
	  	 	 	 	 	 	 	 	
End of year	  	$	17,815	  	 	$	11,866	  	
	  	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:	  				 				
Interest paid	  	$	57,694	  	 	$	52,047	  	
Income taxes paid	  	 	56,319	  	 	 	55,085	  	
Non-cash investing activities:	  				 				
Equipment purchased under capital lease	  	$	5,989	  	 	$	4,381	  	
The accompanying notes are an integral part of these consolidated financial statements.
 
F-7

Table of Contents
 FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
1.	Organization	
FML Holdings, Inc. and its consolidated subsidiaries (the “Company”) is a supplier of proppants and sand products. The Company is organized into two segments: Proppant Solutions and Industrial & Recreational Products. This segmentation is based on the end markets we serve, our management structure and the financial information that is reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance.
The Proppant Solutions business serves the oil and gas recovery markets in the United States, Canada, Argentina, Mexico, China, northern Europe and the Middle East, providing raw and coated proppants primarily for use in hydraulic fracturing. The raw sand and substrate for our coated sand generally consists of high-purity silica sands produced at our facilities in Illinois, Wisconsin, Minnesota and Texas.
The Industrial & Recreational Products business provides raw and coated sands to the foundry, building products, glass, turf and landscape and filtration industries.
In addition to its wholly-owned subsidiaries, the Company owns 90% of a holding company, Technimat LLC, which owns 70% of Santrol (Yixing) Proppant Co., a manufacturer of resin-based proppants located in China. During 2013, the company liquidated its interest in Santrol (Tianjin) Proppant Company Ltd., which was owned by Technimat. The noncontrolling interests in both entities are presented as “Noncontrolling interest” on the balance sheet.
 
2.	Summary of Significant Accounting Policies	
Principles of Consolidation
The consolidated financial statements include the accounts of FML Holdings, Inc. and its wholly-owned and majority-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, delivery of products has occurred, the selling price is fixed or determinable, collectability is reasonably assured and title and risk of loss transfer to the customer. This generally occurs when products leave a storage terminal or, in the case of direct shipments, when products leave a production facility. Transportation costs to move product from a production facility to a storage terminal are borne by the Company and capitalized into the cost of inventory. These costs are included in the cost of sales as the product is sold.
The Company derives its revenue by mining and processing minerals that its customers purchase for various uses. Its net sales are primarily a function of the price per ton realized and the volumes sold. In some instances,
 
F-8

Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
its net sales also include a charge for transportation services it provides to its customers. The Company’s transportation revenue fluctuates based on a number of factors, including the volume of product it transports under contract, service agreements with its customers, the mode of transportation used and the distance between its plants and customers.
The Company primarily sells its products under market rate contracts with terms typically ranging from two to ten years. The Company invoices the majority of its customers on a per shipment basis when the customer takes possession of the product.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. At various times, the Company maintains funds on deposit at its banks in excess of FDIC insurance limits.
Accounts Receivable
Trade accounts receivable are stated at the amount management expects to collect, and do not bear interest. Management provides for uncollectible amounts based on its assessment of the current status of individual accounts. Accounts receivable are net of allowance for doubtful accounts of $796, and $1,189 as of December 31, 2013 and 2012, respectively.
The following table presents the activity in the Company’s allowance for doubtful accounts for the years ended December 31, 2012 and 2013:

 	  	Balance at
Beginning of Period	 	  	Net Additions
Charged to Expense	 	  	Accounts Receivable
Written Off	 	 	Balance at
End of Period	 	
Year ended December 31, 2012	  	$	761	  	  	$	502	  	  	$	(74	) 	 	$	1,189	  	
Year ended December 31, 2013	  	 	1,189	  	  	 	1,741	  	  	 	(2,134	) 	 	 	796	  	
Included in accounts receivable is $7,163 and $5,797 of recoverable value-added taxes and other taxes remitted in Mexico, as of December 31, 2013 and 2012, respectively.
Inventories
Inventories are stated at the lower of cost or market. Certain subsidiaries determine cost using the last-in, first-out (LIFO) method. If the first-in, first-out (FIFO) method of inventory accounting had been used, inventories would have been higher by $176 and $4,287 at December 31, 2013 and 2012, respectively. The significant decrease in the LIFO inventory reserve is due to the impact of purchase accounting for FTSI, whereby acquired work-in-process inventory was stepped up to fair value, creating a significant increase in the LIFO inventory on hand at the end of the year, as well as an ending quantity decrement at another location (see note 8).
Such inventories comprise 24% and 20% of inventories reflected in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012, respectively. The cost of inventories of all other subsidiaries is determined using the FIFO method. The Company recognized a $4,958 permanent write-down in the value of finished goods inventory, net of expected recoveries from suppliers, in the year ended December 31, 2013. The inventory write-down is included in cost of sales.
 
F-9

Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Expenditures, including interest, for property, plant and equipment and items that substantially increase the useful lives of existing assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred.
Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful lives of the related assets. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements.
Depletion expense calculated for depletable land and mineral rights is based on cost multiplied by a depletion factor. The depletion factor varies based on production and other factors, but is generally equal to annual tons mined divided by total estimated remaining reserves for the mine.
The estimated service lives of property and equipment are principally as follows:

Land improvements	  	 	10-40 years	  	
Machinery and equipment	  	 	3-20 years	  	
Buildings and improvements	  	 	10-40 years	  	
Furniture, fixtures, and other	  	 	3-10 years	  	
Construction in progress is stated at cost, which includes the cost of construction and other direct costs attributable to the construction. No provision for depreciation is made on construction in progress until such time as the relevant assets are completed and put into use. Construction in progress at December 31, 2013, represents machinery and facilities under installation.
The Company capitalizes interest cost incurred on funds used to construct property, plant, and equipment. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. Interest cost capitalized was $2,540 and $2,654 in 2013 and 2012, respectively.
Depreciation and depletion expense was $35,917 and $27,562 in 2013 and 2012, respectively.
Included in land and improvements are occupancy rights in China of $354 that are held for a term of 50 years until December 2057.
The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of property, plant and equipment may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets or asset groups. The factors considered by management in performing this assessment include current operating results, trends, and prospects, as well as the effects of obsolescence, demand, competition, and other economic factors. As a result of these tests, the Company recorded a write down in the carrying value of certain minerals rights of $0 and $273 in the years ended December 31, 2013 and 2012, respectively.
 
F-10

Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
Deferred Financing Costs
Deferred financing costs are amortized over the terms of the related debt obligations and are included in other assets. In connection with the refinancing of the Company’s debt in September 2013 (see note 10), the Company incurred financing costs of $15,132 of which $14,171 were capitalized. In connection with the refinancing, the Company wrote off $11,358 of costs that were previously capitalized. The following table presents deferred financing costs as of December 31, 2013 and 2012:

 	  	2013	 	 	2012	 	
Deferred financing costs	  	$	36,705	  	 	$	43,721	  	
Accumulated amortization	  	 	(12,475	) 	 	 	(16,105	) 	
	  	 	 	 	 	 	 	 	
Deferred financing costs, net	  	$	24,230	  	 	$	27,616	  	
	  	 	 	 	 	 	 	 	
Goodwill and Intangible Assets
Goodwill and intangible assets are reviewed for impairment by applying a fair-value based test on an annual basis or more frequently if circumstances indicate that impairment may have occurred. The Company assesses goodwill for possible impairment using a two-step method. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an indication of goodwill impairment exists. The second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss is recognized equal to the excess. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill.
The Company reviews definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of a definite-lived intangible asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets or asset groups.
The evaluation of goodwill or other intangible assets for possible impairment includes estimating fair value using one or a combination of valuation techniques, such as discounted cash flows or based on comparable companies or transactions. These valuations require the Company to make estimates and assumptions regarding future operating results, cash flows, changes in working capital and capital expenditures, selling prices, profitability, and the cost of capital. Although the Company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.
The Company did not recognize any impairment losses for goodwill or other intangible assets in the years ended December 31, 2013 and 2012.
Earnings per Share
Basic and diluted earnings per share is presented for net income attributable to FML Holdings, Inc. Basic earnings per share is computed by dividing income available to FML Holdings, Inc. common stockholders by the weighted-average number of outstanding common shares for the period. Diluted earnings per share is computed
 
F-11

Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
by increasing the weighted-average number of outstanding common shares to include the additional common shares that would be outstanding after exercise of outstanding stock options. Potential common shares in the diluted earnings per share calculation are excluded to the extent that they would be anti-dilutive.
Derivatives and Hedging Activities
Due to its variable-rate indebtedness, the Company is exposed to fluctuations in interest rates. The Company uses interest rate swaps to manage this exposure. These derivative instruments are recorded on the balance sheet at their fair values. Changes in the fair value of derivatives are recorded each period in current earnings or in other comprehensive income, depending on whether a derivative is designated as part of a hedging relationship and, if it is, depending on the type of hedging relationship. For cash flow hedges in which the Company is hedging the variability of cash flows related to a variable-rate liability, the effective portion of the gain or loss on the derivative instrument is reported in other comprehensive income in the periods during which earnings are impacted by the variability of the cash flows of the hedged item. The ineffective portion of all hedges is recognized in current period earnings. As interest expense is accrued on the debt obligation, amounts in accumulated other comprehensive income (loss) related to the interest rate swaps are reclassified into income to obtain a net cost on the debt obligation equal to the effective yield of the fixed rate of each swap. In the event that an interest rate swap is terminated prior to maturity, gains or losses in accumulated other comprehensive income (loss) remain deferred and are reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.
The Company formally designates and documents instruments at inception that qualify for hedge accounting of underlying exposures in accordance with GAAP. Both at inception and for each reporting period, the Company assesses whether the financial instruments used in hedging transactions are effective in offsetting changes in cash flows of the related underlying exposure.
Foreign Currency Translation
Assets and liabilities of all foreign operations are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are reflected as accumulated other comprehensive income (loss) in equity.
Concentration of Labor
Approximately 14% of the Company’s domestic labor force is covered under eight union agreements that expire at various times through November 2016. None of the contracts expire before March 2015.
Concentration of Credit Risk
Approximately 39% and 38% of the accounts receivable balance at December 31, 2013 and 2012, respectively, was outstanding from three customers.
Income Taxes
The Company uses the asset and liability method to account for deferred income taxes. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax bases. Management reviews the Company’s deferred tax
 
F-12

Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
assets to determine whether their value can be realized based upon available evidence. A valuation allowance is established if management believes it is more likely than not that some portion of the deferred tax assets will not be realized.
Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change.
The Company recognizes a tax benefit associated with an uncertain tax position when the tax position is more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company recognizes interest and penalties accrued related to unrecognized tax uncertainties in income tax expense.
Asset Retirement Obligations
We estimate the future cost of dismantling, restoring and reclaiming operating excavation sites and related facilities in accordance with federal, state and local regulatory requirements. We record the initial estimated present value of reclamation costs as an asset retirement obligation and increase the carrying amount of the related asset by a corresponding amount. We allocate reclamation costs to expense over the life of the related assets and adjust the related liability for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate. If the asset retirement obligation is settled for more or less than the carrying amount of the liability, a loss or gain will be recognized, respectively.
Research and Development
The Company’s research and development expenses consist of personnel and other direct and indirect costs for internally funded project development. Total expenses for R&D for the years ended December 31, 2013 and 2012 were $5,364 and $1,815, respectively. Total research and development expenditures represented 0.54% and 0.21% of revenues in 2013 and 2012, respectively.
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) is a separate line within equity that reports the Company’s cumulative income that has not been reported as part of net income. Items that are included in this line are the income or loss from foreign currency translation, actuarial gains and losses and prior service cost related to pension liabilities, and the unrealized gains and losses on certain investments or hedges, net of taxes. The components of accumulated other comprehensive income (loss) attributable to FML Holdings, Inc. at December 31, 2013 and 2012 were as follows:

 	  	December 31, 2013	 	
 	  	Gross	 	 	Tax Effect	 	 	Net Amount	 	
Foreign currency translation	  	$	(2,626	) 	 	 	—  	  	 	$	(2,626	) 	
Additional pension liability	  	 	(2,717	) 	 	 	1,019	  	 	 	(1,698	) 	
Unrealized gain on interest rate hedges	  	 	1,260	  	 	 	(472	) 	 	 	788	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	(4,083	) 	 	$	547	  	 	$	(3,536	) 	

F-13

Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)

 	  	December 31, 2012	 	
 	  	Gross	 	 	Tax Effect	 	  	Net Amount	 	
Foreign currency translation	  	$	(2,624	) 	 	 	—  	  	  	$	(2,624	) 	
Additional pension liability	  	 	(4,179	) 	 	 	1,567	  	  	 	(2,612	) 	
Unrealized losses on interest rate hedges	  	 	(6,341	) 	 	 	2,378	  	  	 	(3,963	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	
	  	$	(13,144	) 	 	$	3,945	  	  	$	(9,199	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	
The following table presents the changes in accumulated other comprehensive income by component for the year ended December 31, 2013:

 	  	Year Ended December 31, 2013	 	
 	  	Unrealized gain
(loss) on interest
rate hedges	 	 	Additional
pension liability	 	 	Foreign
currency
translation	 	 	Total	 	
Beginning balance	  	$	(3,963	) 	 	$	(2,612	) 	 	$	(2,624	) 	 	$	(9,199	) 	
Other comprehensive income (loss) before reclassifications	  	 	3,368	  	 	 	744	  	 	 	(2	) 	 	 	4,110	  	
Amounts reclassified from accumulated other comprehensive income	  	 	1,383	  	 	 	170	  	 	 	—  	  	 	 	1,553	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	788	  	 	$	(1,698	) 	 	$	(2,626	) 	 	$	(3,536	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The following table presents the reclassifications out of accumulated comprehensive income during the year ended December 31, 2013:

Details about accumulated other comprehensive income	  	Amount reclassified
from accumulated
other
comprehensive
income	 	 	Affected line item on the
statement of income	
Change in fair value of derivative swap agreements	  				 		
Interest rate contracts	  	$	2,212	  	 	Interest expense	
	  	 	(829	) 	 	Tax expense (benefit)	
	  	 	 	 	 		
	  	$	1,383	  	 	Net of tax	
			
Amortization of pension obligations	  				 		
Prior service cost	  	$	19	  	 	Cost of sales	
Actuarial gains (losses)	  	 	253	  	 	Cost of sales	
	  	 	 	 	 		
	  	 	272	  	 	Total before tax	
	  	 	(102	) 	 	Tax expense	
	  	 	 	 	 		
	  	$	170	  	 	Net of tax	

Total reclassifications for the period	  	$	1,553	  	 	Net of tax	

3.	Recent Accounting Pronouncements	
In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
(ASU 2013-11). ASU 2013-11 requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions except where the deferred tax asset or other carryforward are not available for use. The guidance is effective for reporting periods beginning after December 15, 2013. The adoption of the guidance has not had a material impact on the Company’s consolidated financial statements.
In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08), which amended existing requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting will be limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. The guidance is effective for disposal transactions occurring in reporting periods beginning after December 15, 2014. Presentation and disclosures of future disposal transactions after adoption of the guidance may be different than under current standards.
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09). Under ASU 2014-09, companies recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The guidance is effective for reporting periods beginning after December 15, 2016. The Company is in the process of evaluating the effect of the new guidance on its financial statements and disclosures.
 
4.	Inventories	
At December 31, 2013 and 2012, inventories consisted of the following:

 	  	2013	 	 	2012	 	
Raw materials	  	$	16,766	  	 	$	20,667	  	
Work-in-process	  	 	24,576	  	 	 	23,342	  	
Finished goods	  	 	77,183	  	 	 	51,710	  	
	  	 	 	 	 	 	 	 	
	  	 	118,525	  	 	 	95,719	  	
Less: LIFO reserve	  	 	(176	) 	 	 	(4,287	) 	
	  	 	 	 	 	 	 	 	
Inventories	  	$	118,349	  	 	$	91,432	  	

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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
5.	Property, Plant, and Equipment	
At December 31, 2013 and 2012, property, plant and equipment consisted of the following:

 	  	2013	 	 	2012	 	
Land and improvements	  	$	38,557	  	 	$	23,445	  	
Mineral reserves and mine development	  	 	280,727	  	 	 	124,066	  	
Machinery and equipment	  	 	426,798	  	 	 	253,875	  	
Buildings and improvements	  	 	100,217	  	 	 	76,091	  	
Furniture, fixtures and other	  	 	2,558	  	 	 	2,459	  	
Construction in progress	  	 	112,819	  	 	 	77,982	  	
	  	 	 	 	 	 	 	 	
	  	 	961,676	  	 	 	557,918	  	
Accumulated depletion and depreciation	  	 	(212,838	) 	 	 	(182,756	) 	
	  	 	 	 	 	 	 	 	
Property, plant and equipment, net	  	$	748,838	  	 	$	375,162	  	

6.	Accrued Expenses	
At December 31, 2013 and 2012, accrued expenses consisted of the following:

 	  	2013	 	  	2012	 	
Accrued payroll and fringe benefits	  	$	12,386	  	  	$	8,981	  	
Contingent consideration	  	 	9,833	  	  	 	—  	  	
Accrued income taxes	  	 	—  	  	  	 	11,497	  	
Other accrued expenses	  	 	6,487	  	  	 	7,799	  	
	  	 	 	 	  	 	 	 	
Accrued Expenses	  	$	28,706	  	  	$	28,277	  	
	  	 	 	 	  	 	 	 	
Contingent consideration relates to the Great Plains acquisition and was initially recorded at $9,600 which represented fair value at the time of acquisition. Changes in fair value, primarily relating to the passage of time, are recorded through earnings.
 
7.	Other Long-Term Liabilities	
At December 31, 2013 and 2012, other long-term liabilities consisted of the following:

 	  	2013	 	  	2012	 	
Interest rate swaps	  	$	5,637	  	  	$	8,738	  	
Accrued asset retirement obligations	  	 	2,680	  	  	 	2,901	  	
Accrued compensation and benefits	  	 	8,057	  	  	 	9,365	  	
Other	  	 	4,714	  	  	 	5,125	  	
	  	 	 	 	  	 	 	 	
Other long term liabilities	  	$	21,088	  	  	$	26,129	  	

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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
8.	Acquisitions	
The Company made three acquisitions in 2013. On April 30, 2013, the Company acquired 100% of Self-Suspending Proppant LLC (“SSP”) for total consideration of $56,320 plus contingent consideration. The Company accounted for this transaction as an acquisition of a group of assets. SSP owned the exclusive rights to certain intellectual property related to providing proppant with enhanced performance attributes through proprietary coating technology. The contingent consideration is a fixed percentage of the cumulative product margin, less certain adjustments, generated by our Propel SSP sales for the five years commencing on October 1, 2015. Because the earnout is dependent on future sales and the related cost of sales, the amounts of which are highly uncertain, it is not possible to estimate the amount that will be paid. The contingent consideration will be capitalized, and the associated amortization expense will be recognized, at the time a payment is probable and reasonably estimable.
On June 12, 2013, the Company purchased Great Plains Sands, LLC (“Great Plains”), located in Minnesota, for total purchase consideration of $73,579. The Company accounted for this acquisition under ASC 805 as a business combination. Included in the purchase amount is contingent consideration of $9,600 for additional payments due to the seller based on the acquired plant meeting certain operating targets. The Company believes it is highly likely these targets will be met and therefore has discounted the payments only to reflect the time value of money until the expected payment date, which is within one year. The goodwill of $3,887 is primarily attributable to the synergies expected to arise after the acquisition. The Company expects that all of the goodwill generated in this acquisition will be deductible for tax purposes. The production facilities were not complete at the time of the acquisition, and accordingly there were no preacquisition revenues or cost of sales. As a result, pro forma results would not be meaningful in evaluating the financial effect of this acquisition. It is not practicable to determine revenue and net income included in the Company’s operating results relating to Great Plains since the date of acquisition because Great Plains has been fully integrated into the Company’s operations, and the operating results of Great Plains can therefore not be separately identified.
On September 6, 2013, the Company purchased certain assets and assumed certain liabilities from FTS International Services, LLC (“FTSI”) and affiliates. The Company acquired sand reserves, frac sand production capacity, resin coating capacity and logistics assets consisting of terminals and railcars. The assets are located in various states, including Texas, Wisconsin, Missouri, Alabama, and Illinois. In connection with this acquisition, the Company also entered into a ten year supply agreement with FTSI. In April 2014, the contractual quantities of certain raw sand required under the supply agreement were lowered to 80% of the original quantity. The total consideration was $347,704. The Company accounted for this acquisition under ASC 805 as a business combination. The goodwill of $49,456 is primarily attributable to the synergies expected to arise after the acquisition. The Company expects that all of the goodwill generated in this acquisition will be deductible for tax purposes. The historical financial information for the assets acquired was impracticable to obtain, and inclusion of pro forma information would require the Company to make estimates and assumptions regarding these assets’ historical financial results that may not be reasonable or accurate. As a result, pro forma results are not presented. It is not practicable to determine revenue and net income included in the Company’s operating results relating to FTSI since the date of acquisition because FTSI has been fully integrated into the Company’s operations, and the operating results of FTSI can therefore not be separately identified.
The purchase price for each of these acquisitions was assigned to the fair value of the assets acquired. Such determination of fair value is based on valuation models that incorporate the present value of expected future cash flows and profitability projections. There are many assumptions and estimates underlying the determination of the fair value. Although the Company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
The purchase price for the three transactions in 2013 has been allocated to the fair value of the assets acquired and liabilities assumed as follows:

 	  	SSP	 	  	Great Plains
Sands	 	 	FTSI	 	
Land and buildings	  	$	—  	  	  	$	7,623	  	 	$	2,428	  	
Inventory	  	 	—  	  	  	 	1,085	  	 	 	25,990	  	
Machinery and equipment	  	 	—  	  	  	 	13,200	  	 	 	125,239	  	
Mineral reserves	  	 	—  	  	  	 	48,100	  	 	 	95,500	  	
Other assets	  	 	—  	  	  	 	1,568	  	 	 	—  	  	
Acquired technology	  	 	56,320	  	  	 	—  	  	 	 	—  	  	
Supply agreement	  	 	—  	  	  	 	—  	  	 	 	50,700	  	
Other intangibles	  	 	—  	  	  	 	—  	  	 	 	687	  	
Goodwill	  	 	—  	  	  	 	3,887	  	 	 	49,456	  	
Liabilities assumed	  	 	—  	  	  	 	(1,884	) 	 	 	(2,296	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	
Net assets acquired	  	$	56,320	  	  	$	73,579	  	 	$	347,704	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Cash consideration	  	$	56,320	  	  	$	63,979	  	 	$	347,704	  	
Contingent consideration	  	 	—  	  	  	 	9,600	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total purchase consideration	  	$	56,320	  	  	$	73,579	  	 	$	347,704	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
The company capitalized $1,320 of transaction related expenses in connection with the SSP transaction. The Company recognized $7,113 of transaction related expenses in connection with the Great Plains and FTSI acquisitions, which is included in selling, general and administrative expenses.
 
9.	Goodwill and Other Intangible Assets	
The following table summarizes the activity in goodwill for the years ended December 31, 2013 and 2012.

 	  	Balance at
Beginning of
Year	 	  	Current Year
Acquisitions	 	  	Current Year
Dispositions	 	 	Currency
Translation	 	  	Balance at End
of Year	 	
Year Ended December 31, 2013:	  				  				  				 				  				
Proppant Solutions	  	$	18,676	  	  	$	53,343	  	  	$	(1,050	) 	 	$	22	  	  	$	70,991	  	
Industrial & Recreational	  	 	16,461	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	16,461	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total	  	$	35,137	  	  	$	53,343	  	  	$	(1,050	) 	 	$	22	  	  	$	87,452	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Year Ended December 31, 2012:	  				  				  				 				  				
Proppant Solutions	  	$	18,589	  	  	$	—  	  	  	$	—  	  	 	$	87	  	  	$	18,676	  	
Industrial & Recreational	  	 	16,461	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	16,461	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total	  	$	35,050	  	  	$	—  	  	  	$	—  	  	 	$	87	  	  	$	35,137	  	

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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
Information regarding our acquired intangible assets as of December 31, 2013 and 2012 is as follows:

 	  	December 31, 2013	 	
 	  	Gross Carrying
Amount	 	  	Accumulated
Amortization	 	 	Intangible
Assets, net	 	
Acquired technology and patents	  	$	57,128	  	  	$	(553	) 	 	$	56,575	  	
Supply agreement	  	 	50,700	  	  	 	(1,690	) 	 	 	49,010	  	
Other intangible assets	  	 	687	  	  	 	(36	) 	 	 	651	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Intangible assets	  	$	108,515	  	  	$	(2,279	) 	 	$	106,236	  	

													
 	  	December 31, 2012	 	
 	  	Gross Carrying
Amount	 	  	Accumulated
Amortization	 	 	Intangible
Assets, net	 	
Acquired technology and patents	  	$	808	  	  	$	(425	) 	 	$	383	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Intangible assets	  	$	808	  	  	$	(425	) 	 	$	383	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
The acquired technology from the SSP acquisition will be amortized ratably over its estimated useful life once product using the technology is first commercialized. The supply agreement is being amortized ratably over 10 years. Capitalized patents will be fully amortized by the end of 2014.
Estimated future amortization expense related to intangible assets at December 31, 2013 is as follows:

 	  	Amortization	 	
2014	  	$	5,268	  	
2015	  	 	5,213	  	
2016	  	 	5,210	  	
2017	  	 	5,192	  	
2018	  	 	5,147	  	
Thereafter	  	 	23,686	  	
	  	 	 	 	
Total	  	$	49,716	  	

10.	Long-Term Debt	

 	  	Total	 	
 	  	2013	 	 	2012	 	
Term Loans—Term B-1, closing March 15, 2011	  	$	—  	  	 	$	815,000	  	
Term Loans—Term B-1, closing September 5, 2013	  	 	322,714	  	 	 	—  	  	
Term Loans—Term B-2	  	 	878,605	  	 	 	—  	  	
Industrial Revenue bond	  	 	10,000	  	 	 	10,000	  	
Revolving credit facility and other	  	 	42,775	  	 	 	1,027	  	
Capital leases, net	  	 	8,052	  	 	 	5,168	  	
	  	 	 	 	 	 	 	 	
	  	 	1,262,146	  	 	 	831,195	  	
Less: current portion	  	 	(15,687	) 	 	 	(3,332	) 	
	  	 	 	 	 	 	 	 	
Long-term debt including leases	  	$	1,246,459	  	 	$	827,863	  	

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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
On March 15, 2011, the Company entered into an amendment (“Amended Credit Agreement”) to the Credit and Guaranty Agreement dated August 5, 2010 (“Original Credit Agreement”). The Amended Credit Agreement provided for revolving loans up to $75,000 and a Senior Secured Tranche B Term Loan in an aggregate principal amount of $1,000,000. Unless otherwise accelerated, the Revolving Commitment was due to expire on August 5, 2015 and the Tranche B Term Loan was due to mature on March 15, 2017.
On September 5, 2013, the Company entered into an amendment (“2013 Amended Credit Agreement”) to the Amended Credit Agreement. The 2013 Amended Credit Agreement caused the issuance of two new term loans, Senior Secured Term B-1 (“B-1 Term Loan”) of $325,000 and Senior Secured Term B-2 (“B-2 Term Loan”) of $885,000, and a new Revolving Credit Agreement (“New Revolver”) with a commitment amount of $75,000. The proceeds of the borrowings under the 2013 Amended Credit Agreement were used to repay amounts outstanding under the previous credit facility and to fund the acquisition of the proppant assets of FTSI (see note 8).
The B-1 Term Loan matures on March 15, 2017 and requires quarterly principal repayments of $800 (1% annually) with the balance due at maturity. The B-2 Term Loan matures on September 5, 2019 and requires quarterly principal repayments of $2,200 (1% annually) with the balance due at maturity. The New Revolver expires on September 5, 2018. Until they were repriced in March 2014, borrowings under the B-1 Term Loan, the B-2 Term Loan and the revolving credit facility bore interest, at the Company’s discretion, at the base rate (the greater of prime rate, federal funds rate plus 0.5%, 2.0%, or one-month LIBOR plus 1.0%) plus 3.0% or the adjusted Eurodollar Rate (subject to a 1.0% floor) plus 4.0%. With respect to borrowings under the B-1 Term Loan and Revolving Credit Facility, the 2.0% minimum for Base Rate borrowings and 1.0% for Eurodollar Rate borrowings did not apply. The applicable margin on the loans could be reduced by 0.25% if the Company’s leverage ratio fell below 2.75. As of December 31, 2013, the borrowings for the B-1 Term Loan and the New Revolver bore interest at 4.3% and the B-2 Term Loan at 5.0%. Additionally, the Company pays a commitment fee of 0.5% per annum, based on the daily average of the unused commitment under the New Revolver.
The terms of the 2013 Amended Credit Agreement provide for customary representations and warranties and affirmative covenants. The credit facility also contains customary negative covenants setting forth limitations on further indebtedness, liens, investments, disposition of assets, acquisitions, junior payments and restrictions on subsidiary distributions. The Company must maintain a leverage ratio as of the end of each quarter of no more than 4.75 if the aggregate revolver borrowing is equal to or greater than 25% of the total revolver commitment.
In February 2014 the Company executed a joinder agreement to borrow $41,000 as an additional B-2 Term Loan. The proceeds of this borrowing were used to repay then outstanding amounts under the New Revolver. The additional borrowings mature on the same date as the then existing B-2 Term Loan (September 5, 2019) and the required quarterly principal repayments for the B-2 Term Loan were increased by one-quarter of 1% of the amount borrowed with the balance due at maturity. There were no other changes in the terms, interest rates or covenants of the 2013 Amended Credit Agreement.
In March 2014 the Company amended the existing credit agreement whereby the applicable margin for B-1 and B-2 Base Rate loans was reduced to 2.5% and B-1 and B-2 Eurodollar Rate loans was reduced to 3.5%.
The Company granted the lenders a first priority lien on substantially all of the Company’s assets.
The Company has a $10,000 Industrial Revenue Bond outstanding related to the construction of a manufacturing facility in Wisconsin. The bond bears interest, which is payable monthly, at a variable rate. The
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
rate was 0.1% at December 31, 2013. The bond matures on September 1, 2027 and is collateralized by a letter of credit of $10,000.
Maturities of long-term debt are as follows:

 	  	Capital Lease Obligations	 	  	Other
Long-term Debt	 	  	Total Principal
Payments	 	
Year Ended	  	Lease
Payment	 	  	Less
Interest	 	  	Present
Value	 	  			  			
2014	  	$	3,768	  	  	$	254	  	  	$	3,514	  	  	$	12,173	  	  	$	15,687	  	
2015	  	 	3,031	  	  	 	130	  	  	 	2,901	  	  	 	12,113	  	  	 	15,014	  	
2016	  	 	1,484	  	  	 	29	  	  	 	1,455	  	  	 	12,114	  	  	 	13,569	  	
2017	  	 	169	  	  	 	3	  	  	 	166	  	  	 	323,303	  	  	 	323,469	  	
2018	  	 	17	  	  	 	1	  	  	 	16	  	  	 	8,866	  	  	 	8,882	  	
Thereafter	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	885,525	  	  	 	885,525	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	8,469	  	  	$	417	  	  	$	8,052	  	  	$	1,254,094	  	  	$	1,262,146	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Information pertaining to assets and related accumulated depreciation in the balance sheet for capital lease items is as follows:

 	  	2013	 	 	2012	 	
Cost	  	$	11,648	  	 	$	11,023	  	
Accumulated depreciation	  	 	(2,011	) 	 	 	(3,661	) 	
	  	 	 	 	 	 	 	 	
Net book value	  	$	9,637	  	 	$	7,362	  	

11.	Earnings per Share	
The table below shows the computation of basic and diluted earnings per share of Class A and Class B common stock for the years ended December 31, 2013 and 2012.

 	  	2013	 	  	2012	 	
Numerator:	  				  				
Net income attributable to FML Holdings, Inc.	  	$	103,961	  	  	$	148,886	  	
Denominator:	  				  				
Basic weighted average shares outstanding	  	 	4,588,477	  	  	 	4,583,141	  	
Dilutive effect of employee stock options	  	 	253,804	  	  	 	250,045	  	
	  	 	 	 	  	 	 	 	
Diluted weighted average shares outstanding	  	 	4,842,281	  	  	 	4,833,186	  	
	  	 	 	 	  	 	 	 	
Earnings per common share—basic	  	$	22.66	  	  	$	32.49	  	
Earnings per common share—diluted	  	$	21.47	  	  	$	30.80	  	
The calculation of diluted weighted average shares outstanding for 2013 and 2012 excludes 32,707 and 42,430 potential common shares, respectively, because the effect of including those potential common shares would be antidilutive.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
12.	Derivative Instruments	
The Company enters into interest rate swap agreements as a means to hedge its variable interest rate risk on debt instruments. The notional value of these swap agreements is $560,550 at December 31, 2013 and effectively fixes the variable rate in a range of 0.830% to 3.115%. The notional amount of these instruments is scheduled to increase over time to provide a hedge against variable interest rate debt. The interest rate swap agreements mature at various dates between December 31, 2013 and September 5, 2019.
Certain of the interest rate swaps qualify for cash flow hedge accounting treatment. The following table summarizes the fair values and the respective classification in the Consolidated Balance Sheets as of December 31, 2013 and 2012:

 	  	 	  	Assets (Liabilities)	 	
Interest Rate Swap Agreements	  	Balance Sheet Classification	  	2013	 	 	2012	 	
Designated as hedges	  	Other long-term liabilities	  	$	(2,297	) 	 	$	(5,870	) 	
Not designated as hedges	  	Other long-term liabilities	  	 	(3,340	) 	 	 	(2,868	) 	
Designated as hedges	  	Other assets	  	 	2,706	  	 	 	—  	  	
	  		  	 	 	 	 	 	 	 	
	  		  	$	(2,931	) 	 	$	(8,738	) 	
	  		  	 	 	 	 	 	 	 	
We recognized $(15) and $0 in interest expense, representing the ineffective portion of our interest rate swap agreements designated as hedges, in the years ended December 31, 2013 and 2012, respectively. We expect $2,490 to be reclassified from accumulated other comprehensive income into interest expense in the year ending December 31, 2014.
 
13.	Fair Value Measurements	
Financial instruments held by the Company include cash equivalents, accounts receivable, accounts payable, long-term debt and interest rate swaps. The Company is also liable for contingent consideration from an acquisition that is subject to fair value measurement. Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1	  	Quoted market prices in active markets for identical assets or liabilities	
		
Level 2	  	Observable market based inputs or unobservable inputs that are corroborated by market data	
		
Level 3	  	Unobservable inputs that are not corroborated by market data	
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The book value of cash equivalents, accounts receivable and accounts payable are considered to be representative of their fair values because of their short maturities. The carrying value of the Company’s debt is
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
also considered to be representative of its fair value since the interest rate is variable and fluctuates with the market.
The following table presents the amounts carried at fair value as of December 31, 2013 and 2012 for the Company’s other financial instruments.

 	  	Quoted Prices
in Active
Markets
(Level 1)	 	  	Other
Observable
Inputs
(Level 2)	 	 	Unobservable
Inputs
(Level 3)	 	 	Total	 	
December 31, 2013	  				  				 				 				
Contingent consideration liability	  	$	—  	  	  	$	—  	  	 	$	(9,833	) 	 	$	(9,833	) 	
Interest rate swap agreements	  	 	—  	  	  	 	(2,931	) 	 	 	—  	  	 	 	(2,931	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	—  	  	  	$	(2,931	) 	 	$	(9,833	) 	 	$	(12,764	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
December 31, 2012	  				  				 				 				
Interest rate swap agreements	  	$	—  	  	  	$	(8,738	) 	 	$	—  	  	 	$	(8,738	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	—  	  	  	$	(8,738	) 	 	$	—  	  	 	$	(8,738	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
The contingent consideration related to the Great Plains acquisition is valued based on the expected cash flows using a discount rate of 5.0%.
 
14.	Income Taxes	
Income before provision for income taxes includes the following components:

 	  	2013	 	  	2012	 	
United States	  	$	137,456	  	  	$	205,493	  	
Foreign	  	 	12,420	  	  	 	14,349	  	
	  	 	 	 	  	 	 	 	
	  	$	149,876	  	  	$	219,842	  	
	  	 	 	 	  	 	 	 	
The components of the provision for income taxes are as follows:

 	  	2013	 	  	2012	 	
Federal	  	$	34,578	  	  	$	51,537	  	
State and local	  	 	3,329	  	  	 	2,429	  	
Foreign	  	 	6,486	  	  	 	6,318	  	
	  	 	 	 	  	 	 	 	
Sub-total	  	 	44,393	  	  	 	60,284	  	
Change in deferred	  	 	826	  	  	 	10,085	  	
	  	 	 	 	  	 	 	 	
Total	  	$	45,219	  	  	$	70,369	  	

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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
The difference between the statutory federal and state income tax rates and the Company’s effective tax rate is due principally to tax depletion and nondeductible expenses. A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

 	  	2013	 	 	2012	 	
U.S. Statutory rate	  	 	35.0	% 	 	 	35.0	% 	
Increase (decrease) resulting from:	  				 				
State income taxes, net	  	 	2.2	  	 	 	1.1	  	
Foreign tax rate differential and adjustment	  	 	1.4	  	 	 	0.6	  	
U.S. statutory depletion	  	 	(6.9	) 	 	 	(3.2	) 	
Manufacturers deduction	  	 	(2.1	) 	 	 	(2.4	) 	
Other	  	 	0.6	  	 	 	0.9	  	
	  	 	 	 	 	 	 	 	
Effective rate	  	 	30.2	% 	 	 	32.0	% 	
	  	 	 	 	 	 	 	 	
Significant components of deferred tax assets and liabilities as of December 31, 2013 and 2012 are as follows:

 	  	2013	 	 	2012	 	
Current:	  				 				
Accrued liabilities	  	$	2,976	  	 	$	3,115	  	
Inventory	  	 	8,346	  	 	 	1,536	  	
Foreign tax credit carryforwards	  	 	426	  	 	 	664	  	
	  	 	 	 	 	 	 	 	
	  	 	11,748	  	 	 	5,315	  	
	  	 	 	 	 	 	 	 	
Long-term:	  				 				
Property, plant and equipment	  	 	(65,028	) 	 	 	(55,378	) 	
Stock compensation	  	 	15,921	  	 	 	12,821	  	
Deferred compensation	  	 	1,372	  	 	 	1,438	  	
Interest rate derivatives	  	 	1,026	  	 	 	3,549	  	
Additional pension liability	  	 	978	  	 	 	1,504	  	
Intangibles	  	 	(542	) 	 	 	(176	) 	
Other liabilities	  	 	(578	) 	 	 	(230	) 	
	  	 	 	 	 	 	 	 	
	  	 	(46,851	) 	 	 	(36,472	) 	
	  	 	 	 	 	 	 	 	
Net deferred tax (liabilities) assets	  	$	(35,103	) 	 	$	(31,157	) 	
	  	 	 	 	 	 	 	 	
At December 31, 2013 and 2012, the Company had $426 and $664, respectively, of gross deferred tax assets related to U.S. foreign tax credits which will begin expiring in 2021.
At December 31, 2013 and 2012, cumulative undistributed earnings of foreign subsidiaries included in consolidated retained earnings amounted to $7,165 and $12,583, respectively. These earnings are indefinitely reinvested in international operations. Accordingly, no provision has been made for U.S. deferred taxes related to future repatriation of these earnings, nor is it practical to estimate the amount of income taxes that would have to be provided if the Company was to conclude that such earnings will be remitted in the foreseeable future.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
The Company or its subsidiaries file income tax returns in the United States, Canada, China, Mexico, and Denmark. The Company is subject to income tax examinations for its U.S. Federal income taxes for the preceding three fiscal years and, in general, is subject to state and local income tax examinations for the same periods. The Company is subject to income tax examinations in Canada, China, Mexico, and Denmark for calendar years 2009 through 2012.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 	  	2013	 	 	2012	 	
Uncertain tax benefits balance as of January 1	  	$	4,767	  	 	$	3,144	  	
Increases (decreases) for tax positions in prior years	  	 	(267	) 	 	 	655	  	
Increases (decreases) for tax positions in current year	  	 	182	  	 	 	1,304	  	
Lapses in statutes of limitations	  	 	(138	) 	 	 	(336	) 	
	  	 	 	 	 	 	 	 	
	  	$	4,544	  	 	$	4,767	  	
	  	 	 	 	 	 	 	 	
At December 31, 2013 and 2012, the Company had $4,544 and $4,767, respectively, of unrecognized tax benefits. If the $4,544 were recognized, the full amount would affect the effective tax rate. We do not expect that the amount of unrecognized tax benefits will change significantly within the next twelve months. Interest and penalties are recorded in provision for income taxes. At December 31, 2013 and 2012, the Company had $1,506 and $1,400, respectively, of accrued interest and penalties related to unrecognized tax benefits recorded.
 
15.	Common Stock and Stock Based Compensation	
The Company has two classes of common stock. Class A and Class B common stock have similar rights, with the only difference being that Class B shares do not have voting rights.
The Company’s bylaws provide for certain rights with respect to share transactions. Transfers of shares are, except in limited circumstances, subject to certain rights of refusal by the Company and other existing stockholders, as defined. In addition, each stockholder has the right to request the Company to repurchase the shares he or she owns during designated semi-annual redemption request periods (redemption requests). The Board of Directors shall then determine, in its unconditional, sole and absolute discretion, the aggregate number of shares, if any, that the Company will purchase. Further, employee stockholders are subject to mandatory repurchase provisions in the event of termination of employment under certain circumstances. The purchase price under the redemption requests and the mandatory repurchase provisions shall be at fair market value, as defined, payable in cash either immediately or on a deferred basis.
The Company has a stock option plan that allows for granting of options to acquire 350,000 Class B shares to employees and key non-employees. The options are exercisable for a ten year period. Options are exercisable at times determined by the compensation committee of the Company and, as set forth in each individual option agreement. The options may become exercisable over a period of years or become exercisable only if performance or other goals set by the Board are attained, or may be a combination of both. Options may be exercised, in whole or in part, at any time after becoming exercisable, but not later than the date the option expires, which is typically 10 years from the grant date. Options granted after 2009 contain a 7 year vesting period that may be shortened to five years upon attainment of certain Company performance goals as determined by the compensation committee. The stock option plan also contains a change in control provision that provides for immediate vesting upon certain changes of ownership of the company. All options granted prior to 2010 are fully vested. The Company uses shares available in treasury when options are exercised, to the extent available.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
The weighted-average fair value of options granted during the years ended December 31, 2013 and 2012 was $181.80 and $185.19, respectively, based on the Black-Scholes-Merton options-pricing model, with the following assumptions:

 	  	2013	 	 	2012	 	
Dividend yield	  	 	0.00	% 	 	 	0.00	% 	
Expected volatility	  	 	46.38	% 	 	 	49.66	% 	
Risk free interest rate	  	 	1.12 - 2.00	% 	 	 	0.97 - 1.26	% 	
Expected option life	  	 	6.5 years	  	 	 	6.5 years	  	
The Company has no current plans to declare a dividend that would require a dividend yield assumption other than zero. Expected volatility is based on the volatilities of various comparable companies’ common stock. The comparable companies were selected by analyzing public companies in the industry based on various factors including, but not limited to, company size, financial data availability, active trading volume, and capital structure. The risk free interest rate is an interpolated rate from the U.S. constant maturity treasury rate for a term corresponding to the expected option life. Because the Company does not have sufficient historical data to provide a reasonable basis to estimate the expected life of the options, the Company uses the simplified method, which assumes the expected life is the mid-point between the vesting date and the end of the contractual term.
In determining the underlying value of the Company’s stock, the company used a combination of the guideline company approach and a discounted cash flow analysis. The key assumptions in this estimate include management’s projections of future cash flows, the Company-specific cost of capital used as a discount rate, lack of marketability discount, and qualitative factors to compare the Company to comparable guideline companies. During 2013, factors that contributed to changes in the underlying value of the Company’s stock included the continued recovery of the oil and gas fracking market, changes to future cash flows projected from the Company’s acquisitions, increases in operating leverage due to increased debt, product mix including mix of raw versus resin coated sand, and other factors. As the Company is highly dependent on sales to the oil and gas industry, the market conditions for this industry have a high degree of impact on the Company’s value.
The Company recorded $10,133 and $11,434 of stock compensation expense related to these options, which is included in additional paid-in capital, for the years ended December 31, 2013 and 2012, respectively.
Option activity during 2013 is as follows:

 	  	Options	 	 	Weighted
Average
Exercise
Price	 	
Outstanding at December 31, 2012	  	 	538,288	  	 	$	104.34	  	
Granted	  	 	66,450	  	 	 	355.40	  	
Exercised	  	 	(21,908	) 	 	 	58.28	  	
Forfeited	  	 	(24,567	) 	 	 	120.17	  	
Expired	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Outstanding at December 31, 2013	  	 	558,263	  	 	$	135.33	  	
Exercisable at December 31, 2013	  	 	388,912	  	 	$	93.17	  	
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
Options outstanding as of December 31, 2013 have an aggregate intrinsic value of $136,059 and a weighted average remaining contractual life of 6.3 years. Options that are exercisable as of December 31, 2013 have an aggregate intrinsic value of $113,027 and a weighted average remaining contractual life of 5.6 years. The aggregate intrinsic value represents the difference between the fair value of the Company’s shares of $379.05 per share at December 31, 2013 and the exercise price of the dilutive options, multiplied by the number of dilutive options outstanding at that date.
The aggregate intrinsic value of stock options exercised during the years ended December 31, 2013 and 2012 was $6,564 and $2,574, respectively.
Net cash proceeds from the exercise of stock options were $1,277 and $716 in the years ended December 31, 2013 and 2012, respectively.
There was $2,461 and $965 of income tax benefits realized from stock option exercises in the years ended December 31, 2013 and 2012, respectively.
At December 31, 2013, options to purchase 240,573 Class A shares and 317,690 Class B shares were outstanding. At December 31, 2012, options to purchase 267,098 Class A shares and 271,190 Class B shares were outstanding. As of December 31, 2013, $15,997 of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately 2.4 years.
 
16.	Defined Benefit Plans	
The Company maintains two defined benefit pension plans covering all union employees at certain facilities that provide benefits based upon years of service or a combination of employee earnings and length of service. The plans are underfunded by $926 and $2,553 as of December 31, 2013 and 2012, respectively. The Company is expected to fund the minimum annual contributions as determined by applicable regulations, which will be $234 for 2014; the Company reserves the right to make contributions in excess of this amount.
The following assumptions were used to determine the Company’s obligations under the plans:

 	  	Wedron Pension	 	 	Troy Grove Pension	 	
 	  	  2013  	 	 	  2012  	 	 	  2013  	 	 	  2012  	 	
Discount rate	  	 	4.50	% 	 	 	3.75	% 	 	 	5.00	% 	 	 	4.00	% 	
Long-term rate of return on plan assets	  	 	9.00	% 	 	 	9.00	% 	 	 	9.00	% 	 	 	9.00	% 	
The difference in the discount rates used for the Wedron Pension and the Troy Grove Pension is due to the differing characteristics of the two plans, including employee characteristics and plan size. The Company uses a cash flow matching approach to determine its discount rate using each plan’s projected cash flows and the Citigroup Discount Curve.
The long term rate of return on assets is based on management’s estimate of future long term rates of return on similar assets and is consistent with historical returns on such assets.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
The written investment policy for the pension plans includes a target allocation of about 70% in equities and 30% in fixed income investments. Only high-quality diversified securities similar to stocks and bonds are used. Higher-risk securities or strategies (such as derivatives) are not currently used but could be used incidentally by mutual funds held by the plan. The pension plans’ obligations are long-term in nature and the investment policy is therefore focused on the long-term. Goals include achieving gross returns at least equal to relevant indices. Management and the plans’ investment advisor regularly review and discuss investment performance, adherence to the written investment policy, and the investment policy itself.
Benefits under the Wedron plan were frozen effective December 31, 2012.
The following relates to the defined benefit plans as of December 31, 2013 and 2012:

 	  	2013	 	 	2012	 	
Change in benefit obligation	  				 				
Benefit obligation at beginning of year	  	$	8,105	  	 	$	7,613	  	
Service cost	  	 	86	  	 	 	211	  	
Interest cost	  	 	300	  	 	 	306	  	
Actuarial (gain)/loss	  	 	(805	) 	 	 	196	  	
Benefit payments	  	 	(268	) 	 	 	(221	) 	
	  	 	 	 	 	 	 	 	
Benefit obligation at end of year	  	$	7,418	  	 	$	8,105	  	
	  	 	 	 	 	 	 	 	
Change in plan assets	  				 				
Fair value of plan assets at beginning of year	  	$	5,552	  	 	$	4,543	  	
Actual return on plan assets	  	 	887	  	 	 	604	  	
Employer contributions	  	 	321	  	 	 	626	  	
Benefit payments	  	 	(268	) 	 	 	(221	) 	
	  	 	 	 	 	 	 	 	
Fair value of plan assets at end of year	  	$	6,492	  	 	$	5,552	  	
	  	 	 	 	 	 	 	 	
Accrued benefit cost	  	$	(926	) 	 	$	(2,553	) 	
	  	 	 	 	 	 	 	 	
The accrued benefit cost is included in the Consolidated Balance Sheets in other long-term liabilities.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
The following relates to the defined benefit plans as of December 31, 2013 and 2012:

 	  	2013	 	 	2012	 	
Components of net periodic benefit cost	  				 				
Service cost	  	$	86	  	 	$	211	  	
Interest cost	  	 	300	  	 	 	306	  	
Expected return on plan assets	  	 	(503	) 	 	 	(433	) 	
Amortization of prior service cost	  	 	19	  	 	 	19	  	
Amortization of net actuarial loss	  	 	253	  	 	 	265	  	
	  	 	 	 	 	 	 	 	
Net periodic benefit cost	  	$	155	  	 	$	368	  	
	  	 	 	 	 	 	 	 	
Changes in other comprehensive income (loss)	  				 				
Net actuarial gain (loss)	  	$	1,189	  	 	$	(25	) 	
Amortization of prior service costs	  	 	19	  	 	 	19	  	
Amortization of net actuarial loss	  	 	253	  	 	 	265	  	
Deferred tax asset	  	 	(565	) 	 	 	(93	) 	
	  	 	 	 	 	 	 	 	
Other comprehensive loss	  	$	896	  	 	$	166	  	
	  	 	 	 	 	 	 	 	
The net actuarial loss and prior service cost that the Company expects will be amortized from accumulated other comprehensive loss into periodic benefit cost in the year ending December 31, 2014 are $151 and $18, respectively.
Benefits expected to be paid out over the next ten years:

Year Ending	  	Benefit Payment	 	
2014	  	$	291	  	
2015	  	 	331	  	
2016	  	 	357	  	
2017	  	 	384	  	
2018	  	 	414	  	
2019-2023	  	 	2,411	  	
Fair value measurements for assets held in the benefit plans as of December 31, 2013 are as follows:

 	  	Quoted Prices in
Active Markets
(Level 1)	 	  	Other
Observable
Inputs
(Level 2)	 	  	Unobservable
Inputs
(Level 3)	 	  	Balance at
December 31,
2013	 	
Cash	  	$	31	  	  	$	—  	  	  	$	—  	  	  	$	31	  	
Fixed income	  	 	2,275	  	  	 	—  	  	  	 	—  	  	  	 	2,275	  	
Mutual funds	  	 	4,186	  	  	 	—  	  	  	 	—  	  	  	 	4,186	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	6,492	  	  	$	—  	  	  	$	—  	  	  	$	6,492	  	

17.	Other Benefit Plans	
Certain union employees participate in a multiemployer defined benefit pension plan under which monthly contributions are made by the Company based upon payroll costs as governed by the collective bargaining
 
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Table of Contents
Fairmount Minerals LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
agreement. The risks of participating in a multiemployer plan are different from a single-employer plan in the following aspects (a) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (b) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (c) if the Company chooses to stop participating in the multiemployer plan, the Company may be required to pay the multiemployer plan an amount based on the underfunded status of the multiemployer plan, referred to as a withdrawal liability. The Company has no plans or intentions to stop participating in the plan as of December 31, 2013. Pension expense for such plans totaled $155 and $367 for the years ended December 31, 2013 and 2012, respectively.
The Company has a defined contribution retirement savings trust and plan covering substantially all employees. Under the provisions of the plan, the Company matches 50% of each employee’s contribution up to 5% of an employee’s annual salary. Company contributions were $965 and $739 for the years ended December 31, 2013 and 2012, respectively.
The Company has a profit sharing plan (Stock Bonus Trust and Plan). This plan covers substantially all nonunion employees. Company contributions are discretionary and plan funds will be allocated to participating employees based upon compensation, as defined. Discretionary contributions accrued at December 31, 2013 and 2012 were $2,103 and $3,320, respectively. The Stock Bonus Trust and Plan held 238,679 of class A shares as of December 31, 2013 and 2012.
Effective January 1, 1999, the Company adopted a Supplemental Executive Retirement Plan (SERP) for certain employees who participate in the Company’s qualified 401(k) plan and/or the Qualified Employee Stock Bonus Plan (ESBP). The purpose of the SERP is to provide an opportunity for the participants of the SERP to defer compensation and to receive their pro rata share of former ESBP contributions. Due to income restrictions imposed by the IRS code, such contributions were formerly made to the ESBP but, in some instances, were forfeited by these employees to the remaining ESBP participant accounts. Company contributions to the SERP were $15 and $163 for the years ended December 31, 2013 and 2012, respectively.
The Company has deferred compensation agreements with various management employees that provide for supplemental payments upon retirement. These amounts are being accrued for over the estimated employment periods of these individuals.
 
18.	Self-Insured Plans	
Certain subsidiaries, located in Illinois and Michigan, are self-insured for workers’ compensation up to $1,000 per occurrence and $3,000 in the aggregate. The Company has an accrued liability of $748 and $364 as of December 31, 2013 and 2012, respectively, for anticipated future payments on claims incurred to date. Management believes these amounts are adequate to cover all required payments.
The Company is also self-insured for medical benefits. The Company has an accrued liability of $2,017 and $2,092 as of December 31, 2013 and 2012, respectively, for anticipated future payments on claims incurred to date. Management believes this amount is adequate to cover all required payments.
 
19.	Commitments and Contingencies	
Certain subsidiaries are defendants in lawsuits in which the alleged injuries are claimed to be silicosis-related and to have resulted, in whole or in part, from exposure to silica-containing products, allegedly
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
including those sold by certain subsidiaries. In the majority of cases, there are numerous other defendants. In accordance with its insurance obligations, the defense of these actions has been tendered to and the cases are being defended by the subsidiaries’ insurance carriers. Management believes that the Company’s substantial level of existing and available insurance coverage combined with various open indemnities is more than sufficient to cover any exposure to silicosis-related expenses.
The Company has entered into numerous mineral rights agreements, in which payments under the agreements are expensed as incurred. Certain agreements require annual payments while other agreements require payments based upon annual tons mined and others a combination thereof. Total royalty expense was $1,818 and $1,503 for the years ended December 31, 2013 and 2012, respectively.
The Company leases certain machinery, equipment (including railcars), buildings and office space under operating lease arrangements. Total rent expense associated with these leases was $34,195 and $25,375 for the years ended December 31, 2013 and 2012, respectively.
Minimum lease payments, primarily for equipment and office leases, due under the long-term operating lease obligations:

 	  	Equipment	 	  	Real Estate	 	  	Total	 	
2014	  	$	90	  	  	$	1,470	  	  	$	1,560	  	
2015	  	 	90	  	  	 	1,208	  	  	 	1,298	  	
2016	  	 	—  	  	  	 	1,029	  	  	 	1,029	  	
2017	  	 	—  	  	  	 	621	  	  	 	621	  	
2018	  				  	 	526	  	  	 	526	  	
Thereafter	  	 	—  	  	  	 	1,055	  	  	 	1,055	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	180	  	  	$	5,909	  	  	$	6,089	  	

20.	Transactions With Related Parties	
The Company had purchases from an affiliated entity for freight, logistic services and consulting services related to its operations in China of $1,382 and $3,463 in the years ended December 31, 2013 and 2012, respectively.
The Company had purchases from an affiliated entity for material purchases related to its operations in China of $32 and $334 in the years ended December 31, 2013 and 2012, respectively.
The Company pays a management fee to an affiliated entity. The Company paid a management fee of $2,821 and $1,000 in the years ended December 31, 2013 and 2012, respectively.
 
21.	Segment Reporting	
The Company organizes its business into two reportable segments, Proppant Solutions and Industrial & Recreational Products. The reportable segments are consistent with how management views the markets served by the Company and the financial information reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
The chief operating decision maker primarily evaluates an operating segment’s performance based on segment contribution margin, which excludes certain corporate costs not associated with the operations of the segment. These corporate costs are separately stated below and include costs that are related to functional areas such as operations management, corporate purchasing, accounting, treasury, information technology, legal and human resources. The other accounting policies of the segments are the same as those in the summary of significant accounting policies included in Note 2.

 	  	2013	 	  	2012	 	
Revenue	  				  				
Proppant Solutions	  	$	856,212	  	  	$	757,851	  	
Industrial & Recreational Products	  	 	132,174	  	  	 	127,339	  	
	  	 	 	 	  	 	 	 	
Total revenue	  	 	988,386	  	  	 	885,190	  	
Segment contribution margin	  				  				
Proppant Solutions	  	 	296,320	  	  	 	316,251	  	
Industrial & Recreational Products	  	 	34,765	  	  	 	37,837	  	
	  	 	 	 	  	 	 	 	
Total segment contribution margin	  	 	331,085	  	  	 	354,088	  	
Operating expenses excluded from segment contribution margin	  				  				
Cost of sales	  	 	4,959	  	  	 	—  	  	
Selling, general, and administrative	  	 	47,440	  	  	 	36,745	  	
Depreciation, depletion, and amortization	  	 	37,771	  	  	 	27,690	  	
Stock compensation expense	  	 	10,133	  	  	 	11,434	  	
Other operating expense (income)	  	 	2,826	  	  	 	(207	) 	
Interest expense, net	  	 	61,926	  	  	 	56,714	  	
Loss on extinguishment of debt	  	 	11,760	  	  	 	—  	  	
Other non-operating expense	  	 	4,394	  	  	 	1,870	  	
	  	 	 	 	  	 	 	 	
Income before provision for income taxes	  	$	149,876	  	  	$	219,842	  	
	  	 	 	 	  	 	 	 	
Asset information, including capital expenditures and depreciation, depletion and amortization, by segment is not included in the reports used by management in monitoring performance, and therefore it is not reported by segment.
The Company’s two largest customers accounted for 19% and 11% of consolidated net sales in the year ended December 31, 2013 and 25% and 11% of consolidated net sales in the year ended December 31, 2012. Both are customers of our Proppant Solutions segment.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
(in thousands, except share and per share data)
 
22.	Geographic Information	
The following tables show total Company revenues and long-lived assets. Revenues are attributed to geographic regions based on the selling location. Long-lived assets are located in the respective geographic regions.

 	  	Year Ended
December 31,	 	
 	  	2013	 	  	2012	 	
Revenue	  				  				
Domestic	  	$	920,636	  	  	$	795,372	  	
International	  	 	67,750	  	  	 	89,818	  	
	  	 	 	 	  	 	 	 	
Net sales	  	$	988,386	  	  	$	885,190	  	

									
 	  	As of December 31,	 	
 	  	2013	 	  	2012	 	
Long-lived assets	  				  				
Domestic	  	$	737,652	  	  	$	361,959	  	
International	  	 	11,186	  	  	 	13,203	  	
	  	 	 	 	  	 	 	 	
Long-lived assets	  	$	748,838	  	  	$	375,162	  	

23.	Subsequent Events	
Management evaluates events occurring subsequent to the date of the financial statements in determining the accounting for and disclosure of transactions and events that affect the financial statements. Subsequent events have been evaluated through July 11, 2014, which is the date the financial statements were available to be issued.
 
24.	Subsequent Events (unaudited)	
On August 15, 2014, FML Holdings, Inc. changed its name to FMSA Holdings Inc.
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Six Months Ended June 30, 2014 and 2013
(unaudited)

 	  	Six Months Ended June 30,	 	
 	  	          2014             	 	 	          2013           	 	
 	  	(in thousands,
except share and per share amounts)	 	
Revenue	  	$	629,223	  	 	$	448,241	  	
Cost of sales (excluding depreciation, depletion, amortization, and stock compensation expense shown separately)	  	 	402,302	  	 	 	266,406	  	
Operating expenses	  				 				
Selling, general and administrative expenses	  	 	49,168	  	 	 	36,280	  	
Depreciation, depletion, and amortization expense	  	 	27,522	  	 	 	15,553	  	
Stock compensation expense	  	 	4,313	  	 	 	3,709	  	
Other operating expense (income)	  	 	(328	) 	 	 	672	  	
	  	 	 	 	 	 	 	 	
Income from operations	  	 	146,246	  	 	 	125,621	  	
Interest expense, net	  	 	34,478	  	 	 	26,541	  	
Other non-operating expense	  	 	541	  	 	 	570	  	
	  	 	 	 	 	 	 	 	
Income before provision for income taxes	  	 	111,227	  	 	 	98,510	  	
Provision for income taxes	  	 	32,412	  	 	 	29,694	  	
	  	 	 	 	 	 	 	 	
Net income	  	 	78,815	  	 	 	68,816	  	
Less: Net income attributable to the noncontrolling interest	  	 	355	  	 	 	252	  	
	  	 	 	 	 	 	 	 	
Net income attributable to FML Holdings, Inc.	  	$	78,460	  	 	$	68,564	  	
	  	 	 	 	 	 	 	 	
Earnings per share	  				 				
Basic	  	$	17.04	  	 	$	14.95	  	
Diluted	  	$	16.11	  	 	$	14.17	  	
Weighted average number of shares outstanding	  				 				
Basic	  	 	4,605,094	  	 	 	4,585,585	  	
Diluted	  	 	4,870,152	  	 	 	4,839,676	  	
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
Six Months Ended June 30, 2014 and 2013
(unaudited)

 	  	Six Months Ended June 30,	 	
 	  	    2014    	 	 	    2013    	 	
 	  	(in thousands)	 	
Net income	  	$	78,815	  	 	$	68,816	  	
Other comprehensive income (loss), net of tax:	  				 				
Foreign currency translation adjustment	  	 	(372	) 	 	 	(380	) 	
Pension obligations	  	 	56	  	 	 	86	  	
Change in fair value of derivative swap agreements	  	 	(5,006	) 	 	 	978	  	
	  	 	 	 	 	 	 	 	
Total other comprehensive income (loss), net of tax	  	 	(5,322	) 	 	 	684	  	
	  	 	 	 	 	 	 	 	
Comprehensive income	  	 	73,493	  	 	 	69,500	  	
Comprehensive income attributable to the noncontrolling interest	  	 	355	  	 	 	252	  	
	  	 	 	 	 	 	 	 	
Comprehensive income attributable to FML Holdings, Inc.	  	$	73,138	  	 	$	69,248	  	

 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 30, 2014 and December 31, 2013
(unaudited)

 	  	June 30, 2014	 	 	December 31, 2013	 	
 	  	(in thousands,
except share and per share amounts)	 	
Assets	  				 				
Current assets	  				 				
Cash and cash equivalents	  	$	12,514	  	 	$	17,815	  	
Accounts receivable, net	  	 	209,766	  	 	 	146,851	  	
Inventories	  	 	127,355	  	 	 	118,349	  	
Deferred income taxes	  	 	9,363	  	 	 	11,748	  	
Prepaid expenses and other assets	  	 	7,209	  	 	 	10,575	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	366,207	  	 	 	305,338	  	
Property, plant and equipment, net	  	 	786,500	  	 	 	748,838	  	
Goodwill	  	 	87,457	  	 	 	87,452	  	
Intangibles, net	  	 	103,575	  	 	 	106,236	  	
Other assets	  	 	31,749	  	 	 	35,567	  	
	  	 	 	 	 	 	 	 	
Total assets	  	$	1,375,488	  	 	$	1,283,431	  	
	  	 	 	 	 	 	 	 	
Liabilities and Equity	  				 				
Current liabilities	  				 				
Current portion of long-term debt	  	$	15,687	  	 	$	15,687	  	
Accounts payable	  	 	89,047	  	 	 	89,998	  	
Accrued expenses	  	 	29,153	  	 	 	28,706	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	133,887	  	 	 	134,391	  	
Long-term debt	  	 	1,249,285	  	 	 	1,246,459	  	
Deferred income taxes	  	 	47,953	  	 	 	46,851	  	
Other long-term liabilities	  	 	26,336	  	 	 	21,088	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	1,457,461	  	 	 	1,448,789	  	
	  	 	 	 	 	 	 	 	
Equity	  				 				
Class A common stock: $0.01 par value, 8,000,000 authorized shares	  				 				
Shares outstanding: 4,627,751 and 4,594,501 at June 30, 2014 and December 31, 2013, respectively	  	 	69	  	 	 	69	  	
Class B common stock: $0.01 par value, 2,000,000 authorized shares	  				 				
Shares outstanding: 14,688 and 7,333 at June 30, 2014 and December 31, 2013, respectively	  	 	—  	  	 	 	—  	  	
Additional paid-in capital	  	 	746,345	  	 	 	735,360	  	
Retained earnings	  	 	405,189	  	 	 	326,729	  	
Accumulated other comprehensive income (loss)	  	 	(8,858	) 	 	 	(3,536	) 	
	  	 	 	 	 	 	 	 	
Total equity attributable to FML Holdings, Inc. before treasury stock	  	 	1,142,745	  	 	 	1,058,622	  	
Less: Treasury stock at cost	  				 				
Shares in treasury: 2,286,544 and 2,285,475 at June 30, 2014 and December 31, 2013, respectively	  	 	(1,227,663	) 	 	 	(1,227,001	) 	
	  	 	 	 	 	 	 	 	
Total equity (deficit) attributable to FML Holdings, Inc.	  	 	(84,918	) 	 	 	(168,379	) 	
Noncontrolling interest	  	 	2,945	  	 	 	3,021	  	
	  	 	 	 	 	 	 	 	
Total equity (deficit)	  	 	(81,973	) 	 	 	(165,358	) 	
	  	 	 	 	 	 	 	 	
Total liabilities and equity	  	$	1,375,488	  	 	$	1,283,431	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity
Six Months Ended June 30, 2014 and 2013
(unaudited)

 	 	Equity (deficit) attributable to FML Holdings, Inc.	 	 	 	 	 	 	 	
 	 	Common
Stock	 	 	Additional
Paid-in
Capital	 	 	Retained
Earnings	 	 	Other
Comprehensive
Income (Loss)	 	 	Treasury
Stock	 	 	Subtotal	 	 	Non
Controlling
Interest	 	 	Total	 	
 	 	(in thousands)	 	
Balances at December 31, 2012	 	$	69	  	 	$	722,123	  	 	$	222,768	  	 	$	(9,199	) 	 	$	(1,225,299	) 	 	$	(289,538	) 	 	$	3,610	  	 	$	(285,928	) 	
Purchase of treasury stock	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,678	) 	 	 	(1,678	) 	 	 	—  	  	 	 	(1,678	) 	
Stock options exercised	 	 	—  	  	 	 	497	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	497	  	 	 	—  	  	 	 	497	  	
Stock compensation expense	 	 	—  	  	 	 	3,709	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	3,709	  	 	 	—  	  	 	 	3,709	  	
Tax effect of stock options exercised	 	 	—  	  	 	 	751	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	751	  	 	 	—  	  	 	 	751	  	
Transactions with noncontrolling interest	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(239	) 	 	 	(239	) 	
Net income	 	 	—  	  	 	 	—  	  	 	 	68,564	  	 	 	—  	  	 	 	—  	  	 	 	68,564	  	 	 	252	  	 	 	68,816	  	
Other comprehensive income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	684	  	 	 	—  	  	 	 	684	  	 	 	—  	  	 	 	684	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at June 30, 2013	 	$	69	  	 	$	727,080	  	 	$	291,332	  	 	$	(8,515	) 	 	$	(1,226,977	) 	 	$	(217,011	) 	 	$	3,623	  	 	$	(213,388	) 	

Balances at December 31, 2013	 	$	69	  	 	$	735,360	  	 	$	326,729	  	 	$	(3,536	) 	 	$	(1,227,001	) 	 	$	(168,379	) 	 	$	3,021	  	 	$	(165,358	) 	
Purchase of treasury stock	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(662	) 	 	 	(662	) 	 	 	—  	  	 	 	(662	) 	
Stock options exercised	 	 	—  	  	 	 	2,306	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	2,306	  	 	 	—  	  	 	 	2,306	  	
Stock compensation expense	 	 	—  	  	 	 	4,313	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	4,313	  	 	 	—  	  	 	 	4,313	  	
Tax effect of stock options exercised	 	 	—  	  	 	 	4,366	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	4,366	  	 	 	—  	  	 	 	4,366	  	
Transactions with noncontrolling interest	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(431	) 	 	 	(431	) 	
Net income	 	 	—  	  	 	 	—  	  	 	 	78,460	  	 	 	—  	  	 	 	—  	  	 	 	78,460	  	 	 	355	  	 	 	78,815	  	
Other comprehensive income (loss)	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(5,322	) 	 	 	—  	  	 	 	(5,322	) 	 	 	—  	  	 	 	(5,322	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at June 30, 2014	 	$	69	  	 	$	746,345	  	 	$	405,189	  	 	$	(8,858	) 	 	$	(1,227,663	) 	 	$	(84,918	) 	 	$	2,945	  	 	$	(81,973	) 	

The accompanying notes are an integral part of these condensed consolidated financial statements.
 
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Table of Contents
 FML Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2014 and 2013
(unaudited)

 	  	Six Months Ended June 30,	 	
 	  	      2014      	 	 	      2013      	 	
 	  	(in thousands)	 	
Net income	  	$	78,815	  	 	$	68,816	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  				 				
Depreciation and depletion	  	 	24,861	  	 	 	15,488	  	
Amortization of deferred financing costs	  	 	2,637	  	 	 	3,339	  	
Amortization of original issue discount	  	 	599	  	 	 	—  	  	
Amortization of intangible assets	  	 	2,662	  	 	 	64	  	
(Gain) loss on sale of fixed assets	  	 	(953	) 	 	 	—  	  	
Unrealized loss (gain) on interest rate swaps	  	 	145	  	 	 	(10	) 	
Stock compensation expense	  	 	4,313	  	 	 	3,709	  	
Change in operating assets and liabilities, net of acquired balances:	  				 				
Accounts receivable	  	 	(62,915	) 	 	 	(13,730	) 	
Inventories	  	 	(9,006	) 	 	 	(2,056	) 	
Prepaid expenses and other assets	  	 	8,272	  	 	 	(1,783	) 	
Accounts payable	  	 	(951	) 	 	 	9,461	  	
Accrued expenses	  	 	1,503	  	 	 	10,359	  	
	  	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	49,982	  	 	 	93,657	  	
	  	 	 	 	 	 	 	 	
Cash flows from investing activities	  				 				
Proceeds from sale of fixed assets	  	 	1,214	  	 	 	—  	  	
Capital expenditures	  	 	(61,827	) 	 	 	(41,276	) 	
Purchase of business and assets	  	 	—  	  	 	 	(120,299	) 	
	  	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(60,613	) 	 	 	(161,575	) 	
	  	 	 	 	 	 	 	 	
Cash flows from financing activities	  				 				
Proceeds from issuance of term loans	  	 	41,000	  	 	 	23,000	  	
Payments on term debt	  	 	(6,256	) 	 	 	—  	  	
Change in other long-term debt and capital leases	  	 	(2,277	) 	 	 	(1,430	) 	
Proceeds from borrowing on revolving credit facility	  	 	32,000	  	 	 	82,500	  	
Payments on revolving credit facility	  	 	(63,000	) 	 	 	(32,500	) 	
Proceeds from option exercises	  	 	2,306	  	 	 	497	  	
Purchase of treasury stock	  	 	(662	) 	 	 	(1,678	) 	
Tax effect of stock options exercised	  	 	4,366	  	 	 	751	  	
Transactions with noncontrolling interest	  	 	(431	) 	 	 	(239	) 	
Financing costs	  	 	(1,699	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net cash provided by financing activities	  	 	5,347	  	 	 	70,901	  	
	  	 	 	 	 	 	 	 	
Foreign currency adjustment	  	 	(17	) 	 	 	85	  	
	  	 	 	 	 	 	 	 	
(Decrease) increase in cash and cash equivalents	  	 	(5,301	) 	 	 	3,068	  	
Cash and cash equivalents:	  				 				
Beginning of period	  	 	17,815	  	 	 	11,866	  	
	  	 	 	 	 	 	 	 	
End of period	  	$	12,514	  	 	$	14,934	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
F-38

Table of Contents
FML Holdings, Inc. and Subsidiaries
 Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
 
1.	Significant Accounting Policies	
Basis of Presentation
The unaudited condensed consolidated financial statements of FML Holdings, Inc. and its consolidated subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which are of a normal, recurring nature) and disclosures necessary for a fair presentation of the financial position, results of operations, comprehensive income and cash flows of the reported interim periods. The condensed consolidated balance sheet as of December 31, 2013 was derived from audited financial statements, but does not include all disclosures required by GAAP. Interim results are not necessarily indicative of the results to be expected for the full year or any other interim period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included elsewhere in this prospectus.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08), which amended existing requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting will be limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. The guidance is effective for disposal transactions occurring in reporting periods beginning after December 15, 2014. Presentation and disclosures of future disposal transactions after adoption of the guidance may be different than under current standards.
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09). Under ASU 2014-09, companies recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. The new requirements significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The Company is not required to adopt this reporting standard until reporting periods beginning after December 15, 2016. We are in the process of evaluating the effect of the new guidance on our financial statements and disclosures.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)

2.	Inventories	
At June 30, 2014 and December 31, 2013, inventories consisted of the following:

 	  	June 30,
2014	 	 	December 31,
2013	 	
Raw materials	  	$	17,568	  	 	$	16,766	  	
Work-in-process	  	 	22,874	  	 	 	24,576	  	
Finished goods	  	 	86,975	  	 	 	77,183	  	
	  	 	 	 	 	 	 	 	
	  	 	127,417	  	 	 	118,525	  	
Less: LIFO reserve	  	 	(62	) 	 	 	(176	) 	
	  	 	 	 	 	 	 	 	
	  	$	127,355	  	 	$	118,349	  	

3.	Property, Plant and Equipment	
At June 30, 2014 and December 31, 2013, property, plant and equipment consisted of the following:

 	  	June 30,
2014	 	 	December 31,
2013	 	
Land and improvements	  	$	40,320	  	 	$	38,557	  	
Mineral reserves and mine development	  	 	288,776	  	 	 	280,727	  	
Machinery and equipment	  	 	446,980	  	 	 	426,798	  	
Buildings and improvements	  	 	108,076	  	 	 	100,217	  	
Furniture, fixtures and other	  	 	3,064	  	 	 	2,558	  	
Construction in progress	  	 	136,081	  	 	 	112,819	  	
	  	 	 	 	 	 	 	 	
	  	 	1,023,297	  	 	 	961,676	  	
Accumulated depreciation and depletion	  	 	(236,797	) 	 	 	(212,838	) 	
	  	 	 	 	 	 	 	 	
Property, plant and equipment, net	  	$	786,500	  	 	$	748,838	  	

4.	Long-Term Debt	
At June 30, 2014 and December 31, 2013, long-term debt consisted of the following:

 	  	June 30,
2014	 	 	December 31,
2013	 	
Term Loan B-1	  	$	321,315	  	 	$	322,714	  	
Term Loan B-2	  	 	915,148	  	 	 	878,605	  	
Industrial Revenue bond	  	 	10,000	  	 	 	10,000	  	
Revolving credit facility and other	  	 	11,286	  	 	 	42,775	  	
Capital leases, net	  	 	7,223	  	 	 	8,052	  	
	  	 	 	 	 	 	 	 	
	  	 	1,264,972	  	 	 	1,262,146	  	
Less: current portion	  	 	(15,687	) 	 	 	(15,687	) 	
	  	 	 	 	 	 	 	 	
Long-term debt including leases	  	$	1,249,285	  	 	$	1,246,459	  	

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FML Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
 
In February 2014 the Company executed a joinder agreement to borrow $41,000 as an additional Term Loan B-2. The proceeds of this borrowing were used to repay then outstanding amounts under the revolving credit facility. The additional borrowings mature on the same date as the then existing Term Loan B-2 (September 5, 2019) and the required quarterly principal repayments for the Term Loan B-2 were increased by one-quarter of 1% of the amount borrowed with the balance due at maturity. There were no other changes in the terms, interest rates or covenants of the 2013 Amended Credit Agreement.
In March 2014 the Company amended the existing 2013 Amended Credit Agreement whereby the applicable margin for the Term Loan B-1 and the Term Loan B-2 base rate loans was reduced to 2.50% and the applicable margin for the Term Loan B-1 and the Term Loan B-2 Eurodollar rate loans was reduced to 3.50% .
 
5.	Earnings per Share	
The table below shows the computation of basic and diluted earnings per share for the six months ended June 30, 2014 and 2013:

 	  	Six Months Ended June 30,	 	
 	  	2014	 	  	2013	 	
Numerator:	  				  				
Net income attributable to FML Holdings, Inc.	  	$	78,460	  	  	$	68,564	  	
Denominator:	  				  				
Basic weighted average shares outstanding	  	 	4,605,094	  	  	 	4,585,585	  	
Dilutive effect of employee stock options	  	 	265,058	  	  	 	254,091	  	
	  	 	 	 	  	 	 	 	
Diluted weighted average shares outstanding	  	 	4,870,152	  	  	 	4,839,676	  	
	  	 	 	 	  	 	 	 	
Earnings per common share—basic	  	$	17.04	  	  	$	14.95	  	
Earnings per common share—diluted	  	$	16.11	  	  	$	14.17	  	
The calculation of diluted weighted average shares outstanding for the six months ended June 30, 2014 and 2013 excludes 55,764 and 23,642 potential common shares, respectively, because the effect of including these potential common shares would be antidilutive.
 
6.	Derivative Instruments	
The Company enters into interest rate swap agreements as a means to hedge its variable interest rate risk on debt instruments. The notional value of these swap agreements is $542,300 at June 30, 2014 and effectively fixes the variable rate in a range of 0.83% to 3.115% . The notional amount of these instruments is scheduled to increase over time to provide a hedge against variable interest rate debt. The interest rate swap agreements mature at various dates between March 31, 2015 and September 5, 2019.
The derivative instruments are recorded on the balance sheet at their fair values. Changes in the fair value of derivatives are recorded each period in current earnings or in other comprehensive income, depending on whether a derivative is designated as part of a hedging relationship and, if it is, depending on the type of hedging relationship. For cash flow hedges in which the Company is hedging the variability of cash flows related to a variable-rate liability, the effective portion of the gain or loss on the derivative instrument is reported in other comprehensive income in the periods during which earnings are impacted by the variability of the cash flows of the hedged item. The ineffective portion of all hedges is recognized in current period earnings. As interest
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
 
expense is accrued on the debt obligation, amounts in accumulated other comprehensive income (loss) related to the interest rate swaps are reclassified into income to obtain a net cost on the debt obligation equal to the effective yield of the fixed rate of each swap. In the event that an interest rate swap is terminated prior to maturity, gains or losses in accumulated other comprehensive income (loss) remain deferred and are reclassified into earnings in the periods which the hedged forecasted transaction affects earnings.
The Company formally designated and documents instruments at inception that qualify for hedge accounting of underlying exposures in accordance with GAAP. Both at inception and for each reporting period, the Company assesses whether the financial instruments used in hedging transactions are effective in offsetting changes in cash flows of the related underlying exposure.
The following table summarizes the fair values and the respective classification in the Condensed Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013:

 	  	 	  	Assets (Liabilities)	 	
 	  	 	  	June 30,
2014	 	 	December 31,
2013	 	
Interest Rate Swap Agreements	  	Balance Sheet Classification	  			 			
Designated as hedges	  	Other long-term liabilities	  	$	(8,175	) 	 	$	(2,297	) 	
Not designated as hedges	  	Other long-term liabilities	  	 	(2,410	) 	 	 	(3,340	) 	
Designated as hedges	  	Other assets	  	 	146	  	 	 	2,706	  	
	  		  	 	 	 	 	 	 	 	
	  		  	$	(10,439	) 	 	$	(2,931	) 	
	  		  	 	 	 	 	 	 	 	
We recognized $21 and $0 in interest expense, representing the ineffective portion of our interest rate swap agreements designated as hedges, in the six months ended June 30, 2014 and 2013, respectively.
 
7.	Fair Value Measurements	
Financial instruments held by the Company include cash equivalents, accounts receivable, accounts payable, long-term debt and interest rate swaps. The Company is also liable for contingent consideration from an acquisition that is subject to fair value measurement. Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1	  	Quoted market prices in active markets for identical assets or liabilities	
		
Level 2	  	Observable market based inputs or unobservable inputs that are corroborated by market data	
		
Level 3	  	Unobservable inputs that are not corroborated by market data	
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
 
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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
 
The book value of cash equivalents, accounts receivable and accounts payable are considered to be representative of their fair values because of their short maturities. The carrying value of the Company’s debt is also considered to be representative of its fair value since the interest rate is variable and fluctuates with the market. The contingent consideration related to the Great Plains acquisition is valued based on the expected cash flows using a discount rate of 5%.
The following table presents the amounts carried at fair value as of June 30, 2014 and December 31, 2013 for the Company’s other financial instruments.

 	  	Quoted Prices
in Active
Markets
(Level 1)	 	  	Other
Observable
Inputs
(Level 2)	 	 	Unobservable
Inputs
(Level 3)	 	 	Total	 	
Contingent consideration liability	  	$	—  	  	  	$	—  	  	 	$	(10,000	) 	 	$	(10,000	) 	
Interest rate swap agreements	  	 	—  	  	  	 	(10,438	) 	 	 	—  	  	 	 	(10,438	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
June 30, 2014	  	$	—  	  	  	$	(10,438	) 	 	$	(10,000	) 	 	$	(20,438	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Contingent consideration liability	  	$	—  	  	  	$	—  	  	 	$	(9,833	) 	 	$	(9,833	) 	
Interest rate swap agreements	  	 	—  	  	  	 	(2,931	) 	 	 	—  	  	 	 	(2,931	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
December 31, 2013	  	$	—  	  	  	$	(2,931	) 	 	$	(9,833	) 	 	$	(12,764	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
The contingent consideration related to the Great Plains Sands, LLC acquisition is revalued each period based on the expected cash flows, using a discount rate of 5.0% . The amount due under the earnout agreement was determined to be $10 million and was paid in July 2014.
 
8.	Common Stock and Stock Based Compensation	
The Company granted options to purchase 9,750 and 9,000 shares of common stock in the six months ended June 30, 2014 and 2013, respectively. The average exercise price was $379.05 and $355.40 in the six months ended June 30, 2014 and 2013, respectively.
 
9.	Defined Benefit Plans	
The Company maintains two defined benefit pension plans covering all union employees at certain facilities that provide benefits based upon years of service or a combination of employee earnings and length of service. Net periodic benefit cost recognized for these plans for the six months ended June 30, 2014 and 2013 is as follows:

 	  	Six Months
Ended June 30,	 	
 	  	2014	 	 	2013	 	
Service cost	  	$	38	  	 	$	44	  	
Interest cost	  	 	166	  	 	 	150	  	
Expected return on plan assets	  	 	(292	) 	 	 	(252	) 	
Amortization of prior service cost	  	 	10	  	 	 	10	  	
Amortization of net actuarial loss	  	 	80	  	 	 	126	  	
	  	 	 	 	 	 	 	 	
Net periodic benefit cost	  	$	2	  	 	$	78	  	

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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
 
The Company contributed $130 and $226 during the six months ended June 30, 2014 and 2013, respectively. Total expected employer contributions during the year ending December 31, 2014 are $234.
 
10.	Accumulated Other Comprehensive Income	
The components of accumulated other comprehensive income (loss) attributable to FML Holdings, Inc. at June 30, 2014 and December 31, 2013 were as follows:

 	  	June 30, 2014	 	
 	  	Gross	 	 	Tax effect	 	 	Net Amount	 	
Foreign currency translation	  	$	(2,998	) 	 	$	—  	  	 	$	(2,998	) 	
Additional pension liability	  	 	(2,627	) 	 	 	985	  	 	 	(1,642	) 	
Unrealized loss on interest rate hedges	  	 	(6,749	) 	 	 	2,531	  	 	 	(4,218	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	(12,374	) 	 	$	3,516	  	 	$	(8,858	) 	

 	  	December 31, 2013	 	
 	  	Gross	 	 	Tax effect	 	 	Net Amount	 	
Foreign currency translation	  	$	(2,626	) 	 	$	—  	  	 	$	(2,626	) 	
Additional pension liability	  	 	(2,717	) 	 	 	1,019	  	 	 	(1,698	) 	
Unrealized loss on interest rate hedges	  	 	1,260	  	 	 	(472	) 	 	 	788	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	(4,083	) 	 	$	547	  	 	$	(3,536	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
The following table presents the changes in accumulated other comprehensive income by component for the six months ended June 30, 2014:

 	  	Six Months Ended June 30, 2014	 	
 	  	Unrealized
gain (loss) on
interest rate
hedges	 	 	Additional
pension
liability	 	 	Foreign
currency
translation	 	 	Total	 	
Beginning balance	  	$	788	  	 	$	(1,698	) 	 	$	(2,626	) 	 	$	(3,536	) 	
Other comprehensive income (loss) before reclassifications	  	 	(5,822	) 	 	 	—  	  	 	 	(372	) 	 	 	(6,194	) 	
Amounts reclassified from accumulated other comprehensive income	  	 	816	  	 	 	56	  	 	 	—  	  	 	 	872	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	(4,218	) 	 	$	(1,642	) 	 	$	(2,998	) 	 	$	(8,858	) 	

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Table of Contents
FML Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
 
The following table presents the reclassifications out of accumulated other comprehensive income during the six months ended June 30, 2014:

Details about accumulated other comprehensive income	  	Amount
reclassified from
accumulated other
comprehensive
income	 	 	Affected
line item
on the
statement of
income	
Change in fair value of derivative swap agreements	  				 		
Interest rate contracts	  	$	1,305	  	 	Interest expense	
	  	 	(489	) 	 	Tax expense (benefit)	
	  	 	 	 	 		
	  	$	816	  	 	Net of tax	
Amortization of pension obligations	  				 		
Prior service cost	  	$	8	  	 	Cost of sales	
Actuarial gains (losses)	  	 	82	  	 	Cost of sales	
	  	 	 	 	 		
	  	 	90	  	 	Total before tax	
	  	 	(34	) 	 	Tax expense	
	  	 	 	 	 		
	  	$	56	  	 	Net of tax	
	  	 	 	 	 		
Total reclassifications for the period	  	$	872	  	 	Net of tax	

11.	Commitments and Contingencies	
Certain subsidiaries are defendants in lawsuits in which the alleged injuries are claimed to be silicosis-related and to have resulted, in whole or in part, from exposure to silica-containing products, allegedly including those sold by certain subsidiaries. In the majority of cases, there are numerous other defendants. In accordance with its insurance obligations, the defense of these actions has been tendered to and the cases are being defended by the subsidiaries’ insurance carriers. Management believes that the Company’s substantial level of existing and available insurance coverage combined with various open indemnities is more than sufficient to cover any exposure to silicosis-related expenses.
The Company has entered into numerous mineral rights agreements, in which payments under the agreements are expensed as incurred. Certain agreements require annual payments while other agreements require payments based upon annual tons mined and others a combination thereof.
The Company leases certain machinery, equipment (including railcars), buildings and office space under operating lease arrangements. Total rent expense associated with these leases was $25,458 and $12,398 for the six months ended June 30, 2014 and 2013, respectively.
The Company is subject to a contingent consideration arrangement related to the purchase of Self-Suspending Proppant LLC (“SSP”), which was accounted for as an acquisition of a group of assets. The contingent consideration is based on a fixed percentage of the cumulative product margin, less certain adjustments, generated by sales of Propel SSP for the five years commencing on October 1, 2015. Because the earnout is dependent on future sales and the related cost of sales, the amounts of which are highly uncertain, it is not currently possible to estimate the amounts that will be paid. The contingent consideration will be accrued and capitalized as part of the cost of the SSP assets at the time a payment is probable and reasonably estimable.
 
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FML Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)

12.	Transactions with Related Parties	
The Company had purchases from an affiliated entity for freight, logistic services and consulting services related to its operations in China of $976 and $608 in the six months ended June 30, 2014 and 2013, respectively.
The Company had purchases from an affiliated entity for material purchases related to its operations in China of $0 and $8 in the six months ended June 30, 2014 and 2013, respectively.
The Company paid management fees of $526 and $500 in the six months ended June 30, 2014 and 2013, respectively, to an affiliated entity.
 
13.	Segment Reporting	
The Company organizes its business into two reportable segments, Proppant Solutions and Industrial & Recreational Products. The reportable segments are consistent with how management views the markets served by the Company and the financial information reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance.
The chief operating decision maker primarily evaluates an operating segment’s performance based on segment contribution margin, which excludes certain corporate costs not associated with the operations of the segment. These corporate costs are separately stated below and include costs that are related to functional areas such as operations management, corporate purchasing, accounting, treasury, information technology, legal and human resources.

 	  	Six Months Ended June 30,	 	
 	  	    2014    	 	 	    2013    	 	
Revenue	  				 				
Proppant Solutions	  	$	567,185	  	 	$	378,286	  	
Industrial & Recreational Products	  	 	62,038	  	 	 	69,955	  	
	  	 	 	 	 	 	 	 	
Total revenue	  	 	629,223	  	 	 	448,241	  	
			
Segment contribution margin	  				 				
Proppant Solutions	  	 	192,928	  	 	 	150,267	  	
Industrial & Recreational Products	  	 	16,835	  	 	 	17,002	  	
	  	 	 	 	 	 	 	 	
Total segment contribution margin	  	 	209,763	  	 	 	167,269	  	
			
Operating expenses excluded from segment contribution margin	  				 				
Selling, general, and administrative	  	 	32,010	  	 	 	21,714	  	
Depreciation, depletion, and amortization	  	 	27,522	  	 	 	15,553	  	
Stock compensation expense	  	 	4,313	  	 	 	3,709	  	
Other operating expense (income)	  	 	(328	) 	 	 	672	  	
Interest expense, net	  	 	34,478	  	 	 	26,541	  	
Other non-operating expense	  	 	541	  	 	 	570	  	
	  	 	 	 	 	 	 	 	
Income before provision for income taxes	  	$	111,227	  	 	$	98,510	  	

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FML Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)

14.	Subsequent Events	
Management evaluates events occurring subsequent to the date of the financial statements in determining the accounting for and disclosure of transactions and events that affect the financial statements. Subsequent events have been evaluated through August 22, 2014, which is the date the financial statements were available to be issued.
On August 15, 2014, FML Holdings, Inc. changed its name to FMSA Holdings Inc.
 
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 APPENDIX A—GLOSSARY OF TERMS
activator : A substance that triggers chemical properties which create an increased propensity for undergoing a specified chemical reaction. 
API : American Petroleum Institute
BTU : British Thermal Unit
captive terminal : A terminal owned by or operated exclusively for the benefit of the Company.
ceramic proppant : An artificially manufactured proppant of consistent size and sphere shape that offers a high crush resistance.
Class I Railroad : A designation by the Surface Transportation Board of the largest railroads based upon annual carrier operating revenues.
curable resin : A resin that bonds together under closure stress and high temperatures. This resin is designed to generate more uniform stress distribution. 
diagenesis : A chemical reaction where proppants, under heat and pressure, react with the fracturing fluids and/or formation face to degrade the proppant. 
downhole completions : A set of events and protocols necessary to bring a wellbore into production once drilling operations have been concluded, including but not limited to fracturing, pumping of frac fluid system, and shut-in after installation of downhole hardware and equipment required to enable safe and efficient production from an oil or gas well.
EBITDA : A non-GAAP supplemental financial measure defined as net income (loss) before net interest expense, income tax expense and depreciation and depletion expense.
embedment : The ability of a proppant to embed into the surrounding rock formation, which results in reduced flow capacity by decreasing the overall width of the fracture. 
fines : Crushed sand grains. 
frac sand : A proppant used in the completion and re-completion of oil and gas wells to stimulate and maintain oil and natural gas production through the process of hydraulic fracturing.
GAAP : Generally accepted accounting principles in the United States.
hydraulic fracturing : The process of pumping fluids, mixed with granular proppants, into a geological formation at pressures sufficient to create fractures in the hydrocarbon-bearing rock.
md-FT : The most common unit of measure for conductivity. It represents the product of fracture permeability and fracture width.
mesh size : Measurement of the size of a grain of sand indicating it will pass through a sieve of a certain size.
 
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mine horizon : The mix of grades of sand from top to bottom of the reserves deposit.
Northern White sand : A monocrystalline sand with greater sphericity and roundness enabling higher crush resistances and conductivity.
polymer breaking : After higher viscosity fracturing fluid serves its purpose of fracturing the formation, it is necessary to “break” the gelled polymer in order for hydrocarbons to flow. The polymer gel viscosity is reduced significantly upon breaking. In short, polymer breaking means reduction in the molecular chain length of the starting material. The chemical breakers used are either oxidizers, acids or enzymes.
proppant : A sized particle mixed with fracturing fluid to hold fractures open after a hydraulic fracturing treatment.
proven reserves : Quantity of sand estimated with reasonable certainty, from the analysis of geologic and engineering data, to be recoverable from well-established or known reservoirs with the existing equipment and under the existing operating conditions.
reserves : Sand that can be economically extracted or produced at the time of determination based on relevant legal, economic and technical considerations.
resin coated sand : Raw sand that is coated with a flexible resin that increases the sand’s crush resistance and prevents crushed sand from dispersing throughout the fracture.
roundness : A measure of how round the curvatures of an object are. The opposite of round is angular. It is possible for an object to be round but not spherical (e.g. an egg-shaped particle is round, but not spherical). When used to describe proppant, roundness is a reference to having a curved shape which promotes hydrocarbon flow, as the curvature creates a space through which the hydrocarbons can flow.
silica : A chemically resistant dioxide of silicon that occurs in crystalline, amorphous and cryptocrystalline forms.
sold in-basin: Sales of proppant products in oil and gas producing basins proximate to their end use.
sphericity : A measure of how well an object is formed in a shape where all points are equidistant from the center. The more spherical a proppant, the more highly it is desired relative to non-spherical proppant, as the gaps created by it are typically the largest and this promotes maximum hydrocarbon flow.
tempered resin : A sand-grain coating that is designed to increase the strength of individual grains by adding a thin deformable coating onto the grain. This coating allows greater grain-to-grain contact and more evenly distributes the point stresses. These products do not require activation, as their chemical properties are already active.
transloading capacity : The annual aggregate throughput volume of proppants at the Company’s terminals.
Tier I emissions: Direct greenhouse gas emissions from sources owned or controlled by a company.
Tier II emissions: Indirect greenhouse gas emissions from goods or resources used by a company.
turbidity : Measurement of the level of contaminants, such as silt and clay, in a sample.
unit train : A train made up of 100 or more railcars which are all shipped from the same origin to the same destination without being split up or stored en route.
 
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Table of Contents
             Shares

FMSA Holdings Inc.
COMMON STOCK
PROSPECTUS
                    , 2014
Morgan Stanley
Wells Fargo Securities
Barclays
Goldman, Sachs & Co.
Jefferies
J.P. Morgan
KeyBanc Capital Markets
RBC Capital Markets
Baird
Cowen and Company
PNC Capital Markets LLC
Raymond James
Scotiabank / Howard Weil
Simmons & Company
International
Tudor, Pickering, Holt & Co.
Through and including                     , 2014 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to an unsold allotment or subscription.

Table of Contents
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 13.	Other expenses of issuance and distribution	
The following table sets forth an itemized statement of the amounts of all expenses (excluding underwriting discounts and commissions) payable by us in connection with the registration of the common stock offered hereby. With the exception of the Registration Fee, FINRA Filing Fee and New York Stock Exchange listing fee), the amounts set forth below are estimates.

SEC Registration Fee	  	$	12,880	  	
FINRA Filing Fee	  	$	15,500	  	
New York Stock Exchange listing fee	  	 	*	  	
Accountants’ fees and expenses	  	 	*	  	
Legal fees and expenses	  	 	*	  	
Printing and engraving expenses	  	 	*	  	
Transfer agent and registrar fees	  	 	*	  	
Miscellaneous	  	 	*	  	
	  	 	 	 	
Total	  	$	*	  	

*	To be filed by amendment.	
 
Item 14.	Indemnification of Directors and Officers	
Our amended and restated certificate of incorporation will provide that a director will not be liable to the corporation or its stockholders for monetary damages to the fullest extent permitted by the DGCL. In addition, if the DGCL is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the corporation, in addition to the limitation on personal liability provided for in our certificate of incorporation, will be limited to the fullest extent permitted by the amended DGCL. Our amended and restated bylaws will provide that the corporation will indemnify, and advance expenses to, any officer or director to the fullest extent authorized by the DGCL.
Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with specified actions, suits and proceedings whether civil, criminal, administrative, or investigative, other than a derivative action by or in the right of the corporation, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification extends only to expenses, including attorneys’ fees, incurred in connection with the defense or settlement of such action and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, bylaws, disinterested director vote, stockholder vote, agreement or otherwise.
Our amended and restated certificate of incorporation will also contain indemnification rights for our directors and our officers. Specifically, our amended and restated certificate of incorporation will provide that we shall indemnify our officers and directors to the fullest extent authorized by the DGCL. Further, we may maintain insurance on behalf of our officers and directors against expense, liability or loss asserted incurred by them in their capacities as officers and directors.
 
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We have obtained directors’ and officers’ insurance to cover our directors, officers and some of our employees for certain liabilities.
We will enter into written indemnification agreements with our directors and executive officers. Under these proposed agreements, if an officer or director makes a claim of indemnification to us, either a majority of the independent directors or independent legal counsel selected by the independent directors must review the relevant facts and make a determination whether the officer or director has met the standards of conduct under Delaware law that would permit (under Delaware law) and require (under the indemnification agreement) us to indemnify the officer or director.
The underwriting agreement provides for indemnification by the underwriters of us and our officers and directors, and by us of the underwriters, for certain liabilities arising under the Securities Act or otherwise in connection with this offering.
 
Item 15.	Recent Sales of Unregistered Securities	
During the past three years, we have issued unregistered securities to a limited number of persons, as described below. None of these transactions involved any underwriters, underwriting discounts or commissions or any public offering, and we believe that each of these transactions was exempt from the registration requirements pursuant to Section 4(2) of the Securities Act, Regulation D or Regulation S promulgated thereunder or Rule 701 of the Securities Act. All share and price information included in this section does not reflect the impact of the expected pre-offering split of our common stock.
The following table sets forth information on the restricted stock awards issued by us and common stock issued pursuant to the exercise of stock options in the three years preceding the filing of this registration statement.

Shared Issued Pursuant to Exercise of Option	 	
 	  	 	 	  	Common Stock Issued	  	 	 	
Date	  	Person or Class of
Person	 	  	Class A	 	  	Class B	  	Total Consideration	 	
March 18, 2011	  	 	Executive Officer	  	  	 	36,878	  	  		  	$	1,034,579.90	  	
March 21, 2011	  	 	Executive Officer	  	  	 	3,000	  	  		  	$	145,200.00	  	
March 28, 2011	  	 	Executive Officer	  	  	 	25,000	  	  		  	$	1,210,000.00	  	
March 30, 2011	  	 	Employee	  	  	 	1,421	  	  		  	$	68,776.40	  	
March 30, 2011	  	 	Employee	  	  	 	1,000	  	  		  	$	48,400.00	  	
April 28, 2011	  	 	Employee	  	  	 	1,250	  	  		  	$	60,500.00	  	
April 28, 2011	  	 	Employee	  	  	 	400	  	  		  	$	5,020.00	  	
April 28, 2011	  	 	Executive Officer	  	  	 	3,500	  	  		  	$	169,400.00	  	
April 28, 2011	  	 	Employee	  	  	 	2,400	  	  		  	$	116,160.00	  	
May 02, 2011	  	 	Employee	  	  	 	8,399	  	  		  	$	406,511.60	  	
May 23, 2011	  	 	Executive Officer	  	  	 	50,000	  	  		  	$	2,036,000.00	  	
May 23, 2011	  	 	Employee	  	  	 	29,011	  	  		  	$	1,404,132.40	  	
May 23, 2014	  	 	Employee	  	  	 	500	  	  		  	$	24,200.00	  	
May 25, 2011	  	 	Employee	  	  	 	8,500	  	  		  	$	411,400.00	  	
May 23, 2011	  	 	Executive Officer	  	  	 	2,200	  	  		  	$	15,675.00	  	
May 23, 2011	  	 	Employee	  	  	 	5,000	  	  		  	$	242,000.00	  	
June 7, 2011	  	 	Employee	  	  	 	300	  	  		  	$	14,520.00	  	
June 27, 2011	  	 	Employee	  	  	 	3,000	  	  		  	$	145,200.00	  	
September 2, 2011	  	 	Employee	  	  	 	1,779	  	  		  	$	86,103.60	  	
September 26, 2011	  	 	Employee	  	  	 	7,500	  	  		  	$	363,000.00	  	
November 1, 2011	  	 	Executive Officer	  	  	 	15,000	  	  		  	$	242,000.00	  	
 
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Shared Issued Pursuant to Exercise of Option	 	
 	  	 	  	Common Stock Issued	 	  	 	 	
Date	  	Person or Class of
Person	  	Class A	 	  	Class B	 	  	Total Consideration	 	
November 15, 2011	  	Employee	  	 	2,000	  	  				  	$	10,640.00	  	
December 2, 2011	  	Employee	  	 	600	  	  				  	$	29,040.00	  	
December 13, 2011	  	Employee	  	 	567	  	  				  	$	27,442.80	  	
February 29, 2012	  	Employee	  				  	 	100	  	  	$	12,105.00	  	
February 29, 2012	  	Employee	  	 	4,900	  	  	 	850	  	  	$	340,052.50	  	
March 08, 2012	  	Employee	  				  	 	350	  	  	$	42,367.50	  	
April 06, 2012	  	Executive Officer	  				  	 	1,400	  	  	$	169,470.00	  	
May 15, 2012	  	Employee	  				  	 	1,100	  	  	$	133,155.00	  	
May 23, 2012	  	Employee	  				  	 	10	  	  	$	1,210.50	  	
May 7, 2013	  	Employee	  				  	 	300	  	  	$	36,315.00	  	
May 07, 2013	  	Employee	  	 	400	  	  				  	$	19,360.00	  	
May 07, 2013	  	Employee	  	 	700	  	  				  	$	33,880.00	  	
May 07, 2013	  	Employee	  	 	300	  	  				  	$	14,520.00	  	
May 07, 2013	  	Employee	  	 	300	  	  				  	$	14,520.00	  	
May 31, 2013	  	Employee	  	 	4,533	  	  	 	1,200	  	  	$	364,657.20	  	
June 07, 2013	  	Employee	  	 	275	  	  				  	$	13,310.00	  	
September 30, 2013	  	Employee	  				  	 	200	  	  	$	24,210.00	  	
November 8, 2013	  	Employee	  				  	 	1,200	  	  	$	145,260.00	  	
November 22, 2013	  	Employee	  				  	 	600	  	  	$	72,630.00	  	
November 22, 2013	  	Employee	  	 	200	  	  				  	$	9,680.00	  	
November 25, 2013	  	Executive Officer	  	 	10,500	  	  				  	$	508,200.00	  	
December 9, 2013	  	Employee	  				  	 	100	  	  	$	12,105.00	  	
December 10, 2013	  	Employee	  	 	1,000	  	  				  	$	5,320.00	  	
December 13, 2013	  	Employee	  	 	100	  	  				  	$	2,920.00	  	
April 7, 2014	  	Employee	  	 	450	  	  	 	1,050	  	  	$	148,882.50	  	
June 2, 2014	  	Employee	  				  	 	100	  	  	$	12,105.00	  	
June 04, 2014	  	Executive Officer	  	 	6,615	  	  				  	$	47,131.88	  	
June 6, 2014	  	Employee	  	 	1,325	  	  				  	$	50,690.00	  	
June 11, 2014	  	Employee	  				  	 	1,050	  	  	$	127,102.50	  	
June 13, 2014	  	Executive Officer	  	 	13,500	  	  				  	$	653,400.00	  	
June 18, 2014	  	Employee	  	 	500	  	  				  	$	24,200.00	  	
June 19, 2014	  	Employee	  	 	475	  	  				  	$	22,990.00	  	
June 23, 2014	  	Employee	  				  	 	700	  	  	$	108,170.00	  	
June 24, 2014	  	Executive Officer	  				  	 	1,000	  	  	$	121,050.00	  	
June 24, 2014	  	Executive Officer	  	 	5,660	  	  				  	$	165,272.00	  	
June 25, 2014	  	Employee	  	 	175	  	  				  	$	8,470.00	  	
June 25, 2014	  	Employee	  	 	5,000	  	  				  	$	242,000.00	  	
June 26, 2014	  	Employee	  				  	 	2,200	  	  	$	266,310.00	  	
June 26, 2014	  	Employee	  				  	 	2,550	  	  	$	308,677.50	  	
June 30, 2014	  	Employee	  	 	1,500	  	  				  	$	72,600.00	  	
June 30, 2014	  	Employee	  	 	1,500	  	  				  	$	72,600.00	  	
June 30, 2014	  	Employee	  				  	 	300	  	  	$	36,315.00	  	
June 30, 2014	  	Employee	  	 	889	  	  				  	$	43,027.60	  	
June 30, 2014	  	Employee	  				  	 	3,000	  	  	$	363,150.00	  	
 
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The following table sets forth information on the stock options issued by us in the three years preceding the filing of this registration statement.

Non-qualified Stock Options Granted Through 6/30/14	 	
Date of Issuance	  	 	  	Number of
options Granted	 	  	Strike Price	 	
May 30, 2011	  	Employee	  	 	1,000	  	  	$	193.10	  	
May 31, 2011	  	Executive Officer	  	 	7,500	  	  	$	193.10	  	
June 13, 2011	  	Employee	  	 	7,000	  	  	$	193.10	  	
August 15, 2011	  	Employee	  	 	5,000	  	  	$	334.45	  	
August 22, 2011	  	Employee	  	 	5,100	  	  	$	334.45	  	
August 29, 2011	  	Employee	  	 	7,500	  	  	$	334.45	  	
September 1, 2011	  	Employee	  	 	1,500	  	  	$	334.45	  	
October 1, 2011	  	Employees	  	 	7,000	  	  	$	334.45	  	
November 14, 2011	  	Employee	  	 	500	  	  	$	334.45	  	
January 1, 2012	  	Employees	  	 	1,000	  	  	$	371.20	  	
January 9, 2012	  	Employee	  	 	5,000	  	  	$	371.20	  	
January 23, 2012	  	Employee	  	 	1,750	  	  	$	371.20	  	
June 18, 2012	  	Employees	  	 	4,000	  	  	$	371.20	  	
July 27, 2012	  	Employee	  	 	500	  	  	$	381.05	  	
August 7, 2012	  	Employee	  	 	2,500	  	  	$	381.05	  	
September 27, 2012	  	Employee	  	 	500	  	  	$	371.05	  	
October 10, 2012	  	Employee	  	 	1,500	  	  	$	381.05	  	
April 1, 2013	  	Employees	  	 	1,500	  	  	$	355.40	  	
July 15, 2013	  	Employees	  	 	7,500	  	  	$	355.40	  	
July 22, 2013	  	Employee	  	 	500	  	  	$	355.40	  	
July 31, 2013	  	Executive Officer	  	 	500	  	  	$	355.40	  	
July 31, 2013	  	Employee	  	 	1,000	  	  	$	355.40	  	
August 23, 2013	  	Employee	  	 	500	  	  	$	355.40	  	
September 20, 2013	  	Employee	  	 	1,500	  	  	$	355.40	  	
September 30, 2013	  	Employees	  	 	9,000	  	  	$	355.40	  	
October 7, 2013	  	Employee	  	 	1,500	  	  	$	355.40	  	
October 17, 2013	  	Employees	  	 	16,500	  	  	$	355.40	  	
December 10, 2013	  	Employees	  	 	11,450	  	  	$	355.40	  	
December 10, 2013	  	Executive Officers	  	 	12,500	  	  	$	355.40	  	
December 16, 2013	  	Employee	  	 	2,500	  	  	$	355.40	  	
May 31, 2014	  	Employees	  	 	8,750	  	  	$	379.05	  	
June 2, 2014	  	Employee	  	 	500	  	  	$	379.05	  	
June 17, 2014	  	Employees	  	 	1,000	  	  	$	379.05	  	
The issuances of common stock described above either represent grants of restricted stock under, or were made pursuant to the exercise of stock options granted under our compensation plans to our officers, directors, employees and consultants in reliance upon an available exemption from the registration requirements of the Securities Act, including those contained in Rule 701 promulgated under Section 3(b) of the Securities Act. Among other things, we relied on the fact that, under Rule 701, companies that are not subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act are exempt from registration under the Securities Act with respect to certain offers and sales of securities pursuant to “compensatory benefit plans” as defined under that rule.
 
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Item 16.	Exhibits and financial statement schedules	
See the Exhibit Index immediately following the signature page hereto, which is incorporated by reference as if fully set forth herein.
 
Item 17.	Undertakings	
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(4) For purposes of determining any liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
 
 	i.	Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;	
 
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 	ii.	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;	
 
 	iii.	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and	
 
 	iv.	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.	
 
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chesterland, State of Ohio, on August 22, 2014.

FMSA Holdings Inc.	
		
By:	 	/s/  Jenniffer D. Deckard	
Name:  	 	Jenniffer D. Deckard	
Title:	 	President and Chief Executive Officer	
* * *
Each person whose signature appears below appoints Christopher L. Nagel and David J. Crandall, and each of them, any of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement (including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or would do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them of their or his substitute and substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons on August 22, 2014.

Name	 	Title	
/s/  Jenniffer D. Deckard	 	President, Chief Executive Officer and Director
(Principal Executive Officer)	
Jenniffer D. Deckard	 		
		
/s/  Christopher L. Nagel	 	Chief Financial Officer and Executive Vice President
of Finance
(Principal Financial and Accounting Officer)	
Christopher L. Nagel	 		
		
/s/  William E. Conway
 	 	Director	
William E. Conway	 		
		
/s/  Charles D. Fowler
 	 	Director	
Charles D. Fowler	 		
		
/s/  William P. Kelly
 	 	Director	
William P. Kelly	 		
		
/s/  Matthew F. LeBaron
 	 	Director	
Matthew F. LeBaron	 		
		
/s/  Michael E. Sand
 	 	Director	
Michael E. Sand	 		
		
/s/  Lawrence W. Schultz
 	 	Director	
Lawrence W. Schultz	 		
 
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INDEX TO EXHIBITS

Exhibit
number	 	  	Description	
		
 	*1.1	  	  	Form of Underwriting Agreement	
		
 	*3.1	  	  	Third Amended and Restated Certificate of Incorporation of FMSA Holdings Inc.	
		
 	*3.2	  	  	Fourth Amended and Restated Bylaws of FMSA Holdings Inc.	
		
 	*4.1	  	  	Specimen Common Stock Certificate	
		
 	5.1	  	  	Opinion of Vinson & Elkins L.L.P. as to the legality of the securities being registered	
		
 	10.1	  	  	Second Amended and Restated Credit and Guaranty Agreement dated as of September 5, 2013 by and among Fairmount Minerals, Ltd., Fairmount Minerals Holdings, Inc., certain subsidiaries of Fairmount Minerals, Ltd., Lake Shore Sand Company (Ontario) Ltd., the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent, as Collateral Agent and as Revolving Administrative Agent and the other agents referred to therein.	
		
 	10.2	  	  	Amendment Agreement dated as of September 5, 2013 by and among Fairmount Minerals, Ltd., Fairmount Minerals Holdings, Inc., certain subsidiaries of Fairmount Minerals, Ltd., Lake Shore Sand Company (Ontario) Ltd., the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent and as Collateral Agent and the other agents referred to therein.	
		
 	10.3	  	  	First Amendment to Second Amended and Restated Credit and Guaranty Agreement dated as of March 27, 2014 by and among Fairmount Minerals, Ltd., Fairmount Minerals Holdings, Inc., certain subsidiaries of Fairmount Minerals, Ltd., Lake Shore Sand Company (Ontario) Ltd., the Lenders party thereto from time to time, Barclays Bank PLC, as Administrative Agent, as Collateral Agent and as Revolving Administrative Agent and the other agents referred to therein.	
		
 	10.4	  	  	Joinder Agreement, dated as of February 14, 2014 by and among Barclays Bank PLC, Fairmount Minerals, Ltd., as borrower representative and Barclays Bank PLC, as administrative agent.	
		
 	*10.5	  	  	Form of Fourth Amended and Restated Stockholders Agreement	
		
 	*10.6	† 	  	Form of Indemnification Agreement	
		
 	*10.7	† 	  	FML Holdings, Inc. Non-Qualified Stock Option Plan	
		
 	*10.8	† 	  	Form of Stock Option Agreement for FML Holdings, Inc. Non-Qualified Stock Option Plan	
		
 	*10.9	† 	  	FML Holdings, Inc. Long Term Incentive Compensation Plan	
		
 	*10.10	† 	  	Form of Stock Option Agreement for FML Holdings, Inc. Long Term Incentive Compensation Plan	
		
 	*10.11	† 	  	FML Holdings, Inc. Stock Option Plan	
		
 	*10.12	† 	  	Form of Stock Option Agreement for FML Holdings, Inc. Stock Option Plan	
		
 	*10.13 	†  	  	Form of FMSA Holdings, Inc. 2014 Long Term Incentive Plan	
		
 	*10.14	  	  	Interest Purchase Agreement, dated as of April 30, 2013, by and among Fairmont Minerals, Ltd., Soane Energy LLC and Self-Suspending Proppant LLC	
		
 	21.1	  	  	List of Subsidiaries of FMSA Holdings Inc.	
		
 	23.1	  	  	Consent of PricewaterhouseCoopers LLP	
		
 	23.2	  	  	Consent of GZA, GeoEnvironmental, Inc.	
		
 	23.3	  	  	Consent of Vinson & Elkins L.L.P. (included as part of Exhibit 5.1 hereto)	
		
 	23.4	  	  	Consent of Freedonia Group, Inc.	
		
 	23.5	  	  	Consent of PacWest Consulting Partners	
		
 	23.6	  	  	Consent of PropTester, Inc.	
		
 	24.1	  	  	Power of Attorney (included on the signature page of this Registration Statement)	

*	To be filed by amendment.	
†	Compensatory plan or arrangement.	
 
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Exhibit 5.1

                    , 2014
FMSA Holdings Inc.
8834 Mayfield Road
Chesterland, Ohio 44026
 
 	RE:	Registration Statement on Form S-1	
Ladies and Gentlemen:
We have acted as counsel for FMSA Holdings Inc., a Delaware corporation (the “ Company ”), in connection with the proposed offer and sale (the “ Offering ”) by the selling stockholders (the “ Selling Stockholders ”), pursuant to a prospectus forming a part of a Registration Statement on Form S-1, (such Registration Statement, as amended at the effective date thereof, being referred to herein as the “ Registration Statement ”), of up to shares of common stock, par value $0.01 per share, of the Company (the “ Common Shares ”).
In connection with this opinion, we have assumed that (i) the Registration Statement, and any amendments thereto (including post-effective amendments), will have become effective, (ii) the Common Shares will be sold in the manner described in the Registration Statement and the prospectus relating thereto, and (iii) a definitive underwriting agreement, in the form filed as an exhibit to the Registration Statement, with respect to the sale of the Common Shares will have been duly authorized and validly executed and delivered by the Company and the other parties thereto.
In connection with the opinion expressed herein, we have examined, among other things, (i) the form of amended and restated Certificate of Incorporation of the Company and the form of amended and restated Bylaws of the Company, (ii) the records of corporate proceedings that have occurred prior to the date hereof with respect to the Offering, (iii) the Registration Statement and (iv) the form of underwriting agreement filed as an exhibit to the Registration Statement. We have also reviewed such questions of law as we have deemed necessary or appropriate. As to matters of fact relevant to the opinion expressed herein, and as to factual matters arising in connection with our examination of corporate documents, records and other documents and writings, we relied upon certificates and other communications of corporate officers of the Company, without further investigation as to the facts set forth therein.
Based upon the foregoing, we are of the opinion that with respect to the Common Shares proposed to be sold by the Selling Stockholders, such Common Shares will be validly issued, fully paid and nonassessable.
The foregoing opinions are limited in all respects to the General Corporation Law of the State of Delaware (including the applicable provisions of the Delaware Constitution and the reported judicial decisions interpreting these laws) and the federal laws of the United States of America, and we do not express any opinions as to the laws of any other jurisdiction.

			
Vinson & Elkins LLP Attorneys at Law
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, 2014    Page 2

We hereby consent to the statements with respect to us under the heading “Legal Matters” in the prospectus forming a part of the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, and the rules and regulations thereunder.
Very truly yours,

Exhibit 10.1
SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT
dated as of September 5, 2013
among
FAIRMOUNT MINERALS, LTD.,
as U.S. Borrower,
LAKE SHORE SAND COMPANY (ONTARIO) LTD.,
as Canadian Borrower,
FAIRMOUNT MINERALS HOLDINGS, INC.,
CERTAIN SUBSIDIARIES OF FAIRMOUNT MINERALS, LTD.,
as Guarantors,
VARIOUS LENDERS,
BARCLAYS BANK PLC and KEYBANK NATIONAL ASSOCIATION,
as Joint Lead Arrangers,
BARCLAYS BANK PLC, KEYBANK NATIONAL ASSOCIATION,
PNC CAPITAL MARKETS LLC and WELLS FARGO SECURITIES, LLC
as Joint Bookrunners,
KEYBANK NATIONAL ASSOCIATION,
as Syndication Agent,
BARCLAYS BANK PLC,
as Administrative Agent and Collateral Agent,
BARCLAYS BANK PLC,
as Revolving Administrative Agent,
and
PNC BANK, NATIONAL ASSOCIATION and WELLS FARGO SECURITIES, LLC,
as Co-Documentation Agents

$1,285,000,000 Senior Secured Credit Facilities

TABLE OF CONTENTS

 	 	 	  	Page	 	
		
ARTICLE I. DEFINITIONS AND INTERPRETATION	  	 	2	  	
	 	Section 1.01	 	Definitions	  	 	2	  	
	 	Section 1.02	 	Accounting Terms	  	 	44	  	
	 	Section 1.03	 	Interpretation, Etc.	  	 	44	  	
		
ARTICLE II. LOANS AND LETTERS OF CREDIT	  	 	45	  	
	 	Section 2.01	 	Term Loans	  	 	45	  	
	 	Section 2.02	 	Revolving Loans	  	 	45	  	
	 	Section 2.03	 	Swing Line Loans	  	 	47	  	
	 	Section 2.04	 	Issuance of Letters of Credit and Purchase of Participations Therein	  	 	49	  	
	 	Section 2.05	 	Pro Rata Shares; Availability of Funds	  	 	55	  	
	 	Section 2.06	 	Use of Proceeds	  	 	56	  	
	 	Section 2.07	 	Evidence of Debt; Registers; Notes	  	 	56	  	
	 	Section 2.08	 	Interest on Loans	  	 	57	  	
	 	Section 2.09	 	Conversion/Continuation	  	 	60	  	
	 	Section 2.10	 	Default Interest	  	 	60	  	
	 	Section 2.11	 	Fees	  	 	61	  	
	 	Section 2.12	 	Scheduled Payments/Commitment Reductions	  	 	63	  	
	 	Section 2.13	 	Voluntary Prepayments/Commitment Reductions	  	 	64	  	
	 	Section 2.14	 	Mandatory Prepayments/Commitment Reductions	  	 	67	  	
	 	Section 2.15	 	Application of Prepayments/Reductions	  	 	69	  	
	 	Section 2.16	 	General Provisions Regarding Payments	  	 	70	  	
	 	Section 2.17	 	Ratable Sharing	  	 	72	  	
	 	Section 2.18	 	Making or Maintaining Eurodollar Rate Loans	  	 	72	  	
	 	Section 2.19	 	Increased Costs; Capital Adequacy	  	 	74	  	
	 	Section 2.20	 	Taxes; Withholding, Etc.	  	 	76	  	
	 	Section 2.21	 	Obligation to Mitigate	  	 	79	  	
	 	Section 2.22	 	Defaulting Lenders	  	 	80	  	
	 	Section 2.23	 	Removal or Replacement of a Lender	  	 	81	  	
	 	Section 2.24	 	Incremental Facilities	  	 	82	  	
	 	Section 2.25	 	Appointment of Borrower Representative	  	 	84	  	
		
ARTICLE III. CONDITIONS PRECEDENT	  	 	85	  	
	 	Section 3.01	 	Restatement Date	  	 	85	  	
	 	Section 3.02	 	Conditions to Each Credit Extension	  	 	87	  	
		
ARTICLE IV. REPRESENTATIONS AND WARRANTIES	  	 	88	  	
	 	Section 4.01	 	Organization; Requisite Power and Authority; Qualification	  	 	88	  	
	 	Section 4.02	 	Equity Interests and Ownership	  	 	89	  	
	 	Section 4.03	 	Due Authorization	  	 	89	  	
	 	Section 4.04	 	No Conflict	  	 	89	  	

									
	 	Section 4.05	 	Governmental Consents	  	 	89	  	
	 	Section 4.06	 	Binding Obligation	  	 	90	  	
	 	Section 4.07	 	Historical Financial Statements	  	 	90	  	
	 	Section 4.08	 	Projections	  	 	90	  	
	 	Section 4.09	 	No Material Adverse Change	  	 	90	  	
	 	Section 4.10	 	[Reserved]	  	 	90	  	
	 	Section 4.11	 	Adverse Proceedings, Etc.	  	 	90	  	
	 	Section 4.12	 	Payment of Taxes	  	 	91	  	
	 	Section 4.13	 	Properties	  	 	91	  	
	 	Section 4.14	 	Environmental Matters	  	 	92	  	
	 	Section 4.15	 	No Defaults	  	 	92	  	
	 	Section 4.16	 	Material Contracts	  	 	92	  	
	 	Section 4.17	 	Governmental Regulation	  	 	92	  	
	 	Section 4.18	 	Margin Stock	  	 	93	  	
	 	Section 4.19	 	Employee Matters	  	 	93	  	
	 	Section 4.20	 	Employee Benefit Plans	  	 	93	  	
	 	Section 4.21	 	Solvency	  	 	94	  	
	 	Section 4.22	 	Compliance with Statutes, Etc.	  	 	94	  	
	 	Section 4.23	 	Disclosure	  	 	94	  	
	 	Section 4.24	 	PATRIOT Act	  	 	94	  	
	 	Section 4.25	 	Intellectual Property	  	 	95	  	
		
ARTICLE V. AFFIRMATIVE COVENANTS	  	 	95	  	
	 	Section 5.01	 	Financial Statements and Other Reports	  	 	95	  	
	 	Section 5.02	 	Existence	  	 	99	  	
	 	Section 5.03	 	Payment of Taxes and Claims	  	 	99	  	
	 	Section 5.04	 	Maintenance of Properties	  	 	99	  	
	 	Section 5.05	 	Insurance	  	 	99	  	
	 	Section 5.06	 	Books and Records; Inspections	  	 	100	  	
	 	Section 5.07	 	Lenders’ Meetings	  	 	100	  	
	 	Section 5.08	 	Compliance with Laws	  	 	101	  	
	 	Section 5.09	 	Environmental	  	 	101	  	
	 	Section 5.10	 	Subsidiaries	  	 	102	  	
	 	Section 5.11	 	Additional Material Real Estate Assets	  	 	103	  	
	 	Section 5.12	 	Additional Collateral	  	 	105	  	
	 	Section 5.13	 	Interest Rate Protection	  	 	105	  	
	 	Section 5.14	 	Further Assurances	  	 	105	  	
	 	Section 5.15	 	Control Accounts; Approved Deposit Accounts	  	 	106	  	
	 	Section 5.16	 	Maintenance of Ratings	  	 	106	  	
	 	Section 5.17	 	Post-Restatement Date Obligations	  	 	106	  	
		
ARTICLE VI. NEGATIVE COVENANTS	  	 	107	  	
	 	Section 6.01	 	Indebtedness	  	 	107	  	
	 	Section 6.02	 	Liens	  	 	109	  	
	 	Section 6.03	 	No Further Negative Pledges	  	 	111	  	
	 	Section 6.04	 	Restricted Junior Payments	  	 	111	  	
	 	Section 6.05	 	Restrictions on Subsidiary Distributions	  	 	112	  	
 
2

									
	 	Section 6.06	 	Investments	  	 	113	  	
	 	Section 6.07	 	Financial Covenant	  	 	114	  	
	 	Section 6.08	 	Fundamental Changes; Disposition of Assets; Acquisitions	  	 	114	  	
	 	Section 6.09	 	Disposal of Subsidiary Interests	  	 	116	  	
	 	Section 6.10	 	Sales and Lease-Backs	  	 	116	  	
	 	Section 6.11	 	Transactions with Shareholders and Affiliates	  	 	116	  	
	 	Section 6.12	 	Conduct of Business	  	 	116	  	
	 	Section 6.13	 	Permitted Activities of Holdings	  	 	116	  	
	 	Section 6.14	 	Amendments or Waivers of Organizational Documents, Related Documents and Certain Indebtedness	  	 	117	  	
	 	Section 6.15	 	Fiscal Year	  	 	117	  	
		
ARTICLE VII. GUARANTY	  	 	117	  	
	 	Section 7.01	 	Guaranty of the Obligations	  	 	117	  	
	 	Section 7.02	 	Contribution by Guarantors	  	 	118	  	
	 	Section 7.03	 	Payment by Guarantors	  	 	118	  	
	 	Section 7.04	 	Liability of Guarantors Absolute	  	 	119	  	
	 	Section 7.05	 	Waivers by Guarantors	  	 	121	  	
	 	Section 7.06	 	Guarantors’ Rights of Subrogation, Contribution, Etc.	  	 	121	  	
	 	Section 7.07	 	Subordination of Other Obligations	  	 	122	  	
	 	Section 7.08	 	Continuing Guaranty	  	 	122	  	
	 	Section 7.09	 	Authority of Guarantors or the Borrowers	  	 	122	  	
	 	Section 7.10	 	Financial Condition of the Borrowers	  	 	122	  	
	 	Section 7.11	 	Bankruptcy, Etc.	  	 	123	  	
	 	Section 7.12	 	Discharge of Guaranty Upon Sale of Guarantor	  	 	123	  	
		
ARTICLE VIII. EVENTS OF DEFAULT	  	 	124	  	
	 	Section 8.01	 	Events of Default	  	 	124	  	
	 	Section 8.02	 	Right to Cure	  	 	127	  	
		
ARTICLE IX. AGENTS	  	 	128	  	
	 	Section 9.01	 	Appointment of Agents	  	 	128	  	
	 	Section 9.02	 	Powers and Duties	  	 	129	  	
	 	Section 9.03	 	General Immunity	  	 	129	  	
	 	Section 9.04	 	Agents Entitled to Act as Lender	  	 	131	  	
	 	Section 9.05	 	Lenders’ Representations, Warranties and Acknowledgment	  	 	132	  	
	 	Section 9.06	 	Right to Indemnity	  	 	132	  	
	 	Section 9.07	 	Successor Administrative Agent, Collateral Agent and Swing Line Lender	  	 	132	  	
	 	Section 9.08	 	Security Documents and Guaranty	  	 	135	  	
	 	Section 9.09	 	Withholding Taxes	  	 	136	  	
	 	Section 9.10	 	Administrative Agent May File Proofs of Claim	  	 	137	  	
		
ARTICLE X. MISCELLANEOUS	  	 	137	  	
	 	Section 10.01	 	Notices	  	 	137	  	
	 	Section 10.02	 	Expenses	  	 	139	  	
	 	Section 10.03	 	Indemnity	  	 	140	  	
 
3

									
	 	Section 10.04	 	Set-Off	  	 	142	  	
	 	Section 10.05	 	Amendments and Waivers	  	 	142	  	
	 	Section 10.06	 	Successors and Assigns; Participations	  	 	146	  	
	 	Section 10.07	 	Independence of Covenants, Etc.	  	 	151	  	
	 	Section 10.08	 	Survival of Representations, Warranties and Agreements	  	 	151	  	
	 	Section 10.09	 	No Waiver; Remedies Cumulative	  	 	152	  	
	 	Section 10.10	 	Marshalling; Payments Set Aside	  	 	152	  	
	 	Section 10.11	 	Severability	  	 	152	  	
	 	Section 10.12	 	Obligations Several; Independent Nature of Lenders’ Rights	  	 	152	  	
	 	Section 10.13	 	Table of Contents and Headings	  	 	153	  	
	 	Section 10.14	 	APPLICABLE LAW	  	 	153	  	
	 	Section 10.15	 	CONSENT TO JURISDICTION	  	 	153	  	
	 	Section 10.16	 	WAIVER OF JURY TRIAL	  	 	154	  	
	 	Section 10.17	 	Confidentiality	  	 	155	  	
	 	Section 10.18	 	Usury Savings Clause	  	 	156	  	
	 	Section 10.19	 	Counterparts	  	 	156	  	
	 	Section 10.20	 	Effectiveness; Entire Agreement; No Third Party Beneficiaries	  	 	156	  	
	 	Section 10.21	 	PATRIOT Act	  	 	157	  	
	 	Section 10.22	 	Electronic Execution of Assignments	  	 	157	  	
	 	Section 10.23	 	No Fiduciary Duty	  	 	157	  	
	 	Section 10.24	 	Judgment Currency	  	 	158	  	
	 	Section 10.25	 	Effect of Restatement	  	 	158	  	
 
4

					
SCHEDULES:	  	1.01(a)	  	Tranche B-1 Term Loan Commitments	
	  	1.01(b)	  	Tranche B-2 Term Loan Commitments	
	  	1.01(c)	  	Revolving Commitments	
	  	1.01(d)	  	Notice Addresses	
	  	4.01	  	Jurisdictions of Organization and Qualification	
	  	4.02	  	Equity Interests and Ownership	
	  	4.13	  	Real Estate Assets	
	  	4.16	  	Material Contracts	
	  	5.17(b)	  	Restatement Date Mortgaged Properties	
	  	6.01	  	Certain Indebtedness	
	  	6.02	  	Certain Liens	
	  	6.06	  	Certain Investments	
			
EXHIBITS:	  	A-1	  	Borrowing Notice	
	  	A-2	  	Conversion/Continuation Notice	
	  	A-3	  	Issuance Notice	
	  	B-1	  	Tranche B-1 Term Loan Note	
	  	B-2	  	Tranche B-2 Term Loan Note	
	  	B-3	  	Revolving Loan Note	
	  	B-4	  	Swing Line Note	
	  	C	  	Compliance Certificate	
	  	D	  	[Reserved]	
	  	E	  	Assignment Agreement	
	  	F	  	Certificate re Non-Bank Status	
	  	G-1	  	Restatement Date Certificate	
	  	G-2	  	Solvency Certificate	
	  	H	  	Counterpart Agreement	
	  	I	  	Pledge and Security Agreement	
	  	J	  	Mortgage	
	  	K	  	Landlord Waiver and Consent Agreement	
	  	L	  	Intercompany Note	
	  	M	  	Joinder Agreement	
 
5

SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT, dated as of September 5, 2013, is entered into by and among FAIRMOUNT MINERALS, LTD., a Delaware corporation (the “ U.S. Borrower ” or the “ Borrower Representative ”), FAIRMOUNT MINERALS HOLDINGS, INC., a Delaware corporation (“ Holdings ”), CERTAIN SUBSIDIARIES OF THE U.S. BORROWER, as Guarantors, LAKE SHORE SAND COMPANY (Ontario) LTD., an entity organized under the laws of the province of Ontario, Canada, as Canadian Borrower (the “ Canadian Borrower ”, and, together with the U.S. Borrower, the “ Borrowers ”), the Lenders party hereto from time to time, BARCLAYS BANK PLC (“ Barclays Bank ”), as Administrative Agent (together with its permitted successors in such capacity, the “ Administrative Agent ”), as Revolving Administrative Agent (together with its permitted successors in such capacity, the “ Revolving Administrative Agent ”) and as Collateral Agent (together with its permitted successors in such capacity, the “ Collateral Agent ”), KEYBANK NATIONAL ASSOCIATION (“ KeyBank ”) as Syndication Agent (together with its permitted successors in such capacity, the “ Syndication Agent ”), and PNC BANK, NATIONAL ASSOCIATION (“ PNC Bank ”) and WELLS FARGO SECURITIES, LLC (“ Wells Fargo Securities ”), as Co-Documentation Agents (together with their permitted successors in such capacity, the “ Co-Documentation Agents ”).
RECITALS:
WHEREAS, capitalized terms used in these Recitals have the respective meanings set forth for such terms in Section 1.01 hereof;
WHEREAS, the Borrowers, the other loan parties from time to time party thereto, the lenders, agents, issuing banks, Barclays Bank as administrative agent and collateral agent and PNC Bank as revolving administrative agent, are parties to the Credit and Guaranty Agreement, dated as of August 5, 2010 (as amended and restated by that certain Amended and Restated Credit and Guaranty Agreement, dated as of March 15, 2011, as amended by that certain Amendment to Credit Agreement, dated as of April 22, 2011, as further amended by that certain Second Amendment to Amended and Restated Credit Agreement, dated as of April 18, 2013, and as further amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “ Existing Credit Agreement ”).
WHEREAS , pursuant to that certain Asset Purchase Agreement, dated as of July 23, 2013 (the “ Acquisition Agreement ”), the U.S. Borrower agreed to acquire (the “ Acquisition ”) certain assets and liabilities of FTS International Services, LLC, FTS International Logistics, LLC and FTS International Manufacturing, LLC (collectively, the “ Sellers ”) comprising the Proppants business of the Sellers (the “ Target ”).
WHEREAS, the Borrowers have agreed to secure all of their Obligations by granting to the Collateral Agent, for the benefit of the Secured Parties, a First Priority Lien on substantially all of their respective assets, including with respect to the U.S. Borrower, a pledge of all of the Equity Interests of each of its Domestic Subsidiaries, 66.0% (or in the case of Guarantors with respect to the Obligations of the Canadian Borrower, 100%) of all of the voting Equity Interests of each of its Foreign Subsidiaries and all of the non-voting Equity Interests of each of its Foreign Subsidiaries, and including with respect to the Canadian Borrower, a pledge of all the Equity Interests of each of its Subsidiaries;

WHEREAS, the Guarantors have agreed to guarantee the Obligations of the Borrowers hereunder and to secure their respective Obligations by granting to the Collateral Agent, for the benefit of the Secured Parties, a First Priority Lien on substantially all of their respective assets, including a pledge of all of the Equity Interests of each of their respective Domestic Subsidiaries (including a pledge by Holdings of all of its interests in the U.S. Borrower), 66.0% (or in the case of Guarantors with respect to the Obligations of the Canadian Borrower, 100%) of all of the voting Equity Interests of each of their respective Foreign Subsidiaries and all of the non-voting Equity Interests of each of their respective Foreign Subsidiaries; and
WHEREAS , pursuant to the Amendment Agreement, the Borrowers, the Required Lenders (as defined in the Existing Credit Agreement), the Administrative Agent and the Revolving Administrative Agent have agreed to amend and restate the Existing Credit Agreement in the form hereof. The amendment and restatement of the Existing Credit Agreement evidenced by this Agreement shall become effective as provided in the Amendment Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
Section 1.01 Definitions . The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:
“ Acquisition ” has the meaning specified in the recitals hereto.
“ Acquisition Agreement ” has the meaning specified in the recitals hereto.
“ Acquisition Documents ” means the Acquisition Agreement, together with all other instruments and agreements entered into by the U.S. Borrower or its Subsidiaries in connection therewith.
“ Adjusted Eurodollar Rate ” means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the greater of (I) 1.00% per annum and (II) the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/16 of 1.00%) (i) (a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum equal to the rate
 
2

determined by the Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum equal to the offered quotation rate to first class banks in the London interbank market by the Administrative Agent for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan of the Administrative Agent, in its capacity as a Lender, for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement. Notwithstanding the foregoing, with respect to any determination of the Adjusted Eurodollar Rate with respect to Revolving Loans or Tranche B-1 Term Loans, clause (I) of the foregoing shall be disregarded.
“ Administrative Agent ” has the meaning specified in the preamble hereto.
“ Adverse Proceeding ” means any action, suit, proceeding, hearing (in each case, whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Holdings or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Holdings or any of its Subsidiaries, threatened against or affecting Holdings or any of its Subsidiaries or any property of Holdings or any of its Subsidiaries.
“ Affected Lender ” has the meaning set forth in Section 2.18(b).
“ Affected Loans ” has the meaning set forth in Section 2.18(b).
“ Affiliate ” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 10% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise; provided , that no Agent or Lender shall be deemed to be an Affiliate of any Loan Party.
“ Agent ” means each of the Administrative Agent, the Revolving Administrative Agent, the Syndication Agent, the Collateral Agent and the Co-Documentation Agents.
“ Agent Affiliates ” has the meaning set forth in Section 10.01(b)(iii).
“ Aggregate Amounts Due ” has the meaning set forth in Section 2.17.
“ Aggregate Payments ” has the meaning set forth in Section 7.02.
 
3

“ Agreement ” means this Second Amended and Restated Credit and Guaranty Agreement, dated as of September 5, 2013, as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“ Agreement Currency ” has the meaning set forth in Section 10.24.
“ Amendment Agreement ” means the Amendment Agreement, dated as of the Restatement Date, effecting, among other things, this amendment and restatement of the Existing Credit Agreement.
“ Applicable Margin ” means for any day, with respect to (i) (a) Tranche B-1 Term Loans or Tranche B-2 Term Loans that are Eurodollar Rate Loans, 4.00% per annum and (b) Tranche B-1 Term Loans or Tranche B-2 Term Loans that are Base Rate Loans, 3.00% per annum, (ii) (a) Revolving Loans that are Eurodollar Rate Loans, 4.00% per annum and (b) Revolving Loans that are Base Rate Loans or Canadian Prime Rate Loans, 3.00% per annum; provided that commencing upon the date that financial statements are delivered for the Fiscal Quarter ending December 31, 2013, if the Leverage Ratio (calculated on a pro forma basis) as of the date of the most recently delivered financial statements is less than 2.75:1.00, each percentage figure in the preceding clause (ii) shall be reduced by 25 basis points (e.g. 4.00% shall be reduced to 3.75%). Changes in the Applicable Margin resulting from changes in the Leverage Ratio shall become effective on the date on which quarterly or annual financial statements are delivered to the Lenders pursuant to Section 5.01 and shall remain in effect until the next change to be effected pursuant to this definition. If any financial statements referred to above are not delivered within the time periods specified in Section 5.01, then, at the option of (and upon delivery of notice (telephonic or otherwise) by) the Required Revolving Lenders, until such financial statements are delivered, the Leverage Ratio as at the end of the fiscal period that would have been covered thereby shall for the purposes of this definition be deemed to be in excess of 2.75:1.00. In the event that any financial statement or certificate delivered pursuant to Section 5.01 is shown to be inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “ Applicable Period ”) than the Applicable Margin applied for such Applicable Period, then (i) the U.S. Borrower shall immediately deliver to the Administrative Agent a correct certificate required by Section 5.01 for such Applicable Period and (ii) the U.S. Borrower (or the Canadian Borrower, as applicable) shall immediately pay to the Revolving Administrative Agent the accrued additional fees owing as a result of such increased Applicable Margin for such Applicable Period.
“ Applicable Reserve Requirement ” means, at any time, for any Eurodollar Rate Loan, the maximum rate, expressed as a decimal, at which reserves (including any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors or other applicable banking regulator. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurodollar Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.
 
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“ Applicable Revolving Commitment Fee Percentage ” means 0.50% per annum.
“ Approved Electronic Communications ” means any notice, demand, communication, information, document or other material that any Loan Party provides to the Administrative Agent pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Agents or to the Lenders by means of electronic communications pursuant to Section 10.01(b).
“ Arrangers ” means Barclays Bank and KeyBank in their capacities as joint lead arrangers.
“ Asset Sale ” means a sale, sale and leaseback, assignment, transfer or other disposition to, or any exchange of property with (or any lease or sub-lease (as lessor or sublessor) or exclusive license (as licensor or sublicensor) having substantially the same effect as any of the foregoing), any Person (other than the Borrowers or any Wholly-Owned Subsidiary Guarantor), in one transaction or a series of transactions, of all or any part of Holdings’ or any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or licensed, including the Equity Interests of any of Holdings’ Subsidiaries, other than (i) inventory (or other assets) sold, leased or licensed out in the ordinary course of business (excluding any such sales, leases or licenses out by operations or divisions discontinued or to be discontinued), (ii) dispositions of Cash and Cash Equivalents in the ordinary course of business and (iii) sales, leases or licenses out of other assets for aggregate consideration of less than $5,000,000 with respect to any transaction or series of related transactions.
“ Assignment Agreement ” means an Assignment and Assumption Agreement substantially in the form of Exhibit E, with such amendments or modifications as may be approved by the Administrative Agent.
“ Assignment Effective Date ” has the meaning set forth in Section 10.06(b).
“ Attributable Indebtedness ” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided , however , that if such sale and leaseback transaction results in a Capital Lease, the amount of Indebtedness represented thereby will be determined in accordance with GAAP.
“ Available Amount ” means, as of any date, the sum, without duplication, of: (i) the aggregate cumulative amount of any Consolidated Excess Cash Flow to the extent not otherwise required to be applied pursuant to Section 2.14(e), beginning with the Fiscal Year ending December 31, 2010 (provided, that, notwithstanding the foregoing, with respect to the Fiscal Year ending December 31, 2013, with respect to which no prepayment is required under Section 2.14(e), only 50% of the Consolidated Excess Cash Flow for such Fiscal Year shall be included in the determination of “Available Amount”), (ii) the Net Cash Proceeds received after the
 
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Original Closing Date and on or prior to the date of such determination of the Available Amount, of any sale of Equity Interests by, or capital contribution to, the U.S. Borrower (which, in the case of any such sale of Equity Interests is not Disqualified Equity Interests, are not issued in connection with the Transactions, used to make Capital Expenditures or consummate Permitted Acquisitions and are not required to repay the Loans pursuant to Section 2.14(c)) and (iii) an amount equal to any returns (including dividends, interest, distributions, returns on principal, profits on sale, repayments, income and similar amounts) actually received in cash and Cash Equivalents by any Loan Party in respect of any Investments made pursuant to Section 6.06(j), less , the sum of any Available Amount used to make (w) Restricted Junior Payments pursuant to Section 6.04(f), (x) Investments permitted by Section 6.06(m), (y) Permitted Acquisitions pursuant to Section 6.08(f) and (z) below par purchases of Term Loans in accordance with Section 2.13(c). The Available Amount as of the Restatement Date is $154,587,000.
“ Authorized Officer ” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president or one of its vice presidents (or the equivalent thereof), and such Person’s chief financial officer or treasurer.
“ Bankruptcy Code ” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
“ Barclays Bank ” has the meaning specified in the preamble hereto.
“ Base Rate ” means, for any day, a rate per annum equal to the greatest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus  1 ⁄ 2 of 1.00%, (iii) 2.00% and (iv) the Adjusted Eurodollar Rate that would be payable on such day for a Eurodollar Rate Loan with a one-month Interest Period plus 1.00%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. Notwithstanding the foregoing, with respect to any determination of the Base Rate with respect to Revolving Loans or Tranche B-1 Term Loans, clause (iii) of the foregoing shall be disregarded.
“ Base Rate Loan ” means a Loan bearing interest at a rate determined by reference to the Base Rate.
“ Beneficiary ” means each Agent, Issuing Bank, Lender and Lender Counterparty.
“ Board of Governors ” means the Board of Governors of the United States Federal Reserve System, or any successor thereto.
“ Bookrunners ” means Barclays Bank, KeyBank, PNC Capital Markets LLC and Wells Fargo in their capacities as joint bookrunners.
“ Borrower Representative ” has the meaning specified in the preamble hereto.
“ Borrowers ” has the meaning specified in the preamble hereto.
“ Borrowing Notice ” means a notice substantially in the form of Exhibit A-1.
 
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“ Business Day ” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close, (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, the term “Business Day” means any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market and (iii) with respect to all interest rate settings, funding disbursement, settlements and payments in Canadian Dollars, the term “Business Day” shall additionally exclude any day on which commercial banks in Toronto Ontario are authorized or required by law to close.
“ Canadian Borrower ” has the meaning specified in the preamble hereto.
“ Canadian Dollars ” or “ C$ ” means the lawful money of Canada.
“ Canadian Issuing Bank ” means an Issuing Bank that has agreed to issue Canadian Letters of Credit.
“ Canadian Letter of Credit ” means any commercial or standby letter of credit issued or to be issued by an Issuing Bank for the account of the Canadian Borrower or any of its Subsidiaries pursuant to Section 2.04(a)(ii) of this Agreement.
“ Canadian Letter of Credit Sublimit ” means the lesser of (a) $1,000,000 and (b) the aggregate unused amount of the Canadian Revolving Commitments then in effect.
“ Canadian Letter of Credit Usage ” means, as at any date of determination, the sum of (i) the Dollar Equivalent of the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all Canadian Letters of Credit then outstanding, and (ii) the Dollar Equivalent of the aggregate amount of all drawings under Canadian Letters of Credit honored by a Canadian Issuing Bank and not theretofore reimbursed by or on behalf of the Canadian Borrower.
“ Canadian Prime Rate ” means, for any date, the rate of interest per annum equal to the higher of: (a) the rate of interest quoted in The Wall Street Journal , Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75.0% of the nation’s thirty (30) largest banks), as in effect from time to time and (b) the CDOR Rate (as defined herein) calculated with reference to a 30 day Interest Period plus one percent (1.00%) per annum, in each case, such rate to be adjusted automatically, without notice, as of the opening of business on the effective date of any change in such rate.
“ Canadian Prime Rate Loans ” means Loans for which the applicable rate of interest is based upon the Canadian Prime Rate.
“ Canadian Revolving Commitment ” means the commitment of a Lender to make or otherwise fund any Canadian Revolving Loan and to acquire participations in Canadian Letters of Credit hereunder and “Canadian Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Canadian Revolving Commitment, if any, is set forth on Schedule 1.01(c) or in the applicable Assignment Agreement or Joinder
 
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Agreement, as applicable, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Canadian Revolving Commitments as of the Restatement Date is $1,000,000.
“ Canadian Revolving Commitment Period ” means the period from the Restatement Date to but excluding the Canadian Revolving Commitment Termination Date.
“ Canadian Revolving Commitment Termination Date ” means the earliest to occur of (i) the fifth anniversary of the Restatement Date, (ii) the date the Canadian Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14 and (iii) the date of the termination of the Canadian Revolving Commitments pursuant to Section 8.01.
“ Canadian Revolving Exposure ” means, with respect to any Lender as of any date of determination, (i) prior to the termination of the Canadian Revolving Commitments, that Lender’s Canadian Revolving Commitment; and (ii) after the termination of the Canadian Revolving Commitments, the sum of (a) the Dollar Equivalent of the aggregate outstanding principal amount of the Canadian Revolving Loans of that Lender, (b) in the case of a Canadian Issuing Bank, the Dollar Equivalent of the aggregate Canadian Letter of Credit Usage in respect of all Canadian Letters of Credit issued by such Issuing Bank (net of any participations by Lenders in such Canadian Letters of Credit) and (c) the Dollar Equivalent of the aggregate amount of all participations by that Lender in any outstanding Canadian Letters of Credit or any unreimbursed drawing under any Canadian Letter of Credit.
“ Canadian Revolving Loan ” means Loans made by a Lender in respect of its Canadian Revolving Commitment to the Canadian Borrower pursuant to Section 2.02(a)(ii) and/or Section 2.24.
“ Canadian Security Documents ” means the Canadian Pledge and Security Agreement and all other instruments, documents and agreements delivered by the Canadian Borrower pursuant to this Agreement or any of the other Loan Documents in order to grant to the Collateral Agent, for the benefit of Secured Parties, a Lien on any assets or property of the Canadian Borrower as security for the Obligations, including PPSA financing statements and amendments thereto.
“ Capital Expenditures ” means for any period, the aggregate of all expenditures of the U.S. Borrower and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items reflected in the consolidated statement of cash flows of the U.S. Borrower and its Subsidiaries; provided , that Capital Expenditures shall not include any expenditures which constitute a Permitted Acquisition permitted under Section 6.06 or Section 6.08.
“ Capital Lease ” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person; provided , that notwithstanding the foregoing, in no event will any lease that would have been categorized as an operating lease as determined in accordance with GAAP as of the Restatement Date, be considered a “Capital Lease” as a result of any changes in GAAP subsequent to the Restatement Date.
 
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“ Cash ” means money, currency or a credit balance in any demand or Deposit Account.
“ Cash Equivalents ” means, as at any date of determination, any of the following: (i) marketable securities (a) issued or directly and unconditionally guaranteed or insured as to interest and principal by the United States or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) certificates of deposit, time deposits or bankers’ acceptances maturing within six (6) months after such date and issued or accepted by any Lender or by any commercial bank organized under or licensed by the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator), (b) has Tier 1 capital (as defined in such regulations) of not less than $500,000,000 and (c) has a rating of at least AA- from S&P and Aa3 from Moody’s; (iv) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $2,000,000,000 and (c) has the highest rating obtainable from either S&P or Moody’s; and (v) in the case of Foreign Subsidiaries (including the Canadian Borrower), Investments made locally of a type comparable to those described in clauses (i) through (iv) of this definition.
“Cash Management Products” shall mean any one or more of the following types of services or facilities extended to any Loan Party by any Agent, any Lender, or any Affiliate of any Agent or a Lender in reliance on such Agent’s or such Lender’s agreement to indemnify such Affiliate: (i) Automated Clearing House (ACH) transactions and other similar money transfer services; (ii) cash management, including controlled disbursement and lockbox services; (iii) establishing and maintaining deposit accounts; and (iv) credit card or stored value cards, in each case, entered into with and provided by a Lender Counterparty.
“ CDOR Rate ” means, on any day and for any period, the rate applicable to Canadian Dollar bankers’ acceptances for the applicable Interest Period appearing on the “Reuters Screen CDOR Page” (as defined in the International Swaps and Derivatives Association, Inc. 2000 definitions, as modified and amended from time to time), at approximately 10:00 a.m. (Eastern Time), on such day, or if such day is not a Business Day, then on the immediately preceding Business Day, provided that if such rate does not appear on the Reuters Screen CDOR Page on such day the CDOR Rate on such day shall be the rate for such period applicable to Canadian Dollar bankers’ acceptances quoted by a bank listed in Schedule I of the Bank Act (Canada), as selected by the Revolving Administrative Agent, as of 10:00 a.m. (Eastern Time) on such day or, if such day is not a Business Day, then on the immediately preceding Business Day.
“ Certificate re Non-Bank Status ” means a certificate substantially in the form of Exhibit F.
“ Change in Law ” has the meaning set forth in Section 2.19(a).
 
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“ Change of Control ” means, (i) at any time prior to consummation of a Qualifying IPO, the Permitted Investors shall cease to beneficially own and control at least 50% on a fully diluted basis of the voting interests in the Equity Interests of FML Holdings; (ii) at any time on or after consummation of a Qualifying IPO, any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Permitted Investors (a)(x) shall have acquired beneficial ownership or control of 35.0% or more on a fully diluted basis of the voting interests in the Equity Interests of FML Holdings or (y) shall have acquired beneficial ownership or control of voting interests in the Equity Interests of FML Holdings in excess of those interests owned and controlled by the Permitted Investors at such time or (b) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of FML Holdings; (iii) the Sponsor shall cease to beneficially own and control at least 35.0% in the aggregate, on a fully diluted basis, of the voting interests in the Equity Interests of FML Holdings; (iv) FML Holdings shall cease to beneficially own and control, free and clear of all Liens (other than any inchoate tax liens and Liens in favor of the Collateral Agent for the benefit of Secured Parties), directly or indirectly, 100.0% on a fully diluted basis of the economic and voting interest in the Equity Interests of the U.S. Borrower; (v) the majority of the seats (other than vacant seats) on the board of directors (or similar governing body) of FML Holdings cease to be occupied by Persons who either (a) were members of the board of directors of FML Holdings on the Restatement Date or (b) were nominated for election by the board of directors of FML Holdings, a majority of whom were directors on the Restatement Date or whose election or nomination for election was previously approved by a majority of such directors; or (vi) any “change of control” (or similar event, however denominated) shall occur under and as defined in any indenture or agreement in respect of Material Indebtedness, to which Holdings or any of its Subsidiaries is a party.
“ China Joint Venture ” means Santrol (Yixing) Proppant Co., Ltd., a Chinese company.
“ Class ” means (i) with respect to Lenders, each of the following classes of Lenders: (a) Lenders having Tranche B-1 Term Loan Exposure, (b) Lenders having Tranche B-2 Term Loan Exposure, (c) Lenders having Revolving Exposure (including the Swing Line Lenders) and (d) Lenders having Incremental Term Loan Exposure of each applicable Series, and (ii) with respect to Loans, each of the following classes of Loans: (a) Tranche B-1 Term Loans, (b) Tranche B-2 Term Loans, (c) Revolving Loans (including Swing Line Loans) and (d) each Series of Incremental Term Loans.
“ Co-Documentation Agents ” has the meaning set forth in the preamble.
“ Collateral ” means, collectively, all of the real, personal and mixed property (including Equity Interests) in which Liens are purported to be granted pursuant to the Security Documents as security for the Obligations.
“ Collateral Agent ” has the meaning specified in the preamble hereto.
“ Commitment ” means any Revolving Commitment or Term Loan Commitment.
“ Commodities Account ” has the meaning set forth in the UCC.
 
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“ Company Representations ” mean the representations made by or with respect to the Sellers and the Target under the Acquisition Agreement, but only to the extent that the U.S. Borrower or its Affiliates has the right to terminate its obligations under the Acquisition Agreement or the right not to consummate the Acquisition as a result of a breach of such representations in the Acquisition Agreement.
“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“ Compliance Certificate ” means a Compliance Certificate substantially in the form of Exhibit C.
“ Consolidated Adjusted EBITDA ” means, for any period, an amount determined for the U.S. Borrower and its Subsidiaries on a consolidated basis equal to (i) Consolidated Net Income for such period, plus , to the extent reducing Consolidated Net Income in such period, the sum, without duplication, of amounts for (a) consolidated interest expense, (b) provisions for taxes based on income, profits or capital, (c) total depreciation and depletion expense, (d) total amortization expense, (e) management fees and reimbursement of out-of-pocket expenses paid to the Sponsor pursuant to the Management Agreement, (f) costs and expenses incurred in connection with the Transactions and any related transactions in an aggregate amount not to exceed $25,000,000, (g) all other non-recurring expenses or losses reducing Consolidated Net Income for such period, (h) transaction costs, fees, losses and expenses incurred in connection with the incurrence of indebtedness, disposition of assets, the making of Permitted Acquisitions or other Investments permitted hereunder (in each case whether or not consummated), and (i) other non-Cash charges reducing Consolidated Net Income for such period (excluding any such non-Cash charge to the extent that it represents an accrual or reserve for potential Cash charge in any future period or amortization of a prepaid Cash charge that was paid in a prior period), minus (ii) other non-Cash gains increasing Consolidated Net Income for such period (excluding any such non-Cash gain to the extent it represents the reversal of an accrual or reserve for potential Cash gain in any prior period), minus (iii) amounts distributed to Holdings pursuant to Section 6.04(c)(i) and minus (iv) all non-recurring gains increasing Consolidated Net Income for such period. For the avoidance of doubt, the Consolidated Adjusted EBITDA for the U.S. Borrower and its Subsidiaries (including the Target) for the fiscal quarters ended September 30, 2012, December 31, 2012, March 31, 2013 and June 30, 2013 was $92,617,000, $85,896,000, $87,812,000, and $92,638,000, respectively. In addition and notwithstanding the foregoing and the immediately following paragraph, for purposes of determining Consolidated Adjusted EBITDA of the Target, such Consolidated Adjusted EBITDA shall be deemed to be $17,750,000 for the fiscal quarter ending September 30, 2013.
With respect to any period during which a Permitted Acquisition or an Asset Sale has occurred (each, a “ Subject Transaction ”), for purposes of determining compliance with the financial covenant set forth in Section 6.07, Consolidated Adjusted EBITDA shall be calculated with respect to such period on a pro forma basis, including pro forma adjustments arising out of events which are directly attributable to a specific transaction, are factually supportable and are expected to have a continuing impact, and the reasonable cost savings and other operating improvements projected by the Borrower to be realized as a result of any Permitted Acquisition or Asset Sale (including the termination or discontinuance of activities constituting such
 
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business) in each case calculated on a pro forma basis as though such pro forma adjustments, reasonable cost savings and other operating improvements had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions to the extent already included in the Consolidated Net Income for such period, provided that such pro forma adjustments, reasonable cost savings and other operating improvements shall not exceed 10% in any four fiscal quarter period and such pro forma, reasonable cost savings and other operating improvements shall be certified by the chief financial officer or vice president of Finance of the U.S. Borrower using the historical audited financial statements of any business so acquired or to be acquired or sold or to be sold and the consolidated financial statements of the U.S. Borrower and its Subsidiaries which shall be reformulated as if such Subject Transaction, and any Indebtedness incurred or repaid in connection therewith, had been consummated or incurred or repaid at the beginning of such period (and assuming that such Indebtedness bears interest during any portion of the applicable measurement period prior to the relevant acquisition at the weighted average of the interest rates applicable to outstanding Loans incurred during such period).
“ Consolidated Current Assets ” means, as at any date of determination, the total assets of a Person and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents.
“ Consolidated Current Liabilities ” means, as at any date of determination, the total liabilities of a Person and its Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt.
“ Consolidated Excess Cash Flow ” means, for any period, an amount (if positive) equal to:
 
 	(i)	the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income, plus , (b) to the extent reducing Consolidated Net Income, the sum, without duplication, of amounts for non-Cash charges reducing Consolidated Net Income, including for depreciation and amortization and depletion (excluding any such non-Cash charge to the extent that it represents an accrual or reserve for potential Cash charge in any future period or amortization of a prepaid Cash charge that was paid in a prior period), plus (c) the Consolidated Working Capital Adjustment, minus	
 
 	(ii)	the sum, without duplication, of (a) to the extent not already reducing Consolidated Net Income, the amounts for such period paid in cash from operating cash flow of (1) scheduled repayments of Indebtedness for borrowed money (excluding repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in connection with such repayments) and scheduled repayments of obligations under Capital Leases (excluding any interest expense portion thereof), (2) Capital Expenditures, (3) out-of-pocket costs and expenses paid to the Sponsor in accordance with the terms and provisions of the Management Agreement, (4) management fees paid to the Sponsor in accordance with the terms and provisions of the Management Agreement and (5) without duplication, the amount of any Restricted Junior	
 
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 	Payments actually made to FML Holdings pursuant to Section 6.04(c)(i) and (ii), plus (b) other non-Cash gains increasing Consolidated Net Income for such period (excluding any such non-Cash gain to the extent it represents the reversal of an accrual or reserve for potential Cash gain in any prior period).	
“ Consolidated Net Income ” means, for any period, (i) the net income (or loss) of the U.S. Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus (ii) (a) the income (or loss) of any Person (other than a Subsidiary of the U.S. Borrower) in which any other Person (other than the U.S. Borrower or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the U.S. Borrower or any of its Subsidiaries by such Person during such period, (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of the U.S. Borrower or is merged into or consolidated with the U.S. Borrower or any of its Subsidiaries or that Person’s assets are acquired by the U.S. Borrower or any of its Subsidiaries, (c) the income of any Subsidiary of the U.S. Borrower to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after-tax non-Cash gains (or losses) attributable to Asset Sales or returned surplus assets of any Pension Plan, and (e) (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses. For avoidance of doubt, amounts distributed to FML Holdings pursuant to Section 6.04(h) shall not reduce Consolidated Net Income.
“ Consolidated Total Debt ” means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of the U.S. Borrower and its Subsidiaries (or, if higher, the par value or stated face amount of all such Indebtedness (other than zero coupon Indebtedness) determined on a consolidated basis in accordance with GAAP.
“ Consolidated Working Capital ” means, as at any date of determination, the excess of Consolidated Current Assets of the U.S. Borrower and its Subsidiaries over Consolidated Current Liabilities of the U.S. Borrower and its Subsidiaries.
“ Consolidated Working Capital Adjustment ” means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period. In calculating the Consolidated Working Capital Adjustment there shall be excluded the effect of reclassification during such period of current assets to long term assets and current liabilities to long term liabilities and the effect of any Permitted Acquisition during such period; provided , that there shall be included with respect to any Permitted Acquisition during such period an amount (which may be a negative number) by which the Consolidated Working Capital acquired in such Permitted Acquisition as at the time of such acquisition exceeds (or is less than) Consolidated Working Capital at the end of such period.
“ Contractual Obligation ” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.
 
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“ Contributing Guarantors ” has the meaning set forth in Section 7.02.
“ Control Agreement ” means a Securities Account Control Agreement, a Deposit Account Control Agreement or a Commodities Account Control Agreement, each as defined in the Pledge and Security Agreement.
“ Conversion/Continuation Date ” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.
“ Conversion/Continuation Notice ” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2.
“ Counterpart Agreement ” means a Counterpart Agreement substantially in the form of Exhibit H delivered by a Loan Party pursuant to Section 5.10(a).
“ Covenant Triggering Event ” has the meaning set forth in Section 6.07.
“ Credit Date ” means the date of a Credit Extension.
“ Credit Extension ” means the making of a Loan or the issuing, renewal or amendment of a Letter of Credit.
“ Cure Amount ” has the meaning set forth in Section 8.02.
“ Default ” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.
“ Default Rate ” has the meaning set forth in Section 2.10.
“ Defaulting Lender ” means any Lender that has (a) failed to fund any portion of its Revolving Commitment within three (3) Business Days of the date required to be funded by it hereunder, (b) notified the Borrower Representative, the Administrative Agent, the Revolving Administrative Agent or any Lender in writing, or has otherwise indicated through a public statement, that it does not intend to comply with its funding obligations hereunder and generally under agreements in which it commits to extend credit, (c) failed, within three (3) Business Days after receipt of a written request from the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Revolving Loans, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless the subject of a good faith dispute or (e) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, examiner, liquidator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a
 
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receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment, provided that a Lender shall not qualify as a Defaulting Lender solely as a result of the acquisition or maintenance of an ownership interest in such Lender or its parent company, or of the exercise of control over such Lender or any Person controlling such Lender, by a Governmental Authority or instrumentality thereof; provided , further, that if the Borrower Representative, the Administrative Agent, the Revolving Administrative Agent, the Swing Line Lenders and the Issuing Banks agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateralization of Letters of Credit and/or Swing Line Loans), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Revolving Administrative Agent may determine to be necessary to cause the obligations of the Swing Line Lender and/or the Issuing Bank and the funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Pro Rata Shares (without giving effect to Section 2.22), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.
“ Defaulting Revolving Lender ” has the meaning set forth in Section 2.22.
“ Deposit Account ” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.
“ Disqualified Equity Interests ” means any Equity Interest which, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (i) matures or is mandatorily redeemable (other than solely for Equity Interests which are not otherwise Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise, (ii) is redeemable at the option of the holder thereof (other than solely for Equity Interests which are not otherwise Disqualified Equity Interests), in whole or in part, (iii) provides for scheduled payments or dividends in cash or (iv) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Term Loan Maturity Date, except, in the case of clauses (i) and (ii), if as a result of a change of control or asset sale, so long as any rights of the holders thereof upon the occurrence of such a change of control or asset sale event are subject to the prior Payment in Full of all Obligations.
“ Dollars ” and the sign “ $ ” mean the lawful money of the United States of America.
 
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“ Dollar Equivalent ” means, with respect to an amount denominated in Dollars, such amount, and with respect to an amount denominated in Canadian Dollars, the equivalent in Dollars of such amount determined at the Exchange Rate on the applicable Valuation Date. In making the determination of the Dollar Equivalent for purposes of determining the aggregate available Canadian Revolving Commitments or U.S. Revolving Commitments on any Credit Date, the Revolving Administrative Agent shall use the Exchange Rate in effect at the date on which the applicable Borrower requests the extension of credit for such Credit Date pursuant to the provisions of this Agreement.
“ Domestic Subsidiary ” means (i) any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia and (ii) any Subsidiary treated as a disregarded entity for U.S. federal income tax purposes which is directly owned by the U.S. Borrower, a Guarantor or a Subsidiary described in clause (i) or this clause (ii).
“ Earn Out Indebtedness ” has the meaning set forth in Section 6.01(d).
“ Eligible Assignee ” means any Person other than a natural Person that is (i) a Lender, an Affiliate of any Lender or a Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), (ii) a commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans in the ordinary course of business; provided , that no Loan Party nor any or its Subsidiaries shall be an Eligible Assignee except pursuant to Section 2.13(c) or (iii) the Sponsor, so long as the Sponsor is an “accredited investor” (as defined under Regulation D of the Securities Act).
“ Employee Benefit Plan ” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates or with respect to which Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates has or could reasonably be expected to have liability, contingent or otherwise, under ERISA.
“ Environmental Claim ” means any investigation, notice, notice of violation, claim, action, suit, litigation, cause of action, proceeding, demand, abatement order or other order, decree or directive (conditional or otherwise) by any Governmental Authority or any other Person, directly or indirectly, arising (i) pursuant to or otherwise related to any Environmental Law, (ii) in connection with any actual or alleged violation of, or liability pursuant to, any Environmental Law, including any Governmental Authorizations issued pursuant to Environmental Law, (iii) in connection with any Hazardous Material, including the generation, use, handling, transportation, storage, treatment, disposal, presence, threatened Release or Release of, or exposure to, any Hazardous Materials and any abatement, removal, remedial, corrective or other response action related to Hazardous Materials or (iv) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.
“ Environmental Laws ” means any and all current or future foreign or domestic, federal, state or local laws (including any common law), statutes, ordinances, orders, rules, regulations,
 
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judgments or any other requirements of Governmental Authorities relating to or imposing liability or standards of conduct with respect to (i) environmental matters, (ii) the generation, use, storage, transportation or disposal of, or exposure to, Hazardous Materials; or (iii) the use, operation, development, mining, closure or reclamation of any surface or underground mines or (iv) occupational and other human safety and health (with respect to exposure to Hazardous Materials), industrial hygiene, land use or the protection of natural resources, in any manner applicable to Holdings or any of its Subsidiaries or any Facility.
“ Equity Interests ” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.
“ Equity Issuance ” means any issuance or sale by, or capital contribution to, Holdings or any of its Subsidiaries of any Equity Interests of FML Holdings or any such Subsidiary, as applicable, except in each case for (a) any issuance or sale to FML Holdings or any of its Subsidiaries, (b) any issuance of directors’ qualifying shares, (c) sales or issuances of common stock of Holdings to management or employees of Holdings or any of its Subsidiary under any employee stock option, stock purchase plan, employee benefit plan or other similar arrangements in existence from time to time and (d) sales or issuances of Equity Interests of FML Holdings to any Permitted Investor, (e) issuances pursuant to the conversion of any debt securities to equity or the conversion of any class of equity securities to another class of equity securities and (f) issuances of Equity Interests as consideration for or to finance a Permitted Acquisition.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, the regulations promulgated thereunder and any successor thereto.
“ ERISA Affiliate ” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Holdings or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Holdings or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Holdings or such Subsidiary and with respect to liabilities arising after such period for which Holdings or such Subsidiary could be liable under the Internal Revenue Code or ERISA.
“ ERISA Event ” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Sections 412 or 430 of the Internal Revenue Code or Sections 302 or 303 of ERISA with respect to any Pension Plan (whether or not waived
 
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in accordance with Section 412(c) of the Internal Revenue Code or Section 302(c) of ERISA) or the failure to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) a determination that any Pension Plan is, or is expected to be, in “at risk” status (as defined in Section 430 of the Internal Revenue Code or Section 303 of ERISA); (iv) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (v) a receipt by Holdings from any Multiemployer Plan of notice that such Multiemployer Plan has been determined to be or is, or is expected to be, in “critical” or “endangered” status under Section 432 of the Internal Revenue Code or Section 305 of ERISA; (vi) the withdrawal by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Holdings, any of its Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (vii) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which is reasonably expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (viii) the imposition of liability on Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (ix) the withdrawal of Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (x) the assertion of a claim (other than routine claims for benefits) against any Employee Benefit Plan or the assets thereof other than a Multiemployer Plan or the assets thereof, or against Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (xi) receipt from the Internal Revenue Service of notice of the failure of any Employee Benefit Plan to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; (xii) the imposition of a Lien pursuant to Section 430(k) of the Internal Revenue Code or Section 303(k) of ERISA or a violation of Section 436 of the Internal Revenue Code with respect to any Pension Plan; (xiii) the failure of any foreign pension schemes sponsored or maintained by any of the Borrowers or any of their Subsidiaries to be maintained in accordance with the requirements of applicable foreign law; (xiv) the occurrence of a non-exempt “prohibited transaction” with respect to which Holdings or any of its Subsidiaries is a “disqualified person” or a “party of interest” (within the meaning of Section 4975 of the Internal Revenue Code or Section 406 of ERISA, respectively) which could reasonably be expected to result in liability in to Holdings or any of its Subsidiaries or (xv) any other event or condition with respect to an Employee Benefit Plan with respect to which Holdings or any of its Subsidiaries is likely to incur material liability other than in the ordinary course.
“ Eurodollar Rate Loan ” means a Loan bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate or, solely with respect to Loans denominated in Canadian Dollars, the CDOR Rate.
 
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“ Event of Default ” means any of the conditions or events set forth in Section 8.01.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
“ Exchange Rate ” means, as of any date of determination, the rate at which any currency (the “ Original Currency ”) may be exchanged into another currency (the “ Exchanged Currency ”), on the relevant Reuters screen at or about 11:00 a.m. (New York City time) on such date. In the event that such rate does not appear on the Reuters screen, the “Exchange Rate” with respect to such Original Currency into such Exchanged Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower Representative or, in the absence of such agreement, such “Exchange Rate” shall instead be the Administrative Agent’s spot rate of exchange in the interbank market where its foreign currency exchange operations in respect of such Original Currency are then being conducted, at or about 11:00 a.m., local time, on such date for the purchase of the Exchanged Currency, with such Original Currency for delivery two (2) Business Days later; provided , that if at the time of any such determination, no such spot rate can reasonably be quoted, the Administrative Agent may use any reasonable method as it deems applicable to determine such rate, and such determination shall be conclusive absent manifest error.
“ Excluded Accounts ” has the meaning set forth in Section 5.15.
“ Excluded Foreign Subsidiary ” means any Foreign Subsidiary in respect of which either (a) the pledge of greater than 66.0% of the voting Equity Interests of such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the Obligations is reasonably likely to, in the good faith judgment of the Borrower Representative, now or in the future, result in adverse tax consequences to Holdings and its Subsidiaries as a result of Section 956 of the Internal Revenue Code.
“ Excluded Swap Obligation ” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guaranty thereof or security interest in respect thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guaranty of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes illegal.
“ Excluded Taxes ” means, with respect to any Lender or other recipient of any payment to be made by or on account of any Obligation hereunder or under any other Loan Document, (a) income or franchise taxes imposed on (or measured by) its net income or net profits as a result of a connection between such recipient and the jurisdiction imposing such tax (or any political
 
19

subdivision thereof), other than any such connection arising from such recipient having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document, (b) any branch profits tax that is imposed by any jurisdiction described in clause (a) above, (c) any U.S. Federal withholding tax that is imposed on amounts payable to a recipient at the time the recipient becomes a party to this Agreement, except to the extent such recipient’s assignor was entitled, at the time of assignment, to receive additional amounts with respect to such tax pursuant to Section 2.20 hereof, (d) any withholding taxes attributable to a Lender’s failure (other than as a result of a Change in Law after the date on which such Lender became a party to this Agreement) to comply with Section 2.20(c) and (e) any U.S. Federal withholding taxes imposed under FATCA.
“ Existing Credit Agreement ” has the meaning set forth in the recitals hereto.
“ Existing Lenders ” means the Lenders pursuant to the Existing Credit Agreement immediately prior to the Restatement Date.
“ Existing Loan Document ” has the meaning set forth in Section 10.03.
“ Existing Mortgaged Property ” means each Material Real Estate Asset on which a Mortgage has been granted prior to the Restatement Date.
“ Existing Term Loan Lenders ” means Existing Lenders that hold Existing Term Loans.
“ Existing Term Loans ” means Tranche B Term Loans under, and as defined in, the Existing Credit Agreement.
“ Exposure ” means, with respect to any Lender, such Lender’s Tranche B-1 Term Loan Exposure, Tranche B-2 Term Loan Exposure, Revolving Exposure or Incremental Term Loan Exposure, as applicable.
“ Facility ” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Holdings or any of its Subsidiaries or any of their respective predecessors or Affiliates.
“ Fair Share ” has the meaning set forth in Section 7.02.
“ Fair Share Contribution Amount ” has the meaning set forth in Section 7.02.
“ FATCA ” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code.
“ Federal Funds Effective Rate ” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1.00%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal
 
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Reserve Bank of New York on the Business Day next succeeding such day; provided , that (i) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate charged to the Administrative Agent, in its capacity as a Lender, on such day on such transactions as determined by the Administrative Agent.
“ Financial Officer Certification ” means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer or vice president of Finance of the U.S. Borrower that such financial statements fairly present, in all material respects, the financial condition of Holdings and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.
“ Financial Plan ” has the meaning set forth in Section 5.01(h).
“ First Priority ” means, with respect to any Lien purported to be created in any Collateral pursuant to any Security Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien.
“ Fiscal Quarter ” means a fiscal quarter of any Fiscal Year.
“ Fiscal Year ” means the fiscal year of Holdings and its Subsidiaries ending on December 31 of each calendar year.
“ Flood Certificate ” means a “Standard Flood Hazard Determination Form” of the Federal Emergency Management Agency and any successor Governmental Authority performing a similar function.
“ Flood Program ” means the National Flood Insurance Program created by the U.S. Congress pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004, in each case as amended from time to time, and any successor statutes.
“ Flood Zone ” means areas having special flood hazards as described in the National Flood Insurance Act of 1968, as amended from time to time, and any successor statute.
“ FML Holdings ” means FML Holdings, Inc., a Delaware corporation.
“ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.
“ Funding Guarantors ” has the meaning set forth in Section 7.02.
“ GAAP ” means, subject to the limitations on the application thereof set forth in Section 1.02, United States generally accepted accounting principles in effect as of the date of determination thereof.
 
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“ Governmental Acts ” means any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority.
“ Governmental Authority ” means any federal, state, provincial, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity, officer or examiner exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.
“ Governmental Authorization ” means any permit, license, authorization, certification, registration, approval, plan, directive, consent order or consent decree of or from any Governmental Authority.
“ Grantor ” has the meaning specified in the Pledge and Security Agreement.
“ Guaranteed Obligations ” has the meaning set forth in Section 7.01.
“ Guarantor ” means (i) with respect to the Obligations of the U.S. Borrower, each of Holdings and each Subsidiary of Holdings (other than the U.S. Borrower, the China Joint Venture and any Excluded Foreign Subsidiary) and (ii) with respect to the Obligations of the Canadian Borrower, the U.S. Borrower and each Guarantor described in the foregoing clause (i).
“ Guaranty ” means the guaranty of each Guarantor set forth in Article VII.
“ Hazardous Materials ” means any pollutant, contaminant, chemical, waste, material or substance, which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to human health and safety or to the indoor or outdoor environment, including petroleum, petroleum products, asbestos, urea formaldehyde, radioactive materials, and polychlorinated biphenyls (“ PCBs ”).
“ Hedge Agreement ” means a Swap Contract entered into with a Lender Counterparty.
“ Highest Lawful Rate ” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.
“ Historical Financial Statements ” means (i) the audited financial statements of FML Holdings and its Subsidiaries, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows and (ii) the unaudited financial statements of FML Holdings and its Subsidiaries, consisting of a balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows, in each case delivered to the Administrative Agent prior to the Restatement Date.
“ Holdings ” has the meaning specified in the preamble hereto.
 
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“ Increased Amount Date ” has the meaning set forth in Section 2.24.
“ Increased-Cost Lenders ” has the meaning set forth in Section 2.23.
“ Incremental Revolving Commitments ” has the meaning set forth in Section 2.24.
“ Incremental Revolving Loan Lender ” has the meaning set forth in Section 2.24.
“ Incremental Revolving Loans ” has the meaning set forth in Section 2.24.
“ Incremental Term Loan Commitments ” has the meaning set forth in Section 2.24.
“ Incremental Term Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Incremental Term Loans of such Lender.
“ Incremental Term Loan Lender ” has the meaning set forth in Section 2.24.
“ Incremental Term Loan Maturity Date ” means the date on which Incremental Term Loans of a Series shall become due and payable in full hereunder, as specified in the applicable Joinder Agreement, including by acceleration or otherwise (it being understood that pursuant to Section 2.24 the applicable Incremental Term Loan Maturity Date of each Series shall be no shorter than the latest of the final maturity of the Revolving Loans and the Tranche B-2 Term Loans).
“ Incremental Term Loans ” has the meaning set forth in Section 2.24.
“ Indebtedness ” means, as applied to any Person, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of property or services, including any earn-out obligations (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business and any such obligations incurred under ERISA), which purchase price is (a) due more than six (6) months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument; (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) Disqualified Equity Interests; (viii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another that would otherwise constitute Indebtedness hereunder; (ix) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (x) any liability of such Person for an obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such
 
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obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (a) or (b) of this clause (x), the primary purpose or intent thereof is as described in clause (ix) above; and (xi) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including any Swap Contract, in each case, whether entered into for hedging or speculative purposes; provided , that in no event shall obligations under any derivative transaction be deemed “Indebtedness” for any purpose under Section 6.07 unless such obligations relate to a derivatives transaction which has been terminated. In no event will obligations in respect of Equity Interests constitute Indebtedness hereunder except as provided in clause (vii) above.
“ Indemnified Liabilities ” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), actions, judgments, suits, costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other necessary response or remedial action related to the Release or presence of any Hazardous Materials), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding or hearing commenced or threatened by any Loan Party, its Affiliates (including Subsidiaries) or any other Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect, special or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to make Credit Extensions, the syndication of the credit facilities provided for herein or the use or intended use of the proceeds thereof, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (ii) the fee letter (or subsequent letter agreements entered into by any of the Borrowers with any of the Arrangers or Bookrunners) delivered by any Agent or any Lender to any of the Borrowers with respect to the transactions contemplated by this Agreement; (iii) any Environmental Claim relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Holdings or any of its Subsidiaries; (iv) any Loan or the use of proceeds thereof; or (v) any of the Transactions.
“ Indemnified Taxes ” means all Taxes other than Excluded Taxes.
“ Indemnitee ” has the meaning set forth in Section 10.03(a).
“ Installment ” has the meaning set forth in Section 2.12.
“ Installment Date ” has the meaning set forth in Section 2.12.
 
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“ Intellectual Property ” has the meaning set forth in the Pledge and Security Agreement.
“ Intellectual Property Asset ” means, at the time of determination, any interest (fee, license or otherwise) then owned by any Loan Party in any Intellectual Property.
“ Intellectual Property Security Agreements ” has the meaning set forth in the Pledge and Security Agreement.
“ Intercompany Note ” means a promissory note substantially in the form of Exhibit L evidencing Indebtedness owed among Loan Parties and their Subsidiaries.
“ Interest Payment Date ” means with respect to (i) any Loan that is a Base Rate Loan (including any Swing Line Loan) or any Canadian Prime Rate Loan, each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the Restatement Date and the final maturity date of such Loan; and (ii) any Loan that is a Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided , that in the case of each Interest Period of longer than three (3) months “Interest Payment Date” shall also include each date that is three (3) months, or an integral multiple thereof, after the commencement of such Interest Period.
“ Interest Period ” means, in connection with a Eurodollar Rate Loan, an interest period of one-, two-, three- or six-months (or, if available to all of the Lenders, twelve months), as selected by the applicable Borrower in the applicable Borrowing Notice or Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided , that (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of a calendar month; (c) no Interest Period with respect to any portion of any Class of Term Loans shall extend beyond such Class’s applicable Stated Maturity Date; and (d) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the applicable Stated Maturity Date.
“ Interest Rate Agreement ” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is for the purpose of hedging the interest rate exposure associated with Holdings’ and its Subsidiaries’ operations and not for speculative purposes.
“ Interest Rate Determination Date ” means, with respect to any Interest Period, the date that is two (2) Business Days prior to the first day of such Interest Period.
“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended to the Restatement Date, or any successor provision of law.
 
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“ Investment ” means (i) any direct or indirect purchase or other acquisition by Holdings or any of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person (other than a Subsidiary Guarantor); (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by any Subsidiary of Holdings from any Person (other than Holdings or any Subsidiary Guarantor), of any Equity Interests of such Person; (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by Holdings or any of its Subsidiaries to any other Person (other than Holdings or any Subsidiary Guarantor), including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business and (iv) all investments consisting of any exchange traded or over the counter derivative transaction, including any Swap Contract. The amount of any Investment of the type described in clauses (i), (ii) and (iii) shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.
“ IRB Loan Agreement ” means that certain loan agreement dated September 1, 2007, by and between the Town of Red Cedar, Wisconsin and Wisconsin Industrial Sand Company, L.L.C. relating to the $10,000,000 Town of Red Cedar, Wisconsin Variable Rate Demand Industrial Development Revenue Bonds (Fairmount Minerals, Ltd. Project), Series 2007.
“ Issuance Notice ” means an Issuance Notice substantially in the form of Exhibit A-3.
“ Issuing Bank ” means PNC Bank, as Issuing Bank hereunder, and any other Lender that has notified the Administrative Agent and the Revolving Administrative Agent that it has agreed to a request by the Borrower Representative to become an Issuing Bank, together with its permitted successors and assigns in such capacity. Unless otherwise specified, in respect of any Letter of Credit, “Issuing Bank” shall refer to the Issuing Bank which has issued such Letter of Credit.
“ Joinder Agreement ” means an agreement substantially in the form of Exhibit M.
“ Joint Venture ” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided , that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.
“ Judgment Currency ” has the meaning set forth in Section 10.24.
“ KeyBank ” has the meaning specified in the preamble hereto.
“ Landlord Consent and Estoppel ” means, with respect to any Leasehold Property which is a Material Real Estate Asset, a letter, certificate or other instrument in writing from the lessor under the related lease if required pursuant to the terms of such lease, pursuant to which, among other things, the landlord consents to the granting of a Mortgage on such Leasehold Property by the Loan Party tenant, such Landlord Consent and Estoppel to be in form and substance acceptable to the Collateral Agent in its reasonable discretion, but in any event sufficient for the Collateral Agent to obtain a Title Policy with respect to such Mortgage.
 
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“ Landlord Personal Property Collateral Access Agreement ” means a Landlord Waiver and Consent Agreement substantially in the form of Exhibit K with such amendments or modifications as may be approved by the Collateral Agent.
“ Leasehold Property ” means any material leasehold interest of any Loan Party as lessee under any lease of real property.
“ Lender ” means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement or a Joinder Agreement. Unless the context clearly indicates otherwise, the term “Lenders” shall include the Swing Line Lender.
“ Lender Counterparty ” means each “Lender Counterparty” as defined in the Existing Credit Agreement and each Lender, each Agent and each of their respective Affiliates counterparty to a Swap Contract or documentation governing any Cash Management Product (including any Person who is an Agent or a Lender (and any Affiliate thereof) as of the Restatement Date but subsequently, whether before or after entering into a Swap Contract or documentation governing any Cash Management Product, ceases to be an Agent or a Lender, as the case may be).
“ Letter of Credit ” means a U.S. Letter of Credit or Canadian Letter of Credit, as applicable. Unless the context shall require, on and after the Restatement Date, Letters of Credit issued under the Existing Credit Agreement shall be deemed Letters of Credit issued hereunder.
“ Leverage Ratio ” means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four-Fiscal-Quarter period ending on such date. For the avoidance of doubt, for the purposes of determining the Leverage Ratio, “Consolidated Total Debt” shall not include Earn Out Indebtedness unless not paid when due.
“ Lien ” means (i) any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease or license in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing and (ii) in the case of Securities, any purchase option, call or similar right of a third party with respect to such Securities.
“ Loan ” means a Tranche B-1 Term Loan, a Tranche B-2 Term Loan, a Revolving Loan, a Swing Line Loan and an Incremental Term Loan.
“ Loan Document ” means any of this Agreement, the Notes, if any, the Security Documents, any documents or certificates executed by any Borrower in favor of any Issuing Bank relating to Letters of Credit, and all other documents, instruments or agreements executed and delivered by a Loan Party for the benefit of any Agent, any Issuing Bank or any Lender in connection herewith on or after the Original Closing Date, including without limitation the Amendment Agreement dated as of September 5, 2013 and any other amendment to this Agreement (other than any such document, instrument or agreements that have been terminated).
 
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“ Loan Party ” means each Borrower and each Guarantor.
“ Management Agreement ” means that certain Management Consulting Agreement, by and between FML Holdings and American Securities, LLC as in effect on the Restatement Date or as amended, supplemented or otherwise modified from time to time so long as such amendment, supplement or other modification is not, when taken as a whole, adverse to the Lenders compared to the Management Agreement in effect on the Restatement Date, it being agreed that any increase in the management fee is adverse to the Lenders.
“ Margin Stock ” as defined in Regulation U of the Board of Governors as in effect from time to time.
“ Material Adverse Effect ” means any event, change, effect, development, circumstance or condition that has caused or could reasonably be expected to cause a material adverse change, material adverse effect on and/or material adverse developments with respect to (i) the business, assets, liabilities, operations, financial condition, stockholders’ equity or results of operations of Holdings and its Subsidiaries taken as a whole; (ii) the ability of any Loan Party to fully and timely perform its Obligations; (iii) the legality, validity, binding effect or enforceability against a Loan Party of a Loan Document to which it is a party; or (iv) the rights, remedies and benefits available to, or conferred upon, any Agent and any Lender or any Secured Party under any Loan Document.
“ Material Contract ” means any contract or other arrangement to which Holdings or any of its Subsidiaries is a party (other than the Loan Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect.
“ Material Indebtedness ” means Indebtedness (other than the Loans and Letters of Credit) of any one or more of Holdings, the Borrowers or any Subsidiary in an individual principal amount (or Net Mark-to-Market Exposure) of $15,000,000 or more.
“ Material Real Estate Asset ” means (i) (a) any fee-owned Real Estate Asset having a fair market value in excess of $5,000,000 as of the date of the acquisition thereof and (b) all Leasehold Properties other than those with respect to which the aggregate payments under the term of the lease are less than $2,000,000 per annum or (ii) any Real Estate Asset that the Arrangers have determined prior to the Restatement Date is material to the business operations or the financial condition for Holdings or any Subsidiary thereof.
“ Moody’s ” means Moody’s Investor Services, Inc.
“ Mortgage ” means one or more instruments of mortgage or leasehold mortgage, in each case, substantially in the form of Exhibit J, as it may be amended, restated, supplemented or otherwise modified from time to time.
“ Mortgaged Property ” means (i) each Existing Mortgaged Property, each Restatement Date Mortgaged Property and (iii) any Material Real Estate Asset that becomes a Mortgaged Property after the Restatement Date pursuant to Section 5.11.
 
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“ Multiemployer Plan ” means a “multiemployer plan” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.
“ NAIC ” means The National Association of Insurance Commissioners, and any successor thereto.
“ Narrative Report ” means, with respect to the financial statements for which such narrative report is required, a narrative report describing the operations of Holdings and its Subsidiaries in the form prepared for presentation to senior management thereof for the applicable Fiscal Quarter or Fiscal Year.
“ Net Cash Proceeds ” means (a) with respect to any Asset Sale, an amount equal to: (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by the U.S. Borrower or any of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs incurred in connection with such Asset Sale, including (1) income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale, (2) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that, in the case of a Loan Party, is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale, (3) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by the U.S. Borrower or any of its Subsidiaries in connection with such Asset Sale or for any other liabilities retained by the U.S. Borrower or any of its Subsidiaries associated with such Asset Sale, (4) bona fide selling fees, costs, commissions and expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes) and (5) the U.S. Borrower’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 180 days of such Asset Sale; provided that, to the extent such Cash proceeds are not used to make payments in respect of such unassumed liabilities within 180 days of such Asset Sale, such Cash proceeds shall constitute Net Cash Proceeds; (b) (i) any Cash payments or proceeds received by the U.S. Borrower or any of its Subsidiaries in excess of $5,000,000 (1) under any casualty insurance policy in respect of a covered loss thereunder or (2) as a result of the taking of any assets of the U.S. Borrower or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (1) any actual and reasonable costs incurred by the U.S. Borrower or any of its Subsidiaries in connection with the collection, adjustment or settlement of any claims of the U.S. Borrower or such Subsidiary in respect thereof, and (2) any bona fide direct costs incurred in connection with any sale of such assets as referred to in preceding clause (i)(2), including income taxes paid or payable as a result of any gain recognized in connection therewith and the costs and expenses incurred in connection with the preparation of assets for transfer upon a taking or condemnation; and (c) with respect to any issuance or incurrence of Indebtedness or any Equity Issuance, the Cash proceeds thereof, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses.
 
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“ Net Mark-to-Market Exposure ” of a Person means, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from Swap Contracts or other Indebtedness of the type described in clause (xi) of the definition thereof. As used in this definition, “unrealized losses” means the fair market value of the cost to such Person of replacing such Swap Contract or such other Indebtedness as of the date of determination (assuming the Swap Contract or such other Indebtedness were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Swap Contract or such other Indebtedness as of the date of determination (assuming such Swap Contract or such other Indebtedness were to be terminated as of that date).
“ Non-Consenting Lender ” has the meaning set forth in Section 2.23.
“ Non-Public Information ” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.
“ Non-U.S. Lender ” has the meaning set forth in Section 2.20(c).
“ Note ” means a Tranche B-1 Term Note, a Tranche B-2 Term Loan Note, a Revolving Loan Note or a Swing Line Note.
“ Notice ” means a Borrowing Notice, an Issuance Notice, or a Conversion/ Continuation Notice.
“ Obligations ” means all obligations of every nature of each Loan Party, including obligations from time to time owed to Agents (including former Agents), the Arrangers, the Bookrunners, Lenders or any of them and Lender Counterparties, under any Loan Document, Hedge Agreement or Cash Management Products, whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Loan Party, would have accrued on any Obligation, whether or not a claim is allowed against such Loan Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Hedge Agreements, fees, expenses, indemnification or otherwise.
“ Obligee Guarantor ” has the meaning set forth in Section 7.07.
“ OFAC ” has the meaning specified in Section 4.24.
“ Organizational Documents ” means with respect to any Person all formation, organizational and governing documents, instruments and agreements, including (i) with respect to any corporation, its certificate or articles of incorporation or organization and its by-laws, (ii) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (iii) with respect to any general partnership, its partnership agreement and (iv) with respect to any limited liability company, its articles of organization and its operating agreement. In the event any term or condition of this Agreement or any other Loan Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.
 
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“ Original Closing Date ” means August 5, 2010.
“ Other Taxes ” means any and all present or future stamp, transfer or documentary Taxes or any other excise or property Taxes, charges or similar levies (and interest, fines, penalties and additions related thereto) arising directly or indirectly from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document, including any such Taxes directly or indirectly imposed on or with respect to any reserve, deposit, insurance or other similar requirement that, as a result of a Change in Law, applies or is otherwise related to the Loan, this Agreement or any other Loan Document.
“ Participant Register ” has the meaning set forth in Section 10.06(g)(iv).
“ PATRIOT Act ” has the meaning set forth in Section 3.01(p).
“ Payment in Full ” or “ Paid in Full ” means the payment in full of all Obligations (other than contingent obligations not yet due and payable) and cancellation, expiration or cash collateralization of all Letters of Credit (in a manner and in an amount acceptable to the applicable Issuing Bank) and termination of all Commitments to lend under this Agreement.
“ PBGC ” means the Pension Benefit Guaranty Corporation or any successor thereto.
“ Pension Plan ” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 or Section 430 of the Internal Revenue Code or Section 302 or Section 303 of ERISA.
“ Perfection Certificate ” means a certificate in form reasonably satisfactory to the Collateral Agent that provides information with respect to the personal or mixed property of each Loan Party.
“ Permitted Acquisition ” means any acquisition by the U.S. Borrower or any of its Wholly-Owned Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the Equity Interests of, or a business line or unit or a division of, any Person; provided , that:
 
 	(i)	immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;	
 
 	(ii)	all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations;	
 
 	(iii)	in the case of the acquisition of Equity Interests, all of the Equity Interests (except for any such Securities in the nature of directors’ qualifying shares required pursuant to applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary of the U.S. Borrower in connection with such acquisition shall be owned 100.0% by the U.S. Borrower, the Canadian Borrower or a Subsidiary Guarantor, and the U.S. Borrower shall have taken, or caused to be taken, as of the date such Person becomes a Subsidiary of the U.S. Borrower, each of the actions set forth in Sections 5.10 and/or 5.11, as applicable;	
 
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 	(iv)	after giving effect to such acquisition as of the last date of the Fiscal Quarter most recently ended, the U.S. Borrower and its Subsidiaries shall, pro forma for such acquisition, have a Leverage Ratio (calculated on a pro forma basis) not exceeding 4.75:1.00;	
 
 	(v)	the U.S. Borrower shall have delivered to the Administrative Agent (A) at least five (5) Business Days prior to such proposed acquisition, (i) a Compliance Certificate evidencing compliance with clause (iv) above and (ii) all other relevant financial information with respect to such acquired assets, including the aggregate consideration for such acquisition and any other information required to demonstrate compliance with clause (iv) above and (B) promptly upon request by the Administrative Agent, (i) a copy of the purchase agreement related to the proposed Permitted Acquisition (and any related documents reasonably requested by the Administrative Agent) and (ii) quarterly and annual financial statements (if available or, if unavailable, such other financial or operational information reasonably acceptable to the Administrative Agent) of the Person whose Equity Interests or assets are being acquired for the twelve-month period immediately prior to such proposed Permitted Acquisition, including any audited financial statements that are available;	
 
 	(vi)	any Person or assets or division as acquired in accordance herewith shall be in same business or lines of business in which the U.S. Borrower and/or its Subsidiaries are engaged as of the Restatement Date or similar or related businesses; and	
 
 	(vii)	the aggregate unused portion of the Revolving Commitments at such time (after giving effect to the consummation of the respective acquisition and any financing thereof) shall equal or exceed $15,000,000.	
“ Permitted Investors ” means the Sponsor and each other holder of Equity Interests of Holdings on the Restatement Date.
“ Permitted Liens ” means each of the Liens permitted pursuant to Section 6.02.
“ Permitted Refinancing ” means, with respect to any Person, any modification, refinancing, refunding, renewal or extension of any Indebtedness of such Person; provided , that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended except by an amount equal to unpaid accrued interest and premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred, in connection with such modification, refinancing, refunding, renewal or extension and by an amount equal to any existing commitments unutilized thereunder; (b) such modification, refinancing, refunding, renewal or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to
 
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Maturity of, the Indebtedness being modified, refinanced, refunded, renewed or extended (except by virtue of amortization of or prepayment of Indebtedness prior to such date of determination); (c) at the time thereof, no Default or Event of Default shall have occurred and be continuing; (d) to the extent such Indebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed or extended; (e) the original obligors in respect of such Indebtedness being modified, refinanced, refunded, renewed or extended remain the only obligors thereon; and (f) the terms and conditions of any such modification, refinancing, refunding, renewal or extension, taken as a whole, are not materially less favorable to the Lenders than the terms and conditions of the Indebtedness being modified, refinanced, refunded, renewed or extended.
“ Person ” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.
“ Platform ” has the meaning set forth in Section 5.01(m).
“ Pledge and Security Agreement ” means the U.S. Pledge and Security Agreement entered into by the U.S. Borrower and each Guarantor on the Original Closing Date, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ PNC Bank ” has the meaning specified in the preamble hereto.
“ Prime Rate ” means the rate of interest quoted in The Wall Street Journal , Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75.0% of the nation’s thirty (30) largest banks), as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Administrative Agent, the Revolving Administrative Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.
“ Principal Office ” means, for each of the Administrative Agent, the Revolving Administrative Agent, each Swing Line Lender and each Issuing Bank, such Person’s “Principal Office” as set forth on Schedule 1.01(d) , or such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to the Borrowers, the Administrative Agent, the Revolving Administrative Agent and each Lender.
“ Projections ” has the meaning set forth in Section 4.08.
“ Pro Rata Share ” means (i) with respect to all payments, computations and other matters relating to the Tranche B-1 Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche B-1 Term Loan Exposure of that Lender by (b) the aggregate Tranche B-1 Term Loan Exposure of all Lenders, (ii) with respect to all payments, computations and other matters relating to the Tranche B-2 Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche B-2 Term Loan Exposure of that Lender by (b) the aggregate Tranche B-2 Term
 
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Loan Exposure of all Lenders; (iii) with respect to all payments, computations and other matters relating to the Revolving Commitment or Revolving Loans of any Lender or any Letters of Credit issued or participations purchased therein by any Lender or any participations in any Swing Line Loans purchased by any Lender, the percentage obtained by dividing (1) (a) the U.S. Revolving Exposure of that Lender by (b) the aggregate U.S. Revolving Exposure of all Lenders or (2) with respect to Canadian Revolving Commitments, Canadian Revolving Loans or Canadian Letters of Credit, (a) the Canadian Revolving Exposure of that Lender by (b) the aggregate Canadian Revolving Exposure of all Lenders; and (iv) with respect to all payments, computations, and other matters relating to Incremental Term Loan Commitments or Incremental Term Loans of a particular Series, the percentage obtained by dividing (a) the Incremental Term Loan Exposure of that Lender with respect to that Series by (b) the aggregate Incremental Term Loan Exposure of all Lenders with respect to that Series. For all other purposes with respect to each Lender, “Pro Rata Share” means the percentage obtained by dividing (A) an amount equal to the sum of the Tranche B-1 Term Loan Exposure, the Tranche B-2 Term Loan Exposure, the Revolving Exposure and the Incremental Term Loan Exposure of that Lender, by (B) an amount equal to the sum of the aggregate Tranche B-1 Term Loan Exposure, the Tranche B-2 Term Loan Exposure, the aggregate Revolving Exposure and the aggregate Incremental Term Loan Exposure of all Lenders.
“ Qualifying IPO ” means the initial underwritten public offering of common Equity Interests of Holdings in the United States (other than a public offering pursuant to a registration statement on Form S-8) pursuant to an effective registration statement filed with the SEC in accordance with the Securities Act, that results in at least 15% of enterprise value of Net Cash Proceeds to Holdings.
“ Reaffirmation Agreement ” means the Reaffirmation Agreement, dated as of the Restatement Date, by and among the Borrowers, the Guarantors and the Collateral Agent, pursuant to which each of the Borrowers and the Guarantors acknowledged and confirmed the full force and effect of the Security Documents with respect to this Agreement and the Obligations.
“ Real Estate Asset ” means, at any time of determination, any interest (fee or leasehold) then owned by any Loan Party in any real property.
“ Record Document ” means, with respect to any Leasehold Property, (i) the lease evidencing such Leasehold Property or a memorandum thereof, executed and acknowledged by the owner of the affected real property, as lessor, or (ii) if such Leasehold Property was acquired or subleased from the holder of a Recorded Leasehold Interest, the applicable assignment or sublease document, executed and acknowledged by such holder, in each case in form sufficient to give such constructive notice upon recordation and otherwise in form reasonably satisfactory to the Collateral Agent.
“ Recorded Leasehold Interest ” means a Leasehold Property which is a Material Real Estate Asset with respect to which a Record Document has been recorded in all places necessary or desirable, in the Collateral Agent’s reasonable judgment, to give constructive notice of such Leasehold Property to third-party purchasers and encumbrances of the affected real property.
 
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“ Refunded Swing Line Loans ” has the meaning set forth in Section 2.03(b)(iv).
“ Register ” means the Revolving Commitment Register or the Term Loan Register, as applicable.
“ Regulation D ” means Regulation D of the Board of Governors, as in effect from time to time.
“ Regulation FD ” means Regulation FD as promulgated by the SEC under the Securities Act and Exchange Act.
“ Regulation U ” means Regulation U of the Board of Governors, as in effect from time to time.
“ Reimbursement Date ” has the meaning set forth in Section 2.04(d).
“ Related Fund ” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.
“ Release ” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.
“ Replacement Lender ” has the meaning set forth in Section 2.23.
“ Required Lenders ” means one or more Lenders (other than Defaulting Lenders) having or holding Tranche B-1 Term Loan Exposure, Tranche B-2 Term Loan Exposure, Incremental Term Loan Exposure and/or Revolving Exposure and representing more than 50.0% of the sum of (i) the aggregate Tranche B-1 Term Loan Exposure of all Lenders (other than Defaulting Lenders), (ii) the aggregate Tranche B-2 Term Loan Exposure of all Lenders (other than Defaulting Lenders), (iii) the aggregate Revolving Exposure of all Lenders (other than Defaulting Lenders) and (iv) the aggregate Incremental Term Loan Exposure of all Lenders (other than Defaulting Lenders).
“ Required Revolving Lenders ” means one or more Lenders having or holding Revolving Exposure representing more than 50.0% of the aggregate Revolving Exposure of all Lenders.
“ Restatement Date ” means September 6, 2013.
“ Restatement Date Certificate ” means a Restatement Date Certificate in form and substance reasonably satisfactory to the Administrative Agent.
“ Restatement Date Mortgaged Property ” has the meaning set forth in Section 5.17(b).
 
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“ Restricted Junior Payment ” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Holdings, the U.S. Borrower or any of its Subsidiaries (or any direct or indirect parent of the U.S. Borrower or Holdings) now or hereafter outstanding, except a dividend payable solely in shares of stock to the holders of that class; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Holdings or the U.S. Borrower or any of its Subsidiaries (or any direct or indirect parent thereof) now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of Holdings, the U.S. Borrower or any of its Subsidiaries (or any direct or indirect parent of the U.S. Borrower or Holdings) now or hereafter outstanding; (iv) management or similar fees payable to Sponsor or any of its Affiliates and (v) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to, any Subordinated Indebtedness.
“ Revolving Administrative Agent ” has the meaning set forth in the preamble hereto.
“ Revolving Commitment ” means a U.S. Revolving Commitment and/or Canadian Revolving Commitment, as applicable.
“ Revolving Commitment Period ” means the U.S. Revolving Commitment Period or the Canadian Revolving Commitment Period, as applicable.
“ Revolving Commitment Register ” has the meaning set forth in Section 2.07(b).
“ Revolving Commitment Termination Date ” means the U.S. Revolving Commitment Termination Date or the Canadian Revolving Commitment Termination Date, as applicable.
“ Revolving Exposure ” means, with respect to any Lender as of any date of determination, the sum of such Lender’s U.S. Revolving Exposure and Canadian Revolving Exposure.
“ Revolving Lender ” means a Lender having a Revolving Commitment.
“ Revolving Loan ” means a U.S. Revolving Loan and/or a Canadian Revolving Loan, as applicable.
“ Revolving Loan Note ” means a promissory note substantially in the form of Exhibit B-3, as it may be amended, restated, supplemented or otherwise modified from time to time.
“ S&P ” means Standard & Poor’s, a Division of The McGraw-Hill Companies, Inc.
“ SEC ” means the United States Securities and Exchange Commission and any successor Governmental Authority performing a similar function.
“ Secured Leverage Ratio ” means as of any date of determination the ratio as of such day of (a) Consolidated Total Debt as of such day that is secured by a Lien on any asset or property of Holdings or any Subsidiary to (b) Consolidated Adjusted EBITDA for the most recent four-Fiscal
 
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Quarter period for which financial statements are available. For the avoidance of doubt, for the purposes of determining the Secured Leverage Ratio, “Consolidated Total Debt” shall not include Earn Out Indebtedness unless not paid when due.
“ Secured Parties ” has the meaning set forth in the Pledge and Security Agreement.
“ Securities ” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.
“ Securities Account ” has the meaning set forth in the UCC.
“ Securities Act ” means the Securities Act of 1933, as amended from time to time, and any successor statute.
“ Security Documents ” means the Pledge and Security Agreement, the Reaffirmation Agreement, the Mortgages, the Canadian Security Documents, the Intellectual Property Security Agreements, the Landlord Personal Property Collateral Access Agreements, if any, and all other instruments, documents and agreements delivered by any Loan Party pursuant to this Agreement or any of the other Loan Documents in order to grant to the Collateral Agent, for the benefit of Secured Parties, a Lien on any assets or property of that Loan Party as security for the Obligations, including UCC financing statements and amendments thereto and filings with the U.S. Patent and Trademark Office and the U.S. Copyright Office.
“ Series ” has the meaning set forth in Section 2.24.
“ Solvency Certificate ” means a Solvency Certificate substantially in the form of Exhibit G-2.
“ Solvent ” means, with respect to any Loan Party, that as of the date of determination, both (i) (a) the sum of such Loan Party’s debt (including contingent liabilities) does not exceed the present fair saleable value of such Loan Party’s present assets, which for this purpose shall include rights of contribution in respect of obligations for which such Loan Party has provided a guarantee; (b) such Loan Party’s capital is not unreasonably small in relation to its business as contemplated on the Restatement Date and reflected in the Projections or with respect to any transaction contemplated to be undertaken after the Restatement Date; and (c) such Person has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Person is “solvent” within the meaning given that term and similar terms under the Bankruptcy Code and applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).
 
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“ Specified Representations ” means the representations and warranties set forth in Sections 4.01, 4.03, 4.04(a), 4.06, 4.17, 4.18, 4.21 and 4.24.
“ Specified Equity Contribution ” has the meaning set forth in Section 8.02.
“ Sponsor ” means American Securities LLC or any of its Affiliates (but excluding any operating portfolio companies of the foregoing).
“ Sponsor Affiliated Lender ” means the Sponsor in its capacity as Lender hereunder.
“ Stated Maturity Date ” means with respect to the Tranche B-1 Term Loans, March 15, 2017, with respect to the Tranche B-2 Term Loans, September 5, 2019, with respect to the Revolving Loans, September 5, 2018, and with respect to any Incremental Term Loans, the date specified in the applicable Joinder Agreement.
“ Subordinated Indebtedness ” means any Indebtedness that by its terms is subordinated in right of payment to any of the Obligations.
“ Subsidiary ” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50.0% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided , that in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding.
“ Subsidiary Guarantor ” means each Guarantor other than Holdings.
“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master
 
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Agreement, in each case for the purpose of hedging the foreign currency, interest rate or commodity risk associated with Holdings’ and its Subsidiaries’ operations and not for speculative purposes.
“ Swap Obligation ” means, with respect to any Guarantor, any obligation to pay or perform under any Swap Contract that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“ Swing Line Lender ” means Barclays Bank, in its capacity as the Swing Line Lender hereunder, together with its permitted successors and assigns in such capacity.
“ Swing Line Loan ” means a Loan made by the Swing Line Lender to the U.S. Borrower pursuant to Section 2.03.
“ Swing Line Note ” means a promissory note substantially in the form of Exhibit B-4, as it may be amended, restated, supplemented or otherwise modified from time to time.
“ Swing Line Sublimit ” means the lesser of (i) $40,000,000 and (ii) the aggregate unused amount of U.S. Revolving Commitments then in effect.
“ Syndication Agent ” has the meaning set forth in the preamble hereto.
“ Target Material Adverse Effect ” means any effect, event, transaction, condition, development, occurrence or change that, individually or in the aggregate, (i) materially impairs, or would reasonably be expected to materially impair, the ability of the Sellers to consummate the transactions contemplated by the Acquisition Agreement or (ii) has, or would be reasonably likely to have, a material adverse change on the business, assets, results of operations or financial condition of the Business (as defined in the Acquisition Agreement); provided that, none of the following shall constitute or be taken into account in determining whether there has been a Target Material Adverse Effect: (1) changes in general economic or political conditions, or in the securities, credit or financial markets, except to the extent there is a disproportionate impact on the Business taken as whole relative to other persons and entities in the industry in which the Business operates; (2) changes in the conditions generally affecting the industry in which the Business operates, except to the extent there is a disproportionate effect on the Business taken as a whole relative to other persons and entities in the industry in which the Business operates; (3) natural disasters; (4) changes resulting from acts of war or terrorism, except to the extent there is a disproportionate impact on the Business taken as a whole relative to other persons and entities in the industry in which the Business operates; (5) the effect of any changes in United States generally accepted accounting principles; (6) the effect of any action taken by Buyer or its Affiliates (as such terms are defined in the Acquisition Agreement) other than in accordance with the Acquisition Agreement (but solely in the case of this clause (6) if taken with the consent of the Joint Lead Arrangers and the Bookrunners); and (7) any effect or change resulting from public announcement of the Acquisition Agreement or the transactions contemplated thereby.
“ Tax ” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding (and interest, fines, penalties and additions related thereto) of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed.
 
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“ Technology Acquisition ” shall mean the acquisition of all of the equity interests of any Technology Entity.
“ Technology Acquisition Claw-Back ” shall mean any right of the seller of any Technology Entity to repurchase all or a portion of the equity interests in a Technology Entity if certain “earn-out” thresholds with respect to the underlying Technology Acquisition have not been met.
“ Technology Entity ” shall mean any entity acquired by any Loan Party the material assets of which consist of Intellectual Property and which at the time of such acquisition generated no cash flow (positive or negative).
“ Term Lender ” has the meaning set forth in Section 2.13(c)(i).
“ Term Loan ” means a Tranche B-1 Term Loan, a Tranche B-2 Term Loan and an Incremental Term Loan.
“ Term Loan Commitment ” means the Tranche B-1 Term Loan Commitment, the Tranche B-2 Term Loan Commitment or the Incremental Term Loan Commitment of a Lender, and “ Term Loan Commitments ” means such commitments of all Lenders.
“ Term Loan Maturity Date ” means the Tranche B-1 Term Loan Maturity Date, Tranche B-2 Term Loan Maturity Date and, if such Incremental Term Loans constitute a separate Series of Loans, the Incremental Term Loan Maturity Date of such Series of Incremental Term Loans.
“ Term Loan Register ” has the meaning set forth in Section 2.07(b).
“ Terminated Lender ” has the meaning set forth in Section 2.23.
“ Title Company ” has the meaning set forth in Section 5.11(b)(3).
“ Title Policy ” has the meaning set forth in Section 5.11(b)(3).
“ Total Utilization of Canadian Revolving Commitments ” means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Canadian Revolving Loans (other than Revolving Loans made for the purposes of reimbursing an Issuing Bank for any amount drawn under any Letter of Credit, but not yet so applied) and (ii) the Canadian Letter of Credit Usage.
“ Total Utilization of U.S. Revolving Commitments ” means, as at any date of determination, the Dollar Equivalent of the sum of (i) the aggregate principal amount of all outstanding U.S. Revolving Loans (other than U.S. Revolving Loans made for the purposes of repaying any Refunded Swing Line Loans or reimbursing the applicable Issuing Bank for any amount drawn under any U.S. Letter of Credit, but not yet so applied), (ii) the aggregate principal amount of all outstanding Swing Line Loans and (iii) the U.S. Letter of Credit Usage.
“ Tranche B-1 Term Loan ” means a Tranche B-1 Term Loan made by a Lender to the U.S. Borrower pursuant to Section 2.01(a)(i).
 
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“ Tranche B-1 Term Loan Commitment ” means the commitment of a Lender to make or otherwise fund a Tranche B-1 Term Loan and “Tranche B-1 Term Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Tranche B-1 Term Loan Commitment, if any, is set forth on Schedule 1.01(a) or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Tranche B-1 Term Loan Commitments as of the Restatement Date is $325,000,000.
“ Tranche B-1 Term Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Tranche B-1 Term Loans of such Lender; provided , that at any time prior to the making of the Tranche B-1 Term Loans the Tranche B-1 Term Loan Exposure of any Lender shall be equal to such Lender’s Tranche B-1 Term Loan Commitment.
“ Tranche B-1 Term Loan Maturity Date ” means the earlier of (i) the Stated Maturity Date for the Tranche B-1 Term Loans and (ii) the date on which all Tranche B-1 Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.
“ Tranche B-1 Term Loan Note ” means a promissory note substantially in the form of Exhibit B-1, as it may be amended, restated, supplemented or otherwise modified from time to time.
“ Tranche B-2 Term Loan ” means a Tranche B-2 Term Loan made by a Lender to the U.S. Borrower pursuant to Section 2.01(a)(ii).
“ Tranche B-2 Term Loan Commitment ” means the commitment of a Lender to make or otherwise fund a Tranche B-2 Term Loan and “Tranche B-2 Term Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Tranche B-2 Term Loan Commitment, if any, is set forth on Schedule 1.01(b) or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Tranche B-2 Term Loan Commitments as of the Restatement Date is $885,000,000.
“ Tranche B-2 Term Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Tranche B-2 Term Loans of such Lender; provided , that at any time prior to the making of the Tranche B-2 Term Loans the Tranche B-2 Term Loan Exposure of any Lender shall be equal to such Lender’s Tranche B-2 Term Loan Commitment.
“ Tranche B-2 Term Loan Maturity Date ” means the earlier of (i) the Stated Maturity Date for the Tranche B-2 Term Loans and (ii) the date on which all Tranche B-2 Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.
“ Tranche B-2 Term Loan Note ” means a promissory note substantially in the form of Exhibit B-2, as it may be amended, restated, supplemented or otherwise modified from time to time.
 
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“ Transactions ” means (i) the Borrowing of the Tranche B-1 Term Loans hereunder on the Restatement Date, (ii) the Borrowing of the Tranche B-2 Term Loans hereunder on the Restatement Date, (iii) the repayment (including by cash-less roll) of all Existing Term Loans (including all outstanding Tranche B Term Loans (as defined in the Existing Credit Agreement)), (iv) the Acquisition and the payment of consideration in connection with the Acquisition, (v) the repayment and termination of the Revolving Commitments (as defined in and under the Existing Credit Agreement) and the establishment of the Revolving Commitments hereunder and any drawings of such Revolving Commitments on the Restatement Date and (vi) the payment of fees, commissions, costs and expenses incurred in by the Loan Parties in connection with the foregoing.
“ Transaction Costs ” means the fees, costs and expenses payable by Holdings, any Borrower or any of the Borrowers’ respective Subsidiaries on or before the Restatement Date in connection with the transactions contemplated by the Loan Documents and the Acquisition Documents.
“ Type of Loan ” means (i) with respect to either Term Loans or Revolving Loans, a Base Rate Loan, Canadian Prime Rate Loan or a Eurodollar Rate Loan and (ii) with respect to Swing Line Loans, a Base Rate Loan.
“ UCC ” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.
“ U.S. Borrower ” has the meaning specified in the preamble hereto.
“ U.S. Issuing Bank ” means an Issuing Bank that has agreed to issue U.S. Letters of Credit.
“ U.S. Lender ” has the meaning set forth in Section 2.20(c).
“ U.S. Letter of Credit ” means any commercial or standby letter of credit issued or to be issued by an Issuing Bank for the account of the U.S. Borrower or any of its Subsidiaries pursuant to Section 2.04(a)(i) of this Agreement.
“ U.S. Letter of Credit Sublimit ” means the lesser of (i) $45,000,000 and (ii) the aggregate unused amount of the U.S. Revolving Commitments then in effect.
“ U.S. Letter of Credit Usage ” means, as at any date of determination, the sum of (i) the Dollar Equivalent of the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all U.S. Letters of Credit then outstanding, and (ii) the Dollar Equivalent of the aggregate amount of all drawings under U.S. Letters of Credit honored by an Issuing Bank and not theretofore reimbursed by or on behalf of the U.S. Borrower.
“ U.S. Revolving Commitment ” means the commitment of a Lender to make or otherwise fund any U.S. Revolving Loan and to acquire participations in U.S. Letters of Credit and Swing Line Loans hereunder and “U.S. Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s U.S. Revolving Commitment, if any, is set forth on Schedule 1.01(c) or in the applicable Assignment Agreement or Joinder Agreement,
 
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as applicable, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the U.S. Revolving Commitments as of the Restatement Date is $74,000,000.
“ U.S. Revolving Commitment Period ” means the period from the Restatement Date to but excluding the U.S. Revolving Commitment Termination Date
“ U.S. Revolving Commitment Termination Date ” means the earliest to occur of (i) the fifth anniversary of the Restatement Date, (ii) the date the U.S. Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14 and (iii) the date of the termination of the U.S. Revolving Commitments pursuant to Section 8.01.
“ U.S. Revolving Exposure ” means, with respect to any Lender as of any date of determination, (i) prior to the termination of the U.S. Revolving Commitments, that Lender’s U.S. Revolving Commitment; and (ii) after the termination of the U.S. Revolving Commitments, the sum of (a) the aggregate outstanding principal amount of the U.S. Revolving Loans of that Lender, (b) in the case of an Issuing Bank, the aggregate U.S. Letter of Credit Usage in respect of all U.S. Letters of Credit issued by such Issuing Bank (net of any participations by Lenders in such U.S. Letters of Credit), (c) the Dollar Equivalent of the aggregate amount of all participations by that Lender in any outstanding U.S. Letters of Credit or any unreimbursed drawing under any U.S. Letter of Credit, (d) in the case of the Swing Line Lender, the aggregate outstanding principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and (e) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line Loans.
“ U.S. Revolving Loan ” means Loans made by a Lender in respect of its U.S. Revolving Commitment to the U.S. Borrower pursuant to Section 2.02(a)(i) and/or Section 2.24.
“ Valuation Date ” means (i) the date two (2) Business Days prior to the making, continuing or converting of any Loan or the date of issuance or continuation of any Letter of Credit , (ii) with respect to each U.S. Letter of Credit denominated in Canadian Dollars, the date on which any draft presented under such U.S. Letter of Credit is paid by the Issuing Bank and (iii) any other date designated by the Administrative Agent, the Revolving Administrative Agent or the applicable Issuing Bank.
“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness.
“ Wells Fargo Securities ” has the meaning specified in the preamble hereto.
“ Wholly-Owned Subsidiary ” means, with respect to any Person, any other Person all of the Equity Interests of which (other than (x) directors’ qualifying shares and (y) shares issued to foreign nationals to the extent required by applicable law) are owned by such Person directly and/or through other wholly-owned Subsidiaries of such Person.
 
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“ Wholly-Owned Subsidiary Guarantor ” means any Subsidiary Guarantor that is a Wholly-Owned Subsidiary of the U.S. Borrower.
Section 1.02 Accounting Terms . Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Holdings to Lenders pursuant to Section 5.01(a), 5.01(b) and 5.01(c) shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.01(e), if applicable). Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements; provided that if a change in GAAP would materially change the calculation of the financial covenant, standards or terms of this Agreement, (i) the Borrower Representative shall provide prompt notice of such change to the Administrative Agent and (ii) the Borrower Representative or the Administrative Agent may request that such calculations continue to be made in accordance with GAAP without giving effect to such change (in which case the Borrower Representative, the Administrative Agent and the Lenders agree to negotiate in good faith to amend the provisions hereof to eliminate the effect of such change in GAAP, but until such amendment is entered into, the calculations shall be made in accordance with those used to prepare the Historical Financial Statements of the U.S. Borrower without giving effect to such change).
Section 1.03 Interpretation, Etc. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Article, Section, Schedule or Exhibit shall be to an Article, a Section, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. The terms lease and license shall include sub-lease and sub-license, as applicable. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Except as otherwise expressly provided herein or therein, any reference in this Agreement or any other Loan Document to any agreement, document or instrument shall mean such agreement, document or instrument as amended, restated, supplemented or otherwise modified from time to time, in each case, in accordance with the express terms of this Agreement or such Loan Document.
 
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ARTICLE II.
LOANS AND LETTERS OF CREDIT
Section 2.01 Term Loans . (a) Subject to the terms and conditions hereof,
(i) each Lender severally agrees to make, on the Restatement Date, a Tranche B-1 Term Loan to the U.S. Borrower in an amount equal to such Lender’s Tranche B-1 Term Loan Commitment, and
(ii) each Lender severally agrees to make, on the Restatement Date, a Tranche B-2 Term Loan to the U.S. Borrower in an amount equal to such Lender’s Tranche B-2 Term Loan Commitment.
The U.S. Borrower may make only one borrowing under each of the Tranche B-1 Term Loan Commitment and Tranche B-2 Term Loan Commitment, which shall be on the Restatement Date. Any amount borrowed under this Section 2.01(a) and subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.13(a) and 2.14, all amounts owed hereunder with respect to the Tranche B-1 Term Loans and Tranche B-2 Term Loans shall be paid in full no later than the Tranche B-1 Term Loan Maturity Date and the Tranche B-2 Term Loan Maturity Date, respectively. Each Lender’s Tranche B-1 Term Loan Commitment and Tranche B-2 Term Loan Commitment shall terminate immediately and without further action on the Restatement Date after giving effect to the funding of such Tranche B-1 Term Loan Commitment and Tranche B-2 Term Loan Commitment on such date.
(b) Borrowing Mechanics for Term Loans . Upon satisfaction or waiver of the conditions precedent specified herein, each Lender with a Tranche B-1 Term Loan Commitment or Tranche B-2 Term Loan Commitment shall make its Tranche B-1 Term Loan or Tranche B-2 Term Loan, as the case may be, available to the Administrative Agent not later than 12:00 p.m. (New York City time) on the Restatement Date, by wire transfer of same day funds in Dollars, at the Principal Office designated by the Administrative Agent. The Administrative Agent shall make the proceeds of the Tranche B-1 Term Loans and Tranche B-2 Term Loans available to the U.S. Borrower on the Restatement Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by the Administrative Agent from Lenders to be credited to the account of the U.S. Borrower at the Principal Office designated by the Administrative Agent or to such other account as may be designated in writing to the Administrative Agent by the U.S. Borrower.
Section 2.02 Revolving Loans .
(a) Revolving Commitments .
(i) U.S. Revolving Commitments . During the U.S. Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Revolving Loans to the U.S. Borrower in an aggregate amount up to but not exceeding such Lender’s U.S. Revolving Commitment; provided , that after giving effect to the making of any Revolving Loans in no event shall the Total Utilization of U.S. Revolving Commitments exceed the U.S. Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.02(a)(i) may be repaid and reborrowed during the
 
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U.S. Revolving Commitment Period. Each Lender’s U.S. Revolving Commitment shall expire on the U.S. Revolving Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the U.S. Revolving Loans and the U.S. Revolving Commitments shall be paid in full no later than such date.
(ii) Canadian Revolving Commitments . During the Canadian Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Canadian Revolving Loans to the Canadian Borrower in an aggregate amount up to but not exceeding such Lender’s Canadian Revolving Commitment; provided , that after giving effect to the making of any Canadian Revolving Loans in no event shall the Total Utilization of Canadian Revolving Commitments exceed the Canadian Revolving Commitments then in effect. Loans in respect of the Canadian Revolving Commitments may be drawn in Dollars or Canadian Dollars. Amounts borrowed pursuant to this Section 2.02(a)(ii) may be repaid and reborrowed during the applicable Revolving Commitment Period. Each Lender’s Canadian Revolving Commitments shall expire on the Canadian Revolving Commitment Termination Date and all Canadian Revolving Loans and all other amounts owed hereunder with respect to the Canadian Revolving Loans and the Canadian Revolving Commitments shall be paid in full no later than such date.
(b) Borrowing Mechanics for Revolving Loans .
(i) Except pursuant to 2.04(d), U.S. Revolving Loans that are Base Rate Loans shall be made in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount, U.S. Revolving Loans that are Eurodollar Rate Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of that amount. Canadian Revolving Loans that are Base Rate Loans or Canadian Prime Rate Loans shall be made in a minimum amount of C$100,000 (or $100,000, in the case of Canadian Revolving Loans in Dollars) and integral multiples of C$50,000 (or $50,000, in the case of Canadian Revolving Loans in Dollars) in excess of that amount.
(ii) Whenever a Borrower desires that Lenders make Revolving Loans to it, such Borrower (or Borrower Representative) shall deliver to the Revolving Administrative Agent a fully executed Borrowing Notice no later than 10:00 a.m. (New York City time) (x) at least three (3) Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate Loan, (y) on the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan or (z) at least one (1) Business Days in advance of the proposed Credit Date in the case of a Canadian Prime Rate Loan. Except as otherwise provided herein, a Borrowing Notice for a Revolving Loan that is a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and the applicable Borrower shall be bound to make a borrowing in accordance therewith.
(iii) Notice of receipt of each Borrowing Notice in respect of Revolving Loans, together with the amount of each Lender’s Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by the Revolving Administrative Agent to
 
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each applicable Lender by telefacsimile with reasonable promptness, but (provided the Revolving Administrative Agent shall have received such notice by 10:00 a.m. (New York City time)) not later than 12:00 p.m. (New York City time) on the same day as the Revolving Administrative Agent’s receipt of such Borrowing Notice from the applicable Borrower (or the Borrower Representative).
(iv) Each Lender shall make the amount of its Revolving Loan available to the Revolving Administrative Agent not later than 2:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars (or, with regard to Revolving Loans denominated in Canadian Dollars, Canadian Dollars), at the applicable Principal Office designated by the Revolving Administrative Agent. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, the Revolving Administrative Agent shall make the proceeds of such Revolving Loans available to the applicable Borrower on the applicable Credit Date by causing an amount of same day funds in Dollars (or, with regard to Revolving Loans denominated in Canadian Dollars, Canadian Dollars) equal to the proceeds of all such Revolving Loans received by the Revolving Administrative Agent from Lenders to be credited to the account of applicable Borrower at the Principal Office designated by Revolving Administrative Agent or such other account as may be designated in writing to the Revolving Administrative Agent by the applicable Borrower.
Section 2.03 Swing Line Loans .
(a) Swing Line Loans Commitments . During the U.S. Revolving Commitment Period, subject to the terms and conditions hereof, the Swing Line Lender hereby agrees to make Swing Line Loans to the U.S. Borrower in Dollars in the aggregate amount up to but not exceeding the Swing Line Sublimit; provided , that after giving effect to the making of any Swing Line Loan, in no event shall the Total Utilization of U.S. Revolving Commitments exceed the U.S. Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.03(a) may be repaid and reborrowed during the U.S. Revolving Commitment Period. The Swing Line Lender’s U.S. Revolving Commitment shall expire on the U.S. Revolving Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder with respect to the Swing Line Loans shall be paid in full on the U.S. Revolving Commitment Termination Date.
(b) Borrowing Mechanics for Swing Line Loans .
(i) Swing Line Loans shall be made in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount.
(ii) Whenever the U.S. Borrower desires that the Swing Line Lender make a Swing Line Loan, the U.S. Borrower shall deliver to the Revolving Administrative Agent a Borrowing Notice no later than 12:00 p.m. (New York City time) on the proposed Credit Date.
(iii) The Swing Line Lender shall make the amount of its Swing Line Loan available to the Revolving Administrative Agent not later than 2:00 p.m.(New York City
 
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time) on the applicable Credit Date by wire transfer of same day funds in Dollars at the Revolving Administrative Agent’s Principal Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, the Revolving Administrative Agent shall make the proceeds of such Swing Line Loans available to the U.S. Borrower promptly upon receipt from such Swing Line Lender on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Swing Line Loans received by the Revolving Administrative Agent from such Swing Line Lender to be credited to the account of the U.S. Borrower at the Revolving Administrative Agent’s applicable Principal Office, or to such other account as may be designated in writing to the Revolving Administrative Agent by the U.S. Borrower.
(iv) With respect to any Swing Line Loans which have not been voluntarily prepaid by the U.S. Borrower pursuant to Section 2.13(a) or repaid pursuant to Section 2.03(a) above, the Swing Line Lender may at any time in its sole and absolute discretion, deliver to the Revolving Administrative Agent (with a copy to the Borrower Representative), no later than 11:00 a.m. (New York City time) at least one (1) Business Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a Borrowing Notice given by the Borrower Representative) requesting that with regard to any Swing Line Loan outstanding on such date, each Lender holding a U.S. Revolving Commitment make U.S. Revolving Loans that are Base Rate Loans to the U.S. Borrower on such Credit Date in an amount equal to the amount of such Swing Line Loans (the “ Refunded Swing Line Loans ”) in order to repay such outstanding Swing Line Loans. Anything contained in this Agreement to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the Lenders other than the Swing Line Lender shall be immediately delivered by the Revolving Administrative Agent to the Swing Line Lender (and not to any Borrower) and applied to repay a corresponding portion of the applicable Refunded Swing Line Loans and (2) on the day such Revolving Loans are made, the Swing Line Lender’s Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by the Swing Line Lender to the U.S. Borrower, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note of the Swing Line Lender but shall instead constitute part of the Swing Line Lender’s outstanding Revolving Loans to the U.S. Borrower and shall be due under the applicable Revolving Loan Note issued by the U.S. Borrower to the Swing Line Lender. If any portion of any such amount paid (or deemed to be paid) to the Swing Line Lender should be recovered by or on behalf of the U.S. Borrower from the Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be ratably shared among all Lenders in the manner contemplated by Section 2.17.
(v) If for any reason Revolving Loans are not made pursuant to Section 2.03(b)(iv) in an amount sufficient to repay any amounts owed to the Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after demand for payment thereof by the Swing Line Lender, each Lender holding a U.S. Revolving Commitment shall be deemed to, and hereby agrees to, have purchased a participation in any outstanding Swing Line Loans in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon. Upon one
 
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(1) Business Day’s notice from the Swing Line Lender, each Lender holding a U.S. Revolving Commitment shall deliver to such Swing Line Lender an amount equal to its respective participation in the applicable unpaid amount in same day funds at the Principal Office of such Swing Line Lender. In order to evidence such participation each Lender holding such a Revolving Commitment agrees to enter into a participation agreement at the request of the Swing Line Lender in form and substance reasonably satisfactory to the applicable Line Lender. In the event any Lender holding such a Revolving Commitment fails to make available to the Swing Line Lender the amount of such Lender’s participation as provided in this paragraph, such Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon for three (3) Business Days at the rate customarily used by such Swing Line Lender for the correction of errors among banks and thereafter at the Base Rate.
(vi) Notwithstanding anything contained herein to the contrary, (1) each Lender’s obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to Section 2.03(b)(iv) and each Lender’s obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, any Loan Party or any other Person for any reason whatsoever; (B) the occurrence or continuation of a Default or Event of Default; (C) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Party; (D) any breach of this Agreement or any other Loan Document by any party thereto; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided , that such obligations of each Lender are subject to the condition that the Swing Line Lender had not received prior notice from the U.S. Borrower or the Required Lenders that any of the conditions under Section 3.02 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans were not satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made; and (2) the Swing Line Lender shall not be obligated to make any Swing Line Loans (A) if it has elected not to do so after the occurrence and during the continuation of a Default or Event of Default, (B) it does not in good faith believe that all conditions under Section 3.02 to the making of such Swing Line Loan have been satisfied or waived by the Required Lenders or (C) at a time when any Lender is a Defaulting Revolving Lender, unless such Swing Line Lender has entered into arrangements satisfactory to it and the Borrower Representative to eliminate such Swing Line Lender’s risk with respect to the Defaulting Revolving Lender’s participation in such Swing Ling Loan, including by the U.S. Borrower cash collateralizing such Defaulting Revolving Lender’s Pro Rata Share of the outstanding Swing Line Loans.
Section 2.04 Issuance of Letters of Credit and Purchase of Participations Therein .
(a) Letters of Credit . (i) During the U.S. Revolving Commitment Period, subject to the terms and conditions hereof, each U.S. Issuing Bank agrees to issue U.S. Letters of Credit for the account of any Loan Party in the aggregate amount up to but not exceeding the U.S. Letter of Credit Sublimit; provided , that (1) each U.S. Letter of Credit shall be denominated in Dollars or
 
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Canadian Dollars (provided that only up to $5,000,000 of U.S. Letters of Credit may be denominated in Canadian Dollars); (2) the stated amount of each U.S. Letter of Credit shall not be less than $250,000 (or, with respect to a U.S. Letter of Credit denominated in Canadian Dollars, C$250,000) or such lesser amount as is acceptable to the applicable Issuing Bank; (3) after giving effect to such issuance, in no event shall the Total Utilization of U.S. Revolving Commitments exceed the U.S. Revolving Commitments then in effect; (4) after giving effect to such issuance, in no event shall the U.S. Letter of Credit Usage exceed the U.S. Letter of Credit Sublimit then in effect; (5) unless otherwise agreed to by the applicable Issuing Bank, in no event shall any standby Letter of Credit have an expiration date later than the earlier of (x) the U.S. Revolving Commitment Termination Date and (y) the date which is one year from the date of issuance of such standby Letter of Credit (it being understood that if a Letter of Credit has an expiration date after the U.S. Revolving Termination Date, the obligations of the Revolving Lenders with respect to such Letter of Credit will terminate on the U.S. Revolving Termination Date; and (6) unless otherwise agreed to by the applicable Issuing Bank, in no event shall any commercial Letter of Credit (x) have an expiration date later than the earlier of (1) the U.S. Revolving Commitment Termination Date and (2) the date which is 180 days from the date of issuance of such commercial Letter of Credit or (y) be issued if such commercial Letter of Credit is otherwise unacceptable to the Issuing Bank in its reasonable discretion. Except as expressly provided in Section 2.04(d) with respect to same day reimbursement of any draft on any U.S. Letter of Credit, the amount deemed outstanding under each U.S. Letter of Credit that is denominated in Canadian Dollars at any time, and the amount of the U.S. Borrower’s reimbursement obligations under Section 2.04(d) for any amounts paid by the Issuing Bank in connection with any such U.S. Letter of Credit, shall be the Dollar Equivalent thereof, as determined on the most recent Valuation Date or, if later, the date of reimbursement pursuant to Section 2.04(d).
(ii) During the Canadian Revolving Commitment Period, subject to the terms and conditions hereof, each Canadian Issuing Bank agrees to issue Canadian Letters of Credit for the account of the Canadian Borrower or any Subsidiary thereof in the aggregate amount up to but not exceeding the Canadian Letter of Credit Sublimit; provided , that (1) each Canadian Letter of Credit shall be denominated in Dollars or Canadian Dollars; (2) the stated amount of each Canadian Letter of Credit shall not be less than $100,000 (or, with respect to a Letter of Credit denominated in Canadian Dollars, C$100,000) or such lesser amount as is acceptable to the applicable Issuing Bank; (3) after giving effect to such issuance, in no event shall the Total Utilization of Canadian Revolving Commitments exceed the Canadian Revolving Commitments then in effect; (4) after giving effect to such issuance, in no event shall the Canadian Letter of Credit Usage exceed the Canadian Letter of Credit Sublimit then in effect; (5) unless otherwise agreed to by the applicable Issuing Bank, in no event shall any standby Canadian Letter of Credit have an expiration date later than the earlier of (x) the Canadian Revolving Commitment Termination Date and (y) the date which is one year from the date of issuance of such standby Letter of Credit (it being understood that if a Letter of Credit has an expiration date after the Canadian Revolving Termination Date, the obligations of the Revolving Lenders with respect to such Letter of Credit will terminate on the Canadian Revolving Termination Date); and (6) unless otherwise agreed to by the applicable Issuing Bank, in no event shall any commercial Canadian Letter of Credit (x) have an expiration date later than the earlier of (1) the Canadian Revolving
 
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Commitment Termination Date and (2) the date which is 180 days from the date of issuance of such commercial Letter of Credit or (y) be issued if such commercial Letter of Credit is otherwise unacceptable to the Issuing Bank in its reasonable discretion.
(iii) Subject to the foregoing, each Issuing Bank may agree that a standby Letter of Credit shall automatically be extended for one or more successive periods not to exceed one year each, unless such Issuing Bank elects not to extend for any such additional period; provided , that such Issuing Bank shall not extend any such Letter of Credit if it has received written notice that an Event of Default has occurred and is continuing at the time such Issuing Bank must elect to allow such extension; provided , further , that at any time when any Lender is a Defaulting Revolving Lender, no Issuing Bank shall be required to issue, renew or extend any Letter of Credit unless such Issuing Bank has entered into arrangements satisfactory to it and the Borrower Representative to eliminate such Issuing Bank’s risk with respect to the participation in Letters of Credit of the Defaulting Revolving Lender, including by cash collateralizing such Defaulting Revolving Lender’s Pro Rata Share of the U.S. Letter of Credit Usage or the Canadian Letter of Credit Usage, as applicable.
(b) Notice of Issuance . Whenever a Borrower desires the issuance of a Letter of Credit, it shall deliver to the Revolving Administrative Agent an Issuance Notice (together with a completed application for Letter of Credit in such form as the applicable Issuing Bank may specify) no later than 12:00 p.m. (New York City time) at least three (3) Business Days (in the case of standby Letters of Credit) or five (5) Business Days (in the case of commercial Letters of Credit), or in each case such shorter period as may be agreed to by the applicable Issuing Bank in any particular instance, in advance of the proposed date of issuance. Upon satisfaction or waiver of the conditions set forth in Section 3.02, the applicable Issuing Bank shall issue the requested Letter of Credit only in accordance with such Issuing Bank’s standard operating procedures. Upon the issuance of any Letter of Credit or amendment or modification to a Letter of Credit, the applicable Issuing Bank shall promptly notify the Administrative Agent, the Revolving Administrative Agent and each Lender with an applicable Revolving Commitment of such issuance, amendment or modification which notice shall be accompanied by a copy of such Letter of Credit or amendment or modification to a Letter of Credit and the amount of such Lender’s respective participation in such Letter of Credit pursuant to Section 2.04(e).
(c) Responsibility of the Issuing Bank With Respect to Requests for Drawings and Payments . In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, the applicable Issuing Bank shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. As between any Borrower and the applicable Issuing Bank, the applicable Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by the applicable Issuing Bank by, the respective beneficiaries of such Letters of Credit; provided that this assumption is not intended to, and shall not, preclude the applicable Borrower pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. In furtherance and not in limitation of the foregoing, the applicable Issuing Bank shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and
 
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issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Issuing Bank, including any Governmental Acts; none of the above shall affect or impair, or prevent the vesting of, any of the Issuing Bank’s rights or powers hereunder. Without limiting the foregoing and in furtherance thereof, no action taken or omitted by an Issuing Bank under or in connection with the Letters of Credit or any documents and certificates delivered thereunder, if taken or omitted in good faith and in the absence of gross negligence and willful misconduct (as determined by a final, non-appealable judgment of a court of competent jurisdiction), shall give rise to any liability on the part of such Issuing Bank to any Borrower.
(d) Reimbursement by the Borrowers of Amounts Drawn or Paid Under Letters of Credit . In the event an Issuing Bank has determined to honor a drawing under a Letter of Credit, it shall immediately notify the Borrower Representative, the Revolving Administrative Agent, and the Administrative Agent, and the applicable Borrower shall reimburse the Issuing Bank on or before the Business Day immediately following the date on which such drawing is honored (the “ Reimbursement Date ”) in an amount in Dollars (or Canadian Dollars, as applicable) and in same day funds equal to the amount of such honored drawing; provided that with respect to any reimbursement obligations of the U.S. Borrower arising from the presentment to the Issuing Bank of a draft under a U.S. Letter of Credit denominated in Canadian Dollars, the U.S. Borrower may make payment in Canadian Dollars only if such payment is received by the Issuing Bank on the date such draft is paid by the Issuing Bank and shall make payment thereafter in the Dollar Equivalent of such draft (as determined by the Issuing Bank on the date such draft is paid); provided , that anything contained herein to the contrary notwithstanding, (i) unless the Borrower Representative shall have notified the Revolving Administrative Agent, the Administrative Agent and the applicable Issuing Bank prior to 10:00 a.m. (New York City time) on the date such drawing is honored that the applicable Borrower intends to reimburse the Issuing Bank for the amount of such honored drawing with funds other than the proceeds of Revolving Loans, the applicable Borrower shall be deemed to have given a timely Borrowing Notice to the Revolving Administrative Agent requesting (x) with respect to any U.S. Letter of Credit, that Lenders with U.S. Revolving Commitments to make U.S. Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the Dollar Equivalent of the amount of such honored drawing or (y) with respect to any Canadian Letter of Credit, that Lenders with Canadian Revolving Commitments make Canadian Revolving Loans that are Base Rate Loans or Canadian Prime Rate Loans, as applicable, on the Reimbursement Date in an amount in Canadian Dollars equal to the amount of such honored drawing, and (ii) subject to satisfaction or waiver of the conditions specified in Section 3.02, such Lenders with Revolving Commitments shall, on the Reimbursement Date, make such Revolving Loans that are
 
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Base Rate Loans or Canadian Prime Rate Loans, as applicable, in the Dollar Equivalent amount of such honored drawing (or the Canadian Dollar amount as applicable with respect to Canadian Prime Rate Loans), the proceeds of which shall be applied directly by the Revolving Administrative Agent to reimburse the applicable Issuing Bank for the amount of such honored drawing; provided , further , that if for any reason proceeds of Revolving Loans are not received by such Issuing Bank on the Reimbursement Date in an amount equal to the amount of such honored drawing, the applicable Borrower shall reimburse such Issuing Bank, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this Section 2.04(d) shall be deemed to relieve any Lender with a Revolving Commitment from its obligation to make Revolving Loans on the terms and conditions set forth herein, and each Borrower shall retain any and all rights it may have against any such Lender resulting from the failure of such Lender to make such Revolving Loans under this Section 2.04(d).
(e) Lenders’ Purchase of Participations in Letters of Credit . Immediately upon the issuance of each U.S. Letter of Credit, each Lender having a U.S. Revolving Commitment shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from the applicable Issuing Bank a participation in such U.S. Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the U.S. Revolving Commitments) of the Dollar Equivalent of the maximum amount which is or at any time may become available to be drawn thereunder. Immediately upon the issuance of each Canadian Letter of Credit, each Lender having a Canadian Revolving Commitment shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from the applicable Issuing Bank a participation in such Canadian Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the Canadian Revolving Commitments) of the maximum amount which is or at any time may become available to be drawn thereunder. In the event that the applicable Borrower shall fail for any reason to reimburse the applicable Issuing Bank as provided in Section 2.04(d), such Issuing Bank shall promptly notify each Lender with an applicable Revolving Commitment of the unreimbursed amount of such honored drawing and of such Lender’s respective participation therein based on such Lender’s Pro Rata Share of the applicable Revolving Commitments. Each Lender with a U.S. Revolving Commitment shall make available to the applicable Issuing Bank an amount equal to its respective participation, in Dollars and in same day funds, at the office of such Issuing Bank specified in such notice, not later than 12:00 p.m. (New York City time) on the first Business Day (under the laws of the jurisdiction in which such office of the Issuing Bank is located) after the date notified by such Issuing Bank. Each Lender with a Canadian Revolving Commitment shall make available to the applicable Issuing Bank an amount equal to its respective participation, in Dollars or Canadian Dollars, as applicable, and in same day funds, at the office of such Issuing Bank specified in such notice, not later than 12:00 p.m. (New York City time) on the first Business Day (under the laws of the jurisdiction in which such office of the Issuing Bank is located) after the date notified by such Issuing Bank. In the event that any Lender with a U.S. Revolving Commitment or Canadian Revolving Commitment, as applicable, fails to make available to the applicable Issuing Bank on such Business Day the amount of such Lender’s participation in such Letter of Credit as provided in this Section 2.04(e), the applicable Issuing Bank shall be entitled to recover such amount on demand from such Lender together with interest thereon for three (3) Business Days at the rate customarily used by the applicable Issuing Bank for the correction of errors among banks and thereafter, in respect of U.S. Letters
 
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of Credit, at the Base Rate, and in respect of Canadian Letters of Credit, at the Canadian Prime Rate. In the event the applicable Issuing Bank shall have been reimbursed by other Lenders pursuant to this Section 2.04(e) for all or any portion of any drawing honored by the Issuing Bank under a Letter of Credit, the Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under this Section 2.04(e) with respect to such honored drawing such Lender’s Pro Rata Share (with respect to the applicable Revolving Commitments) of all payments subsequently received by the applicable Issuing Bank from the applicable Borrower in reimbursement of such honored drawing when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth below its name on Schedule 1.01(d) or at such other address as such Lender may request.
(f) Obligations Absolute . The obligation of each Borrower to reimburse an Issuing Bank for drawings honored under Letters of Credit issued by it and to repay any Revolving Loans made by the Lenders pursuant to Section 2.04(d) and the obligations of the Lenders under Section 2.04(e) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under all circumstances including any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which any Borrower or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), any Issuing Bank, any Lender or any other Person or, in the case of a Lender, against any Borrower, whether in connection herewith, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Borrower or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by an Issuing Bank under any Letter of Credit against presentation of a draft or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, general affairs, assets, liabilities, operations, management, condition (financial or otherwise), stockholders’ equity, results of operations or value of any Loan Party; (vi) any breach hereof or any other Loan Document by any party thereto; (vii) the fact that an Event of Default or a Default shall have occurred and be continuing; or (viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
(g) Indemnification . Without duplication of any obligation of any Borrower under Section 10.02 or 10.03, in addition to amounts payable as provided herein, each Borrower hereby agrees to protect, indemnify, pay and save harmless each applicable Issuing Bank from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which such Issuing Bank may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct of such Issuing Bank (as determined by a final, non-appealable judgment of a court of competent jurisdiction) or (2) the wrongful dishonor by such Issuing Bank of a proper demand for payment made under any Letter of Credit issued by it or (ii) the failure of such Issuing Bank to honor a drawing under any such Letter of Credit as a result of any Governmental Act.
 
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(h) Resignation and Removal of an Issuing Bank . An Issuing Bank may resign as an Issuing Bank upon 60 days prior written notice to the Administrative Agent, the Revolving Administrative Agent, the Lenders and the Borrower Representative. An Issuing Bank may be replaced at any time by written agreement among the Borrower Representative, the Administrative Agent, the Revolving Administrative Agent, the replaced Issuing Bank ( provided that no consent of the replaced Issuing Bank will be required if the replaced Issuing Bank has no Letters of Credit or reimbursement Obligations with respect thereto outstanding) and the successor Issuing Bank. The Revolving Administrative Agent shall notify the Lenders of any such replacement or resignation of such Issuing Bank. At the time any such replacement or resignation shall become effective, the applicable Borrower shall pay all unpaid fees accrued for the account of the replaced or resigned Issuing Bank. From and after the effective date of any such replacement or resignation, (i) any successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued by it thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement or resignation of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto to the extent that Letters of Credit issued by it remain outstanding and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement or resignation, but shall not be required to issue additional Letters of Credit or to renew existing Letters of Credit.
(i) Determination of Exchange Rate . On each Valuation Date with respect to each outstanding Letter of Credit denominated in Canadian Dollars, the applicable Issuing Bank shall determine the Exchange Rate as of such Valuation Date and shall promptly notify the Revolving Administrative Agent and the Borrower thereof and of the Dollar Equivalent of all such Letters of Credit issued by it outstanding on such Valuation Date. The Exchange Rate so determined shall become effective on such Valuation Date and shall remain effective until the next succeeding Valuation Date.
Section 2.05 Pro Rata Shares; Availability of Funds .
(a) Pro Rata Shares . All Loans shall be made, and all participations purchased, by the Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Term Loan Commitment or any Revolving Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby.
(b) Availability of Funds . Unless the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, the amount of such Lender’s Loan requested on such Credit Date, the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, may assume that such Lender has made such amount available to the Administrative
 
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Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, on such Credit Date and the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, may, in its sole discretion, but shall not be obligated to, make available to the applicable Borrower a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, by such Lender, the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, at the customary rate set by the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, for the correction of errors among banks for three (3) Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent’s, demand therefor, the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, shall promptly notify the applicable Borrower and the applicable Borrower shall immediately pay such corresponding amount to the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, together with interest thereon, for each day from such Credit Date until the date such amount is paid to the Administrative Agent or, if such borrowing is of Revolving Loans, the Revolving Administrative Agent, at the rate payable hereunder for Base Rate Loans for such Class of Loans. Nothing in this Section 2.05(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitment and Revolving Commitment hereunder or to prejudice any rights that any Borrower may have against any Lender as a result of any default by such Lender hereunder.
Section 2.06 Use of Proceeds . The proceeds of the Term Loans and the Revolving Loans, if any, made on the Restatement Date shall be applied by the U.S. Borrower to consummate the Transactions and for working capital and general corporate purposes. The proceeds of the Revolving Loans, Swing Line Loans and Letters of Credit made after the Restatement Date shall be applied by the U.S. Borrower and the Canadian Borrower for working capital and general corporate purposes of the Borrowers and their respective Subsidiaries, including Permitted Acquisitions. The proceeds of the Incremental Term Loans shall be applied by the U.S. Borrower for general corporate purposes, including Permitted Acquisitions. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors or any other regulation thereof or to violate the Exchange Act.
Section 2.07 Evidence of Debt; Registers; Notes .
(a) Lenders’ Evidence of Debt . Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of each Borrower to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof.
(b) Registers . The Administrative Agent (or its agent or sub-agent appointed by it) shall maintain at its Principal Office a register for the recordation of the names, addresses of, and
 
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the principal and stated interest owing to, the Lenders and the Term Loans of each Lender from time to time (the “ Term Loan Register ”). The Revolving Administrative Agent (or its agent or sub-agent appointed by it) shall maintain at its Principal Office a register for the recordation of the names, addresses of, and the principal and stated interest owing to, the Lenders and the Revolving Commitment and Revolving Loans of each Lender from time to time (the “ Revolving Commitment Register ”). The Registers shall be available for inspection by the Administrative Agent, the Borrower Representative or any Lender (but solely with respect to any entry relating to such Lender’s Loans) at any reasonable time and from time to time upon reasonable prior notice. The Administrative Agent and the Revolving Administrative Agent (as applicable) shall record, or shall cause to be recorded, in the Term Loan Register or the Revolving Commitment Register, as applicable, the Revolving Commitments and the Loans in accordance with the provisions of Section 10.06, and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on the applicable Borrower and each Lender, absent manifest error; provided , that failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitment or any Borrower’s Obligations in respect of any Loan. Each Borrower hereby designates the Administrative Agent and the Revolving Administrative Agent to serve as such Borrower’s agent solely for purposes of maintaining the Term Loan Register and the Revolving Commitment Register as the case may be, as provided in this Section 2.07, and such Borrower hereby agrees that, to the extent the Administrative Agent or the Revolving Administrative Agent serves in such capacity, the Administrative Agent and its officers, directors, employees, agents, sub-agents and affiliates shall constitute “ Indemnitees .”
(c) Notes . If so requested by any Lender by written notice to the Borrower Representative (with a copy to the Administrative Agent) at least two (2) Business Days prior to the Restatement Date, or at any time thereafter, the applicable Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.06) on the Restatement Date (or, if such notice is delivered after the Restatement Date, promptly after the Borrower Representative’s receipt of such notice) a Note or Notes to evidence such Lender’s Tranche B-1 Term Loan, Tranche B-2 Term Loan, Incremental Term Loan, Revolving Loan or Swing Line Loan, as the case may be.
Section 2.08 Interest on Loans .
(a) Except as otherwise set forth herein, each Class of Loan shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows:
(i) in the case of Term Loans and Revolving Loans:
(A) if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or
(B) if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin; or
(C) if a Canadian Prime Rate Loan, at the Canadian Prime Rate plus the Applicable Margin; and
(ii) in the case of Swing Line Loans, at the Base Rate plus the Applicable Margin for Revolving Loans.
 
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(b) The basis for determining the rate of interest with respect to any Loan (except a Swing Line Loan which can be made and maintained as a Base Rate Loan only), and the Interest Period with respect to any Eurodollar Rate Loan, shall be selected by the applicable Borrower and notified to the Administrative Agent or, if relating to Revolving Loans, the Revolving Administrative Agent pursuant to the applicable Borrowing Notice or Conversion/Continuation Notice, as the case may be; provided , that until the date on which the Arrangers notify the Borrower Representative that the primary syndication of the Loans and Revolving Commitments has been completed, as determined by the Arrangers, the Term Loans shall be maintained as Base Rate Loans. If on any day a Loan is outstanding with respect to which a Borrowing Notice or Conversion/Continuation Notice has not been delivered to the Administrative Agent (and, if applicable, the Revolving Administrative Agent) in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan, or if in Canadian Dollars, a Canadian Prime Rate Loan.
(c) In connection with (i) Term Loans that are Eurodollar Rate Loans there shall be no more than seven (7) Interest Periods outstanding at any time and (ii) Revolving Loans that are Eurodollar Rate Loans there shall be no more than three (3) Interest Periods outstanding at any time. In the event a Borrower fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable Borrowing Notice or Conversion/Continuation Notice, such Loan (if outstanding as a Dollar denominated Eurodollar Rate Loan) shall be automatically converted into a Base Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base Rate Loan shall remain as, or (if not then outstanding) shall be made as, a Base Rate Loan). In the event a Borrower fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Borrowing Notice or Conversion/Continuation Notice, such Borrower shall be deemed to have selected an Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each Interest Rate Determination Date, the Administrative Agent or, with regard to Revolving Loans, the Revolving Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to the applicable Borrower and each Lender.
(d) Interest payable pursuant to Section 2.08(a) shall be computed (i) in the case of Base Rate Loans and Canadian Prime Rate Loans on the basis of a 365-day or 366-day year, as the case may be and (ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Term Loan, the last Interest Payment Date with respect to such Term Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of such conversion, as the case may be, shall be included, and
 
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the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of such conversion, as the case may be, shall be excluded; provided , that if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.
(e) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to each such payment date; (ii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of such Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in arrears at maturity of such Loan, including final maturity of such Loan; provided , that with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date.
(f) Each Borrower agrees to pay to the applicable Issuing Bank, with respect to drawings honored under any Letter of Credit issued by it, interest on the amount paid by such Issuing Bank in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by or on behalf of the applicable Borrower at a rate equal to (i) for the period from the date such drawing is honored to but excluding the applicable Reimbursement Date, the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans (or, if such amount paid is denominated in Canadian Dollars, Canadian Prime Rate Loans) and (ii) thereafter, a rate which is 2.00% per annum in excess of the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans (or, if such amount paid is denominated in Canadian Dollars, Canadian Prime Rate Loans).
(g) Interest payable pursuant to Section 2.08(f) shall be computed on the basis of a 365/366-day year for the actual number of days elapsed in the period during which it accrues, and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. Promptly upon receipt by the applicable Issuing Bank of any payment of interest pursuant to Section 2.08(f), such Issuing Bank shall distribute to each applicable Lender, out of the interest received by such Issuing Bank in respect of the period from the date such drawing is honored to but excluding the date on which the Issuing Bank is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of any Revolving Loans), the amount that such Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period if no drawing had been honored under such Letter of Credit. In the event an Issuing Bank shall have been reimbursed by the applicable Lenders for all or any portion of such honored drawing, such Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under Section 2.04(e) with respect to such honored drawing such Lender’s Pro Rata Share of any interest received by such Issuing Bank in respect of that portion of such honored drawing so reimbursed by the applicable Lenders for the period from the date on which such Issuing Bank was so reimbursed by the applicable Lenders to but excluding the date on which such portion of such honored drawing is reimbursed by the applicable Borrower.
(h) For purposes of disclosure pursuant to the Interest Act (Canada), (i) whenever any interest under this Agreement is calculated using a rate based on a year of 360 days or 365 days,
 
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as the case may be, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate based on a year of 360 days or 365 days, as the case may be, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and (z) divided by 360 or 365, as the case may be, (ii) the principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement, and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.
Section 2.09 Conversion/Continuation .
(a) Subject to Section 2.18 and so long as no Default or Event of Default shall have occurred and then be continuing, each Borrower shall have the option:
(i) to convert at any time all or any part of any Term Loan or U.S. Revolving Loan equal to $1,000,000 (or, in the case of a conversion to a Base Rate Loan, $500,000) and integral multiples of $1,000,000 (or, in the case of a conversion to a Base Rate Loan, $100,000) in excess of that amount from one Type of Loan to another Type of Loan; provided , that a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless the U.S. Borrower shall pay all amounts due under Section 2.18 in connection with any such conversion; or
(ii) upon the expiration of any Interest Period applicable to any Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $1,000,000 and integral multiples of $1,000,000 in excess of that amount as a Eurodollar Rate Loan; or
(iii) to convert at any time all or any part of a Canadian Revolving Loan equal to CN$1,000,000 or CN$500,000 in the case of a conversion to a Canadian Prime Rate Loan and integral multiples thereof (or, in the case of conversion to a Canadian Prime Rate Loan, CN$500,000) in excess of that amount for any Type of Loan to another Type of Loan; provided , that a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless the Canadian Borrower shall pay all amounts due under Section 2.18 in connection with any such conversion.
(b) The Borrower Representative shall deliver a Conversion/Continuation Notice to the Administrative Agent (or, with regard to Revolving Loans, the Revolving Administrative Agent) no later than 10:00 a.m. (New York City time) at least one (1) Business Day in advance of the proposed conversion date (in the case of a conversion to and from a Base Rate Loan) and at least three (3) Business Days in advance of the proposed Conversion/Continuation Date (in the case of a conversion to or from, or a continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans shall be irrevocable on and after the related Interest Rate Determination Date, and the applicable Borrower shall be bound to effect a conversion or continuation in accordance therewith.
Section 2.10 Default Interest . Upon the occurrence and during the continuance of an Event of Default under Section 8.01(a), (f), (g) or (i), amounts not paid when due (which, in the
 
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case of interest payments, will be to the extent permitted by applicable law) shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate (the “ Default Rate ”) that is 2.00% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2.00% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans that are Revolving Loans); provided , that in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans, as applicable, and shall thereafter bear interest payable upon demand at a rate which is 2.00% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Administrative Agent or any Lender.
Section 2.11 Fees .
(a) The U.S. Borrower agrees to pay to Lenders (other than Defaulting Lenders) having U.S. Revolving Exposure:
(i) commitment fees equal to (1) the average of the daily difference between (a) the U.S. Revolving Commitments and (b) the Dollar Equivalent of the aggregate principal amount of (x) all outstanding U.S. Revolving Loans plus (y) the U.S. Letter of Credit Usage, times (2) the Applicable Revolving Commitment Fee Percentage; and
(ii) letter of credit fees equal to (1) the Applicable Margin for U.S. Revolving Loans that are Eurodollar Rate Loans, times (2) the Dollar Equivalent of the average aggregate daily maximum amount available to be drawn under all such U.S. Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination).
All fees referred to in this Section 2.11(a) shall be paid to the Revolving Administrative Agent at its Principal Office and upon receipt, the Revolving Administrative Agent shall promptly distribute to each Lender that has Revolving Exposure its Pro Rata Share thereof. Notwithstanding the foregoing, the amount of any commitment fees payable to the Swing Line Lender in respect of its U.S. Revolving Commitments shall be calculated to include its outstanding Swing Line Loans as usage thereunder.
(b) The Canadian Borrower agrees to pay to Lenders (other than Defaulting Lenders) having Canadian Revolving Exposure:
(i) commitment fees equal to (1) the average of the daily difference between (a) the Canadian Revolving Commitments and (b) the Dollar Equivalent of the aggregate principal amount of (x) all outstanding Canadian Revolving Loans plus (y) the Canadian Letter of Credit Usage, times (2) the Applicable Revolving Commitment Fee Percentage; and
(ii) letter of credit fees equal to (1) the Applicable Margin for Canadian Revolving Loans that are Eurodollar Rate Loans, times (2) the Dollar Equivalent of the average aggregate daily maximum amount available to be drawn under all such Canadian Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination).
 
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All fees referred to in this Section 2.11(b) shall be paid in Dollars to the Revolving Administrative Agent at its Principal Office and upon receipt, the Revolving Administrative Agent shall promptly distribute to each Lender that has Canadian Revolving Exposure its Pro Rata Share thereof.
(c) The applicable Borrower agrees to pay directly to each Issuing Bank, for its own account, the following fees:
(i) a fronting fee equal to 0.25%, per annum, times the Dollar Equivalent of the average aggregate daily maximum amount available to be drawn under all Letters of Credit issued by it (determined as of the close of business on any date of determination); and
(ii) such documentary and processing charges for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with the Issuing Bank’s standard schedule for such charges and as in effect at the time of such issuance, amendment, transfer or payment, as the case may be.
(d) All fees referred to in Section 2.11(a), 2.11(b) and 2.11(c)(i) shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year during the Revolving Commitment Period, commencing on the first such date to occur after the Restatement Date, and on the Revolving Commitment Termination Date.
(e) The U.S. Borrower agrees to pay on the Restatement Date to each Lender party to this Agreement extending Tranche B-1 Term Loans as a Lender on the Restatement Date, as compensation for the extension of such Lender’s Tranche B-1 Term Loan, a closing fee in an amount equal to 0.50% of the stated principal amount of such Lender’s Tranche B-1 Term Loans payable to such Lender on the Restatement Date. The U.S. Borrower agrees to pay on the Restatement Date to each Lender party to this Agreement extending Tranche B-2 Term Loans as a Lender on the Restatement Date, as compensation for the extension of such Lender’s Tranche B-2 Term Loan, a closing fee in an amount equal to 0.50% of the stated principal amount of such Lender’s Tranche B-2 Term Loans payable to such Lender on the Restatement Date. The U.S. Borrower agrees to pay on the Restatement Date to each Lender party to this Agreement holding a Revolving Loan Commitment as a Lender on the Restatement Date, as compensation for such Revolving Loan Commitment, a closing fee in an amount equal to 0.50% of such Lender’s Revolving Loan Commitment payable to such Lender on the Restatement Date. Such closing fees shall be in all respects fully earned, due and payable on the Restatement Date and non-refundable and non-creditable thereafter.
(f) In addition to any of the foregoing fees, each Borrower agrees to pay to Agents such other fees in the amounts and at the times separately agreed upon.
 
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Section 2.12 Scheduled Payments/Commitment Reductions . The principal amounts of the Term Loans shall be repaid in consecutive quarterly installments (each, an “ Installment ”) in the aggregate amounts set forth below on the dates set forth below (each, an “ Installment Date ”), commencing December 31, 2013:

Amortization Date	  	Tranche B-1 Term
Loan Installments	 	  	Tranche B-2 Term
Loan Installments	 	
December 31, 2013	  	$	812,500	  	  	$	2,212,500	  	
March 31, 2014	  	$	812,500	  	  	$	2,212,500	  	
June 30, 2014	  	$	812,500	  	  	$	2,212,500	  	
September 30, 2014	  	$	812,500	  	  	$	2,212,500	  	
December 31, 2014	  	$	812,500	  	  	$	2,212,500	  	
March 31, 2015	  	$	812,500	  	  	$	2,212,500	  	
June 30, 2015	  	$	812,500	  	  	$	2,212,500	  	
September 30, 2015	  	$	812,500	  	  	$	2,212,500	  	
December 31, 2015	  	$	812,500	  	  	$	2,212,500	  	
March 31, 2016	  	$	812,500	  	  	$	2,212,500	  	
June 30, 2016	  	$	812,500	  	  	$	2,212,500	  	
September 30, 2016	  	$	812,500	  	  	$	2,212,500	  	
December 31, 2016	  	$	812,500	  	  	$	2,212,500	  	
Term Loan B-1 Stated Maturity Date	  	$	314,437,500	  	  	 	N/A	  	
March 31, 2017	  	 	N/A	  	  	$	2,212,500	  	
June 30, 2017	  	 	N/A	  	  	$	2,212,500	  	
September 30, 2017	  	 	N/A	  	  	$	2,212,500	  	
December 31, 2017	  	 	N/A	  	  	$	2,212,500	  	
March 31, 2018	  	 	N/A	  	  	$	2,212,500	  	
June 30, 2018	  	 	N/A	  	  	$	2,212,500	  	
September 30, 2018	  	 	N/A	  	  	$	2,212,500	  	
December 31, 2018	  	 	N/A	  	  	$	2,212,500	  	
March 31, 2019	  	 	N/A	  	  	$	2,212,500	  	
June 30, 2019	  	 	N/A	  	  	$	2,212,500	  	
Term Loan B-2 Stated Maturity Date	  	 	N/A	  	  	$	834,112,500	  	
provided , that in the event any Incremental Term Loans are made, such Incremental Term Loans shall be repaid on each Installment Date occurring on or after the applicable Increased Amount Date as set forth in the applicable Joinder Agreement (including, if such Incremental Term Loans are documented as an increase in an existing Class of Term Loans).
Notwithstanding the foregoing, (x) such Installments shall be reduced in connection with any voluntary or mandatory prepayments of the Tranche B-1 Term Loans or the Tranche B-2 Term
 
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Loans, as the case may be, in accordance with Sections 2.13, 2.14 and 2.15, as applicable; (y) the Tranche B-1 Term Loans and the Tranche B-2 Term Loans, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the Tranche B-1 Term Loan Maturity Date and the Tranche B-2 Term Loan Maturity Date, respectively; and (z) Incremental Term Loans, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the applicable Incremental Term Loan Maturity Date.
Section 2.13 Voluntary Prepayments/Commitment Reductions .
(a) Voluntary Prepayments .
(i) Any time and from time to time (1) with respect to Base Rate Loans, the U.S. Borrower may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount and the Canadian Borrower may prepay any such Base Rate Loans on any Business Day in whole or in part in an aggregate minimum amount of $100,000 and integral multiples of $50,000 in excess of that amount; (2) with respect to Eurodollar Rate Loans, the U.S. Borrower or the Canadian Borrower may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount; (3) with respect to Swing Line Loans, the U.S. Borrower may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $100,000, and in integral multiples of $100,000 in excess of that amount; and (4) with respect to Canadian Prime Rate Loans, the Canadian Borrower may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of C$100,000 and integral multiples of C$50,000 in excess of that amount.
(ii) All such prepayments shall be made (1) upon not less than one (1) Business Day’s prior written notice in the case of Base Rate Loans or Canadian Prime Rate Loans; (2) upon not less than three (3) Business Days’ prior written notice in the case of Eurodollar Rate Loans; and (3) upon written notice on the date of prepayment, in the case of Swing Line Loans, in each case given to the Administrative Agent, the Revolving Administrative Agent or Swing Line Lender, as the case may be, by 12:00 p.m. (New York City time) on the date required (and the Administrative Agent, the Revolving Administrative Agent or Swing Line Lender, as the case may be, shall promptly transmit such original notice for Term Loans, Revolving Loans or Swing Line Loans, as the case may be, by telefacsimile or telephone to each Lender). Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in Section 2.15(a).
(b) Voluntary Commitment Reductions .
(i) Each Borrower may, upon not less than three (3) Business Days’ prior written notice confirmed in writing to the Administrative Agent and the Revolving Administrative Agent (which original written notice the Administrative Agent shall
 
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promptly transmit by telefacsimile or telephone to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Revolving Commitments in an amount up to the amount by which the Revolving Commitments exceed the Total Utilization of Revolving Commitments at the time of such proposed termination or reduction; provided , that any such partial reduction of (x) the U.S. Revolving Commitments shall be in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount and (y) the Canadian Revolving Commitments shall be in an aggregate minimum amount of $100,000 and integral multiples of $50,000 in excess of that amount.
(ii) A Borrower’s notice to the Administrative Agent and the Revolving Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Commitments shall be effective on the date specified in such Borrower’s notice and shall reduce the Revolving Commitment of each Lender proportionately to its Pro Rata Share thereof.
(c) Below-Par Purchases . Notwithstanding anything to the contrary contained in this Section 2.13 or any other provision of this Agreement and without otherwise limiting the rights in respect of prepayments of the Loans of the U.S. Borrower and its Subsidiaries or the rights of any Term Lender (as defined below) to receive payments of the Term Loans at par value, so long as no Default or Event of Default has occurred and is continuing, the U.S. Borrower may repurchase outstanding Term Loans pursuant to this Section 2.13(c) on the following basis:
(i) (i) The U.S. Borrower may make one or more offers (each, an “ Offer ”) to repurchase all or any portion of the Term Loans (such Term Loans, the “ Offer Loans ”), provided that, (A) the U.S. Borrower delivers notice of its intent to make such Offer to the Administrative Agent at least five (5) Business Days in advance of the launch of any proposed Offer, (B) upon the launch of such proposed Offer, the U.S. Borrower delivers an irrevocable notice of such Offer to the Administrative Agent (and upon receipt by the Administrative Agent of such notice, the Administrative Agent shall promptly notify each Lender holding a Term Loan (each such Lender, a “ Term Lender ”) thereof) indicating (1) the last date on which such Offer may be accepted, (2) the maximum dollar amount of such Offer and (3) the repurchase price per dollar of principal amount of such Offer Loans at which the U.S. Borrower is willing to repurchase such Offer Loans (which price shall be below par), (C) the maximum dollar amount of each Offer shall be an amount reasonably determined by the U.S. Borrower in consultation with the Administrative Agent prior to the making of any such Offer; (D) the U.S. Borrower shall hold such Offer open for a minimum period of days to be reasonably determined by the Administrative Agent and the applicable Borrower prior to the making of any such Offer; (E) a Term Lender who elects to participate in the Offer may choose to sell all or part of such Term Lender’s Offer Loans; (F) such Offer shall be made to all Term Lenders holding the Offer Loans on a pro rata basis in accordance with the respective principal amount then due and owing to the Term Lenders; provided , further that, if any Term Lender elects not to participate in the Offer, either in whole or in part, the amount of such Term Lender’s Offer Loans not being tendered shall be excluded in calculating the pro rata amount applicable to the balance of such Offer Loans and
 
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(G) such Offer shall be conducted pursuant to such procedures the Administrative Agent may establish in consultation with the U.S. Borrower (which shall be consistent with this Section 2.13(c)) and that a Lender must follow in order to have its Offer Loans repurchased, which procedures may include a requirement that the U.S. Borrower represent and warrant that it does not have any material non-public information with respect to any Loan Party (or its Subsidiaries) that could be material to a Lender’s decision to participate in such Offer;
(ii) (ii) With respect to all repurchases made by the U.S. Borrower such repurchases shall be deemed to be voluntary prepayments pursuant to this Section 2.13 in an amount equal to the aggregate principal amount of such Term Loans, provided that such repurchases shall not be subject to the provisions of paragraphs (a) and (b) of this Section 2.13 or Section 2.17;
(iii) Upon the purchase by the U.S. Borrower of any Term Loans, (A) automatically and without the necessity of any notice or any other action, all principal and accrued and unpaid interest on the Term Loans so repurchased shall be deemed to have been paid for all purposes and shall be cancelled and no longer outstanding for all purposes of this Agreement and all other Loan Documents (and in connection with any Term Loan purchased pursuant to this Section 2.13(c), the Administrative Agent is authorized to make appropriate entries in the Term Loan Register to reflect such cancellation) and (B) the U.S. Borrower will promptly advise the Administrative Agent of the total amount of Offer Loans that were repurchased from each Lender who elected to participate in the Offer;
(iv) Failure by the U.S. Borrower to make any payment to a Lender required by an agreement permitted by this Section 2.13(c) shall not constitute an Event of Default under Section 8.01(a);
(v) No proceeds of any Revolving Loans may be used to purchase any Offer Loans, and all amounts used to purchase Offer Loans shall be deemed to be a use of the Available Amount;
(vi) The amount of such repurchases (based on the face value of the Term Loans purchased thereby) shall be applied on a pro rata basis to reduce the remaining Installments on the applicable Class of Term Loans pursuant to Section 2.12; and
(vii) At the time of any purchase of Offer Loans, with respect to the U.S. Borrower and its Subsidiaries, the sum of (i) all Cash not subject to any Lien (other than Liens in favor of the Collateral Agent) and (ii) the then available Revolving Commitments shall be no less than $35,000,000 in the aggregate.
(viii) after giving effect to all Offer Loans purchased and cancelled pursuant to this Section 2.13(c), the aggregate principal amount of all Loans and Commitments then held by all Sponsor Affiliated Lenders (whether by assignment, participation, or other derivative transaction) shall not exceed 20% of the sum of (x) the aggregate unpaid principal amount of the Term Loans then outstanding and (y) the aggregate Revolving Exposure of all Lenders then outstanding.
 
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(d) Tranche B-1 Term Loan Call Protection . In the event that (i) all or any portion of the Tranche B-1 Term Loan is repriced, effectively refinanced through any amendment of the Tranche B-1 Term Loans or refinanced with the proceeds of other Indebtedness or (ii) a Term Lender is replaced as a result of the mandatory assignment of its Tranche B-1 Term Loans in the circumstances described in Section 2.23 following the failure of such Term Lender to consent to an amendment of this Agreement that would have the effect of reducing the stated rate of interest with respect to the Tranche B-1 Term Loans of such Term Lender, in each case, for any reason prior to the six month anniversary of the Restatement Date, such repricings, effective refinancings, refinancings or, solely with respect to such replaced Term Lender, mandatory assignments, will be made at 101.0% of the amount repriced, effectively refinanced, refinanced or mandatorily assigned.
(e) Tranche B-2 Term Loan Call Protection . In the event that (i) all or any portion of the Tranche B-2 Term Loan is repriced, effectively refinanced through any amendment of the Tranche B-2 Term Loans or refinanced with the proceeds of other Indebtedness or (ii) a Term Lender is replaced as a result of the mandatory assignment of its Tranche B-2 Term Loans in the circumstances described in Section 2.23 following the failure of such Term Lender to consent to an amendment of this Agreement that would have the effect of reducing the stated rate of interest with respect to the Tranche B-2 Term Loans of such Term Lender, in each case, for any reason prior to the six month anniversary of the Restatement Date, such repricings, effective refinancings, refinancings or, solely with respect to such replaced Term Lender, mandatory assignments, will be made at 101.0% of the amount repriced, effectively refinanced, refinanced or mandatorily assigned.
Section 2.14 Mandatory Prepayments/Commitment Reductions .
(a) Asset Sales . No later than the third Business Day following the date of receipt by Holdings or any of its Subsidiaries of any Net Cash Proceeds in respect of any Asset Sale, the U.S. Borrower shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to such Net Cash Proceeds; provided , that so long as no Default or Event of Default shall have occurred and be continuing at the time of the delivery of the notice described below or at the proposed time of the investment of such Net Cash Proceeds described below, the U.S. Borrower shall have the option, upon written notice to the Administrative Agent, directly or through one or more of its Subsidiaries, to invest such Net Cash Proceeds within two hundred seventy (270) days of receipt thereof in assets of the general type used in the business of the Loan Parties and their Subsidiaries ( provided that if, prior to the expiration of such two hundred seventy (270) day period, either Borrower, directly or through its respective Subsidiaries, shall have entered into a binding agreement providing for such investment on or prior to the expiration of an additional two hundred seventy (270) day period, such two hundred seventy (270) day period shall be extended to the date provided for such investment in such binding agreement).
(b) Insurance/Condemnation Proceeds . No later than the third Business Day following the date of receipt by Holdings or any of its Subsidiaries, or the Administrative Agent
 
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as loss payee, of any Net Cash Proceeds of the type described in clause (b) of the definition thereof, the U.S. Borrower shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to such Net Cash Proceeds; provided , that so long as no Default or Event of Default shall have occurred and be continuing at the time of the delivery of the notice described below or at the proposed time of the investment of such Net Cash Proceeds described below, the U.S. Borrower shall have the option, upon written notice to the Administrative Agent, directly or through one or more of its Subsidiaries to invest such Net Cash Proceeds within two hundred seventy (270) days of receipt thereof in assets of the general type used in the business of Holdings and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets thereof ( provided that if, prior to the expiration of such two hundred seventy (270) day period, either Borrower, directly or through its respective Subsidiaries, shall have entered into a binding agreement providing for such investment on or prior to the expiration of a two hundred seventy (270) day period, such two hundred seventy (270) day period shall be extended to the date provided for such investment in such binding agreement).
(c) Equity Issuances . On the date of receipt by Holdings or any of its Subsidiaries of any Net Cash Proceeds in respect of an Equity Issuance, the U.S. Borrower shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to 50% of such Net Cash Proceeds.
(d) Issuance or Incurrence of Debt . On the date of receipt by Holdings or any of its Subsidiaries of any Net Cash Proceeds from the issuance or incurrence of any Indebtedness of Holdings or any of its Subsidiaries (other than with respect to any Indebtedness permitted to be incurred pursuant to Section 6.01), the U.S. Borrower shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to 100.0% of such Net Cash Proceeds.
(e) Consolidated Excess Cash Flow . In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with the Fiscal Year ending December 31, 2014), the U.S. Borrower shall, no later than one-hundred twenty (120) days after the end of such Fiscal Year, prepay the Term Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to (i) 50% of such Consolidated Excess Cash Flow minus (ii) voluntary repayments of the Loans (excluding repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in connection with such repayments and excluding any voluntary prepayments described in Section 2.13(c)); provided , that if, as of the last day of the most recently ended Fiscal Year, the Leverage Ratio (determined for any such period by reference to the Compliance Certificate delivered pursuant to Section 5.01(c) calculating the Leverage Ratio as of the last day of such Fiscal Year) shall be less than or equal to 3.50:1.00 and greater than 2.50:1.00, the U.S. Borrower shall only be required to make the prepayments and/or reductions otherwise required hereby in an amount equal to (i) 25% of such Consolidated Excess Cash Flow minus (ii) voluntary repayments of the Loans (excluding repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in connection with such repayments and excluding any voluntary prepayments described in Section 2.13(c)); provided further that if, as of the last day of the most recently ended Fiscal Year, the Leverage Ratio (determined for any such period by reference to the Compliance
 
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Certificate delivered pursuant to Section 5.01(c) calculating the Leverage Ratio as of the last day of such Fiscal Year) shall be less than or equal to 2.50:1.00, the U.S. Borrower shall not be required to make a prepayment of such Consolidated Excess Cash Flow.
(f) Cure Amount . Promptly upon receipt by the U.S. Borrower of any Cure Amount, the U.S. Borrower shall prepay the Term Loans with such Cure Amount until paid in full.
(g) Revolving Loans, Swing Loans and Letters of Credit . Each Borrower shall from time to time prepay first , in the case of the U.S. Borrower, Swing Line Loans, second , its Revolving Loans and third cash collateralize its outstanding Letters of Credit, to the extent necessary so that the Total Utilization of U.S. Revolving Commitments shall not at any time exceed the U.S. Revolving Commitments then in effect and the Total Utilization of Canadian Revolving Commitments shall not at any time exceed the Canadian Revolving Commitments then in effect, as applicable.
(h) Prepayment Certificate . Concurrently with any prepayment of the Loans and/or reduction of the Revolving Commitments pursuant to Sections 2.14(a) through 2.14(g), the Borrower Representative shall deliver to the Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that the Borrower Representative shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, the U.S. Borrower shall promptly make an additional prepayment of the Term Loans and/or the Revolving Commitments shall be permanently reduced in an amount equal to such excess, and the Borrower Representative shall concurrently therewith deliver to the Administrative Agent a certificate of an Authorized Officer demonstrating the derivation of such excess.
Section 2.15 Application of Prepayments/Reductions .
(a) Application of Voluntary Prepayments by Type of Loans . Any prepayment of any Loan pursuant to Section 2.13(a) shall be applied as specified by or on behalf of the Borrower Representative in the applicable notice of prepayment; provided that any voluntary prepayment pursuant to this Section 2.15(a) must be applied pro rata to all Term Loans of the same Class (but may be applied to (x) any Class of Term Loans (and, for the avoidance of doubt, prepayments of the Term Loans do not have to be applied to all Classes of Term Loan) and (y) the Installments thereof, in each case as specified by the Borrower Representative); and provided further , that in the event the Borrower Representative fails to specify the Loans (including, in the case of the Term Loans, the Class) to which any such prepayment shall be applied, such prepayment shall be applied as follows:
first , to repay outstanding Swing Line Loans of the U.S. Borrower to the full extent thereof;
second , to repay outstanding Revolving Loans of such Borrower to the full extent thereof; and
third , if such prepayment is made by (or on behalf of) the U.S. Borrower, to prepay the Term Loans on a pro rata basis (in accordance with the respective outstanding
 
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principal amounts thereof); and further applied on a pro rata basis to reduce the scheduled remaining Installments of principal of the Tranche B-1 Term Loans and Tranche B-2 Term Loans and the Incremental Term Loans.
(b) Application of Mandatory Prepayments by Type of Loans . Any amount required to be paid pursuant to Sections 2.14(a) through 2.14(e) shall be applied as follows:
first , to prepay to the next four (4) scheduled Installments of the Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) and thereafter applied on a pro rata basis to the remaining scheduled Installments of principal of the Term Loans on a pro rata basis (in accordance with respective outstanding principal amounts thereby); provided that prior to the Tranche B-1 Term Loan Maturity Date the U.S. Borrower may elect to have such payments applied solely with respect to the Tranche B-1 Term Loans;
second , to prepay the Swing Line Loans to the full extent thereof and to permanently reduce the Revolving Commitments by the amount of such prepayment;
third , to prepay the Revolving Loans to the full extent thereof and to further permanently reduce the Revolving Commitments by the amount of such prepayment;
fourth , to prepay outstanding reimbursement obligations with respect to Letters of Credit and to further permanently reduce the Revolving Commitments by the amount of such prepayment;
fifth , to cash collateralize Letters of Credit and to further permanently reduce the Revolving Commitments by the amount of such cash collateralization; and
sixth , to further permanently reduce the Revolving Commitments to the full extent thereof.
(c) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate Loans . Considering each Class of Loans being prepaid separately, any prepayment thereof shall be applied first to Base Rate Loans (or, if applicable, Canadian Prime Rate Loans) to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by any Borrower pursuant to Section 2.18(c).
Section 2.16 General Provisions Regarding Payments .
(a) All payments by any Borrower of principal, interest, fees and other Obligations shall be made in Dollars (or with respect to Revolving Loans in Canadian Dollars, Canadian Dollars) in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to the Administrative Agent or, with respect to any payments related to Revolving Loans, the Revolving Administrative Agent, not later than 12:00 p.m. (New York City time) on the date due at the Principal Office designated by the Administrative Agent or, with respect to any payments related to Revolving Loans, the Revolving Administrative Agent, for the account of the applicable Lenders. For purposes of computing interest and fees, funds
 
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received by the Administrative Agent or, with respect to any payments related to Revolving Loans, the Revolving Administrative Agent, after that time on such due date shall be deemed to have been paid by the applicable Borrower on the next succeeding Business Day.
(b) All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Revolving Loans, Base Rate Loans and Canadian Prime Rate Loans) shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid, and all such payments (and, in any event, any payments in respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be applied to the payment of interest then due and payable before application to principal.
(c) The Administrative Agent (or its agent or sub-agent appointed by it) or, with respect to Revolving Loans, the Revolving Administrative Agent (or its agent or sub-agent appointed by it), shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including all fees payable with respect thereto, to the extent received by the Administrative Agent or the Revolving Administrative Agent, as applicable.
(d) Notwithstanding the foregoing provisions hereof, if any Conversion/ Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, the Administrative Agent, or the Revolving Administrative Agent, as applicable, shall give effect thereto in apportioning payments received thereafter.
(e) Subject to the provisos set forth in the definition of “ Interest Period ” as they may apply to Revolving Loans, whenever any payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and, with respect to Revolving Loans only, such extension of time shall be included in the computation of the payment of interest hereunder or of the Revolving Commitment fees hereunder.
(f) Each Borrower hereby authorizes the Administrative Agent and the Revolving Administrative Agent, as applicable, to charge the Borrowers’ respective accounts, with the Administrative Agent and the Revolving Administrative Agent, as applicable, in order to cause timely payment to be made to the Administrative Agent and the Revolving Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose).
(g) The Administrative Agent and the Revolving Administrative Agent, as applicable, shall deem any payment by or on behalf of any Borrower hereunder that is not made in same day funds prior to 12:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by the Administrative Agent or, as applicable, the Revolving Administrative Agent, until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. The Administrative Agent or, with regard to Revolving Loans, the Revolving Administrative Agent, shall give prompt telephonic notice to the Borrower Representative and each applicable Lender (confirmed in writing) if any
 
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payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.01(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the Default Rate from the date such amount was due and payable until the date such amount is paid in full.
(h) If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.01, all payments or proceeds received by Agents hereunder in respect of any of the Obligations, shall be applied in accordance with the application arrangements described in Section 9.2 of the Pledge and Security Agreement.
Section 2.17 Ratable Sharing . The Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim or cross-action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Loan Documents (collectively, the “ Aggregate Amounts Due ” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify the Administrative Agent and the Revolving Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided , that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of any Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Each Borrower expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker’s lien, set-off or counterclaim with respect to any and all monies owing by any Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. The provisions of this Section 2.17 shall not be construed to apply to (a) any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or (b) any payment obtained by any Lender as consideration for the assignment or sale of a participation in any of its Loans or other Obligations owed to it.
Section 2.18 Making or Maintaining Eurodollar Rate Loans .
(a) Inability to Determine Applicable Interest Rate . In the event that the Administrative Agent (or, with regard to Revolving Loans, the Revolving Administrative Agent)
 
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shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, the Administrative Agent (or, with regard to Revolving Loans, the Revolving Administrative Agent) shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to the Borrower Representative and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as the Administrative Agent (or, with regard to Revolving Loans, the Revolving Administrative Agent) notifies the Borrower Representative and Lenders that the circumstances giving rise to such notice no longer exist and (ii) any Borrowing Notice or Conversion/Continuation Notice given by any Borrower with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by such Borrower.
(b) Illegality or Impracticability of Eurodollar Rate Loans . In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful) or (ii) has become impracticable, as a result of contingencies occurring after the Restatement Date which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an “ Affected Lender ” and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to the Borrower Representative and the Administrative Agent and, if such Lender holds Revolving Loans, the Revolving Administrative Agent, of such determination (which notice the Administrative Agent (or, with regard to Revolving Loans, the Revolving Administrative Agent) shall promptly transmit to each other applicable Lender). If the Administrative Agent or the Revolving Administrative Agent receives a notice from (x) any Lender pursuant to clause (i) of the preceding sentence or (y) a notice from Lenders constituting the Required Lenders pursuant to clause (ii) of the preceding sentence, then (1) the obligation of the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by each Affected Lender, (2) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by any Borrower pursuant to a Borrowing Notice or a Conversion/Continuation Notice, the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Lenders’ (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender’s) obligations to maintain their respective outstanding Eurodollar Rate Loans (the “ Affected Loans ”) shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by the Borrower Representative pursuant to a Borrowing Notice or a Conversion/Continuation Notice, the Borrower Representative shall have the option, subject to the provisions of Section 2.18(c),
 
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to rescind such Borrowing Notice or Conversion/Continuation Notice as to all Lenders by giving notice (by telefacsimile) to the Administrative Agent (and, if applicable, the Revolving Administrative Agent) of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission the Administrative Agent (or, if applicable, the Revolving Administrative Agent) shall promptly transmit to each other Lender).
(c) Compensation for Breakage or Non-Commencement of Interest Periods . Each Borrower shall compensate each Lender for all reasonable losses, expenses and liabilities (including any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds but excluding loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Borrowing Notice, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice; (ii) if any prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan; or (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by the applicable Borrower or the Borrower Representative. Such Lender shall deliver to the Borrower Representative a written statement setting forth in reasonable detail any amount or amounts such Lender is entitled to receive under this Section 2.18(c), which statement shall be conclusive and binding absent manifest error. The applicable Borrower shall pay such Lender the amount shown as due on any such statement within five (5) Business Days after the Borrower Representative’s receipt of such statement.
(d) Booking of Eurodollar Rate Loans . Any Lender may make, carry or transfer Eurodollar Rate Loans at, to or for the account of any of its branch offices or the office of an Affiliate of such Lender.
(e) Assumptions Concerning Funding of Eurodollar Rate Loans . Calculation of all amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall be made as though such Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided , that each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.18 and under Section 2.19.
Section 2.19 Increased Costs; Capital Adequacy .
(a) Compensation For Increased Costs and Taxes . In the event that any Lender (which term shall include the Issuing Banks for purposes of this Section 2.19(a)) shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all
 
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parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the Restatement Date (a “ Change in Law ”), or compliance by such Lender with any guideline, request or directive issued or made after the Restatement Date by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate); or (ii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, the applicable Borrower shall within five (5) Business Days after receipt of the statement referred to in the next sentence, pay such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to the Borrower Representative (with a copy to the Administrative Agent (and, if applicable, the Revolving Administrative Agent)) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.
(b) Capital Adequacy Adjustment . In the event that any Lender (which term shall include the Issuing Banks for purposes of this Section 2.19(b)) shall have determined that a Change in Law after the Restatement Date regarding capital adequacy, liquidity requirements, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy or liquidity requirements (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, in each case, after the Restatement Date, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans or Revolving Commitment or Letters of Credit, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit, to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy or liquidity requirements), then from time to time, within five (5) Business Days after receipt by the Borrower Representative from such Lender of the statement referred to in the next sentence, the applicable Borrower shall pay to such Lender such additional amount or amounts as shall compensate such Lender or such controlling corporation on an after-tax basis
 
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for such reduction. Such Lender shall deliver to the Borrower Representative (with a copy to the Administrative Agent and, if applicable the Revolving Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.19(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.
(c) Delay in Requests . Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to the foregoing provisions of this Section 2.19 shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender or an Issuing Bank pursuant to the foregoing provisions of this Section 2.19 for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower Representative of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six (6)-month period referred to above shall be extended to include the period of retroactive effect thereof).
(d) Dodd-Frank Act . Notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, publications, orders, guidelines and directives thereunder or issued in connection therewith shall be deemed to have been adopted and gone into effect after the Restatement Date regardless of when adopted, enacted or issued.
(e) Basel III. Notwithstanding anything herein to the contrary, all requests, rules, publications, orders, guidelines and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to have been adopted and gone into effect after the Restatement Date regardless of when adopted, enacted or issued.
Section 2.20 Taxes; Withholding, Etc.
(a) Payments to Be Free and Clear . All sums payable by or on behalf of any Loan Party hereunder and under other Loan Document shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding for or on account of, any Tax imposed, levied, collected, withheld or assessed by any Governmental Authority.
(b) Withholding of Taxes . If any Loan Party or any other Person is required by law to make any deduction or withholding for or on account of any Tax from any sum paid or payable by or on behalf of any Loan Party to the Administrative Agent or any Lender (which term shall include the Issuing Bank for purposes of this Section 2.20(b)) under any of the Loan Documents: (i) the Borrower Representative shall notify the Administrative Agent and, if applicable the Revolving Administrative Agent, of any such requirement or any change in any such requirement as soon as the Borrower Representative becomes aware of it; (ii) the applicable Borrower shall pay any such Indemnified Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Loan Party) for its own
 
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account or (if that liability is imposed on the Administrative Agent, the Revolving Administrative Agent or such Lender) on behalf of and in the name of the Administrative Agent, the Revolving Administrative Agent or such Lender, as the case may be; (iii) the sum payable by such Loan Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of any deduction, withholding or payment (including any deduction, withholding or payment on such increased amount) with respect to any Indemnified Tax, the Administrative Agent, the Revolving Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty (30) days after the due date of payment of any Indemnified Tax which it is required by clause (ii) above to pay, the Borrower Representative shall deliver to the Administrative Agent and, if applicable the Revolving Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority.
(c) Evidence of Exemption From Withholding Tax . Each Lender shall deliver to the Borrowers and the Administrative Agent, on or before the date such Lender becomes a party to this Agreement and thereafter when reasonably requested by either Borrower or the Administrative Agent, such forms, documentation and other information as will permit payments to such Lender hereunder to be made without withholding or at a reduced rate of withholding. Without limiting the generality of the foregoing, each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a “ Non-U.S. Lender ”) shall, to the extent it is legally entitled to do so, deliver to the Administrative Agent for transmission to the Borrower Representative, (i) on or prior to the Restatement Date (in the case of each Existing Lender) or (ii) on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of the Borrower Representative or the Administrative Agent (each in the reasonable exercise of its discretion), (i) two (2) original copies of Internal Revenue Service Form W-8BEN (claiming benefits of an applicable tax treaty), W-8ECI, W-8EXP and/or W-8IMY (or, in each case, any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by the Borrower Representative or the Administrative Agent to establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to any payments to such Lender under any of the Loan Documents or (ii) if such Lender is relying on the so-called “portfolio interest exception,” a Certificate re Non-Bank Status together with two (2) original copies of Internal Revenue Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender, and such other documentation and information required under the Internal Revenue Code and reasonably requested by the Borrower Representative or the Administrative Agent to establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to any payments to such Lender under any of the Loan Documents. Each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for United States federal income tax purposes (a “ U.S. Lender ”) shall deliver to the Administrative Agent and the Borrower Representative on or prior to the Restatement Date (or, if later, on or prior to the date on which such Lender becomes a party to this Agreement) two (2) original copies of Internal Revenue Service Form W-9 (or any
 
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successor form), properly completed and duly executed by such Lender, certifying that such U.S. Lender is entitled to an exemption from United States backup withholding tax, or otherwise prove that it is entitled to such an exemption. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.20(c) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to the Administrative Agent for transmission to the Borrower Representative two (2) new original copies of Internal Revenue Service Form W-8BEN, W-8ECI, W-8EXP, W-8IMY and/or W-9 (or, in each case, any successor form), or a Certificate re Non-Bank Status and two (2) original copies of Internal Revenue Service Form W-8BEN (or any successor form), as the case may be, properly completed and duly executed by such Lender, and such other documentation and information required under the Internal Revenue Code and reasonably requested by the Borrower Representative or the Administrative Agent to confirm or establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to payments to such Lender under the Loan Documents, or notify the Administrative Agent and the Borrower Representative of its inability to deliver any such forms, certificates or other evidence. No Borrower shall be required to pay any additional amount to any Non-U.S. Lender under Section 2.20(b)(iii) if such Lender shall have failed (1) to deliver the forms, certificates or other evidence required by in the first sentence of this Section 2.20(c) or (2) to notify the Administrative Agent and the Borrower Representative of its inability to deliver any such forms, certificates or other evidence, as the case may be; provided , that if such Lender shall have satisfied the requirements of this Section 2.20(c) on the Restatement Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as applicable, nothing in this last sentence of Section 2.20(c) shall relieve any Borrower of its respective obligations to pay any additional amounts pursuant this Section 2.20 in the event that, as a result of any Change in Law, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described herein. Furthermore, if a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrowers and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 2.20(c), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(d) Without limiting the provisions of Section 2.20(b), each Borrower shall timely pay all Other Taxes to the relevant Governmental Authorities in accordance with applicable law. Each Borrower shall deliver to the Administrative Agent official receipts or other evidence of such payment reasonably satisfactory to the Administrative Agent in respect of any Other Taxes payable hereunder promptly after payment of such Other Taxes.
 
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(e) Each Borrower and Holdings shall jointly and severally indemnify the Administrative Agent, the Revolving Administrative Agent and any Lender (which term shall include Issuing Bank for purposes of this Section 2.20(e)) for the full amount of Indemnified Taxes and Other Taxes, in each case arising in connection with payments made under, or otherwise with respect to, this Agreement or any other Loan Document (including any such Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.20) paid by the Administrative Agent, the Revolving Administrative Agent or Lender or any of their respective Affiliates and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to such Loan Party shall be conclusive absent manifest error. Such payment shall be due within thirty (30) days of such Loan Party’s receipt of such certificate.
(f) If a Lender, the Administrative Agent or the Revolving Administrative Agent, in good faith and in its sole discretion, receives a refund of any Indemnified Taxes or Other Taxes (including any additions to tax, interest and penalties) with respect to which a Borrower has paid additional amounts under this Section 2.20, it shall pay over such refund to the applicable Borrower (including any additions to tax, interest or penalties received with respect thereto), but only to the extent of additional amounts paid by such Borrower under this Section 2.20 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund, and net of all reasonable out-of-pocket expenses of such Lender or Agent (including any Taxes imposed with respect to such refund); provided that such Borrower, upon the request of such Lender or Agent, agrees to repay as soon as reasonably practicable the amount paid over to such Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender or Agent in the event such Lender or Agent is required to repay such refund to a Governmental Authority. This Section 2.20(f) shall not be construed to require any Lender or Agent to make available its tax returns (or any other information relating to its Taxes which it deems confidential) to any Borrower or any other Person.
Section 2.21 Obligation to Mitigate . Each Lender (which term shall include the Issuing Banks for purposes of this Section 2.21) agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.18, 2.19 or 2.20, it shall, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions, including any Affected Loans, through another office of such Lender or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments, Loans or Letters of Credit through such other
 
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office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Revolving Commitments, Loans or Letters of Credit or the interests of such Lender; provided , that such Lender shall not be obligated to utilize such other office pursuant to this Section 2.21 unless the Borrower Representative agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described above. A certificate as to the amount of any such expenses payable by the Borrower Representative pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to the Borrower Representative (with a copy to the Administrative Agent) shall be conclusive absent manifest error.
Section 2.22 Defaulting Lenders . Notwithstanding anything to the contrary contained in this Agreement, if any obligations of any Lender to purchase participations in or otherwise refinance or support any Swing Line Loans or Letters of Credit exist at the time any Revolving Lender becomes a Defaulting Lender (such Lender, a “ Defaulting Revolving Lender ”) then:
(a) all obligations of the applicable Defaulting Revolving Lender to purchase participations in or otherwise refinance or support such Swing Line Loans and Letters of Credit shall be reallocated among the non-Defaulting Revolving Lenders of the applicable Class in accordance with their respective Pro Rata Share thereof, but only to the extent (i) (x) with respect to Swing Line Loans and U.S. Letters of Credit, the sum of the non-Defaulting Revolving Lenders’ Pro Rata Shares of the Total Utilization of U.S. Revolving Commitments plus such Defaulting Revolving Lender’s Pro Rata Share of U.S. Revolving Exposure do not exceed the total of all non-Defaulting Revolving Lenders’ U.S. Revolving Commitments, and (y) with respect to Canadian Letters of Credit, the sum of the non-Defaulting Revolving Lenders’ Pro Rata Shares of the Total Utilization of Canadian Revolving Commitments plus such Defaulting Revolving Lender’s Pro Rata Share of Canadian Revolving Exposure do not exceed the total of all non-Defaulting Revolving Lenders’ Canadian Revolving Commitments and (ii) in each case, the conditions set forth in Section 3.02 are satisfied at such time;
(b) if the reallocation described in clause (a) above cannot, or can only partially, be effected, the applicable Borrower shall (i) first, within one (1) Business Day following notice by the Administrative Agent or the Revolving Administrative Agent, prepay any outstanding Swing Line Loans to the extent the obligations of the applicable Defaulting Revolving Lender to purchase participations in or otherwise refinance or support Swing Line Loans have not been reallocated pursuant to clause (a) above and (ii) second, within three (3) Business Days following notice by the Administrative Agent or the Revolving Administrative Agent, cash collateralize such Defaulting Revolving Lender’s Pro Rata Share of the obligations to purchase participations in or otherwise refinance or support Letters of Credit (after giving effect to any partial reallocation pursuant to clause (a) above) for so long as such obligations are outstanding; and
(c) if the obligations of the applicable Defaulting Revolving Lender to purchase participations in or otherwise refinance or support Letters of Credit are reallocated among the non-Defaulting Revolving Lenders pursuant to clause (a) above, then the fees payable to the Lenders pursuant to Section 2.11 shall be adjusted in accordance with such non-Defaulting Revolving Lenders’ Pro Rata Shares.
 
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Section 2.23 Removal or Replacement of a Lender . Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an “ Increased-Cost Lender ”) is or becomes an Affected Lender or is or becomes entitled to receive payments under Section 2.18, 2.19 or 2.20 and (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect; or (b) (i) any Lender shall become a Defaulting Lender, (ii) such Defaulting Lender’s default shall remain in effect and (iii) such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five (5) Business Days thereafter; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.05(b), the consent of Required Lenders shall have been obtained but the consent of one or more of such other Lenders (each a “ Non-Consenting Lender ”) whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “ Terminated Lender ”), the Borrower Representative may, by giving written notice to the Administrative Agent and any Terminated Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans and its Revolving Commitments, if any, in full to one or more Eligible Assignees (each a “ Replacement Lender ”) in accordance with the provisions of Section 10.06 and the Borrower Representative shall pay the fees, if any, payable thereunder in connection with any such assignment from an Increased-Cost Lender, a Non-Consenting Lender or a Defaulting Lender shall pay the fees, if any, payable thereunder in connection with any such assignment from such Defaulting Lender; provided , that (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender, (B) an amount equal to all unreimbursed drawings that have been funded by such Terminated Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.11; (2) on the date of such assignment, the applicable Borrower shall pay any amounts payable to such Terminated Lender pursuant to Section 2.13(c), 2.18(c), 2.19 or 2.20; or otherwise as if it were a prepayment and (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender; provided , that the Borrower Representative may not make such election with respect to any Terminated Lender that is also an Issuing Bank unless, prior to the effectiveness of such election, the Borrower Representative shall have caused each outstanding Letter of Credit issued thereby to be cancelled. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s Revolving Commitment, if any, such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided , that any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender. Each Lender agrees that if the Borrower Representative exercises its option hereunder to cause an assignment by such Lender as a Non-Consenting Lender or Terminated Lender, such Lender shall, promptly after receipt of written notice of such election, execute and deliver all documentation necessary to effectuate such assignment in accordance with Section 10.06. In the event that a Lender does not comply with the requirements of the immediately preceding sentence within one (1) Business Day after receipt of such notice, each Lender hereby authorizes and directs the Administrative Agent and the Revolving Administrative Agent (as applicable) to execute and deliver such
 
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documentation as may be required to give effect to an assignment in accordance with Section 10.06 on behalf of a Non-Consenting Lender, Defaulting Lender or Terminated Lender and any such documentation so executed by the Administrative Agent shall be effective for purposes of documenting an assignment pursuant to Section 10.06.
Section 2.24 Incremental Facilities . The Borrower Representative may by written notice to the Administrative Agent elect to request (A) prior to the Revolving Commitment Termination Date, an increase to the existing Revolving Commitments (any such increase, the “ Incremental Revolving Commitments ”) and/or (B) the increase in or the establishment of one or more new term loan commitments (the “ Incremental Term Loan Commitments ”), by an amount not in excess of the greater of (i) $200,000,000 in the aggregate and not less than $10,000,000 individually (or such lesser amount which shall be approved by the Administrative Agent or such lesser amount that shall constitute the difference between $200,000,000 and all such Incremental Revolving Commitments and Incremental Term Loan Commitments obtained prior to such date) and (ii) up to an additional amount of Incremental Term Loans or increases to the Incremental Revolving Commitments so long as the Secured Leverage Ratio (calculated on a pro forma basis) is no more than 3.50:1.00, in each case, with respect to any Incremental Revolving Commitments, assuming a borrowing of the maximum amount of Loans available thereunder; provided that, in either case, Incremental Revolving Commitments shall not exceed $50,000,000 in the aggregate. Each such notice shall specify (A) the date (each, an “ Increased Amount Date ”) on which the Borrower Representative proposes that the Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable, shall be effective, which shall be a date not less than ten (10) Business Days after the date on which such notice is delivered to the Administrative Agent and (B) the identity of each Lender or other Person that is an Eligible Assignee (each, an “ Incremental Revolving Loan Lender ” or “ Incremental Term Loan Lender ”, as applicable) to whom the Borrower Representative proposes any portion of such Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable, be allocated and the amounts of such allocations and any Lender approached to provide all or a portion of the Incremental Revolving Commitments or Incremental Term Loan Commitments may elect or decline, in its sole discretion, to provide an Incremental Revolving Commitment or an Incremental Term Loan Commitment, as applicable. Such Incremental Revolving Commitments or Incremental Term Loan Commitments shall become effective as of such Increased Amount Date; provided that (1) no Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to such Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable; (2) both before and after giving effect to the making of any Incremental Term Loans, each of the conditions set forth in Section 3.02 shall be satisfied or waived; (3) the U.S. Borrower shall be in compliance with the financial covenant set forth in Section 6.07 (assuming for this purpose that such financial covenant is in effect) as of the last day of the most recently ended four Fiscal Quarter period for which financial statements are available), after giving effect to such Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable; (4) the Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable, shall be effected pursuant to one or more Joinder Agreements executed and delivered by the Borrower Representative, the Incremental Revolving Loan Lender or Incremental Term Loan Lender, as applicable, and the Administrative Agent, and each of which shall be recorded in the Revolving Commitment Register or the Term Loan Register, as applicable, and each Incremental Revolving Loan Lender and Incremental Term Loan Lender shall be subject to the requirements set forth in
 
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Section 2.20(c); (5) the Borrower Representative shall make (or cause to be made) any payments required pursuant to Section 2.18(c) in connection with the Incremental Revolving Commitments or Incremental Term Loan Commitments, as applicable; and (6) the Borrower Representative shall deliver or cause to be delivered any legal opinions or other documents (including modifications of Mortgages and title insurance endorsements or policies) reasonably requested by the Administrative Agent in connection with any such transaction. Any Incremental Term Loans made on an Increased Amount Date may be designated a separate series (a “ Series ”) of Incremental Term Loans for all purposes of this Agreement or, if requested by the U.S. Borrower and reasonably acceptable to the Administrative Agent, may be designated as an increase to an existing Class of Term Loans. If such Incremental Term Loans are designated as an increase to an existing Class of Term Loans, the terms and provisions of such Incremental Term Loans shall be identical to the Class of Term Loans so increased.
On any Increased Amount Date on which Incremental Revolving Commitments are effected, subject to the satisfaction of the foregoing terms and conditions, (a) each of the applicable Revolving Lenders shall assign to each of the Incremental Revolving Loan Lenders, and each of the Incremental Revolving Loan Lenders shall purchase from each of the applicable Revolving Loan Lenders, at the principal amount thereof (together with accrued interest), such interests in the applicable Revolving Loans outstanding on such Increased Amount Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans will be held by existing applicable Revolving Loan Lenders and Incremental Revolving Loan Lenders ratably in accordance with their Revolving Commitments after giving effect to the addition of such Incremental Revolving Commitments to the Revolving Commitments, (b) each Incremental Revolving Commitment shall be deemed for all purposes a Revolving Commitment and each Loan made thereunder (an “ Incremental Revolving Loan ”) shall be deemed, for all purposes, a Revolving Loan and (c) each Incremental Revolving Loan Lender shall become a Lender with respect to the Incremental Revolving Commitment and all matters relating thereto.
On any Increased Amount Date on which any Incremental Term Loan Commitments are effective, subject to the satisfaction of the foregoing terms and conditions, (i) each Incremental Term Loan Lender shall make a Loan to the U.S. Borrower (an “ Incremental Term Loan ”) in an amount equal to its Incremental Term Loan Commitment and (ii) each Incremental Term Loan Lender shall become a Lender hereunder with respect to the Incremental Term Loan Commitment and the Incremental Term Loans made pursuant thereto.
The Administrative Agent shall notify the Lenders promptly upon receipt of the Borrower Representative’s notice of each Increased Amount Date and in respect thereof (y) the Incremental Revolving Commitments and the Incremental Revolving Loan Lenders or the Series of Incremental Term Loan Commitments and the Incremental Term Loan Lenders of such Series, as applicable and (z) in the case of each notice to any applicable Revolving Loan Lender, the respective interests in such Revolving Loan Lender’s Revolving Loans, in each case subject to the assignments contemplated by this Section.
The terms and provisions of the Incremental Term Loans and Incremental Term Loan Commitments shall be, except as otherwise set forth herein or in the Joinder Agreement, identical to the Term Loans of the same Class (other than Incremental Term Loans). The terms
 
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and provisions of the Incremental Revolving Loans shall be identical to the Revolving Loans; provided that if the Incremental Revolving Loan Lenders require an interest rate in excess of the interest rate or commitment fees in excess of the commitment fees then applicable to the Revolving Loans or Revolving Commitments, the interest rate on the Revolving Loans and the commitment fees on the Revolving Commitments shall be increased to equal such required rate without further consent of the affected Lenders. In any event (i) the Weighted Average Life to Maturity of all Incremental Term Loans of any Series shall be no shorter than the Weighted Average Life to Maturity of the Revolving Loans, the Tranche B-1 Term Loans or the Tranche B-2 Terms Loans (whichever is longer (except by virtue of amortization of or prepayment of Indebtedness prior to such date of determination)) and, for the avoidance of doubt, no Incremental Term Loans may be designated as an increase to the Tranche B-1 Term Loans, (ii) the applicable Incremental Term Loan Maturity Date of each Series shall be no shorter than the latest of the final maturity of the Revolving Loans, the Tranche B-1 Term Loans and the Tranche B-2 Term Loans, and (iii) the yield applicable to the Incremental Term Loans of each Series shall be determined by the applicable Borrower and the applicable new Lenders and shall be set forth in each applicable Joinder Agreement; provided , however , that the yield applicable to the Incremental Term Loans (after giving effect to all interest rate floors, upfront or similar fees or original issue discount payable with respect to such Incremental Term Loans (but, excluding, for the avoidance of doubt, any arranging, underwriting or similar fees) based on the assumed four-year average life for the applicable facilities)) shall not be greater than the applicable interest rate (including the Applicable Margin) payable pursuant to the terms of this Agreement as amended through the date of such calculation with respect to the Term Loans (other than Incremental Term Loans to the extent the terms governing such Incremental Term Loans do not so provide) plus 0.50% per annum. Each Joinder Agreement may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent to effect the provisions of this Section 2.24 (including that such Joinder Agreement may elect to have the Incremental Term Loans constitute part of the same Class as those Term Loans made on the Restatement Date and the Administrative Agent may take any and all action as may be reasonably necessary to ensure that all such Incremental Term Loans be treated as the same Class as those Term Loans made on the Restatement Date for all purposes under the Loan Documents (including to ensure that such Incremental Term Loans or Incremental Revolving Loans share ratably in each payment made with respect to the Term Loans or Revolving Loans, as applicable)). If the yield applicable to the Incremental Term Loans exceeds the applicable interest rate with respect to the existing Term Loans by more than 0.50% per annum, the applicable interest rate with respect to the existing Term Loans shall be increased (without further consent of the affected Lenders) so that such yield is not more than 0.50% per annum in excess of such rate.
Section 2.25 Appointment of Borrower Representative . Each Borrower hereby appoints the Borrower Representative as its agent, attorney-in-fact and representative for the purpose of (i) making any borrowing requests or other requests required under this Agreement, (ii) the giving and receipt of notices by and to Borrowers under this Agreement, (iii) the delivery of all documents, reports, financial statements and written materials required to be delivered by Borrowers under this Agreement, and (iv) all other purposes incidental to any of the foregoing. Each Borrower agrees that any action taken by the Borrower Representative as the agent, attorney-in-fact and representative of the Borrowers shall be binding upon each Borrower to the same extent as if directly taken by such Borrower.
 
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ARTICLE III.
CONDITIONS PRECEDENT
Section 3.01 Restatement Date . The obligation of each Lender to make a Tranche B-1 Term Loans or a Tranche B-2 Term Loan on the Restatement Date and the effectiveness of the Revolving Commitments hereunder are subject to the satisfaction, or waiver in accordance with Section 10.05, of the following conditions on or before the Restatement Date:
(a) Loan Documents . The Administrative Agent shall have received the Amendment Agreement, the Reaffirmation Agreement and each other Loan Document identified by it to be delivered on the Restatement Date, duly executed and delivered by each applicable Loan Party.
(b) Organizational Documents; Incumbency . The Administrative Agent shall have received (1) copies of the Organizational Documents of each Loan Party, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, each dated the Restatement Date or a recent date prior thereto; (2) signature and incumbency certificates of each such Person of each Loan Party executing the Loan Documents to which it is a party; (3) resolutions of the board of directors or similar governing body of each Loan Party approving and authorizing the execution, delivery and performance of the Amendment Agreement, this Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound as of the Restatement Date, certified as of the Restatement Date by its secretary or an assistant secretary of such Person as being in full force and effect without modification or amendment; and (4) a good standing certificate from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date prior to the Restatement Date (except with respect to any jurisdiction where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect).
(c) Organizational and Capital Structure . The organizational structure and capital structure of Holdings and its Subsidiaries, after giving effect to the Transactions, shall be as set forth on Schedule 4.01 .
(d) Subsidiaries . The U.S. Borrower shall cause each of FML Sand, LLC, an Ohio limited liability company, FML Resin, LLC, an Ohio limited liability company, FML Terminal Logistics, LLC an Ohio limited liability company, FML Alabama Resin, Inc. an Ohio corporation and Shakopee Sand LLC, a Minnesota limited liability company to become a Guarantor hereunder and a Grantor under the Pledge and Security Agreement by complying with Section 5.10 of this Agreement prior to the Restatement Date (excluding any requirements set forth in Section 5.17) and taking all other related actions required by any other Loan Document.
(e) Consummation of the Acquisition.
(i) The Acquisition shall have been consummated, or shall be consummated concurrently with the initial borrowings under this Agreement, in accordance with the terms of the Acquisition Documents and no provision thereof shall have been amended, modified or waived in any manner that is materially adverse to the Lenders, the Arrangers or the Bookrunners in their respective capacities as such without the consent of the Arrangers.
 
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(ii) The Administrative Agent shall have received a fully executed or conformed copy of each Acquisition Document. Each Acquisition Document shall be in full force and effect.
(iii) There shall not have occurred, since December 31, 2012, a Target Material Adverse Effect.
(f) Existing Indebtedness . Concurrently with the borrowing of Tranche B-1 Term Loans and Tranche B-2 Term Loans on the Restatement Date, the U.S. Borrower shall have repaid all principal, premium, if any, interest, fees and other amounts due or outstanding with respect to the Term Loans (under and as defined in the Existing Credit Agreement) held by the Existing Lenders; provided that the foregoing requirement shall not limit the ability of Existing Lenders to engage in a cash-less roll of such Term Loans in accordance with procedures approved by the Administrative Agent.
(g) Personal Property Collateral . In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid, perfected First Priority security interest in the personal property Collateral, each Loan Party shall have delivered to the Collateral Agent a completed Perfection Certificate dated the Restatement Date and executed by an Authorized Officer of each Loan Party, together with all attachments contemplated thereby.
(h) Financial Statements . The Administrative Agent shall have received the Historical Financial Statements from the U.S. Borrower that were delivered in accordance with the provisions of the Existing Credit Agreement.
(i) Opinions of Counsel to Loan Parties . The Agents and the Lenders and their respective counsel shall have received originally executed copies of the favorable written opinions of Kaye Scholer LLP, Calfee, Halter & Griswold LLP, Varnum, as special Michigan counsel to the Loan Parties, DLA Piper LLP (U.S.), as special Texas counsel for the Loan Parties and Gray Plant Mooty, as special Minnesota counsel for the Loan Parties, and otherwise in form and substance reasonably satisfactory to the Administrative Agent (and each Loan Party hereby instructs such counsel to deliver such opinions to the Agents and the Lenders).
(j) Accrued Interest and Fees . The Borrowers shall have paid to the Existing Term Loan Lenders any accrued and unpaid interest and fees under the Existing Credit Agreement and the Borrowers shall have paid to the Arrangers and the Bookrunners, for their own account or for the account of the Lenders, as applicable, all fees and expenses required to be paid in connection herewith (including expenses to the extent invoiced at least one (1) Business Day prior to the Restatement Date).
(k) Solvency; Solvency Certificate . (i) after giving effect to the consummation of the Transactions and any rights of contribution, Holdings and its Subsidiaries, on a consolidated basis, is and shall be Solvent, and (ii) the Administrative Agent shall have received a fully executed Solvency Certificate.
 
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(l) Restatement Date Certificate . Holdings and the Borrowers shall have delivered to the Administrative Agent an originally executed Restatement Date Certificate, together with all attachments thereto, and which shall include certifications to the effect that each of the conditions precedent described in this Section 3.01 and Section 3.02 will be satisfied on the Restatement Date (except that no opinion need be expressed as to Administrative Agent’s or Required Lenders’ satisfaction with any document, instrument or other matter).
(m) [Reserved] .
(n) [Reserved] .
(o) Flow of Funds; Letter of Direction . The Administrative Agent shall have received a funds flow memorandum and a duly executed letter of direction from the U.S. Borrower addressed to the Administrative Agent, on behalf of itself and Lenders, directing the disbursement on the Restatement Date of the proceeds of the Tranche B-1 Term Loans and Tranche B-2 Term Loans made on such date.
(p) Bank Regulatory Information . At least ten (10) days prior to the Restatement Date, the Lenders shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (as amended, supplemented or modified from time to time, the “ PATRIOT Act ”).
(q) Lien and Judgment Searches . The Collateral Agent shall have received the results of recent lien and judgment searches in each of the jurisdictions in which Uniform Commercial Code financing statements or other filings or recordations should be made to evidence or perfect security interests in all assets of the Loan Parties, and such search shall reveal no liens on any of the assets of the Loan Party, except for Permitted Liens or liens to be discharged on or prior to the Restatement Date.
(r) Borrowing Notice . The U.S. Borrower shall have delivered to the Administrative Agent and/or the Revolving Administrative Agent, as applicable, a fully executed Borrowing Notice no later than one (1) Business Day prior to the Restatement Date. Promptly upon receipt by the Administrative Agent of such Borrowing Notice, the Administrative Agent and/or the Revolving Administrative Agent, as applicable, shall notify each Lender of the proposed borrowing.
Section 3.02 Conditions to Each Credit Extension .
(a) Conditions Precedent . The obligation of each Lender to make any Loan, or the Issuing Bank to issue any Letter of Credit, on any Credit Date, including the Restatement Date, are subject to the satisfaction, or waiver in accordance with Section 10.05, of the following conditions precedent:
(i) the Administrative Agent and the Revolving Administrative Agent shall have received a fully executed and delivered Borrowing Notice or Issuance Notice, as the case may be;
 
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(ii) after making the Credit Extensions requested on such Credit Date, the Total Utilization of Canadian Revolving Commitments shall not exceed the Canadian Revolving Commitments then in effect and the Total Obligations of U.S. Revolving Commitments shall not exceed the U.S. Revolving Commitments then in effect;
(iii) as of such Credit Date, the representations and warranties contained herein and in the other Loan Documents shall be true and correct in all material respects on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; provided , that to the extent any such representation or warranty is already qualified by materiality or Material Adverse Effect, such representation or warranty shall be true and correct in all respects and provided further that the failure of any representation or warranty with respect to the Target (other than the Specified Representations and Company Representations) to be true and correct on the Restatement Date will not constitute the failure of this condition precedent with respect to the Credit Date occurring on the Restatement Date;
(iv) as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute a Default or an Event of Default; and
(v) if pro forma for such Credit Extension, the Revolving Exposure (calculated as set forth in Section 6.07) as of the date of such Credit Extension is in excess of 25% of the aggregate Revolving Commitments, the Borrower shall be in compliance with the financial covenant set forth in Section 6.07 as of the last day of the most recent Fiscal Quarter for which financial statements are available (as if the financial covenant is in effect).
(b) Notices . Any Notice shall be executed by an Authorized Officer in a writing delivered to the Administrative Agent and the Revolving Administrative Agent.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Issuing Bank to enter into this Agreement and to make each Credit Extension to be made thereby, each Loan Party represents and warrants to each Lender and the Issuing Bank, on the Restatement Date and on each Credit Date that the following statements are true and correct (it being understood and agreed that the representations and warranties made on the Restatement Date are deemed to be made concurrently with the consummation of the Transactions contemplated hereby):
Section 4.01 Organization; Requisite Power and Authority; Qualification . Each of Holdings and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization (which jurisdictions, as of the Restatement Date are identified on Schedule 4.01 ), (b) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter
 
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into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby and (c) is qualified to do business and in good standing in every jurisdiction where any material portion of its assets are located and wherever necessary to carry out its material business and operations except to the extent failure to be to qualified or in good standing could not reasonably be expected to have a Material Adverse Effect.
Section 4.02 Equity Interests and Ownership . The outstanding Equity Interests of each of Holdings and its Subsidiaries has been duly authorized and validly issued and is fully paid and, to the extent applicable, non-assessable. Except as set forth on Schedule 4.02 , as of the Restatement Date, there is no existing option, warrant, call, right, commitment or other agreement to which Holdings or any of its Subsidiaries is a party requiring, and there is no membership interest or other Equity Interests of Holdings or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Holdings or any of its Subsidiaries of any additional Equity Interests of Holdings or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest or other Equity Interests of Holdings or any of its Subsidiaries. Schedule 4.02 correctly sets forth the ownership interest of Holdings and each of its Subsidiaries in their respective Subsidiaries as of the Restatement Date after giving effect to the Transactions.
Section 4.03 Due Authorization . The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary corporate or other organizational action on the part of each Loan Party that is a party thereto.
Section 4.04 No Conflict . The execution, delivery and performance by the Loan Parties of the Loan Documents to which they are parties and the consummation of the transactions contemplated by the Loan Documents do not and will not (a) violate (i) any provision of any law or any governmental rule or regulation applicable to Holdings or any of its Subsidiaries except with respect to performance of the Loan Documents only, as would not be material to the operation of the Loan Parties or the rights of the Secured Parties, (ii) any of the Organizational Documents of Holdings or any of its Subsidiaries or (iii) any order, judgment or decree of any court or other agency of government binding on Holdings or any of its Subsidiaries; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Holdings or any of its Subsidiaries except to the extent such conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Holdings or any of its Subsidiaries (other than any Liens created under any of the Loan Documents in favor of the Collateral Agent on behalf of the Secured Parties); or (d) require any approval of stockholders, members or partners or any approval or consent of any Person under any Contractual Obligation of Holdings or any of its Subsidiaries, except for such approvals or consents which have been obtained on or before the Restatement Date and disclosed in writing to the Lenders and except for any such approvals or consents the failure of which to obtain could not reasonably be expected to have a Material Adverse Effect.
Section 4.05 Governmental Consents . The execution, delivery and performance by Loan Parties of the Loan Documents to which they are parties and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental
 
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Authority except (i) as otherwise set forth in the Acquisition Agreement, (ii) for filings and recordings with respect to the Collateral to be made, or otherwise delivered to the Collateral Agent for filing and/or recordation, as of the Restatement Date, (iii) for those approvals, consents, exemptions, registrations, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and (iv) with respect to performance only, approvals, consents, exemptions, registrations, authorizations, actions, notices or filings, which are not material to the operation of the Loan Parties or the rights of the Secured Parties.
Section 4.06 Binding Obligation . Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.
Section 4.07 Historical Financial Statements . The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments. As of the Restatement Date, neither Holdings nor any of its Subsidiaries has any contingent liability or liability for Taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the Historical Financial Statements or the notes thereto and which in any such case is material in relation to Holdings and its Subsidiaries taken as a whole.
Section 4.08 Projections . On and as of the Restatement Date, the projections of the U.S. Borrower and its Subsidiaries for the period of Fiscal Year 2013 through and including Fiscal Year 2017 (the “ Projections ”) were prepared in good faith based upon accounting principles materially consistent with the historical audited financial statements of the U.S. Borrower and upon assumptions that are believed by the preparer thereof to be reasonable at the time prepared and on the Restatement Date; provided , that the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that the differences may be material; provided , further , as of the Restatement Date, management of the U.S. Borrower believed that the Projections were reasonable and attainable.
Section 4.09 No Material Adverse Change . Since December 31, 2012, no event, circumstance or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect.
Section 4.10 [Reserved] .
Section 4.11 Adverse Proceedings, Etc. There are no Adverse Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. Neither Holdings nor any of its Subsidiaries (a) is in violation of any applicable laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have
 
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a Material Adverse Effect or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 4.12 Payment of Taxes . Except as otherwise permitted under Section 5.03, all income Tax returns and material non-income Tax returns and reports of Holdings and its Subsidiaries required to be filed by any of them have been timely filed, and all material Taxes shown on such Tax returns to be due and payable and all material assessments, fees, Taxes and other governmental charges upon Holdings and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. There is no proposed Tax assessment against Holdings or any of its Subsidiaries which is not being diligently contested by Holdings or such Subsidiary in good faith and by appropriate proceedings; provided , that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor.
Section 4.13 Properties .
(a) Title . Each of Holdings and its Subsidiaries (as applicable) has (i) good, insurable title to each parcel of land that is material to the operation of the business (in the case of fee interests in real property), (ii) valid leasehold interests in each parcel of land that is material to the operation of the business (in the case of leasehold interests in real or personal property), (iii) valid licensed rights in (in the case of licensed interests in intellectual property) and (iv) good title to (in the case of all other material personal property), all of their respective properties and assets reflected in their respective Historical Financial Statements referred to in Section 4.07 and in the most recent financial statements delivered pursuant to Section 5.01, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.08. Except as permitted by this Agreement, including Permitted Liens, all such properties and assets are free and clear of Liens.
(b) Real Estate . As of the Restatement Date, Schedule 4.13 contains a true, accurate and complete list of (i) all Real Estate Assets, and (ii) all leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Real Estate Asset of any Loan Party, regardless of whether such Loan Party is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. To the knowledge of Holdings or its Subsidiaries, each agreement listed in clause (ii) of the immediately preceding sentence for which Holdings or its Subsidiaries pays at least $1,000,000 in rent per annum is in full force and effect and Holdings does not have knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legally valid and binding obligation of each applicable Loan Party, enforceable against such Loan Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles.
(c) Flood Zone Properties . As of the Restatement Date, no Mortgaged Property is located in a Flood Zone (except any such property as to which flood insurance has been obtained and is in full force and effect as required by this Agreement).
 
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Section 4.14 Environmental Matters . Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (a) Holdings and each of its Subsidiaries is in compliance with, and have no liability under, any Environmental Law, and any past noncompliance has been fully resolved without any pending, on-going or future obligation or cost; (b) Holdings and each of its Subsidiaries has obtained and maintained in full force and effect all Governmental Authorizations required pursuant to any Environmental Law for the current and reasonably anticipated future operation of their respective business and to own, lease, mine or operate their respective assets; (c) there are and, to each of Holdings’ and the Borrowers’ knowledge, are, and have been, no conditions, circumstances, activities, occurrences, violations of Environmental Law, or presence or Releases of, or exposure to, Hazardous Materials which could reasonably be expected to form the basis of an Environmental Claim against, or require any investigation, remediation, remedial action or cleanup by, Holdings or any of its Subsidiaries or related to any Real Estate Assets; (d) there are no pending or, to the Borrower’s knowledge, threatened Environmental Claims against Holdings or any of its Subsidiaries, and neither Holdings nor any of its Subsidiaries has received any written notification of any alleged violation of, or liability pursuant to, any Environmental Law or responsibility for the Release or threatened Release of, or exposure to, any Hazardous Materials; (e) Holdings and each of its Subsidiaries possess all bonds, guarantees, surety or other financial assurances or security requirements required pursuant to any Environmental Law or by any Governmental Authority to own, lease, mine or operate their respective assets; (f) neither Holdings nor any of its Subsidiaries is conducting, funding or otherwise responsible for any investigation, remediation, remedial action or cleanup of any Hazardous Materials and (g) no Lien imposed pursuant to any Environmental Law has attached to any Collateral and, to the knowledge of Holdings and the Borrowers, no conditions exist that would reasonably be expected to result in the imposition of such a Lien on any Collateral.
Section 4.15 No Defaults . Neither Holdings nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
Section 4.16 Material Contracts . Schedule 4.16 contains a true, correct and complete list of all the Material Contracts in effect on the Restatement Date, and except as described thereon, all such Material Contracts are in full force and effect and no defaults currently exist thereunder.
Section 4.17 Governmental Regulation . Neither Holdings nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable.
 
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Neither Holdings nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.
Section 4.18 Margin Stock . Neither Holdings nor any of its Subsidiaries owns any Margin Stock.
Section 4.19 Employee Matters . Neither Holdings nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against Holdings or any of its Subsidiaries, or to the best knowledge of Holdings and the Borrowers, threatened against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against Holdings or any of its Subsidiaries or to the best knowledge of Holdings and the Borrowers, threatened against any of them, (b) no strike or work stoppage in existence or threatened involving Holdings or any of its Subsidiaries and (c) to the best knowledge of Holdings and the Borrowers, no union representation question existing with respect to the employees of Holdings or any of its Subsidiaries and, to the best knowledge of Holdings and the Borrowers, no union organization activity that is taking place, except (with respect to any matter specified in clause (a), (b) or (c) above, either individually or in the aggregate) such as is not reasonably likely to have a Material Adverse Effect.
Section 4.20 Employee Benefit Plans . Holdings, each of its Subsidiaries and each of their respective ERISA Affiliates are in compliance in all material respects with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have performed in all material respects all their obligations under each Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified or is maintained pursuant to a prototype or volume submitter plan for which it relies on the IRS opinion or advisory letter and to the knowledge of Holdings and its Subsidiaries nothing has occurred subsequent to the issuance of such determination letter which would cause such Employee Benefit Plan to lose its qualified status. No liability to the PBGC (other than required premium payments), has been or is expected to be incurred by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates with respect to any Employee Benefit Plan. No ERISA Event has occurred or is reasonably expected to occur that could reasonably be expected to have a Material Adverse Effect. Except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no liability exists under any Employee Benefit Plan that provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates except for liabilities that could not reasonably be expected to have a Material Adverse Effect. The present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan) did not exceed the aggregate current fair market value of the assets of such Pension Plan except
 
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when such excess could not reasonably be expected to have a Material Adverse Effect. As of the most recent valuation date for each Multiemployer Plan, the potential liability of Holdings, its Subsidiaries and their respective ERISA Affiliates for a complete or partial withdrawal from such Multiemployer Plan (within the meaning of Section 4203 or Section 4205 of ERISA), when aggregated with such potential liability for a complete or partial withdrawal from all Multiemployer Plans could not reasonably be expected to result in a Material Adverse Effect. Except for instances of non-compliance or default which could not reasonably be expected to result in a Material Adverse Effect, Holdings, each of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.
Section 4.21 Solvency . Holdings and its Subsidiaries, on a consolidated basis, is and, upon the incurrence of any Obligation by any Loan Party on any date on which this representation and warranty is made, shall be, Solvent.
Section 4.22 Compliance with Statutes, Etc. Each of Holdings and its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its assets and property (including compliance with Environmental Law with respect to any Real Estate Asset or governing its business and the requirements of any Governmental Authorizations issued under any Environmental Law with respect to any such Real Estate Asset or the operations of Holdings or any of its Subsidiaries), except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
Section 4.23 Disclosure . No representation or warranty of any Loan Party contained in any Loan Document or in any other documents, certificates or written statements furnished to any Agent or Lender by or on behalf of Holdings or any of its Subsidiaries for use in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact (known to Holdings or the Borrower Representative, in the case of any document not furnished by either of them) necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by Holdings and the Borrower Representative to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.
Section 4.24 PATRIOT Act .
(a) To the extent applicable, each Loan Party is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the PATRIOT Act. No part of the proceeds of the Loans shall be used, directly or indirectly, for any
 
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payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(b) To the knowledge of the Borrowers, no Loan Party or any Subsidiary of such Loan Party, is (i) a person on the list of “Specially Designated Nationals and Blocked Persons” or (ii) currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”). The proceeds of the Loans or the Letters of Credit will not be used for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
Section 4.25 Intellectual Property . Except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) each of the Loan Parties owns, or is licensed to use, all Intellectual Property necessary for or used in the conduct of its business as currently conducted, (ii) no claim has been asserted and is pending by any Person challenging or questioning the ownership, registration or use of any Intellectual Property of the Loan Parties or the validity or effectiveness of any Intellectual Property of the Loan Parties, nor does any Loan Party know of any valid basis for any such claim and (iii) the use of Intellectual Property by each of the Loan Parties does not infringe on the rights of any Person in any material respect.
ARTICLE V.
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees that, so long as any Commitment is in effect and until Payment in Full of all Obligations, such Loan Party shall, and shall cause each of its Subsidiaries to:
Section 5.01 Financial Statements and Other Reports . In the case of the U.S. Borrower, deliver to the Administrative Agent (which shall furnish to each Lender):
(a) Quarterly Financial Statements . As soon as available, and in any event within 45 days after the end of each of the first three (3) Fiscal Quarters of each Fiscal Year, commencing with the Fiscal Quarter in which the Restatement Date occurred, the consolidated balance sheets of the U.S. Borrower and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income, stockholders’ equity and cash flows of the U.S. Borrower and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto;
(b) Annual Financial Statements . As soon as available, and in any event within 120 days after the end of each Fiscal Year, commencing with the Fiscal Year in which the Restatement Date occurred, (i) the consolidated and consolidating balance sheets of the U.S. Borrower and its Subsidiaries as at the end of such Fiscal Year and the related consolidated (and
 
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with respect to statements of income, consolidating) statements of income, stockholders’ equity and cash flows of the U.S. Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; and (ii) with respect to such consolidated financial statements of such Fiscal Year a report thereon of Meaden & Moore, Ltd., or other independent certified public accountants of recognized national standing selected by the U.S. Borrower, and reasonably satisfactory to the Administrative Agent, (which report and/or the accompanying financial statements shall be unqualified as to going concern and scope of audit, and shall state that such consolidated financial statements of such Fiscal Year fairly present, in all material respects, the consolidated financial position of the U.S. Borrower and its Subsidiaries as at the date(s) indicated and the results of their operations and their cash flows for the period(s) indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards), together with a written statement (which written statement may be limited to accounting matters or other items that independent certified public accountants are permitted to cover in such letters pursuant to their professional standards and customs and may disclaim responsibility for legal interpretations) by such independent certified public accountants to the effect that, based upon their ordinary and customary examination of the affairs of the U.S. Borrower and its Subsidiaries, performed in connection with the preparation of such consolidated financial statements, and in accordance with GAAP, they are not aware of the existence of any condition or event which constitutes an Event of Default or Default under Section 6.07 herein (assuming for this purpose that such financial covenant is in effect) or, if they are aware of such condition or event, stating the nature thereof;
(c) Compliance Certificate . Together with each delivery of financial statements of the U.S. Borrower and its Subsidiaries pursuant to Sections 5.01(a) and 5.01(b), a duly executed and completed Compliance Certificate;
(d) Statements of Reconciliation after Change in Accounting Principles . If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of the U.S. Borrower and its Subsidiaries delivered pursuant to Section 5.01(a) or 5.01(b) shall differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one or more statements of reconciliation for all such prior financial statements in form and substance reasonably satisfactory to the Administrative Agent;
(e) Notice of Default . Promptly upon any officer of Holdings or the Borrower Representative obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to Holdings or the Borrower Representative with respect thereto; (ii) that any Person has given any notice to Holdings or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.01(b); or (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the
 
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aggregate, a Material Adverse Effect, a certificate of an Authorized Officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action the applicable Borrower has taken, is taking and proposes to take with respect thereto;
(f) Notice of Litigation . Promptly upon any officer of Holdings or the Borrower Representative obtaining knowledge of (i) any Adverse Proceeding not previously disclosed in writing by the Borrower Representative to the Lenders or (ii) any development in any Adverse Proceeding that, in the case of either clause (i) or (ii), if adversely determined could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, or the exercise of rights or performance of obligations under any Loan Document written notice thereof together with such other information as may be reasonably available to Holdings or the Borrower Representative to enable the Lenders and their counsel to evaluate such matters;
(g) ERISA . (i) Promptly upon the occurrence of or upon any officer of Holdings or any Borrower becoming aware of the forthcoming occurrence of (A) any ERISA Event other than the ERISA Event in subsection (v), (x), (xiii), (xiv) or (xv) of the definition thereof, (B) any ERISA Event in subsection (x), (xiv) or (xv) of the definition thereof which could reasonably be expected to result in a Material Adverse Effect or any ERISA Event in subsection (v) or (xiii) of the definition thereof which could reasonably be expected to result in a material liability to any Borrower and (C) the adoption of an amendment to a Pension Plan if such amendment results in a material increase in benefits or unfunded liabilities, a written notice specifying the nature thereof, what action Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (A) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan as the Administrative Agent shall reasonably request; (B) all notices received by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (C) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as the Administrative Agent shall reasonably request;
(h) Financial Plan . As soon as practicable and in any event no later than thirty (30) days after the beginning of each Fiscal Year, a consolidated plan and financial forecast for such Fiscal Year (a “ Financial Plan ”), including (1) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of the U.S. Borrower and its Subsidiaries for such Fiscal Year, and an explanation of the assumptions on which such forecasts are based and (2) forecasted consolidated statements of income and cash flows of the U.S. Borrower and its Subsidiaries for each fiscal quarter of such Fiscal Year;
(i) Insurance Report . Together with the delivery of financial statements of Holdings and its Subsidiaries pursuant to Section 5.01(b), a certificate from Holdings’ insurance broker(s) outlining all material insurance coverage maintained as of the date of such certificate by Holdings and its Subsidiaries;
 
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(j) Information Regarding Collateral .
(i) the Borrower Representative shall furnish to the Collateral Agent prompt written notice of any change (A) in any Loan Party’s corporate name, (B) in any Loan Party’s identity or corporate structure, (C) in any Loan Party’s jurisdiction of organization or (D) in any Loan Party’s Federal Taxpayer Identification Number or state organizational identification number. The Borrower Representative agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral as contemplated in the Security Documents; and
(ii) the Borrower Representative also agrees promptly to notify the Collateral Agent if any material portion of the Collateral is damaged or destroyed;
(k) Annual Collateral Verification . Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 5.01(c), the Borrower Representative shall deliver to the Collateral Agent a certificate of its Authorized Officer either confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Restatement Date (or Restatement Date, if applicable) or the date of the most recent certificate delivered pursuant to this Section and/or identifying such changes;
(l) Management Letters . Promptly after the receipt thereof by Holdings or any Borrower or any of their respective Subsidiaries, a copy of any “management letter” received by any such Person from its certified public accountants and the management’s response thereto;
(m) Certification of Public Information . Holdings and each Lender acknowledge that certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to receive material non-public information with respect to Holdings, its Subsidiaries or their securities) and, if documents or notices required to be delivered pursuant to this Section 5.01 or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant website or other information platform (the “ Platform ”), any document or notice that the Borrower Representative has indicated contains Non-Public Information shall not be posted on that portion of the Platform designated for such public-side Lenders. The Borrower Representative agrees to clearly designate all Information provided to the Administrative Agent by or on behalf of the Loan Parties which is suitable to make available to Public Lenders. If the Borrower Representative has not indicated whether a document or notice delivered pursuant to this Section 5.01 contains Non-Public Information, the Administrative Agent reserves the right to post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material non-public information with respect to Holdings, its Subsidiaries and their securities;
(n) Defaults Under Material Contracts . Promptly upon any officer of Holdings or any of its Subsidiaries receiving written notice of a default or event of default under any Material
 
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Contract that would reasonably be expected to have a Material Adverse Effect, a certificate of an Authorized Officer of the Borrower Representative specifying the nature and period of existence of such condition or event and the nature of such claimed default or event of default, and what action the Borrower Representative has taken, is taking and proposes to take with respect thereto;
(o) Other Information . (A) Promptly upon their becoming available, copies of (i) all regular and periodic reports and all registration statements and prospectuses, if any, filed by FML Holdings, Holdings or the Borrower Representative with any securities exchange or with the SEC or any governmental or private regulatory authority and (ii) all press releases and other statements made available generally by the U.S. Borrower or any of its Subsidiaries to the public concerning material developments in the business of Holdings or any of its Subsidiaries and (B) such other information and data with respect to Holdings or any of its Subsidiaries as from time to time may be reasonably requested by the Administrative Agent or any Lender.
Section 5.02 Existence . Except as otherwise permitted under Section 6.08, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; provided , that no Loan Party (other than each Borrower with respect to existence) or any of its Subsidiaries shall be required to preserve any such existence, right or franchise, licenses and permits if such Person’s board of directors (or similar governing body) shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person and that the loss thereof is not disadvantageous in any material respect to such Person or to Lenders.
Section 5.03 Payment of Taxes and Claims . Pay all material Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided , that no such Tax or claim need be paid to the extent it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserves or other appropriate provisions as shall be required in conformity with GAAP shall have been made therefor and (b) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim. No Loan Party shall, nor shall it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Holdings or any of its Subsidiaries).
Section 5.04 Maintenance of Properties . Maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Holdings and its Subsidiaries and from time to time shall make or cause to be made all appropriate repairs, renewals and replacements thereof.
Section 5.05 Insurance .
(a) In the case of Holdings, maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage
 
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insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Holdings and its Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as are customary for such Persons. Without limiting the generality of the foregoing, Holdings shall maintain or cause to be maintained (i) flood insurance that covers each Real Estate Asset subject to a mortgage in favor of Collateral Agent, for the benefit of Secured Parties, that is located in a Flood Zone in each case, in compliance with the applicable regulations of the Board of Governors and (ii) replacement value casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses. Each such policy of insurance shall (i) name the Collateral Agent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear, (ii) in the case of each casualty insurance policy, contain a loss payable clause or endorsement, reasonably satisfactory in form and substance to the Collateral Agent, that names the Collateral Agent, on behalf of the Secured Parties, as the loss payee thereunder and (iii) provide that the insurer affording coverage (with respect to property and liability insurance) will provide for at least thirty (30) days’ prior written notice to the Collateral Agent of any modification or cancellation of such policy.
(b) In addition to the foregoing, Holdings and its Subsidiaries shall maintain insurance coverage with at least $40,000,000 as the minimum threshold amount remaining in reasonably expected insurance recoverables to pay defense, settlement and indemnity costs in connection with product liability claims alleging personal injury caused by exposure to silica and/or silica-containing products.
Section 5.06 Books and Records; Inspections . Maintain proper books of record and accounts in which full, true and correct entries shall be made of all financial transactions and matters involving its assets and business, in a form in which financial statements conforming with GAAP can be generated. Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any authorized representatives designated by any Lender to visit and inspect any of the properties of any Loan Party and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested; provided , that in the case of any meeting with any independent public accountants, representatives of the Loan Parties may be present; provided , further , that in the absence of an Event of Default, no more than two such visit for the Lenders will be permitted in any Fiscal Year. The Lenders will use commercially reasonable efforts to coordinate any visits or inspections made pursuant to this Section 5.06 so as to minimize inconvenience to the Loan Parties.
Section 5.07 Lenders’ Meetings . In the case of each of Holdings and the U.S. Borrower, upon the request of the Administrative Agent, participate in a quarterly telephonic conference call with the Administrative Agent and the Lenders, such telephonic conference call to be held at such time as may be agreed to by the U.S. Borrower and the Administrative Agent but in any event no later than sixty (60) days after the end of any Fiscal Quarter.
 
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Section 5.08 Compliance with Laws . Comply, and cause all other Persons, if any, on or occupying any Facilities to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), noncompliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 5.09 Environmental .
(a) In the case of Holdings, deliver to the Administrative Agent:
(i) as soon as practicable following receipt thereof, copies of all environmental assessments, audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of Holdings or any of its Subsidiaries or by any independent consultants, Governmental Authorities or other Persons, that identifies any failure to comply with Environmental Laws or any other matter that would reasonably be expected to result in an Environmental Claim, which failure to comply or Environmental Claim would reasonably be expected to result in Holdings or any of its Subsidiaries incurring any cost, loss or liability that could reasonably be expected to result in a Material Adverse Effect;
(ii) promptly upon the occurrence or receipt thereof, written notice relating to (1) any Release of Hazardous Materials which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (2) any remedial action taken by Holdings or any other Person in response to (A) any Hazardous Materials the existence of which has a reasonable possibility of resulting in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect or (B) any Environmental Claim that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (3) Holdings or the Borrower’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Facility that could cause such Facility or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Law that could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect or (4) the imposition or written threat of any imposition of any Lien on any Collateral pursuant to any Environmental Law;
(iii) as soon as practicable following the sending or receipt thereof by Holdings or any of its Subsidiaries, a copy of any and all written communications with respect to any Release of Hazardous Materials or any actual or threatened Environmental Claims that, individually or in the aggregate, have a reasonable possibility of resulting in a Material Adverse Effect;
(iv) prompt written notice describing in reasonable detail (A) any proposed acquisition of stock, assets, or other property by Holdings or any of its Subsidiaries that could reasonably be expected to (1) expose Holdings or any of its Subsidiaries to, or
 
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result in, Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (2) adversely affect the ability of Holdings or any of its Subsidiaries to maintain compliance with Environmental Laws to a degree that could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect and (B) any proposed material modification by Holdings or any of its Subsidiaries to current operations that could reasonably be expected to result in additional capital and operating costs related to compliance with Environmental Laws for any one year that could reasonably be expected to result in a Material Adverse Effect at any individual Facility; and
(v) with reasonable promptness, such other documents and information as from time to time may be reasonably requested by the Administrative Agent in relation to any matters disclosed pursuant to this Section 5.09(a) or otherwise related to compliance with, or liability pursuant to, any Environmental Law by such Loan Party or any of its Subsidiaries.
(b) Promptly take any and all actions necessary to (i) cure any violation of any Environmental Law by such Loan Party or any of its Subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (ii) conduct any investigative or remedial action that may be required pursuant to any Environmental Law by such Loan Party or any of its Subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (iii) make an appropriate response to any Environmental Claim against such Loan Party or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(c) Use and operate all of its Facilities in compliance with all Environmental Laws, obtain and maintain in full force and effect all necessary Governmental Authorizations required pursuant to any Environmental Laws, and cause all lessees, contractors and other Persons that are agents or invitees of a Loan Party operating or occupying any property owned or leased by any Loan Party to comply in all material respects, with all Environmental Law, in each case except where the failure to comply, obtain or maintain could not reasonably be expected to have a Material Adverse Effect.
Section 5.10 Subsidiaries .
(a) In the case of the U.S. Borrower, in the event that any Person becomes a Subsidiary of the U.S. Borrower (other than an Excluded Foreign Subsidiary) after the Original Closing Date, (a) promptly cause such Subsidiary to become a Guarantor hereunder and a Grantor under the Pledge and Security Agreement by executing and delivering to the Administrative Agent and the Collateral Agent a Counterpart Agreement, and (b) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Section 3.01(b), 3.01(g), 3.01(i), 3.01(q), Section 5.11(b) (if applicable) and Section 5.12.
(b) In the case of the U.S. Borrower, with respect to any new Excluded Foreign Subsidiary created or acquired, as the case may be, after the Original Closing Date by the U.S.
 
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Borrower or any of its Subsidiaries, promptly execute deliver, all such documents, instruments, agreements, and certificates as are similar to those described in Section 3.01(b)(1), and the U.S. Borrower shall take all of the actions referred to in Section 5.12 necessary to grant and to perfect a First Priority Lien in favor of the Collateral Agent, for the benefit of Secured Parties, under the Pledge and Security Agreement in the Equity Interests of such new Subsidiary that is owned by the U.S. Borrower or any of its Subsidiaries ( provided that in no event shall more than 66.0% of the voting Equity Interests and 100% of the non-voting Equity Interests of any new Excluded Foreign Subsidiary be required to be so pledged).
(c) With respect to each new Subsidiary, the U.S. Borrower shall promptly send to the Collateral Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of the U.S. Borrower and (ii) all of the data required to be set forth in Schedules 4.01 and 4.02 with respect to all Subsidiaries of the U.S. Borrower; and such written notice shall be deemed to supplement Schedule 4.01 and 4.02 for all purposes hereof.
Section 5.11 Additional Material Real Estate Assets . (a) Subject to the provisions of Section 5.17(b), in the event that any Loan Party acquires a Real Estate Asset that constitutes a Material Real Estate Asset or a Real Estate Asset owned or leased on the Restatement Date becomes a Material Real Estate Asset as a result of improvements upon such property, and such interest has not otherwise been made subject to the Lien of the Security Documents in favor of the Collateral Agent, for the benefit of Secured Parties, at the time of the acquisition thereof (or within a reasonable time after the completion of the construction of the improvements), such Loan Party shall promptly take all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates similar to those described in Section 5.11(b) with respect to each such Material Real Estate Asset, that the Collateral Agent shall reasonably request to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority Lien in such Material Real Estate Assets; provided , however , that if the Material Real Estate Asset is a Leasehold Property, and the lease with respect to such Leasehold Property requires lessor consent to effectuate a Mortgage, such Loan Party shall use commercially reasonable efforts to obtain such consent, and, in addition, in the case of any Material Real Estate Asset which is a Leasehold Property for which a memorandum of such Leasehold Property is not recorded, such Loan Party shall use commercially reasonable efforts to obtain fully executed and notarized Record Documents for such Leasehold Property, in proper form for recording in all appropriate places in all applicable jurisdictions. The inability of such Loan Party to obtain a landlord’s consent and/or a Record Document following commercially reasonable efforts to do so, and the concurrent inability of such Loan Party to deliver a Mortgage encumbering such Material Real Estate Asset which is a Leasehold Property shall not be deemed to be a failure to satisfy this Section 5.11(a). In addition to the foregoing, in the case of the U.S. Borrower, at the request of the Collateral Agent, deliver, from time to time, to the Collateral Agent such appraisals as are required by law or regulation of Real Estate Assets with respect to which the Collateral Agent has been granted a Lien and any environmental site assessments or reports that the Administrative Agent or Collateral Agent reasonably request with respect to such Material Real Estate Assets; provided , however , environmental site assessments shall not be required more than once in any twelve (12) month period, unless Collateral Agent has a good faith belief that there is a violation of Environmental Laws or a release of Hazardous Materials at the Real Estate Asset.
 
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(b) In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in a Material Real Estate Asset as required by Section 5.11(a), the applicable Loan Party shall promptly take such actions, and execute and deliver, or cause to be executed and delivered the following, in each case, to the extent reasonably requested by the Administrative Agent:
(i) a fully executed and notarized Mortgage, in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering such Material Real Estate Asset, subject to the proviso in the first sentence of Section 5.11(a);
(ii) an opinion of counsel (which counsel shall be reasonably satisfactory to the Collateral Agent) in each jurisdiction in which such Material Real Estate Asset is located with respect to the enforceability of the form(s) of Mortgages to be recorded in such jurisdiction and such other matters as the Collateral Agent may reasonably request, in each case in form and substance reasonably satisfactory to the Collateral Agent;
(iii) ALTA mortgagee title insurance policies or unconditional commitments therefor issued by Chicago Title Insurance Company or another title company reasonably acceptable to the Collateral Agent (the “ Title Company ”) with respect to each such Material Real Estate Asset (each, a “ Title Policy ”), in amounts as reasonably agreed by the Collateral Agent and the Borrower Representative insuring the fee simple title to or leasehold interest in, as applicable (and available), each of the Material Real Estate Assets vested in the applicable Loan Party and insuring the Collateral Agent that the relevant Mortgage creates a valid and enforceable First Priority mortgage Lien on such Material Real Estate Asset encumbered thereby, each which Title Policy, (A) shall include all endorsements reasonably requested by the Collateral Agent and available in each respective jurisdiction and (B) shall provide for affirmative insurance and such reinsurance as the Collateral Agent may reasonably request, all of the foregoing in form and substance reasonably satisfactory to the Collateral Agent; and evidence satisfactory to the Collateral Agent that the applicable Loan Party has (i) delivered to the Title Company all certificates and affidavits required by the Title Company in connection with the issuance of the applicable Title Policy and (ii) paid to the Title Company or to the appropriate Governmental Authorities all expenses and premiums of the Title Company and all other sums required in connection with the issuance of the Title Policies and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Mortgages with respect to such Material Real Estate Asset in the applicable real property records; together with a title report issued by a title company with respect thereto, dated not more than thirty (30) days prior to the date of the creation of the Mortgage on such Material Real Estate Asset and copies of all recorded documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to the Collateral Agent; and
(iv) (A) a completed Flood Certificate with respect to each such Material Real Estate Asset, which Flood Certificate shall (i) be addressed to the Collateral Agent, (ii) be completed by a company which has guaranteed the accuracy of the information contained therein, and (iii) otherwise comply with the Flood Program; (B) evidence describing
 
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whether the community in which each such Material Real Estate Asset is located participates in the Flood Program; (C) if any Flood Certificate states that such Material Real Estate Asset is located in a Flood Zone, the applicable Borrower’s written acknowledgement of receipt of written notification from the Collateral Agent (i) as to the existence of each such Material Real Estate Asset, and (ii) as to whether the community in which each such Material Real Estate Asset is located is participating in the Flood Program; and (D) if any such Material Real Estate Asset is located in a Flood Zone and is located in a community that participates in the Flood Program, evidence that the applicable Loan Party has obtained a policy of flood insurance that is in compliance with all applicable regulations of the Board of Governors.
Section 5.12 Additional Collateral . With respect to any assets or property acquired after the Original Closing Date by Holdings, the U.S. Borrower or any of its Subsidiaries (other than (x) any assets or property described in Section 5.10 or Section 5.11, (y) any assets or property subject to a Lien expressly permitted by Section 6.02 and (z) assets or property acquired by an Excluded Foreign Subsidiary) as to which the Collateral Agent, for the benefit of the Secured Parties, does not have a perfected First Priority Lien, promptly (i) execute and deliver to the Collateral Agent such amendments to the Pledge and Security Agreement or such other documents as the Collateral Agent deems necessary or advisable to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected First Priority Lien in such assets or property and (ii) take all actions necessary or advisable to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected First Priority Lien in such assets or property, including without limitation, the filing of UCC financing statements in such jurisdictions as may be required by the Pledge and Security Agreement or by law or as may be requested by the Collateral Agent.
Section 5.13 Interest Rate Protection . In the case of the U.S. Borrower, no later than one hundred and twenty (120) days following the Restatement Date and at all times thereafter until the third anniversary of the Restatement Date, obtain and cause to be maintained protection against fluctuations in interest rates pursuant to one or more Interest Rate Agreements in form and substance reasonably satisfactory to the Administrative Agent, in order to ensure that no less than 33% of the aggregate principal amount of the total Indebtedness for borrowed money of Holdings and its Subsidiaries then outstanding is either (i) subject to such Interest Rate Agreements or (ii) Indebtedness that bears interest at a fixed rate.
Section 5.14 Further Assurances . At any time or from time to time upon the reasonable request of the Administrative Agent, at the expense of the Loan Parties, promptly execute, acknowledge and deliver such further documents and do such other acts and things as the Administrative Agent or the Collateral Agent may reasonably request in order to effect fully the purposes of the Loan Documents or to more fully perfect or renew the rights of the Administrative Agent or the Lenders with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the U.S. Borrower or any Subsidiary which may be deemed to be part of the Collateral). In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as the Administrative Agent or the Collateral Agent may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of Holdings and its Subsidiaries and all of the outstanding Equity Interests of the U.S. Borrower and its Subsidiaries (subject to limitations
 
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contained in the Loan Documents with respect to Foreign Subsidiaries). Upon the exercise by the Administrative Agent or the Collateral Agent of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which required any consent, approval, recording, qualification or authorization of any Governmental Authority, the U.S. Borrower will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or the Collateral Agent may be required to obtain from Holdings or any of its Subsidiaries for such consent, approval, recording, qualification or authorization.
Section 5.15 Control Accounts; Approved Deposit Accounts .
(a) The U.S. Borrower and each Loan Party that is a Domestic Subsidiary of the U.S. Borrower shall use commercially reasonable efforts to enter into Control Agreements with respect to each of its Deposit Accounts, Securities Accounts and Commodities Accounts unless such account is an Excluded Account. For purposes of this Section 5.15 “Excluded Accounts” shall mean: (w) each zero-balance account maintained for the purpose of managing local disbursements, (x) may maintain payroll, withholding tax and other fiduciary accounts, (y) all accounts of Wisconsin Industrial Sand Company, L.L.C. for so long as the IRB Loan Agreement remains in effect; provided that such accounts do not have an aggregate balance in excess of $250,000 at any one time and (z) any other accounts as long as the aggregate monthly average daily balance over the immediately preceding 12-month period for all such Loan Parties in all such other accounts does not exceed $2,000,000 at any time. Nothing in this Section 5.15 shall prohibit or restrict the Loan Parties’ right to make pledges or cash deposits permitted by Section 6.02.
(b) If the agreement governing the maintenance of any existing Deposit Account, Securities Account or Commodities Account is terminated by such Loan Party, such Loan Party shall have 45 days (or such longer period as the Collateral Agent may approve) following such termination to establish a new Deposit Account, Securities Account or Commodity Account, as applicable.
Section 5.16 Maintenance of Ratings . In the case of the U.S. Borrower, at all times use commercially reasonable efforts to maintain public ratings issued by Moody’s and S&P with respect to its senior secured debt.
Section 5.17 Post-Restatement Date Obligations .
(a) Within 60 days following the Restatement Date (or such later date as the Collateral Agent may agree in its reasonable discretion), the Collateral Agent shall have received (a) modifications to each Mortgage in favor of the Collateral Agent with respect to each Existing Mortgaged Property, duly executed and acknowledged by each Loan Party that is the owner of or holder of any interest in such Mortgaged Property, and otherwise in form for recording in the recording office of each applicable political subdivision where each such Mortgaged Property is situated, together with an endorsement updating the Title Policy with respect to such Mortgaged Property consistent with the requirements of Section 5.11(b)(3) and an updated Flood Certificate with respect to such Mortgaged Property consistent with the requirements of Section 5.11(b)(4) and (b) opinions of counsel to the applicable Loan Parties in each applicable jurisdiction addressed to the Agents, the Arrangers and the Lenders, all of which shall be in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent.
(b) Within 60 days following the Restatement Date (or such later date as the Collateral Agent may agree in its reasonable discretion), the U.S. Borrower and each applicable Guarantor shall comply with each of the requirements set forth in Section 5.11(b) in the case of each Material Real Estate Asset acquired in the Acquisition and listed on Schedule 5.17(b) (each, a “ Restatement Date Mortgaged Property ”).
 
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ARTICLE VI.
NEGATIVE COVENANTS
Each Loan Party covenants and agrees that, so long as any Commitment is in effect and until Payment in Full of all Obligations, such Loan Party shall not, nor shall it cause or permit any of its Subsidiaries to:
Section 6.01 Indebtedness . Directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except:
(a) the Obligations (including, without limitation, with respect to Incremental Term Loans and Incremental Revolving Loans);
(b) Indebtedness of any Subsidiary owed to the U.S. Borrower or to any other Subsidiary, or of the U.S. Borrower owed to any Subsidiary; provided , that (i) all such Indebtedness shall be evidenced by the Intercompany Note, and, if owed to a Loan Party, shall be subject to a First Priority Lien pursuant to the Pledge and Security Agreement, (ii) all such Indebtedness shall be unsecured and subordinated in right of payment to the Payment in Full of the Obligations pursuant to the terms of the Intercompany Note, (iii) any payment by any such Subsidiary Guarantor under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any Indebtedness owed by such Subsidiary to the U.S. Borrower or to any of its Subsidiaries for whose benefit such payment is made and (iv) such Indebtedness is permitted as an Investment under Section 6.06(d);
(c) Unsecured Indebtedness that (i) matures after, and does not require any scheduled amortization or other scheduled payments of principal prior to, the maturity date of the Term Loans (it being understood that such Indebtedness may have mandatory prepayment, repurchase or redemptions provisions satisfying the requirement of clause (ii) hereof), (ii) has terms and conditions (other than interest rate, redemption premiums and subordination terms), taken as a whole, that are not materially less favorable to the U.S. Borrower than the terms and conditions customary at the time for high-yield debt securities issued in a public offering (or if applicable, high-yield subordinated debt securities so issues) and (iii) is incurred by the U.S. Borrower or a Guarantor; provided , that both immediately prior and after giving effect to the incurrence thereof, (x) no Default or Event of Default shall exist or result therefrom and (y) as of the last day of the most recent Fiscal Quarter for which financial statements are available, the U.S. Borrower shall be in compliance with a Leverage Ratio (calculated on a pro forma basis) not exceeding 4.75:1.00;
 
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(d) Indebtedness incurred by Holdings or any of its Subsidiaries arising from agreements providing for indemnification, adjustment of purchase price or similar obligations (including, Indebtedness consisting of the deferred purchase price of assets or property acquired in a Permitted Acquisition, “ Earn Out Indebtedness ”), or from guaranties or letters of credit, surety bonds or performance bonds securing the performance of the U.S. Borrower or any such Subsidiary pursuant to such agreements, in connection with Permitted Acquisitions or permitted dispositions of any business, assets or Subsidiary of Holdings or any of its Subsidiaries;
(e) Indebtedness which may be deemed to exist pursuant to any workers’ compensation claims, self-insurance obligations, bankers’ acceptances, bids, guaranties, performance, surety, statutory, appeal or similar obligations incurred in the ordinary course of business;
(f) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;
(g) guaranties in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of the U.S. Borrower and its Subsidiaries;
(h) guaranties by the U.S. Borrower of Indebtedness of a Subsidiary Guarantor or guaranties by a Subsidiary Guarantor of Indebtedness of the U.S. Borrower or another Subsidiary Guarantor with respect, in each case, to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.01; provided , that if the Indebtedness that is being guarantied is unsecured and/or subordinated to the Obligations, the guaranty shall also be unsecured and/or subordinated to the Obligations;
(i) Indebtedness described in Schedule 6.01 and any Permitted Refinancing thereof;
(j) Indebtedness of the U.S. Borrower and its Subsidiaries with respect to Capital Leases and Attributable Indebtedness in an aggregate amount not to exceed at any time $25,000,000;
(k) purchase money Indebtedness of the U.S. Borrower and its Subsidiaries in an aggregate amount not to exceed at any time $25,000,000; provided , that any such Indebtedness (i) shall be secured only by the asset acquired in connection with the incurrence of such Indebtedness, and (ii) shall constitute not more than 80.0% of the aggregate consideration paid with respect to such asset;
(l) (i) Indebtedness of a Person or Indebtedness attaching to assets of a Person that, in either case, becomes a Subsidiary or Indebtedness attaching to assets that are acquired by the U.S. Borrower or any of its Subsidiaries, in each case after the Restatement Date as the result of a Permitted Acquisition, provided , that (x) such Indebtedness existed at the time such Person became a Subsidiary or at the time such assets were acquired and, in each case, was not created in anticipation thereof and (y) such Indebtedness is not guaranteed in any respect by Holdings or any of its Subsidiaries (other than by any such person that so becomes a Subsidiary) and (ii) any Permitted Refinancing thereof; provided , that (1) the direct and contingent obligors with respect to such Indebtedness are not changed and (2) such Indebtedness shall not be secured by any assets other than the assets securing the Indebtedness being renewed, extended or refinanced;
 
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(m) Indebtedness of the type described in clause (xi) of the definition thereof incurred in the ordinary course of business; provided that in each case such Indebtedness shall not have been entered into for speculative purposes;
(n) Indebtedness incurred by the U.S. Borrower or any of its Subsidiaries owing to any insurance company in connection with the financing of any insurance premiums permitted by such insurance company in the ordinary course of business; and
(o) other Indebtedness of the U.S. Borrower and its Subsidiaries in an aggregate amount not to exceed at any time $60,000,000.
Section 6.02 Liens . Directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of Holdings or any of its Subsidiaries, whether now owned or hereafter acquired or licensed, or any income, profits or royalties therefrom, except:
(a) Liens in favor of the Collateral Agent for the benefit of Secured Parties granted pursuant to any Loan Document;
(b) Liens for Taxes to the extent obligations with respect to such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted so long as adequate reserves or other appropriate provisions as shall be required in conformity with GAAP shall have been made therefor;
(c) statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 430(k) of the Internal Revenue Code or Section 303(k) of ERISA or a violation of Section 436 of the Internal Revenue Code), in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five (5) days) are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts;
(d) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof;
(e) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of Holdings or any of its Subsidiaries and that, in the aggregate, do not materially detract from the value of the property subject thereto;
 
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(f) any interest or title of a lessor or sublessor under any lease of real estate permitted hereunder and covering only the assets so leased;
(g) Liens solely on any cash earnest money deposits made by Holdings or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;
(h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property, consignments and similar arrangements entered into in the ordinary course of business;
(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(j) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property and do not impair the use or value of the Real Estate Assets;
(k) non-exclusive outbound licenses of patents, copyrights, trademarks and other intellectual property rights granted by Holdings or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of or materially detracting from the value of the business of the Holdings or such Subsidiary;
(l) Liens described in Schedule 6.02 or on a title report delivered pursuant to Section 5.17(b) and any refinancings, renewals or extensions thereof; provided that (i) no additional property is covered thereby, (ii) the amount secured or benefitted thereby is not increased (except, in connection with any refinancing, refunding, renewal or extension thereof, by an amount equal to accrued interest, a reasonable premium paid in connection with such renewal, replacement, extension or refinancing, as applicable, and fees and expenses reasonably incurred in connection therewith) and (iii) if such Lien secures Indebtedness, such Indebtedness is a refinancing, renewal or extension of Indebtedness permitted by Section 6.01(i);
(m) Liens securing Indebtedness permitted pursuant to Section 6.01(j) and (k); provided , that any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness;
(n) Liens securing Indebtedness permitted by Section 6.01(l), provided , that any such Lien shall encumber only those assets which secured such Indebtedness at the time such assets were acquired by the U.S. Borrower or its Subsidiaries;
(o) Liens arising from judgments in circumstances not constituting an Event of Default under Section 8.01(h);
(p) Liens arising by virtue of any statutory, contractual or common law provision relating to rights of set-off or similar rights relating to the establishment of depository relations in the ordinary course of business with banks not given in connection with the issuance of Indebtedness;
 
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(q) Liens of a collection bank arising under Section 4-210 of the UCC on items in the course of collection;
(r) Liens on specific items of inventory or other goods arising under Article 2 of the UCC in the ordinary course of business securing such Person’s obligations in respect of bankers’ acceptances and letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods, in any case covering only goods actually sold;
(s) Liens on insurance policies and the proceeds thereof securing the financing of premiums with respect thereto to the extent permitted hereunder;
(t) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by any Loan Party in the ordinary course of business and consistent with the past practices of such Loan Party;
(u) Liens on the equity interests of any Technology Entity pursuant to any Technology Acquisition Claw-Back; and
(v) other Liens on assets other than the Collateral securing Indebtedness (including Indebtedness incurred pursuant to Section 6.01(o)), in an aggregate amount not to exceed $30,000,000 at any time outstanding.
Section 6.03 No Further Negative Pledges . Except with respect to (a) this Agreement and the other Loan Documents, (b) specific assets or property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to a permitted Asset Sale, (c) Liens permitted by Section 6.02(e), (m) and (n) or any document or agreement governing such Liens; provided that such restrictions are limited by the assets and/or property securing such Lien and (d) restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business ( provided that such restrictions are limited to the assets or property secured by such Liens or the assets or property subject to such leases, licenses or similar agreements, as the case may be), enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired, to secure the Obligations.
Section 6.04 Restricted Junior Payments . Directly or indirectly through any manner or means nor shall it permit any of its Affiliates directly or indirectly through any manner or means, declare, order, pay, make or set apart, or agree to declare, order, pay, make or set apart, any sum for any Restricted Junior Payment except that (a) any Subsidiary of the U.S. Borrower may declare and pay dividends or make other distributions ratably to the U.S. Borrower or any Wholly-Owned Subsidiary Guarantor; (b) the U.S. Borrower may make regularly scheduled payments of interest in respect of any Subordinated Indebtedness in accordance with the terms of, and only to the extent required by, and subject to any subordination provisions contained in, the indenture or other agreement pursuant to which such Indebtedness was issued; (c) the U.S. Borrower may make Restricted Junior Payments to Holdings, and Holdings may make Restricted Junior Payments to FML Holdings (i) to the extent necessary to permit FML Holdings to pay
 
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general administrative costs and expenses attributable to its ownership of Holdings and the U.S. Borrower incurred in the ordinary course of business, determined in accordance with GAAP and (ii) so long as such Loan Party is a member of a group with FML Holdings as the common parent filing a consolidated or combined return, to the extent necessary to permit FML Holdings to discharge the consolidated or combined tax liabilities of FML Holdings and its Subsidiaries, in each case so long as FML Holdings applies the amount of any such Restricted Junior Payment for such purpose; (d) so long as no Default or Event of Default shall have occurred and be continuing or shall be caused thereby, the U.S. Borrower may make Restricted Junior Payments to Holdings, and Holdings may make Restricted Junior Payments to FML Holdings in an aggregate amount not to exceed $5,000,000 to permit FML Holdings to purchase common stock or common stock options of FML Holdings from shareholders (including, without limitation, present or former officers or employees of FML Holdings or any of Holdings’ Subsidiaries upon the death, disability or termination of employment of such officer or employee); (e) the U.S. Borrower may pay, or make Restricted Junior Payments to Holdings, and Holdings may make Restricted Junior Payments to FML Holdings to allow it to pay amounts due and owing to the Sponsor or its Affiliates pursuant to the terms of the Management Agreement (including, without limitation, amounts in respect of management fees and reimbursement obligations); provided , that upon the occurrence of a Default or an Event of Default and during the continuance thereof, no payment of any management fees or similar distributions to the Sponsor or any of its Affiliates shall be permitted under this Section 6.04(e); (f) so long as no Default or Event of Default shall have occurred or shall be caused thereby, the U.S. Borrower may make Restricted Junior Payments to allow FML Holdings to make payments in cash, in lieu of the issuance of fractional shares, upon the exercise of warrants or upon the conversion or exchange of Equity Interests of any such Person; and (g) so long as no Default or Event of Default shall have occurred and be continuing or shall be caused thereby, other Restricted Junior Payments in an aggregate amount not to exceed, if the Leverage Ratio (calculated on a pro forma basis) is less than 3.50:1.00, an amount equal to the Available Amount; provided that, notwithstanding the foregoing clause (g), if the Leverage Ratio (calculated on a pro forma basis) is greater than or equal to 3.50:1.00, the U.S. Borrower may make distributions of up to $5,000,000 per Fiscal Year to Holdings and Holdings may make Restricted Junior Payments to FML Holdings to enable FML Holdings to purchase common stock or common stock options of FML Holdings from shareholders, so long as such amount distributed does not exceed the Available Amount and no Default or Event of Default shall have occurred and be continuing and; provided , further that, in each case, after giving effect to any Restricted Junior Payment described in this Section 6.04(g), the Leverage Ratio (calculated on a pro forma basis) shall not exceed 4.75:1.00; provided that that the proceeds of any Specified Equity Contribution shall not be used to make payments otherwise permitted pursuant to this Section 6.04.
Section 6.05 Restrictions on Subsidiary Distributions . Except as provided herein, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of the U.S. Borrower to (a) pay dividends or make any other distributions on any of such Subsidiary’s Equity Interests owned by the U.S. Borrower or any other Subsidiary of the U.S. Borrower, (b) repay or prepay any Indebtedness owed by such Subsidiary to the U.S. Borrower or any other Subsidiary of the U.S. Borrower, (c) make loans or advances to the U.S. Borrower or any other Subsidiary of the U.S. Borrower, or (d) transfer, lease or license any of its property or assets to a Borrower or any other Subsidiary of a Borrower other than restrictions (i) in agreements evidencing Indebtedness permitted by
 
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Section 6.01(k) that impose restrictions on the property so acquired, (ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements entered into in the ordinary course of business or (iii) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Equity Interests not otherwise prohibited under this Agreement.
Section 6.06 Investments . Directly or indirectly, make or own any Investment in any Person, including any Joint Venture, except:
(a) Investments in Cash and Cash Equivalents;
(b) equity Investments owned as of the Restatement Date in any Subsidiary and Investments made after the Restatement Date in the U.S. Borrower, the Canadian Borrower and any Wholly-Owned Subsidiary Guarantor;
(c) Investments (i) in any Securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors and (ii) consisting of accounts receivables, deposits, prepayments and other trade credits to suppliers created, acquired or made in the ordinary course of business consistent with the past practices of Holdings and its Subsidiaries;
(d) intercompany loans to the extent permitted under Section 6.01(b) and other Investments in Subsidiaries which are not Wholly-Owned Subsidiary Guarantors, provided that such Investments (including through intercompany loans and any Permitted Acquisition) in Subsidiaries other than Wholly-Owned Subsidiary Guarantors shall not exceed at any time an aggregate amount $40,000,000;
(e) Capital Expenditures with respect to any Borrower and the Guarantors;
(f) loans and advances to employees, officers and directors of FML Holdings and its Subsidiaries made in the ordinary course of business in an aggregate principal amount not to exceed $2,000,000;
(g) Permitted Acquisitions permitted pursuant to Section 6.08;
(h) Investments described in Schedule 6.06;
(i) Hedge Agreements which constitute Investments;
(j) loans by the U.S. Borrower or any of its Subsidiaries to the employees, officers or directors of FML Holdings, the U.S. Borrower or any of their respective Subsidiaries in connection with management incentive plans; provided that such loans represent cashless transactions pursuant to which such employees, officers or directors directly invest the proceeds of such loans in Equity Interests issued by FML Holdings;
(k) Investments in the Net Cash Proceeds from Asset Sales and of the type described in clause (b) of the definition thereof, to the extent permitted under Section 2.14(a) or (b), respectively;
 
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(l) Investments arising directly out of the receipt by the U.S. Borrower or any Subsidiary of non-cash consideration for any sale of assets permitted under Section 6.08(d); provided that such non-cash consideration shall in no event exceed 25% of the total consideration received for such sale;
(m) so long as no Default or Event of Default shall have occurred and the Leverage Ratio (calculated on a pro forma basis) is less than 3.50:1.00, Investments an amount equal to the Available Amount; and
(n) other Investments in an aggregate amount not to exceed the sum of (i) $40,000,000 and (ii) the amount of any cash returns actually received by the U.S. Borrower or any Guarantor with regard to any such Investments during the term of this Agreement.
Notwithstanding the foregoing, in no event shall any Loan Party make any Investment which results in or facilitates in any manner any Restricted Junior Payment not otherwise permitted under the terms of Section 6.04.
Section 6.07 Financial Covenant . In the case of the U.S. Borrower, as of the last day of any Fiscal Quarter permit the Leverage Ratio to exceed 4.75:1.00; provided that the covenant set forth in this Section 6.07 shall only be tested if the aggregate Revolving Exposure (excluding any Letters of Credit that have been cash collateralized or backstopped in a manner reasonably satisfactory to the Issuing Bank in an amount equal to 100% or more of the maximum stated amount of the relevant Letter of Credit) of all of the Lenders as of the last day of any such Fiscal Quarter is greater than or equal to 25% of the amount of the Revolving Commitments (a “Covenant Triggering Event”). After the occurrence of a Covenant Triggering Event, the Leverage Ratio shall continue to be tested on the last day of each Fiscal Quarter until the aggregate Revolving Exposure (excluding any Letters of Credit that have been cash collateralized or backstopped in a manner reasonably satisfactory to the Issuing Bank in an amount equal to 100% or more of the maximum stated amount of the relevant Letter of Credit) of all of the Lenders is equal to or less than 25% of the amount of the Revolving Commitments, in which case such Covenant Triggering Event shall no longer be deemed to be continuing for purposes of this Agreement.
Section 6.08 Fundamental Changes; Disposition of Assets; Acquisitions . Enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or license, exchange, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or licensed, or acquire by purchase or otherwise (other than purchases or other acquisitions of inventory, materials and equipment and capital expenditures in the ordinary course of business) the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business or other business unit of any Person, except:
(a) any Subsidiary of any Borrower may be merged with or into such Borrower or any Wholly-Owned Subsidiary Guarantor, or be liquidated, wound up or dissolved, or all or any part of its business, assets or property may be conveyed, sold, leased, transferred or otherwise
 
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disposed of, in one transaction or a series of transactions, to such Borrower or any Wholly-Owned Subsidiary Guarantor; provided , that in the case of such a merger, the applicable Borrower or such Wholly-Owned Subsidiary Guarantor, as applicable shall be the continuing or surviving Person;
(b) any Subsidiary of any Borrower may dispose of any or all of its assets (upon voluntary liquidation or otherwise) to such Borrower or any Wholly-Owned Subsidiary Guarantor;
(c) sales or other dispositions of assets that do not constitute Asset Sales;
(d) Asset Sales, the proceeds of which (valued at the principal amount thereof in the case of non-Cash proceeds consisting of notes or other debt Securities and valued at fair market value in the case of other non-Cash proceeds) when aggregated with the proceeds of all other Asset Sales made within the same Fiscal Year, are less than $20,000,000; provided , that (1) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of the Borrower Representative (or similar governing body)), (2) no less than 75%% thereof shall be paid in Cash, and (3) the Net Cash Proceeds thereof shall be applied as required by Section 2.14(a);
(e) disposals of damaged, obsolete, worn out or surplus property;
(f) the Acquisition and Permitted Acquisitions; provided that in respect of acquisition targets not domiciled within the United States, the consideration for such Persons or assets shall be limited to the Available Amount;
(g) an exchange or “swap” of fixed tangible assets of the Loan Parties or any of their Subsidiaries for similar fixed tangible assets of a Person (other than another Loan Party or its Subsidiaries) or for credit against such similar assets in the ordinary course of business and consistent with past business practices; provided that such Loan Party (or its subsidiary) received reasonable equivalent value for such assets; and provided further that the fair market value of all such assets (as determined in good faith and in accordance with customary valuation techniques by the chief financial officer or vice president of Finance of the U.S. Borrower) exchanged or swapped does not exceed $15,000,000 per Fiscal Year;
(h) any disposition of real property to a Governmental Authority that results in Net Cash Proceeds applied in accordance with Section 2.14(b);
(i) the abandonment, cancellation or other disposition of Intellectual Property that is not material or is no longer used or useful in any material respect in the operation of the U.S. Borrower and its Subsidiaries or the disposition of any equity interest in a Technology Entity pursuant to a Technology Acquisition Claw-Back;
(j) the sale or discount, in each case without recourse and in the ordinary course of business, of overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables); and
(k) Investments made in accordance with Section 6.06 and Restricted Junior Payments made in accordance with Section 6.04.
 
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Section 6.09 Disposal of Subsidiary Interests . Except for any sale or other disposition of all of its interests in the Equity Interests of any of its Subsidiaries permitted by the provisions of Section 6.08 and any Lien on or disposition of equity interests in a Technology Entity pursuant to a Technology Acquisition Claw-Back, (a) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any Equity Interests of any of its Subsidiaries, except to qualify directors if required by applicable law; or (b) permit any of its Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any Equity Interests of any of its Subsidiaries, except to another Loan Party (subject to the restrictions on such disposition otherwise imposed hereunder), or to qualify directors if required by applicable law.
Section 6.10 Sales and Lease-Backs . Directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Loan Party (a) has sold or transferred or is to sell or to transfer to any other Person (other than Holdings or any of its Subsidiaries), or (b) intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by such Loan Party to any Person (other than Holdings or any of its Subsidiaries) in connection with such lease, except for any such arrangement to the extent that the sale of such property is fair market value and in compliance with Section 6.08(d) and the Attributable Indebtedness or Indebtedness with respect thereto is permitted by Section 6.01(j) or (o).
Section 6.11 Transactions with Shareholders and Affiliates . Directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, the rendering of any service or the payment of any management, advisory or similar fees) with any Affiliate of Holdings on terms that are less favorable to Holdings or that Subsidiary, as the case may be, than those that might be obtained in a comparable arm’s length transaction at the time from a Person who is not such a holder or Affiliate; provided , that the foregoing restriction shall not apply to (a) any transaction between any Borrower and any Wholly-Owned Subsidiary Guarantor; (b) reasonable and customary fees paid to members of the board of directors (or similar governing body) of FML Holdings and its Subsidiaries; (c) the payment of amounts to the Sponsor and/or its Affiliates pursuant to the terms of the Management Agreement; (d) the issuance or sale of Equity Interests of the Loan Parties to FML Holdings or any Loan Party, to the extent not prohibited by the terms of this Agreement; and (e) compensation arrangements for officers and other employees of Holdings and its Subsidiaries entered into in the ordinary course of business.
Section 6.12 Conduct of Business . Engage in any business (either directly or through a Subsidiary) other than the businesses engaged in by such Loan Party on the Restatement Date and businesses which are reasonably related, ancillary or complementary thereto or are reasonable extensions thereof.
Section 6.13 Permitted Activities of Holdings . In the case of Holdings, (a) incur, directly or indirectly, any Indebtedness or any other obligation or liability whatsoever other than the Indebtedness and obligations under this Agreement, the other Loan Documents and the
 
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Related Documents; (b) create or suffer to exist any Lien upon any assets or property now owned or hereafter acquired, leased or licensed by it other than the Liens created under the Security Documents to which it is a party or permitted pursuant to Section 6.02; (c) engage in any business or activity or own any assets other than (i) holding 100.0% of the Equity Interests of the U.S. Borrower, (ii) performing its obligations and activities incidental thereto under the Loan Documents, and to the extent not inconsistent therewith, the Related Documents; and (iii) making Restricted Junior Payments and Investments to the extent permitted by this Agreement; (d) consolidate with or merge with or into, or convey, transfer, lease or license all or substantially all its assets to, any Person; (e) sell or otherwise dispose of any Equity Interests of any of its Subsidiaries except to the extent expressly permitted by this Agreement; (f) create or acquire any Subsidiary or make or own any Investment in any Person other than the U.S. Borrower; or (g) fail to hold itself out to the public as a legal entity separate and distinct from all other Persons.
Section 6.14 Amendments or Waivers of Organizational Documents, Related Documents and Certain Indebtedness . Agree to (a) any material amendment, restatement, supplement or other modification to, waiver of or termination of (other than in accordance with the regularly scheduled termination date) any of its Organizational Documents, or any Acquisition Document if such amendment, restatement, supplement or other modification or termination would be materially adverse to the Lenders or (b) any amendment, restatement, supplement, waiver or other modification changing the terms of any Subordinated Indebtedness, or make any payment consistent with an amendment, restatement, supplement, waiver or other modification thereto, if the effect of such amendment, restatement, supplement, waiver or other modification is to increase the interest rate on such Subordinated Indebtedness, change (to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto), change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions of such Subordinated Indebtedness (or of any guaranty thereof), or if the effect of such amendment, restatement, supplement, waiver or other modification, together with all other amendments, restatements, supplements, waivers and other modifications made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders of such Subordinated Indebtedness (or a trustee or other representative on their behalf) which would be materially adverse to any Loan Party or Lenders.
Section 6.15 Fiscal Year . Change its Fiscal Year-end from December 31, or change its method of determining Fiscal Quarters.
ARTICLE VII.
GUARANTY
Section 7.01 Guaranty of the Obligations . Subject to the provisions of Section 7.02, Guarantors (including with respect to the Obligations of the Canadian Borrower, the U.S. Borrower) jointly and severally hereby irrevocably and unconditionally guaranty to the Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual Payment in Full of all Obligations other than any Excluded Swap Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or
 
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otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “ Guaranteed Obligations ”). For the avoidance of doubt, in no event shall any Excluded Foreign Subsidiary (including, without limitation, the Canadian Borrower (for so long as it is an Excluded Foreign Subsidiary)) guaranty the Obligations of the U.S. Borrower or of any other Domestic Subsidiary that is a Loan Party.
Section 7.02 Contribution by Guarantors . All Guarantors desire to allocate among themselves (collectively, the “ Contributing Guarantors ”), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “ Funding Guarantor ”) under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “ Fair Share ” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations Guaranteed. “ Fair Share Contribution Amount ” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided , that solely for purposes of calculating the “ Fair Share Contribution Amount ” with respect to any Contributing Guarantor for purposes of this Section 7.02, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “ Aggregate Payments ” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including in respect of this Section 7.02), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.02. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 7.02 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.02.
Section 7.03 Payment by Guarantors . Subject to Section 7.02, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of any Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the
 
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automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors shall upon demand pay, or cause to be paid, in Cash, to the Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for a Borrower becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against any such Borrower for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.
Section 7.04 Liability of Guarantors Absolute . Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than Payment in Full of the Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:
(a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;
(b) the Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between any Borrower and any Beneficiary with respect to the existence of such Event of Default;
(c) the obligations of each Guarantor hereunder are independent of the obligations of any Borrower and the obligations of any other guarantor (including any other Guarantor) of the obligations of any Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against any Borrower or any of such other guarantors and whether or not any Borrower is joined in any such action or actions;
(d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if the Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;
(e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the
 
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payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith or the applicable Hedge Agreements and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against any Borrower or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Loan Documents or any Hedge Agreements; and
(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than Payment in Full of the Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents or any Hedge Agreements, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Loan Documents, any of the Hedge Agreements or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Loan Document, such Hedge Agreement or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Loan Documents or any of the Hedge Agreements or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of Holdings or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which any Borrower may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.
 
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Section 7.05 Waivers by Guarantors . Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against any Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from any Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of any Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any Borrower or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of any Borrower or any other Guarantor from any cause other than Payment in Full of the Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, the Hedge Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to any Borrower and notices of any of the matters referred to in Section 7.04 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.
Section 7.06 Guarantors’ Rights of Subrogation, Contribution, Etc. Until the Obligations shall have been Paid in Full, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against any Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against any Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against any Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Obligations shall have been Paid in Full, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other
 
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Guarantor) of the Guaranteed Obligations, including any such right of contribution as contemplated by Section 7.02. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against any Borrower or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against any Borrower, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Obligations shall not have been Paid in Full, such amount shall be held in trust for the Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to the Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.
Section 7.07 Subordination of Other Obligations . Any Indebtedness of any Borrower or any Guarantor now or hereafter held by any Guarantor (the “ Obligee Guarantor ”) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such Indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for the Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to the Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof.
Section 7.08 Continuing Guaranty . This Guaranty is a continuing guaranty and shall remain in effect until all of the Obligations shall have been Paid in Full. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.
Section 7.09 Authority of Guarantors or the Borrowers . It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or any Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.
Section 7.10 Financial Condition of the Borrowers . Any Credit Extension may be made to any Borrower or continued from time to time, and any Hedge Agreements may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of such Borrower at the time of any such grant or continuation or at the time such Hedge Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of any Borrower. Each Guarantor has adequate means to obtain information from the Borrowers on a continuing basis concerning the financial condition of the Borrowers and their ability to perform its obligations under the Loan Documents and Hedge Agreements, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of the Borrowers and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each
 
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Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of any Borrower now known or hereafter known by any Beneficiary.
Section 7.11 Bankruptcy, Etc.
(a) So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of the Administrative Agent acting pursuant to the instructions of Required Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency case or proceeding of or against any Borrower or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of any Borrower or any other Guarantor or by any defense which any Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve any Borrower of any portion of such Guaranteed Obligations. Guarantors shall permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person to pay the Administrative Agent, or allow the claim of the Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.
(c) In the event that all or any portion of the Guaranteed Obligations are paid by the applicable Borrower, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.
Section 7.12 Discharge of Guaranty Upon Sale of Guarantor . If all of the Equity Interests of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such Asset Sale.
 
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ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.01 Events of Default . If any one or more of the following conditions or events occur:
(a) Failure to Make Payments When Due . Failure by any Borrower to pay (i) when due any installment of principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; (ii) when due any amount payable to the Issuing Bank in reimbursement of any drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee or any other amount due hereunder within five (5) days after the date due; or
(b) Default Under Other Agreements . (i) Failure of any Loan Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount, including any payment in settlement, payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.01(a)) in an individual principal amount (or Net Mark-to-Market Exposure) of $25,000,000 or more or with an aggregate principal amount (or Net Mark-to-Market Exposure) of $25,000,000 or more, in each case beyond the grace period, if any, provided therefor; or (ii) breach or default by any Loan Party with respect to any other material term of (1) one or more items of Indebtedness in the individual or aggregate principal amounts (or Net Mark-to-Market Exposure) referred to in clause (i) above or (2) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; provided , that clause (ii) of this Section 8.01(b) shall not apply to secured Indebtedness that becomes due as a result of the voluntary disposition of the property or assets securing such Indebtedness, if such disposition is permitted hereunder and such Indebtedness that becomes due is paid upon such disposition; or
(c) Breach of Certain Covenants . Failure of any Loan Party to perform or comply with any term or condition contained in Section 2.06, Sections 5.01(a), 5.01(b) or 5.01(c), 5.01(d) and 5.01(f), Section 5.02, Section 5.17 or Article VI; provided that, to the extent that such financial covenant is in effect, failure to comply with the financial covenant set forth in Section 6.07 will not constitute an Event of Default for purposes of any Tranche B-1 Term Loan or Tranche B-2 Term Loan, and no Term Lender will be permitted to exercise any remedies with respect to an Event of Default in respect of the financial covenant set forth in Section 6.07 until the date, if any, on which the Revolving Commitments have been terminated and the Revolving Loans have been accelerated as a result of such breach of the covenant set forth in Section 6.07 ; or
(d) Breach of Representations, Etc. (i) Any Specified Representation or any Company Representation shall prove to have been inaccurate in any material respect, (ii) any representation or warranty in Article IV (other than those included in the foregoing clause (i)), was inaccurate as of the Restatement Date in any material respect ( provided that such materiality qualifier shall not be applicable to any representations and warranties that are already qualified by materiality or material adverse effect in the text thereof); provided further that such inaccuracy will not be an Event of Default hereunder if within 30 days of the Restatement Date,
 
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reasonable steps are being taken so as to remedy such Default within such period and such inaccuracy is remedied within such period and (iii) at any time after the Restatement Date, any representation, warranty, certification or other statement made or deemed made by any Loan Party in any Loan Document or in any statement or certificate at any time given by any Loan Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect as of the date made or deemed made or, to the extent that any such representation, warranty, certification or other statement is already qualified by materiality or material adverse effect in the text thereof, such representation, warranty, certification or other statement shall be false in any respect as of the date made or deemed made; or
(e) Other Defaults Under Loan Documents . Any Loan Party shall default in the performance of or compliance with any term contained herein or any of the other Loan Documents, other than any such term referred to in any other Section of this Section 8.01, and such default shall not have been remedied or waived within thirty (30) days after the earlier of (i) an Authorized Officer of such Loan Party becoming aware of such default or (ii) receipt by any Borrower of written notice from the Administrative Agent or any Lender of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Holdings or any of its Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Holdings or any of its Subsidiaries under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, conservator, custodian or other officer having similar powers over Holdings or any of its Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee, conservator or other custodian of Holdings or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Holdings or any of its Subsidiaries, and any such event described in this clause (ii) shall continue for sixty (60) days without having been dismissed, bonded or discharged; or
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. (i) Holdings or any of its Subsidiaries shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee, conservator or other custodian for all or a substantial part of its property; or Holdings or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Holdings or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or similar governing body) of Holdings or any of its Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.01(f); or
 
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(h) Judgments and Attachments . Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $25,000,000 or (ii) in the aggregate at any time an amount in excess of $25,000,000 (in either case to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Holdings or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days (or in any event later than five (5) days prior to the date of any proposed sale thereunder); or
(i) Dissolution . Any order, judgment or decree shall be entered against any Loan Party decreeing the dissolution or split up of such Loan Party and such order shall remain undischarged or unstayed for a period in excess of sixty (60) days; or
(j) Employee Benefit Plans . There shall occur (i) one or more ERISA Events which individually or in the aggregate results in or could reasonably be expected to result in a Material Adverse Effect or (ii) the ERISA Event described in clause (ii) of the definition thereof; or
(k) Change of Control . A Change of Control occurs; or
(l) Guaranties, Security Documents and other Loan Documents . At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of the Obligations being Paid in Full, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement or any Security Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the Obligations being Paid in Full) or shall be declared null and void, or the Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral purported to be covered by the Security Documents with the priority required by the relevant Security Document, in each case for any reason other than the failure of the Collateral Agent or any Secured Party to take any action within its control, or (iii) any Loan Party shall contest the validity or enforceability of any Loan Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Loan Document to which it is a party or shall contest the validity or perfection of any Lien in any Collateral purported to be covered by the Security Documents; or
(m) Subordinated Indebtedness . Any Subordinated Indebtedness permitted hereunder or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations of the Loan Parties hereunder, as provided in the indenture governing such Subordinated Indebtedness, or any Loan Party, any Affiliate of any Loan Party, the agent of trustee in respect of any such Subordinated Indebtedness or the holders of at least 25.0% in aggregate principal amount of such Subordinated Indebtedness shall so assert;
THEN , (1) upon the occurrence of any Event of Default described in Section 8.01(f) or 8.01(g), automatically, and (2) upon the occurrence and during the continuance of any other Event of
 
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Default, at the request of or with the consent of the Required Lenders, (A) the Revolving Commitments, if any, of each Lender having such Revolving Commitments, the obligation of any Issuing Bank to issue any Letter of Credit and the obligation of any Swing Line Lender to make any Swing Line Loan shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Loan Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit), and (III) all other Obligations; provided , that the foregoing shall not affect in any way the obligations of Lenders under Section 2.03(b)(v) or Section 2.04(e); (C) the Administrative Agent may cause the Collateral Agent to enforce any and all Liens and security interests created pursuant to Security Documents; (D) the Administrative Agent shall direct each Borrower to pay (and each Borrower hereby agrees upon receipt of such notice, or upon the occurrence of any Event of Default specified in Sections 8.01(f) and (g) to pay) to the Revolving Administrative Agent such additional amounts of cash as reasonable requested by any Issuing Bank, to be held as security for such Borrower’s reimbursement Obligations in respect of Letters of Credit then outstanding; and (E) the Administrative Agent, the Revolving Administrative Agent and the Collateral Agent may exercise on behalf of themselves, the Lenders, each Issuing Bank and the other Secured Parties all rights and remedies available to the Administrative Agent, the Revolving Administrative Agent, the Collateral Agent, the Lenders and any Issuing Bank under the Loan Documents or under applicable law or in equity.
Section 8.02 Right to Cure. (a) In the event that the U.S. Borrower fails to comply with the covenant set forth in Section 6.07 and, within ten (10) Business Days thereof if (i) Holdings issues Equity Interests (other than Disqualified Equity Interests) for cash or otherwise receive cash contributions on account of its existing Equity Interests (the “ Specified Equity Contribution ”) and the net cash proceeds from such issuance or contribution (the “ Cure Amount ”) are contributed to the U.S. Borrower) and (ii) upon the receipt by the U.S. Borrower of such Cure Amount, the Loans are prepaid in an amount equal to the Cure Amount pursuant to Section 2.14(f), then, the covenant set forth in such Section 6.07 shall be recalculated, giving effect to a pro forma increase to Consolidated Adjusted EBITDA for such four fiscal quarter period in an amount equal to the Cure Amount, but without giving effect to such prepayment of Loans. Any such pro forma adjustment to Consolidated Adjusted EBITDA shall be provided solely for the purpose of determining the existence of a Default or an Event of Default under the covenant set forth in Section 6.07 with respect to any four fiscal quarter period that includes the fiscal quarter for which such Specified Equity Contribution was exercised (and with respect to each such fiscal quarter, such prepayment shall not be given effect) and not for any other purpose under any Loan Document.
(b) If, after the exercise of the Specified Equity Contribution and the recalculations pursuant to clause (a) above, Holdings shall then be in compliance with the requirements of the covenant set forth in Section 6.07 during such four fiscal quarter period, Holdings shall be deemed to have satisfied the requirements of such covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at
 
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such date, and the applicable Default or Event of Default under Section 8.01 that had occurred shall be deemed cured; provided that during the term of this Agreement (i) the Specified Equity Contribution shall be exercised in no more than two (2) Fiscal Quarters in each four consecutive fiscal quarter period, (ii) the Specified Equity Contribution shall be exercised no more than four (4) times, (iii) with respect to any exercise of the Specified Equity Contribution, the Cure Amount shall be no greater than the amount required to cause Holdings to be in compliance with the covenant set forth in Section 6.07, (iv) such Specified Equity Contribution may only be exercised from the date on which financial statements are required to be delivered with respect to the then-applicable fiscal quarter until the expiration of the tenth Business Day after such date, (v) other than for purposes of Section 3.02, no Event of Default under Section 6.07 shall be deemed to have occurred until the aforementioned tenth Business Day occurs without exercise of the Specified Equity Contribution, (vi) the increase to Consolidated Adjusted EBITDA represented by the exercise of the Specified Equity Contribution shall be solely for the purpose of curing the failure to comply with the financial covenant set forth in Section 6.07 and not for any other purpose, including the calculation of determining pricing, financial ratio based conditions or any basket amount or exception otherwise set forth in this Agreement, (vii) the proceeds of any such Specified Equity Contribution shall have been contributed to the U.S. Borrower as cash equity and (viii) there shall be no pro forma reduction in Indebtedness with the proceeds of any Specified Equity Contribution for determining compliance with Section 6.07 in the quarter in which such Specified Equity Contribution is made.
ARTICLE IX.
AGENTS
Section 9.01 Appointment of Agents . KeyBank is hereby appointed the Syndication Agent hereunder, and each Lender hereby authorizes KeyBank to act as the Syndication Agent in accordance with the terms hereof and the other Loan Documents. Barclays Bank is hereby appointed the Administrative Agent, the Revolving Administrative Agent and the Collateral Agent hereunder and under the other Loan Documents and each Lender hereby authorizes Barclays Bank to act as the Administrative Agent, the Revolving Administrative Agent and the Collateral Agent in accordance with the terms hereof and the other Loan Documents. PNC Bank and Wells Fargo Securities are hereby appointed the Co-Documentation Agents hereunder, and each Lender hereby authorizes PNC Bank and Wells Fargo Securities to act as the Co-Documentation Agents in accordance with the terms hereof and the other Loan Documents. Each Agent hereby agrees to act in its capacity as such upon the express conditions contained herein and the other Loan Documents, as applicable. The provisions of this Article IX (other than as expressly provided herein) are solely for the benefit of the Agents and the Lenders and no Loan Party shall have any rights as a third party beneficiary of any of the provisions of this Article IX (other than as expressly provided herein). In performing its functions and duties hereunder, each Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Holdings or any of its Subsidiaries. The Syndication Agent and each of the Co-Documentation Agents, without consent of or notice to any party hereto, may assign any and all of their respective rights or obligations hereunder to any of their respective Affiliates. Notwithstanding any other provision of this Agreement or any provision of any other Loan Document, each of the Arrangers, the Bookrunners, the Syndication Agent and the Co-Documentation Agents are named as such for recognition purposes only, and in their respective
 
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capacities as such shall have no duties, responsibilities or liabilities with respect to this Agreement or any other Loan Document; it being understood and agreed that each of the Arrangers, the Bookrunners, Syndication Agent and the Co-Documentation Agents shall be entitled to all indemnification and reimbursement rights in favor of the Agents provided herein and in the other Loan Documents and all of the other benefits of this Article IX. Without limitation of the foregoing, none of the Arrangers, the Bookrunners, the Syndication Agent nor the Co-Documentation Agents in their respective capacities as such shall, by reason of this Agreement or any other Loan Document, have any fiduciary relationship in respect of any Lender, Loan Party or any other Person.
Section 9.02 Powers and Duties . Each Lender irrevocably authorizes each Agent to take such action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Loan Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. In the event that any obligations (other than the Obligations) are permitted to be incurred hereunder and secured by Liens permitted to be incurred hereunder on all or a portion of the Collateral, each Lender authorizes the Administrative Agent to enter into intercreditor agreements, subordination agreements and amendments to the Security Documents to reflect such arrangements on terms acceptable to the Administrative Agent. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Loan Documents. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Loan Documents, a fiduciary relationship or other implied duties in respect of any Lender; and nothing herein or any of the other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Loan Documents except as expressly set forth herein or therein. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement and in the other Loan Documents with reference to any Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under the agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.
Section 9.03 General Immunity .
(a) No Responsibility for Certain Matters . No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Loan Document, or for the creation, perfection or priority of any Lien, or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to the Lenders or by or on behalf of any Loan Party or to any Agent or Lender in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Loan Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or as to the value or sufficiency of any Collateral or as to the satisfaction of
 
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any condition set forth in Article III or elsewhere herein (other than confirm receipt of items expressly required to be delivered to such Agent) or to inspect the properties, books or records of Holdings or any of its Subsidiaries or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, neither the Administrative Agent nor the Revolving Administrative Agent shall have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof.
(b) Exculpatory Provisions . No Agent nor any of its officers, partners, directors, employees or agents shall be liable to the Lenders (i) for any action taken or omitted by any Agent (A) under or in connection with any of the Loan Documents or (B) with the consent or at the request of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement) except to the extent caused by such Agent’s gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction or (ii) for any failure of any Loan Party to perform its obligations under this Agreement or any other Loan Document. No Agent shall, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose or be liable for the failure to disclose, any information relating to any Borrower or any of its Affiliates that is communicated to or obtained by such Agent or any of its Affiliates in any capacity. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Loan Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Required Lenders (or such other Lenders as may be required to give such instructions under Section 10.05) and, upon receipt of such instructions from Required Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions and shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Holdings and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Loan Documents in accordance with the instructions of Required Lenders (or such other Lenders as may be required to give such instructions under Section 10.05).
(c) Delegation of Duties . Each of the Administrative Agent, the Revolving Administrative Agent and the Collateral Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Loan Document by or through any one or more sub-agents appointed by it. Each of the Administrative Agent, the Revolving Administrative Agent, the Collateral Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9.03 and of Section 9.06 shall apply to any of the Affiliates of the Administrative Agent, the Revolving Administrative Agent or the Collateral Agent and shall apply to their respective activities in connection with the
 
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syndication of the credit facilities provided for herein as well as activities of the Administrative Agent, Revolving Administrative Agent or Collateral Agent, as applicable. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9.03 and of Section 9.06 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by the Administrative Agent or the Revolving Administrative Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other Person, against any or all of Loan Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to the Administrative Agent or, as applicable, the Revolving Administrative Agent, and not to any Loan Party, Lender or any other Person and no Loan Party, Lender or any other Person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent.
(d) Notice of Default or Event of Default . No Agent shall be deemed to have knowledge of any Default or Event of Default unless and until written notice describing such Default or Event of Default is given to such Agent by a Loan Party or a Lender. In the event that the Administrative Agent or the Revolving Administrative Agent shall receive such a notice, the Administrative Agent or the Revolving Administrative Agent shall give notice thereof to the Lenders, provided that failure to give such notice shall not result in any liability on the part of the Administrative Agent or the Revolving Administrative Agent.
Section 9.04 Agents Entitled to Act as Lender . The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder in its capacity as a Lender as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Holdings or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from any Borrower for services in connection herewith and otherwise without having to account for the same to Lenders. The Lenders acknowledge that pursuant to such activities, the Agents or their Affiliates may receive information regarding any Loan Party or any Affiliate of any Loan Party (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Agents and their Affiliates shall be under no obligation to provide such information to them.
 
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Section 9.05 Lenders’ Representations, Warranties and Acknowledgment .
(a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Holdings and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Holdings and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.
(b) Each Lender, by delivering its signature page to this Agreement, an Assignment Agreement or a Joinder Agreement and funding its Loans on the Original Closing Date or Restatement Date, as applicable, or by the funding of any Incremental Term Loans or Incremental Revolving Loans, as the case may be, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be approved by any Agent, Required Lenders or Lenders, as applicable on the Original Closing Date or Restatement Date, as applicable, or as of the date of funding of such Loans.
Section 9.06 Right to Indemnity . Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Loan Party (and without limiting its obligation to do so), for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Loan Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Loan Documents; provided , that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided , that in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided , further , that this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.
Section 9.07 Successor Administrative Agent, Collateral Agent and Swing Line Lender .
(a) The Administrative Agent shall have the right to resign at any time by giving prior written notice thereof to the Lenders and the Borrower Representative, and, if the Administrative Agent is deemed insolvent or becomes the subject of an insolvency, bankruptcy, dissolution, liquidation or reorganization proceeding, or if the Administrative Agent or any substantial part of its property becomes the subject of an appointment of a receiver, intervenor or
 
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conservator, or a trustee or similar officer becomes the subject of a bankruptcy under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, the Administrative Agent may be removed at any time thereafter by an instrument or concurrent instruments in writing delivered to the Borrower Representative and the Administrative Agent and signed by Required Lenders. The Administrative Agent shall have the right to appoint a financial institution to act as the Administrative Agent and/or the Collateral Agent hereunder, subject to the reasonable satisfaction of the Borrower Representative and the Required Lenders, and the Administrative Agent’s resignation shall become effective on the earlier of (i) the acceptance of such successor the Administrative Agent by the Borrower Representative and the Required Lenders or (ii) the thirtieth day after such notice of resignation. Upon any such notice of resignation or any such removal, if a successor the Administrative Agent has not already been appointed by the retiring the Administrative Agent, the Required Lenders shall have the right, upon five (5) Business Days’ notice to the Borrower Representative, to appoint a successor the Administrative Agent; provided that so long as no Default or Event of Default exists, such appointment shall be reasonably satisfactory to the Borrower Representative. If neither Required Lenders nor the Administrative Agent have appointed a successor Administrative Agent, then the Required Lenders shall be deemed to have succeeded to and become vested with all the rights, powers, privileges and duties of the retiring the Administrative Agent; provided , that until a successor the Administrative Agent is so appointed by Required Lenders or the Administrative Agent, the Administrative Agent, by notice to the Borrower Representative and Required Lenders, may retain its role as the Collateral Agent under any Security Document. Upon the acceptance of any appointment as the Administrative Agent hereunder by a successor the Administrative Agent, that successor the Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed the Administrative Agent and the retiring or removed the Administrative Agent shall promptly (i) transfer to such successor the Administrative Agent all sums, Securities and other items of Collateral held under the Security Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor the Administrative Agent under the Loan Documents, and (ii) execute and deliver to such successor the Administrative Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor the Administrative Agent of the security interests created under the Security Documents, whereupon such retiring or removed the Administrative Agent shall be discharged from its duties and obligations hereunder. Except as provided above, any resignation or removal of Barclays Bank or its successor as the Administrative Agent pursuant to this Section shall also constitute the resignation or removal of Barclays Bank or its successor as the Collateral Agent. After any retiring or removed the Administrative Agent’s resignation or removal hereunder as the Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent hereunder. Any successor the Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor the Collateral Agent for all purposes hereunder. If Barclays Bank or its successor as the Administrative Agent pursuant to this Section has resigned as the Administrative Agent but retained its role as the Collateral Agent and no successor the Collateral Agent has become the Collateral Agent pursuant to the immediately preceding sentence, Barclays Bank or its successor may resign as the Collateral Agent upon notice to the Borrower Representative and Required Lenders at any time.
 
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(b) In addition to the foregoing, the Collateral Agent may resign at any time by giving thirty (30) days’ prior written notice thereof to Lenders and the Borrower Representative. The Administrative Agent shall have the right to appoint a financial institution as the Collateral Agent hereunder, subject to the reasonable satisfaction of the Borrower Representative and the Required Lenders and the Collateral Agent’s resignation shall become effective on the earlier of (i) the acceptance of such successor Collateral Agent by the Borrower Representative and the Required Lenders or (ii) the thirtieth day after such notice of resignation. Upon any such notice of resignation, Required Lenders shall have the right, upon five (5) Business Days’ notice to the Administrative Agent, to appoint a successor Collateral Agent provided that so long as no Default or Event of Default exists, such appointment shall be reasonably satisfactory to the Borrower Representative. Upon the acceptance of any appointment as the Collateral Agent hereunder by a successor Collateral Agent, that the successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent under this Agreement and the Security Documents, and the retiring Collateral Agent under this Agreement shall promptly (i) transfer to such successor Collateral Agent all sums, Securities and other items of Collateral held hereunder or under the Security Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Collateral Agent under this Agreement and the Security Documents, and (ii) execute and deliver to such successor Collateral Agent or otherwise authorize the filing of such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Collateral Agent of the security interests created under the Security Documents, whereupon such retiring Collateral Agent shall be discharged from its duties and obligations under this Agreement and the Security Documents. After any retiring Collateral Agent’s resignation hereunder as the Collateral Agent, the provisions of this Agreement and the Security Documents shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement or the Security Documents while it was the Collateral Agent hereunder.
(c) The Revolving Administrative Agent shall have the right to resign at any time by giving prior written notice thereof to the Revolving Lenders, the Administrative Agent and the Borrower Representative. The Revolving Administrative Agent shall have the right to appoint a financial institution to act as the Revolving Administrative Agent hereunder, subject to the reasonable satisfaction of the Borrower Representative and the Required Revolving Lenders, and the Revolving Administrative Agent’s resignation shall become effective on the earlier of (i) the acceptance of such successor Revolving Administrative Agent by the Borrower Representative and the Required Revolving Lenders or (ii) the thirtieth day after such notice of resignation. Upon any such notice of resignation, if a successor Revolving Administrative Agent has not already been appointed by the retiring Revolving Administrative Agent, Required Revolving Lenders shall have the right, upon five (5) Business Days’ notice to the Borrower Representative, to appoint a successor Revolving Administrative Agent; provided that so long as no Default or Event of Default exists, such appointment shall be reasonably satisfactory to the Borrower Representative. If neither Required Revolving Lenders nor the Revolving Administrative Agent have appointed a successor Revolving Administrative Agent, then the Administrative Agent shall be deemed to have succeeded to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent. After any retiring Revolving Administrative Agent’s resignation hereunder as the Revolving Administrative Agent, the provisions of this Section 9.07 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the
 
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Revolving Administrative Agent hereunder. Upon the acceptance of any appointment as the Revolving Administrative Agent hereunder by a successor Revolving Administrative Agent, that successor Revolving Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Revolving Administrative Agent whereupon such retiring Revolving Administrative Agent shall be discharged from its duties and obligations hereunder.
(d) Any resignation or removal of PNC Bank or its successor as the Revolving Administrative Agent pursuant to this Section shall also constitute the resignation or removal of PNC Bank or its successor as the Swing Line Lender, and any successor Revolving Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Swing Line Lender for all purposes hereunder. In such event (i) the U.S. Borrower shall prepay any outstanding Swing Line Loans made by the retiring or removed Revolving Administrative Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the retiring or removed Revolving Administrative Agent and Swing Line Lender shall surrender any Swing Line Note held by it to the U.S. Borrower for cancellation and (iii) the U.S. Borrower shall issue, if so requested by the successor Revolving Administrative Agent and the Swing Line Lender, a new Swing Line Note to the successor Revolving Administrative Agent and the Swing Line Lender, in the principal amount of the Swing Line Sublimit then in effect and with other appropriate insertions.
Section 9.08 Security Documents and Guaranty .
(a) Agents under Security Documents and Guaranty . Each Secured Party hereby further authorizes the Administrative Agent, the Revolving Administrative Agent or the Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, to be the agent for and representative of Secured Parties with respect to the Guaranty, the Collateral and the Security Documents; provided , that neither the Administrative Agent, the Revolving Administrative Agent nor the Collateral Agent shall owe any fiduciary duty, duty of loyalty, duty of care, duty of disclosure or any other obligation whatsoever to any holder of Obligations with respect to any Hedge Agreement. Subject to Section 10.05, without further written consent or authorization from any Secured Party, the Administrative Agent, the Revolving Administrative Agent or the Collateral Agent, as applicable may execute any documents or instruments necessary to (i) in connection with a sale or disposition of assets permitted by this Agreement, release any Lien encumbering any item of Collateral that is the subject of such sale or other disposition of assets or to which Required Lenders (or such other Lenders as may be required to give such consent under Section 10.05) have otherwise consented or (ii) release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Required Lenders (or such other Lenders as may be required to give such consent under Section 10.05) have otherwise consented.
(b) Right to Realize on Collateral and Enforce Guaranty . Anything contained in any of the Loan Documents to the contrary notwithstanding, each Borrower, the Administrative Agent, the Revolving Administrative Agent, the Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the
 
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Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Security Documents may be exercised solely by the Collateral Agent and (ii) in the event of a foreclosure by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Collateral Agent at such sale or other disposition.
(c) Rights under Swap Contracts and Cash Management Products . No Swap Contract nor any document governing any Cash Management Product shall create (or be deemed to create) in favor of any Lender Counterparty that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Loan Documents except as expressly provided in Section 10.05(c)(v) of this Agreement and Section 9.2 of the Pledge and Security Agreement. By accepting the benefits of the Collateral, such Lender Counterparty shall be deemed to have appointed the Collateral Agent as its agent and agreed to be bound by the Loan Documents as a Secured Party, subject to the limitations set forth in this clause (c).
(d) Release of Collateral and Guarantees, Termination of Loan Documents . Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations have been Paid in Full, upon request of the applicable Borrower, the Administrative Agent, the Revolving Administrative Agent, and the Collateral Agent shall (without notice to, or vote or consent of, any Lender or any Lender Counterparty) take such actions as shall be required to release its security interest in all Collateral, and to release all guarantee obligations provided for in any Loan Document. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.
Section 9.09 Withholding Taxes . To the extent required by any applicable law, the Administrative Agent and the Revolving Administrative Agent, as applicable, may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If any payment has been made by the Administrative Agent or the Revolving Administrative Agent to any Lender without the applicable withholding Tax being withheld and the Administrative Agent or the Revolving Administrative Agent has paid over the applicable withholding Tax to the Internal Revenue Service or other Governmental Authority, or the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent or the Revolving Administrative Agent, as applicable, did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was
 
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not properly executed or because such Lender failed to notify the Administrative Agent or the Revolving Administrative Agent, as applicable, of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, such Lender shall indemnify the Administrative Agent and the Revolving Administrative Agent, as applicable, fully for all amounts paid, directly or indirectly, by the Administrative Agent or the Revolving Administrative Agent, as applicable, as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.
Section 9.10 Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under the Bankruptcy Code or other applicable law or any other judicial proceeding relative to any Borrower, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the other Secured Parties (including fees, disbursements and other expenses of counsel) allowed in such judicial proceeding and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same. Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and other Secured Party to make such payments to the Administrative Agent. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or other Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or other Secured Party to authorize the Administrative Agent to vote in respect of the claim of such Person or in any such proceeding.
ARTICLE X.
MISCELLANEOUS
Section 10.01 Notices .
(a) Notices Generally . Any notice or other communication herein required or permitted to be given to a Loan Party, the Collateral Agent, the Administrative Agent, the Revolving Administrative Agent, the Swing Line Lender or an Issuing Bank, shall be sent to such Person’s address as set forth on Schedule 1.01(d) or in the other relevant Loan Document, and in the case of any Lender, the address as indicated on Schedule 1.01(d) or otherwise indicated to the Administrative Agent and the Revolving Administrative Agent in writing. Except as otherwise set forth in paragraph (b) below, each notice hereunder shall be in writing and may be personally served, telexed or sent by telefacsimile or United States or Canadian mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile, ordinary or registered post, or three (3) Business Days after depositing it in ordinary or prepaid post or United States or Canadian mail with postage prepaid and properly addressed; provided , that no notice to any Agent shall be effective until received by such Agent; provided , further , that any
 
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such notice or other communication shall at the request of the Administrative Agent or the Revolving Administrative Agent, as applicable, be provided to any sub-agent appointed pursuant to Section 9.03(c) hereto as designated by the Administrative Agent or the Revolving Administrative Agent, as applicable, from time to time.
(b) Electronic Communications .
(i) Notices and other communications to the Administrative Agent, the Revolving Administrative Agent, the Swing Line Lender, Lenders and any Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites, including the Platform) pursuant to procedures approved by the Administrative Agent or, in the case of notices to the Revolving Administrative Agent, the Swing Line Lender or any Issuing Bank, approved by such Person; provided , that the foregoing shall not apply to notices to any Lender or an Issuing Bank pursuant to Article II if such Lender or such Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. The Administrative Agent, the Revolving Administrative Agent or the Borrower Representative may, in their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided , further , that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided , that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
(ii) Each Loan Party understands that the distribution of material through an electronic medium by the Administrative Agent, Revolving Administrative Agent, a Lender or Issuing Bank is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct or gross negligence of such Administrative Agent, Revolving Administrative Agent, Lender or Issuing Bank, as applicable, as determined by a final, non-appealable judgment of a court of competent jurisdiction.
(iii) The Platform and any Approved Electronic Communications are provided “as is” and “as available”. None of the Agents nor any of their respective officers, directors, employees, agents, advisors or representatives (the “ Agent Affiliates ”) warrant the accuracy, adequacy, or completeness of the Approved Electronic Communications or the Platform and each expressly disclaims liability for errors or omissions in the Platform
 
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and the Approved Electronic Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Agent Affiliates in connection with the Platform or the Approved Electronic Communications. Each party hereto agrees that no Agent has any responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Approved Electronic Communication or otherwise required for the Platform. In no event shall any Agent nor any of the Agent Affiliates have any liability to any Loan Party, any Lender or any other Person for damages of any kind, whether or not based on strict liability and including (A) direct or damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or any Agent’s transmission of communications through the internet, except to the extent the liability of any such Person if found in a final ruling by a court of competent jurisdiction to have resulted from such Person’s gross negligence or willful misconduct or (B) indirect, special, incidental or consequential damages. No Agent or Agent Affiliate shall be liable for any damages arising from the use by others of any information or other materials obtained through internet, electronic, telecommunications or other information transmission systems, except to the extent same resulted primarily from the gross negligence or willful misconduct of such Agent or Agent Affiliate (to the extent determined by a court of competent jurisdiction in a final and non-appealable judgment).
(iv) Each Loan Party, each Lender, the Issuing Bank and each Agent agrees that the Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Platform in accordance with the Administrative Agent’s customary document retention procedures and policies.
(v) All uses of the Platform shall be governed by and subject to, in addition to this Section 10.01, separate terms and conditions posted or referenced in such Platform and related agreements executed by the Lenders and their Affiliates in connection with the use of such Platform.
(vi) Any notice of Default or Event of Default may be provided by telephonic notice if confirmed promptly thereafter by delivery of written notice thereof.
(c) Change of Address . Any party hereto may changes its address or telecopy number for notices and other communications hereunder by written notice to the other parties hereto.
Section 10.02 Expenses . Whether or not the transactions contemplated hereby are consummated, the Borrowers agree to pay promptly (and without duplication) (a) all the actual and reasonable costs and out-of-pocket expenses incurred by the Agents in connection with the negotiation, preparation and execution of the Loan Documents and any consents, amendments, supplements, waivers or other modifications thereto; (b) all the costs of furnishing all opinions by counsel for the Borrower Representative and the other Loan Parties; (c) the reasonable fees, out-of-pocket expenses and disbursements of counsel to the Agents (in each case including allocated costs of internal counsel) in connection with the negotiation, preparation, execution and
 
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administration of the Loan Documents and any consents, amendments, supplements, waivers or other modifications thereto and any other documents or matters requested by any Borrower; (d) all the actual costs and reasonable expenses of creating, perfecting, recording, maintaining and preserving Liens in favor of the Collateral Agent, for the benefit of Secured Parties, including filing and recording fees, expenses and Taxes, stamp or documentary Taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and of counsel providing any opinions that any Agent or Required Lenders may request in respect of the Collateral or the Liens created pursuant to the Security Documents; (e) all the actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any agents employed or retained by the Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (f) all other actual and reasonable costs and out-of-pocket expenses incurred by each Agent in connection with the syndication of the Loans and Commitments; and (g) all actual costs and expenses, (including the reasonable fees, disbursements and other charges of (i) a single firm of counsel for the Administrative Agent, (ii) a single firm of counsel for the other Agents and Lenders, (iii) local and/or special counsel in each applicable jurisdiction and (iv) in the case of any actual or perceived conflict of interest (as determined by the applicable indemnified person) separate firms of counsel to such Agent or Lender, if necessary) and costs of settlement, incurred by any Agent or Lender in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents. All amounts due under this Section 10.02 shall be due and payable within ten (10) days after demand therefor.
Section 10.03 Indemnity .
(a) In addition to the payment of expenses pursuant to Section 10.02, whether or not the transactions contemplated hereby are consummated, each Loan Party agrees to defend (subject to Indemnitees’ rights to selection of counsel), indemnify, pay and hold harmless, each Agent, the Arrangers, the Bookrunners, the Issuing Bank, the Swing Line Lender and Lender and the officers, partners, members, directors, trustees, shareholders, advisors, employees, representatives, attorneys, controlling persons, agents, sub-agents and Affiliates of each of the Agents, the Arrangers, the Bookrunners, the Issuing Bank, the Swing Line Lender and Lender, as well as the respective heirs, successors and assigns of the foregoing (each, an “ Indemnitee ”), from and against any and all Indemnified Liabilities; provided , that no Loan Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise (i) from the gross negligence or willful misconduct of that Indemnitee, in each case, as determined by a final, non-appealable judgment of a court of competent jurisdiction or (ii) from or out of any dispute among Indemnified Persons (other than a dispute involving claims against the Administrative Agent, the Revolving Administrative Agent, the Collateral Agent, the Arrangers, the Bookrunners or any other agent or co-agent (if any) designated by the Arrangers with respect to the credit facilities hereunder, in each case in their respective capacities as such, or the Arrangers or any Bookrunner, solely in connection with its syndication activities as contemplated hereunder) that a court of competent jurisdiction has determined in a final and non-appealable decision did not involve an act or omission of the Loan Parties. Without limiting the foregoing, and to the extent permitted by applicable law, each Loan Party agrees not to assert and hereby waives all rights for contribution or any other rights of recovery against any Indemnitee with respect to all Indemnified Liabilities relating to or arising out of any Environmental Claim or related to any actual or alleged presence, release of, or
 
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exposure to, any Hazardous Materials; provided , that any Loan Party (i) shall not have any obligation to any Indemnitee hereunder and (ii) may assert and does not waive any rights for contribution or recovery with respect to any Indemnified Liabilities or Environmental Claim arising from or related to any Release of Hazardous Materials on, upon or into real property, to the extent such Liabilities arise and are incurred as a result of any Indemnitee’s gross negligence or willful misconduct following foreclosure or deed in lieu or other similar transfer of such real property and are attributable solely to acts of such Indemnitee. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.03 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Loan Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.
(b) To the extent permitted by applicable law, no Loan Party shall assert, and each Loan Party hereby waives, any claim against each Agent, the Arrangers, the Bookrunners, the Issuing Bank, the Swing Line Lender and Lender and their respective Affiliates, officers, partners, members, directors, trustees, shareholders, advisors, employees, representatives, attorneys, controlling persons, agents and sub-agents on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of or in any way related to this Agreement or any Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, the transmission of information through the Internet, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Loan Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through internet, electronic, telecommunications or other information transmission systems, except to the extent same resulted primarily from the gross negligence or willful misconduct of such Indemnitee (to the extent determined by a court of competent jurisdiction in a final and non-appealable judgment).
(c) The Loan Parties agrees that any indemnification or other protection provided to any Indemnitee pursuant to the Existing Credit Agreement (including pursuant to Section 10.03 thereof) or any other Loan Document (as defined in the Existing Credit Agreement and each an “ Existing Loan Document ”) shall survive the effectiveness of this Agreement and any indemnification or other protection provided to any Indemnitee pursuant to the Existing Credit Agreement, any other Existing Loan Document, this Agreement (including pursuant to this Section 10.03) or any other Loan Document shall (i) survive Payment in Full of all Obligations and (ii) inure to the benefit of any Person that was at any time an Indemnitee under the Existing Credit Agreement, any other Existing Loan Document, this Agreement or any other Loan Document; provided , that any indemnification or other protection provided to any Indemnitee shall be subject to the same limitations and terms set forth in the Existing Credit Agreement, the other Existing Loan Documents, this Agreement or the other Loan Documents, including, without limitation, such limitations set forth in Section 10.03(a) of this Agreement and the Existing Credit Agreement with respect to an Indemnitee’s gross negligence or willful misconduct.
(d) All amounts due under this Section 10.03 shall be due and payable within ten (10) days after demand therefor.
 
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Section 10.04 Set-Off . In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default each Lender (other than a Defaulting Lender except to the extent prohibited by law) is hereby authorized by each Loan Party at any time or from time to time subject to the consent of the Administrative Agent or Revolving Administrative Agent, as applicable (such consent not to be unreasonably withheld or delayed), without notice to any Loan Party or to any other Person (other than the Administrative Agent or the Revolving Administrative Agent, as applicable), any such notice being hereby expressly waived to the fullest extent permitted by applicable law, to set off and to appropriate and to apply any and all deposits (time or demand, provisional or final, general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender to or for the credit or the account of any Loan Party against and on account of the obligations and liabilities of any Loan Party to such Lender hereunder, the Letters of Credit and participations therein and under the other Loan Documents, including all claims of any nature or description arising out of or connected hereto, the Letters of Credit and participations therein or with any other Loan Document, irrespective of whether or not (a) such Lender shall have made any demand hereunder or (b) such obligations and liabilities, or any of them, may be contingent or unmatured. Each Lender agrees to notify the Borrowers promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
Section 10.05 Amendments and Waivers .
(a) Required Lenders’ Consent . Subject to the additional requirements of Sections 10.05(b) and 10.05(c) and except as provided in Section 2.24 and Sections 10.05(d) and (e), no amendment, supplement, modification, termination or waiver of any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall in any event be effective without the written concurrence of the Required Lenders and the Borrower Representative (delivery of an executed counterpart of a signature page to the applicable amendment, supplement, modification, termination or waiver by facsimile or other electronic transmission will be effective as delivery of a manually executed counterpart thereof); provided that all Loans held by a Sponsor Affiliated Lender shall be disregarded for purposes of this Section 10.05(a).
(b) Affected Lenders’ Consent . Without the written consent of each Lender (other than a Defaulting Lender) that would be directly and adversely affected thereby, no amendment, supplement, modification, termination, or consent shall be effective if the effect thereof would:
(i) extend the scheduled final maturity of any Loan or Note;
 
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(ii) waive, reduce or postpone any scheduled repayment (but not prepayment) of principal;
(iii) reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.10) or any fee or any premium payable hereunder (it being understood that only the consent of the Required Lenders shall be necessary to amend the Default Rate in Section 2.10 or to waive any obligation of the Borrowers to pay interest at the Default Rate;
(iv) waive or extend the time for payment of any such interest, fees or premiums;
(v) reduce or forgive the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit;
(vi) amend, modify, terminate or waive any provision of Section 2.13(b)(ii), the requirement to make Offer Loans to all Lenders under Section 2.13(c), Section 2.16(c), Section 2.17, this Section 10.05(b), Section 10.05(c), Section 9.2 of the Pledge and Security Agreement or any other provision of this Agreement that expressly provides that the consent of all Lenders is required;
(vii) amend the definition of “ Required Lenders ” or amend Section 10.05(a) in a manner that has the same effect as an amendment to such definition or the definition of “ Pro Rata Share ”; provided that with the consent of Required Lenders, additional extensions of credit pursuant hereto may be included in the determination of “ Required Lenders ” or “ Pro Rata Share ” on substantially the same basis as the Term Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are included on the Original Closing Date or Restatement Date, as applicable;
(viii) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guaranty except as expressly provided in the Loan Documents;
(ix) consent to the assignment or transfer by any Loan Party of any of its rights and obligations under any Loan Document except as expressly provided in any Loan Document; or
(x) change the stated currency in which any Borrower is required to make payments of principal, interest, fees or other amounts hereunder or under any other Loan Document;
provided that, for the avoidance of doubt, all Lenders shall be deemed directly and adversely affected thereby with respect to any amendment described in clauses (vii), (viii), (ix) and (x).
(c) Other Consents . No amendment, modification, termination or waiver of any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall:
(i) increase any Revolving Commitment of any Lender over the amount thereof then in effect or extend the outside date for such Revolving Commitment without the consent of such Lender; provided that no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall be deemed to constitute an increase in any Revolving Commitment of any Lender;
 
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(ii) amend, modify, terminate or waive any provision hereof relating to the Swing Line Sublimit or the Swing Line Loans without the consent of Swing Line Lender;
(iii) alter the required application of any repayments or prepayments as between Classes pursuant to Section 2.15 without the consent of Lenders holding more than 50.0% of the aggregate Exposure of all Lenders, as applicable, of each Class which is being allocated a lesser repayment or prepayment as a result thereof; provided , that Required Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment which is still required to be made is not altered;
(iv) amend, modify, terminate or waive any obligation of Lenders relating to the purchase of participations in Letters of Credit as provided in Section 2.04(e) without the written consent of the Revolving Administrative Agent and of the applicable Issuing Banks;
(v) amend, modify or waive this Agreement, the Pledge and Security Agreement or any Security Document so as to alter the ratable treatment of Obligations arising under the Loan Documents and Obligations arising under Hedge Agreements or the definition of “ Lender Counterparty ,” “ Obligations ,” “ Hedge Agreement ” or “ Secured Obligations ” (as defined in any applicable Security Document) in each case in a manner adverse to any Lender Counterparty with Obligations then outstanding without the written consent of any such Lender Counterparty or release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guaranty except as expressly provided in the Loan Documents without the written consent of each Lender Counterparty with Obligations then outstanding;
(vi) amend, modify, terminate or waive any provision of Article IX as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent or the Revolving Administrative Agent, as applicable;
(vii) (x) increase or extend the Commitment or Loan of any Defaulting Lender, nor may the principal of any Loan of a Defaulting Lender be reduced, in each case without the consent of such Lender and (y) in the case of any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms, affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of each such Defaulting Lender; or
(viii) amend any condition for any Credit Extensions set forth in Section 3.02 without the consent of Lenders holding more than 50.0% of the aggregate Revolving Exposure of all Lenders;
 
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provided that, notwithstanding the foregoing, any waiver, amendment, supplement or other modification with respect to Section 6.07 (or, for purposes of the financial covenant set forth in Section 6.07, the definition of “Leverage Ratio” or any defined terms set forth in the definition of “Leverage Ratio” or any defined term used therein) shall require the written consent only of the U.S. Borrower and the Required Revolving Lenders.
(d) Refinancing Amendments . In addition, notwithstanding Sections 10.05(a), (b) and (c), this Agreement may be amended with the written consent of the Administrative Agent, the Borrower Representative and the Lenders providing the Replacement Term Loans (as defined below) to permit the refinancing of all outstanding Term Loans of a tranche (“ Refinanced Term Loans ”) with a replacement term loan (“ Replacement Term Loans ”) hereunder; provided that (i) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate principal amount of such Refinanced Term Loans, (ii) the Applicable Margin with respect to such Replacement Term Loans (or similar interest rate spread applicable to such Replacement Term Loans) shall not be higher than the Applicable Margin for such Refinanced Term Loans (or similar interest rate spread applicable to such Refinanced Term Loans) immediately prior to such refinancing, (iii) the Weighted Average Life to Maturity of such Replacement Term Loans shall not be shorter than the Weighted Average Life to Maturity of such Refinanced Term Loans at the time of such refinancing (except to the extent of nominal amortization for periods where amortization has been eliminated as a result of prepayment of the Term Loans) and (iv) all other terms applicable to such Replacement Term Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Term Loans than, those applicable to such Refinanced Term Loans, except to the extent necessary to provide for covenants and other terms applicable to any period after the latest final maturity of the Term Loans in effect immediately prior to such refinancing (and, without limiting the foregoing, the Administrative Agent and Collateral Agent are authorized to amend any Security Document to the extent necessary to ensure that all such Term Loans or Revolving Commitments are provided with the benefit of the applicable Security Documents on a pari passu basis with the other Obligations).
(e) Extensions of Maturity . In addition and notwithstanding Sections 10.05(a), (b) and (c), the Agreement may be amended to extend the maturity date of any Term Loan or Revolving Commitments hereunder; in each case with the consent solely of the Administrative Agent, Collateral Agent and Lenders providing such extended Term Loans or extended Revolving Commitments as applicable; provided that such extended Term Loans or Revolving Commitments otherwise meet the requirements set forth in clauses (i), (iii) (with respect to Term Loans only) and (iv) of the preceding clause (d) (and, without limiting the foregoing, the Administrative Agent and the Collateral Agent are authorized to amend any Security Document to the extent necessary to ensure that all such Term Loans or Revolving Commitments (including as so extended) are provided with the benefit of the applicable Security Documents on a pari passu basis with the other Obligations). For the avoidance of doubt, the Applicable Margin with respect to any such extended Term Loans or Revolving Commitments may be greater than the Applicable Margin applicable to non-extended Term Loans or Revolving Commitments and such extended Term Loans or Revolving Commitments may be deemed to constitute a separate Class of Term Loans or Revolving Commitments.
 
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(f) Limitation on Rights of Sponsor Affiliates Lenders . No Sponsor Affiliate Lender shall have any right, (i) to consent to any amendment, modification, waiver, consent or other such action with respect to any of the terms of this Agreement or any other Loan Document, (ii) to require any Agent or other Lender to undertake any action (or refrain from taking any action) with respect to this Agreement or any other Loan Document, (iii) to otherwise vote on any matter related to this Agreement or any other Loan Document, (iv) to attend any meeting with any Agent or Lender or receive any information from any Agent or Lender or (v) to make or bring any claim, in its capacity as a Lender, against the Agent or any Lender with respect to the duties and obligations of such Persons under the Loan Documents, but no amendment, modification or waiver shall deprive such Sponsor Affiliate Lender of its share of any payments which the Lenders are entitled to share on a pro rata basis or disproportionately affects such Sponsor Affiliate Lender more adversely than any other Lender of the same Class.
(g) Execution of Amendments, Etc. The Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, supplements, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. In the case of any waiver, the parties hereto shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Default or Event Default, or impair any right consequent thereon. No notice to or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.05 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Loan Party, on such Loan Party.
Notwithstanding anything to the contrary contained in this Section 10.05, if the Administrative Agent and the Borrower Representative shall have jointly identified an obvious or manifest error or any error or omission of a technical or immaterial nature, in each case, in any provision of the Loan Documents, then the Administrative Agent and the Borrower Representative shall be permitted to amend such provision and such amendment shall become effective without any further action or consent of any other party to any Loan Document if the same is not objected to in writing by the Required Lenders within five (5) Business Days following receipt of notice thereof. In addition, notwithstanding anything to the contrary provided herein, no consent of any Lender shall be required in connection with the marking of any amendment to any Loan Document of the type described in Section 2.24 hereof which states in such Section that no consent of any Lender, other than the applicable Incremental Revolving Loan Lender or Incremental Term Loan Lender, is required.
Section 10.06 Successors and Assigns; Participations .
(a) Generally . This Agreement shall be binding upon the parties hereto and their respective successors and permitted assigns and shall inure to the benefit of the parties hereto
 
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and the successors and permitted assigns of Lenders. No Loan Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Loan Party without the prior written consent of all Lenders (and any purported assignment or delegation without such consent shall be null and void).
(b) Register . Each Borrower, the Administrative Agent, the Revolving Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and notwithstanding anything else herein, no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register following receipt of a fully executed Assignment Agreement effecting the assignment or transfer thereof, together with the required forms and certificates regarding Tax matters and any fees payable in connection with such assignment, in each case, as provided in Section 10.06(d). Each assignment shall be recorded in the Register promptly following receipt by the Administrative Agent (or the Revolving Administrative Agent, as applicable) of the fully executed Assignment Agreement and all other necessary documents and approvals, prompt notice thereof shall be provided to the Borrower Representative and a copy of such Assignment Agreement shall be maintained, as applicable. The date of such recordation of a transfer shall be referred to herein as the “ Assignment Effective Date .” Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans.
(c) Right to Assign . Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including all or a portion of its Commitment or Loans owing to it or other Obligations ( provided , that pro rata assignments shall not be required and each assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any applicable Loan and any related Commitments):
(i) to any Person meeting the criteria of clause (i) of the definition of the term of “Eligible Assignee” upon the giving of notice to the Administrative Agent and, in the case of assignments of Revolving Loans or Revolving Commitments, notice to the Revolving Administrative Agent and, if such Eligible Assignee is not, or is not an Affiliate of a Revolving Lender, the applicable Issuing Bank and Swing Line Lender;
(ii) to any Person meeting the criteria of clause (ii) or (iii) of the definition of the term of “Eligible Assignee” upon giving of notice to the Borrower Representative and the Administrative Agent and, in the case of assignments of Revolving Loans or Revolving Commitments to any such Person (except in the case of assignments made by or to Barclays Bank), consented to by each of the Borrower Representative ( provided that the Borrower Representative shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof), the Revolving Administrative Agent with respect to assignments of Revolving Loans and Revolving Commitments, the applicable Issuing Banks and the Swing Line Lender (such consents not to be (x) unreasonably withheld or delayed or (y) in the case of the Borrower Representative,
 
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required at any time an Event of Default has occurred and is continuing); provided , that further each such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than (A) $5,000,000 (or such lesser amount as may be agreed to by the Borrower Representative, the Administrative Agent and the Revolving Administrative Agent) or as shall constitute the aggregate amount of the Revolving Commitments and Revolving Loans of the assigning Lender) with respect to the assignment of the Revolving Commitments and Revolving Loans and (B) $1,000,000 (or such lesser amount as may be agreed to by the Borrower Representative and the Administrative Agent or as shall constitute the aggregate amount of the Tranche B-1 Term Loans, Tranche B-2 Term Loans or with respect to Incremental Term Loans constituting a separate Series, such Incremental Term Loans of such Series of the assigning Lender) with respect to the assignment of Term Loans; provided , that the Related Funds of any individual Lender may aggregate their Loans for purposes of determining compliance with such minimum assignment amounts; and
(iii) if the Eligible Assignee is a Sponsor Affiliated Lender, such assignment may be of Term Loans only and (1) after giving effect to such assignment, to all other assignments and participations with all Sponsor Affiliated Lenders and to all Offer Loans purchased and cancelled pursuant to Section 2.13(c), the aggregate principal amount of all Loans and Commitments then held by all Sponsor Affiliated Lenders (whether by assignment, participation, or other derivative transaction) shall not exceed 20% of the sum of (x) the aggregate unpaid principal amount of the Term Loans then outstanding and (y) the aggregate Revolving Exposure of all Lenders then outstanding, and (2) such Sponsor Affiliated Lender shall execute a waiver in form and substance satisfactory to the Administrative Agent that it shall have no right whatsoever, so long as such Person is a Sponsor Affiliate Lender (A) to consent to any amendment, modification, waiver, consent or other such action with respect to any of the terms of this Agreement or any other Loan Document except to the extent set forth in Section 10.05(f), (B) to require any Agent or other Lender to undertake any action (or refrain from taking any action) with respect to this Agreement or any other Loan Document, (C) to attend (or receive any notice of) any meeting, conference call or correspondence with any Agent or Lender or receive any information from any Agent or Lender, (D) to have access to the Platform (including, without limitation, that portion of the Platform that has been designated for “private-side” Lenders) or (E) to make or bring any claim, in its capacity as Lender, against the Agent or any Lender with respect to the duties and obligations of such Persons under the Loan Documents, but no amendment, modification or waiver shall deprive any Sponsor Affiliated Lender of its share of any payments which the Lenders are entitled to share on a pro rata basis hereunder. By purchasing or being assigned the Loans and by its acceptance of the benefits of this Agreement, each Sponsor Affiliated Lender acknowledges and agrees that the Loans owned by it shall be non-voting under sections 1126 and 1129 of the Bankruptcy Code in the event that any proceeding thereunder shall be instituted by or against any Borrower or any other Loan Party.
(d) Mechanics . Assignments and assumptions of Term Loans and Term Loan Commitments by Lenders shall be effected by manual execution and delivery to the Administrative Agent (and, with respect to any assignment of Revolving Loans or Revolving Commitments, the Revolving Administrative Agent) of an Assignment Agreement. Assignments
 
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made pursuant to the foregoing provision shall be effective as of the Assignment Effective Date. In connection with all assignments there shall be delivered to the Administrative Agent (and, with respect to any assignment of Revolving Loans or Revolving Commitments, the Revolving Administrative Agent) such forms, certificates or other evidence, if any, with respect to United States federal income Tax withholding matters as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.20(c), together with payment to the Administrative Agent (or, in the case of any assignment of Revolving Loans or Revolving Commitments, the Revolving Administrative Agent) of a registration and processing fee of $3,500 (except that no such registration and processing fee shall be payable (y) in connection with an assignment by or to Barclays Bank or any Affiliate thereof or (z) in the case of an assignee which is already a Lender or is an Affiliate or Related Fund of a Lender or a Person under common management with a Lender).
(e) Representations and Warranties of Assignee . Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants as of the Original Closing Date, the Restatement Date or as of the Assignment Effective Date, as applicable, that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii) it shall make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.06, the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control).
(f) Effect of Assignment . Subject to the terms and conditions of this Section 10.06, as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent of its interest in the Loans and Commitments as reflected in the applicable Register(s) and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof, including under Section 10.08) and be released from its obligations hereunder (and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date; provided , that anything contained in any of the Loan Documents to the contrary notwithstanding, (y) the Issuing Bank shall continue to have all rights and obligations thereof with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (z) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be modified to reflect any Commitment of such assignee and any Revolving Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to the Administrative Agent for cancellation, and thereupon the applicable Borrower shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions,
 
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to reflect the new Revolving Commitments and/or outstanding Loans of the assignee and/or the assigning Lender. Subject to Section 10.06(b), any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply the requirements of this Section 10.06 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.06(g). Any assignment by a Lender pursuant to this Section 10.06 shall not in any way constitute or be deemed to constitute a novation, discharge, rescission, extinguishment or substitution of the Indebtedness hereunder, and any Indebtedness so assigned shall continue to be the same obligation and not a new obligation.
(g) Participations .
(i) Each Lender shall have the right at any time to sell one or more participations to any Person (other than Holdings, any of its Subsidiaries or any of its Affiliates) in all or any part of its Commitments, Loans or in any other Obligation; provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Agents, the Lenders and the Issuing Banks shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.
(ii) The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that would (A) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Commitment Termination Date) in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (B) consent to the assignment or transfer by any Loan Party of any of its rights and obligations under this Agreement, or (C) release all or substantially all of the Guarantors or the Collateral under the Security Documents (except as expressly provided in the Loan Documents) supporting the Loans hereunder in which such participant is participating.
(iii) Each Borrower agrees that each participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided , that (x) a participant shall not be entitled to receive any greater payment under Section 2.18(c), 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation to such participant is made with the Borrower Representative’s prior written consent and (y)
 
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a participant shall not be entitled to the benefits of Section 2.20 unless the applicable Borrower is notified of the participation sold to such participant and such participant agrees, for the benefit of such Borrower, to comply with Section 2.20 as though it were a Lender; provided , further , that, except as specifically set forth in clauses (x) and (y) of this sentence, nothing herein shall require any notice to the Borrower Representative’s or any other Person in connection with the sale of any participation. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.04 as though it were a Lender; provided , that such Participant agrees to be subject to Section 2.17 as though it were a Lender.
(iv) Each Lender that sells a participation shall maintain a register on which it enters the name and address of each participant and the principal amounts of each participant’s interest in the Commitments, Loans and other Obligations held by it (the “ Participant Register ”). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such Commitments, Loans and other Obligations as the owner thereof for all purposes of this Agreement notwithstanding any notice to the contrary. Any such Participant Register shall be available for inspection by the Administrative Agent and, if applicable, the Revolving Administrative Agent at any reasonable time and from time to time upon reasonable prior notice.
(h) Certain Other Assignments and Participations . In addition to any other assignment or participation permitted pursuant to this Section 10.06 any Lender may assign and/or pledge (without the consent of any Borrower or any Agent) all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors and any operating circular issued by such Federal Reserve Bank; provided , that no Lender, as between any Borrower and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge; provided , further , that in no event shall the applicable Federal Reserve Bank, pledgee or trustee, be considered to be a “Lender” or be entitled to require the assigning Lender to take or omit to take any action hereunder.
Section 10.07 Independence of Covenants, Etc. . All covenants, conditions and other terms hereunder and under the other Loan Documents shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, conditions or other terms, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant, condition or other term shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.
Section 10.08 Survival of Representations, Warranties and Agreements . All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension as long as the Obligations shall not have been Paid in Full. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Loan Party set forth in Sections 2.18(c), 2.19, 2.20, 10.02 and 10.03 and the agreements of Lenders set forth in Sections 2.17, 9.03(b), 9.06, 9.09 and 10.04 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof.
 
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Section 10.09 No Waiver; Remedies Cumulative . No failure or delay or course of dealing on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Loan Documents or any of the Hedge Agreements. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. Without limiting the generality of the foregoing, the making of any Credit Extension shall not be construed as a waiver of any Default or Event of Default, regardless of whether any Agent, Issuing Bank or Lender may have had notice or knowledge of such Default or Event of Default at the time of the making of any such Credit Extension.
Section 10.10 Marshalling; Payments Set Aside . Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Loan Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Loan Party makes a payment or payments to the Administrative Agent, the Revolving Administrative Agent or Lenders (or to the Administrative Agent or Revolving Administrative Agent, on behalf of Lenders), or any Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred.
Section 10.11 Severability . In case any provision in or obligation hereunder or under any other Loan Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby (it being understood that the invalidity, illegality or unenforceability of a particular provision in a particular jurisdiction shall not in and of itself affect the validity, legality or enforceability of such provision in any other jurisdiction). The parties hereto shall endeavor in good faith negotiations to replace any invalid, illegal or unenforceable provisions with valid, legal and enforceable provisions the economic effect of which comes as close as reasonably possible to that of the invalid, illegal or unenforceable provisions.
Section 10.12 Obligations Several; Independent Nature of Lenders’ Rights . The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any
 
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other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.
Section 10.13 Table of Contents and Headings . The Table of Contents hereof and Article and Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose, modify or amend the terms or conditions hereof, be used in connection with the interpretation of any term or condition hereof or be given any substantive effect.
Section 10.14 APPLICABLE LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK. UNLESS OTHERWISE EXPRESSLY AGREED BY THE ISSUING BANK AND THE APPLICABLE BORROWER WHEN A LETTER OF CREDIT IS ISSUED, INCLUDING ANY SUCH AGREEMENT APPLICABLE TO A CANADIAN LETTER OF CREDIT OR U.S. LETTER OF CREDIT LISTED IN SECTIONS A AND B OF SCHEDULE 1.01(I), (A) EACH STANDBY LETTER OF CREDIT ISSUED UNDER THIS AGREEMENT SHALL BE SUBJECT EITHER TO THE RULES OF THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, AS MOST RECENTLY PUBLISHED BY THE INTERNATIONAL CHAMBER OF COMMERCE AT THE TIME OF ISSUANCE (“UCP”) OR THE RULES OF THE INTERNATIONAL STANDBY PRACTICES (ICC PUBLICATION NUMBER 590), AS DETERMINED BY THE ISSUING BANK, AND (B) EACH COMMERCIAL LETTER OF CREDIT SHALL BE SUBJECT TO UCP, AND IN EACH CASE TO THE EXTENT NOT INCONSISTENT HEREWITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES.
Section 10.15 CONSENT TO JURISDICTION . SUBJECT TO CLAUSE (E) OF THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER LOAN DOCUMENT, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY HERETO, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, HEREBY EXPRESSLY AND IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN WITH RESPECT TO ACTIONS BY ANY AGENT IN RESPECT OF RIGHTS UNDER ANY SECURITY DOCUMENT
 
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GOVERNED BY A LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (I) JURISDICTION AND VENUE OF COURTS IN ANY OTHER JURISDICTION IN WHICH IT MAY BE ENTITLED TO BRING SUIT BY REASON OF ITS PRESENT OR FUTURE DOMICILE OR OTHERWISE AND (II) ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.01; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT THE AGENTS AND THE LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY SECURITY DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT.
Section 10.16 WAIVER OF JURY TRIAL . EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
 
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Section 10.17 Confidentiality . Each Agent and each Lender (which term shall for the purposes of this Section 10.17 include the Issuing Bank) shall hold all non-public information regarding the Loan Parties and their Subsidiaries and their businesses identified as such by the Borrower Representative and obtained by such Agent or such Lender pursuant to the requirements hereof in accordance with such Agent’s and such Lender’s customary procedures for handling confidential information of such nature, it being understood and agreed by the Borrower Representative that, in any event, the Administrative Agent may disclose such information to the Lenders and each Agent and each Lender may make (i) disclosures of such information to Affiliates or Related Funds of such Lender or Agent and to their respective officers, directors, employees, representatives, agents and advisors (and to other Persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17); provided that prior to any disclosure, such Affiliates, Related Funds, officers, directors, employees, representatives, agents and advisors and other persons are instructed to preserve the confidentiality of any confidential information relating to the Loan Parties received by it from any Agent or any Lender, (ii) disclosures of such information reasonably required by (A) any pledgee referred to in Section 10.06(h), (B) any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation of any Loans or any participations therein, (C) any bona fide or potential direct or indirect contractual counterparties (or the professional advisors thereto) to any swap or derivative transaction relating to any Borrower and its obligations or (D) any direct or indirect investor or prospective investor in a Related Fund; provided , that such pledgees, assignees, transferees, participants, counterparties, advisors and investors are advised of and agree to be bound by either the provisions of this Section 10.17 or other provisions at least as restrictive as this Section 10.17, (iii) disclosure to any rating agency when required by it; provided , that, prior to any disclosure, such rating agency be instructed to preserve the confidentiality of any confidential information relating to the Loan Parties received by it from any Agent or any Lender, (iv) disclosures in connection with the exercise of any remedies hereunder or under any other Loan Document, (v) disclosures required or requested by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process (in which case the disclosing Agent or Lender agrees, to the extent practicable and not prohibited by applicable law, to inform the Borrower Representative promptly thereof prior to such disclosure) and (vi) disclosure to the extent requested or required by regulatory authorities (in which case the disclosing Agent or Lender agrees, to the extent practicable and not prohibited by applicable law, to inform the Borrower Representative promptly thereof prior to such disclosure); provided , that unless specifically prohibited by applicable law or court order, each Lender and each Agent shall make reasonable efforts to notify the Borrower Representative of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information. In addition, each Agent and each Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar services providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement and the other Loan Documents.
 
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Notwithstanding anything to the contrary set forth herein, each party (and each of their respective employees, representatives or other agents) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions and other tax analyses) that are provided to any such party relating to such tax treatment and tax structure. However, any information relating to the tax treatment or tax structure shall remain subject to the confidentiality provisions hereof (and the foregoing sentence shall not apply) to the extent reasonably necessary to enable the parties hereto, their respective Affiliates, and their respective Affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax structure” means any facts relevant to the federal income tax treatment of the transactions contemplated by this Agreement but does not include information relating to the identity of any of the parties hereto or any of their respective Affiliates.
Section 10.18 Usury Savings Clause . Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law, shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, each Borrower shall pay to the Administrative Agent, or the Revolving Administrative Agent, as applicable, an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and each Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Loans made hereunder or be refunded to the applicable Borrower.
Section 10.19 Counterparts . This Agreement may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic transmission will be effective as delivery of a manually executed counterpart thereof.
Section 10.20 Effectiveness; Entire Agreement; No Third Party Beneficiaries . This Agreement, the other Loan Documents and any fee letter or commitment letter entered into in connection with the Amendment Agreement, represent the entire agreement of Holdings and its Subsidiaries, the Agents, the Issuing Bank, the Swing Line Lender, the Arrangers, the Bookrunners and the Lenders with respect to the subject matter hereof and thereof, and there are
 
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no promises, undertakings, representations or warranties by any Agent, Issuing Bank, Swing Line Lender, the Arrangers or any of the Bookrunners or Lender relative to the subject matter hereof or thereof not expressly set forth or referred to herein or in the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, express or implied, shall be construed to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders, holders of participations in all or any part of a Lender’s Commitments, Loans or in any other Obligations, and the Indemnitees) any rights, remedies, obligations, claims or liabilities under or by reason of this Agreement or the other Loan Documents. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of any Agent, the Issuing Bank or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement.
Section 10.21 PATRIOT Act . Each Lender, the Administrative Agent and the Revolving Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Loan Party that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that shall allow such Lender, the Administrative Agent or the Revolving Administrative Agent, as applicable, to identify such Loan Party in accordance with the PATRIOT Act.
Section 10.22 Electronic Execution of Assignments . The words “execution,” “signed,” “signature,” and words of like import in any Assignment Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
Section 10.23 No Fiduciary Duty . Each Agent, each Lender, the Arrangers, the Bookrunners, the Issuing Bank, the Swing Line Lender and their respective Affiliates (collectively, solely for purposes of this paragraph, the “ Lenders ”), may have economic interests that conflict with those of the Borrowers, their respective stockholders and/or their respective Affiliates. Each Borrower agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and the Borrowers, their respective stockholders or their respective Affiliates, on the other. The Loan Parties acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrowers, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of the Borrowers, their stockholders or their respective Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Borrower, its stockholders or its Affiliates on other matters) or any other obligation to
 
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the Borrowers except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Borrower, its management, stockholders, creditors or any other Person. Each Borrower acknowledges and agrees that the Borrowers have consulted their own legal and financial advisors to the extent each deemed appropriate and that each is responsible for making its own respective independent judgment with respect to such transactions and the process leading thereto. Each Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to any Borrower, in connection with such transaction or the process leading thereto.
Section 10.24 Judgment Currency . If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which, in accordance with normal banking procedures, the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment in given. The obligation of any Borrower in respect of such sum due from it to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the applicable Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to such Borrower (or to any other Person who may be entitled thereto under applicable Law).
Section 10.25 Effect of Restatement . This Agreement shall, except as otherwise expressly set forth herein, supersede the Existing Credit Agreement from and after the Restatement Date with respect to the Loans and Letters of Credit outstanding under the Existing Credit Agreement as of the Restatement Date. The parties hereto acknowledge and agree, however, that (a) this Agreement and all other Loan Documents executed and delivered herewith do not constitute a novation or termination of the Obligations (under and as defined in the Existing Credit Agreement) and the other Loan Documents as in effect prior to the Restatement Date except to the extent such Obligations are repaid on the Restatement Date and (b) such Obligations are in all respects continuing with only the terms being modified as provided in this Agreement and the other Loan Documents. The parties hereto further acknowledge and agree that all references in the other Loan Documents to the Existing Credit Agreement shall be deemed to refer without further amendment to this Agreement. In addition, unless specifically amended hereby, each of the Loan Documents and Exhibits and Schedules to the Existing Credit Agreement shall continue in full force and effect and, if applicable, in the forms attached to the Existing Credit Agreement, and with the effect that from and after the Restatement Date all references therein shall be references to this Agreement.
 
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SCHEDULE 1.01(a)
TO CREDIT AND GUARANTY AGREEMENT
Tranche B-1 Term Loan Commitments
[ON FILE WITH ADMINISTRATIVE AGENT]
 
SCHEDULE 1.01(a)-1

SCHEDULE 1.01(b)
TO CREDIT AND GUARANTY AGREEMENT
Tranche B-2 Term Loan Commitments
[ON FILE WITH ADMINISTRATIVE AGENT]
 
SCHEDULE 1.01(b)-1

SCHEDULE 1.01(c)
TO CREDIT AND GUARANTY AGREEMENT
U.S. Revolving Commitments
[ON FILE WITH ADMINISTRATIVE AGENT]
Canadian Revolving Commitments
[ON FILE WITH ADMINISTRATIVE AGENT]
 
SCHEDULE 1.01(c)-1

SCHEDULE 1.01(d)
TO CREDIT AND GUARANTY AGREEMENT
Notice Addresses
If to any Loan Party:
Fairmount Minerals, Ltd.
8834 Mayfield Road
Chesterland, Ohio 44026
Attn: Jenniffer Deckard
Facsimile: (440) 729-0265
in each case, with a copy to:
American Securities LLC
299 Park Avenue, 34th Floor
New York, NY 10171
Attn: Eric L. Schondorf
Facsimile: (212) 697-5524
and
Kaye Scholer LLP
425 Park Avenue
New York, NY 10022
Attn: Emanuel S. Cherney, Esq.
Facsimile: (212) 836-8689
 
SCHEDULE 1.01(d)-1

BARCLAYS BANK PLC,
as Administrative Agent, Revolving Administrative Agent, Collateral Agent, and a Lender:
Barclays Bank PLC
745 Seventh Ave
New York, NY 10019
Attention: Vanessa Kurbatskiy
Facsimile: 212-526-2799
Telephone: 212-526-1126
Email: vanessa.kurbatskiy@barclays.com / ltmny@barclays.com
with a copy to (for payments and requests for credit extensions:
Barclays Bank PLC
1301 Sixth Avenue
New York, NY 10019
Attention: Joe Tricamo / Barclays Agency Services
Facsimile: 917-522-0569
Telephone: 212-320-7564
Email: joe.tricamo@barclays.com / xrausloanops5@barclays.com
 
SCHEDULE 1.01(d)-2

KEYBANK NATIONAL ASSOCIATION,
as Syndication Agent and a Lender:
KeyBank National Association
127 Public Square
Cleveland, OH 44114
Attn: Ryan Pastore
Telephone: 216-689-5766
Facsimile: 216-689-4814
Email: rpastore@key.com
With a copy to
KeyBank National Association
4900 Tiedeman Road
Brooklyn, OH 44144
Attn: Donna Boening, Key Agency Services
Telephone: 216-813-4816
Facsimile: 216-370-6112
Email: donna_l_boening@keybank.com
Principal Office with regard to Dollar and Canadian Dollar denominated Loans:
KeyBank National Association
4900 Tiedeman Road
Brooklyn, OH 44144
Attn: Donna Boening, Key Agency Services
Telephone: 216-813-4816
Facsimile: 216-370-6112
Email: donna_l_boening@keybank.com
 
SCHEDULE 1.01(d)-3

Exhibit 10.2
EXECUTION VERSION
AMENDMENT AGREEMENT dated as of September 5, 2013 (this “ Amendment ”), to the Amended and Restated Credit and Guaranty Agreement dated as of March 15, 2011 (as amended by that certain Amendment to Credit Agreement, dated as of April 22, 2011, as further amended by that certain Second Amendment to Amended and Restated Credit Agreement, dated as of April 18, 2013, and as further amended, restated or otherwise modified prior to the date hereof, the “ Existing Credit Agreement ”), by and among FAIRMOUNT MINERALS, LTD., a Delaware corporation (the “ U.S. Borrower ” or the “ Borrower Representative ”), FAIRMOUNT MINERALS HOLDINGS, INC., a Delaware corporation (“ Holdings ”), CERTAIN SUBSIDIARIES OF THE U.S. BORROWER, as Guarantors, LAKE SHORE SAND COMPANY (Ontario) LTD., an entity organized under the laws of the province of Ontario, Canada, as Canadian Borrower (the “ Canadian Borrower ”, and, together with the U.S. Borrower, the “ Borrowers ”), the Lenders party thereto from time to time, BARCLAYS BANK PLC (“ Barclays Bank ”), as Administrative Agent (in such capacity, the “ Administrative Agent ”) and as Collateral Agent (in such capacity, the “ Collateral Agent ”), and the other agents party thereto.
A. Pursuant to the Existing Credit Agreement, the Lenders party thereto have extended, and have agreed to extend, credit to the Borrowers.
B. Pursuant to Section 9.07(c) of the Existing Credit Agreement, PNC Bank, National Association desires to resign as Revolving Administrative Agent (in such capacity, the “ Existing Revolving Agent ”) under the Existing Credit Agreement and the other Loan Documents and the Borrowers and the Required Lenders desire to ratify the appointment of Barclays Bank PLC as successor Revolving Administrative Agent (in such capacity, the “ Revolving Administrative Agent ”) under the Second Amended and Restated Credit Agreement and the other Loan Documents and the Revolving Administrative Agent wishes to accept such appointment.
C. The Borrowers and the Required Lenders under the Existing Credit Agreement desire to amend the Existing Credit Agreement in the form of the Second Amended and Restated Credit Agreement attached hereto as Annex A (the “ Second Amended and Restated Credit Agreement ”; except as otherwise provided herein, all capitalized terms used but not defined herein shall have the meanings ascribed to such terms therein), subject to the satisfaction of the conditions precedent to effectiveness referred to in Section 4 hereof.
D. The Borrowers and the Guarantors are party to one or more of the Security Documents, pursuant to which, among other things, the Borrowers and Guarantors provided security for the Obligations.
E. On the Restatement Date (as defined in Section 4 below), the U.S. Borrower shall (a)(i) borrow new term loans in an aggregate principal amount of $325,000,000 having the terms set forth for Tranche B-1 Term Loans (under and as defined in the Second Amended and Restated Credit Agreement), (ii) borrow new term loans in an aggregate principal amount of $885,000,000 having the terms set forth for Tranche B-2 Term Loans (under and as defined in the Second Amended and Restated Credit Agreement (the Tranche B-1 Term Loans, together with the Tranche B-2 Term Loans, collectively, the “ New Term Loan Facility ”) and (iii) repay

and terminate the Revolving Commitments (under and as defined in the Existing Credit Agreement) and establish the Revolving Commitments under the Second Amended and Restated Credit Agreement (the “ New Revolving Loan Facilities ” and together with the New Term Loan Facility, the “ New Credit Facilities ”) and (b) use the proceeds of the New Credit Facilities (i) to repay in full all existing Term Loans and Revolving Loans (each as defined in the Existing Credit Agreement), (ii) to pay the consideration in connection with the Acquisition, (iii) to pay fees and expenses incurred in connection with the foregoing and (iv) to the extent remaining after the application of proceeds for the foregoing, for working capital and general corporate purposes of the Borrowers. The transactions described in this paragraph are collectively referred to herein as the “ Transactions ”.
F. (i) The Lenders set forth on Schedules 1.01(a) and (b) to the Second Amended and Restated Credit Agreement attached hereto as part of Annex B (the “ New Term Lenders ”) are willing to make Tranche B-1 Term Loans and Tranche B-2 Term Loans, respectively, under the New Term Loan Facility to the U.S. Borrower on the Restatement Date, (ii) the Lenders set forth on Schedule 1.01(c) to the Second Amended and Restated Credit Agreement attached hereto as part of Annex B (“ New Revolving Lenders ”) are willing to extend U.S. Revolving Commitments under the New Revolving Loan Facilities to the U.S. Borrower (and as noted on said Schedule, Canadian Revolving Commitments to the Canadian Borrower) on the Restatement Date and (iii) the Required Lenders under the Existing Credit Agreement are willing to agree to the amendment and restatement to the Existing Credit Agreement provided for herein, in each case on the terms set forth herein and in the Second Amended and Restated Credit Agreement and subject to the conditions set forth herein.
Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendment and Restatement of Existing Credit Agreement.
The Loan Parties, the Required Lenders under the Existing Credit Agreement and the other parties hereto each agree that:
(a) the Existing Credit Agreement shall be amended and restated on the Restatement Date, as reflected in the Second Amended and Restated Credit Agreement attached as Exhibit A hereto and any term or provision of the Existing Credit Agreement which is different from that set forth in the Second Amended and Restated Credit Agreement shall be replaced and superseded in all respects by the terms and provisions of the Second Amended and Restated Credit Agreement;
(b) all of the Schedules to the Existing Credit Agreement will be amended and restated in their entirety on the Restatement Date, in the form attached hereto as Annex B ; and

(c) the Administrative Agent is authorized to amend Exhibits A-1, A-2, B-1, B-2, C and E of the Existing Credit Agreement to reflect the Tranche B-1 Term Loans and the Tranche B-2 Term Loans and the changes to the definition of Consolidated Adjusted EBITDA and other conforming changes to the Second Amended and Restated Credit Agreement.
SECTION 2. Loans . Each Lender set forth on Schedules 1.01(a) and (b) to the Second Amended and Restated Credit Agreement agrees, severally and not jointly, to make, on the Restatement Date, a Tranche B-1 Term Loan and Tranche B-2 Term Loan, respectively, to the U.S. Borrower pursuant to and as set forth in Section 2.01(b) of the Second Amended and Restated Credit Agreement. Each Lender set forth on Schedule 1.01(c) to the Second Amended and Restated Credit Agreement agrees, severally and not jointly, to make, on the Restatement Date, Revolving Commitments available to the U.S. Borrower pursuant and as set forth in Section 2.02(b) of the Second Amended and Restated Credit Agreement. The proceeds of the New Credit Facilities are to be used by the U.S. Borrower solely for the purposes set forth in Recital E of this Amendment. For the avoidance of doubt, from and after the Restatement Date, references in the Second Amended and Restated Credit Agreement to the “Term Loans” shall be the Term Loans made by the Lenders to the U.S. Borrower on the Restatement Date and not the Term Loans under and as defined in the Existing Credit Agreement.
SECTION 3. Reaffirmation of Guaranty. Each Loan Party party to the Existing Credit Agreement, subject to the terms and limits contained in the Second Amended and Restated Credit Agreement and in the Security Documents, reaffirms its guaranty of the Obligations pursuant to the Existing Credit Agreement as amended and restated by the Second Amended and Restated Credit Agreement. Each Loan Party party to the Existing Credit Agreement hereby acknowledges that it has reviewed the terms and provisions of this Amendment and consents to the amendment and restatement of the Existing Credit Agreement effected pursuant to this Amendment. Each Loan Party to the Existing Credit Agreement hereby confirms that each Loan Document to which it is a party or is otherwise bound will continue to be in full force and effect as amended by this Amendment and all of its obligations thereunder shall not be impaired or limited by the execution or effectiveness of this Amendment.
SECTION 4. Amendment Agreement Effectiveness; Conditions Precedent to Borrowing of Loans . The effectiveness of this Amendment and the obligations of the Lenders to make Tranche B-1 Term Loans and Tranche B-2 Term Loans under the New Term Loan Facility and Revolving Commitments under the New Revolving Loan Facilities shall be subject to the following conditions precedent: (a) the Administrative Agent shall have received counterparts of this Amendment that, when taken together, bear the signatures of the Borrowers, the Guarantors, the Administrative Agent, the Revolving Administrative Agent, the Collateral Agent, each Lender making a Tranche B-1 Term Loan or a Tranche B-2 Term Loan under the New Term Loan Facility and each Lender making a Revolving Commitment under the New Revolving Loan Facilities (b) the Administrative Agent shall have received duly executed consents from the Required Lenders approving and directing the Administrative Agent to execute and deliver this Amendment; (c) each of the conditions in Section 3.01 and Section 3.02 of the Second Amended and Restated Credit Agreement shall be satisfied (or waived in accordance therewith); and (d) the Administrative Agent shall have received the fees set forth in Section 2.11(e) of the Second Amended and Restated Credit Agreement and all other fees and reimbursement of all costs and expenses required to be paid by the U.S. Borrower in connection with the transactions contemplated hereby. The date on which such conditions have been satisfied (or waived) is referred to herein as the “ Restatement Date ”.

SECTION 5. Resignation of Revolving Administrative Agent . Effective upon the Restatement Date, PNC Bank shall resign as Revolving Administrative Agent and Swing Line Lender. The Required Lenders under the Existing Credit Agreement hereby appoint Barclays Bank PLC as Revolving Administrative Agent (and the Borrower Representative hereby consents to such appointment). Barclays Bank PLC shall also act as Swing Line Lender under the Second Amended and Restated Credit Agreement. The Borrowers and Required Lenders under the Existing Credit Agreement hereby waive any notice requirement provided for under the Loan Documents in respect of such resignation or appointment. The parties hereto confirm that all of the provisions of the Existing Credit Agreement, including, without limitation, Article IX ( Agents ) to the extent they pertain to the Existing Revolving Agent, continue in effect for the benefit of the Existing Revolving Agent and its Agent Affiliates in respect of any actions taken or omitted to be taken by them while the Existing Revolving Agent was acting as Revolving Administrative Agent under the Existing Credit Agreement.
SECTION 6. Effect of Amendment . On and after the Restatement Date, each reference to the Existing Credit Agreement in any Loan Document shall be deemed to be a reference to the Second Amended and Restated Credit Agreement. Except as expressly provided in this Amendment, nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Existing Credit Agreement, the Second Amended and Restated Credit Agreement or any other Loan Document in similar or different circumstances. On and after the Restatement Date, this Amendment shall constitute a “Loan Document” for all purposes of the Second Amended and Restated Credit Agreement and the other Loan Documents. On and after the Restatement Date, as used in the Second Amended and Restated Credit Agreement, the terms “Agreement”, “this Agreement”, “herein”, “hereinafter”, “hereto”, “hereof”, and words of similar import shall, unless the context otherwise requires, mean the Second Amended and Restated Credit Agreement.
SECTION 7. Consent . Each Lender (as defined in the Existing Credit Agreement) that delivers an executed counterpart of this Amendment on or prior to the Restatement Date hereby consents to this Amendment and the transactions contemplated hereby.
SECTION 8. Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other customary means of electronic transmission (e.g., “pdf”) shall be as effective as delivery of a manually executed counterpart hereof.
SECTION 9. Applicable Law . THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE

OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.
SECTION 10. Submission to Jurisdiction . Section 10.15 of the Second Amended and Restated Credit Agreement is hereby incorporated by reference.
SECTION 11. Headings . The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
[Remainder of page intentionally left blank ]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers, all as of the date and year first above written.

FAIRMOUNT MINERALS, LTD.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
LAKE SHORE SAND COMPANY (ONTARIO) LTD.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
FAIRMOUNT MINERALS HOLDINGS, INC.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
BEST SAND CORPORATION	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
BEST SAND OF PENNSYLVANIA, INC.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
CHEYENNE SAND CORP.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
CONSTRUCTION AGGREGATES CORPORATION OF MICHIGAN, INC.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
FAIRMOUNT WATER SOLUTIONS, LLC	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
MINERAL VISIONS INC.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
SPECIALTY SANDS, INC.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
STANDARD SAND CORPORATION	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
TECHNIMAT LLC	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
TECHNISAND, INC.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
WEDRON SILICA COMPANY	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
WEXFORD SAND CO.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
WISCONSIN INDUSTRIAL SAND COMPANY, LLC	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
WISCONSIN SPECIALTY SANDS, INC.	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
ALPHA RESINS, LLC	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
BLACK LAB LLC	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
	
FAIRMOUNT MINERALS, LLC	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
SELF-SUSPENDING PROPPANT LLC	
		
By:	 	/s/ Christopher L. Nagel	
	 	Name: Christopher L. Nagel	
	 	Title: Chief Financial Officer	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
BARCLAYS BANK PLC, as Administrative
Agent, Revolving Administrative Agent and
New Term Lender and New Revolving Lender	
		
By:	 	/s/ Vanessa A. Kurbatsky	
	 	Name: Vanessa A. Kurbatsky	
	 	Title: Vice President	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
KEYBANK NATIONAL ASSOCIATION, as
New Revolving Lender	
		
By:	 	/s/	
	 	Name:	
	 	Title:	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
PNC BANK, NATIONAL ASSOCIATION, as
New Revolving Lender	
		
By:	 	/s/ Christian S. Brown	
	 	Name: Christian S. Brown	
	 	Title: Senior Vice President	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
SUMITOMO MITSUI BANKING CORP, as
New Revolving Lender	
		
By:	 	/s/ David Kee	
	 	Name: David Kee	
	 	Title: Managing Director	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
WELLS FARGO BANK, NATIONAL ASSOCIATION, as New Revolving Lender	
		
By:	 	/s/ Kristen Brockman	
	 	Name: Kristen Brockman	
	 	Title: Vice President	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
FIRST MERIT BANK NA, as New Revolving Lender	
		
By:	 	/s/ Robert G. Morlan	
	 	Name: Robert G. Morlan	
	 	Title: Senior Vice President	
 
[Fairmount Minerals Amendment Agreement Signature Page]

			
SIEMENS FINANCIAL SERVICES INC, as
New Revolving Lender	
		
By:	 	/s/	
	 	Name:	
	 	Title:	
 
[Fairmount Minerals Amendment Agreement Signature Page]

Exhibit 10.3
Execution Version
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT
This AMENDMENT dated as of March 27, 2014 (this “ Amendment ”), to the Second Amended and Restated Credit and Guaranty Agreement dated as of September 5, 2013 (as amended, restated or otherwise modified prior to the date hereof, the “ Credit Agreement ”), by and among FAIRMOUNT MINERALS, LTD., a Delaware corporation (the “ U.S. Borrower ” or the “ Borrower Representative ”), FAIRMOUNT MINERALS HOLDINGS, INC., a Delaware corporation (“ Holdings ”), CERTAIN SUBSIDIARIES OF THE U.S. BORROWER, as Guarantors, LAKE SHORE SAND COMPANY (Ontario) LTD., an entity organized under the laws of the province of Ontario, Canada, as Canadian Borrower (the “ Canadian Borrower ”, and, together with the U.S. Borrower, the “ Borrowers ”), the Lenders party thereto from time to time, BARCLAYS BANK PLC (“ Barclays ”), as Administrative Agent (in such capacity, the “ Administrative Agent ”) and as Collateral Agent (in such capacity, the “ Collateral Agent ”), BARCLAYS BANK PLC, as the Revolving Administrative Agent (in such capacity, the “ Revolving Administrative Agent ”) and the other agents referred to therein. Except as otherwise provided herein, all capitalized terms used but not defined herein shall have the meanings given them in the Credit Agreement.
A. WHEREAS, pursuant to the Credit Agreement, the Lenders have extended, and have agreed to extend, credit to the Borrowers;
B. WHEREAS, on the Amendment Effective Date (as defined herein), the U.S. Borrower shall (a) (i) borrow new term loans in an aggregate principal amount of $324,187,500.00 having the terms set forth for Tranche B-1 Term Loans (under and as defined in the Amended Credit Agreement (as defined herein)) (such new term loans, the “New Tranche B-1 Term Loans ”) and (ii) borrow new term loans in an aggregate principal amount of $923,787,500.00 having the terms set forth for Tranche B-2 Term Loans (under and as defined in the Amended Credit Agreement) (such new term loans, the “ New Tranche B-2 Term Loans ”) and (b) use the proceeds of (i) the New Tranche B-1 Term Loans and (ii) the New Tranche B-2 Term Loans to repay in full all Term Loans existing under the Credit Agreement immediately prior to the effectiveness of this Amendment (the holders of such existing Term Loans, the “ Existing Term Lenders ”). The transaction described in this paragraph is referred to herein as the “ Refinancing ”.
C. WHEREAS, the Borrowers shall pay to each Existing Term Lender on the Amendment Effective Date all outstanding principal and all accrued and unpaid interest on its Term Loans to, but not including, the Amendment Effective Date on such date of effectiveness;
D. WHEREAS, Section 10.5(d) of the Credit Agreement provides that the Credit Agreement may be amended with the written consent of the Borrower Representative, the Administrative Agent and the Lender providing Replacement Term Loans (as defined therein) (and no other Lender);

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendment of Credit Agreement.
(a) The definition of “Applicable Margin” in Section 1.01 of the Credit Agreement is hereby amended by deleting clause (i) in its entirety and replacing it with the following: “(a) Tranche B-1 Term Loans or Tranche B-2 Term Loans that are Eurodollar Rate Loans, 3.50% per annum and (b) Tranche B-1 Term Loans or Tranche B-2 Term Loans that are Base Rate Loans, 2.50% per annum”.
(b) Section 1.01 of the Credit Agreement is hereby amended to add the following definition in appropriate alphabetical order:
“ First Amendment Effective Date ” shall mean the date that the First Amendment to the Second Amended and Restated Credit and Guaranty Agreement became effective pursuant to its terms, which date was March 27, 2014.”
(c) Section 2.13(e) is hereby amended and restated as follows:
“(e) Tranche B-2 Term Loan Call Protection. In the event (i) all or any portion of the Tranche B-2 Term Loan is repriced, effectively refinanced through any amendment of the Tranche B-2 Term Loans or refinanced with the proceeds of other secured Indebtedness or (ii) a Term Lender is replaced as a result of the mandatory assignment of its Tranche B-2 Term Loans in the circumstances described in Section 2.23 following the failure of such Term Lender to consent to an amendment of this Agreement that would have the effect of reducing the stated rate of interest with respect to the Tranche B-2 Term Loans of such Term Lender, in each case, for any reason within six months of the First Amendment Effective Date, such repricings, effective refinancings, refinancings or, solely with respect to such replaced Term Lender, mandatory assignments, will be made at 101.0% of the amount repriced, effectively refinanced, refinanced or mandatorily assigned.”
SECTION 2. Loans. Each Lender set forth on Schedule A hereto agrees (such Lender in such capacity, an “ Additional Lender ”), severally and not jointly, to make, on the Amendment Effective Date, a New Tranche B-1 Term Loan or a New Tranche B-2 Term Loan, as applicable, to the Borrowers in accordance with the borrowing mechanics set forth in Section 2.01(b) of the Credit Agreement in the amount set forth as its New Tranche B-1 Term Loan Commitment (the “New Tranche B-1 Term Loan Commitment ”) or New Tranche B-2 Term Loan Commitment (the “ New Tranche B-2 Term Loan Commitment ”), as applicable, set forth opposite its name under the heading “New Tranche B-1 Term Loan Commitments” or “New Tranche B-2 Term Loan Commitments”, as applicable, on Schedule A to this Amendment. The U.S. Borrower may only make one borrowing of each of the New Tranche B-1 Term Loan Commitment and New Tranche B-2 Term Loan Commitment and, once repaid, the New Tranche B-1 Term Loans and New Tranche B-2 Term Loan may not be reborrowed. The proceeds of the New Tranche B-1 Term Loan and New Tranche B-2 Term Loan are to be used by the Borrowers solely for the purposes set forth in Recital B of this Amendment. Subject to Sections 2.13(a) and 2.14 of the
 
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Credit Agreement, all amounts owed with respect to the New Tranche B-1 Term Loans shall be paid in full no later than the Tranche B-1 Term Loan Maturity Date and all amounts owed with respect to the New Tranche B-2 Term Loan shall be paid in full no later than the Tranche B-2 Term Loan Maturity Date. Each Lender’s New Tranche B-1 Term Loan Commitment and/or New Tranche B-2 Term Loan Commitment, as applicable, shall terminate immediately and without further action on the Amendment Effective Date after giving effect to the funding of such New Tranche B-1 Term Loan Commitment and New Tranche B-2 Term Loan Commitment on such date. For the avoidance of doubt, from and after the Amendment Effective Date, (a) references in the Credit Agreement to the “Tranche B-1 Term Loans” shall include the New Tranche B-1 Term Loans made by the Existing Term Lenders to the Borrowers on the Amendment Effective Date and shall exclude the Tranche B-1 Term Loans (as defined in the Credit Agreement) made by the Existing Term Lenders (as defined in the Credit Agreement) on the Closing Date (which Tranche B-1 Term Loans shall be repaid in full on the Amendment Effective Date) and (b) references in the Credit Agreement to the “Tranche B-2 Term Loans” shall include the New Tranche B-2 Term Loans made by the Existing Term Lenders to the Borrowers on the Amendment Effective Date and shall exclude the Tranche B-2 Term Loans (as defined in the Credit Agreement) made by the Existing Term Lenders (as defined in the Credit Agreement) on the Closing Date (which Tranche B-2 Term Loans shall be repaid in full on the Amendment Effective Date).
SECTION 3. Representations and Warranties . To induce the other parties hereto to enter into this Amendment, each of the Loan Parties represents and warrants to each of the Lenders (including Lenders making the New Tranche B-1 Term Loans and the New Tranche B-2 Term Loans) that, as of the date hereof:
(a) the representations and warranties set forth in Article IV of the Credit Agreement are true and correct in all material respects on and as of the date hereof to the same extent as if made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; provided that to the extent any such representation and warranty is already qualified by materiality or Material Adverse Effect, such representation and warranty shall be true and correct in all respects.
(b) each Loan Party has the requisite power and authority to execute and deliver this Amendment and to perform its obligations under this Amendment and each Loan Document, as amended hereby. The execution and delivery of this Amendment and the performance by each Loan Party of this Amendment and each Loan Document (as amended hereby) to which it is a party have been duly approved by all necessary organizational action of each such Loan Party;
(c) this Amendment has been duly executed and delivered by each Loan Party that is a party hereto and thereto and this Amendment is the legally valid and binding obligation of such Loan Party thereto, enforceable against such Loan Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability; and
(d) no Default or Event of Default has occurred and is continuing.
 
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SECTION 4. Reaffirmations
(a) Each Loan Party, subject to the terms and limits contained in the Credit Agreement and in the Security Documents, reaffirms its guaranty of the Obligations pursuant to the Credit Agreement. Each Loan Party hereby acknowledges that it has reviewed the terms and provisions of this Amendment and consents to the amendment of the Credit Agreement effected pursuant to this Amendment. Each Loan Party hereby confirms that each Loan Document to which it is a party or is otherwise bound will continue to be in full force and effect as amended by this Amendment and all of its obligations thereunder shall not be impaired or limited by the execution or effectiveness of this Amendment or the incurrence of the New Tranche B-1 Term Loans and the New Tranche B-2 Term Loans.
(b) Each Loan Party hereby (i) confirms that each Loan Document to which it is a party or is otherwise bound and all Collateral encumbered thereby will continue to secure to the fullest extent possible in accordance with the Loan Documents, the payment and performance of the Obligations, as the case may be, (ii) confirms its respective grant to the Administrative Agent for the benefit of the Secured Parties of the security interest in and continuing Lien on all of such Loan Party’s right, title and interest in, to and under all Collateral, in each case whether now owned or existing or hereafter acquired or arising and wherever located, as collateral security for the prompt and complete payment and performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all applicable Obligations (including all such Obligations as amended, reaffirmed and/or increased pursuant to the Amended Credit Agreement), subject to the terms contained in the applicable Loan Documents, (iii) confirms its pledges, grants of security interests and other obligations, as applicable, under and subject to the terms of each of the Loan Documents to which it is a party, and (iv) acknowledges that the Lenders providing New Tranche B-1 Term Loans and New Tranche B-2 Term Loans on the date hereof are “Lenders” and “Secured Parties” for all purposes under the Loan Documents.
SECTION 5. Amendment Agreement Effectiveness . The effectiveness of this Amendment shall be subject to the following conditions precedent (the date on which such conditions have been satisfied (or waived) is referred to herein as the “ Amendment Effective Date ”):
(a) The Administrative Agent shall have received the following, each of which shall be originals or facsimiles or “.pdf” files (followed promptly by originals) unless otherwise specified, each properly executed by an Authorized Officer of the signing Loan Party, each dated as of the Amendment Effective Date and each in form and substance reasonably satisfactory to the Administrative Agent:
(i) executed counterparts of this Amendment from the Administrative Agent, each Loan Party and Additional Lenders providing New Tranche B-1 Term Loan Commitments and New Tranche B-2 Term Loan Commitments sufficient to refinance in full the Term Loans; and
(ii) a Note executed by the U.S. Borrower in favor of each Lender who shall have requested a Note not less than three Business Days prior to the Amendment Effective Date.
 
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(b) The Administrative Agent shall have received (1) copies of the Organizational Documents of each Loan Party, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, each dated the Amendment Effective Date or a recent date prior thereto; (2) signature and incumbency certificates of each such Person of each Loan Party executing the Loan Documents to which it is a party; (3) resolutions of the board of directors or similar governing body of each Loan Party approving and authorizing the execution, delivery and performance of this Amendment, the Amended Credit Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound as of the Amendment Effective Date, certified as of the Amendment Effective Date by its secretary or an assistant secretary of such Person as being in full force and effect without modification or amendment; and (4) a good standing certificate from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date prior to the Amendment Effective Date (except with respect to any jurisdiction where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect); provided that, in lieu of delivery of each of the documents set forth in clauses (1) and (2) above, each applicable Loan Party may deliver a certificate executed by an Authorized Officer of such Loan Party certifying that there have been no material amendments to those documents previously delivered to the Administrative Agent on the Amendment Effective Date pursuant to Section 3.01(b)(1) and 3.01(b)(2) of the Credit Agreement; provided, further, that any change to any incumbency certificate previously delivered to the Administrative Agent on the Amendment Effective Date shall be deemed material.
(c) The Agents and the Lenders and their respective counsel shall have received executed copies of the favorable written opinions of Kaye Scholer LLP, Calfee, Halter & Griswold LLP, Varnum, as special Michigan counsel to the Loan Parties, DLA Piper LLP (U.S.), as special Texas counsel for the Loan Parties and Gray Plant Mooty, as special Minnesota counsel for the Loan Parties, each dated as of the Amendment Effective Date and otherwise in form and substance reasonably satisfactory to the Administrative Agent (and each Loan Party hereby instructs such counsel to deliver such opinions to the Agents and the Lenders).
(d) The U.S. Borrower shall have delivered to the Administrative Agent a fully executed Borrowing Notice no later than one (1) Business Day prior to the Amendment Effective Date. Promptly upon receipt by the Administrative Agent of such Borrowing Notice, the Administrative Agent shall notify each Additional Lender of the proposed borrowing.
(e) On the Amendment Effective Date, (i) after giving effect to the consummation of the Refinancing and any rights of contribution, Holdings and its Subsidiaries, on a consolidated basis, is and shall be Solvent, and (ii) the Administrative Agent shall have received a fully executed Solvency Certificate.
(f) No Default or Event of Default shall exist, or would result from the execution and delivery of this Amendment, from the Refinancing and the related Credit Extensions.
(g) The representations and warranties of the Loan Parties made pursuant to Section 3 of this Amendment shall be true and correct as of the Amendment Effective Date.
 
5

(h) The Borrower Representative shall have delivered to the Administrative Agent an executed Amendment Effective Date Certificate which shall include certifications to the effect that each of the conditions precedent described in this Section shall have been satisfied on the such date (except that no opinion need be expressed as to Administrative Agent’s satisfaction with any document, instrument or other matter).
(i) The Borrowers shall have paid to the Administrative Agent for its own account or for the account of the Lenders, as applicable, all fees and expenses required to be paid in connection herewith (including expenses to the extent invoiced at least one (1) Business Day prior to the Amendment Effective Date).
(j) The Administrative Agent shall have received a prepayment notice issued by the Borrower Representative in accordance with Section 2.13(a) of the Credit Agreement indicating (i) the anticipated date of such prepayments, and (ii) the Borrower’s intention to repay in full of the Term Loans on the terms set forth in this Amendment.
(k) The U.S. Borrower shall have paid to the Administrative Agent on the Amendment Effective Date, for the account of the Existing Term Lenders, all outstanding principal amounts under, and all accrued and unpaid interest on, the Term Loans of each Existing Term Lender to, but not including the date of such prepayment.
SECTION 6. Effect of Amendment . (a) On and after the Amendment Effective Date, each reference to the Credit Agreement in any Loan Document shall be deemed to be a reference to the Credit Agreement as amended by this Amendment (as so amended, the “ Amended Credit Agreement ”). Except as expressly provided in this Amendment, nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances. On and after the Amendment Effective Date, this Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents. On and after the Amendment Effective Date, as used in the Credit Agreement, the terms “Agreement”, “this Agreement”, “herein”, “hereinafter”, “hereto”, “hereof”, and words of similar import shall, unless the context otherwise requires, mean the Amended Credit Agreement.
(b) The U.S. Borrower agrees that each Consent and Cashless Roll Election (each, a “ Consent ”) executed by a Lender shall satisfy any requirement under Section 10.06 of the Credit Agreement to effectuate an Amendment Agreement (as defined in the Credit Agreement) in connection with the transactions contemplated by this Amendment and each Consent. On and after the Amendment Effective Date, each Consent shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.
SECTION 7. Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other customary means of electronic transmission (e.g., “.pdf”) shall be as effective as delivery of a manually executed counterpart hereof.
 
6

SECTION 8. Applicable Law . THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.
SECTION 9. Submission to Jurisdiction . Section 10.15 of the Credit Agreement is hereby incorporated by reference.
SECTION 10. Headings . The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
[Remainder of page intentionally left blank]
 
7

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers, all as of the date and year first above written.

FAIRMOUNT MINERALS, LTD.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
LAKE SHORE SAND COMPANY (ONTARIO) LTD.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
 
[Fairmount Minerals First Amendment Signature Page]

					
FAIRMOUNT MINERALS HOLDINGS, INC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
BEST SAND CORPORATION	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
BEST SAND OF PENNSYLVANIA, INC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
CHEYENNE SAND CORP.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
CONSTRUCTION AGGREGATES CORPORATION OF MICHIGAN, INC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
FAIRMOUNT WATER SOLUTIONS, LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
 
[Fairmount Minerals First Amendment Signature Page]

					
MINERAL VISIONS INC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
SPECIALTY SANDS, INC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
STANDARD SAND CORPORATION	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
TECHNIMAT LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
TECHNISAND, INC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
WEDRON SILICA COMPANY	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
 
[Fairmount Minerals First Amendment Signature Page]

					
WEXFORD SAND CO.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
WISCONSIN INDUSTRIAL SAND COMPANY, LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
WISCONSIN SPECIALTY SANDS, INC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
ALPHA RESINS, LLC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
BLACK LAB LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
FAIRMOUNT MINERALS, LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
 
[Fairmount Minerals First Amendment Signature Page]

					
SELF-SUSPENDING PROPPANT LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
SHAKOPEE SAND LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
FML ALABAMA RESIN, INC.	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
FML SAND, LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
FML RESIN, LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
	
FML TERMINAL LOGISTICS LLC	
		
By:	 	/s/ Christopher Nagel	
	 	Name:	 	Christopher Nagel	
	 	Title:	 	Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer	
 
[Fairmount Minerals First Amendment Signature Page]

					
BARCLAYS BANK PLC, as Administrative Agent and Lender	
			
	 	By:	 	/s/ Paul Cugno	
	 		 	Name: Paul Cugno	
	 		 	Title: Managing Director	
 
[Fairmount Minerals First Amendment Signature Page]

ANNEX A
New Tranche B-1 Term Loan Commitments

New Tranche B-1 Term Loan Lender	  	Commitment	 	
Barclays Bank PLC	  	$	324,187,500.00	  	
	  	 	 	 	
	  	Total: $	324,187,500.00	  	
	  	 	 	 	
New Tranche B-2 Term Loan Commitments

New Tranche B-2 Term Loan Lender	  	Commitment	 	
Barclays Bank PLC	  	$	923,787,500.00	  	
	  	 	 	 	
	  	Total: $	923,787,500.00	  	

Exhibit 10.4
Execution Version
JOINDER AGREEMENT
THIS JOINDER AGREEMENT , dated as of February 14, 2014 (this “ Agreement ”), by and among Barclays Bank PLC (the “ Incremental Term Loan Lender ”), Fairmount Minerals, Ltd., as borrower representative (in such capacity, the “ Borrower Representative ”) and Barclays Bank PLC (“ Barclays ”), as Administrative Agent (together with its successors and permitted assigns, the “ Administrative Agent ”). This Joinder Agreement shall constitute a “Loan Document” for all purposes of the Credit Agreement (as defined below) and the other Loan Documents.
RECITALS:
WHEREAS , reference is hereby made to that certain Second Amended and Restated Credit and Guaranty Agreement, dated as of September 5, 2013 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ’’; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Fairmount Minerals Holdings, Inc., Fairmount Minerals, Ltd. (the “ U.S. Borrower ”), certain Subsidiaries of the U.S. Borrower party thereto as guarantors, Lake Shore Sand Company (Ontario) Ltd. (the “ Canadian Borrower ”), the Lenders party thereto from time to time, KeyBank National Association, as Syndication Agent, Barclays Bank PLC, as Administrative Agent and Collateral Agent, Barclays Bank PLC, as Revolving Administrative Agent and PNC Bank, National Association and Wells Fargo Securities, LLC, as Co-Documentation Agents; and
WHEREAS , subject to the terms and conditions of the Credit Agreement, the Borrower Representative may request an increase to the existing Revolving Commitments or Term Loans and/or the establishment of Incremental Term Loan Commitments, with such increase or establishment becoming effective by the Borrower Representative entering into one or more Joinder Agreements with the Incremental Term Loan Lender and/or Incremental Revolving Loan Lender(s), as applicable, and the Administrative Agent.
NOW, THEREFORE , in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:
The Incremental Term Loan Lender hereby agrees to commit to provide its Commitment as set forth on Schedule A annexed hereto, on the terms and subject to the conditions set forth herein and in the Credit Agreement.
The Incremental Term Loan Lender (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender or Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes Administrative Agent and Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to Administrative Agent and Collateral Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.
The Incremental Term Loan Lender hereby agrees to extend Term Loans to the U.S. Borrower on the following terms and conditions and in accordance with the terms and provisions of the Credit Agreement.

1.	Amount and Type of Incremental Term Loans. In accordance with Section 2.24 of the Credit Agreement, the Borrower Representative has requested an Incremental Term Loan in the amount of $41,000,000 to be made to the U.S. Borrower on February 14, 2014 (the “ Increased Amount Date ”).	

a.	  	Interest rate option :	  		 	¨	 	a.	 	Base Rate Loan(s)	
	  		  		 	x	 	b.	 	Eurodollar Rate Loans	
	  		  		 		 		 	with an initial Interest	
	  		  		 		 		 	Period ending on March 31, 2014	
 
2.	Incremental Term Loan:	
a. The parties hereto hereby acknowledge and agree that the term loans made on Increased Amount Date (the “ Incremental Term Loans ”) shall not constitute a separate Class of Term Loans, but shall instead be part of the same Class as the Tranche B-2 Term Loans made on the Restatement Date. Each of the parties hereto hereby agrees that the Administrative Agent may take any and all action as may be reasonably necessary to ensure that all such Incremental Term Loans may be treated as such Tranche B-2 Term Loans for all purposes under the Loan Documents.
b. The Stated Maturity Date for the Incremental Term Loans shall be September 5, 2019.
 
3.	Applicable Margin.	
 
 	i.	Base Rate Loans: The Applicable Margin for each Incremental Term Loan that is a Base Rate Loan shall mean, as of any date of determination, 3.00% per annum.	
 
 	ii.	Eurodollar Rate Loans: The Applicable Margin for each Incremental Term Loan that is a Eurodollar Rate Loan shall mean, as of any date of determination, 4.00% per annum.	
 
4.	Principal Payments . The U.S. Borrower shall repay the Incremental Term Loans in full on the Tranche B-2 Term Loan Maturity Date	
 
5.	Voluntary and Mandatory Prepayments. Scheduled installments of principal of the Incremental Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Incremental Term Loans in accordance with Sections 2.13, 2.14 and 2.15 of the Credit Agreement; provided further , that the Incremental Term Loans and all other amounts under the Credit Agreement with respect to the Incremental Term Loans shall be paid in full no later than the Tranche B-2 Term Loan Maturity Date.	
In addition, the principal amount of Incremental Term Loans, together with the existing Tranche B-2 Term Loans shall be repaid in consecutive quarterly installments in an aggregate amount equal to $2,315,256.89 with the next payment on March 31, 2014 and then quarterly thereafter as provided in Section 2.12 of the Credit Agreement and Section 2.12 of the Credit Agreement is hereby amended to reflect such amounts as the Installments of Tranche B-2 Term Loans payable on each Installment Date commencing on March 31, 2014 as set forth therein and that the unpaid balance of all Tranche B-2 Term Loans, including the Incremental Term Loans hereunder, shall be due and payable on the Maturity Date.
 
6.	Prepayment Fees. The Incremental Term Loans shall be subject to the same call protection as the other Tranche B-2 Term Loans as set forth in Section 2.13(e) of the Credit Agreement, which call protection shall expire six months after the Restatement Date.	
 
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7.	Other Fees . The U.S. Borrower agrees to pay the Incremental Term Loan Lender, on the Effective Date (as herein defined), a fee equal to 0.50% of the principal amount of the Incremental Term Loan funded on the Increased Amount Date.	
 
8.	Incremental Lenders . The Incremental Term Loan Lender acknowledges and agrees that upon its execution of this Agreement and the making of Incremental Term Loans that the Incremental Term Loan Lender shall become a “Lender” under, and for all purposes of, the Credit Agreement and the other Loan Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.	
 
9.	Credit Agreement Governs. Except as set forth in this Agreement, the Incremental Term Loans shall otherwise be subject to the terms and provisions of the Credit Agreement and the other Loan Documents.	
 
10.	Conditions Precedent. The effectiveness of this Agreement and the commitments of the Incremental Term Loan Lender hereunder are subject to the satisfaction of the following conditions on or prior to February 14, 2014 (the “ Effective Date ”):	
 
 	i.	The Administrative Agent and the Incremental Term Loan Lender shall have received a satisfactory legal opinion of Kaye Scholer LLP and other documents reasonably requested by Administrative Agent in connection with this Agreement;	
 
 	ii.	The representations and warranties and other certifications set forth in Section 11 hereof shall be true and correct as of the Effective Date; and	
 
 	iii.	Such other confirmations, documents and certifications as reasonably requested by the Administrative Agent.	
 
11.	Borrower’s Certifications . By its execution of this Agreement, the undersigned officer, to the best of his or her knowledge, and the U.S. Borrower hereby represents and warrants that:	
 
 	i.	The representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date; provided, that to the extent any such representation or warranty is already qualified by materiality or material adverse effect, such representation or warranty is true and correct in all respects;	
 
 	ii.	No Default or Event of Default exists on such Increased Amount Date before or after giving effect to the Proposed Borrowing contemplated hereby;	
 
 	iii.	As of the date hereof, the undersigned officer of the Borrower Representative hereby certifies that the conditions to lending specified in Section 3.02(a)(ii)(iv) of the Credit Agreement have been or will be, as the case may be, satisfied (or waived in accordance with the Credit Agreement);	
 
 	iv.	The U.S. Borrower has performed in all material respects all agreements and satisfied all conditions which the Credit Agreement provides shall be performed or satisfied by it on or before the date hereof; and	
 
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 	v.	The U.S. Borrower is in pro forma compliance with each of the covenants set forth in Section 6.07 of the Credit Agreement as of the last day of the most recently ended Fiscal Quarter after giving effect to such Incremental Term Loan Commitments, the calculations of which are set forth in reasonable detail on Annex A attached hereto.	
 
 	vi.	The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate or other organizational action on the part of the Borrower Representative.	
 
 	vii.	This Agreement has been duly executed and delivered by the Borrower Representative and is the legally valid and binding obligation of the Borrower Representative, enforceable against the Borrower Representative in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.	
 
12.	Eligible Assignee. By its execution of this Agreement, the Incremental Term Loan Lender represents and warrants that it is an Eligible Assignee.	
 
13.	Notice . For purposes of the Credit Agreement, the initial notice address of the Incremental Term Loan Lender shall be as set forth below its signature below, which may be changed in accordance with Section 10.01 of the Credit Agreement.	
 
14.	Non-U.S. Lenders . If the Incremental Term Loan Lender is a Non-U.S. Lender, delivered herewith to the Administrative Agent are such forms, certificates or other evidence with respect to United States federal income tax withholding matters as the Incremental Term Loan Lender may be required to deliver to the Administrative Agent pursuant to subsection 2.20(c) of the Credit Agreement.	
 
15.	Recordation of the New Loans . Upon execution and delivery hereof, the Administrative Agent will record the Incremental Term Loans made by the Incremental Term Loan Lender in the Term Loan Register.	
 
16.	Amendment, Modification and Waiver . This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto.	
 
17.	Entire Agreement . This Agreement, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof.	
 
18.	GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.	
 
19.	Severability . Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.	
 
4

20.	Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic transmission will be effective as delivery of a manually executed counterpart thereof.	
[Remainder of page intentionally left blank]
 
5

IN WITNESS WHEREOF , each of the undersigned has caused its duly authorized officer to execute and deliver this Joinder Agreement as of the date first written above.

BARCLAYS BANK PLC	
		
By:	 	/s/ Kevin Creavese	
Name:	 	Kevin Creavese	
Title:	 	Managing Director	
	
Notice Address:	
	
Barclays Bank PLC	
745 Seventh Avenue	
New York, NY 10019	
Attention: Vanessa Kurbatskiy	
Telephone: (212) 526-2799	
Facsimile: (212) 526-5115	
 
[Signature Page to Joinder Agreement]

			
FAIRMOUNT MINERALS, LTD. , as	
Borrower Representative	
		
By:	 	/s/ Christopher Nagel	
Name:	 	Christopher Nagel	
Title:	 	Chief Financial Officer	
 
[Signature Page to Joinder Agreement]

			
Consented to by:	
	
BARCLAYS BANK PLC,
as Administrative Agent	
		
By:	 	/s/ Kevin Creavese	
Name:	 	Kevin Creavese	
Title:	 	Managing Director	
 
[Signature Page to Joinder Agreement]

SCHEDULE A
TO JOINDER AGREEMENT

Name of Lender	  	Type of Commitment	  	Amount	 	
Barclays Bank PLC	  	Incremental Term Loan Commitment for Tranche B-2 Term Loans	  	$	41,000,000	  	
	  		  	 	 	 	
	  		  	Total: $	41,000,000	  	

Exhibit 21.1
SUBSIDIARIES OF FMSA HOLDINGS INC.

Name	  	Jurisdiction	
Fairmount Santrol Inc.	  	Delaware	
Technisand, Inc.	  	Delaware	
Wisconsin Industrial Sand Company, LLC	  	Delaware	
Wedron Silica Company	  	Ohio	
FML Sand, LLC	  	Ohio	

Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-1 of FMSA Holdings Inc. of our report dated July 11, 2014 relating to the consolidated financial statements of FML Holdings, Inc. and subsidiaries, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Cleveland, Ohio
August 22, 2014

Exhibit 23.2
August 22, 2014
CONSENT OF GZA GeoEnvironmental, Inc.
The undersigned hereby consents to the references to our firm in the form and context in which they appear in this Registration Statement on Form S-1 of FMSA Holdings Inc. and the related prospectus that is a part thereof. We hereby further consent to the use in such Registration Statement and prospectus of information contained in our reports setting forth the estimates of reserves of FMSA Holdings Inc. as of December 31, 2013.
We further consent to the reference to this firm under heading “EXPERTS.”
Respectfully submitted,
GZA GeoEnvironmental, Inc.

		
By:	 	/s/ Mark J. Krumenacher	
			
Name:	 	Mark J. Krumenacher	
Title:	 	Principal/Senior Vice President	

Exhibit 23.4
CONSENT TO BE NAMED IN REGISTRATION STATEMENT
The undersigned hereby consents to the references to our firm in the form and context in which they appear in this Registration Statement on Form S-1 of FMSA Holdings Inc. and the related prospectus that is a part thereof. We hereby further consent to the use in such Registration Statement and prospectus of information contained in our Industry Study #3160, “Well Stimulation Materials,” published in June 2014.

Very truly yours,	
	
/s/ Clinton I. Delafield, III	
Clinton I. Delafield, III	
EVP, Business Development	
The Freedonia Group	
August 22, 2014

Exhibit 23.5
CONSENT TO BE NAMED IN REGISTRATION STATEMENT
The undersigned hereby consents to the references to our firm in the form and context in which they appear in this Registration Statement on Form S-1 of FMSA Holdings Inc. and the related prospectus that is a part thereof. We hereby further consent to the use in such Registration Statement and prospectus of information contained in our “Proppant Market Analysis: 13Q4 Release,” published in March 2014.

Very truly yours,	
	
/s/ Christopher J. Robart	
Christopher J. Robart, Partner	
PacWest Consulting Partners	
August 22, 2014

Exhibit 23.6
August 22, 2014
CONSENT OF PropTester, Inc.
The undersigned hereby consents to the references to our firm in the form and context in which they appear in this Registration Statement on Form S-1 of FMSA Holdings Inc. and the related prospectus that is a part thereof.
Respectfully submitted,
PropTester, Inc.

		
By:	 	/s/ Ian Renkes	
			
Name:	 	Ian Renkes	
Title:	 	Manager of Operations