Item 1.02. Termination of a Material Definitive Agreement.
On December 27, 2019, CARBO Ceramics Inc. (the "Company") and Ascent Resources -
Utica, LLC ("Ascent") entered into a Termination and Release Agreement,
effective as of December 27, 2019 (the "Termination Agreement"), pursuant to
which, among other things, the Company and Ascent mutually agreed to terminate
the Letter Agreement, dated as of September 17, 2018 (the "Sand Purchase
Agreement"), by and between the Company and Ascent, and Ascent paid the Company
approximately $2.75 million in cash as reimbursement for a portion of the cost
and expense previously incurred by the Company in purchasing frac sand
inventory.
In connection with their entry into the Termination Agreement and the
termination of the Sand Purchase Agreement, the Company and Ascent entered into
a Consignment Agreement, dated and effective as of December 27, 2019, setting
forth the terms and conditions upon which the Company will have the right to
purchase all or any portion of Ascent's remaining frac sand inventory (the "Sand
Inventory") on a consignment basis for the purpose of resale by the Company to
third parties. Under the terms of the Consignment Agreement, among other things,
(i) the Company will be solely responsible for all costs and expenses
attributable to the marketing and resale of the Sand Inventory, (ii) any resales
of the Sand Inventory by the Company must generally be made on an arms-length
basis to unaffiliated third party customers and (iii) the Company must use
commercially reasonable efforts to resell the Sand Inventory at the highest
price and on the best terms available, and in any event at a price no less than
the average prevailing market price of sand of similar grade or quality. The
Consignment Agreement also provides that, upon the Company's resale of any
portion of the Sand Inventory, the Company will pay 50% of the gross proceeds
from such resale to Ascent, with the remainder of such gross proceeds to be
retained by the Company as commission.
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