Exhibit 10.1
Published CUSIP Number: ________
CREDIT AGREEMENT
dated as of August 12, 2005
among
FLOWSERVE CORPORATION,
THE LENDERS NAMED HEREIN,
and
BANK OF AMERICA, N.A.,
as Administrative Agent, Swingline Lender
and Collateral Agent
BANC OF AMERICA SECURITIES LLC,
Joint Lead Arranger and Joint Book Manager
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Joint Lead Arranger and Joint Book Manager
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
as Syndication Agent
and
CALYON NEW YORK BRANCH,
MIZUHO CORPORATE BANK,
and
PNC BANK, NATIONAL ASSOCIATION
as Co-Documentation Agents

 

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TABLE OF CONTENTS

              Page  
ARTICLE I DEFINITIONS
    1  
 
       
Section 1.01. Defined Terms
    1  
 
       
Section 1.02. Terms Generally
    27  
 
       
Section 1.03. Classification of Loans and Borrowings
    27  
 
       
Section 1.04. Exchange Rates
    28  
 
       
ARTICLE II THE CREDITS
    28  
 
       
Section 2.01. Commitments
    28  
 
       
Section 2.02. Loans
    29  
 
       
Section 2.03. Borrowing Procedure
    30  
 
       
Section 2.04. Evidence of Debt; Repayment of Loans
    31  
 
       
Section 2.05. Fees
    32  
 
       
Section 2.06. Interest on Loans
    33  
 
       
Section 2.07. Default Interest
    33  
 
       
Section 2.08. Alternate Rate of Interest
    34  
 
       
Section 2.09. Termination and Reduction of Commitments
    34  
 
       
Section 2.10. Conversion and Continuation of Borrowings
    34  
 
       
Section 2.11. Repayment of Term Borrowings
    36  
 
       
Section 2.12. Prepayment
    37  
 
       
Section 2.13. Mandatory Prepayments
    37  
 
       
Section 2.14. Reserve Requirements; Change in Circumstances
    39  
 
       
Section 2.15. Change in Legality
    40  
 
       
Section 2.16. Indemnity
    41  
 
       
Section 2.17. Pro Rata Treatment
    41  
 
       
Section 2.18. Sharing of Setoffs
    42  
 
       
Section 2.19. Payments
    42  
 
       
Section 2.20. Taxes
    43  
 
       
Section 2.21. Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate
    44  
 
       
Section 2.22. Swingline Loans
    45  
 
       
Section 2.23. Letters of Credit
    47  

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TABLE OF CONTENTS
(continued)

              Page  
ARTICLE III REPRESENTATIONS AND WARRANTIES
    51  
 
       
Section 3.01. Organization; Powers
    51  
 
       
Section 3.02. Authorization
    51  
 
       
Section 3.03. Enforceability
    52  
 
       
Section 3.04. Governmental Approvals
    52  
 
       
Section 3.05. Financial Statements
    52  
 
       
Section 3.06. No Material Adverse Change
    52  
 
       
Section 3.07. Title to Properties; Possession Under Leases
    52  
 
       
Section 3.08. Subsidiaries
    53  
 
       
Section 3.09. Litigation; Compliance with Laws
    53  
 
       
Section 3.10. Agreements
    53  
 
       
Section 3.11. Federal Reserve Regulations
    53  
 
       
Section 3.12. Investment Company Act; Public Utility Holding Company Act
    53  
 
       
Section 3.13. Use of Proceeds
    54  
 
       
Section 3.14. Tax Returns
    54  
 
       
Section 3.15. No Material Misstatements
    54  
 
       
Section 3.16. Employee Benefit Plans
    54  
 
       
Section 3.17. Environmental Matters
    54  
 
       
Section 3.18. Insurance
    55  
 
       
Section 3.19. Security Documents
    55  
 
       
Section 3.20. Location of Real Property and Leased Premises
    56  
 
       
Section 3.21. Labor Matters
    56  
 
       
Section 3.22. Solvency
    56  
 
       
ARTICLE IV CONDITIONS OF LENDING
    56  
 
       
Section 4.01. All Credit Events
    57  
 
       
Section 4.02. Closing Date
    57  
 
       
ARTICLE V AFFIRMATIVE COVENANTS
    60  
 
       
Section 5.01. Existence; Businesses and Properties
    60  
 
       
Section 5.02. Insurance
    61  

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TABLE OF CONTENTS
(continued)

              Page  
Section 5.03. Obligations and Taxes
    62  
 
       
Section 5.04. Financial Statements, Reports, etc
    62  
 
       
Section 5.05. Litigation and Other Notices
    63  
 
       
Section 5.06. Information Regarding Collateral
    64  
 
       
Section 5.07. Maintaining Records; Access to Properties and Inspections
    64  
 
       
Section 5.08. Use of Proceeds
    65  
 
       
Section 5.09. Further Assurances
    65  
 
       
Section 5.10. Interest Rate Protection
    66  
 
       
Section 5.11. Debt Ratings on Notes
    66  
 
       
Section 5.12. Completion of Restatement and Form 10-K Filing
    66  
 
       
ARTICLE VI NEGATIVE COVENANTS
    66  
 
       
Section 6.01. Indebtedness
    66  
 
       
Section 6.02. Liens
    68  
 
       
Section 6.03. Sale and Lease-Back Transactions
    69  
 
       
Section 6.04. Investments, Loans and Advances
    70  
 
       
Section 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions
    72  
 
       
Section 6.06. Dividends and Distributions; Restrictive Agreements
    73  
 
       
Section 6.07. Transactions with Affiliates
    75  
 
       
Section 6.08. Business of Company and Subsidiaries
    75  
 
       
Section 6.09. Other Indebtedness and Agreements
    75  
 
       
Section 6.10. Capital Expenditures
    75  
 
       
Section 6.11. Interest Coverage Ratio
    77  
 
       
Section 6.12. Maximum Leverage Ratio
    77  
 
       
Section 6.13. Fiscal Year
    77  
 
       
ARTICLE VII EVENTS OF DEFAULT
    77  
 
       
ARTICLE VIII THE AGENTS
    80  
 
       
Section 8.01. Appointment
    80  
 
       
Section 8.02. Liability of Agents
    81  
 
       
Section 8.03. Resignation and Replacement
    81  
 
       
Section 8.04. Agent in Individual Capacity
    82  

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TABLE OF CONTENTS
(continued)

              Page  
Section 8.05. Indemnification of Agents
    82  
 
       
Section 8.06. No Reliance
    83  
 
       
Section 8.07. Notice of Default
    83  
 
       
ARTICLE IX MISCELLANEOUS
    83  
 
       
Section 9.01. Notices
    83  
 
       
Section 9.02. Survival of Agreement
    85  
 
       
Section 9.03. Binding Effect
    85  
 
       
Section 9.04. Successors and Assigns
    86  
 
       
Section 9.05. Expenses; Indemnity
    90  
 
       
Section 9.06. Right of Setoff
    91  
 
       
Section 9.07. Applicable Law
    91  
 
       
Section 9.08. Waivers; Amendment
    91  
 
       
Section 9.09. Interest Rate Limitation
    92  
 
       
Section 9.10. Entire Agreement
    92  
 
       
Section 9.11. WAIVER OF JURY TRIAL
    92  
 
       
Section 9.12. Severability
    93  
 
       
Section 9.13. Counterparts
    93  
 
       
Section 9.14. Headings
    93  
 
       
Section 9.15. Jurisdiction; Consent to Service of Process
    93  
 
       
Section 9.16. Judgment Currency
    94  
 
       
Section 9.17. Confidentiality
    94  
 
       
Section 9.18. European Monetary Union
    95  
 
       
Section 9.19. Release of Collateral
    95  
 
       
Section 9.20. USA Patriot Act
    96  

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TABLE OF CONTENTS
(continued)
Page

         
SCHEDULES:
       
 
       
Schedule 1.01(a)
  —   Domestic Subsidiary Guarantors
Schedule 1.01(b)
  —   Mortgaged Properties
Schedule 1.01(c)
  —   Inactive Subsidiaries
Schedule 1.01(d)
  —   Existing Letters of Credit
Schedule 1.01(e)
  —   Fifth Third Letters of Credit
Schedule 1.01(f)
  —   Consolidated EBITDA
Schedule 1.01(g)
  —   Issuing Banks
Schedule 3.08
  —   Subsidiaries
Schedule 3.09
  —   Litigation
Schedule 3.17
  —   Environmental Matters
Schedule 3.18
  —   Insurance
Schedule 3.19(d)
  —   Mortgage Filing Offices
Schedule 3.20(a)
  —   Owned Real Property
Schedule 3.20(b)
  —   Leased Real Property
Schedule 3.20(c)
  —   Designated Properties
Schedule 6.01(a)
  —   Existing Indebtedness
Schedule 6.01(d)
  —   Existing Purchase Money Indebtedness
Schedule 6.01(e)
  —   Existing Capital Lease Obligations
Schedule 6.01(f)
  —   Outstanding Industrial Revenue Bonds
Schedule 6.01(g)
  —   Existing Indebtedness of Foreign Subsidiaries
Schedule 6.02
  —   Existing Liens
Schedule 6.04
  —   Existing Intercompany Loans
 
       
EXHIBITS:
       
 
       
Exhibit A
  —   Administrative Questionnaire
Exhibit B
  —   Assignment and Acceptance
Exhibit C
  —   Borrowing Request
Exhibit D
  —   Guarantee Agreement
Exhibit E
  —   Pledge Agreement
Exhibit F
  —   Security Agreement
Exhibit G
  —   Promissory Notes
Exhibit I-1
  —   Company Counsel Opinion
Exhibit I-2
  —   In-House Counsel Opinion

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FLOWSERVE CORPORATION
CREDIT AGREEMENT
     This CREDIT AGREEMENT is dated as of August 12, 2005, and entered into
among FLOWSERVE CORPORATION, a New York corporation (the “Company”), the
financial institutions from time to time party hereto (collectively, the
“Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., a national
banking association (“BofA”), as Swingline Lender, as Administrative Agent and
as Collateral Agent for the Lenders.
     WHEREAS, the Company has requested that the Lenders extend credit
facilities in the form of (i) Term Loans (such term and each other capitalized
term used but not defined herein having the meaning given such term in
Article I) in an aggregate principal amount of $600,000,000 and (ii) Revolving
Loans in an aggregate principal amount of up to $400,000,000, the proceeds of
which will be used to refinance certain Existing Indebtedness, to consummate the
redemption of the Subordinated Notes and for general corporate purposes of the
Company and its Subsidiaries;
     WHEREAS, the Obligations are to be guarantied and secured as provided
herein; and
     WHEREAS, the Lenders are willing to extend such credit facilities to the
Company pursuant to the terms and conditions of this Agreement on the terms and
subject to the conditions set forth herein.
     NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Company, the Lenders, the
Administrative Agent and the Collateral Agent agree as follows:
ARTICLE I
Definitions
     Section 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
     “ABN” shall mean ABN Amro Bank N.V. and any successor thereto.
     “ABN Standby Credit” shall mean bank guarantees, surety and performance
bonds, letters of credit and similar financial accommodations issued by ABN or
any Affiliate thereof for the account of the Company or any Subsidiary solely to
support contractual obligations of the Company and its Subsidiaries incurred in
the ordinary course of business of the Company and its Subsidiaries.
     “ABR,” when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
     “Additional KSM Investments” means investments made after the Closing Date
(i) in KSM’s seals business acquired in exchange for, or in connection with an
offsetting sale of,

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Flowserve International, Inc.’s existing interests in KSM’s bellows business; or
(ii) in additional interests in KSM for cash, or a combination of (i) and (ii),
so long as the net cash investments made by Loan Parties to consummate such
transactions do not exceed an amount separately agreed upon by Company and
Administrative Agent.
     “Adjusted LIBO Rate” shall mean, with respect to any Euro Rate Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate in
effect for such Interest Period and (b) Statutory Reserves.
     “Administrative Agent” means BofA in its capacity as administrative agent
under any of the Loan Documents or any successor administrative agent in respect
thereof.
     “Administrative Agent Fees” shall have the meaning assigned to such term in
Section 2.05(b).
     “Administrative Agent’s Fee Letter” shall mean the Administrative Agent’s
Fee Letter dated July 12, 2005, between the Company and BofA.
     “Administrative Questionnaire” shall mean an Administrative Questionnaire
in the form of Exhibit A, or such other form as may be supplied from time to
time by the Administrative Agent.
     “Affiliate” shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified, provided that for purposes of Section 6.07, the term “Affiliate”
shall also include any person that directly or indirectly owns more than 5% of
any class of capital stock or other equity interests of the person specified or
that is an officer or director of the person specified.
     “Agent Parties” shall have the meaning assigned to such term in
Section 9.01.
     “Agents” shall mean the Administrative Agent and the Collateral Agent.
     “Aggregate Revolving Credit Exposure” shall mean the aggregate amount of
the Lenders’ Revolving Credit Exposures.
     “Agreement” shall mean this Credit Agreement dated as of August 12, 2005,
as it may be amended, supplemented or otherwise modified from time to time.
     “Alternate Base Rate” shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the preceding sentence, until the circumstances
giving rise to such inability no longer exist. Any

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change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively. The
term “Prime Rate” shall mean the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect; each
change in the Prime Rate shall be effective on the date specified in the public
announcement of such change. The term “Federal Funds Effective Rate” shall mean,
for any day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for the day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
     “Alternative Currency” shall mean, with respect to any Letter of Credit,
Sterling, euro and any other freely transferable currency (other than dollars)
in which such Letter of Credit shall be denominated, as requested by the Company
and agreed to by the applicable Issuing Bank, with prior written notice to the
Administrative Agent.
     “Alternative Currency Letter of Credit” shall mean any Letter of Credit
denominated in an Alternative Currency.
     “Applicable Percentage” shall mean, for any day, with respect to (i) any
Euro Rate Term Loan, Euro Rate Revolving Loan, Performance Letter of Credit,
Financial Letter of Credit or the Commitment Fee, the applicable percentage set
forth below under the corresponding caption, in each case, based upon the
Leverage Ratio as of the relevant date of determination:

                                              Euro Rate   Euro Rate            
    Spread –   Spread –   Financial   Performance         Term   Revolving  
Letters of   Letters of   Commitment Leverage Ratio   Loans   Loans   Credit  
Credit   Fee
Category 1
Greater than or equal to 3.50 to 1.00
    1.75 %     2.25 %     2.25 %     1.75 %     0.500 %
 
                                       
Category 2
Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00
    1.75 %     2.00 %     2.00 %     1.50 %     0.500 %
 
                                       
Category 3
Greater than or equal to 2.25 to 1.00 but less than 3.00 to 1.00
    1.75 %     1.75 %     1.75 %     1.25 %     0.500 %
 
                                       
Category 4
Greater than or equal to 1.50 to 1.00 but less than 2.25 to 1.00
    1.50 %     1.375 %     1.375 %     0.875 %     0.375 %
 
                                       
Category 5
Less than 1.50 to 1.00
    1.50 %     1.125 %     1.125 %     0.750 %     0.300 %

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  ; (ii) with respect to Loans that are ABR Loans, an amount equal to (a) the
Applicable Percentage for Euro Rate Loans of such Type as set forth above minus
(b) 1.00% per annum; and (iii) with respect to any Swingline Loan, the
Applicable Percentage for Revolving Loans determined at the ABR Rate. Each
change in the Applicable Percentage resulting from a change in the Leverage
Ratio shall be effective with respect to all Term Loans, Revolving Loans,
Swingline Loans, Standby Letters of Credit outstanding and the Commitment Fee on
and after the date of delivery to the Administrative Agent of the financial
statements and certificates required by Section 5.04(a) or (b) and
Section 5.04(c), respectively, indicating such change until the date immediately
preceding the next date of delivery of such financial statements and
certificates indicating another such change. Notwithstanding the foregoing,
(i) as of the Closing Date, the Leverage Ratio shall be deemed to be in Category
3, and until the Company shall have delivered the financial statements and
certificates required by Section 5.04(a) and Section 5.04(c), respectively, for
the its fiscal year ended December 31, 2005, the Leverage Ratio shall be deemed
to be in Category 3 for purposes of determining the Applicable Percentage to the
extent it otherwise would have been in Category 4 or Category 5; provided,
however, that (a) at any time during which the Company has failed to deliver the
financial statements and certificates required by Section 5.04(a) or (b) and
Section 5.04(c), respectively, or (b) at any time after the occurrence and
during the continuance of an Event of Default, the Leverage Ratio shall be
deemed to be in Category 1 for purposes of determining the Applicable
Percentage; and (ii) if, prior to April 1, 2006, the Debt Ratings are downgraded
to B+ or lower by S&P or B1 or lower by Moody’s, the Applicable Percentages
(other than Commitment Fees) shall be increased by 0.25% and such increases
shall remain effective until the Debt Ratings have been restored to BB- or
higher by S&P and Ba3 or higher by Moody’s.
     “Asset Sale” shall mean the sale, transfer or other disposition (by way of
merger, casualty, condemnation or otherwise), other than an Asset Swap, by the
Company or any of the Subsidiaries to any person other than the Company or any
Subsidiary Guarantor of (a) any capital stock or other equity interests of any
of the Subsidiaries (other than directors’ qualifying shares) or (b) any other
assets of the Company or any of the Subsidiaries (other than (i) inventory,
damaged, obsolete or worn out assets, scrap and Permitted Investments, in each
case disposed of in the ordinary course of business, (ii) the sale of Program
Receivables pursuant to the Receivables Program, (iii) dispositions between or
among Subsidiaries that are not Loan Parties, (iv) dispositions from Loan
Parties to Subsidiaries that are not Loan Parties of (x) the capital stock of
Subsidiaries that are not Loan Parties or (y) assets having an aggregate value
not in excess of $25,000,000 from and after the Closing Date, (v) investments
permitted by Section 6.04 (and, in the case of Additional KSM Investments, any
disposition of interests in KSM in connection therewith) and Restricted Payments
permitted by Section 6.06, and (vi) sales, transfers or other dispositions (in
addition to those described in clauses (i) through (v) above) in any fiscal year
of the Company of assets having an aggregate value not in excess of
$10,000,000). Notwithstanding the foregoing, the non-recourse factoring of
accounts receivable by Foreign Subsidiaries permitted by Section 6.05(b) shall
not be deemed an Asset Sale for purposes of Section 2.13(b).

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     “Asset Swap” shall mean any transfer of assets of the Company or any
Subsidiary to any person other than the Company or any Affiliate of the Company
in exchange for assets of such person if such exchange would qualify, whether in
part or in full, as a like-kind exchange pursuant to Section 1031 of the Code.
Nothing in this definition shall require the Company or any Subsidiary to elect
that Section 1031 of the Code be applicable to any Asset Swap.
     “Assignee Group” shall mean two or more assignees that are Affiliates of
one another or two or more Related Funds.
     “Assignment and Acceptance” shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
     “Assignment Fee” shall have the meaning assigned to such term in
Section 9.04(b).
     “Board” shall mean the Board of Governors of the Federal Reserve System of
the United States of America.
     “Borrowing” shall mean (a) Loans of the same Class and Type made, converted
or continued on the same date (including the conversion of Converted Term Loans
into Term Loans hereunder on the Closing Date pursuant to Section 2.01) and, in
the case of a Euro Rate Borrowing, as to which a single Interest Period is in
effect or (b) a Swingline Loan.
     “Borrowing Request” shall mean a request by the Company in accordance with
the terms of Section 2.03 and substantially in the form of Exhibit C, or such
other form as shall be approved by the Administrative Agent.
     “Breakage Event” shall have the meaning assigned to such term in
Section 2.16.
     “Business Day” shall mean any day other than a Saturday, Sunday or day on
which banks in New York City or Dallas, Texas are authorized or required by law
to close; provided, however, that when used in connection with a Euro Rate Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in deposits in dollars in the London interbank eurodollar market.
     “Calculation Date” shall mean (a) the last Business Day of each month, if
any Alternative Currency Letter of Credit is outstanding on such day, and
(b) the Business Day preceding the date of issuance, extension, renewal or
amendment of any Alternative Currency Letter of Credit.
     “Calyon Facility” shall mean that certain Letter of Credit Facility dated
as of July 28, 2004 by and among Calyon New York Branch, as administrative
agent, the lenders party thereto, Flowserve B.V., and the Company and certain
material Subsidiaries of Flowserve B.V., as guarantors.
     “Capital Expenditures” shall mean, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Company and
its consolidated Subsidiaries that are (or should be) set forth in a
consolidated statement of cash flows of the Company for such

5

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period prepared in accordance with GAAP and (b) Capital Lease Obligations
incurred by the Company and its consolidated Subsidiaries during such period,
but excluding in each case any such expenditure made to restore, replace or
rebuild property to the condition of such property immediately prior to any
damage, loss, destruction or condemnation of such property to the extent such
expenditure is made with insurance proceeds, condemnation awards or damage
recovery proceeds relating to any such damage, loss, destruction or
condemnation; provided, however, that (i) amounts reinvested as contemplated in
the proviso to clause (a) in the definition of Net Cash Proceeds and (ii) the
acquisition of assets pursuant to any Permitted Acquisition, shall not be deemed
Capital Expenditures.
     “Capital Lease Obligations” of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
     “Captive Insurance Company” shall mean Flowcom Insurance Company, Inc., a
Hawaii corporation.
     “Change in Control” shall be deemed to have occurred if (a) any person or
group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934
as in effect on the date hereof) shall own directly or indirectly, beneficially
or of record, shares representing more than 25% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Company;
(b) a majority of the seats (other than vacant seats) on the board of directors
of the Company shall at any time be occupied by persons who were neither
(i) nominated by the board of directors of the Company, nor (ii) appointed by
directors so nominated; or (c) any change in control (or similar event, however
denominated) with respect to the Company or any Subsidiary shall occur under and
as defined in any indenture or agreement in respect of Material Indebtedness to
which the Company or any Subsidiary is a party.
     “Change in Law” shall mean (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or Issuing Bank
(or, for purposes of Section 2.14, by any lending office of such Lender or by
such Lender’s or Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
     “Charges” shall have the meaning assigned to such term in Section 9.09.
     “Class,” when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term
Loans or Swingline Loans and, when used in reference to any Commitment, refers
to whether such Commitment is a Revolving Credit Commitment, Term Loan
Commitment or Swingline Commitment.

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     “Closing Date” shall mean the date that the conditions set forth in
Section 4.02 are satisfied or waived.
     “Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time.
     “Collateral” shall mean all the “Collateral” as defined in any Security
Document and shall also include the Mortgaged Properties.
     “Collateral Agent” means BofA in its capacity as collateral agent under any
of the Loan Documents or any successor collateral agent in respect thereof.
     “Commitment” shall mean, with respect to any Lender, such Lender’s
Revolving Credit Commitment, Term Loan Commitment and/or Swingline Commitment.
     “Commitment Fee” shall have the meaning assigned to such term in
Section 2.05(a).
     “Company Materials” shall have the meaning assigned to such term in
Section 9.01.
     “Confidential Information Memorandum” shall mean the Confidential
Information Memorandum of the Company dated July 29, 2005.
     “Consolidated EBITDA” shall mean, for any period, Consolidated Net Income
for such period, plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) Consolidated Interest
Expense for such period, (ii) consolidated income tax expense for such period,
(iii) all amounts attributable to depreciation and amortization for such period,
(iv) any extraordinary losses or extraordinary non-cash charges for such period,
(v) the amount of premium payments paid by the Company or its Subsidiaries, and
charges in respect of unamortized fees and expenses, in each case associated
with the redemption of the Subordinated Notes, (vi) charges in respect of
unamortized fees and expenses associated with the prepayment of loans and
termination of commitments under the Existing Credit Agreement, (vii) non-cash
charges taken on or prior to December 31, 2005 attributable to the extension of
the expiry of stock options, and (viii) the amount for such period, if any, set
forth on Schedule 1.01(f), and minus (b) without duplication and to the extent
included in determining such Consolidated Net Income, any extraordinary gains
for such period, all determined on a consolidated basis in accordance with GAAP.
     “Consolidated Interest Expense” shall mean, for any period, interest
expense for the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, plus, without duplication, all fees,
discounts, premiums, expenses or similar amounts incurred by the Company or any
of its Subsidiaries in connection with the Receivables Program for such period,
including purchase discounts (net of any loss reserves), purchase premiums,
operating expense fees, structuring fees, collection agent fees, unutilized
purchase limit fees and other similar fees and expenses.
     “Consolidated Net Income” shall mean, for any period, the net income or
loss of the Company and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by the Subsidiary of that

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income is not at the time permitted by operation of the terms of its charter or
any agreement, instrument, judgment, decree, statute, rule or regulation
applicable to such Subsidiary, (b) the income or loss of any person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with
the Company or any Subsidiary or the date that such person’s assets are acquired
by the Company or any Subsidiary, and (c) after tax gains and losses
attributable to sales of assets outside of the ordinary course of business.
     “Control” shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms “Controlling” and “Controlled” shall have meanings correlative
thereto.
     “Conversion Notice” shall have the meaning assigned to such term in
Section 2.01.
     “Converted Term Loans” shall have the meaning assigned to such term in
Section 2.01.
     “Credit Event” shall have the meaning assigned to such term in
Section 4.01.
     “Current Assets” shall mean, at any time, the consolidated current assets
(other than cash and Permitted Investments) of the Company and the Subsidiaries.
     “Current Liabilities” shall mean, at any time, the consolidated current
liabilities of the Company and the Subsidiaries at such time, but excluding,
without duplication, (a) the current portion of any long-term Indebtedness and
(b) outstanding Revolving Loans and Swingline Loans.
     “Debt Ratings” shall mean the credit rating of the Loans by S&P and
Moody’s.
     “Default” shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
     “Defeased IRBs” shall mean the industrial revenue bonds due January 15,
2015 and issued by The City of Albuquerque, New Mexico in the aggregate
principal amount of $15,000,000.
     “Designated Properties” shall have the meaning assigned to such term in
Section 3.20(c).
     “Disbursement Agreements” means those certain agreements of even date
herewith among the Company, FFBV, the Administrative Agent, the Collateral Agent
and the Securities Intermediary in forms satisfactory to the Administrative
Agent.
     “dollars” or “$” shall mean lawful money of the United States of America.
     “Dollar Equivalent” shall mean, with respect to an amount of any
Alternative Currency on any date, the equivalent in dollars of such amount,
determined by the Administrative Agent pursuant to Section 1.04 using the
applicable Exchange Rate with respect to such currency at the time in effect.

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     “Dollar Subordinated Note Indenture” shall mean the indenture dated as of
August 8, 2000, between the Company, the Guarantors identified therein and The
Bank of New York, as trustee, as in effect on the Closing Date and as thereafter
amended from time to time in accordance with the requirements thereof, pursuant
to which the Dollar Subordinated Notes are issued.
     “Dollar Subordinated Notes” shall mean the Company’s 12-1/4% Senior
Subordinated Notes due 2010, in the initial aggregate principal amount of
$290,000,000, and an aggregate outstanding principal amount as of the date
hereof of $188,500,000, issued pursuant to the Dollar Subordinated Note
Indenture.
     “Domestic Subsidiaries” shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
     “EIB Facilities” shall mean loan facilities by and between the European
Investment Bank, as lender, and the Company and Flowserve B.V., as co-borrowers,
including, without limitation that certain Finance Contract dated as of
April 14, 2004, and as the same may be amended from time to time in accordance
with the requirements thereof and of this Agreement.
     “EMU Legislation” shall mean the legislative measures of the European Union
for the introduction of, changeover to or operation of the euro in one or more
member states.
     “Environmental Laws” shall mean all applicable Federal, state, local and
foreign laws (including common law), treaties, regulations, rules, ordinances,
codes, decrees, judgments and orders (including consent orders), in each case,
relating to protection of the environment, natural resources, human health and
safety as related to Hazardous Materials or the presence, Release of, or
exposure to, Hazardous Materials, or the generation, manufacture, processing,
distribution, use, treatment, storage, transport, recycling or handling of, or
the arrangement for such activities with respect to, Hazardous Materials.
     “Environmental Liability” shall mean liabilities, obligations, claims,
actions, suits, judgments or orders under or relating to any Environmental Law
for any damages, injunctive relief, losses, fines, penalties, fees, expenses
(including fees and expenses of attorneys and consultants) or costs, including
those arising from or relating to: (a) any action to address the on- or off-site
presence, Release of, or exposure to, Hazardous Materials; (b) permitting and
licensing, administrative oversight, insurance premiums and financial assurance
requirements; (c) any personal injury (including death), property damage (real
or personal) or natural resource damage; and (d) the compliance or
non-compliance with any Environmental Law.
     “Equity Issuance” shall mean any issuance or sale by the Company or any of
its Subsidiaries of any capital stock or other equity interests of the Company
or any Subsidiary, as applicable, or any obligations convertible into or
exchangeable for, or giving any person a right, option or warrant to acquire
such capital stock or equity interests or such convertible or exchangeable
obligations, except in each case for (a) any issuance or sale to the Company or
any Subsidiary, (b) any issuance of directors’ qualifying shares and (c) sales
or issuances of common stock of the Company to management or employees of the
Company or any Subsidiary under

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any employee stock option or stock purchase plan or employee benefit plan in
existence from time to time.
     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
     “ERISA Affiliate” shall mean any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
     “ERISA Event” shall mean (a) any “reportable event,” as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Company or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any Plan or the withdrawal or partial
withdrawal of the Company or any of its ERISA Affiliates from any Multiemployer
Plan; (e) the receipt by the Company or any of its ERISA Affiliates from the
PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(f) the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA;
(g) the receipt by the Company or any of its ERISA Affiliates of any notice, or
the receipt by any Multiemployer Plan from the Company or any of its ERISA
Affiliates of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence
of a “prohibited transaction” (within the meaning of Section 4975 of the Code)
with respect to which the Company or any such Subsidiary incurs liability; or
(i) any Foreign Benefit Event.
     “euro” or “€” shall mean the single currency of the European Union as
constituted by the Treaty on European Union and as referred to in the EMU
Legislation.
     “Euro Rate,” when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing (which Loans shall be
denominated in dollars), are bearing interest at a rate determined by reference
to the Adjusted LIBO Rate.
     “Euro Subordinated Note Indenture” shall mean the Indenture dated as of
August 8, 2000, between FFBV, the Company and the other Guarantors identified
therein and The Bank of New York, as trustee, as in effect on the Closing Date
and as thereafter amended from time to time in accordance with the requirements
thereof, pursuant to which the Euro Subordinated Notes are issued.
     “Euro Subordinated Notes” shall mean FFBV’s 12-1/4% Senior Subordinated
Notes due 2010, in an initial aggregate principal amount of €100,000,000 and an
aggregate outstanding principal amount as of the date hereof of €65,000,000,
issued pursuant to the Euro Subordinated Note Indenture.

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     “Event of Default” shall have the meaning assigned to such term in
Article VII.
     “Excess Cash Flow” shall mean, for any fiscal year of the Company, (a) the
sum, without duplication, of (i) Consolidated EBITDA for such fiscal year and
(ii) reductions to noncash working capital of the Company and the Subsidiaries
for such fiscal year (i.e., the decrease, if any, in Current Assets minus
Current Liabilities from the beginning to the end of such fiscal year), less
(b) the sum, without duplication, of (i) the amount of any Taxes payable in cash
by the Company and the Subsidiaries with respect to such fiscal year,
(ii) Consolidated Interest Expense for such fiscal year, (iii) Capital
Expenditures made in cash in accordance with Section 6.10 during such fiscal
year, except to the extent financed with the proceeds of Indebtedness (other
than Revolving Loans), Equity Issuances, Net Insurance/Condemnation Proceeds or
other proceeds that would not be included in Consolidated EBITDA, (iv) permanent
repayments of Indebtedness (other than mandatory repayments of Loans under
Section 2.13) made by the Company and the Subsidiaries during such fiscal year,
but only to the extent that such repayments by their terms cannot be reborrowed
or redrawn and do not occur in connection with a refinancing of all or any
portion of such Indebtedness, (v) amounts added to Consolidated Net Income in
determining Consolidated EBITDA for such year pursuant to clause (vii) of the
definition thereof, (vi) the amount of extraordinary cash losses for such period
to the extent added to Consolidated Net Income in determining Consolidated
EBITDA for such year and (vii) additions to noncash working capital for such
fiscal year (i.e., the increase, if any, in Current Assets minus Current
Liabilities from the beginning to the end of such fiscal year).
     “Exchange Rate” shall mean, on any day with respect to Alternative
Currency, the rate at which such Alternative Currency may be exchanged into
dollars (or, for purposes of Section 2.02(f) or any other provision of this
Agreement requiring or permitting the conversion of an Alternative Currency to
dollars, the rate at which dollars may be exchanged into an Alternative
Currency), based on the spot rate of exchange of the Administrative Agent in the
primary market where its foreign currency exchange operations in respect of such
Alternative Currency are then being conducted, at or about 10:00 a.m., local
time, on such date for the purchase of dollars (or such Alternative Currency, as
the case may be) for delivery two Business Days later; provided that if at the
time of any such determination, for any reason, no such spot rate is being
quoted, the Administrative Agent may use any reasonable method it deems
appropriate to determine such rate, and such determination shall be presumed
correct absent manifest error.
     “Excluded Foreign Equity Interests” means equity interests in entities
organized under the laws of Saudi Arabia or a state or territory of Australia,
including Flowserve Australia Pty. Ltd., Thompsons, Kelly & Lewis Pty. Limited,
and Flowserve Abahsain Co. Ltd.
     “Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Company hereunder, (a) income or franchise
taxes imposed (or measured) on the basis of the net income of such recipient by
the United States of America, or by the jurisdiction under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable lending office is located,
(b) any

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branch profits taxes imposed by the United States of America or any similar tax
imposed by the jurisdiction under the laws of which such recipient is organized
or in which its principal office is located or, in the case of any Lender, in
which its applicable lending office is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Company under
Section 2.21(a)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender’s
failure to comply with Section 2.20(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Company with respect to such withholding tax pursuant to Section 2.20(a).
     “Existing Credit Agreement” shall mean the First Amended and Restated
Credit Agreement dated as of May 2, 2002 among the Company, Flowserve France
SAS, the Lenders’ party thereto, BofA as administrative agent, collateral agent,
and swingline lender, and Credit Suisse First Boston as syndication agent, as
amended as of the Closing Date.
     “Existing Indebtedness” shall mean Indebtedness under the Existing Credit
Agreement and the Subordinated Notes.
     “Existing Letter of Credit” shall mean each Letter of Credit previously
issued for the account of the Company or a Subsidiary that is outstanding on the
Closing Date and listed on Schedule 1.01(d).
     “Existing Term Loans” means “Term Loans” outstanding to the Company under
(and as defined in) the Existing Credit Agreement immediately prior to the
satisfaction of the condition set forth in Section 4.02(p).
     “Fee Letter” shall mean the Fee Letter dated July 12, 2005 among the
Company, Merrill Lynch Pierce Fenner & Smith Incorporated, Merrill Lynch Capital
Corporation, BofA and Banc of America Securities LLC.
     “Fees” shall mean the Commitment Fees, the Administrative Agent’s Fees, the
L/C Participation Fees and the Issuing Bank Fees.
     “FFBV” shall mean Flowserve Finance B.V., a Netherlands corporation
(besloten vennootschap) and a wholly owned subsidiary of the Company.
     “Fifth Third” shall mean Fifth Third Bancorp, an Ohio corporation, its
subsidiaries and any successor thereto.
     “Fifth Third Letter of Credit” shall mean each letter of credit previously
issued for the account of the Company or a Subsidiary that (a) is outstanding on
the Closing Date and (b) is listed on Schedule 1.01(e).
     “Fifth Third Letter of Credit Exposure” shall mean, at any time, the sum of
(a) the aggregate undrawn amount of all outstanding Fifth Third Letters of
Credit at such time and (b) the aggregate principal amount of all disbursements
or payments made by Fifth Third or any

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of its Affiliates in respect of Fifth Third Letters of Credit that have not yet
been reimbursed by the Company or its Subsidiaries at such time.
     “Financial L/C Rate” shall have the meaning assigned to such term in
Section 2.05(d).
     “Financial Letter of Credit” shall mean each letter of credit issued (or
deemed issued) pursuant to Section 2.23 under which an Issuing Bank agrees to
make payments for the account of the Company or any Subsidiary in respect of
Indebtedness incurred or proposed to be incurred by the Company or such
Subsidiary. Any Letter of Credit that is neither a Performance Letter of Credit
nor a Trade Letter of Credit shall be deemed to be a Financial Letter of Credit.
     “Financial Officer” of any person shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such person.
     “Finsub” shall mean a bankruptcy-remote, wholly owned subsidiary of the
Company, organized and existing solely for the purpose of engaging in the
Receivables Program.
     “Flowserve B.V.” shall mean Flowserve B.V., a company organized under the
laws of the Netherlands and a Subsidiary of the Company.
     “Foreign Benefit Event” shall mean, with respect to any Foreign Pension
Plan, (a) the existence of unfunded liabilities in excess of the amount
permitted under any applicable law, or in excess of the amount that would be
permitted absent a waiver from a Governmental Authority, (b) the failure to make
the required contributions or payments, under any applicable law, on or before
the due date for such contributions or payments, (c) the receipt of a notice by
a Governmental Authority relating to the intention to terminate any such Foreign
Pension Plan or to appoint a trustee or similar official to administer any such
Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension
Plan and (d) the incurrence of any liability in excess of $10,000,000 (or the
Dollar Equivalent thereof in another currency) by the Company or any of its
Subsidiaries under applicable law on account of the complete or partial
termination of such Foreign Pension Plan or the complete or partial withdrawal
of any participating employer therein, or (e) the occurrence of any transaction
that is prohibited under any applicable law that results in the incurrence of
any liability by the Company or any of its Subsidiaries, or the imposition on
the Company or any of its Subsidiaries of any fine, excise tax or penalty
resulting from any noncompliance with any applicable law, in each case in excess
of $10,000,000 (or the Dollar Equivalent thereof in another currency).
     “Foreign Lender” shall mean any Lender that is organized in or under the
laws of a jurisdiction other than the United States of America, any State
thereof or the District of Columbia. For purposes of this definition, the United
States of America, any State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.
     “Foreign Pension Plan” shall mean any benefit plan which under applicable
foreign law is required to be funded through a trust or other funding vehicle
other than a trust or funding vehicle maintained exclusively by a Governmental
Authority.
     “Foreign Pledge Agreement” means each pledge agreement or similar
instrument governed by the laws of a country other than the United States,
executed on the Closing Date or

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from time to time thereafter by any Loan Party that owns capital stock of one or
more Foreign Subsidiaries organized in such country, in form and substance
reasonably satisfactory to the Administrative Agent.
     “Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic
Subsidiary.
     “GAAP” shall mean United States generally accepted accounting principles
applied on a consistent basis.
     “General Services Sale” shall mean the divestiture of the so-called
“general services” operations of the Company and its Subsidiaries as more
particularly described in the Company’s press release dated February 7, 2005.
     “Governmental Authority” shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
     “Granting Lender” shall have the meaning assigned to such term in
Section 9.04(i).
     “Guarantee” of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation,
(b) to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation or (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation; but, provided, however, that the term “Guarantee” shall not include
endorsements for collection or deposit in the ordinary course of business.
     “Guarantee Agreement” shall mean the Guarantee Agreement dated as of the
Closing Date made by the Guarantors in favor of the Collateral Agent for the
benefit of the Secured Parties, substantially in the form of Exhibit D annexed
hereto, as the same may be amended, supplemented or otherwise modified from time
to time.
     “Guarantors” shall mean each person listed on Schedule 1.01(a) and each
other person that becomes party to the Guarantee Agreement as a Guarantor, and
the permitted successors and assigns of each such person, so long as such person
remains a Guarantor thereunder.
     “Hazardous Materials” shall mean (a) any petroleum products or byproducts
and all other hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other
ozone-depleting substances, in each case regulated by any Environmental Law, and
(b) any chemical, material, substance or waste that is prohibited, limited or
regulated by or pursuant to any Environmental Law.

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     “Hedging Agreement” shall mean any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
     “HSBC Backstopped Letters of Credit” means letters of credit issued under
the Existing Credit Facility by HSBC Bank or its Affiliates which are fully
supported by Letters of Credit outstanding under this Agreement.
     “Inactive Subsidiary” shall mean each Subsidiary that (i) has not conducted
any business during the twelve-month period preceding the date of determination
and (ii) has less than $50,000 in assets. The Inactive Subsidiaries on the
Closing Date are listed on Schedule 1.01(c).
     “Inbound Distributions” shall have the meaning assigned to such term in
Section 6.04(d).
     “Incremental EIB Indebtedness” shall mean Indebtedness incurred under EIB
Facilities pursuant to clause (y) of Section 6.01(g) after the Closing Date,
except to the extent the same refinances Indebtedness then outstanding under EIB
Facilities.
     “Incremental Receivables Program Indebtedness” means Receivables Program
Indebtedness incurred after the Closing Date if and to the extent the aggregate
amount of Receivables Program Indebtedness outstanding after giving effect to
such incurrence exceeds the sum of $60,000,000 plus the amount of any
prepayments of the Term Loans made after the Closing Date pursuant to Section
2.13(e) arising from the incurrence of Receivables Program Indebtedness.
     “Indebtedness” of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person upon which interest charges are customarily paid,
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property or assets purchased by such person,
(e) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business), (f) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such person, whether or not the obligations secured thereby
have been assumed, (g) all Guarantees by such person of Indebtedness of third
parties, (h) all Capital Lease Obligations of such person, (i) all obligations
of such person as an account party in respect of letters of credit, (j) all
obligations of such person in respect of bankers’ acceptances, and (k) all
Receivables Program Indebtedness of such person. The Indebtedness of any person
shall include the Indebtedness of any partnership in which such person is a
general partner, except to the extent the terms of such Indebtedness provide
that such Indebtedness is not recourse to such person. Notwithstanding the
foregoing, so long as the Defeased IRBs are owned by the Company or a wholly
owned subsidiary, neither the Defeased IRBs nor any Guarantee thereof shall
constitute Indebtedness hereunder. The Subordinated Notes shall not be
considered Indebtedness for purposes of calculating the Applicable Percentage so
long as the Subordinated Note Condition shall have been satisfied.

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     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.
     “Indemnitee” shall have the meaning assigned to such term in
Section 9.05(b).
     “Indemnity, Subrogation and Contribution Agreement” shall mean the
Indemnity, Subrogation and Contribution Agreement dated as of the Closing Date
among the Company, the Guarantors and the Collateral Agent, as the same may be
amended, supplemented or otherwise modified from time to time.
     “Interest Coverage Ratio” shall mean, for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
     “Interest Payment Date” shall mean, (a) with respect to any ABR Loan (other
than a Swingline Loan), the last Business Day of each March, June, September and
December, (b) with respect to any Euro Rate Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Euro Rate Borrowing with an Interest Period of more than three months’
duration, each day that would have been an Interest Payment Date had successive
Interest Periods of three months’ duration been applicable to such Borrowing,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid pursuant to Section 2.04(a).
     “Interest Period” shall mean, with respect to any Euro Rate Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months (or, if each Lender
participating in such Borrowing confirms to the Administrative Agent that
Interest Periods of such duration are acceptable to such Lender, two weeks,
9 months or 12 months) thereafter, as the Company may elect; provided, however,
that if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
     “Investment Grade Ratings” shall mean that the credit rating of the
Company’s senior unsecured, non-credit-enhanced long-term debt (the “Senior
Unsecured Debt”) is (a) BBB- or higher, as determined by S&P, and (b) Baa3 or
higher, as determined by Moody’s. The Company shall be deemed to have obtained
Investment Grade Ratings if it shall deliver to the Administrative Agent letters
from S&P and Moody’s to the effect that the Senior Unsecured Debt would be so
rated assuming that the Secured Parties had released their liens in the
Collateral.
     “Issuing Bank” shall mean, as the context may require, (a) BofA, (b) with
respect to each Existing Letter of Credit, the Lender that issued such Existing
Letter of Credit, or (c) any other Lender that may become an Issuing Bank
pursuant to Section 2.23(i) or Section 2.23(k), with respect to Letters of
Credit issued by such Lender. As of the Closing Date, Company has

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designated (and Administrative Agent has approved) pursuant to Section 2.23(k),
the Lenders set forth on Schedule 1.01(g) as Issuing Banks hereunder.
     “Issuing Bank Fees” shall have the meaning assigned to such term in
Section 2.05(d).
     “Judgment Currency” shall have the meaning assigned to such term in
Section 9.16.
     “Judgment Currency Conversion Date” shall have the meaning assigned to such
term in Section 9.16.
     “KSM” shall mean Korea Seal Master Company Ltd.
     “L/C Commitment” shall mean, with respect to any Issuing Bank, the
commitment of such Issuing Bank to issue Letters of Credit pursuant to
Section 2.23.
     “L/C Disbursement” shall mean a payment or disbursement made by an Issuing
Bank pursuant to a Letter of Credit.
     “L/C Exposure” shall mean, at any time, the sum of (a) the Trade L/C
Exposure and (b) the Standby L/C Exposure at such time. The L/C Exposure of any
Revolving Credit Lender at any time shall equal its Pro Rata Percentage of the
aggregate L/C Exposure at such time.
     “L/C Participation Fees” shall have the meaning assigned to such term in
Section 2.05(d).
     “Lead Arrangers” shall mean Banc or America Securities LLC and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
     “Lenders” shall have the meaning assigned to such term in the introductory
paragraph hereto and, unless the context clearly indicates otherwise, the term
“Lenders” shall include the Swingline Lender.
     “Letter of Credit” shall mean any letter of credit issued pursuant to
Section 2.23 and any Existing Letter of Credit.
     “Leverage Ratio” shall mean, on any date, the ratio of Total Debt on such
date to Consolidated EBITDA for the period of four consecutive fiscal quarters
most recently ended on or prior to such date; provided, however, if as of any
date the Leverage Ratio is being determined, the Company or any Subsidiary shall
have completed a Permitted Acquisition or an Asset Sale during the relevant four
fiscal quarter period, Consolidated EBITDA shall be computed (for purposes of
such determination) on a pro forma basis (in accordance with the last sentence
of Section 6.04(h)) as if such Permitted Acquisition or Asset Sale and any
related incurrence of Indebtedness, had occurred at the beginning of such
period.
     “LIBO Rate” shall mean, with respect to any Euro Rate Borrowing for any
Interest Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m., London time, on the date that is two Business Days
prior to the commencement of such Interest Period by reference to the British
Bankers’ Association LIBOR Rate, as published by Reuters (or

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other commercially available source providing quotations of such rate as
designated by the Administrative Agent from time to time), for deposits in
dollars (for delivery on the first day of such Interest Period), for a period
equal to such Interest Period; provided that, to the extent that an interest
rate is not ascertainable pursuant to the foregoing provisions of this
definition, the “LIBO Rate” shall be the interest rate per annum determined by
the Administrative Agent to be the rate per annum at which deposits in dollars
are offered for such relevant Interest Period to major banks in the London
interbank eurodollar market by the Administrative Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to the
beginning of such Interest Period.
     “Lien” shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
     “Loan Documents” shall mean this Agreement, the Guarantee Agreement, the
Security Documents and the Indemnity, Subrogation and Contribution Agreement.
     “Loan Parties” shall mean the Company and the Guarantors.
     “Loans” shall mean the Revolving Loans, the Term Loans and the Swingline
Loans.
     “Margin Stock” shall have the meaning assigned to such term in
Regulation U.
     “Material Adverse Effect” shall mean (a) a materially adverse effect on the
business, assets, results of operations or financial condition of the Company
and the Subsidiaries, taken as a whole, (b) material impairment of the ability
of the Company or any other Loan Party to perform its obligations under the Loan
Documents to which it is or will be a party or (c) material impairment of the
rights of or benefits available to the Lenders or Administrative Agent under the
Loan Documents.
     “Material Indebtedness” shall mean Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Company and the Subsidiaries in an aggregate principal
amount exceeding $10,000,000. For purposes of determining Material Indebtedness,
the “principal amount” of the obligations of the Company or any Subsidiary in
respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Company or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
     “Maximum Rate” shall have the meaning assigned to such term in
Section 9.09.
     “Moody’s” shall mean Moody’s Investors Service, Inc. or any successor
thereto.
     “Mortgaged Properties” shall mean the owned real properties of the Loan
Parties specified on Schedule 1.01(b).

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     “Mortgages” shall mean the mortgages, deeds of trust, assignments of leases
and rents, modifications and other security documents delivered on the Closing
Date by any Loan Party in favor of the Collateral Agent for the benefit of the
Secured Parties in form and substance satisfactory to the Administrative Agent,
as the same may be amended, supplemented or otherwise modified from time to
time.
     “Multiemployer Plan” shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
     “Net Cash Proceeds” shall mean (a) with respect to any Asset Sale, the cash
proceeds (including cash proceeds subsequently received (as and when received)
in respect of noncash consideration initially received), net of (i) selling
expenses (including broker’s fees or commissions, legal fees, transfer and
similar taxes and the Company’s good faith estimate of income taxes paid or
payable in connection with such sale), (ii) amounts provided as a reserve, in
accordance with GAAP, against any liabilities under any indemnification
obligations or purchase price adjustment associated with such Asset Sale
(provided that, to the extent and at the time any such amounts are released from
such reserve, such amounts shall constitute Net Cash Proceeds) and (iii) the
principal amount, premium or penalty, if any, interest and other amounts on any
Indebtedness for borrowed money which is secured by the asset sold in such Asset
Sale and which is required to be repaid with such proceeds (other than any such
Indebtedness assumed by the purchaser of such asset); provided, however, that if
(x) the Company shall deliver a certificate of a Financial Officer to the
Administrative Agent at or prior to the time of receipt thereof setting forth
the Company’s intent to reinvest such proceeds in productive assets of a kind
then used or usable in the business of the Company and its Subsidiaries within
270 days of receipt of such proceeds and (y) no Event of Default shall have
occurred and shall be continuing at the time of such certificate, such proceeds
shall not constitute Net Cash Proceeds except to the extent not so used or
contractually committed to be used at the end of such 270-day period, at which
time such proceeds shall be deemed to be Net Cash Proceeds; and (b) with respect
to any incurrence, issuance or disposition of Indebtedness (including
Incremental Receivables Program Indebteness) or any Equity Issuance, the cash
proceeds thereof, net of all taxes and fees, commissions, costs and other
expenses incurred in connection therewith. Any “boot” or other non-like-kind
assets received in connection with an Asset Swap shall, to the extent received
in cash or at the time converted into cash, be considered cash proceeds from the
sale of an asset.
     “Net Insurance/Condemnation Proceeds” means any cash payments or proceeds
received by Company or any of its Domestic Subsidiaries as a result of the
taking of any assets of Company 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 or any casualty event, in excess of $5,000,000 per event and, in each
case, net of any actual and reasonable documented costs incurred by Company or
any of its Subsidiaries in connection with the adjustment or settlement of any
claims of Company or such Subsidiary in respect thereof, provided, however, that
if (x) the Company shall deliver a certificate of a Financial Officer to the
Administrative Agent not later than the tenth Business Day after receipt thereof
setting forth the Company’s intent to reinvest such proceeds in productive
assets of a kind then used or usable in the business of the Company and its
Subsidiaries within 270 days of receipt of such proceeds and (y) no Event of
Default shall have occurred and shall be continuing at the time of such
certificate, such proceeds shall not constitute

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Net Insurance/Condemnation Proceeds except to the extent not so used or
contractually committed to be used at the end of such 270-day period, at which
time such proceeds shall be deemed to be Net Insurance/Condemnation Proceeds.
     “New Unsecured Debt” means Indebtedness having the following
characteristics: (i) the issuer shall be the Company and/or any Foreign
Subsidiary and such Indebtedness may be guaranteed by one or more of the Company
and the Guarantors only, (ii) such Indebtedness shall be unsecured, (iii) such
Indebtedness shall not have any scheduled payment of principal, scheduled
prepayment, scheduled mandatory redemption or sinking fund payment prior to
December 31, 2012, (iv) the Net Cash Proceeds of such Indebtedness shall be
applied as required by Section 2.13(e), (v) such Indebtedness shall not contain
any provision prohibiting the creation or assumption of any Lien on any of the
properties or assets of the Company or its Subsidiaries, whether then owned or
thereafter acquired, or prohibiting guaranties by the Company or any of its
Subsidiaries, in either case, to secure or guarantee payment of the Obligations
or any agreement renewing, refinancing or extending the Obligations or this
Agreement, (vi) the Company shall be in compliance with Section 6.11 and
Section 6.12 on a pro forma basis after giving effect to the incurrence of such
Indebtedness, and (vii) such Indebtedness shall be on terms and conditions
reasonably determined by Administrative Agent to be consistent with prevailing
market terms and shall be issued pursuant to documentation reasonably
satisfactory to the Administrative Agent.
     “Non-Consenting Lender” shall have the meaning assigned to such term in
Section 2.21(a).
     “Obligation Currency” shall have the meaning assigned to such term in
Section 9.16.
     “Obligations” shall mean all obligations defined as “Obligations” in the
Guarantee Agreement and the Security Documents.
     “Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
     “Outbound Debts” shall have the meaning assigned to such term in
Section 6.04(d).
     “PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
     “Perfection Certificate” shall mean the Perfection Certificate
substantially in the form attached to the Security Agreement.
     “Performance L/C Rate” shall have the meaning assigned to such term in
Section 2.05(d).
     “Performance Letter of Credit” shall mean each letter of credit issued (or
deemed issued) pursuant to Section 2.23 under which an Issuing Bank agrees to
make payments for the account of the Company or any Subsidiary in respect of
obligations (other than Indebtedness) of, or performance by, the Company or such
Subsidiary pursuant to contracts to which the Company or

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such Subsidiary is or proposes to be a party, in each case in the ordinary
course of business of the Company or such Subsidiary.
     “Permitted Acquisition” shall have the meaning assigned to such term in
Section 6.04(h).
     “Permitted Investments” shall mean:
     (a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;
     (b) investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, one of the three
highest credit ratings obtainable from S&P or from Moody’s;
     (c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within one year from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any Agent or any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof that has a
combined capital and surplus and undivided profits of not less than
$500,000,000;
     (d) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria of clause (c) above;
     (e) investments in “money market funds” within the meaning of Rule 2a-7 of
the Investment Company Act of 1940, as amended, substantially all of whose
assets are invested in investments of the type described in clauses (a) through
(d) above; and
     (f) other short-term investments utilized by Foreign Subsidiaries in
accordance with normal investment practices for cash management in investments
of a type analogous to the foregoing.
     “person” shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
     “Plan” shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which the
Company or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5)
of ERISA.
     “Platform” shall have the meaning assigned to such term in Section 9.01.

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     “Pledge Agreement” shall mean the Pledge Agreement dated as of the Closing
Date between the Company, the Subsidiaries party thereto and the Collateral
Agent for the benefit of the Secured Parties, substantially in the form of
Exhibit E annexed hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
     “Program Receivables” shall mean all trade receivables and related contract
rights originated and owned by the Company or any Subsidiary and sold pursuant
to the Receivables Program.
     “Pro Rata Percentage” of any Revolving Credit Lender at any time shall mean
the percentage of the Total Revolving Credit Commitment represented by such
Lender’s Revolving Credit Commitment. In the event the Revolving Credit
Commitments shall have expired or been terminated, the Pro Rata Percentages
shall be determined on the basis of the Revolving Credit Commitments most
recently in effect.
     “Public Lender” shall have the meaning assigned to such term in
Section 9.01.
     “Receivables Program” shall mean the Program Receivables facility
established pursuant to the Receivables Program Documentation.
     “Receivables Program Documentation” shall mean collectively, (i) the
existing receivables facility evidenced by the Receivables Purchase Agreement
dated as of October 7, 2004 by and among Finsub, Flowserve US Inc., Jupiter
Securitization Corporation and Bank One, NA, as agent for the Purchasers party
thereto and related documentation in the forms delivered to the Administrative
Agent prior to the date hereof, as the same may be amended, supplemented or
otherwise modified from time to time (with the approval of the Administrative
Agent, in the case of any such amendment, supplement or modification that is
adverse to the Company and its Subsidiaries or the Lenders in any material
respect), and (ii) any other facility or arrangement involving (a) the sale of,
or transfer of interests in, Program Receivables to Finsub in a “true sale”
transaction and (b) the financing by Finsub of such Program Receivables, either
through the sale of, or transfer of interests in, such Program Receivables to
persons that are not Affiliates of the Company, the incurrence of Indebtedness
by Finsub or otherwise; provided that the terms and conditions of such other
facility or arrangement (including those providing for recourse to the Company
or any of its Subsidiaries other than Finsub) shall be subject to the prior
written approval of the Administrative Agent (not to be unreasonably withheld)
if materially different than those of the existing receivables facility referred
to in clause (i) above.
     “Receivables Program Indebtedness” means all consideration or other amounts
received by Finsub from the purchaser or financier of Program Receivables under
the Receivables Program less any amounts collected with respect to the Program
Receivables sold or transferred to or financed by such purchaser or financier,
regardless of whether such amount is required to be reflected as a liability on
the consolidated balance sheet of the Company and its Subsidiaries in accordance
with GAAP (it being the intent of the parties that the amount of Receivables
Program Indebtedness at any time outstanding approximates as closely as possible
the principal amount of Indebtedness that would be outstanding at such time
under the Receivables Program if the same were structured as a secured lending
agreement).

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     “Redemption Date” shall have the meaning given to such term in the
definition of the “Subordinated Note Condition.”
     “Register” shall have the meaning given such term in Section 9.04(d).
     “Regulation T” shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
     “Regulation U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
     “Regulation X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
     “Related Fund” shall mean, with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised
or managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
     “Release” shall mean any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into or through the environment or within or upon any building,
structure, facility or fixture.
     “Release Date” shall have the meaning assigned to such term in
Section 9.19.
     “Required Lenders” shall mean, at any time, Lenders having Loans (excluding
Swingline Loans), L/C Exposure, Swingline Exposure and unused Revolving Credit
Commitments and Term Loan Commitments representing at least a majority of the
sum of all Loans outstanding (excluding Swingline Loans), L/C Exposure,
Swingline Exposure and unused Revolving Credit Commitments and Term Loan
Commitments at such time.
     “Responsible Officer” of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement.
     “Restatement” shall have the meaning assigned to such term in Section 5.12.
     “Restricted Payment” shall have the meaning assigned to such term in
Section 6.06(a).
     “Revolving Credit Borrowing” shall mean a Borrowing comprised of Revolving
Loans.
     “Revolving Credit Commitment” shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Loans pursuant to clause (b) of
Section 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be
(a) reduced from time to time pursuant to Section 2.09 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The amount of each Lender’s Revolving Credit
Commitment shall be set forth in the Register.

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     “Revolving Credit Exposure” shall mean, with respect to any Lender at any
time, the aggregate principal amount at such time of all outstanding Revolving
Loans of such Lender, plus the aggregate amount at such time of such Lender’s
L/C Exposure, plus the aggregate amount at such time of such Lender’s Swingline
Exposure.
     “Revolving Credit Lender” shall mean a Lender with a Revolving Credit
Commitment or an outstanding Revolving Loan.
     “Revolving Credit Maturity Date” shall mean August 12, 2010.
     “Revolving Loans” shall mean the revolving loans made by the Lenders to the
Company pursuant to clause (b) of Section 2.01.
     “Secured Parties” shall have the meaning assigned to such term in the
Security Agreement.
     “Securities Intermediary” means Banc of America Securities LLC or Banc of
America Securities Limited, as applicable, in its capacity as “Securities
Intermediary” pursuant to a Disbursement Agreement.
     “Security Agreement” shall mean the Security Agreement dated as of the
Closing Date among the Company, the Subsidiaries party thereto and the
Collateral Agent for the benefit of the Secured Parties, substantially in the
form of Exhibit F annexed hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
     “Security Documents” shall mean the Mortgages, the Security Agreement, the
Pledge Agreement, any Foreign Pledge Agreement and each of the security
agreements, pledge agreements, mortgages, control agreements and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.09.
     “SPC” shall have the meaning assigned to such term in Section 9.04(i).
     “S&P” shall mean Standard & Poor’s Ratings Services or any successor
thereto.
     “Standby Letter of Credit” shall mean any Financial Letter of Credit or any
Performance Letter of Credit.
     “Standby L/C Exposure” shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding Standby Letters of Credit at such
time that are denominated in dollars, plus the Dollar Equivalent at such time of
the aggregate undrawn amount of all outstanding Alternative Currency Standby
Letters of Credit, and (b) the aggregate principal amount of all L/C
Disbursements in respect of Standby Letters of Credit denominated in dollars
that have not yet been reimbursed at such time plus the Dollar Equivalent at
such time of the aggregate principal amount of all L/C Disbursements in respect
of Standby Letters of Credit denominated in Alternative Currencies that have not
yet been reimbursed at such time. The Standby L/C Exposure of any Revolving
Credit Lender at any time shall equal its Pro Rata Percentage of the aggregate
Standby L/C Exposure at such time.

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     “Statutory Reserves” shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board. Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.
     “Sterling” or “£” shall mean lawful money of the United Kingdom.
     “Subordinated Note Condition” shall mean, (i) Company shall have delivered
to the trustee for the Dollar Subordinated Notes and FFBV shall have delivered
to the trustee for the Euro Subordinated Notes a notice of redemption
irrevocably calling all outstanding Subordinated Notes for redemption on
September 12, 2005 (the “Redemption Date”), together with the officer’s
certificates and opinions of counsel required by the Subordinated Note
Indentures in connection therewith; (ii) Company shall have deposited funds (on
behalf of itself and FFBV) with either (a) the trustee under the Subordinated
Note Indentures or (b) the Securities Intermediary pursuant to the Disbursement
Agreements, in either case in an amount sufficient to redeem all Subordinated
Notes on the Redemption Date (including accrued interest to the Redemption Date
and the amount of the applicable premiums thereon); (iii) if applicable, Company
and FFVBV shall have provided irrevocable direction to the Securities
Intermediary to deliver such funds to the trustee before the Redemption Date;
and (iv) the Administrative Agent shall have received reasonably satisfactory
evidence of the occurrence of the events described in clauses (i)-(iii) above.
     “Subordinated Note Indentures” shall mean the Dollar Subordinated Note
Indenture and the Euro Subordinated Note Indenture.
     “Subordinated Notes” shall mean the Dollar Subordinated Notes and the Euro
Subordinated Notes.
     “subsidiary” shall mean, with respect to any person (herein referred to as
the “parent”), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any determination is being
made, owned, controlled or held.
     “Subsidiary” shall mean any subsidiary of the Company.
     “Swingline Commitment” shall mean the commitment of the Swingline Lender to
make Loans pursuant to Section 2.22, as the same may be reduced from time to
time pursuant to Section 2.09.
     “Swingline Exposure” shall mean at any time the aggregate principal amount
at such time of all outstanding Swingline Loans. The Swingline Exposure of any
Revolving Credit Lender at any time shall equal its Pro Rata Percentage of the
aggregate Swingline Exposure at such time.
     “Swingline Lender” means BofA in its capacity as swingline lender under any
of the Loan Documents or any successor swingline lender in respect thereof.

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     “Swingline Loan” shall mean any Loan made by the Swingline Lender pursuant
to Section 2.22.
     “Taxes” shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
     “Term Borrowing” shall mean a Borrowing comprised of Term Loans.
     “Term Loan Commitments” shall mean, with respect to each Lender, the
commitment of such Lender to make (or convert Existing Term Loans into) Term
Loans to the Company pursuant to clause (a) of Section 2.01. The amount of each
Lender’s Term Loan Commitment shall be set forth in the Register. The initial
amount of the aggregate Term Loan Commitments is $600,000,000.
     “Term Loans” shall mean the term loans made by the Lenders to the Company
or converted from Existing Term Loans into term loans to the Company, in each
case pursuant to clause (a) of Section 2.01.
     “Term Loan Maturity Date” shall mean August 10, 2012.
     “Term Loan Repayment Date” shall have the meaning assigned to such term in
Section 2.11(a).
     “Total Debt” shall mean, at any time, the total consolidated Indebtedness
of the Company and the Subsidiaries at such time (excluding (a) Indebtedness
under Section 6.01(j), and (b) Indebtedness of the type described in clause
(i) of the definition of such term and under Section 6.01(k), except in each
case to the extent of any unreimbursed drawings or payments thereunder).
     “Total Revolving Credit Commitment” shall mean, at any time, the aggregate
amount of the Revolving Credit Commitments, as in effect at such time. The
initial amount of the Total Revolving Credit Commitment is $400,000,000.
     “Trade Letter of Credit” shall mean each commercial documentary letter of
credit issued (or deemed issued) by an Issuing Bank for the account of the
Company or any Subsidiary pursuant to Section 2.23 for the purchase of goods by
the Company or such Subsidiary in the ordinary course of its business.
     “Trade L/C Exposure” shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Trade Letters of Credit at such time that are
denominated in dollars, plus the Dollar Equivalent at such time of the aggregate
undrawn amount of all outstanding Alternative Currency Trade Letters of Credit,
and (b) the aggregate principal amount of all L/C Disbursements in respect of
Trade Letters of Credit denominated in dollars that have not yet been reimbursed
at such time plus the Dollar Equivalent at such time of the aggregate principal
amount of all L/C Disbursements in respect of Trade Letters of Credit
denominated in Alternative Currencies that have not yet been reimbursed at such
time.

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     “Transactions” shall mean, collectively, the transactions to occur pursuant
to the Loan Documents, including (a) the execution and delivery of the Loan
Documents, the performance by the Loan Parties of their respective obligations
thereunder and the initial Borrowings hereunder, (b) the repayment of the
Indebtedness under the Existing Credit Agreement and the release of Liens
securing the same, (c) the redemption of the Subordinated Notes, and (d) the
payment of all fees and expenses to be paid on or prior to the Closing Date and
owing in connection with the foregoing.
     “Type,” when used in respect of any Loan or Borrowing, shall refer to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term “Rate” shall include the
Adjusted LIBO Rate and the Alternate Base Rate.
     “wholly owned subsidiary” of any person shall mean a subsidiary of such
person of which securities (except for directors’ qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person.
     “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
     Section 1.02. Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include,” “includes” and “including” shall
be deemed to be followed by the phrase “without limitation.” All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, (a) any reference in this Agreement to any Loan Document shall
mean such document as amended, restated, supplemented or otherwise modified from
time to time and (b) all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided,
however, that if the Company notifies the Administrative Agent that the Company
wishes to amend any covenant in Article VI or any related definition to
eliminate the effect of any change in GAAP occurring after the date of this
Agreement on the operation of such covenant (or if the Administrative Agent
notifies the Company that the Required Lenders wish to amend Article VI or any
related definition for such purpose), then the Company’s compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Company
and the Required Lenders.
     Section 1.03. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Euro Rate Loan”) or by Class and Type (e.g., a “Euro
Rate Revolving Loan”). Borrowings also

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may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by
Type (e.g., a “Euro Rate Borrowing”) or by Class and Type (e.g., a “Euro Rate
Revolving Borrowing”).
     Section 1.04. Exchange Rates. (a) On each Calculation Date, the
Administrative Agent shall (i) determine the relevant Exchange Rates as of such
Calculation Date and (ii) give notice thereof to the Lenders and the Company.
The Exchange Rates so determined shall become effective on the first Business
Day immediately following the relevant Calculation Date (a “Reset Date”), shall
remain effective until the next succeeding Reset Date, and shall for all
purposes of this Agreement (other than Section 2.02(f), Section 2.05(d),
Section 2.22(c), Section 9.16 or any other provision expressly requiring the use
of a current Exchange Rate) be the Exchange Rates employed in converting any
amounts between dollars and Alternative Currencies.
     (b) Notwithstanding the foregoing, no Default shall be deemed to have
occurred if, solely as a result of changes in exchange rates and not as the
result of additional incurrences of Indebtedness, investments, loans or
advances, the dollar equivalent of any amount subject to a cash basket set forth
in Section 6.01, Section 6.02 or Section 6.04 is exceeded.
ARTICLE II
The Credits
     Section 2.01. Commitments. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, (a) each Lender with a
Term Loan Commitment agrees, severally and not jointly, to (i) make Term Loans
to the Company, in dollars, in an aggregate principal amount not to exceed its
Term Loan Commitment or (ii) with the consent of the Administrative Agent,
pursuant to a timely Term Loan Conversion Notice delivered pursuant to the
penultimate sentence of this Section 2.01(a), convert all of such Lender’s
Existing Term Loans into a Term Loan to the Company, in dollars, outstanding
under this Agreement, in either case on the Closing Date, and (b) each Lender
with a Revolving Credit Commitment agrees, severally and not jointly, to make
Revolving Loans to the Company, at any time and from time to time on or after
the date hereof, and until the earlier of the Revolving Credit Maturity Date and
the termination of the Revolving Credit Commitment of such Lender in accordance
with the terms hereof, in dollars, in an aggregate principal amount at any time
outstanding that will not result in (i) such Lender’s Revolving Credit Exposure
exceeding such Lender’s Revolving Credit Commitment or (ii) the Aggregate
Revolving Credit Exposure exceeding the Total Revolving Credit Commitment.
Within the limits set forth in clause (b) of the preceding sentence and subject
to the terms, conditions and limitations set forth herein, the Company may
borrow, pay or prepay and reborrow Revolving Loans. Amounts paid or prepaid in
respect of Term Loans may not be reborrowed. Administrative Agent has offered
certain Lenders the opportunity to convert their respective Existing Term Loans
into Term Loans hereunder and certain such Lenders have accepted such offer and
elected to convert all of their respective Existing Term Loans into Term Loans
hereunder by delivery of a duly executed, irrevocable written notice thereof to
Administrative Agent substantially in the form supplied by Administrative Agent
on the Platform (any such notice being a “Conversion Notice” and any Existing
Term Loan to be converted pursuant thereto being a “Converted Term Loan”). On
the Closing Date, Converted Term Loans shall be converted into (and shall
constitute for all purposes hereunder) Term Loans under this Agreement and the
Administrative Agent shall record in the Register the Converted Term Loans

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converted into Term Loans hereunder. A Lender’s delivery of a duly executed
Conversion Notice shall obviate the need for such Lender to execute this
Agreement or an Assignment and Acceptance with respect to its Term Loans, such
Conversion Notice being deemed a signature to this Agreement for all purposes.
     Section 2.02. Loans. (a) Each Loan (other than Swingline Loans) shall be
made as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their applicable Commitments; provided, however, that the
failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). Except for Loans deemed made
pursuant to Section 2.02(f), the Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $1,000,000 and
not less than $5,000,000 or (ii) equal to the remaining available balance of the
applicable Commitments.
     (b) Subject to Section 2.08 and Section 2.15, each Borrowing of Loans shall
be comprised entirely of ABR Loans in dollars or Euro Rate Loans in dollars as
the Company may request pursuant to Section 2.03. Each Lender may at its option
make any Euro Rate Loan by causing any domestic or foreign branch or Affiliate
of such Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of the Company to repay such Loan in accordance
with the terms of this Agreement. Borrowings of more than one Type may be
outstanding at the same time; provided, however, that the Company shall not be
entitled to request any Borrowing that, if made, would result in more than 25
Euro Rate Borrowings outstanding hereunder at any time. For purposes of the
foregoing, Borrowings having different Interest Periods, regardless of whether
they commence on the same date, shall be considered separate Borrowings.
     (c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account as the
Administrative Agent may designate not later than 12:00 noon, Dallas time, and
the Administrative Agent shall promptly credit the amounts so received to an
account in the name of the Company, maintained with the Administrative Agent and
designated by the Company in the applicable Borrowing Request or, if a Borrowing
shall not occur on such date because any condition precedent herein specified
shall not have been met, return the amounts so received to the respective
Lenders.
     (d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Company on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Company severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Company until the date such amount is
repaid to the

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Administrative Agent at (i) in the case of the Company, the interest rate
applicable at the time to ABR Loans of such Type and (ii) in the case of such
Lender, a rate determined by the Administrative Agent to represent its cost of
overnight or short-term funds (which determination shall be conclusive absent
manifest error). If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Lender’s Loan as part of
such Borrowing for purposes of this Agreement.
     (e) Notwithstanding any other provision of this Agreement, the Company
shall not be entitled to request any Revolving Credit Borrowing if the Interest
Period requested with respect thereto would end after the Revolving Credit
Maturity Date.
     (f) If, with respect to any L/C Disbursement made under a Standby Letter of
Credit, the applicable Issuing Bank shall not have received from the Company the
payment required to be made by Section 2.23(e) within the time specified in such
Section, such Issuing Bank will promptly notify the Administrative Agent of the
L/C Disbursement and the Administrative Agent will promptly notify each
Revolving Credit Lender of such L/C Disbursement, the Dollar Equivalent thereof
(if denominated in an Alternative Currency) and its Pro Rata Percentage thereof.
Each Revolving Credit Lender shall pay by wire transfer of immediately available
dollars to the Administrative Agent not later than 1:00 p.m., Dallas time, on
such date (or, if such Revolving Credit Lender shall have received such notice
later than 11:00 a.m., Dallas time, on any day, not later than 1:00 p.m., Dallas
time, on the immediately following Business Day), an amount equal to such
Lender’s Pro Rata Percentage of such L/C Disbursement (or the Dollar Equivalent
thereof, if such L/C Disbursement was denominated in an Alternative Currency)
(it being understood that such amount shall be deemed to constitute an ABR
Revolving Loan of such Lender and such payment shall be deemed to have reduced
the Standby L/C Exposure), and the Administrative Agent will promptly pay to the
applicable Issuing Bank amounts so received by it from the Revolving Credit
Lenders. The Administrative Agent will promptly pay to the applicable Issuing
Bank any amounts received by it from the Company pursuant to Section 2.23(e)
prior to the time that any Revolving Credit Lender makes any payment pursuant to
this paragraph (f); any such amounts received by the Administrative Agent
thereafter will be promptly remitted by the Administrative Agent to the
Revolving Credit Lenders that shall have made such payments and to the
applicable Issuing Bank, as their interests may appear. If any Revolving Credit
Lender shall not have made its Pro Rata Percentage of such L/C Disbursement
available to the Administrative Agent as provided above, such Lender and the
Company severally agree to pay interest on such amount, for each day from and
including the date such amount is required to be paid in accordance with this
paragraph to but excluding the date such amount is paid, to the Administrative
Agent for the account of the applicable Issuing Bank at (i) in the case of the
Company, a rate per annum equal to the interest rate applicable to Revolving
Loans pursuant to Section 2.06(a), and (ii) in the case of such Lender, for the
first such day, the Federal Funds Effective Rate, and for each day thereafter,
the Alternate Base Rate.
     Section 2.03. Borrowing Procedure. In order to request a Borrowing (other
than a Swingline Loan or a deemed Borrowing pursuant to Section 2.02(f), as to
which this Section 2.03 shall not apply), the Company shall hand deliver or
telecopy to the Administrative Agent a duly completed Borrowing Request (a) in
the case of a Euro Rate Borrowing, not later than 12:00 noon, Dallas time, three
Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 2:00 p.m., Dallas time, one Business Day before a
proposed

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Borrowing. Each Borrowing Request shall be irrevocable, shall be signed by or on
behalf of the Company and shall specify the following information: (i) whether
the Borrowing then being requested is to be a Term Borrowing or a Revolving
Credit Borrowing, and whether such Borrowing is to be a Euro Rate Borrowing or
an ABR Borrowing (provided that until the Administrative Agent shall have
notified the Company that the primary syndication of the Commitments with
respect to a particular Class has been completed (which notice shall be given as
promptly as practicable and, in any event, within 45 days after the Closing
Date), the Company shall only request, at its option, Borrowings of Loans of
such Class as either (x) ABR Borrowings or (y) Euro Rate Borrowings with
one-month Interest Periods all ending on the same date unless Company agrees to
pay costs arising from a Breakage Event in connection with the primary
syndication); (ii) the date of such Borrowing (which shall be a Business Day);
(iii) the number and location of the account to which funds are to be disbursed
(which shall be an account that complies with the requirements of
Section 2.02(c); (iv) the amount of such Borrowing and (v) if such Borrowing is
to be a Euro Rate Borrowing, the Interest Period with respect thereto; provided,
however, that, notwithstanding any contrary specification in any Borrowing
Request, each requested Borrowing shall comply with the requirements set forth
in Section 2.02. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Euro Rate Borrowing is specified in any such
notice, then the Company shall be deemed to have selected an Interest Period of
one month’s duration. The Administrative Agent shall promptly advise the
applicable Lenders of any notice given pursuant to this Section 2.03 (and the
contents thereof), and of each Lender’s portion of the requested Borrowing.
     Section 2.04. Evidence of Debt; Repayment of Loans. (a) The Company hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender (i) the principal amount of each Term Loan of such Lender made to
the Company as provided in Section 2.11 and (ii) the then unpaid principal
amount of each Revolving Loan of such Lender on the Revolving Credit Maturity
Date. The Company hereby promises to pay the Swingline Lender the then unpaid
principal amount of each Swingline Loan on the earlier of the Revolving Credit
Maturity Date and the first date after such Swingline Loan is made that is the
last day of a calendar month and is at least fifteen days after such Swingline
Loan is made.
     (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Company to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
     (c) The Administrative Agent shall maintain the Register in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Company to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Company or any Guarantor and each Lender’s share thereof.
     (d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to

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maintain such accounts or any error therein shall not in any manner affect the
obligations of the Company to repay the Loans in accordance with their terms. In
the event of any inconsistency between the Register and any Lender’s records,
the recordations of the Register shall govern.
     (e) Any Lender may request that Loans made by it hereunder be evidenced by
a promissory note. In such event, the Company shall execute and deliver to such
Lender a promissory note payable to such Lender and its registered assigns and
in substantially in the form for the applicable Class of Loan or Commitment
attached hereto as Exhibit G. Notwithstanding any other provision of this
Agreement, in the event any Lender shall request and receive such a promissory
note, the interests represented by such note shall at all times (including after
any assignment of all or part of such interests pursuant to Section 9.04) be
represented by one or more promissory notes payable to the payee named therein
or its registered assigns.
     Section 2.05. Fees. (a) The Company agrees to pay to each Lender, through
the Administrative Agent, on the last Business Day of March, June, September and
December, in each year and on each date on which any Revolving Credit Commitment
of such Lender shall expire or be terminated as provided herein, a commitment
fee (a “Commitment Fee”) equal to the Applicable Percentage multiplied by the
average daily unused amount (treating Standby L/C Exposure as usage of the
Revolving Credit Commitments) of the Revolving Credit Commitments of such Lender
(other than the Swingline Commitment) during the preceding quarter (or other
period commencing with the Closing Date or ending with the Revolving Credit
Maturity Date or the date on which the Revolving Credit Commitments of such
Lender shall expire or be terminated). All Commitment Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. The
Commitment Fee due to each Lender shall commence to accrue on the Closing Date
and shall cease to accrue on the date on which the Revolving Credit Commitment
of such Lender shall expire or be terminated as provided herein. For purposes of
calculating Commitment Fees only, no portion of the Revolving Credit Commitments
shall be deemed utilized as a result of outstanding Swingline Loans or Trade
Letters of Credit.
     (b) The Company agrees to pay to the Administrative Agent, for its own
account, the administrative fees set forth in the Administrative Agent’s Fee
Letter at the times and in the amounts specified therein (the “Administrative
Agent Fees”).
     (c) The Company agrees to pay to the Underwriting Banks (as defined in the
Fee Letter), for their own account (and/or the account of the Lenders, if the
Underwriting Banks so elect), the Underwriting Fee (as defined in the Fee
Letter) set forth in the Fee Letter.
     (d) The Company agrees to pay (i) to each Revolving Credit Lender, in
dollars, through the Administrative Agent, on the last Business Day of March,
June, September and December, of each year and on the date on which the
Revolving Credit Commitment of such Lender shall be terminated as provided
herein, a fee (an “L/C Participation Fee”) calculated on such Lender’s Pro Rata
Percentage of the daily aggregate Standby L/C Exposure (excluding the portion
thereof attributable to unreimbursed L/C Disbursements) during the preceding
quarter (or shorter period commencing with the date hereof or ending with the
Revolving Credit Maturity Date or the date on which all Letters of Credit have
been canceled or have expired and the Revolving Credit Commitments of all
Lenders shall have been terminated) at a rate equal to (y) in the case of
Financial Letters of Credit, the Applicable Percentage with respect to Financial

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Letters of Credit (the “Financial L/C Rate”), and (z) in the case of Performance
Letters of Credit, the Applicable Percentage with respect to Performance Letters
of Credit (the “Performance L/C Rate”), and (ii) to the applicable Issuing Bank
with respect to each Standby Letter of Credit a fronting fee equal to 1/8 of 1%
per annum (or such other amount as may be agreed upon by the Company and the
applicable Issuing Bank) on the aggregate face amount of such Letter of Credit
plus the amount of any other issuance and drawing costs specified from time to
time by such Issuing Bank with regard to a Letter of Credit (the “Issuing Bank
Fees”). All L/C Participation Fees and, except as otherwise agreed by the
Company and the applicable Issuing Bank, Issuing Bank Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. For
purposes of determining the amount of the L/C Participation Fees with respect to
any Alternative Currency Letter of Credit, the Standby L/C Exposure shall be
determined by the Administrative Agent using the Exchange Rates in effect at
approximately 11:00 a.m., New York City time, on the date that is two Business
Days before the payment of the L/C Participation Fee.
     (e) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be paid directly to
the applicable Issuing Bank. Once paid, none of the Fees shall be refundable
under any circumstances.
     Section 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year of
360 days at all other times) at a rate per annum equal to the Alternate Base
Rate plus the Applicable Percentage in effect from time to time.
     (b) Subject to the provisions of Section 2.07, the Loans comprising each
Euro Rate Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Percentage in effect from time to time.
     (c) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
     Section 2.07. Default Interest. If the Company shall default in the payment
of the principal of or interest on any Loan or any other amount becoming due
hereunder, by acceleration or otherwise, or under any other Loan Document, the
Company shall on demand from time to time pay interest, to the extent permitted
by law, on such defaulted amount to but excluding the date of actual payment
(after as well as before judgment) (a) in the case of overdue principal, at the
rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00% per
annum and (b) in all other cases, at a rate per annum (computed on the basis of
the actual number of days elapsed over a year of 365 or 366 days, as the case
may be, when determined by reference to the Prime Rate and over a year of
360 days at all other times) equal to the rate that would be applicable to an
ABR Revolving Loan plus 2.00%.

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     Section 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Euro Rate Borrowing the Administrative Agent shall have
determined that deposits in dollars in the principal amounts of the Loans
comprising such Borrowing are not generally available in the applicable
interbank market, or that the rates at which such deposits are being offered
will not adequately and fairly reflect the cost to any Lender of making or
maintaining its Euro Rate Loan during such Interest Period, or that reasonable
means do not exist for ascertaining the Adjusted LIBO Rate for the applicable
Loan, the Administrative Agent shall, as soon as practicable thereafter, give
written or telecopy notice of such determination to the Company and the Lenders.
In the event of any such determination, until the Administrative Agent shall
have advised the Company and the Lenders that the circumstances giving rise to
such notice no longer exist, any request by the Company for a Euro Rate
Borrowing pursuant to Section 2.03 or Section 2.10 shall be deemed to be a
request for an ABR Borrowing. Each determination by the Administrative Agent
under this Section 2.08 shall be conclusive absent manifest error.
     Section 2.09. Termination and Reduction of Commitments. (a) The Term Loan
Commitments shall automatically terminate upon the making of the Term Loans on
the Closing Date. The Revolving Credit Commitments, the Swingline Commitment and
the L/C Commitments shall automatically terminate on the Revolving Credit
Maturity Date.
     (b) Upon at least three Business Days’ prior written or telecopy notice to
the Administrative Agent (which notice shall be irrevocable unless it is
specified as being conditioned upon the consummation of a refinancing and the
Company agrees to pay costs, if any, arising from a Breakage Event in connection
therewith), the Company may at any time in whole permanently terminate, or from
time to time in part permanently reduce, the Revolving Credit Commitments;
provided, however, that (i) each partial reduction of the Revolving Credit
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $5,000,000 and (ii) the Total Revolving Credit Commitment shall not be
reduced to an amount that is less than the sum of the Aggregate Revolving Credit
Exposure at the time.
     (c) Each reduction in the Commitments hereunder shall be made ratably among
the Lenders in accordance with their respective Commitments of the applicable
Class. The Company shall pay to the Administrative Agent for the account of the
applicable Lenders, on the date of each termination or reduction, the Commitment
Fees on the amount of the Revolving Credit Commitments so terminated or reduced
accrued to but excluding the date of such termination or reduction.
     Section 2.10. Conversion and Continuation of Borrowings. The Company shall
have the right at any time upon prior irrevocable notice to the Administrative
Agent (a) not later than 12:00 noon, Dallas time, one Business Day prior to
conversion, to convert any Euro Rate Borrowing into an ABR Borrowing, (b) not
later than 12:00 noon, Dallas time, three Business Days prior to conversion or
continuation, to convert any ABR Borrowing into a Euro Rate Borrowing, or to
continue any Euro Rate Borrowing as a Euro Rate Borrowing for an additional
Interest Period, and (c) not later than 12:00 noon, Dallas time, three Business
Days prior to conversion, to convert the Interest Period with respect to any
Euro Rate Borrowing to another permissible Interest Period, subject in each case
to the following:

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          (i) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing;
          (ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting Borrowing shall
satisfy the limitations specified in Section 2.02(a) and Section 2.02(b)
regarding the principal amount and maximum number of Borrowings of the relevant
Type;
          (iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the new Loan of
such Lender resulting from such conversion and reducing the Loan (or portion
thereof) of such Lender being converted by an equivalent principal amount;
accrued interest on any Euro Rate Loan (or portion thereof) being converted
shall be paid by the Company at the time of conversion;
          (iv) if any Euro Rate Borrowing is converted at a time other than the
end of the Interest Period applicable thereto, the Company shall pay, upon
demand, any amounts due to the Lenders pursuant to Section 2.16;
          (v) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Euro Rate
Borrowing;
          (vi) any portion of a Euro Rate Borrowing that cannot be converted
into or continued as a Euro Rate Borrowing by reason of the immediately
preceding clause shall be automatically converted at the end of the Interest
Period in effect for such Borrowing into an ABR Borrowing;
          (vii) upon notice to the Company from the Administrative Agent given
at the request of the Required Lenders, after the occurrence and during the
continuance of a Default or Event of Default, no outstanding Loan may be
converted into, or continued as, a Euro Rate Loan; and
          (viii) until the Administrative Agent shall have notified the Company
that the primary syndication of the Commitments or Loans of a particular Class
has been completed (which notice shall be given by the Administrative Agent as
promptly as practicable and, in any event, within 45 days after the Closing
Date), no ABR Borrowing may be converted into a Euro Rate Borrowing with respect
to Loans of such Class(other than a Euro Rate Borrowing with an Interest Period
of not more than one-month’s duration and which does not end on a date different
from any other outstanding Euro Rate Borrowing) unless the Company agrees to pay
costs arising from a Breakage Event in connection with the primary syndication.
     Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Company requests be converted or continued, (ii) whether such Borrowing
is to be converted to or continued as a Euro Rate Borrowing or an ABR Borrowing,
(iii) if such notice requests a conversion, the date of such conversion (which
shall be a Business Day) and (iv) if such Borrowing is to be converted to or
continued as a Euro Rate Borrowing, the Interest Period with respect thereto. If
no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Euro

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Rate Borrowing, the Company shall be deemed to have selected an Interest Period
of one month’s duration. The Administrative Agent shall advise the Lenders of
any notice given pursuant to this Section 2.10 and of each Lender’s portion of
any converted or continued Borrowing. If the Company shall not have given notice
in accordance with this Section 2.10 to continue any Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in accordance with
this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end
of the Interest Period applicable thereto (unless repaid pursuant to the terms
hereof), automatically be continued as an ABR Borrowing.
     Section 2.11. Repayment of Term Borrowings. (a) The Company shall pay to
the Administrative Agent, for the account of the Lenders, on the dates set forth
below, or if any such date is not a Business Day, on the next preceding Business
Day (each such date being a “Term Loan Repayment Date”), a principal amount of
Term Loans (as adjusted from time to time pursuant to Section 2.12 or
Section 2.13) equal to the amount set forth below for such date, together in
each case with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of such payment:

          Date   Amount
December 31, 2005
  $ 1,500,000  
March 31, 2006
  $ 1,500,000  
June 30, 2006
  $ 1,500,000  
September 30, 2006
  $ 1,500,000  
December 31, 2006
  $ 1,500,000  
March 31, 2007
  $ 1,500,000  
June 30, 2007
  $ 1,500,000  
September 30, 2007
  $ 1,500,000  
December 31, 2007
  $ 1,500,000  
March 31, 2008
  $ 1,500,000  
June 30, 2008
  $ 1,500,000  
September 30, 2008
  $ 1,500,000  
December 31, 2008
  $ 1,500,000  
March 31, 2009
  $ 1,500,000  
June 30, 2009
  $ 1,500,000  
September 30, 2009
  $ 1,500,000  
December 31, 2009
  $ 1,500,000  
March 31, 2010
  $ 1,500,000  
June 30, 2010
  $ 1,500,000  
September 30, 2010
  $ 1,500,000  
December 31, 2010
  $ 1,500,000  
March 31, 2011
  $ 1,500,000  
June 30, 2011
  $ 1,500,000  
September 30, 2011
  $ 1,500,000  
December 31, 2011
  $ 141,000,000  
March 31, 2012
  $ 141,000,000  
June 30, 2012
  $ 141,000,000  
Term Loan Maturity Date
  $ 141,000,000  

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     (b) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Loan Maturity Date, together with accrued and unpaid
interest on the principal amount to be paid to but excluding the date of
payment.
     (c) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
     Section 2.12. Prepayment. (a) The Company shall have the right at any time
and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days’ prior written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) in the case of Euro Rate
Loans, or written or telecopy notice (or telephone notice promptly confirmed by
written or telecopy notice) at least one Business Day prior to the date of
prepayment in the case of ABR Loans, to the Administrative Agent before 12:00
noon, Dallas time; provided, however, that each partial prepayment shall be in
an amount that is an integral multiple of $1,000,000 and not less than
$5,000,000.
     (b) Optional prepayments of Term Loans by the Company shall be applied
first, in chronological order to the installments of principal scheduled to be
paid within 12 months after such prepayment and second, pro rata against the
remaining scheduled installments of principal due in respect of the Term Loans
under Section 2.11(a).
     (c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Company to prepay such Borrowing by the amount
stated therein on the date stated therein (unless it is specified as being
conditioned upon the consummation of a refinancing and the Company agrees to pay
costs, if any, arising from a Breakage Event in connection therewith). All
prepayments under this Section 2.12 shall be subject to Section 2.16 but
otherwise without premium or penalty. All prepayments under this Section 2.12
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
     Section 2.13. Mandatory Prepayments. (a) In the event of any termination of
all the Revolving Credit Commitments, the Company shall, on the date of such
termination, repay or prepay all its outstanding Revolving Credit Borrowings and
all outstanding Swingline Loans and replace all outstanding Letters of Credit
and/or deposit an amount equal to the L/C Exposure in cash in a cash collateral
account established with the Collateral Agent for the benefit of the Secured
Parties. If (i) at any time as a result of any partial reduction of the
Revolving Credit Commitments, or (ii) on any Calculation Date as a result of
fluctuations in exchange rates, the Aggregate Revolving Credit Exposure would
exceed the Total Revolving Credit Commitment after giving effect thereto, then
the Company shall, on the date of such reduction or termination or on such
Calculation Date, as the case may be, repay or prepay Revolving Credit
Borrowings or Swingline Loans (or a combination thereof) and/or replace or cash
collateralize outstanding Letters of Credit in an amount sufficient to eliminate
such excess. In addition, if on any date the Aggregate Revolving Credit Exposure
would exceed the Total Revolving Credit Commitment, then on such date the
Company shall repay or prepay Revolving Credit Borrowings or Swingline Loans (or
a combination thereof) and/or replace or cash collateralize outstanding Letters
of Credit in an aggregate amount sufficient to eliminate such excess.

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     (b) Not later than the tenth Business Day following the completion of any
Asset Sale, the Company shall apply 100% of the Net Cash Proceeds received with
respect thereto to prepay outstanding Term Loans in accordance with
Section 2.13(g).
     (c) Subject to paragraph (i) below, in the event and on each occasion that
an Equity Issuance occurs, the Company shall, substantially simultaneously with
(and in any event not later than the fifth Business Day next following) the
occurrence of each Equity Issuance, prepay outstanding Term Loans in accordance
with Section 2.13(g) in an aggregate amount equal to 50% of the Net Cash
Proceeds therefrom.
     (d) Subject to paragraph (i) below, no later than the earlier of
(i) 100 days after the end of each fiscal year of the Company (or May 30, 2006,
in the case of the fiscal year ending December 31, 2005), commencing with the
fiscal year ending on December 31, 2005, and (ii) the date on which the audited
financial statements with respect to such period are delivered pursuant to
Section 5.04(a), the Company shall prepay outstanding Term Loans in accordance
with Section 2.13(g) in an aggregate principal amount equal to 75% of Excess
Cash Flow for the fiscal year then ended; provided, however, that in the event
the Leverage Ratio at the end of such fiscal year was less than 3.0 to 1.0, but
greater than or equal to 2.5 to 1.0, such amount shall be reduced to 50% of such
Excess Cash Flow, and if the Leverage Ratio at the end of such fiscal year was
less than 2.5 to 1.0, such amount shall be reduced to 0% of such Excess Cash
Flow.
     (e) Subject to paragraph (i) below, in the event that any Loan Party or any
Subsidiary of a Loan Party shall receive Net Cash Proceeds from the issuance or
other disposition of Indebtedness by any Loan Party or any Subsidiary of a Loan
Party (other than Indebtedness permitted under Section 6.01 (other than
Incremental EIB Indebtedness, Incremental Receivables Program Indebtedness or
New Unsecured Debt), the Company shall, substantially simultaneously with (and
in any event not later than the fifth Business Day next following) the receipt
of such Net Cash Proceeds by a Loan Party or a subsidiary, apply an amount equal
to 100% of such Net Cash Proceeds to prepay outstanding Term Loans in accordance
with Section 2.13(g).
     (f) Subject to paragraph (i) below, no later than the tenth Business Day
following the date of receipt by Administrative Agent or by Company or any
Guarantor of any Net Insurance/Condemnation Proceeds, Company shall prepay the
Term Loans in an aggregate amount equal to the amount of such Net
Insurance/Condemnation Proceeds in accordance with Section 2.13(g).
     (g) Mandatory prepayments of outstanding Term Loans under this Agreement
shall be applied pro rata against the remaining scheduled installments of
principal due in respect thereof under Section 2.11(a).
     (h) The Company shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 2.13, (i) a certificate signed by a
Financial Officer of the Company setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three days prior written notice of such prepayment. Each notice of
prepayment shall specify the prepayment date, the Type of each Loan being
prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid. All prepayments of

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Borrowings under this Section 2.13 shall be subject to Section 2.16, but shall
otherwise be without premium or penalty.
     (i) The provisions of paragraphs (c), (d), (e) and (f) of this Section 2.13
shall cease to be effective upon the Company’s obtaining, and so long as the
Company maintains, Investment Grade Ratings.
     Section 2.14. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision of this Agreement, if any Change in Law
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender or any Issuing Bank (except any such reserve requirement
which is reflected in the Adjusted LIBO Rate) or shall impose on such Lender or
such Issuing Bank or the London interbank market (or other relevant interbank
market) any other condition affecting this Agreement or Euro Rate Loans made by
such Lender or any Letter of Credit or participation therein, and the result of
any of the foregoing shall be to increase the cost to such Lender or such
Issuing Bank of making or maintaining any Euro Rate Loan or increase the cost to
any Lender of issuing or maintaining any Letter of Credit or purchasing or
maintaining a participation therein or to reduce the amount of any sum received
or receivable by such Lender or such Issuing Bank hereunder (whether of
principal, interest or otherwise) by an amount deemed by such Lender or such
Issuing Bank to be material, then the Company will pay to such Lender or such
Issuing Bank, as the case may be, upon demand such additional amount or amounts
as will compensate such Lender or Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
     (b) If any Lender or Issuing Bank shall have determined that any Change in
Law regarding capital adequacy has or would have the effect of reducing the rate
of return on such Lender’s or Issuing Bank’s capital or on the capital of such
Lender’s or Issuing Bank’s holding company, if any, as a consequence of this
Agreement or the Loans made or participations in Letters of Credit purchased by
such Lender pursuant hereto or the Letters of Credit issued by such Issuing Bank
pursuant hereto to a level below that which such Lender or Issuing Bank or such
Lender’s or Issuing Bank’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or Issuing Bank’s
policies and the policies of such Lender’s or Issuing Bank’s holding company
with respect to capital adequacy) by an amount deemed by such Lender or Issuing
Bank to be material, then from time to time the Company shall pay to such Lender
or Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or Issuing Bank or such Lender’s or Issuing Bank’s
holding company for any such reduction suffered.
     (c) A certificate of a Lender or Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or Issuing Bank or its holding
company, as applicable, as specified in paragraph (a) or (b) above shall be
delivered to the Company and shall be conclusive absent manifest error. The
Company shall pay such Lender or Issuing Bank the amount shown as due on any
such certificate delivered by it within 10 days after its receipt of the same.
     (d) Failure or delay on the part of any Lender or any Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender’s or Issuing Bank’s right to

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demand such compensation; provided that the Company shall not be under any
obligation to compensate any Lender or Issuing Bank under paragraph (a) or
(b) above with respect to increased costs or reductions with respect to any
period prior to the date that is 90 days prior to such request if such Lender or
Issuing Bank knew or could reasonably have been expected to know of the
circumstances giving rise to such increased costs or reductions and of the fact
that such circumstances would result in a claim for increased compensation by
reason of such increased costs or reductions; provided further that the
foregoing limitation shall not apply to any increased costs or reductions
arising out of the retroactive application of any Change in Law within such
90-day period. The protection of this Section shall be available to each Lender
and Issuing Bank regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement, guideline or other
change or condition that shall have occurred or been imposed.
     (e) This Section 2.14 shall not apply to any Change in Law with respect to
Taxes, including, but not limited to, changes in the rate of Taxes pertaining to
any particular Lender.
     Section 2.15. Change in Legality. (a) Notwithstanding any other provision
of this Agreement, if (i) any Change in Law shall make it unlawful for any
Lender to make or maintain any Euro Rate Loan or to give effect to its
obligations as contemplated hereby with respect to any Euro Rate Loan, or shall
make it unlawful for any Issuing Bank to issue Letters of Credit denominated in
an Alternative Currency, or (ii) there shall have occurred any change in
national or international financial, political or economic conditions (including
the imposition of or any change in exchange controls) or currency exchange rates
which would make it impracticable for any Issuing Bank to issue Letters of
Credit denominated in such Alternative Currency, then, by written notice to the
Company and to the Administrative Agent:
          (i) such Lender may declare that Euro Rate Loans will not thereafter
(for the duration of such unlawfulness) be made by such Lender hereunder (or be
continued for additional Interest Periods) and ABR Loans will not thereafter
(for such duration) be converted into Euro Rate Loans, whereupon any request for
a Euro Rate Borrowing (or to convert an ABR Borrowing to a Euro Rate Borrowing
or to continue a Euro Rate Borrowing, as the case may be, for an additional
Interest Period) shall, as to such Lender only, be deemed a request for an ABR
Loan (or a request to continue an ABR Loan as such for an additional Interest
Period or to convert a Euro Rate Loan into an ABR Loan, as the case may be),
unless such declaration shall be subsequently withdrawn;
          (ii) such Lender may require that all outstanding Euro Rate Loans made
by it be converted to ABR Loans in which event all such Euro Rate Loans shall be
automatically converted to ABR Loans as of the effective date of such notice as
provided in paragraph (b) below; and
          (iii) in the case of any such change affecting an Issuing Bank’s
ability to issue Letters of Credit denominated in an Alternative Currency, such
Issuing Bank may declare that Letters of Credit will not thereafter be issued in
the affected Alternative Currency or Currencies, whereupon the affected
Alternative Currency or Currencies shall be deemed (for the duration of such
unlawfulness and with respect to such Issuing Bank only) not to constitute an
Alternative Currency.

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In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Euro Rate Loans that would have been made by such Lender or the
converted Euro Rate Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Euro Rate Loans.
     (b) For purposes of this Section 2.15, a notice to the Company by any
Lender shall be effective as to each Euro Rate Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such Euro
Rate Loan; in all other cases such notice shall be effective on the date of
receipt by the Company.
     Section 2.16. Indemnity. The Company shall indemnify each Lender against
any loss or expense that such Lender may sustain or incur as a consequence of
(a) any event, other than a default by such Lender in the performance of its
obligations hereunder, which results in (i) such Lender receiving or being
deemed to receive any amount on account of the principal of any Euro Rate Loan
made to the Company prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Euro Rate Loan to an ABR Loan made to the Company, or
the conversion of the Interest Period with respect to any Euro Rate Loan made to
the Company, in each case other than on the last day of the Interest Period in
effect therefor, or (iii) any Euro Rate Loan to be made by such Lender to the
Company (including any Euro Rate Loan to be made to the Company pursuant to a
conversion or continuation under Section 2.10) not being made after notice of
such Loan shall have been given by the Company hereunder (any of the events
referred to in this clause (a) being called a “Breakage Event”) or (b) any
default in the making of any payment or prepayment by the Company required to be
made hereunder. In the case of any Breakage Event, such loss shall include an
amount equal to the excess, as reasonably determined by such Lender or the
Administrative Agent, as the case may be, of (i) its cost of obtaining funds for
the Euro Rate Loan that is the subject of such Breakage Event for the period
from the date of such Breakage Event to the last day of the Interest Period in
effect (or that would have been in effect) for such Loan over (ii) the amount of
interest likely to be realized by such Lender or the Administrative Agent, as
the case may be in redeploying the funds released or not utilized by reason of
such Breakage Event for such period. A certificate of any Lender or the
Administrative Agent, as the case may be setting forth any amount or amounts
which such Lender or the Administrative Agent, as the case may be is entitled to
receive pursuant to this Section 2.16 shall be delivered to the Company and
shall be conclusive absent manifest error.
     Section 2.17. Pro Rata Treatment. Except as provided below in this
Section 2.17 with respect to Swingline Loans and as required under Section 2.15,
each Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Term Loan Commitments or the Revolving Credit Commitments and
each conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans). For purposes of determining the
available Revolving Credit Commitments of the Lenders at any time, each
outstanding Swingline Loan shall be deemed to have utilized the Revolving Credit
Commitments of the Lenders (including those Lenders which shall not have made
Swingline Loans) pro rata in accordance with such respective Revolving Credit

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Commitments. Each Lender agrees that in computing such Lender’s portion of any
Borrowing to be made hereunder, the Administrative Agent may, in its discretion,
round each Lender’s percentage of such Borrowing to the next higher or lower
whole dollar amount.
     Section 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker’s lien, setoff or counterclaim against
the Company or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or L/C Disbursement (other than any payment made in accordance
with the terms of this Agreement) as a result of which the unpaid principal
portion of its Loans and participations in L/C Disbursements shall be
proportionately less than the unpaid principal portion of the Loans and
participations in L/C Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Loans and L/C Exposure of such other Lender, so that the aggregate unpaid
principal amount of the Loans and L/C Exposure and participations in Loans and
L/C Exposure held by each Lender shall be in the same proportion to the
aggregate unpaid principal amount of all Loans and L/C Exposure then outstanding
as the principal amount of its Loans and L/C Exposure prior to such exercise of
banker’s lien, setoff or counterclaim or other event was to the principal amount
of all Loans and L/C Exposure outstanding prior to such exercise of banker’s
lien, setoff or counterclaim or other event; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.18
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. The
Company expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in a Loan or L/C Disbursement deemed to have been
so purchased may exercise any and all rights of banker’s lien, setoff or
counterclaim with respect to any and all moneys owing by the Company to such
Lender by reason thereof as fully as if such Lender had made a Loan directly to
the Company in the amount of such participation.
     Section 2.19. Payments. (a) The Company shall make each payment (including
principal of or interest on any Borrowing or any L/C Disbursement or any Fees or
other amounts) required to be made by it hereunder and under any other Loan
Document not later than 1:00 p.m., Dallas time, on the date when due in
immediately available funds, without setoff, defense or counterclaim. Each such
payment (other than (i) Issuing Bank Fees, which shall be paid directly to the
applicable Issuing Bank, and (ii) principal of and interest on Swingline Loans,
which shall be paid directly to the Swingline Lender except as otherwise
provided in Section 2.22(e)) shall be made to the Administrative Agent at the
address specified for payments in Section 9.01. Each such payment (other than
L/C Disbursements denominated in an Alternative Currency and Issuing Bank Fees
with respect to Letters of Credit dominated in an Alternative Currency, for
which payments of principal and interest shall be made in the applicable
Alternative Currency) shall be made in dollars.
     (b) Except as otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder or under any other Loan Document shall become due, or
otherwise would occur, on a day that is not a

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Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
     Section 2.20. Taxes. (a) Any and all payments by or on account of any
obligation of the Company or any Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Company or any Loan Party
shall be required by law to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or such
Lender (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Company or such Loan Party
shall make such deductions and (iii) the Company or such Loan Party shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
     (b) In addition, the Company shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
     (c) The Company shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment on account of any
obligation of the Company or any Loan Party hereunder or under any other Loan
Document on the Company’s behalf (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable out-of-pocket 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 the Company by a Lender, or by the Administrative Agent
on its behalf or on behalf of a Lender, shall be conclusive absent manifest
error.
     (d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Company or any other Loan Party to a Governmental Authority, the
Company shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
     (e) Any Foreign Lender (or any participating bank or other entity that
would be a Foreign Lender if it were a Lender) that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Company is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Company (with
a copy to the Administrative Agent) (or, in the case of a participating bank or
other entity, the Foreign Lender from which the related participation was
purchased), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Company as will permit such payments to be made without
withholding or at a reduced rate. In addition, each Foreign Lender (or
participating bank or other entity that would be a Foreign Lender if it were a

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Lender) shall deliver substitute forms upon becoming aware of the obsolescence
or invalidity of any form previously delivered by such Foreign Lender (or
participating bank or other entity) or upon the reasonable request of the
Company.
     Section 2.21. Assignment of Commitments Under Certain Circumstances; Duty
to Mitigate. (a) In the event (i) any Lender or Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
Issuing Bank delivers a notice described in Section 2.15, (iii) the Company is
required to pay any additional amount to any Lender or Issuing Bank or any
Governmental Authority on account of any Lender or Issuing Bank pursuant to
Section 2.20, or (iv) a Lender refuses to consent to an amendment, modification
or waiver of this Agreement for which the consent of the Required Lenders has
been obtained, that, pursuant to Section 9.08(b) requires the consent of all
Lenders or all Lenders with obligations affected (each such Lender being a
“Non-Consenting Lender”) the Company may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender or Issuing Bank and the
Administrative Agent, require such Lender or Issuing Bank to transfer and
assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (w) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction, (x) the
Company shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing
Banks and the Swingline Lender), which consent shall not unreasonably be
withheld, (y) the Company or such assignee shall have paid to the affected
Lender or Issuing Bank in immediately available funds an amount equal to the sum
of the principal of and interest accrued to the date of such payment on the
outstanding Loans or L/C Disbursements of such Lender or Issuing Bank,
respectively, plus all Fees and other amounts accrued for the account of such
Lender or Issuing Bank hereunder (including any amounts under Section 2.14 and
Section 2.16), and (z) in the case of a Non-Consenting Lender, the assignee
shall provide the applicable consent at the time of the assignment and the
Company shall require all other Non-Consenting Lenders to assign their
interests, rights and obligations under this Agreement; provided further that,
if prior to any such transfer and assignment the circumstances or event that
resulted in such Lender’s or Issuing Bank’s claim for compensation under
Section 2.14 or notice under Section 2.15 or the amounts paid pursuant to
Section 2.20, as the case may be, cease to cause such Lender or Issuing Bank to
suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital, or cease to have the consequences specified in
Section 2.15, or cease to result in amounts being payable under Section 2.20, as
the case may be (including as a result of any action taken by such Lender or
Issuing Bank pursuant to paragraph (b) below), or if such Lender or Issuing Bank
shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall withdraw its notice under
Section 2.15 or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event or shall agree to consent to the
applicable proposed amendment, modification or waiver, as the case may be, then
such Lender or Issuing Bank shall not thereafter be required to make any such
transfer and assignment hereunder.
     (b) If (i) any Lender or Issuing Bank shall request compensation under
Section 2.14, (ii) any Lender or Issuing Bank delivers a notice described in
Section 2.15 or (iii) the Company

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is required to pay any additional amount to any Lender or Issuing Bank or any
Governmental Authority on account of any Lender or Issuing Bank, pursuant to
Section 2.20, then such Lender or Issuing Bank shall use reasonable efforts
(which shall not require such Lender or Issuing Bank to incur an unreimbursed
loss or unreimbursed cost or expense or otherwise take any action inconsistent
with its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Company or (y) to
assign its rights and delegate and transfer its obligations hereunder to another
of its offices, branches or affiliates, if such filing or assignment would
reduce its claims for compensation under Section 2.14 or enable it to withdraw
its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to
Section 2.20, as the case may be, in the future. The Company hereby agrees to
pay all reasonable costs and expenses incurred by any Lender or Issuing Bank in
connection with any such filing or assignment, delegation and transfer.
     Section 2.22. Swingline Loans. (a) Swingline Commitment. Subject to the
terms and conditions and relying upon the representations and warranties herein
set forth, the Swingline Lender agrees to make loans to the Company, in dollars,
at any time and from time to time on and after the Closing Date and until the
earlier of the Revolving Credit Maturity Date and the termination of the
Revolving Credit Commitments in accordance with the terms hereof, in an
aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of all Swingline Loans (other than Swingline
Loans made pursuant to Section 2.22(c)) exceeding $30,000,000 or (ii) the
Aggregate Revolving Credit Exposure exceeding the Total Revolving Credit
Commitment. Except for Swingline Loans made pursuant to Section 2.22(c), each
Swingline Loan shall be in a principal amount that is an integral multiple of
$500,000. The Swingline Commitment may be terminated or reduced from time to
time as provided herein. Within the foregoing limits, the Company may borrow,
pay or prepay and reborrow Swingline Loans hereunder, subject to the terms,
conditions and limitations set forth herein.
     (b) Making of Swingline Loans. Except with respect to Swingline Loans made
pursuant to Section 2.22(c) (as to which this Section 2.22(b) shall not apply),
the Company shall notify the Administrative Agent by telecopy, or by telephone
(confirmed by telecopy), not later than 12:00 noon, Dallas time, on the day of a
proposed Swingline Loan. Such notice shall be delivered on a Business Day, shall
be irrevocable and shall refer to this Agreement and shall specify the requested
date (which shall be a Business Day) and amount of such Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any notice
received from the Company pursuant to this paragraph (b). The Swingline Lender
shall make each Swingline Loan available to the Company by means of a credit to
the general deposit account of the Company with the Swingline Lender by 5:00
p.m., Dallas time, on the date such Swingline Loan is so requested.
     (c) Trade L/C Disbursements. If the Issuing Bank of any Trade Letters of
Credit shall not have received from the Company the payment required to be made
by Section 2.23(e) with respect to such Trade Letters of Credit within the time
specified in such Section, such Issuing Bank will promptly notify the
Administrative Agent and the Swingline Lender of the L/C Disbursement. The
amount of such L/C Disbursement (or the Dollar Equivalent thereof, if
denominated in an Alternative Currency) shall be deemed to constitute a
Swingline Loan of the

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Swingline Lender made to the Company on the date of such L/C Disbursement and
shall be deemed to have reduced the Trade L/C Exposure.
     (d) Prepayment. The Company shall have the right at any time and from time
to time to prepay any Swingline Loan, in whole or in part, upon giving written
or telecopy notice (or telephone notice promptly confirmed by written, or
telecopy notice) to the Swingline Lender and to the Administrative Agent before
2:00 p.m., Dallas time, on the date of prepayment at the Swingline Lender’s
address for notices specified on Section 9.01. All principal payments of
Swingline Loans shall be accompanied by accrued interest on the principal amount
being repaid to the date of payment.
     (e) Interest. Each Swingline Loan shall be an ABR Loan and, subject to the
provisions of Section 2.07, shall bear interest as provided in Section 2.06(a).
Interest on each Swingline Loan shall be payable on the Interest Payment Date
with respect thereto.
     (f) Participations. If the Company does not fully repay a Swingline Loan on
or prior to the due date therefor (whether by demand, acceleration or
otherwise), the Swingline Lender shall promptly notify the Administrative Agent
thereof (by telecopy or by telephone, confirmed in writing), and the
Administrative Agent shall promptly notify each Revolving Credit Lender thereof
(by telecopy or by telephone, confirmed in writing) and of its Pro Rata
Percentage of such Swingline Loan. Upon such notice but without any further
action, the Swingline Lender hereby agrees to grant to each Revolving Credit
Lender, and each Revolving Credit Lender hereby agrees to acquire from the
Swingline Lender, a participation in such defaulted Swingline Loan equal to such
Lender’s Pro Rata Percentage of the aggregate principal amount of such defaulted
Swingline Loan. In furtherance of the foregoing, each Revolving Credit Lender
hereby absolutely and unconditionally agrees, upon receipt of notice as provided
above, to pay to the Administrative Agent, for the account of the Swingline
Lender, such Lender’s Pro Rata Percentage of each Swingline Loan that is not
repaid when due in accordance with Section 2.04(a) or Article VII. Each
Revolving Credit Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or an Event of Default,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Revolving Credit Lender shall comply
with its obligation under this paragraph by wire transfer of immediately
available funds, in the same manner as provided in Section 2.02(c) with respect
to Loans made by such Lender (and Section 2.02(c) shall apply, mutatis mutandis,
to the payment obligations of the Revolving Credit Lenders) and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Revolving Credit Lenders. The Administrative Agent shall
notify the Company of any participations in any Swingline Loan acquired pursuant
to this paragraph and thereafter payments in respect of such Swingline Loan
shall be made to the Administrative Agent and not to the Swingline Lender. Any
amounts received by the Swingline Lender from the Company (or other party on
behalf of the Company) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Credit Lenders that shall have made their payments pursuant to
this paragraph and to the Swingline Lender, as their interests may appear. The

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purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Company (or other party liable for obligations of the Company)
of any default in the payment thereof.
     Section 2.23. Letters of Credit. (a) General. The Company may request the
issuance of a Letter of Credit for its own account or the account of any wholly
owned subsidiary of the Company (in which case the Company and such wholly owned
subsidiary of the Company shall be co-applicants with respect to such Letter of
Credit) in a form acceptable to the Administrative Agent and the applicable
Issuing Bank, at any time and from time to time while the Revolving Credit
Commitments remain in effect. This Section shall not be construed to impose an
obligation upon any Issuing Bank to issue any Letter of Credit that is
inconsistent with the terms and conditions of this Agreement. Upon the
effectiveness of this Agreement, the Existing Letters of Credit shall be deemed
to be Letters of Credit issued and outstanding under this Agreement of the type
indicated on Schedule 1.01(d).
     (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
In order to request the issuance of a Letter of Credit (or to amend, renew or
extend an existing Letter of Credit), the Company shall hand deliver, telecopy
or send electronically to the applicable Issuing Bank and the Administrative
Agent (two Business Days in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying whether such Letter of Credit is to be a Financial Letter of
Credit, a Performance Letter of Credit or a Trade Letter of Credit (such
designation to be subject to the satisfaction of the Administrative Agent,
acting reasonably), the date of issuance, amendment, renewal or extension, the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) below), the amount of such Letter of Credit, the currency in which
such Letter of Credit is to be denominated (which shall be dollars or, subject
to Section 2.15, an Alternative Currency), the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare
such Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if, and upon issuance, amendment, renewal or extension of each
Letter of Credit the Company shall be deemed to represent and warrant that,
after giving effect to such issuance, amendment, renewal or extension (i) the
L/C Exposure shall not exceed $300,000,000, (ii) the Trade L/C Exposure shall
not exceed $30,000,000 and (iii) the Aggregate Revolving Credit Exposure shall
not exceed the Total Revolving Credit Commitment.
     (c) Expiration Date. Each Trade Letter of Credit shall expire at the close
of business on the earlier of the date that is 360 days after the date of
issuance of such Letter of Credit and the date that is five Business Days prior
to the Revolving Credit Maturity Date, unless such Letter of Credit expires by
its terms on an earlier date. Each Financial Letter of Credit shall expire at
the close of business on the earlier of the date that is one year after the date
of the issuance of such Letter of Credit and the date that is five Business Days
prior to the Revolving Credit Maturity Date, unless such Letter of Credit
expires by its terms on an earlier date. Each Performance Letter of Credit shall
expire at the close of business on the earlier of the date that is three years
after the date of the issuance of such Letter of Credit and the date that is
five Business Days prior to the Revolving Credit Maturity Date, unless such
Letter of Credit expires by its terms on an earlier date. Notwithstanding the
foregoing, (i) one or more Performance Letters of Credit in an aggregate face
amount not to exceed $50,000,000 at any time outstanding

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may expire on a date that is more than three years after the date of issuance
thereof (but not later than five business days prior to the Revolving Credit
Maturity Date,), and (ii) one or more Financial Letters of Credit and/or
Performance Letters of Credit may, upon the request of the Company, include a
provision whereby such Letter of Credit shall be renewed automatically for
additional consecutive periods of 12 months or less (but not beyond the date
that is five Business Days prior to the Revolving Credit Maturity Date) unless
the applicable Issuing Bank notifies the beneficiary thereof at least 30 days
prior to the then-applicable expiration date that such Letter of Credit will not
be renewed.
     (d) Participations. By the issuance of a Standby Letter of Credit and
without any further action on the part of the applicable Issuing Bank or the
Lenders, the applicable Issuing Bank hereby grants to each Revolving Credit
Lender, and each such Lender hereby acquires from the applicable Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Pro Rata
Percentage of the aggregate amount available to be drawn under such Letter of
Credit, effective upon the issuance of such Letter of Credit. In consideration
and in furtherance of the foregoing, each Revolving Credit Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the applicable Issuing Bank, such Lender’s Pro Rata Percentage of
each L/C Disbursement made by such Issuing Bank in respect of a Standby Letter
of Credit and not reimbursed by the Company (or, if applicable, another party
pursuant to its obligations under any other Loan Document) forthwith on the date
due as provided in Section 2.02(f), in dollars, notwithstanding that such L/C
Disbursement may be denominated in an Alternative Currency. Each Revolving
Credit Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Standby Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
     (e) Reimbursement. If an Issuing Bank shall make any L/C Disbursement in
respect of a Letter of Credit, the Company shall pay to the Administrative Agent
an amount equal to such L/C Disbursement not later than 1:00 p.m., Dallas time,
on the Business Day immediately following the day the Company shall have
received notice from such Issuing Bank that payment of such draft will be made.
     (f) Obligations Absolute. The Company’s obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:
          (i) any lack of validity or enforceability of any Letter of Credit or
any Loan Document, or any term or provision therein;
          (ii) any amendment or waiver of or any consent to departure from all
or any of the provisions of any Letter of Credit or any Loan Document;
          (iii) the existence of any claim, setoff, defense or other right that
the Company, any other party guaranteeing, or otherwise obligated with, the
Company, any Subsidiary or other Affiliate thereof or any other person may at
any time have against the beneficiary under any

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Letter of Credit, any Issuing Bank, the Administrative Agent or any Lender or
any other person, whether in connection with this Agreement, any other Loan
Document or any other related or unrelated agreement or transaction;
          (iv) any draft or other document presented under a 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;
          (v) payment by the applicable Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply with the
terms of such Letter of Credit; and
          (vi) any other act or omission to act or delay of any kind of any
Issuing Bank, the Lenders, the Administrative Agent or any other person or any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of the Company’s obligations hereunder.
     Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Company hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or willful misconduct of any Issuing Bank. However, the
foregoing shall not be construed to excuse any Issuing Bank from liability to
the Company to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Company to the
extent permitted by applicable law) suffered by the Company that are caused by
such Issuing Bank’s gross negligence or willful misconduct in determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof; it is understood that each Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (i) an Issuing Bank’s
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount of
any draft presented under such Letter of Credit, whether or not the amount due
to the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute willful misconduct or gross negligence of an Issuing
Bank.
     (g) Disbursement Procedures. The applicable Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. Such Issuing Bank shall as promptly
as possible give telephonic notification, confirmed by telecopy, to the
Administrative Agent and the Company of such demand for payment and whether such
Issuing Bank has made or will make an L/C Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the Company
of its obligation to reimburse the Issuing Bank and the Revolving Credit Lenders
with

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respect to any such L/C Disbursement. The Administrative Agent shall promptly
give each Revolving Credit Lender notice thereof.
     (h) Interim Interest. If an Issuing Bank shall make any L/C Disbursement in
respect of a Standby Letter of Credit, then, unless the Company shall reimburse
such L/C Disbursement in full on such date, the unpaid amount thereof shall bear
interest for the account of such Issuing Bank, for each day from and including
the date of such L/C Disbursement, to but excluding the earlier of the date of
payment by the Company or the date on which interest shall commence to accrue
thereon as provided in Section 2.02(f), at the rate per annum that would apply
to such amount if such amount were an ABR Revolving Loan. If such amount is
denominated in an Alternative Currency, then the interest rate applicable
thereto shall be determined by such Issuing Bank to be the average rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which overnight deposits in
such Alternative Currency are obtainable by such Issuing Bank on such date in
the relevant interbank market plus the Applicable Percentage for Euro Rate
Revolving Loans at the time.
     (i) Resignation or Removal of an Issuing Bank. An Issuing Bank may resign
at any time by giving 180 days’ prior written notice to the Administrative
Agent, the Lenders and the Company, and may be removed at any time by the
Company by notice to the Issuing Bank, the Administrative Agent and the Lenders,
provided that (i) resignation of Administrative Agent pursuant to Section 8.03
shall constitute concurrent resignation of such Agent as an Issuing Bank
hereunder and (ii) if the resigning or removed Issuing Bank is the sole Issuing
Bank hereunder, the effectiveness of such resignation or removal shall be
contingent on a Lender agreeing to serve as successor Issuing Bank. Upon the
effectiveness of any such resignation or removal, the retiring or removed
Issuing Bank shall be discharged from its obligations to issue additional
Letters of Credit hereunder. At the time such removal or resignation shall
become effective, the Company shall pay all accrued and unpaid fees pursuant to
Section 2.05(d)(ii). The acceptance of any appointment as an Issuing Bank
hereunder by a successor Lender shall be evidenced by an agreement entered into
by such successor, in a form satisfactory to the Company and the Administrative
Agent, and, from and after the effective date of such agreement, (i) such
successor Lender shall have all the rights and obligations of the previous
Issuing Bank under this Agreement and the other Loan Documents and (ii)
references herein and in the other Loan Documents 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 resignation or removal of an Issuing Bank hereunder, the retiring Issuing
Bank shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement and the other Loan Documents
with respect to Letters of Credit issued by it prior to such resignation or
removal, but shall not be required to issue additional Letters of Credit.
     (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Company shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Standby Letters of Credit) thereof and of the
amount to be deposited, deposit in an account with the Collateral Agent, for the
benefit of the Revolving Credit Lenders, an amount in cash equal to the L/C
Exposure as of such date. Such

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deposit shall be held by the Collateral Agent as collateral for the payment and
performance of the Obligations. The Collateral Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such deposits in
Permitted Investments, which investments shall be made at the option and sole
discretion of the Collateral Agent, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall (i) automatically be applied by the
Administrative Agent to reimburse the Issuing Banks for L/C Disbursements for
which they have not been reimbursed, (ii) be held for the satisfaction of the
reimbursement obligations of the Company for the L/C Exposure at such time and
(iii) if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Credit Lenders holding participations in outstanding
Standby Letters of Credit representing greater than 50% of the aggregate undrawn
amount of all outstanding Standby Letters of Credit), be applied to satisfy the
Obligations. If the Company is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Company within
three Business Days after all Events of Default have been cured or waived.
     (k) Additional Issuing Banks. The Company may, at any time and from time to
time, designate additional Lenders to act as issuing banks under the terms of
the Agreement with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld so long as the total number of Issuing Banks does
not exceed six). Any Lender designated as an issuing bank pursuant to this
paragraph (k) shall be deemed to be an “Issuing Bank” (in addition to being a
Lender) in respect of Letters of Credit issued or to be issued by such Lender,
and, with respect to such Letters of Credit, such term shall thereafter apply to
the other Issuing Banks and such Lender.
ARTICLE III
Representations and Warranties
     The Company hereby represents and warrants to the Administrative Agent, the
Collateral Agent, the Issuing Banks and each of the Lenders that:
     Section 3.01. Organization; Powers. The Company and each of the
Subsidiaries (a) (i) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) has all requisite
power and authority to own its property and assets and to carry on its business
as now conducted and as proposed to be conducted and (iii) is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where any such failure, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, and (b) has the power and authority to execute, deliver and perform its
obligations under each of the Loan Documents and each other agreement or
instrument contemplated hereby to which it is or will be a party and, in the
case of the Company, to borrow hereunder.
     Section 3.02. Authorization. The Transactions (a) have been duly authorized
by all requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or

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other constitutive documents or by-laws of the Company or any Subsidiary,
(B) any order of any Governmental Authority or (C) any provision of any
indenture, agreement or other instrument to which the Company or any Subsidiary
is a party or by which any of them or any of their property is or may be bound,
(ii) be in conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default under, or give rise to any right to
accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other instrument (other than
the Indebtedness under the Existing Credit Agreement and the Subordinated Note
Indebtedness), or (iii) result in the creation or imposition of any Lien upon or
with respect to any property or assets now owned or hereafter acquired by the
Company or any Subsidiary (other than any Lien created hereunder or under the
Security Documents).
     Section 3.03. Enforceability. This Agreement has been duly executed and
delivered by the Company and constitutes, and each other Loan Document when
executed and delivered by each Loan Party thereto will constitute, a legal,
valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors’ rights generally or by equitable principles
relating to enforceability.
     Section 3.04. Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Transactions, except for (a) the
filing of Uniform Commercial Code financing statements and filings with the
United States Patent and Trademark Office and the United States Copyright
Office, (b) recordation of the Mortgages and (c) such as have been made or
obtained and are in full force and effect.
     Section 3.05. Financial Statements. The Company has heretofore furnished to
the Lenders its unaudited consolidated balance sheets and statements of income,
stockholders’ equity (in the case of the Company) and cash flows as of and for
the fiscal year ended December 31, 2004 and as of and for the fiscal quarter
ended March 31, 2005. Subject to adjustments arising from the Restatement,
previously announced pending IRS tax audits, and normal year-end audit
adjustments, such financial statements present fairly the financial condition
and results of operations and cash flows of the Company and its consolidated
Subsidiaries as of such dates and for such periods, such balance sheets and the
notes thereto disclose all material liabilities, direct or contingent, of the
Company and its consolidated Subsidiaries as of the dates thereof, and such
financial statements were prepared in accordance with GAAP.
     Section 3.06. No Material Adverse Change. Since December 31, 2003, no
event, change or condition has occurred that has had, or could reasonably be
expected to have, a Material Adverse Effect.
     Section 3.07. Title to Properties; Possession Under Leases. (a) Each of the
Company and the Subsidiaries has valid title to, or valid leasehold interests
in, all its material properties and assets (including all Mortgaged Property),
except for defects in title that do not interfere with its ability to conduct
its business as currently conducted or to utilize such properties and assets for
their intended purposes. All such material properties and assets are free and
clear of Liens, other than Liens expressly permitted by Section 6.02.

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     (b) Each of the Company and the Subsidiaries has complied with all material
obligations under all material leases to which it is a party and, to the
Company’s knowledge, all such leases are in full force and effect.
     Section 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing Date
a list of all Subsidiaries and the percentage ownership interest of the Company
therein. The shares of capital stock or other ownership interests so indicated
on Schedule 3.08 are fully paid and non-assessable and as of the Closing Date
are owned by the Company, directly or indirectly, free and clear of all Liens
(other than Liens created under the Security Documents).
     Section 3.09. Litigation; Compliance with Laws. (a) Except as set forth on
Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) which could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
     (b) None of the Company or any of the Subsidiaries or any of their
respective material properties or assets is in violation of any law, rule or
regulation (including any zoning, building, Environmental Law, ordinance, code
or approval or any building permits) or any restrictions of record or agreements
affecting the Mortgaged Property, or is in default with respect to any judgment,
writ, injunction, decree or order of any Governmental Authority, where such
violation or default could reasonably be expected to result in a Material
Adverse Effect.
     Section 3.10. Agreements. (a) Neither the Company, nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
     (b) Neither the Company, nor any of the Subsidiaries is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default could reasonably be expected to result in a Material
Adverse Effect.
     Section 3.11. Federal Reserve Regulations. (a) Neither the Company, nor any
of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
     (b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation T, U
or X.
     Section 3.12. Investment Company Act; Public Utility Holding Company Act.
Neither the Company, nor any Subsidiary is (a) an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a “holding company” as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.

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     Section 3.13. Use of Proceeds. The Company will use the proceeds of the
Term Loans for the purpose of (i) refinancing the Existing Credit Agreement,
(ii) prior to the Redemption Date, depositing such proceeds with the trustee for
the Subordinated Notes or with the Securities Intermediary pursuant to the
Disbursement Agreements (and in such case, investing such proceeds pursuant
thereto) and consummating the redemption of the Subordinated Notes with such
proceeds on the Redemption Date and (iii) paying costs and expenses related to
the Transactions, with any excess to be applied to general corporate purposes of
the Company and its Subsidiaries. The Company will use the proceeds of the
Revolving Loans and will request the issuance of Letters of Credit for general
corporate purposes of the Company and its Subsidiaries.
     Section 3.14. Tax Returns. Each of the Company, and the Subsidiaries
(a) has filed or caused to be filed all Federal, state, local and foreign tax
returns or materials required to have been filed by it except for foreign
filings the delinquency of which could not reasonably be expected to have a
Material Adverse Effect, and (b) has paid or caused to be paid all taxes due and
payable by it and all material written assessments received by it, except taxes
that are being contested in good faith by appropriate proceedings and for which
the Company or such Subsidiary, as applicable, shall have set aside on its books
adequate reserves.
     Section 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of the Company to the
Administrative Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omitted, omits or
will omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were, are or will be made,
not misleading; provided that to the extent any such information, report,
financial statement, exhibit or schedule was based upon or constitutes a
forecast or projection, the Company represents only that it acted in good faith
and utilized reasonable assumptions and due care in the preparation of such
information, report, financial statement, exhibit or schedule.
     Section 3.16. Employee Benefit Plans. Each of the Company and its ERISA
Affiliates is in compliance in all respects with the applicable provisions of
ERISA and the Code and the regulations and published interpretations thereunder,
except where such non-compliance, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No ERISA Event
has occurred or is reasonably expected to occur that, when taken together with
all other such ERISA Events, could reasonably be expected to result in a
Material Adverse Effect.
     Section 3.17. Environmental Matters. (a) Except as set forth in
Schedule 3.17 and except with respect to any other matters that, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, neither the Company, nor any of the Subsidiaries (i) has failed
to comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
received notice of any claim with respect to any Environmental Liability or
(iii) knows of any basis for any Environmental Liability to which it is or
reasonably could become subject.

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     (b) Since the date of this Agreement, there has been no change in the
status of the matters disclosed on Schedule 3.17 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
     Section 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Company or by the Company
for its Subsidiaries as of the Closing Date. As of such date, such insurance is
in full force and effect and all premiums have been duly paid. The Company and
its Subsidiaries have insurance in such amounts and covering such risks and
liabilities as are in accordance with normal industry practice.
     Section 3.19. Security Documents. (a) Prior to the Release Date, the Pledge
Agreement is effective to create in favor of the Collateral Agent, for the
ratable benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral (as defined in the Pledge Agreement) and, when the
Collateral is delivered to the Collateral Agent, the Pledge Agreement shall
constitute a fully perfected first priority Lien on, and security interest in,
all right, title and interest of the pledgors thereunder in such Collateral, in
each case prior and superior in right to any other person.
     (b) Prior to the Release Date, the Security Agreement is effective to
create in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Collateral (as
defined in the Security Agreement) and, when financing statements in appropriate
form are filed in the offices specified on Schedule 5 to the Perfection
Certificate, the Security Agreement shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the grantors
thereunder in such Collateral to the extent such filing can perfect a security
interest (other than Copyrights, as defined in the Security Agreement), in each
case prior and superior in right to any other person, other than with respect to
Liens expressly permitted by Section 6.02.
     (c) When proper filings are made in the United States Patent and Trademark
Office and the United States Copyright Office, prior to the Release Date, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in the
Intellectual Property (as defined in the Security Agreement), in each case prior
and superior in right to any other person (it being understood that subsequent
recordings in the United States Patent and Trademark Office and the United
States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the grantors after
the date hereof).
     (d) Prior to the Release Date, the Mortgages are effective to create in
favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable Lien on all of the Loan Parties’ right, title and
interest in and to the Mortgaged Property thereunder and the proceeds thereof,
and when the Mortgages are filed in the offices specified on Schedule 3.19(d),
the Mortgages shall constitute a fully perfected Lien on, and security interest
in, all right, title and interest of the Loan Parties in such Mortgaged Property
and the proceeds thereof, in each case prior and superior in right to any other
person, other than with respect to the rights of persons pursuant to Liens
expressly permitted by Section 6.02.

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     Section 3.20. Location of Real Property and Leased Premises. (a)
Schedule 3.20(a) lists completely and correctly as of the Closing Date all real
property located in the United States that is owned by the Company and the
Domestic Subsidiaries (excluding sales offices) and the addresses thereof.
     (b) Schedule 3.20(b) lists completely and correctly as of the Closing Date
all real property located in the United States that is leased by the Company and
the Domestic Subsidiaries (excluding sales offices) and the addresses thereof.
     (c) Schedule 3.20(c) sets forth certain real property of the Company and
the Domestic Subsidiaries which, as of the Closing Date, the Company intends to
sell or otherwise dispose of in connection with the General Services Sale (the
“Designated Properties”).
     Section 3.21. Labor Matters. As of the date hereof and the Closing Date,
there are no strikes, lockouts or slowdowns against the Company or any
Subsidiary pending or, to the knowledge of the Company, threatened. Except with
respect to any violations that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, the hours worked
by and payments made to employees of the Company and the Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All payments due
from the Company or any Subsidiary, or for which any claim may be made against
the Company or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of the Company or such Subsidiary except where the failure to make
or accrue any such payments, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. The consummation
of the Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Company or any Subsidiary is bound.
     Section 3.22. Solvency. Immediately following the making of each Loan and
after giving effect to the application of the proceeds of each Loan, (a) the
fair value of the assets of each Loan Party, at a fair valuation, will exceed
its debts and liabilities, subordinated, contingent or otherwise; (b) the
present fair saleable value of the property of each Loan Party will be greater
than the amount that will be required to pay the probable liability of its debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Loan Party will be able
to pay its debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) each Loan Party will
not have unreasonably small capital with which to conduct the business in which
it is engaged as such business is now conducted and is proposed to be conducted
following the Closing Date.
ARTICLE IV
Conditions of Lending
     The obligations of the Lenders to make Loans and of the Issuing Banks to
issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:

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     Section 4.01. All Credit Events. On the date of each Borrowing, including
each Borrowing of a Swingline Loan, and on the date of each issuance, amendment
increasing the face amount, extension or renewal of a Letter of Credit (each
such event being called a “Credit Event”):
     (a) The Administrative Agent shall have received a notice of such Borrowing
as required by Section 2.03 (or such notice shall have been deemed given in
accordance with Section 2.03) or, in the case of the issuance, amendment
increasing the face amount, extension or renewal of a Letter of Credit, the
applicable Issuing Bank and the Administrative Agent shall have received a
notice requesting the issuance, amendment increasing the face amount, extension
or renewal of such Letter of Credit as required by Section 2.23(b) or, in the
case of the Borrowing of a Swingline Loan, the Swingline Lender and the
Administrative Agent shall have received a notice requesting such Swingline Loan
as required by Section 2.22(b).
     (b) The representations and warranties set forth in Article III hereof and
in each other Loan Document shall be true and correct in all material respects
on and as of the date of such Credit Event with the same effect as though made
on and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date.
     (c) The Company and each other Loan Party shall be in compliance with all
the terms and provisions set forth herein and in each other Loan Document on its
part to be observed or performed, and at the time of and immediately after such
Credit Event, no Event of Default or Default shall have occurred and be
continuing.
     Each Credit Event shall be deemed to constitute a representation and
warranty by the Company on the date of such Credit Event as to the matters
specified in paragraphs (b) and (c) of this Section 4.01.
     Section 4.02. Closing Date. The obligations of the Lenders to make the
initial Loans and of the Issuing Banks to issue Letters of Credit on the Closing
Date are subject to the satisfaction of the following conditions which shall be
satisfied or waived on or before the Closing Date:
     (a) This Agreement shall have been duly executed by the parties hereto and
delivered to the Administrative Agent and shall be in full force and effect.
     (b) The Administrative Agent shall have received, on behalf of itself, the
Lenders and the Issuing Banks, a favorable written opinion of (i) Cravath,
Swaine & Moore LLP, counsel for the Company, substantially to the effect set
forth in Exhibit I-1, and (ii) John M. Nanos, Senior Associate General Counsel
of the Company, substantially to the effect set forth in Exhibit I-2, in each
case (A) dated the Closing Date, (B) addressed to the Issuing Banks, the
Administrative Agent and the Lenders, and (C) covering such other matters
relating to the Loan Documents and the Transactions as the Administrative Agent
shall reasonably request, and the Company hereby requests such counsel to
deliver such opinions.
     (c) All legal matters incident to this Agreement, the Borrowings and
extensions of credit hereunder and the other Loan Documents shall be reasonably
satisfactory to the Lenders, to the Issuing Banks and to the Administrative
Agent.

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     (d) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto, of
each Loan Party, certified (to the extent relevant) as of a recent date by the
Secretary of State of the state of its organization, and a certificate as to the
good standing of each Loan Party as of a recent date, from such Secretary of
State, and to the extent generally available, a certificate or other evidence of
good standing as to payment of any applicable franchise or similar taxes from
the appropriate taxing authority of each of such jurisdictions; (ii) a
certificate of the Secretary or Assistant Secretary (or similar officer) of each
Loan Party dated the Closing Date and certifying (A) that attached thereto is a
true and complete copy of the by-laws or articles of association of such Loan
Party as in effect on the Closing Date and at all times since a date prior to
the date of the resolutions described in clause (B) below, (B) that attached
thereto is a true and complete copy of resolutions duly adopted by the Board of
Directors of such Loan Party authorizing the execution, delivery and performance
of the Loan Documents to which such person is a party and, in the case of the
Company, the borrowings hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C) that the
certificate or articles of incorporation or other charter document of such Loan
Party have not been amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection herewith on behalf
of such Loan Party; (iii) a certificate of another officer as to the incumbency
and specimen signature of the Secretary or Assistant Secretary (or similar
officer) executing the certificate pursuant to (ii) above; and (iv) such other
documents as the Lenders, the Issuing Banks or the Administrative Agent may
reasonably request.
     (e) The Administrative Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer of the Company, confirming
compliance with the conditions precedent set forth in paragraphs (b) and (c) of
Section 4.01.
     (f) The Administrative Agent shall have received all Fees and other amounts
due and payable on or prior to the Closing Date, including, to the extent
invoiced at least 1 Business Day prior to the Closing Date, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid by the
Company hereunder or under any other Loan Document.
     (g) The Pledge Agreement shall have been duly executed by the Loan Parties
and delivered to the Collateral Agent and shall be in full force and effect, and
all the outstanding capital stock of the Domestic Subsidiaries (other than
Inactive Subsidiaries and the Captive Insurance Company) and 65% of the capital
stock of each first-tier Foreign Subsidiary (other than the Excluded Foreign
Equity Interests), in each case owned by a Loan Party, shall have been duly and
validly pledged thereunder to the Collateral Agent for the ratable benefit of
the Secured Parties and certificates representing such shares, accompanied by
instruments of transfer and stock powers endorsed in blank, shall be in the
actual possession of the Collateral Agent except with respect to shares of
Foreign Subsidiaries (which shall be delivered to the extent available under
applicable law, reasonably promptly following the Closing Date pursuant to
Section 5.09); provided that the Loan Parties shall not be required to pledge
more than 65% of the voting stock of any Foreign Subsidiary.

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     (h) The Collateral Agent shall have received a Perfection Certificate with
respect to the Loan Parties dated the Closing Date and duly executed by a
Responsible Officer of the Company.
     (i) The Security Agreement shall have been duly executed by the Loan
Parties party thereto and shall have been delivered to the Collateral Agent and
shall be in full force and effect on such date and each document (including each
Uniform Commercial Code financing statement) required by law or reasonably
requested by the Administrative Agent to be filed, registered or recorded in
order to create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest in and
lien on the Collateral (subject to any Lien expressly permitted by Section 6.02)
described in such agreement shall have been delivered to the Collateral Agent.
     (j) The Collateral Agent shall have received the results of a search of the
Uniform Commercial Code filings (or equivalent filings) made with respect to the
Loan Parties in the states (or other jurisdictions) of its organization and the
other jurisdictions in which Uniform Commercial Code filings (or equivalent
filings) are to be made pursuant to the preceding paragraph, together with
copies of the financing statements (or similar documents) disclosed by such
search, and accompanied by evidence satisfactory to the Collateral Agent that
the Liens indicated in any such financing statement (or similar document) are
permitted pursuant to Section 6.02 or have been released.
     (k) Each of the Security Documents, in form and substance reasonably
satisfactory to the Collateral Agent, relating to each of the Mortgaged
Properties shall have been duly executed by the parties thereto and delivered to
the Collateral Agent and shall be in full force and effect.
     (l) The Guarantee Agreement shall have been duly executed by the
Guarantors, shall have been delivered to the Collateral Agent and shall be in
full force and effect.
     (m) The Indemnity, Subrogation and Contribution Agreement shall have been
duly executed by the Loan Parties, shall have been delivered to the Collateral
Agent and shall be in full force and effect.
     (n) The Administrative Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents, each of
which, to the extent insuring Collateral, shall be endorsed or otherwise amended
to include a “standard” or “New York” lender’s loss payable endorsement and to
name the Collateral Agent as additional insured, in form and substance
satisfactory to the Administrative Agent.
     (o) The Lenders shall be reasonably satisfied as to the amount and nature
of any environmental exposures to which the Company or any of the Subsidiaries
may be subject and with the Company’s plans with respect thereto.
     (p) Substantially concurrent with the funding of initial Loans hereunder,
the Company and its Subsidiaries shall (a) repay in full all Indebtedness under
the Existing Credit Agreement (other than Existing Term Loans converted into
Term Loans hereunder pursuant to Section 2.01 and the HSBC Backstopped Letters
of Credit), (b) terminate any commitments to

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lend or make other extensions of credit thereunder, and (c) deliver to
Administrative Agent all documents or instruments necessary to release all Liens
securing such Indebtedness or other obligations of the Company and its
Subsidiaries thereunder. The Company and its Subsidiaries shall have outstanding
no Indebtedness or preferred stock other than (i) Indebtedness under the Loan
Documents, (ii) Indebtedness permitted pursuant to Section 6.01(c), (h), (i),
(j), (k), (l) and (n) - (q),and (iii) other Indebtedness set forth on
Schedule 6.01(a), (d), (e), (f), (g) and 6.04.
     (q) Substantially concurrent with the funding of the initial Loans
hereunder, the Subordinated Note Condition shall have been satisfied.
     (r) The Calyon Facility (other than letters of credit issued thereunder
constituting Existing Letters of Credit hereunder) shall have been terminated.
     (s) The Lenders shall have received unaudited consolidated balance sheets
and related statements of income, stockholders’ equity (in the case of the
Company) and cash flows of the Company for the 2004 fiscal year and for the
fiscal quarter ended March 31, 2005.
     (t) There shall be no litigation or administrative proceeding that could
reasonably be expected to have a Material Adverse Effect.
ARTICLE V
Affirmative Covenants
     The Company covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired and all amounts drawn
thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, the Company will, and will cause each of the
Subsidiaries to:
     Section 5.01. Existence; Businesses and Properties. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise expressly permitted under Section 6.05
and except, with respect to any Subsidiary, where the failure to do so could not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
     (b) Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of the business of the Company and its Subsidiaries
taken as a whole; maintain and operate such business in substantially the manner
in which it is presently conducted and operated; comply in all material respects
with all applicable laws, rules, regulations (including (i) all Environmental
Laws and (ii) any zoning, building, ordinance, code or approval or any building
permits or any restrictions of record or agreements affecting the Mortgaged
Properties) and decrees and orders of any Governmental Authority, whether now in
effect or hereafter enacted, except where the failure to do so could not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect; and at all times maintain and preserve all property
material to the conduct of such business and

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keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times, except where the failure to do so could not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
     Section 5.02. Insurance. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies in
the same or similar businesses operating in the same or similar locations,
including public liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
     (b) Cause all such policies covering any Collateral to be endorsed or
otherwise amended to include a “standard” or “New York” lender’s loss payable
endorsement, in form and substance satisfactory to the Administrative Agent and
the Collateral Agent, which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice from
the Administrative Agent or the Collateral Agent of the occurrence of an Event
of Default, the insurance carrier shall pay all proceeds otherwise payable to
the Company or the Loan Parties under such policies directly to the Collateral
Agent; cause all such policies to provide that neither the Company, the
Administrative Agent, the Collateral Agent nor any other party shall be a
coinsurer thereunder and to contain a “Replacement Cost Endorsement,” without
any deduction for depreciation, and such other provisions as the Administrative
Agent or the Collateral Agent may reasonably require from time to time to
protect their interests; deliver original or certified copies of all such
policies to the Collateral Agent; cause each such policy to provide that it
shall not be canceled, modified or not renewed (i) by reason of nonpayment of
premium upon not less than 10 days’ prior written notice thereof by the insurer
to the Administrative Agent and the Collateral Agent (giving the Administrative
Agent and the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason upon not less than 30 days’ prior written
notice thereof by the insurer to the Administrative Agent and the Collateral
Agent; deliver to the Administrative Agent and the Collateral Agent, prior to
the cancellation, modification or nonrenewal of any such policy of insurance, a
copy of a renewal or replacement policy (or other evidence of renewal of a
policy previously delivered to the Administrative Agent and the Collateral
Agent) together with evidence satisfactory to the Administrative Agent and the
Collateral Agent of payment of the premium therefor.
     (c) If at any time the area in which any property subject to a Mortgage is
located is designated (i) a “flood hazard area” in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency (or any successor agency),
obtain flood insurance in such total amount as the Administrative Agent, the
Collateral Agent or the Required Lenders may from time to time require, and
otherwise comply with the National Flood Insurance Program as set forth in the
Flood Disaster Protection Act of 1973, as it may be amended from time to time,
or (ii) a “Zone 1” area, obtain earthquake insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from time
to time require.

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     (d) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the “broad form CGL
endorsement” and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than $50,000,000, naming the Collateral Agent as
an additional insured, on forms satisfactory to the Collateral Agent.
     (e) Notify the Administrative Agent and the Collateral Agent immediately
whenever any separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 5.02 is taken out
by the Company; and promptly deliver to the Administrative Agent and the
Collateral Agent a duplicate original copy of such policy or policies.
     Section 5.03. Obligations and Taxes. Pay its Indebtedness promptly and in
accordance with their terms and pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise that, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such payment and
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as (a) the validity or amount thereof shall be
contested in good faith by appropriate proceedings, (b) the Company or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP, (c) such contest operates to suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a
Lien, and (d) in the case of a Mortgaged Property, there is no risk of
forfeiture of such property.
     Section 5.04. Financial Statements, Reports, etc. In the case of the
Company, furnish to the Administrative Agent:
     (a) within 100 days after the end of each fiscal year commencing with
Company’s fiscal year ending December 31, 2005, its consolidated balance sheet
and related statements of income, stockholders’ equity and cash flows showing
the financial condition of the Company and its consolidated Subsidiaries as of
the close of such fiscal year and the results of its operations and the
operations of such Subsidiaries during such year, all audited by
PricewaterhouseCoopers LLP or other independent public accountants of recognized
national standing and accompanied by an opinion of such accountants (which shall
not be qualified in any material respect) to the effect that such consolidated
financial statements fairly present the financial condition and results of
operations of the Company and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP, provided, that, in the case of Company’s fiscal
year ending December 31, 2005, the last day for delivery of the audited
financial statements and related opinions required by this Section 5.04(a) shall
be May 30, 2006, so long as no later than April 10, 2006 Company furnishes to
the Administrative Agent unaudited financial statements for such fiscal year,
certified by one of its Financial Officers as fairly presenting the financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
audit adjustments;

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     (b) within 50 days after the end of each of the first three fiscal quarters
of each fiscal year, its consolidated balance sheet and related statements of
income, stockholders’ equity and cash flows showing the financial condition of
the Company and its consolidated Subsidiaries as of the close of such fiscal
quarter and the results of its operations and the operations of such
Subsidiaries during such fiscal quarter and the then elapsed portion of the
fiscal year, compared with the consolidated budget for such fiscal quarter (to
the extent a budget was required for such period under Section 5.04(d)) as well
as the results of its operations and the operations of its Subsidiaries in the
corresponding quarter from the prior fiscal year, all certified by one of its
Financial Officers as fairly presenting the financial condition and results of
operations of the Company and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP, subject to normal year-end audit adjustments;
     (c) concurrently with any delivery of financial statements under paragraph
(a) or (b) above, a certificate of the accounting firm (in the case of paragraph
(a)) or Financial Officer (in the case of paragraph (b)) opining on or
certifying such statements (which certificate, when furnished by an accounting
firm, may be limited to compliance with financial maintenance covenants and
disclaim responsibility for legal interpretations) and certifying that no Event
of Default or Default has occurred or, if such an Event of Default or Default
has occurred, specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto, and, in the case of a
certificate delivered with the financial statements required by paragraph
(a) above, setting forth the Company’s calculation of Excess Cash Flow;
     (d) unless the Company has Investment Grade Ratings, at least 10 days prior
to the commencement of each fiscal year of the Company, a detailed consolidated
budget for such fiscal year (including a projected consolidated balance sheet
and related statements of projected operations and cash flow as of the end of
and for each quarter of such fiscal year and as of the end of and for such
fiscal year and describing the assumptions used for purposes of preparing such
budget) and, promptly when available, any significant revisions of such budget;
     (e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Company or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed to its
shareholders, as the case may be;
     (f) promptly after the receipt thereof by the Company or any of its
Subsidiaries, a copy of any final “management letter” received by any such
person from its certified public accountants and the management’s response
thereto;
     (g) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Company or any
Subsidiary, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.
     Section 5.05. Litigation and Other Notices. Furnish to the Administrative
Agent, each Issuing Bank and each Lender prompt written notice of the following:

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     (a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken with
respect thereto;
     (b) the filing or commencement of, or any threat or notice of intention of
any person to file or commence, any action, suit or proceeding, whether at law
or in equity or by or before any Governmental Authority, against the Company or
any Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect;
     (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Company and the Subsidiaries in an aggregate amount exceeding
$10,000,000;
     (d) any notice from S&P or Moody’s indicating the possibility of an adverse
change in the credit ratings applicable to the Company or any of its
Indebtedness assigned by S&P or Moody’s and promptly after the Company obtains
knowledge of any change in the rating established by S&P or Moody’s, as
applicable, with respect to the Debt Rating, a notice of such change, which
notice shall specify the new rating, the date on which such change was publicly
announced, and such other information with respect to such change as the
Administrative Agent may reasonably request;
     (e) any development that has resulted in, or could reasonably be expected
to result in, a Material Adverse Effect.
     Section 5.06. Information Regarding Collateral. (a) Furnish to the
Administrative Agent prompt written notice of any change (i) in any Loan Party’s
corporate name or in any trade name used to identify it in the conduct of its
business or in the ownership of its properties, (ii) jurisdiction of
organization of any Loan Party, (iii) in any Loan Party’s identity or corporate
structure or (iv) in any Loan Party’s Federal Taxpayer Identification Number.
The Company agrees not to effect or permit any change referred to in the
preceding sentence unless all filings have been made under the Uniform
Commercial Code 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. The Company also agrees
promptly to notify the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.
     (b) Each year, at the time of delivery of the annual financial statements
with respect to the preceding fiscal year pursuant to Section 5.04(a), deliver
to the Administrative Agent a certificate of a Financial Officer (i) confirming
that there has been no change since the Closing Date or the date of the most
recent certificate delivered pursuant to this Section 5.06(b) to any of the
items set forth in Section 5.06(a) and (ii) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of the Perfection
Certificate delivered on the Closing Date or the date of the most recent
certificate delivered pursuant to this Section 5.06(b).
     Section 5.07. Maintaining Records; Access to Properties and Inspections.
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all requirements of law are made of all dealings and
transactions in relation to its business and activities. Each Loan Party will,
and will cause each of its Subsidiaries to, permit any

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representatives designated by the Administrative Agent or any Lender to visit
and inspect the financial records and the properties of the Company or any
Subsidiary at reasonable times and as often as reasonably requested and to make
extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of the Company or any Subsidiary with the
officers thereof and independent accountants therefor; provided that any such
visit or inspection does not interfere with the normal operation of such
business conducted at the properties.
     Section 5.08. Use of Proceeds. The Company will use the proceeds of the
Term Loans for the purpose of (i) refinancing the Existing Credit Agreement,
(ii) prior to the Redemption Date, depositing such proceeds with the trustee for
the Subordinated Notes or with the Securities Intermediary pursuant to the
Disbursement Agreement (and in such case, investing such proceeds pursuant
thereto) and consummating the redemption of the Subordinated Notes with such
proceeds on the Redemption Date and (iii) paying costs and expenses related to
the Transactions, with any excess proceeds to be used for general corporate
purposes. The Company will use the proceeds of the Revolving Loans and will
request the issuance of Letters of Credit for general corporate purposes of the
Company and its Subsidiaries.
     Section 5.09. Further Assurances. Execute and/or deliver any and all
further documents, financing statements, agreements and instruments, and take
(or authorize) all further action (including filing Uniform Commercial Code and
other financing statements, executing and delivering mortgages, deeds of trust
and Foreign Pledge Agreements (with respect to the pledge of the stock of
Foreign Subsidiaries), and local counsel opinions with respect thereto), that
may be required under applicable law, or that the Collateral Agent may
reasonably request, in order to effectuate the transactions contemplated by the
Loan Documents and in order to grant, preserve, protect and perfect or better
perfect the validity and required priority of the security interests created or
intended to be created by the Security Documents. The Company will cause any
subsequently acquired or organized wholly-owned Domestic Subsidiary (other than
Finsub) to execute a Guarantee Agreement, Indemnity, Subrogation and
Contribution Agreement and each applicable Security Document in favor of the
Collateral Agent. In addition, from time to time, the Company will, at its cost
and expense, promptly secure the Obligations by pledging or creating, or causing
to be pledged or created, perfected security interests with respect to such of
its assets and properties (and those of the other Loan Parties) as the
Administrative Agent or the Required Lenders shall designate (it being
understood that it is the intent of the parties that the Obligations shall be
secured by, among other things, substantially all the assets of the Loan Parties
(including real and other properties acquired subsequent to the Closing Date but
excluding Program Receivables sold to Finsub pursuant to the Receivables Program
Documentation, leasehold interests in real property, mortgage on the Designated
Properties (except as set forth below), stock of the Captive Insurance Company
and the Excluded Foreign Equity Interests and voting equity interests in other
Foreign Subsidiaries in excess of 65% of the voting equity interests thereof)).
Such security interests and Liens will be created under the Security Documents
and other security agreements, mortgages, deeds of trust and other instruments
and documents in form and substance reasonably satisfactory to the Collateral
Agent, and the Company shall deliver or cause to be delivered to the Lenders all
such instruments and documents (including legal opinions and lien searches) as
the Collateral Agent shall reasonably request to evidence compliance with this
Section. The Company agrees to provide such evidence as the Collateral Agent
shall reasonably request as to the perfection and

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priority status of each such security interest and Lien. In the event that any
one or more of the Designated Properties continues to be owned by any of the
Loan Parties and is not subject to a definitive contract for its sale by
March 31, 2006, or, in the event the Company determines not to sell or otherwise
dispose of any Designated Property, within 90 days of such decision, if earlier,
execute any and all documents, financing statements, agreements and instruments,
and take all action (including filing Uniform Commercial Code and other
financing statements, mortgages and deeds of trust) that may be required under
applicable law, or that the Collateral Agent may reasonably request, in order to
grant, preserve, protect and perfect a valid and first priority security
interest in each such Designated Property in favor of the Collateral Agent for
the ratable benefit of the Secured Parties.
     Section 5.10. Interest Rate Protection. Commencing within three months
after the Closing Date, the Company shall maintain the lesser of (a)
$250,000,000 in principal amount and (b) 30% of its long-term Indebtedness as
Indebtedness bearing a fixed rate of interest, whether pursuant to Hedging
Agreements (which shall be acceptable to the Administrative Agent) or otherwise.
     Section 5.11. Debt Ratings on Notes. Company shall maintain Debt Ratings.
     Section 5.12. Completion of Restatement and Form 10-K Filing. The Company
shall have completed the its publicly announced restatement of its financial
statements for periods from January 1, 2000 through March 31, 2004 (the
“Restatement”), delivered such restated financial statements to the
Administrative Agent, and filed a Form 10-K with the Securities Exchange
Commission for its fiscal year ended 2004, in each case on or before
December 31, 2005.
ARTICLE VI
Negative Covenants
     The Company covenants and agrees with each Lender that, so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document have been paid in full and all
Letters of Credit have been canceled or have expired and all amounts drawn
thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, the Company will not, and will not cause or permit
any of the Subsidiaries to:
     Section 6.01. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:
     (a) Indebtedness for borrowed money existing on the date hereof and set
forth in Schedules 6.01(a), (d), (e), (f) and (g), and any extensions, renewals
or replacements of such Indebtedness to the extent the principal amount of such
Indebtedness is not increased, the weighted average life to maturity of such
Indebtedness is not decreased, such Indebtedness, if subordinated to the
Obligations, remains so subordinated on terms not less favorable to the Lenders,
and no Loan Party (unless the original obligor in respect of such Indebtedness)
becomes an obligor with respect thereto;

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     (b) Indebtedness created hereunder and under the other Loan Documents;
     (c) Intercompany Indebtedness of the Company and the Subsidiaries to the
extent permitted by Section 6.04(d), (i) or (j);
     (d) Indebtedness of the Company or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including any Indebtedness assumed in connection with the acquisition of any
such assets or secured by a Lien on any such assets prior to the acquisition
thereof, and extensions, renewals and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof; provided that (i) such
Indebtedness is incurred prior to or within 90 days after such acquisition or
within 90 days after the completion of such construction or improvement and
(ii) the aggregate principal amount of Indebtedness permitted by this
Section 6.01(d), when combined with the aggregate principal amount of all
Capital Lease Obligations incurred pursuant to Section 6.01(e) and outstanding
Indebtedness listed on Schedules 6.01(d) and 6.01(e), shall not exceed
$75,000,000 at any time outstanding;
     (e) Capital Lease Obligations in an aggregate principal amount, when
combined with the aggregate principal amount of all Indebtedness incurred
pursuant to Section 6.01(d) and outstanding Indebtedness listed on Schedules
6.01(d) and 6.01(e), not in excess of $75,000,000 at any time outstanding;
     (f) Indebtedness under industrial revenue bonds in an aggregate principal
amount, when combined with the outstanding principal amounts of industrial
revenue bonds listed on Schedule 6.01(f), not to exceed $20,000,000 at any time
outstanding;
     (g) Indebtedness incurred by (x) Foreign Subsidiaries in an aggregate
principal amount, when combined with the outstanding principal amount of all
Indebtedness listed on Schedule 6.01(g), not to exceed $50,000,000 at any time
outstanding and Guarantees thereof by other Foreign Subsidiaries (other than
Loan Parties), and (y) Flowserve B.V. and Company as a co-borrowers under the
EIB Facilities, in an aggregate principal amount not to exceed €125,000,000 at
any time outstanding;
     (h) in respect of the Company, unsecured Guarantees of Indebtedness of
Subsidiaries permitted to be incurred pursuant to this Agreement, provided that
if such Indebtedness is subordinated to the Obligations, the Guarantee thereof
by the Company shall be subordinated on terms no less favorable to the Lenders;
     (i) Receivables Program Indebtedness in an amount not exceeding
$200,000,000 in the aggregate at any time outstanding;
     (j) in respect of the Company and Guarantors, Guarantees of loans, in an
aggregate amount outstanding at any time not to exceed $30,000,000, made by
third parties to employees who are participants in the Company’s stock purchase
program, if implemented, to enable such employees to purchase common stock of
the Company;
     (k) Indebtedness or other contingent obligations (including obligations as
an account party under any letter of credit), solely in respect of surety and
performance bonds, bank

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guarantees and similar obligations in respect of contractual obligations of the
Company or its Subsidiaries, provided that such obligations are (i) incurred in
the ordinary course of business of the Company and the Subsidiaries and
(ii) except as expressly permitted under Section 6.02(a), (c), (f), (g) or (l),
unsecured;
     (l) Indebtedness in respect of the Fifth Third Letters of Credit, but not
any renewals, extensions or replacements thereof;
     (m) Indebtedness constituting New Unsecured Debt in an aggregate principal
amount not to exceed $325,000,000 or its Dollar Equivalent;
     (n) other unsecured Indebtedness of the Company or the Subsidiaries (other
than Foreign Subsidiaries) in an aggregate principal amount not exceeding
$50,000,000 at any time outstanding;
     (o) from the Closing Date through the Redemption Date, Indebtedness in
respect of the Subordinated Notes;
     (p) Indebtedness in respect of the ABN Standby Credit in an aggregate
amount outstanding at any time not to exceed $20,000,000; and
     (q) Indebtedness in respect of the HSBC Backstopped Letters of Credit..
     Section 6.02. Liens. Create, incur, assume or permit to exist any Lien on
any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
     (a) Liens on property or assets of the Company and its Subsidiaries
existing on the date hereof and set forth on Schedule 6.02; provided that to the
extent such Liens secure obligations, they shall secure only those obligations
which they secure on the date hereof and any extensions, renewals or
replacements thereof to the extent the same are permitted under Section 6.01;
     (b) any Lien created under the Loan Documents, including Liens created
under the Security Documents to secure the Fifth Third Letter of Credit Exposure
or Hedging Agreements entered into with Lenders or Affiliates of Lenders;
     (c) any Lien existing on any property or asset prior to the acquisition
thereof by the Company or any Subsidiary; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition, (ii) such
Lien does not apply to any other property or assets of the Company or any
Subsidiary and (iii) such Lien does not (A) materially interfere with the use,
occupancy and operation of any Mortgaged Property, (B) materially reduce the
fair market value of such Mortgaged Property but for such Lien or (C) result in
any material increase in the cost of operating, occupying or owning or leasing
such Mortgaged Property;
     (d) Liens for taxes not yet due or which are being contested in compliance
with Section 5.03;

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     (e) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or which are being contested in
compliance with Section 5.03;
     (f) pledges and deposits made in the ordinary course of business in
compliance with workmen’s compensation, unemployment insurance and other social
security laws or regulations;
     (g) deposits to secure the performance of bids, trade contracts (other than
for Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
     (h) zoning restrictions, easements, rights-of-way, restrictions on use of
real property and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Company or any of its
Subsidiaries;
     (i) Liens on fixed or capital assets hereafter acquired (or, in the case of
improvements, constructed) by the Company or any Subsidiary; provided that
(i) such Liens secure Indebtedness permitted by Section 6.01(d) or (e),
(ii) such Liens are incurred, and the Indebtedness secured thereby is created,
within 90 days after such acquisition (or construction), (iii) except in the
case of Capital Lease Obligations, the Indebtedness secured thereby does not
exceed 90% of the lesser of the cost or the fair market value of such fixed or
capital asset at the time of such acquisition (or construction) and (iv) such
Liens do not apply to any other property or assets of the Company or any
Subsidiary;
     (j) Liens on the property of Finsub incurred pursuant to the Receivables
Program Documentation;
     (k) Liens arising out of judgments or awards that do not constitute an
Event of Default under Article VII, subsection (i) or in respect of which the
Company or any of the Subsidiaries shall in good faith be prosecuting an appeal
or proceedings for review in respect of which there shall be secured a
subsisting stay of execution pending such appeal or proceedings; and
     (l) Liens on assets of Foreign Subsidiaries; provided that (i) such Liens
do not extend to, or encumber, assets which constitute Collateral or the capital
stock of any of the Subsidiaries owned by a Loan Party, and (ii) such Liens
extending to the assets of any Foreign Subsidiary secure only Indebtedness
(x) incurred by such Foreign Subsidiary pursuant to Section 6.01(g) or (y) of up
to $10,000,000 in the aggregate incurred by Foreign Subsidiaries pursuant to
Section 6.01(k).
     Section 6.03. Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or

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purposes as the property being sold or transferred unless (a) the sale of such
property is permitted by Section 6.05 and (b) any Capital Lease Obligations or
Liens arising in connection therewith are permitted by Section 6.01 and
Section 6.02, respectively.
     Section 6.04. Investments, Loans and Advances. Purchase, hold or acquire
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
     (a) (i) investments by the Company and the Subsidiaries existing on the
date hereof in the capital stock or other equity interests of the Subsidiaries,
(ii) additional investments by the Company and the Subsidiaries in the capital
stock or other equity interests of the Subsidiaries; provided that (A) any such
capital stock or other equity interests held by a Loan Party shall be pledged
pursuant to the Pledge Agreement (subject to the limitations applicable to
voting stock of a Foreign Subsidiary referred to in Section 4.02(g)) and (B) the
aggregate amount of equity investments made after the Closing Date pursuant to
this clause (ii) by Loan Parties in Subsidiaries that are not Loan Parties shall
not exceed $25,000,000 at any time outstanding plus up to $5,000,000 of equity
investments arising from the forgiveness or conversion of intercompany loans or
advances permitted under Section 6.04(d); and (iii) additional investments in
Captive Insurance Company up to an aggregate of $5,000,000;
     (b) (i) investments by the Company and the Subsidiaries existing on the
date hereof in the capital stock or other equity interests in joint ventures,
(ii) investments in an aggregate amount not to exceed $50,000,000, the proceeds
of which are used, directly or indirectly, to acquire from any third-party joint
venture participant all such participant’s interest in a joint venture, with the
result that the joint venture becomes a wholly owned subsidiary,
(iii) additional investments in Flowserve Sanmar Limited in an aggregate amount
not to exceed $30,000,000, and (iv) Additional KSM Investments;
     (c) Permitted Investments and, prior to the Redemption Date, investments
made pursuant to the Disbursement Agreements;
     (d) (i) intercompany loans and advances existing on the Closing Date and
set forth on Schedule 6.04 and, except to the extent any such loan or advance is
forgiven or otherwise converted to equity, renewals, refinancings, substitutions
and replacements of such intercompany loans and advances to the extent the
aggregate principal amount of all such loans and advances is not increased, it
being understood that this clause (i) shall be construed to permit intercompany
loans and advances by Loan Parties to Subsidiaries that are not Loan Parties at
any time outstanding in an aggregate principal amount not exceeding the
aggregate principal amount of intercompany loans and advances by Loan Parties to
Subsidiaries that are not Loan Parties existing on the Closing Date as set forth
on Schedule 6.04 minus the amount of any such loan or advance forgiven or
otherwise converted to equity; (ii) other loans or advances made by the Company
to any Subsidiary and made by any Subsidiary to the Company or any other
Subsidiary; provided that the amount of such loans and advances outstanding
under this clause (ii) by the Company or a Guarantor to Subsidiaries that are
not Guarantors shall not exceed $75,000,000 minus the amount of any such loan or
advance forgiven or otherwise converted to equity; and (iii) other loans or
advances made by the Company or a Guarantor to a Foreign

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Subsidiary (“Outbound Debts”); provided that (A) within 10 Business Days of the
making of any such loan or advance by the Company or Guarantor to a Subsidiary
that is not a Guarantor, one or more of the Foreign Subsidiaries shall return an
equivalent amount of funds to one or more of the Company and the Guarantors
(“Inbound Distributions”) by way of (x) a dividend or return of capital or (y) a
loan or advance to the Company or a Guarantor, which loan or advance shall be
subordinated in right of payment to the Obligations in a manner satisfactory to
the Administrative Agent and (B) the aggregate amount of Outbound Debts
outstanding at any time to Subsidiaries that are not Guarantors shall not exceed
the aggregate amount of Inbound Distributions from Subsidiaries that are not
Guarantors by more than $100,000,000 at any time. In the case of each loan or
advance made by a Loan Party permitted under clauses (i), (ii) or (iii) above,
such loan or advance shall be permitted under this Section 6.04 only if
evidenced by a promissory note (in form and substance satisfactory to the
Administrative Agent) which promissory note shall be pledged to the Collateral
Agent as security for the Obligations pursuant to the Pledge Agreement. In
addition to the foregoing, the Company or a wholly owned subsidiary may own the
Defeased IRBs;
     (e) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
     (f) the Company and the Subsidiaries may make loans and advances in the
ordinary course of business to their respective employees so long as the
aggregate principal amount thereof at any time outstanding shall not exceed
$5,000,000;
     (g) the Company and the Subsidiaries may enter into Hedging Agreements that
(i) are required by Section 5.10 or (ii) are not speculative in nature, are
entered into in the ordinary course of business and are related to interest rate
hedging for floating interest rate exposure or hedging (including currency and
commodity hedging) of bookings, sales, income and dividends derived from the
foreign operations of the Company or any Subsidiary or otherwise related to
purchases from suppliers;
     (h) the Company or any Subsidiary may acquire all or substantially all the
assets of a person or line of business of such person, or not less than 100% of
the capital stock or other equity interests of a person (referred to herein as
the “Acquired Entity”); provided that (i) such acquisition was not preceded by
an unsolicited tender offer for such capital stock or other equity interest by,
or proxy contest initiated by, the Company or any Subsidiary; (ii) the Acquired
Entity shall be a going concern, shall be in a similar line of business as that
of the Company and the Subsidiaries as conducted during the current and most
recent calendar year and shall have had positive Consolidated EBITDA over the
twelve month period preceding the acquisition; and (iii) at the time of such
transaction (A) both before and after giving effect thereto, no Event of Default
or Default shall have occurred and be continuing; (B) the Company would be in
compliance with the covenants set forth in Section 6.11 and the Leverage Ratio
shall be at least 25 basis points below the maximum Leverage Ratio permitted at
the time pursuant to Section 6.12, in each case as of the most recently
completed period of four consecutive fiscal quarters ending prior to such
transaction for which the financial statements and certificates required by
Section 5.04(a) or Section 5.04(b) have been delivered or for which comparable
financial statements have been filed with the Securities and Exchange
Commission, after giving pro forma

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effect to such transaction and to any other event occurring after such period as
to which pro forma recalculation is appropriate (including any other transaction
described in this Section 6.04(h) occurring after such period) as if such
transaction had occurred as of the first day of such period; (C) after giving
effect to such acquisition, there must be at least $60,000,000 of unused and
available Revolving Credit Commitments; and (D) the aggregate of the
consideration paid in connection with all such acquisitions (including any
Indebtedness of the Acquired Entity that is assumed by the Company or any
Subsidiary following such acquisition) shall not exceed (w) if the Company’s
Leverage Ratio calculated as provided under clause (iii) (B) above is greater
than 3.0 to 1.0, $50,000,000 in any fiscal year of the Company, (x) if the
Company’s Leverage Ratio calculated as provided under clause (iii) (B) above is
equal to or less than 3.0 to 1.0 but greater than 2.0 to 1.0, $100,000,000 in
any fiscal year of the Company, (y) if the Company’s Leverage Ratio calculated
as provided under clause (iii) (B) above is equal to or less than 2.0 to 1.0,
$150,000,000 in any fiscal year of Company, and (z) $500,000,000 for all such
acquisitions, provided, that the amounts may be increased by the amount of
consideration for any such acquisition consisting solely of, or paid with the
Net Cash Proceeds from the issuance of, common stock of the Company (any
acquisition of an Acquired Entity meeting all the criteria of this
Section 6.04(h) being referred to herein as a “Permitted Acquisition”). All pro
forma calculations required to be made pursuant to this Section 6.04(h) shall
(i) include only those adjustments that would be permitted or required by
Regulation S-X under the Securities Act of 1933, as amended, are reviewed by the
Company’s independent certified public accountants and are based on reasonably
detailed written assumptions reasonably acceptable to the Administrative Agent
and (ii) be certified to by a Financial Officer as having been prepared in good
faith based upon reasonable assumptions;
     (i) investments in the form of promissory notes and other non-cash
consideration received in connection with any asset disposition or transfer
permitted by this Agreement;
     (j) in addition to investments permitted by clauses (a) through (i) above,
additional investments, loans and advances by the Company and the Subsidiaries
(other than equity investments in Foreign Subsidiaries) so long as the aggregate
amount invested, loaned or advanced (determined without regard to any
write-downs or write-offs of such investments, loans and advances) does not
exceed $20,000,000 in the aggregate.
     Section 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.
(a) Merge into or consolidate with any other person (except as a means of
effecting a sale of a Subsidiary permitted by clause Section 6.05(b)), or permit
any other person to merge into or consolidate with it, or sell, transfer, lease
or otherwise dispose of (in one transaction or in a series of transactions) all
or substantially all the assets of the Company (in each such case, whether now
owned or hereafter acquired) or any capital stock of any Subsidiary (except as
permitted by Section 6.05(b) or (c), below, or in a transaction that is not an
Asset Sale), or purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
person, except that (i) the Company and any Subsidiary may purchase and sell
inventory in the ordinary course of business, (ii) if at the time thereof and
immediately after giving effect thereto no Event of Default or Default shall
have occurred and be continuing (x) any wholly owned subsidiary of the Company
may merge into the Company in a transaction in which the Company is the
surviving corporation and (y) any wholly owned subsidiary of the Company may
merge into or consolidate with any other wholly owned subsidiary of the

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Company in a transaction in which the surviving entity is a wholly owned
subsidiary of the Company (and a Loan Party, if the merged subsidiary was a Loan
Party) and no person other than the Company or a wholly owned subsidiary of the
Company receives any consideration, (iii) the Company and the Subsidiaries may
make Permitted Acquisitions (including by way of merger of a person or persons
into the Company (where the Company is the surviving entity) or a Subsidiary),
(iv) any Subsidiary may be liquidated if the assets and liabilities of such
Subsidiary have been (or as a result of such liquidation are) assigned to and
assumed by the Company or another Subsidiary (which must be a Loan Party if the
liquidated Subsidiary is a Loan Party) in a manner permitted hereunder, (v) any
Loan Party (other than the Company) may sell, transfer, lease or otherwise
dispose of (in one transaction or a series of transactions) all or substantially
all of the assets of such Loan Party to another Loan Party and (vi) the Company
or any Subsidiary may sell Program Receivables to Finsub, and Finsub may sell
Program Receivables pursuant to the Receivables Program Documentation.
     (b) Engage in any Asset Sale otherwise permitted under paragraph (a) above
unless (i) such Asset Sale is for consideration at least 75% of which is cash,
(ii) such consideration is at least equal to the fair market value (as certified
by a Responsible Officer of the Company or, in the case of an asset with a fair
market value in excess of $20,000,000 other than the General Services Sale,
determined in good faith by the board of directors of the Company) of the assets
being sold, transferred, leased or disposed of and (iii) the fair market value
of all assets sold, transferred, leased or disposed of pursuant to this
paragraph (b) (excluding the General Services Sale) shall not exceed (i)
$100,000,000 in any fiscal year or (ii) $350,000,000 in the aggregate from and
after the Closing Date, provided that the limitations set forth in this clause
(iii) shall not apply to the non-recourse factoring of accounts receivable by
Foreign Subsidiaries, provided that the aggregate outstanding amount of accounts
receivable (assuming each such account receivable remains outstanding for the
number of days provided in the applicable invoice for non-delinquent payment) at
any time which have been so factored since the Closing Date shall not exceed
$75,000,000. Any Asset Sale by a Subsidiary of all or substantially all of its
assets and permitted by this Section 6.05 may be effected by a sale of all of
the capital stock of such Subsidiary or by the merger or consolidation of such
Subsidiary into another person.
     (c) Engage in any Asset Swap otherwise permitted by Section 6.05(a) unless
all of the following conditions are met: (i) such exchange complies with the
definition of Asset Swap, (ii) if the fair market value of the assets
transferred exceeds $25,000,000, the board of directors of the Company approves
such exchange and the Company secures an appraisal given by an unaffiliated
third party in form and substance reasonably satisfactory to the Administrative
Agent, (iii) the fair market value of all assets of the Company and the
Subsidiaries transferred pursuant to Asset Swaps since the Closing Date shall
not exceed $100,000,000 in the aggregate and (iv) the fair market value of any
property or assets received is at least equal to the fair market value of the
property or assets so transferred.
     Section 6.06. Dividends and Distributions; Restrictive Agreements.
(a) Declare or pay, directly or indirectly, any dividend or make any other
distribution (by reduction of capital or otherwise), whether in cash, property,
securities or a combination thereof, with respect to any shares of its capital
stock or directly or indirectly redeem, purchase, retire or otherwise acquire
for value (or permit any Subsidiary to purchase or acquire) any shares of any
class of its capital stock or set aside any amount for any such purpose (a
“Restricted Payment”); provided, however,

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that (i) any Subsidiary may make Restricted Payments ratably to its
shareholders, (ii) so long as no Event of Default or Default shall have occurred
and be continuing or would result therefrom, the Company may repurchase shares
of its capital stock owned by employees of the Company or the Subsidiaries or
make payments to employees of the Company or the Subsidiaries in connection with
the exercise of stock options, stock appreciation rights or similar equity
incentives or equity based incentives upon termination of employment or in
connection with the death or disability of such employees, in an aggregate
amount not to exceed $5,000,000 in any fiscal year, (iii) so long as no Event of
Default or Default shall have occurred and be continuing or would result
therefrom, the Company may repurchase shares of its capital stock for
contribution to employee benefit plans maintained by the Company and the
Subsidiaries, in an aggregate amount not to exceed $10,000,000 in any fiscal
year, (iv) so long as no Event of Default or Default shall have occurred and be
continuing or would result therefrom, any non-wholly owned Subsidiary may
acquire its own equity interests from its minority owner(s) (which acquisitions,
for avoidance of doubt, shall constitute investments subject to the limitations
of Section 6.04), and (v) so long as no Event of Default or Default shall have
occurred and be continuing or would result therefrom, from and after the
delivery of the audited financial statements to the Lenders pursuant to Section
5.04(a) for the Company’s fiscal year ended December 31, 2005, the Company and
its Subsidiaries may make Restricted Payments in an amount not to exceed in the
aggregate the sum of (a) $50,000,000 plus (b) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period) from October 31,
2005 to the end of the most recent fiscal quarter for which financial statements
have been delivered to the Lenders pursuant to Section 5.04(a) or Section
5.04(b) prior to the date of such Restricted Payment plus (c) 100% of the Net
Cash Proceeds of any Equity Issuance of Company common stock after the Closing
Date not required to be used to prepay the Loans pursuant to Section 2.13(c) or
used to finance a Permitted Acquisition.
     (b) Enter into, incur or permit to exist any agreement or other arrangement
that prohibits, restricts or imposes any condition upon (i) the ability of the
Company or any Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets to secure the Obligations or any Indebtedness
refinancing the Obligations, or (ii) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to the Company or any other Subsidiary or
to Guarantee Indebtedness of the Company or any other Subsidiary; provided that
(A) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document, (B) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of
assets or a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the assets or Subsidiary that is to be sold and such
sale is permitted hereunder, (C) the foregoing shall not apply to restrictions
and conditions imposed on Finsub under the Receivables Program Documentation,
(D) the foregoing shall not apply to restrictions and conditions imposed on any
Foreign Subsidiary by the terms of any Indebtedness of such Foreign Subsidiary
permitted to be incurred hereunder, (E) clause (i) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (F) clause
(i) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.

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     Section 6.07. Transactions with Affiliates. Except for transactions by or
among the Company and Guarantors, sell or transfer any property or assets to, or
purchase or acquire any property, assets or services from, or otherwise engage
in any other transactions with, any of its Affiliates, except that (a) the
Company or any Subsidiary may engage in any of the foregoing transactions at
prices and on terms and conditions not less favorable to the Company or such
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) reasonable and customary fees may be paid to members of the Board
of Directors, officers, employees and consultants of the Company and the
Subsidiaries for services rendered to the Company or any such Subsidiary in the
ordinary course of business, together with customary indemnities in connection
therewith and in accordance with applicable law, (c) dividends and other
payments permitted to be made under Section 6.06 will be permitted, (d) the
Company, Finsub and the other Subsidiaries may consummate the transactions
contemplated by the Receivables Program Documentation, (e) the Company and the
Subsidiaries may enter into intercompany transactions permitted by Section 6.04,
(f) the Company and the Subsidiaries may incur intercompany indebtedness
permitted by Section 6.01 and (g) the Company and the Subsidiaries may
consummate the Transactions.
     Section 6.08. Business of Company and Subsidiaries. Engage at any time in
any business or business activity other than the business currently conducted by
the Company and the Subsidiaries and business activities reasonably incidental
thereto, including any activities permitted hereunder, which, in the case of
Finsub, shall be limited solely to performing its obligations under the
Receivables Program Documentation.
     Section 6.09. Other Indebtedness and Agreements. (a) Permit any waiver,
supplement, modification, amendment, termination or release of any indenture,
instrument or agreement pursuant to which any Material Indebtedness of the
Company or any of its Subsidiaries is outstanding if the effect of such waiver,
supplement, modification, amendment, termination or release would materially
increase the obligations of the obligor or confer additional material rights on
the holder of such Indebtedness in a manner adverse to the Company, any of the
Subsidiaries or the Lenders.
     (b) (i) Make any distribution, whether in cash, property, securities or a
combination thereof, other than regular scheduled payments of principal or
interest as and when due (to the extent not prohibited by applicable
subordination provisions), in respect of, or pay, or offer or commit to pay, or
directly or indirectly redeem, repurchase, retire or otherwise acquire for
consideration, or set apart any sum for the aforesaid purposes, any subordinated
Indebtedness (other than for redemption of the Subordinated Notes or any such
redemption, repurchase, retirement or acquisition with the proceeds of
Indebtedness otherwise permitted hereunder, which (if the subordinated
Indebtedness being redeemed, repurchased, retired or acquired is required by the
terms of this Agreement to be subordinated) is subordinated on terms no less
favorable to the Lenders and has a weighted life to maturity no less than the
subordinated Indebtedness to be refinanced), or (ii) pay in cash any amount in
respect of any Indebtedness or preferred equity interests that may at the
obligor’s option be paid in kind or in other securities.
     Section 6.10. Capital Expenditures. Until such time as the Company obtains,
and during any period in which the Company does not maintain, Investment Grade
Ratings, permit

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the aggregate amount of Capital Expenditures made by the Company and the
Subsidiaries in any fiscal year, to exceed $75,000,000 in the aggregate.
The amount of permitted Capital Expenditures set forth above in respect of any
fiscal year commencing with the fiscal year ending on December 31, 2005, shall
be increased (but not reduced) by (i) the amount of unused permitted Capital
Expenditures for the immediately preceding fiscal year less (ii) an amount equal
to unused Capital Expenditures carried forward to such preceding fiscal year.

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     Section 6.11. Interest Coverage Ratio. Permit the Interest Coverage Ratio
for any period of four consecutive fiscal quarters, in each case taken as one
accounting period, ending during any period set forth below to be less than the
ratio set forth opposite such period below:

          Period   Ratio
Closing Date through September 30, 2006
    2.75:1.00  
 
       
October 1, 2006 through September 30, 2007
    3.00:1.00  
 
       
October 1, 2007 and thereafter
    3.25:1.00  

     Section 6.12. Maximum Leverage Ratio. Permit the Leverage Ratio as of the
end of any fiscal quarter ending during a period set forth below to be greater
than the ratio set forth opposite such period below:

          Period   Ratio
Closing Date through September 30, 2006
    3.75:1.00  
 
       
October 1, 2006 through September 30, 2007
    3.50:1.00  
 
       
October 1, 2007 and thereafter
    3.00:1.00  

     Section 6.13. Fiscal Year. With respect to the Company, change its fiscal
year-end to a date other than December 31; provided that the Company may use a
52/53 week fiscal year ending around December 31.
ARTICLE VII
Events of Default
     In case of the happening of any of the following events (“Events of
Default”):
     (a) any representation or warranty made or deemed made in or in connection
with any Loan Document or the borrowings or issuances of Letters of Credit
hereunder, or any representation, warranty, statement or information contained
in any report, certificate, financial statement or other instrument furnished in
connection with or pursuant to any Loan Document, shall prove to have been false
or misleading in any material respect when so made, deemed made or furnished;
     (b) default shall be made in the payment of any principal of any Loan or
the reimbursement with respect to any L/C Disbursement (after giving effect to
the reimbursement of the applicable Issuing Bank out of the proceeds of a
Revolving Loan or Swingline Loan pursuant to Section 2.02(f) or Section 2.22(c),
respectively) when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;

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     (c) default shall be made in the payment of any interest on any Loan or any
Fee or L/C Disbursement or any other Obligation (other than an amount referred
to in (b) above) due under any Loan Document, when and as the same shall become
due and payable, and such default shall continue unremedied for a period of
three Business Days;
     (d) default shall be made in the due observance or performance by the
Company or any Subsidiary of any covenant, condition or agreement contained in
Section 5.01(a), Section 5.05, Section 5.08 or Section 5.12 or in Article VI;
     (e) default shall be made in the due observance or performance by the
Company or any Subsidiary of any covenant, condition or agreement contained in
any Loan Document (other than those specified in (b), (c) or (d) above) and such
default shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Company;
     (f) the Company or any Subsidiary shall (i) fail to pay any principal or
interest, regardless of amount, due in respect of any Material Indebtedness when
and as the same shall become due and payable (after giving effect to any
applicable grace period), or (ii) fail to observe or perform any other term,
covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or holders
of such Indebtedness or a trustee on its or their behalf to cause, such
Indebtedness to become due prior to its stated maturity;
     (g) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of the Company or any Subsidiary (other than any Inactive Subsidiary),
or of a substantial part of the property or assets of the Company or a
Subsidiary (other than any Inactive Subsidiary), under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or any Subsidiary (other than any Inactive
Subsidiary) or for a substantial part of the property or assets of the Company
or a Subsidiary (other than any Inactive Subsidiary) or (iii) the winding-up or
liquidation of the Company or any Subsidiary (other than any Inactive
Subsidiary); and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing shall
be entered;
     (h) the Company or any Subsidiary (other than any Inactive Subsidiary)
shall (i) voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described in (g) above, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Company or any Subsidiary (other than any Inactive Subsidiary) or for a
substantial part of the property or assets of the Company or any Subsidiary
(other than any Inactive Subsidiary), (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to

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pay its debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing;
     (i) one or more judgments for the payment of money in an aggregate amount
in excess of $10,000,000 shall be rendered against the Company, any Subsidiary
(other than any Inactive Subsidiary) or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to levy upon assets or properties of the Company or any
Subsidiary (other than any Inactive Subsidiary) to enforce any such judgment;
     (j) an ERISA Event shall have occurred that, in the reasonable opinion of
the Required Lenders, when taken together with all other such ERISA Events,
could reasonably be expected to result in a Material Adverse Effect;
     (k) any Guarantee under the Guarantee Agreement for any reason shall cease
to be in full force and effect (other than in accordance with its terms), or any
Guarantor shall deny in writing that it has any further liability under its
Guarantee Agreement (other than as a result of the discharge of such Guarantor
in accordance with the terms of the Loan Documents);
     (l) any security interest purported to be created by any Security Document
shall cease to be, or shall be asserted by the Company or any other Loan Party
not to be, a valid, perfected, first priority (except as otherwise expressly
provided in this Agreement or such Security Document) security interest in the
securities, assets or properties covered thereby, except to the extent that any
such loss of perfection or priority results from the failure of the Collateral
Agent to maintain possession of certificates representing securities pledged
under the Pledge Agreement, except to the extent that any such loss of
perfection or priority results from the failure of the Collateral Agent to file
the documents submitted to the Collateral Agent by the Company for filing and
except to the extent that such loss is covered by a lender’s title insurance
policy and the related insurer promptly after such loss shall have acknowledged
in writing that such loss is covered by such title insurance policy;
     (m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the Company
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Company, take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments and (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Company accrued hereunder and
under any other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Company, anything contained herein or in any
other Loan Document to the contrary notwithstanding; and in any event with
respect to the Company described in paragraph (g) or (h) above, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Company accrued hereunder

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(including under Section 2.23(j)) and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Company, anything contained herein or in any other Loan Document to the contrary
notwithstanding.
ARTICLE VIII
The Agents
     Section 8.01. Appointment. (a) Each Lender hereby irrevocably (subject to
Section 8.03) appoints Bank of America, N.A. to act as Administrative Agent and
Collateral Agent on behalf of the Lenders and the Issuing Banks. Each of the
Lenders and each assignee of any such Lender hereby irrevocably authorizes the
Agents to take such actions on behalf of such Lender or assignee or Issuing Bank
and to exercise such powers as are specifically delegated to the Agents by the
terms and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto, including, to execute,
deliver and perform such actions under the Security Documents and to execute and
deliver one or more intercreditor agreements in connection with the Receivables
Program (including, without limitation, an amendment to, or replacement of, the
intercreditor agreement between the existing purchaser of Program Receivables
and Bank of America, N.A. in its capacities as administrative agent and
collateral agent under the Existing Credit Agreement). The Administrative Agent
is hereby expressly authorized by the Lenders and the Issuing Banks, without
hereby limiting any implied authority, (i) to receive on behalf of the Lenders
and the Issuing Banks all payments of principal of and interest on the Loans,
all payments in respect of L/C Disbursements and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender or Issuing Bank its
proper share of each payment so received; (ii) to give notice on behalf of each
of the Lenders to the Company of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (iii) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by the
Company or any other Loan Party pursuant to this Agreement or the other Loan
Documents as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Collateral Agent and Administrative Agent are
hereby expressly authorized to execute any and all documents (including
releases) with respect to the Collateral and the rights of the Secured Parties
with respect thereto, as contemplated by and in accordance with the provisions
of this Agreement and the Security Documents. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, no Agent shall have any duties or responsibilities except those
expressly set forth herein, nor shall any Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against any
Agent. Without limiting the generality of the foregoing sentence, the use of the
term “agent” in this Agreement with reference to any Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. Further,
the title of “Joint Lead Arranger,” “Syndication Agent” and “Co-Documentation
Agent” provided to certain Lenders or their Affiliates on the cover of this
Agreement is honorary only and does not impose any duty or obligation on such
entity.

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     (b) The Issuing Banks shall act on behalf of the Lenders with respect to
any Letters of Credit issued by them and the documents associated therewith
until such time and except for so long as the Administrative Agent may agree at
the request of the Required Lenders to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Banks shall have all of the
benefits and immunities (i) provided to the Agents in this Article VIII with
respect to any acts taken or omissions suffered by an Issuing Bank in connection
with Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term “Agent” as used in this Article VIII included
Issuing Banks with respect to such acts or omissions and (ii) as additionally
provided in this Agreement with respect to Issuing Banks.
     Section 8.02. Liability of Agents. Neither the Agents nor any of their
respective directors, officers, employees or agents shall be liable as such for
any action taken or omitted by any of them except for its or his own gross
negligence or willful misconduct, or be responsible for any statement, warranty
or representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Company or any other Loan Party of any of the
terms, conditions, covenants or agreements contained in any Loan Document. The
Agents shall not be responsible to the Lenders for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement or any
other Loan Documents, instruments or agreements. The Agents shall in all cases
be fully protected in acting, or refraining from acting, in accordance with
written instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Agents nor any of
their respective directors, officers, employees or agents shall have any
responsibility to the Company or any other Loan Party on account of the failure
of or delay in performance or breach by any Lender or Issuing Bank of any of its
obligations hereunder or to any Lender or Issuing Bank on account of the failure
of or delay in performance or breach by any other Lender or Issuing Bank or the
Company or any other Loan Party of any of their respective obligations hereunder
or under any other Loan Document or in connection herewith or therewith. Each of
the Agents may execute any and all duties hereunder by or through agents or
employees and shall be entitled to rely upon the advice of legal counsel
selected by it with respect to all matters arising hereunder and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel.
     Section 8.03. Resignation and Replacement. Subject to the appointment and
acceptance of a successor Agent as provided below, any Agent may resign at any
time by notifying the Lenders and the Company. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor acceptable to the
Company, such consent not to be unreasonably withheld; provided, however, that
the consent of the Company shall not be required to any such appointment during
the continuance of any Event of Default. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be a bank with an office in the United States, having a combined
capital and surplus of at least $500,000,000 or an Affiliate of any such bank.

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Upon the acceptance of any appointment as Agent hereunder by a successor bank,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations hereunder. After the Agent’s
resignation hereunder, the provisions of this Article and Section 9.05 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent. Any resignation by Administrative
Agent pursuant to this Section 8.03 shall constitute the concurrent resignation
of such entity as Swingline Lender and as an Issuing Bank and, upon the
effectiveness of such resignation, Company shall repay outstanding Swingline
Loans of the retiring Swingline Lender, provided that any successor
Administrative Agent appointed pursuant to this Section 8.03 shall, upon
acceptance of such appointment, become the successor Swingline Lender for all
purposes hereunder and, if the Administrative Agent was the sole Issuing Bank
hereunder, a successor Issuing Bank.
     Section 8.04. Agent in Individual Capacity. With respect to the Loans made
by it hereunder, each Agent in its individual capacity and not as Agent shall
have the same rights and powers as any other Lender and may exercise the same as
though it were not an Agent, and the Agents and their Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Company or any Subsidiary or other Affiliate thereof as if it were not an
Agent.
     Section 8.05. Indemnification of Agents. Each Lender agrees (a) to
reimburse the Agents, on demand, in the amount of its pro rata share (based on
the aggregate amount of its outstanding Term Loans and its Revolving Credit
Commitments hereunder) of any expenses incurred for the benefit of the Lenders
by the Agents, including reasonable counsel fees and disbursements and
compensation of agents and employees paid for services rendered on behalf of the
Lenders, that shall not have been reimbursed by the Company and (b) to indemnify
and hold harmless each Agent and any of its directors, officers, employees,
agents or Affiliates (including the Lead Arrangers), on demand, in the amount of
such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against it or any of them in any way relating to or
arising out of this Agreement, the underwriting arrangement of the Loans made
thereunder or any other Loan Document or any action taken or omitted by it or
any of them under this Agreement or any other Loan Document, to the extent the
same shall not have been reimbursed by the Company or any other Loan Party,
provided that no Lender shall be liable to an Agent or any such other
indemnified person for any portion of such liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that is determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent or any of its directors, officers, employees agents or
Affiliates. Each Revolving Credit Lender agrees to reimburse each Issuing Bank
and its directors, employees and agents, in each case, to the same extent and
subject to the same limitations as provided above for the Agents. In addition,
each Lender shall promptly return to the Administrative Agent the amount of any
payment made to such Lender in anticipation of receipt of amounts due from the
Company in the event such payment is not made by the Company as and when due
(which amounts shall be returned to the Administrative Agent with interest at
the customary rate set by the Administrative Agent for the correction of errors
among banks).

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     Section 8.06. No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Agents or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents or
any other Lender and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement or any other Loan Document,
any related agreement or any document furnished hereunder or thereunder.
     Section 8.07. Notice of Default. No Agent shall be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except, in the
case of the Administrative Agent, with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent for
the account of the Lenders, unless such Agent shall have received written notice
from a Lender or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a “notice of
default.” An Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be directed by the Required Lenders; provided, however,
that unless and until the Administrative Agent has received any such direction,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Lenders.
ARTICLE IX
Miscellaneous
     Section 9.01. Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
     (a) if to the Company, to it at 5212 N. O’Connor Blvd., Suite 2300, Irving,
TX 75039, Attention of Mr. Paul Fehlman (Telecopy No. (972) 443-6817);
     (b) if to the Administrative Agent:
     For payments and notices of borrowing, conversion and continuation:
Charlotte Conn
Credit Services
Bank of America, N.A., as Agent
901 Main Street
Mail Code TX1-492-14-12
Dallas, TX 75202-3714
ABA # 111000012
Account # 1292000883
Ref: Flowserve
(Telephone No. (214) 209-1225)
(Telecopy No. (214) 290-9553)

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For financial statements and other deliverables:
Don B. Pinzon
Bank of America, N.A., as Agent
Agency Management Officer
335 Madison Avenue, 4th Floor
Mail Code: NY1-503-04-03
New York, New York 10017
(Telephone No. (212) 503-8326)
(Telecopy No. (212) 901-7843)
     (c) if to a Lender, to it at its address (or telecopy number) on file with
Administrative Agent.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
     The Company hereby acknowledges that (a) the Administrative Agent will make
available to the Lenders and each Issuing Bank materials and/or information
provided by or on behalf of the Company hereunder (collectively, “Company
Materials”) by posting the Company Materials on IntraLinks or another similar
electronic system (the “Platform”) and (b) certain of the Lenders may be
“public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Company or its securities) (each, a
“Public Lender”). Company hereby agrees that (w) all Company Materials that are
to be made available to Public Lenders shall be clearly and conspicuously marked
“PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear
prominently on the first page thereof; (x) by marking Company Materials
“PUBLIC,” the Company shall be deemed to have authorized the Administrative
Agent, Issuing Banks and the Lenders to treat such Company Materials as not
containing any material non-public information with respect to the Company or
their respective securities for purposes of United States federal and state
securities laws (provided, however, that to the extent such Company Materials
constitute Information (as defined in Section 9.17), they shall be treated as
set forth in Section 9.17); (y) all Company Materials marked “PUBLIC” are
permitted to be made available through a portion of the Platform designated
“Public Investor”; and (z) the Administrative Agent shall be entitled to treat
any Company Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor.”
Notwithstanding the foregoing, Company shall be under no obligation to mark any
Company Materials “PUBLIC.”
     Notices and other communications to the Lenders and any Issuing Bank
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender or any Issuing Bank pursuant to Article II if

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such Lender or Issuing Bank, as applicable, has notified the Administrative
Agent that it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Company may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.
     THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMPANY
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM THE COMPANY MATERIALS. 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 ANY AGENT PARTY IN
CONNECTION WITH THE COMPANY MATERIALS OR THE PLATFORM. In no event shall the
Administrative Agent or any of its Affiliates (collectively, the “Agent
Parties”) have any liability to the Company, any Lender, any Issuing Bank or any
other person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of the Company’s or the
Administrative Agent’s transmission of Company Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses
are determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided, however, that in no event shall any Agent Party have
any liability to the Company, any Lender, any Issuing Bank or any other person
for indirect, special, incidental, consequential or punitive damages (as opposed
to direct or actual damages).
     Section 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Company herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Banks and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Banks, regardless of any investigation made by the Lenders or the
Issuing Banks or on their behalf, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any Fee or any
other amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not been terminated. The provisions of Section 2.14,
Section 2.16, Section 2.20 and Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent, the Collateral Agent, any Lender or any Issuing
Bank.
     Section 9.03. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Company and the Administrative Agent and the
conditions set forth in

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Section 4.02 have been satisfied, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns.
     Section 9.04. Successors and Assigns. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party, which shall include, in the case
of a Lender, any entity resulting from a merger or consolidation; and all
covenants, promises and agreements by or on behalf of the Company, the
Administrative Agent, the Issuing Banks or the Lenders that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
     (b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) (x) the Company and the Administrative Agent (and, in the case
of any assignment of a Revolving Credit Commitment, the Swingline Lender and
each Issuing Bank (which consent shall be deemed given by an Issuing Bank if it
does not affirmatively deny its consent in writing within two Business Days of a
request therefor)) must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld or delayed); provided,
however, that such consents shall not be required in the case of an assignment
of Term Loans to a Lender or an Affiliate or Related Fund of a Lender; provided,
further, that, the consent of the Company shall not be required to any such
assignment during the continuance of any Event of Default, and (y) the amount of
the Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 in the case of Revolving Loans and $1,000,000 in the case of Term
Loans (or, if less, the entire remaining amount of such Lender’s Commitment),
provided, however, that concurrent assignments to members of an Assignee Group
and concurrent assignments from members of an Assignee Group to a single
assignee (or to an assignee and members of its Assignee Group) will be treated
as a single assignment for purposes of determining whether such minimum amount
has been met, (ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee (an “Assignment Fee”) in the amount of $2,500 for
each assignment; provided, however, that such processing and recordation fee
shall not apply to any Assignment and Acceptances delivered to the
Administrative Agent on or before the second Business Day following the Closing
Date (or, in the case of any Assignment and Acceptances by a Lender to an
Affiliate or Related Fund thereof, on or before the tenth Business Day following
such date) and shall not apply to assignments at any time by Administrative
Agent or Merrill Lynch Capital Corporation or their respective Affiliates; and
provided, further, that in the event of two or more concurrent assignments to
members of the same Assignee Group (which may be effected by a suballocation of
an assigned amount among members of such Assignee Group) or two or more
concurrent assignments by members of the same Assignee Group to a single
assignee (or to an assignee and members of its Assignee Group), the Assignment
Fee shall be $2,500 for the first four such concurrent assignments or
suballocations and $500 for each additional concurrent assignment or
suballocation thereafter, and (iii) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire. Upon
acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment and Acceptance,
(A) the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such

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Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement and (B) the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Section 2.14,
Section 2.16, Section 2.20 and Section 9.05, as well as to any Fees accrued for
its account and not yet paid).
     (c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Company or any Subsidiary or the
performance or observance by the Company or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05 or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
     (d) The Administrative Agent, acting for this purpose as an agent of the
Company, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive and the Company,
the Administrative Agent, the Issuing Banks, the Collateral Agent and the
Lenders may treat each person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Company, the Issuing Banks and the Collateral

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Agent, at any reasonable time and from time to time upon reasonable prior
notice. In addition, Administrative Agent shall make the Register available for
inspection by the Lenders upon reasonable prior notice at reasonable times,
provided that a Lender shall only be entitled to inspect its own entry in the
Register and not that of any other Lender.
     (e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above (if applicable) and, if required, the written consent of the Company,
the Swingline Lender, the Issuing Banks and the Administrative Agent to such
assignment, the Administrative Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Lenders, the Issuing Banks and the
Swingline Lender. No assignment shall be effective unless it has been recorded
in the Register as provided in this paragraph (e). Prior to such recordation,
all amounts owed with respect to the applicable Commitment or outstanding Loan
shall be owed to the Lender listed in the Register as the owner thereof, and 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 the
Lender shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Commitments or Loans.
     (f) Each Lender may, without the consent of the Company, the Swingline
Lender, the Issuing Banks or the Administrative Agent, sell participations to
one or more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided, however, 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, (iii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in
Section 2.14, Section 2.16 or Section 2.20 to the same extent as if they were
Lenders provided that the Company shall not be required to reimburse the
participating banks or other entities pursuant to Section 2.14, Section 2.16 or
Section 2.20 in an amount in excess of the amount that would have been payable
thereunder to such Lender had such Lender not sold such participation, (iv) a
participating bank or other entity that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.20 unless the Company
is notified of the participation sold to such participating bank or other entity
and such participating bank or other entity agrees, for the benefit of the
Company, to comply with Section 2.20(e), and (v) the Company, the Administrative
Agent, the Issuing Banks and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Company relating to the Loans or L/C
Disbursements and to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
decreasing any fees payable hereunder or the amount of principal of or the rate
at which interest is payable on the Loans, extending any scheduled principal
payment date or date fixed for the payment of interest on the Loans, increasing
or extending the Commitments or releasing all or substantially all of the
Guarantors or all or substantially all of the Collateral).

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     (g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Company or the Subsidiaries
furnished to such Lender by or on behalf of the Company or the Subsidiaries;
provided that, prior to any such disclosure of information designated by the
Company as confidential, each such assignee or participant or proposed assignee
or participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of
such confidential information on terms no less restrictive than those applicable
to the Lenders pursuant to Section 9.17.
     (h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to secure extensions of credit to such Lender without the
consent of either of the Company or the Administrative Agent; provided that no
such assignment shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
     (i) Notwithstanding anything to the contrary contained herein, any Lender
(a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Company, the option to provide to the Company all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Company pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 9.04, any SPC
may (i) with notice to, but without the prior written consent of, the Company
and the Administrative Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by the Company and the
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and
(ii) disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC.
     (j) The Company shall not assign or delegate any of its rights or duties
hereunder without the prior written consent of the Administrative Agent, the
Issuing Banks and each Lender, and any attempted assignment without such consent
shall be null and void.

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     Section 9.05. Expenses; Indemnity. (a) The Company agrees to pay all
out-of-pocket expenses incurred by the Agents, the Issuing Banks and the
Swingline Lender in connection with the syndication of the credit facilities
provided for herein and the preparation and administration of this Agreement and
the other Loan Documents or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby or thereby contemplated shall be consummated) or incurred by the Agents
or any Lender in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents or in connection
with the Loans made or Letters of Credit issued hereunder, including the
reasonable fees, charges and disbursements of O’Melveny & Myers LLP, counsel for
the Agents, and Ernst & Young LLP, for advisory services performed for the
Agents, and, in connection with any such enforcement or protection, the fees,
charges and disbursements of any other counsel or advisors for the Agents or any
Lender.
     (b) The Company agrees to indemnify the Agents, each Lender and each
Issuing Bank, each Affiliate of any of the foregoing persons (including the Lead
Arrangers) and each of their respective directors, officers, employees, agents,
trustees and investment advisors (each such person being called an “Indemnitee”)
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder, the underwriting or arrangement of the credit
extensions made thereunder or the consummation of the Transactions and the other
transactions contemplated thereby, (ii) the use of the proceeds of the Loans or
issuance of Letters of Credit, (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto, or (iv) any actual or alleged presence or Release of Hazardous
Materials on or from any property currently or formerly owned or operated by the
Company or any of the Subsidiaries, or any Environmental Liability related in
any way to the Company or any of the Subsidiaries, in all cases, whether or not
caused by or arising, in whole or in part, out of the comparative, contributory
or sole negligence of the Indemnitee; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee. To the extent permitted by
law, Company waives any claim against any Indemnitee under any theory of
liability for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of or in connection with the Loan
Documents, the Transactions, any Loan, Letter of Credit or the use of the
proceeds thereof.
     (c) The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the any Agent, any Lender or any Issuing Bank. All amounts due under this
Section 9.05 shall be payable on written demand therefor.

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     Section 9.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, except to the extent prohibited by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Company against any of and all the obligations of
the Company now or hereafter existing under this Agreement (including, in the
case of the Company, Article X hereof) and other Loan Documents held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or such other Loan Document and although such obligations
may be unmatured. The rights of each Lender under this Section 9.06 are in
addition to other rights and remedies (including other rights of setoff) which
such Lender may have.
     Section 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH
LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM
CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE “UNIFORM CUSTOMS”) AND, AS TO
MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
     Section 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Company or any other Loan Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances.
     (b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Company and the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or extend the maturity of
or any scheduled principal payment date or date for the payment of any interest
on any Loan or any date for reimbursement of an L/C Disbursement, or waive or
excuse any such payment or any part thereof, or decrease the rate of interest on
any Loan or L/C Disbursement, without the prior written consent of each Lender
affected thereby, (ii) increase or extend the Commitment of any Lender or
decrease or extend the

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date for payment of the Fees due to any Lender without the prior written consent
of such Lender, (iii) amend or modify the definition of the term “Required
Lenders”, the pro rata requirements of Section 2.17 (it being understood that
with the consent of Required Lenders (determined before giving effect to the
proposed action), additional extensions of credit pursuant to this Agreement may
be included in determining what constitutes Required Lenders and in determining
the Pro Rata Percentage of Lenders), the provisions of Section 9.04(j), the
provisions of this Section, or release all or substantially all of the
Guarantors or all or substantially all of the Collateral (except, in each case,
any release expressly permitted by the Loan Documents or any release of any
Collateral on the Release Date), without the prior written consent of each
Lender, (iv) change the provisions of any Loan Document in a manner that by its
terms adversely affects the rights in respect of payments due to Lenders holding
Loans of one Class differently from the rights of Lenders holding Loans of any
other Class without the prior written consent of Lenders holding a majority in
interest of the outstanding Loans and unused Commitments of each adversely
affected Class, (v) modify the protections afforded to an SPC pursuant to the
provisions of Section 9.04(i) without the written consent of such SPC; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Collateral Agent, any Issuing
Bank or the Swingline Lender hereunder or under any other Loan Document without
the prior written consent of the Administrative Agent, the Collateral Agent,
such Issuing Bank or the Swingline Lender.
     Section 9.09. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this
Section 9.09 shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans or participations or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
     Section 9.10. Entire Agreement. This Agreement, the Administrative Agent’s
Fee Letter, the Fee Letter and the other Loan Documents represent the final
agreement among the parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements among the parties. Any other previous agreement among
the parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any party
other than the parties hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.
     Section 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT

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IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS Section 9.10.
     Section 9.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
     Section 9.13. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 9.03.
Delivery of an executed signature page to this Agreement by facsimile
transmission or pdf copy shall be as effective as delivery of a manually signed
counterpart of this Agreement.
     Section 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
     Section 9.15. Jurisdiction; Consent to Service of Process. (a) The Company
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Agent, any Issuing
Bank or any Lender may otherwise have to bring any action or proceeding relating
to this Agreement or the other Loan Documents against any the Company or its
properties in the courts of any jurisdiction.

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     (b) The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
     (c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
     Section 9.16. Judgment Currency. (a) The obligations of the Company and the
other Loan Parties hereunder and under the other Loan Documents to make payments
in dollars (the “Obligation Currency”) shall not be discharged or satisfied by
any tender or recovery pursuant to any judgment expressed in or converted into
any currency other than the Obligation Currency, except to the extent that such
tender or recovery results in the effective receipt by the Administrative Agent
or a Lender or an Issuing Bank of the full amount of the Obligation Currency
expressed to be payable to the Administrative Agent or such Lender or Issuing
Bank under this Agreement or the other Loan Documents. If, for the purpose of
obtaining or enforcing judgment against the Company or any other Loan Party or
in any court or in any jurisdiction, it becomes necessary to convert into or
from any currency other than the Obligation Currency (such other currency being
hereinafter referred to as the “Judgment Currency”) an amount due in the
Obligation Currency, the conversion shall be made at the Dollar Equivalent, in
the case of any Alternative Currency or dollars, and, in the case of other
currencies, the rate of exchange (as quoted by the Administrative Agent or if
the Administrative Agent does not quote a rate of exchange on such currency, by
a known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the date immediately preceding the day on which
the judgment is given (such Business Day being hereinafter referred to as the
“Judgment Currency Conversion Date”).
     (b) If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, the Company covenants and agrees to pay, or cause to be paid, as a separate
obligation and notwithstanding any judgment, such additional amounts, if any
(but in any event not a lesser amount), as may be necessary to ensure that the
amount paid in the Judgment Currency, when converted at the rate of exchange
prevailing on the date of payment, will produce the amount of the Obligation
Currency which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial award at the rate of exchange prevailing
on the Judgment Currency Conversion Date.
     (c) For purposes of determining the Dollar Equivalent or rate of exchange
for this Section, such amounts shall include any premium and costs payable in
connection with the purchase of the Obligation Currency.
     Section 9.17. Confidentiality. The Agents, each Issuing Bank and each of
the Lenders agrees to keep confidential (and to use its best efforts to cause
its respective agents and representatives to keep confidential) the Information
(as defined below) and all copies thereof,

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extracts therefrom and analyses or other materials based thereon, except that
any Agent, any Issuing Bank or any Lender shall be permitted to disclose
Information (a) to such of its respective officers, directors, employees,
agents, affiliates and representatives as need to know such Information, (b) to
a pledgee under Section Section 9.04(h) or a potential assignee or participant
of such Lender or any direct or indirect contractual counterparty in any swap
agreement relating to the Loans or such potential assignee’s or participant’s or
counterparty’s advisors who need to know such Information (provided that any
such pledgee, potential assignee or participant or counterparty shall, and shall
use commercially reasonable efforts to cause its advisors to, keep confidential
all such Information on the terms set forth in this Section 9.17), (c) to the
extent requested by any regulatory authority or quasi-regulatory authority such
as the National Association of Insurance Commissioners (NAIC), (d) to the extent
otherwise required by applicable laws and regulations or by any subpoena or
similar legal process, (e) in connection with any suit, action or proceeding
relating to the enforcement of its rights hereunder or under the other Loan
Documents or (f) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section 9.17 or (ii) becomes
available to any Agent, any Issuing Bank or any Lender on a nonconfidential
basis from a source other than the Company. For the purposes of this Section and
Section 9.01, “Information” shall mean all financial statements, certificates,
reports, agreements and information (including all analyses, compilations and
studies prepared by any Agent, any Issuing Bank or any Lender based on any of
the foregoing) that are received from the Company and related to the Company or
any of its Subsidiaries, any shareholder of the Company or any employee,
customer or supplier of the Company or any of its Subsidiaries, other than any
of the foregoing that were available to any Agent, any Issuing Bank or any
Lender on a nonconfidential basis prior to its disclosure thereto by the
Company, and which are in the case of Information provided after the date
hereof, clearly identified at the time of delivery as confidential.
Notwithstanding the foregoing, the Administrative Agent and the Lenders may
disclose the existence of this Agreement and information about this Agreement to
market data collectors, similar service providers to the lending industry, and
service providers to the Administrative Agent and the Lenders, and the
Administrative Agent or any of its Affiliates may place customary “tombstone”
advertisements relating hereto in publications (including publications
circulated in electronic form) of its choice at its own expense. The provisions
of this Section 9.17 shall remain operative and in full force and effect
regardless of the expiration and term of this Agreement.
     Section 9.18. European Monetary Union. If, as a result of the further
implementation of European monetary union, (a) any Alternative Currency (other
than the euro) ceases to be lawful currency of the nation issuing the same and
is replaced by the euro, then the amount payable hereunder in respect thereof
shall be determined by translating the amount payable in such currency to euro
at the exchange rate recognized by the European Central Bank for the purpose of
replacing such currency by the euro and thereafter translated in dollars in
accordance with the provisions hereof, or (b) any such Alternative Currency and
the euro are at the same time recognized by the central bank or comparable
authority of the nation issuing such currency as lawful currency of such nation,
then (i) any Alternative Currency Letter of Credit issued at such time that
would otherwise be denominated in such currency shall be denominated in euro.
     Section 9.19. Release of Collateral. (a) Notwithstanding any other
provision of this Agreement or any Security Document, all Collateral held under
any Security Document shall be released from the Liens created thereunder, in
each case without representation, warranty or

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recourse of any nature, on a Business Day specified by the Company (the “Release
Date”), and the provisions of Section 5.06, Section 5.09 and any other provision
set forth in this Agreement expressly relating to assets serving as collateral
for the Obligations (other than provisions relating to the cash
collateralization of Letters of Credit under certain circumstances) insofar as
they relate to assets serving as collateral for the Obligations shall cease to
be of any force or effect, upon satisfaction of the following conditions
precedent:
          (i) the Company shall have given written notice to the Agents at least
30 days prior to the Release Date, specifying the proposed Release Date;
          (ii) as of the Release Date, the Company shall have obtained, and for
a period of not less than 90 consecutive days, maintained Investment Grade
Ratings;
          (iii) no Default or Event of Default shall have occurred and be
continuing as of the Release Date; and
          (iv) on the Release Date, the Collateral Agent shall have received a
certificate, dated the Release Date and executed on behalf of the Company by the
President, a Vice President or a Financial Officer of the Company, confirming
the satisfaction of the conditions set forth in clauses (ii) and (iii) above.
     (b) Subject to the satisfaction of the conditions set forth in paragraph
(a) above, on or after the Release Date, the Lenders hereby expressly authorize
the Collateral Agent to, and the Collateral Agent hereby agrees to, deliver the
Pledged Securities (as defined in the Pledge Agreement) to the Company and to
execute and deliver to the Company all such instruments and documents as the
Company may reasonably request to effectuate, evidence or confirm the releases
of Collateral provided for in this Section 9.19. Any execution and delivery of
documents pursuant to this Section 9.19 shall be without recourse to or warranty
by the Collateral Agent.
     (c) Without limiting the provisions of Section 9.05, the Company shall
reimburse the Agents and the Lenders upon demand for all costs and expenses,
including attorneys fees and disbursements and the allocated costs and
disbursements of internal legal counsel, incurred by any of them in connection
with any action contemplated by this Section 9.19.
     Section 9.20. USA Patriot Act. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Company that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Company, which information includes the name and address of the
Company and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify the Company in accordance with the Act.
[remainder of page left intentionally blank]

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

            FLOWSERVE CORPORATION
      By:           Name:   Paul W. Fehlman        Title:   Vice President and
Treasurer     

S-1

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BANK OF AMERICA, N.A.,    
 
as Administrative Agent, Collateral Agent,    
 
Swingline Lender, an Issuing Bank and a Lender    
 
       
 
By:        
 
       
 
Name:    
 
Title:    

S-2

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LENDERS:    
 
       
 
By:      
 
       
 
Name:    
 
Title:    

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SCHEDULE 1.01(a)
DOMESTIC SUBSIDIARY GUARANTORS
BW/IP-New Mexico, Inc.
Flowserve Holdings, Inc.
Flowserve International Inc.
Flowserve Management Company
Flowserve US Inc.
PMV-USA, Inc.