Exhibit 10.1
CREDIT AGREEMENT
dated as of August 31, 2005
among
LUBY’S, INC.
The Lenders From Time to Time Party Hereto
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Administrative Agent
WELLS FARGO BANK, NATIONAL ASSOCIATION
and
AMEGY BANK, NATIONAL ASSOCIATION,
as Documentation Agents
J.P. MORGAN SECURITIES INC.,
as Sole Bookrunner and Lead Arranger

 

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TABLE OF CONTENTS

              Page
ARTICLE I Definitions
    1  
 
       
SECTION 1.01 Defined Terms
    1  
SECTION 1.02 Classification of Loans and Borrowings
    16  
SECTION 1.03 Terms Generally
    16  
SECTION 1.04 Accounting Terms; GAAP
    17  
 
       
ARTICLE II The Credits
    17  
 
       
SECTION 2.01 Revolving Commitments
    17  
SECTION 2.02 Loans and Borrowings
    17  
SECTION 2.03 Requests for Borrowings
    18  
SECTION 2.04 Letters of Credit
    19  
SECTION 2.05 Funding of Borrowings
    23  
SECTION 2.06 Interest Elections
    24  
SECTION 2.07 Termination, Reduction and Increase of Revolving Commitments
    25  
SECTION 2.08 Repayment of Loans; Evidence of Debt
    26  
SECTION 2.09 Prepayment of Loans
    27  
SECTION 2.10 Fees
    28  
SECTION 2.11 Interest
    29  
SECTION 2.12 Alternate Rate of Interest
    30  
SECTION 2.13 Increased Costs
    30  
SECTION 2.14 Break Funding Payments
    31  
SECTION 2.15 Taxes
    32  
SECTION 2.16 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
    33  
SECTION 2.17 Mitigation Obligations; Replacement of Lenders
    34  
SECTION 2.18 Swingline Loans
    35  
SECTION 2.19 Defaulting Lender
    36  
 
       
ARTICLE III Representations and Warranties
    37  
 
       
SECTION 3.01 Organization; Powers
    37  
SECTION 3.02 Authorization; Enforceability
    38  
SECTION 3.03 Governmental Approvals; No Conflicts
    38  
SECTION 3.04 Financial Condition
    38  
SECTION 3.05 Properties
    38  
SECTION 3.06 Litigation and Environmental Matters
    39  
SECTION 3.07 Compliance with Laws and Agreements
    39  
SECTION 3.08 Investment and Holding Company Status
    39  
SECTION 3.09 Taxes
    39  
SECTION 3.10 ERISA
    39  
SECTION 3.11 Disclosure
    40  
SECTION 3.12 Subsidiaries
    40  
SECTION 3.13 Insurance
    40  
SECTION 3.14 Labor Matters
    40  
SECTION 3.15 Solvency
    40  
 
       
ARTICLE IV Conditions
    41  

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TABLE OF CONTENTS

              Page
 
       
SECTION 4.01 Effective Date
    41  
SECTION 4.02 Each Credit Event
    42  
 
       
ARTICLE V Affirmative Covenants
    43  
 
       
SECTION 5.01 Financial Statements and Other Information
    43  
SECTION 5.02 Notices of Material Events
    44  
SECTION 5.03 Information Regarding Borrower
    44  
SECTION 5.04 Existence; Conduct of Business
    44  
SECTION 5.05 Payment of Obligations
    44  
SECTION 5.06 Maintenance of Properties
    45  
SECTION 5.07 Insurance
    45  
SECTION 5.08 Books and Records; Inspection and Audit Rights
    45  
SECTION 5.09 Compliance with Laws
    45  
SECTION 5.10 Use of Proceeds and Letters of Credit
    45  
SECTION 5.11 Further Assurances
    45  
SECTION 5.12 Financial Covenants
    46  
 
       
ARTICLE VI Negative Covenants
    46  
 
       
SECTION 6.01 Indebtedness; Certain Equity Securities
    46  
SECTION 6.02 Liens
    47  
SECTION 6.03 Fundamental Changes
    48  
SECTION 6.04 Investments, Loans, Advances and Guarantees
    48  
SECTION 6.05 Asset Sales
    49  
SECTION 6.06 Sale and Leaseback Transactions
    50  
SECTION 6.07 Swap Agreements
    50  
SECTION 6.08 Restricted Payments
    50  
SECTION 6.09 Transactions with Affiliates
    50  
SECTION 6.10 Restrictive Agreements
    50  
SECTION 6.11 Amendment of Material Documents
    51  
SECTION 6.12 Additional Subsidiaries
    51  
SECTION 6.13 Capital Expenditures
    51  
SECTION 6.14 Acquisitions
    51  
 
       
ARTICLE VII Events of Default
    52  
 
       
ARTICLE VIII The Administrative Agent
    54  
 
       
ARTICLE IX Miscellaneous
    56  
 
       
SECTION 9.01 Notices
    56  
SECTION 9.02 Waivers; Amendments
    57  
SECTION 9.03 Expenses; Indemnity; Damage Waiver
    58  
SECTION 9.04 Successors and Assigns
    59  
SECTION 9.05 Survival
    62  
SECTION 9.06 Counterparts; Integration; Effectiveness
    63  
SECTION 9.07 Severability
    63  

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TABLE OF CONTENTS

              Page
SECTION 9.08 Right of Setoff
    63  
SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process
    63  
SECTION 9.10 WAIVER OF JURY TRIAL
    64  
SECTION 9.11 Headings
    64  
SECTION 9.12 Interest Rate Limitation
    65  
SECTION 9.13 USA Patriot Act
    65  
SECTION 9.14 Confidentiality
    66  
SECTION 9.15 Amendment and Restatement
    66  
SECTION 9.16 Further Assurances
    66  

Schedule 2.01 — Revolving Commitments
Schedule 3.12 — Subsidiaries
Schedule 6.01 — Existing Indebtedness
Schedule 6.02 — Existing Liens
Schedule 6.05 — Properties to be Sold
Schedule 6.09 — Affiliate Transactions
Exhibit A — Assignment and Assumption
Exhibit B — Compliance Certificate
Exhibit C-1 — Revolving Note
Exhibit C-2 — Swingline Note
 iii 

 

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CREDIT AGREEMENT
     CREDIT AGREEMENT (as amended, modified, restated, supplemented and in
effect from time to time, herein called this “Agreement”) dated as of August 31,
2005 (the “Effective Date”), among LUBY’S, INC., a Delaware corporation, the
LENDERS party hereto, WELLS FARGO BANK, NATIONAL ASSOCIATION and AMEGY BANK,
NATIONAL ASSOCIATION, as Documentation Agents, and JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, as Administrative Agent for the Lenders.
ARTICLE I
Definitions
     The parties hereto agree as follows:
     SECTION 1.01 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
     “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.
     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
     “Administrative Agent” means JPMorgan Chase Bank, National Association, in
its capacity as administrative agent for the Lenders hereunder, and its
successors in that capacity.
     “Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
     “Affiliate” means, 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.
     “Alternate Base Rate” means, for any day, a rate per annum equal to the
greatest 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%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
     “Applicable Percentage” means, with respect to any Revolving Lender, the
percentage of the total Revolving Commitments represented by such Lender’s
Revolving Commitment. If the

 

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Revolving Commitments have terminated or expired, the Applicable Percentages
shall be determined based upon the Revolving Commitments most recently in
effect, giving effect to any assignments.
     “Applicable Rate” means, for any day with respect to any ABR Loan or
Eurodollar Loan or with respect to the commitment fees payable hereunder, as the
case may be, the applicable rate per annum set forth below under the caption
“ABR Spread”, “Eurodollar Spread” or “Commitment Fee Rate”, as the case may be,
based upon the Total Leverage Ratio as of the most recent determination date;
but until the end of the first fiscal quarter of fiscal year 2006 the Eurodollar
Spread shall be 1.25%, the ABR Spread shall be 0.00% and the Commitment Fee Rate
shall be 0.25%:

              Total           Commitment Fee Leverage Ratio   ABR Spread  
Eurodollar Spread   Rate
Category 1: greater
than 1.50
  0.25   1.75   0.35               Category 2: greater
than 1.00 but less
than or equal to
1.50   0.00   1.50   0.30               Category 3: greater
than 0.50 but less
than or equal to
1.00   0.00   1.25   0.25               Category 4: less
than or equal to
0.50   0.00   1.00   0.25

For purposes of the foregoing, (i) the Total Leverage Ratio shall be determined
as of the end of each fiscal quarter of the Borrower’s fiscal year based upon
the Borrower’s consolidated financial statements delivered pursuant to
Sections 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting
from a change in the Total Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change; but the
Total Leverage Ratio shall be deemed to be in Category 1 at the request of the
Required Lenders if the Borrower fails to timely deliver the consolidated
financial statements required to be delivered by it pursuant to Sections 5.01(a)
or (b), during the period from the deadline for delivery thereof until such
consolidated financial statements are received.
     “Approved Fund” has the meaning assigned to such term in Section 9.04.
     “Assignment and Assumption” means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

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     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America and any successor entity performing similar functions.
     “Borrower” means Luby’s, Inc., a Delaware corporation.
     “Borrowing” means (a) Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect and (b) a Swingline Loan.
     “Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Houston, Texas are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
     “Capital Expenditures” means, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Borrower and
its consolidated Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of Borrower for such period prepared in accordance with
GAAP and (b) Capital Lease Obligations incurred by the Borrower and its
consolidated Subsidiaries during such period, but excluding expenditures for the
restoration, repair or replacement of any fixed or capital asset which was
destroyed, damaged or condemned, in whole or in part, to the extent financed by
the proceeds of an insurance policy maintained by such Person or the receipt of
any proceeds resulting from such condemnation, as applicable. If the Borrower
acquires (or causes a Subsidiary of Borrower to acquire) a replacement corporate
headquarters within six (6) months of the date of a sale of the Prior Corporate
Headquarters to an unaffiliated third party (whether before or after such sale),
then an amount equal to the lesser of (i) the acquisition costs paid for such
replacement corporate headquarters or (ii) the proceeds realized from the sale
of the Prior Corporate Headquarters, shall be excluded in calculating Capital
Expenditures for any period that includes the date of such acquisition.
     “Capital Lease Obligations” of any Person means 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.
     “Ceiling Rate” means, on any day, the maximum nonusurious rate of interest
permitted for that day by whichever of applicable federal or Texas (or any
jurisdiction whose usury laws are deemed to apply to the Notes or any other Loan
Documents despite the intention and desire of the parties to apply the usury
laws of the State of Texas) laws permits the higher interest rate,

3

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stated as a rate per annum. On each day, if any, that the Texas Finance Code
establishes the Ceiling Rate, the Ceiling Rate shall be the “weekly ceiling” (as
defined in the Texas Finance Code) for that day. Administrative Agent may from
time to time, as to current and future balances, implement any other ceiling
under the Texas Finance Code by notice to the Borrower, if and to the extent
permitted by the Texas Finance Code. Without notice to the Borrower or any other
Person, the Ceiling Rate shall automatically fluctuate upward and downward as
and in the amount by which such maximum nonusurious rate of interest permitted
by applicable law fluctuates.
     “Change in Control” means (a) any “person” or “group” (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable), is or becomes the “beneficial owner” (as that term is used in
Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable), except
that a person shall be deemed to have “beneficial ownership” of all shares that
any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time, directly or indirectly, of more
than 35% of the total voting power in the aggregate of all classes of Equity
Interests then outstanding of the Borrower normally entitled to vote in
elections of directors or (b) occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Borrower by Persons who were
neither (1) nominated by the board of directors of the Borrower nor
(2) appointed by directors so nominated.
     “Change in Law” means (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 the Issuing Bank
(or, for purposes of Section 2.13(b), by any lending office of such Lender or by
such Lender’s or the Issuing Bank’s holding company, if any) with any binding
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.
     “Class”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans or
Swingline Loans.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Contribution Agreement” means that certain Contribution Agreement dated as
of June 4, 2004 by and among Borrower and the current Subsidiaries of Borrower,
as the same may be amended, modified, supplemented and restated—and joined in
pursuant to a joinder agreement—from time to time.
     “Control” means 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 ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
     “Convertible Subordinated Debt Facility” means the Subordinated Debt
evidenced by those two certain Amended and Restated Convertible Subordinated
Promissory Notes, each

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dated June 7, 2004 and in the original principal amount of $5,000,000, executed
by the Borrower payable to the order of Harris J. Pappas and Christopher J.
Pappas, respectively, and all renewals, extensions, modifications and
replacements thereof and substitutions therefor.
     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
     “dollars” or “$” refers to lawful money of the United States of America.
     “EBITDA” means, without duplication, for any period, consolidated income
from continuing operations of the Borrower, consistent with the Borrower’s Forms
10-K and 10-Q, plus depreciation, amortization, other non-cash expenses,
interest expense, taxes, and minus in the case of income or plus in the case of
losses, non-cash income and extraordinary gains or losses and other
non-recurring items of income or expense as approved by the Administrative
Agent; provided that, if the Borrower or any of its Subsidiaries acquires the
Equity Interests or assets of any Person during such period under circumstances
permitted under Section 6.14 hereof, EBITDA shall be adjusted to give pro forma
effect to such acquisition assuming that such transaction had occurred on the
first day of such period.
     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any other Loan Party directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
     “Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, or any warrants, options
or other rights to acquire such interests.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower or any other Loan Party, 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.

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     “ERISA Event” means (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 Borrower or any other Loan Party or any of their
ERISA Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any other Loan Party
or any of their ERISA Affiliates from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by the Borrower or any other
Loan Party or any of their ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any other Loan Party or any of their ERISA Affiliates
of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
other Loan Party or any of their 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.
     “Eurodollar”, 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 Adjusted LIBO Rate.
     “Event of Default” has the meaning assigned to such term in Article VII.
     “Excluded Taxes” means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income 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 branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.17(b)), 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 2.15(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 Borrower with respect to such withholding tax
pursuant to Section 2.15(a).
     “Federal Funds Effective Rate” means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) 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 (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received

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by the Administrative Agent from three Federal funds brokers of recognized
standing selected by the Administrative Agent.
     “Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
     “GAAP” means generally accepted accounting principles in the United States
of America.
     “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor 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 the guarantor, 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 thereof, (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 thereof, (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 or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
     “Guarantors” means each of the present or future Subsidiaries of Borrower.
     “Guaranty” means that certain Guaranty dated as of June 4, 2004 executed by
Guarantors in favor of the Administrative Agent and any and all other guaranties
now or hereafter executed in favor of the Administrative Agent relating to the
Obligations hereunder and the other Loan Documents, as any of them may from time
to time be amended, modified, restated or supplemented.
     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas,

7

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infectious or medical wastes and all other substances or wastes of any nature
regulated pursuant to any Environmental Law.
     “Indebtedness” of any Person means, 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 acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable 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 Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and
(j) all obligations, contingent or otherwise, of such Person in respect of
bankers’ acceptances. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. Notwithstanding the foregoing, (i) contingent obligations
in respect of surety bonds in an aggregate amount equal to or less than
$5,000,000 shall not constitute “Indebtedness” for purposes of this Agreement
and (ii) contingent obligations in respect of standby letters of credit shall
not constitute “Indebtedness” to the extent such obligations are fully cash
collateralized.
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Interest Coverage Ratio” means, as of the last day of any fiscal quarter
of the Borrower, the ratio of (a) EBITDA for the four fiscal quarters ending on
such date to (b) Interest Expense for such four fiscal quarter period,
determined in each case on a consolidated basis for Borrower and its
Subsidiaries.
     “Interest Election Request” means a request by the Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.06.
     “Interest Expense” means, for any period, interest expense of the Borrower
and its Subsidiaries, on a consolidated basis, during such period, determined in
accordance with GAAP, minus, to the extent included in the foregoing, (a) any
amounts representing amortization of the intrinsic net value of the conversion
feature of the Convertible Subordinated Debt Facility, and (b) the unamortized
portion of the intrinsic net value of the conversion feature of the Original
Convertible Subordinated Debt Facility; provided, that if the Borrower or any of
its Subsidiaries acquires the Equity Interests or assets of any Person during
such period under circumstances permitted under Section 6.14 hereof, Interest
Expense shall be adjusted to give pro forma effect to such acquisition assuming
that such transaction had occurred on the first day of such period.

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     “Interest Payment Date” means (a) with respect to any ABR Loan (other than
a Swingline Loan), the last day of each March, June, September and December,
(b) with respect to any Eurodollar 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
Eurodollar Borrowing with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months’ duration after the first day of such Interest Period,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.
     “Interest Period” means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, or, if all of the Lenders shall have consented in writing, nine or
twelve months thereafter, as the Borrower may elect; provided, that (i) 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, and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month 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.
     “Issuing Bank” means JPMorgan Chase Bank, National Association, in its
capacity as the issuer of Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.04(i). The Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of the Issuing Bank, in which case the term “Issuing Bank” shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.
Without limiting the foregoing, as to any particular Letter of Credit, the
Borrower and any Lender may agree that such Lender (or an Affiliate of such
Lender) shall be the “Issuing Bank” and in such event, such Lender shall be
entitled to all of the rights, benefits and privileges of the Issuing Bank under
this Agreement and the other Loan Documents (provided that the address of such
Issuing Bank shall, in lieu of the address set forth in Section 9.1(iii) hereof,
be such address as the Borrower and such Issuing Bank may agree in writing). If
any Letter of Credit is issued by any Person other than JPMorgan Chase Bank,
National Association or its Affiliates, written notice thereof shall be given to
the Administrative Agent designating the applicable Issuing Bank and providing
applicable administrative information.
     “LC Disbursement” means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

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     “Lenders” means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption. Unless the context otherwise requires, the term
“Lenders” includes the Swingline Lender.
     “Letter of Credit” means any letter of credit issued pursuant to this
Agreement.
     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of 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” means, collectively, this Agreement, the Notes, the
Guaranty, the Notice of Entire Agreement, the Contribution Agreement, the
Subordination Agreements, all instruments, certificates and agreements now or
hereafter executed or delivered to the Administrative Agent or any Lender
pursuant to any of the foregoing or in connection with the obligations under
this Agreement and the other Loan Documents, and all amendments, modifications,
renewals, extensions, increases and rearrangements of, and substitutions for,
any of the foregoing.
     “Loan Parties” means the Borrower and each of its Subsidiaries and shall
also include each Guarantor.
     “Loans” means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
     “Management Employment Contracts” means employment contracts entered into
by and between Borrower and Christopher J. Pappas and Harris J. Pappas,
respectively, as the same may be amended, modified, restated, supplemented and
in effect from time to time.

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     “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document or (c) the
rights of or benefits available to the Lenders under any Loan Document.
     “Material Indebtedness” means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Swap Agreements, of
any one or more of the Borrower and any other Loan Party in an aggregate
principal amount exceeding $8,000,000. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations in respect of any Swap
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that would be required to be paid if such Swap Agreement
were terminated at such time.
     “Moody’s” means Moody’s Investors Service, Inc.
     “Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
     “Notes” shall have the meaning assigned to such term in Section 2.02(a)
hereof.
     “Notice of Entire Agreement” means a notice of entire agreement executed by
Borrower each other Loan Party and the Administrative Agent, as the same may
from time to time be amended, modified, supplemented or restated.
     “Obligations” means, as at any date of determination thereof, the sum of
the following: (i) the aggregate principal amount of Loans outstanding
hereunder, plus (ii) the aggregate amount of the LC Exposure, plus (iii) all
other liabilities, obligations and indebtedness under any Loan Document of
Borrower or any other Loan Party, including, but not limited to, amounts
accruing subsequent to the filing of any bankruptcy receivership, insolvency or
like petition, whether or not allowed in connection with such bankruptcy,
receivership, insolvency or like proceeding.
     “Original Convertible Subordinated Debt Facility” means $10,000,000 of
convertible subordinated debt issued by the Borrower to Christopher J. Pappas
and Harris J. Pappas in June, 2001, which subordinated debt was refinanced by
the Convertible Subordinated Debt Facility.
     “Other Taxes” means 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.
     “Participant” has the meaning set forth in Section 9.04.
     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

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     “Permitted Encumbrances” means:
     (a) Liens imposed by law for taxes, assessments, or other governmental
charges or levies that are not yet due or are being contested in compliance with
Section 5.05;
     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.05;
     (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance, old age pensions
or other social security or retirement benefits, or similar legislation or to
secure public or statutory obligations of the Borrower or any of its
Subsidiaries;
     (d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
     (e) judgment liens in respect of judgments that do not constitute an Event
of Default under clause (l) of Article VII;
     (f) rights of set-off of banks or lenders in the ordinary course of banking
arrangements; and
     (g) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or interfere with the ordinary conduct of
business of the Borrower or other Loan Party;
provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.
     “Permitted Investments” means:
     (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, the highest
credit rating obtainable from S&P or from Moody’s;
     (c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed

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with, and money market deposit accounts issued or offered by, any domestic
office of any Lender or any other commercial bank organized under the laws of
the United States of America or any State thereof which 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 described in clause (c) above; and
     (e) money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio
assets of at least $5,000,000,000.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Plan” means 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 Borrower or other Loan
Party or any of their ERISA Affiliates 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.
     “Prime Rate” means, on any day, the prime rate of JPMorgan Chase Bank,
National Association in effect for that day at the principal offices of JPMorgan
Chase Bank, National Association in Houston, Texas. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate or a
favored rate, and Administrative Agent and each Lender disclaims any statement,
representation or warranty to the contrary. Administrative Agent, any Lender or
JPMorgan Chase Bank, National Association may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.
     “Prior Corporate Headquarters” means the property owned by a Subsidiary of
the Borrower located at 2211 Loop 410 Northeast, San Antonio, TX 78217.
     “Register” has the meaning set forth in Section 9.04.
     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.
     “Required Lenders” means Lenders having Revolving Exposures and unused
Revolving Commitments representing at least 66-2/3% of the sum of the total
Revolving Exposures and unused Revolving Commitments at such time.
     “Restricted Payment” means (i) any payment or prepayment of any
Subordinated Debt and (ii) any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the
Borrower or other Loan Party, or any payment (whether in

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cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Equity Interests in the Borrower or other
Loan Party or any option, warrant or other right to acquire any such Equity
Interests in the Borrower or other Loan Party. The term “Restricted Payments” as
used herein shall include management fees paid to any Person owning any Equity
Interests in and to Borrower or any other Loan Party but shall not include
issuances of Equity Interests by the Borrower or the conversion of the
Convertible Subordinated Debt Facility to Equity Interests in the Borrower.
     “Revolving Availability Period” means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.
     “Revolving Commitment” means, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Revolving Exposure
hereunder, as such commitment may be (a) reduced or increased from time to time
pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender’s Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Assumption pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders’ Revolving Commitments is $45,000,000.
     “Revolving Exposure” means, with respect to any Lender at any time, the sum
of the outstanding principal amount of such Lender’s Revolving Loans and its LC
Exposure and Swingline Exposure at such time.
     “Revolving Lender” means a Lender with a Revolving Commitment or, if the
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
     “Revolving Loan” means a Loan made pursuant to Section 2.01.
     “Revolving Maturity Date” means August 31, 2008.
     “S&P” means Standard & Poor’s Ratings Group.
     “Senior Leverage Ratio” means, as of any day, the ratio of (a) Indebtedness
as of such date minus Subordinated Debt to (b) EBITDA for the four fiscal
quarters most recently ended, determined in each case on a consolidated basis
for Borrower and its Subsidiaries.
     “Statutory Reserve Rate” means 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 to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in

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Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
     “Subordination Agreements” means (i) that certain Subordination and
Intercreditor Agreement dated concurrently herewith executed by the holders of
the Indebtedness under the Convertible Subordinated Debt Facility in favor of
the Administrative Agent, (ii) any other subordination agreements now or
hereafter executed in favor the Administrative Agent with respect to any of the
Subordinated Debt, and (iii) all amendments, modifications, renewals,
extensions, increases and rearrangements of, and substitutions for, any of the
foregoing.
     “Subordinated Debt” means all Indebtedness of a Person which has been
subordinated on terms and conditions satisfactory to the Required Lenders, in
their sole discretion, to all of the Obligations, whether now existing or
hereafter incurred. Indebtedness shall not be considered as “Subordinated Debt”
unless and until the Administrative Agent shall have received copies of the
documentation evidencing or relating to such Indebtedness together with a
subordination agreement, in form and substance satisfactory to the Required
Lenders, duly executed by the holder or holders of such Indebtedness and
evidencing the terms and conditions of the required subordination. The term
“Subordinated Debt” shall include all liabilities and obligations under the
Convertible Subordinated Debt Facility.
     “Subordinated Debt Documents” means any indenture or note under which any
Subordinated Debt is issued and all other instruments, agreements and other
documents evidencing or governing any Subordinated Debt or providing for any
Guarantee or other right in respect thereof.
     “Subsidiary” means, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, Controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
     “Swap Agreement” means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former

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directors, officers, employees or consultants of the Borrower or any of its
Subsidiaries shall be a Swap Agreement.
     “Swingline Exposure” means, at any time, the aggregate principal amount of
all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time. The initial maximum amount of Swingline Exposure is
$5,000,000.
     “Swingline Lender” means JPMorgan Chase Bank, National Association, in its
capacity as lender of Swingline Loans hereunder.
     “Swingline Loan” means a Loan made pursuant to Section 2.18.
     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
     “Total Leverage Ratio” means, as of any day, the ratio of (a) Indebtedness
as of such date to (b) EBITDA for the four fiscal quarters most recently ended,
determined in each case on a consolidated basis for Borrower and its
Subsidiaries.
     “Transactions” means (a) the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder and (b) the execution, delivery and performance by each Loan Party of
each other document and instrument required to satisfy the conditions precedent
to the initial Loan hereunder.
     “Type”, when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
     “Withdrawal Liability” means 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 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 “Eurodollar Loan”) or by Class and Type (e.g., a
“Eurodollar Revolving Loan”). Borrowings also may be classified and referred to
by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).
     SECTION 1.03 Terms Generally. The definitions of terms herein shall apply
equally to 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”. The word “will”
shall be construed to have the same meaning and effect as the word

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“shall”. Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
     SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
     SECTION 2.01 Revolving Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower from
time to time during the Revolving Availability Period in an aggregate principal
amount that will not result in such Lender’s Revolving Exposure exceeding such
Lender’s Revolving Commitment. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans. Borrower, Administrative Agent and the Lenders agree
pursuant to Chapter 346 (“Chapter 346”) of the Texas Finance Code, that
Chapter 346 (which relates to open-end line of credit revolving loan accounts)
shall not apply to this Agreement, the Notes or any Revolving Loan and that
neither the Notes nor any Revolving Loan shall be governed by Chapter 346 or
subject to its provisions in any manner whatsoever.
     SECTION 2.02 Loans and Borrowings.
     (a) Each Loan (other than a Swingline Loan) shall be made as part of a
Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Revolving Commitments. The failure
of any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Revolving
Commitments of the Lenders are several and no Lender shall be responsible for
any

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other Lender’s failure to make Loans as required. The Loans made by each Lender
shall be evidenced by a single Note of Borrower (each, together with all
renewals, extensions, modifications and replacements thereof and substitutions
therefor, a “Note,” collectively, the “Notes”) in substantially the forms of
Exhibit C-1 (Revolving Loans) and Exhibit C-2 (Swingline Loans) respectively,
payable to the order of such Lender in a principal amount equal to the
applicable Revolving Commitment of such Lender with respect to Revolving Loans,
and in the principal amount of $5,000,000 with respect to Swingline Loans and
otherwise duly completed. Each Lender is hereby authorized by Borrower to
endorse on the schedule (or a continuation thereof) that may be attached to each
Note of such Lender, to the extent applicable, the date, amount, type of and the
applicable period of interest for each Loan made by such Lender to Borrower
hereunder, and the amount of each payment or prepayment of principal of such
Loan received by such Lender, provided, that any failure by such Lender to make
any such endorsement shall not affect the obligations of Borrower under such
Note or hereunder in respect of such Loan.
     (b) Subject to Section 2.12, each Revolving Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at
its option may make any Eurodollar 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 Borrower to repay such
Loan in accordance with the terms of this Agreement.
     (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount of $200,000 or an
integral multiple of $100,000 in excess thereof. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $200,000 or an integral multiple of $100,000 in
excess thereof; provided that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Revolving
Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.04(e). Each Swingline Loan shall be in
an amount that is an integral multiple of $100,000. Borrowings of more than one
Type and Class may be outstanding at the same time; provided that there shall
not at any time be more than a total of five (5) Eurodollar Borrowings
outstanding.
     (d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date.
     SECTION 2.03 Requests for Borrowings. To request a Revolving Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone
(a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Houston,
Texas time, three Business Days before the date of the proposed Borrowing and
(b) in the case of an ABR Borrowing, not later than 11:00 a.m., Houston, Texas
time, one Business Day before the date of the proposed Borrowing; provided that
any such notice of an ABR Revolving Borrowing to finance the reimbursement of an
LC Disbursement as contemplated by Section 2.04(e) may be given not later than
10:00 a.m., Houston, Texas time, on the date of the proposed Borrowing. Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand

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delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
     (i) whether the requested Borrowing is to be a Revolving Borrowing;
     (ii) the aggregate amount of such Borrowing;
     (iii) the date of such Borrowing, which shall be a Business Day;
     (iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
     (v) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and
     (vi) the location and number of the Borrower’s account to which funds are
to be disbursed, which shall comply with the requirements of Section 2.05.
     If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month’s duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.
     SECTION 2.04 Letters of Credit.
     (a) General. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of Letters of Credit, in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time and
from time to time during the Revolving Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
     (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (at least five 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 the date of issuance, amendment,
renewal or extension (which shall be

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a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this Section), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Borrower also shall submit a
letter of credit application on the Issuing Bank’s standard form in connection
with any request for a 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 Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $10,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.
     (c) Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Revolving Maturity Date.
     (d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
grants to each Revolving Lender, and each Revolving Lender hereby acquires from
the Issuing Bank, a participation in such Letter of Credit equal to such
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.
     (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 2:00 p.m., Houston, Texas time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., Houston, Texas time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 2:00 p.m., Houston, Texas time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to
10:00 a.m., Houston, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with this Agreement that such payment be financed with an
ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the
extent so financed, the Borrower’s obligation to make

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such payment shall be discharged and replaced by the resulting ABR Revolving
Borrowing or Swingline Loan. If the Borrower fails to make such payment when
due, the Administrative Agent shall notify each Revolving Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof. Promptly following
receipt of such notice, each Revolving Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.05 with respect to Loans made by such
Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment
obligations of the Revolving Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the Issuing Bank or, to the extent that
Revolving Lenders have made payments pursuant to this paragraph to reimburse the
Issuing Bank, then to such Lenders and the Issuing Bank as their interests may
appear. Any payment made by a Revolving Lender pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans or Swingline Loan as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.
     (f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section 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 this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the 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, or (iv) 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, or
provide a right of setoff against, the Borrower’s obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such

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determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.
     (g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
     (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Revolving Loans; provided that, if the
Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph
(e) of this Section, then Section 2.11(c) shall apply. Interest accrued pursuant
to this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Revolving Lender
pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be
for the account of such Lender to the extent of such payment.
     (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.10(b). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
     (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with

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LC Exposure representing greater than 66-2/3% of the total LC Exposure)
demanding the deposit of cash collateral pursuant to this paragraph, the
Borrower shall deposit in an account with the Administrative Agent, in the name
of the Administrative Agent and for the benefit of the Lenders, an amount in
cash equal to the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in clauses (h) or
(i) of Article VII. The Borrower also shall deposit cash collateral pursuant to
this paragraph as and to the extent required by Section 2.09(b). Each such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative 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, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrower’s
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Revolving
Lenders with LC Exposure representing greater than 66-2/3% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower 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 Borrower within
three Business Days after all Events of Default have been cured or waived. If
the Borrower is required to provide an amount of cash collateral hereunder
pursuant to Section 2.09(b), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower as and to the extent that, after
giving effect to such return, the Borrower would remain in compliance with
Section 2.09(b) and no Default shall have occurred and be continuing.
     SECTION 2.05 Funding of Borrowings.
     (a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 12:00
noon, Houston, Texas time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders; provided
that Swingline Loans shall be made as provided in Section 2.18. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in Houston, Texas and designated by the
Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans
made to finance the reimbursement of an LC Disbursement as provided in
Section 2.04(e) shall be remitted by the Administrative Agent to the Issuing
Bank.
     (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may

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assume that such Lender has made such share available on such date in accordance
with paragraph (a) of this Section and may, in reliance upon such assumption,
make available to the Borrower a corresponding amount. If a Lender has not in
fact made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing.
     SECTION 2.06 Interest Elections.
     (a) Each Revolving Borrowing initially shall be of the Type specified in
the applicable Borrowing Request and, in the case of a Eurodollar Borrowing,
shall have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower may elect to convert such Borrowing to a different Type
or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
elect Interest Periods therefor, all as provided in this Section. The Borrower
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing. This Section shall
not apply to Swingline Borrowings, which may not be converted or continued.
     (b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
     (c) Each telephonic and written Interest Election Request shall specify the
following information:
     (i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);
     (ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;

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     (iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
     (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.
     If any such Interest Election Request requests a Eurodollar Borrowing but
does not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
     (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.
     (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
     SECTION 2.07 Termination, Reduction and Increase of Revolving Commitments.
     (a) Unless previously terminated, the Revolving Commitments shall terminate
on the Revolving Maturity Date.
     (b) The Borrower may at any time terminate, or from time to time reduce,
the Revolving Commitment; provided that (i) each reduction of the Revolving
Commitments shall be in an amount equal to $1,000,000 or an integral multiple of
$500,000 in excess thereof and (ii) the Borrower shall not terminate or reduce
the Revolving Commitments if, after giving effect to any concurrent prepayment
of the Revolving Loans in accordance with Section 2.09, the sum of the Revolving
Exposures would exceed the total Revolving Commitments.
     (c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Revolving Commitments under paragraph (b) of this
Section, at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Revolving

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Commitments shall be permanent. Each reduction of the Revolving Commitments
shall be made ratably among the Lenders in accordance with their respective
Revolving Commitments.
     (d) At any time prior to the expiration of the Revolving Availability
Period, and so long as no Default or Event of Default shall have occurred which
is continuing, Borrower may elect to increase the aggregate of the Revolving
Commitments to an amount not exceeding $60,000,000 minus any reductions in the
Revolving Commitments pursuant to Section 2.07(b) hereof, provided that
(i) Borrower shall give at least fifteen (15) Business Days’ prior written
notice of such increase to the Administrative Agent and each existing Lender,
(ii) each existing Lender shall have the right (but not the obligation) to
subscribe to its pro rata share of the proposed increase in the Revolving
Commitments by giving written notice of such election to Borrower and the
Administrative Agent within ten (10) Business Days after receipt of a notice
from the Borrower as above described and only if an existing Lender does not
exercise such election may the Borrower elect to add a new Lender, (iii) no
Lender shall be required to increase its Revolving Commitment unless it shall
have expressly agreed to such increase in writing (but otherwise, no notice to
or consent by any Lender shall be required, notwithstanding anything to the
contrary set forth in Section 9.02 hereof), (iv) the addition of new Lenders
shall be subject to the terms and provisions of Section 9.04 hereof as if such
new Lenders were acquiring an interest in the Loans by assignment from an
existing Lenders (to the extent applicable, i.e. required approvals, minimum
amounts and the like), (v) Borrower shall execute and deliver such additional or
replacement Notes and such other documentation (including evidence of proper
authorization) as may be reasonably requested by the Administrative Agent, any
new Lender or any Lender which is increasing its Revolving Commitment, (vi) no
Lender shall have any right to decrease its Revolving Commitment as a result of
such increase of the aggregate amount of the Revolving Commitments, (vii) the
Administrative Agent shall have no obligation to arrange, find or locate any
Lender or new bank or financial institution to participate in any unsubscribed
portion of such increase in the aggregate committed amount of the Revolving
Commitments, and (viii) such option to increase the Revolving Commitments may
only be exercised once. Borrowers shall be required to pay (or to reimburse each
applicable Lender for) any breakage costs incurred by any Lender in connection
with the need to reallocate existing Loans among the Lenders following any
increase in the Revolving Commitments pursuant to this provision. Except as may
otherwise be agreed by Borrower and any applicable Lender, Borrower shall not be
required to pay any upfront or other fees or expenses to any existing Lenders,
new Lenders or the Administrative Agent with respect to any such increase in
Revolving Commitments.
     SECTION 2.08 Repayment of Loans; Evidence of Debt.
     (a) The Borrower hereby unconditionally promises to pay (i) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Loan of such Lender on the Revolving Maturity Date and
(ii) to the Swingline Lender the then unpaid principal amount of each Swingline
Loan on the earlier of the Revolving Maturity Date and the date such Swingline
Loan is required to be repaid pursuant to Section 2.18; provided that on each
date that a Revolving Borrowing is made, the Borrower shall repay all Swingline
Loans then outstanding.

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     (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
     (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and 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 Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.
     (d) The entries made in the accounts maintained pursuant to paragraphs (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein (absent manifest error); provided
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligation of
the Borrower to repay the Loans in accordance with the terms of this Agreement.
     SECTION 2.09 Prepayment of Loans.
     (a) The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to the requirements of this
Section.
     (b) In the event and on such occasion that the sum of the Revolving
Exposures exceeds the total Revolving Commitments, the Borrower shall prepay
Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings are
outstanding, deposit cash collateral in an account with the Administrative Agent
pursuant to Section 2.04(j)) in an aggregate amount equal to such excess.
     (c) Prior to any optional or mandatory prepayment of Borrowings hereunder,
the Borrower shall select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to this
Section.
     (d) The Borrower shall notify the Administrative Agent (and, in the case of
prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Revolving Borrowing, not later than 11:00 a.m., Houston, Texas time,
three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., Houston,
Texas time, on the date of prepayment or (iii) in the case of prepayment of a
Swingline Loan, not later than 12:00 noon, Houston, Texas time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or portion thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment; provided that, if a notice of
optional prepayment is given in connection with a conditional notice of
termination of the Revolving Commitments as contemplated by Section 2.07, then
such notice of prepayment may

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be revoked if such notice of termination is revoked in accordance with
Section 2.07. Promptly following receipt of any such notice (other than a notice
relating solely to Swingline Loans), the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in an amount that would be permitted in the case of an advance of a Borrowing
of the same Type as provided in Section 2.02, except as necessary to apply fully
the required amount of a mandatory prepayment.
     SECTION 2.10 Fees.
     (a) The Borrower agrees to pay to the Administrative Agent for the account
of each Lender a commitment fee, which shall accrue at the Applicable Rate on
the average daily unused amount of the Revolving Commitment of such Lender
during the period from and including the date hereof to but excluding the date
on which such Revolving Commitment terminates. Accrued commitment fees shall be
payable in arrears on the last day of March, June, September and December of
each year and on the date on which the Revolving Commitments terminate,
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day). For purposes of computing such commitment fees, a Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose, except in respect
of the Swingline Lender, whose Revolving Commitment shall be reduced by the
Swingline Exposure for purposes of calculating fees due under this
Section 2.10(a)).
     (b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate used to determine the interest rate aplicable to Eurodollar Revolving Loans
on the average daily amount of such Lender’s LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from
and including the Effective Date to but excluding the later of the date on which
such Lender’s Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure (provided, however, that in no event shall such
participation fees for any single Letter of Credit be less than $500) and
(ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 1/8%
per annum on the average daily amount of the LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from
and including the Effective Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank’s standard fees with respect to
the amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Revolving Commitments terminate and
any such fees accruing after the date on which the Revolving Commitments
terminate shall be payable on demand. Any other fees payable to the Issuing Bank
pursuant to this paragraph shall be payable within 10 days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of
360 days and shall

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be payable for the actual number of days elapsed (including the first day but
excluding the last day).
     (c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
     (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
     SECTION 2.11 Interest.
     (a) The Loans comprising each ABR Borrowing (including each Swingline Loan)
shall bear interest at the lesser of (i) the Alternate Base Rate plus the
Applicable Rate or (ii) the Ceiling Rate.
     (b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the lesser of (i) the Adjusted LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Rate or (ii) the Ceiling Rate.
     (c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to the lesser of (i) the Ceiling Rate or (ii) in the case of
overdue principal of any Loan, 2% plus the rate otherwise applicable to such
Loan as provided in the preceding paragraphs of this Section or in the case of
any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided
in paragraph (a) of this Section.
     (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
     (e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or

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Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
     SECTION 2.12 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
     (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
     (b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing; provided that if the circumstances
giving rise to such notice affect only one Type of Borrowings, then the other
Type of Borrowings shall be permitted.
     SECTION 2.13 Increased Costs.
     (a) If any Change in Law shall:
     (i) 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 (except any such reserve requirement reflected in
the Adjusted LIBO Rate) or the Issuing Bank; or
     (ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar 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 of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.

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     (b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the Issuing Bank’s capital or on the capital of
such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or the Issuing Bank’s policies and the policies
of such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company for any such reduction suffered.
     (c) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraphs (a) or (b) of
this Section shall be delivered to the Borrower, demonstrating in reasonable
detail the calculation of the amounts, and shall be conclusive absent manifest
error. The Borrower shall pay such Lender or the Issuing Bank, as the case may
be, the amount shown as due on any such certificate within 10 days after receipt
thereof.
     (d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s or the Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 90 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive and if
such Lender or the Issuing Bank, as the case may be, notifies the Borrower of
such Change of Law within 90 days after the adoption, enactment or similar act
with respect to such Change of Law, then the 90-day period referred to above
shall be extended to include the period from the effective date of such Change
of Law to the date of such notice.
     SECTION 2.14 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, continue
or prepay any Revolving Loan on the date specified in any notice delivered
pursuant hereto, or (d) the assignment of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto as a result of a request by
the Borrower pursuant to Section 2.17, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. Such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for

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the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such
Loan), over (ii) the amount of interest which would accrue on such principal
amount for such period at the interest rate which such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section, demonstrating in reasonable detail the
calculation of the amounts, shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
     SECTION 2.15 Taxes.
     (a) Any and all payments by or on account of any obligation of the Borrower
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
Borrower shall be required 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, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
     (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
     (c) The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, demonstrating in
reasonable detail the calculation of the amounts, shall be conclusive absent
manifest error.
     (d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower 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.

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     (e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
     SECTION 2.16 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
     (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Sections 2.13,
2.14 or 2.15, or otherwise) prior to the time expressly required hereunder or
under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 2:00 p.m., Houston, Texas time), on the date when
due, in immediately available funds, without set-off, deduction or counterclaim.
Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 712 Main Street,
Houston, Harris County, Texas 77002, except payments to be made directly to the
Issuing Bank or Swingline Lender as expressly provided herein and except that
payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly
to the Persons entitled thereto and payments pursuant to other Loan Documents
shall be made to the Persons specified therein. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
under any Loan Document shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in dollars.
     (b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
     (c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Revolving Loans or participations in LC Disbursements or Swingline Loans,
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Loans and participations in LC Disbursements
and Swingline Loans and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Revolving Loans and
participations in LC

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Disbursements and Swingline Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans and participations in LC Disbursements and
Swingline Loans; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant, other than to the Borrower or any other Loan Party or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
Each Lender agrees that it will not exercise any right of set-off or
counterclaim or otherwise obtain payment in respect of any Obligation owed to it
other than principal of and interest accruing on the Loans and participations in
the LC Disbursements and Swingline Loans, unless all of the outstanding
principal of and accrued interest on the Loans and LC Disbursements have been
paid in full. The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
     (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. If the Borrower has not in fact made such
payment when due, then each of the Lenders or the Issuing Bank, as the case may
be, severally agrees to repay to the Administrative Agent forthwith on demand
the amount so distributed to such Lender or Issuing Bank with interest thereon,
for each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
     (e) If any Lender shall fail to make any payment required to be made by it
pursuant to this Agreement, then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations hereunder until all such unsatisfied obligations are
fully paid.
     SECTION 2.17 Mitigation Obligations; Replacement of Lenders.
     (a) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then such Lender shall use reasonable efforts to

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designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or Affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Sections 2.13 or 2.15, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
     (b) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i)such assignor
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements and Swingline
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (ii) in the case of any such assignment resulting from a claim for
compensation under Section 2.13 or payments required to be made pursuant to
Section 2.15, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
     SECTION 2.18 Swingline Loans.
     (a) Subject to the terms and conditions set forth herein, the Swingline
Lender agrees to make Swingline Loans to the Borrower from time to time during
the Revolving Availability Period, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of
outstanding Swingline Loans exceeding $5,000,000 or (ii) the sum of the total
Revolving Exposures exceeding the total Revolving Commitments; provided that the
Swingline Lender shall not be required to make a Swingline Loan to refinance an
outstanding Swingline Loan and provided further that the Swingline Lender shall
not, without the consent of the Required Lenders, make any Swingline Loan if any
Event of Default exists of which the Swingline Lender has actual knowledge.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Swingline Loans. Each
Swingline Loan must be repaid in full within thirty (30) days.
     (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, Houston, Texas time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any

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such notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.04(e), by remittance to the Issuing Bank) by 3:00 p.m.,
Houston, Texas time, on the requested date of such Swingline Loan.
     (c) The Swingline Lender may by written notice given to the Administrative
Agent not later than 12:00 noon, Houston, Texas time, on any Business Day
require the Revolving Lenders to acquire participations on such Business Day in
all or a portion of the Swingline Loans outstanding. Such notice shall specify
the aggregate amount of Swingline Loans in which Revolving Lenders will
participate. The Administrative Agent will give notice thereof to each Revolving
Lender by 1:00 p.m., Houston, Texas time on such Business Day, specifying in
such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans.
Each Revolving 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 Applicable Percentage of such Swingline
Loan or Loans. Each Revolving Lender acknowledges and agrees that its obligation
to acquire participations in Swingline Loans pursuant to this paragraph is
absolute and unconditional, subject to Swingline Lender’s compliance with the
provisions of Section 2.18(a) hereof, and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Revolving Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Revolving Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and
Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the
Revolving Lenders), and the Administrative Agent shall promptly pay to the
Swingline Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify the Borrower in writing 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 Borrower (or other party on behalf of the Borrower) 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 remitted
by the Administrative Agent to the Swingline Lender and to the Revolving Lenders
that shall have made their payments pursuant to this paragraph, as their
interests may appear, such remittance to be made on the day of receipt if such
payment is received by 2:00 p.m., Houston, Texas time and prior to 10:00 a.m. of
the following Business Day if such payment is received after 2:00 p.m., Houston,
Texas time. The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the Borrower of any default in the payment thereof.
     SECTION 2.19 Defaulting Lender.
     (a) Notwithstanding anything to the contrary contained herein, in the event
any Lender (x) has refused (which refusal constitutes a breach by such Lender of
its obligations under this Agreement) to make available its portion of any Loan
or (y) notifies either the

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Administrative Agent or the Borrower that such Lender does not intend to make
available its portion of any Loan (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement) (each, a “Lender
Default”), all rights and obligations hereunder of such Lender (a “Defaulting
Lender”) as to which a Lender Default is in effect and of the other parties
hereto shall be modified to the extent of the express provisions of this Section
while such Lender Default remains in effect.
     (b) Advances shall be incurred pro rata from Lenders which are not
Defaulting Lenders (the “Non-Defaulting Lenders”) based on their respective
Revolving Commitments) and no Revolving Commitment of any Lender or any pro rata
share of any Loans required to be advanced by any Lender shall be increased as a
result of such Lender Default. Amounts received in respect of principal of any
type of Loans shall be applied to reduce the applicable Loans of each Lender pro
rata based on the aggregate of the outstanding Loans of that type of all Lenders
at the time of such application; provided, that, such amount shall not be
applied to any Loans of a Defaulting Lender at any time when, and to the extent
that, the aggregate amount of Loans of any Non-Defaulting Lender exceeds such
Non-Defaulting Lender’s Revolving Commitment of all Loans then outstanding.
     (c) A Defaulting Lender shall not be entitled to give instructions to the
Administrative Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the other Loan Documents. All amendments,
waivers and other modifications of this Agreement and the other Loan Documents
may be made without regard to a Defaulting Lender and, for purposes of the
definition of “Required Lenders,” a Defaulting Lender shall be deemed not to be
a Lender and not to have Loans outstanding.
     (d) Other than as expressly set forth in this Section, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify the
Administrative Agent) and the other parties hereto shall remain unchanged.
Nothing in this Section shall be deemed to release any Defaulting Lender from
its obligations under this Agreement and the other Loan Documents, shall alter
such obligations, shall operate as a waiver of any default by such Defaulting
Lender hereunder, or shall prejudice any rights which the Borrower, the
Administrative Agent or any Lender may have against any Defaulting Lender as a
result of any default by such Defaulting Lender hereunder.
     (e) In the event a Defaulting Lender retroactively cures to the
satisfaction of the Administrative Agent the breach which caused a Lender to
become a Defaulting Lender, such Defaulting Lender shall no longer be a
Defaulting Lender and shall be treated as a Lender under this Agreement and the
other Loan Documents.
ARTICLE III
Representations and Warranties
     The Borrower represents and warrants to the Lenders that:
     SECTION 3.01 Organization; Powers. Each of the Borrower and the other
applicable Loan Parties is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as

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now conducted and, except where the failure to do so would not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
     SECTION 3.02 Authorization; Enforceability. The Transactions to be entered
into by each Loan Party are within such Loan Party’s powers and have been duly
authorized by all necessary action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document to which
any Loan Party is to be a party, when executed and delivered by such Loan Party,
will constitute, a legal, valid and binding obligation of the Borrower or such
Loan Party (as the case may be), enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
     SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do
not require any material consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any other applicable Loan Party or any order of any
Governmental Authority, (c) will not violate or result in a default under any
material indenture, agreement or other instrument binding upon the Borrower or
any other Loan Party or their assets, or give rise to a right thereunder to
require any payment to be made by the Borrower or any other Loan Party, and
(d) will not result in the creation or imposition of any Lien on any asset of
the Borrower or any other Loan Party, except Liens created under the Loan
Documents.
     SECTION 3.04 Financial Condition. The Borrower has heretofore furnished to
the Lenders Borrower’s consolidated balance sheet and statements of income,
stockholders equity and cash flows (1) as of and for the fiscal year ended
August 25, 2004 and (2) as of and for the fiscal quarter ended May 4, 2005,
certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (2) above. Since August 24, 2004, there has been no
material adverse change in the business, assets, operations or condition,
financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.
After giving effect to the Transactions, none of the Borrower or its
Subsidiaries has, as of the Effective Date, any material contingent liabilities
or unrealized losses except as evidenced by the Loan Documents.
     SECTION 3.05 Properties.
     (a) The Borrower and each other Loan Party has good title to, or valid
leasehold interests in, all its real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.

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     (b) The Borrower and each other Loan Party owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and each other
Loan Party does not infringe upon the rights of any other Person, except for any
such infringements that could not reasonably be expected to result in a Material
Adverse Effect.
     SECTION 3.06 Litigation and Environmental Matters.
     (a) There are no actions, suits or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any other Loan Party (i) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect or (ii) that involve any of the Loan Documents or the
Transactions.
     (b) Except with respect to any other matters that could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any
other Loan Party (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 become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability, (iv) knows of any basis for any Environmental Liability
or (v) has failed to properly dispose of all “hazardous” and “toxic” substances.
No such substances have been released at any site or facility owned or
controlled by the Borrower or any other Loan Party which could result in
liability exceeding $1,000,000 in the aggregate.
     SECTION 3.07 Compliance with Laws and Agreements. The Borrower and each
other Loan Party is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.
     SECTION 3.08 Investment and Holding Company Status. Neither the Borrower
nor any other Loan Party 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.
     SECTION 3.09 Taxes. The Borrower and each other Loan Party has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such other Loan Party, as applicable,
has set aside on its books adequate reserves or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
     SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse

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Effect. The present value of all accumulated benefit obligations under each Plan
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed the fair market value of the assets
of such Plan, and the present value of all accumulated benefit obligations of
all underfunded Plans (based on the assumptions used for purposes of Statement
of Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed the fair market
value of the assets of all such underfunded Plans, in each of such cases so as
to cause a Material Adverse Effect.
     SECTION 3.11 Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which the
Borrower or any other Loan Party is subject, the breach or non-compliance of
which could reasonably be expected to result in a Material Adverse Effect, and
has disclosed to the Lenders all other matters known to any of them, that could
reasonably be expected to result in a Material Adverse Effect. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, taken as a
whole, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Borrower makes no representation or
warranty as to the accuracy of any projections.
     SECTION 3.12 Subsidiaries. As of the date of this Agreement, the Borrower
has no Subsidiaries other than as set forth on Schedule 3.12 hereto. As of the
date of this Agreement, the Borrower owns, directly or indirectly, all of the
outstanding Equity Interests in and to each Subsidiary listed on Schedule 3.12
hereto and such Equity Interests constitute 100% of the issued and outstanding
Equity Interest of each such Subsidiary.
     SECTION 3.13 Insurance. As of the Effective Date, all premiums due in
respect of all insurance maintained by the Borrower and each other Loan Party
have been paid.
     SECTION 3.14 Labor Matters. As of the Effective Date, there are no strikes,
lockouts or slowdowns against the Borrower or any other Loan Party pending or,
to the knowledge of the Borrower, threatened. The hours worked by and payments
made to employees of the Borrower and the other Loan Parties 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, except where any such
violation could not reasonably be expected to have a Material Adverse Effect.
All payments due from the Borrower or any other Loan Party, or for which any
claim may be made against the Borrower or any other Loan Party, 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 Borrower or such other Loan
Party. 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 Borrower or any other Loan Party is
bound.
     SECTION 3.15 Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the

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Effective Date and after giving effect to the application of the proceeds of
such Loans, (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 Effective Date.
ARTICLE IV
Conditions
     SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):
     (a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) counterparts of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed counterparts of this Agreement.
     (b) The Administrative Agent (or its counsel) shall have received from
Borrower an original of each Note signed on behalf of Borrower.
     (c) The Administrative Agent (or its counsel) shall have received from
Borrower and from each other party to the Loan Documents (other than the Notes)
either (i) counterparts of each applicable Loan Document signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of the
applicable Loan Document) that such party has signed counterparts of such Loan
Document.
     (d) The Administrative Agent shall have received written opinions
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of counsel for the Borrower and the other Loan Parties, in form and
substance reasonably satisfactory to the Administrative Agent and its counsel,
covering such other matters relating to the Loan Parties, the Loan Documents or
the Transactions as the Required Lenders shall reasonably request.
     (e) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party,
the authorization of the Transactions and any other legal matters relating to
the Loan Parties, the Loan Documents or the Transactions, all in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.

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     (f) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by an appropriate officer or other responsible party
acceptable to Administrative Agent on behalf of Borrower, confirming compliance
with the conditions set forth in paragraphs (a) and (b) of Section 4.02.
     (g) The Administrative Agent shall have received all fees and other amounts
due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses (including
fees, charges and disbursements of counsel) required to be reimbursed or paid by
any Loan Party hereunder or under any other Loan Document.
     (h) The Administrative Agent and the Lenders shall have received evidence
that the insurance required by Section 5.07 is in effect.
     (i) The Administrative Agent and the Lenders shall have received the
Subordinated Debt Documents relating to the Convertible Subordinated Debt
Facility, together with evidence satisfactory to the Administrative Agent that
the Convertible Subordinated Debt Facility has been fully funded and is in full
force and effect and that no default or event of default exists thereunder (both
before and after giving effect to the initial advance under this Agreement).
     (j) The Administrative Agent and the Lenders shall have received true,
correct and complete copies of the Management Employment Contracts.
     The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
     SECTION 4.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (other than a Borrowing which is merely a
conversion or continuation of existing Loans), and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to receipt of the
request therefor in accordance herewith and to the satisfaction of the following
conditions:
     (a) The representations and warranties of each Loan Party set forth in the
Loan Documents shall be true and correct on and as of the date of such Borrowing
or the date of issuance, amendment, renewal or extension of such Letter of
Credit, as applicable.
     (b) At the time of and immediately after giving effect to such Borrowing or
the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing and there shall
have occurred no event which would be reasonably likely to have a Material
Adverse Effect.
     Each Borrowing (other than a Borrowing which is merely a conversion or
continuation of existing Loans) and each issuance, amendment, renewal or
extension of a Letter of Credit shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.

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ARTICLE V
Affirmative Covenants
     Until the Revolving Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:
     SECTION 5.01 Financial Statements and Other Information. The Borrower will
furnish to the Administrative Agent and each Lender:
     (a) within 90 days after the end of each fiscal year of the Borrower, its
audited consolidated balance sheet and related statements of operations,
shareholders’ equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
     (b) within 45 days after the end of each fiscal quarter (including the last
fiscal quarter) of each fiscal year of the Borrower, its consolidated balance
sheet and related statements of operations, shareholders’ equity and cash flows
as of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
     (c) concurrently with any delivery of financial statements under clauses
(a) or (b) above, a certificate of a Financial Officer of the Borrower, in the
form of Exhibit B hereto, (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections 5.12 and
6.12 and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the Effective Date and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;
     (d) within forty-five (45) days after the commencement of each fiscal year
of the Borrower, 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 such fiscal year and setting
forth the assumptions used for purposes of preparing such budget and including
detailed break-outs for each fiscal month) and, promptly when available, any
significant revisions of such budget;

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     (e) concurrently with any delivery of financial statements under clauses
(a) or (b) above, a management discussion and analysis; and
     (f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any other Loan Party, or compliance with the terms of any Loan
Document, as the Administrative Agent may reasonably request.
     SECTION 5.02 Notices of Material Events. The Borrower will furnish to the
Administrative Agent prompt written notice of the following:
     (a) the occurrence of any Default;
     (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
     (c) any other development that results in, or would reasonably be expected
to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
     SECTION 5.03 Information Regarding Borrower. The Borrower will furnish to
the Administrative Agent prompt written notice of any change (i) in any Loan
Party’s jurisdiction of organization or corporate name, (ii) in the location of
any Loan Party’s chief executive office or its principal place of business,
(iii) in any Loan Party’s identity or corporate structure or (iv) in any Loan
Party’s Federal Taxpayer Identification Number.
     SECTION 5.04 Existence; Conduct of Business. The Borrower will, and will
cause each other Loan Party to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business; provided
that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 or any sale, transfer or disposition
permitted under Section 6.05.
     SECTION 5.05 Payment of Obligations. The Borrower will, and will cause each
other Loan Party to, pay its Indebtedness and other obligations, including
liabilities for Taxes, before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Borrower or such other Loan Party has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP, (c) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest would not reasonably be expected to
result in a Material Adverse Effect.

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     SECTION 5.06 Maintenance of Properties. The Borrower will, and will cause
each other Loan Party to, keep and maintain all property material to the conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
     SECTION 5.07 Insurance. The Borrower will, and will cause each other Loan
Party to, maintain, with financially sound and reputable insurance companies
insurance in such amounts (with no greater risk retention) and against such
risks as are customarily maintained by companies of established repute engaged
in the same or similar businesses operating in the same or similar locations.
Unless required by applicable laws, neither the Borrower nor any Loan Party
shall be required to maintain worker’s compensation insurance so long as the
Borrower or such Loan Party maintains non-subscriber employer’s liability
insurance in such amounts (with no greater risk retention) as are customarily
maintained by companies of established repute engaged in the same or similar
businesses operating in the same or similar locations. The Borrower will furnish
to the Lenders, upon request of the Administrative Agent or any Lender,
information in reasonable detail as to the insurance so maintained. In addition,
upon reasonable request by the Administrative Agent (but, so long as no Event of
Default has occurred which is continuing, not more frequently than once in any
fiscal year), the Borrower will provide to the Administrative Agent a report by
an independent insurance consultant reasonably acceptable to the Administrative
Agent regarding the compliance by the Borrower and the other Loan Parties with
the provisions of this Section.
     SECTION 5.08 Books and Records; Inspection and Audit Rights. The Borrower
will, and will cause each other Loan Party to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each other Loan Party to, permit any representatives designated by
the Administrative Agent or by any Lender, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.
     SECTION 5.09 Compliance with Laws. The Borrower will, and will cause each
other Loan Party to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so would not reasonably be expected to result in a Material
Adverse Effect.
     SECTION 5.10 Use of Proceeds and Letters of Credit. The Letters of Credit
and the proceeds of the Loans will be used only for general working capital
purposes, which may include refinancing existing Indebtedness. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.
     SECTION 5.11 Further Assurances. The Borrower will, and will cause each
other Loan Party to, execute any and all further documents, agreements and
instruments, and take all such

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further actions, which may be required under any applicable law, or which the
Administrative Agent or the Required Lenders may reasonably request, to
effectuate the transactions contemplated by the Loan Documents, all at the
expense of the Loan Parties.
     SECTION 5.12 Financial Covenants. The Borrower will have and maintain:
     (a) Senior Leverage Ratio – a Senior Leverage Ratio of not greater than
2.25 to 1.00 at all times.
     (b) Interest Coverage Ratio – an Interest Coverage Ratio of not less than
(i) 2.50 to 1.00 as of the end of each fiscal quarter occurring during fiscal
year 2005, (ii) 2.75 to 1.00 as of the end of each fiscal quarter occurring
during fiscal year 2006, and (iii) 3.00 to 1.00 as of the end of each fiscal
quarter occurring thereafter.
ARTICLE VI
Negative Covenants
     Until the Revolving Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:
     SECTION 6.01 Indebtedness; Certain Equity Securities.
     (a) The Borrower will not, and will not permit any other Loan Party to,
create, incur, assume or permit to exist any Indebtedness, except:
     (i) Indebtedness created under the Loan Documents;
     (ii) Indebtedness of the Borrower owing to any of its wholly-owned
Subsidiaries and Indebtedness of any of the Borrower’s wholly-owned Subsidiaries
owing to the Borrower or any of its other wholly-owned Subsidiaries;
     (iii) Guarantees by the Borrower or any of Borrower’s wholly-owned
Subsidiaries of Indebtedness of the Borrower or any of its other wholly-owned
Subsidiaries to the extent such Indebtedness is otherwise permitted hereunder;
provided, however, that no such guarantees shall be allowed with respect to the
Indebtedness referred to in Section 6.01(a)(vi);
     (iv) Indebtedness existing on the date of this Agreement and described on
Schedule 6.01 attached hereto;
     (v) “Mark to market” exposure resulting from any Swap Agreement entered
into for protection against interest rate risks, and not for speculative
purposes;
     (vi) Subordinated Debt under the Convertible Subordinated Debt Facility;

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     (vii) (A) pre-existing Indebtedness owing by any Person acquired by the
Borrower or any of its wholly-owned Subsidiaries at the time of such acquisition
(excluding any Indebtedness incurred at the instigation of Borrower or any of
its Subsidiaries in contemplation of such acquisition) which is not assumed by
Borrower or any other Subsidiary of Borrower, (B) purchase money Indebtedness,
and (C) Capital Lease Obligations, in each case, subject to the terms and
provisions of Section 5.12;
     (viii) other indebtedness in an aggregate principal amount not exceeding
$2,000,000 at any one time outstanding; and
     (ix) extensions, renewals and replacements of any of the foregoing that do
not increase the outstanding principal amount thereof.
     (b) The Borrower will not, nor will it permit any other Loan Party to,
issue any preferred stock or other preferred Equity Interests after the
Effective Date, other than preferred stock or preferred Equity Interests issued
by a wholly-owned Subsidiary of the Borrower to the Borrower or to another
wholly-owned Subsidiary of the Borrower pursuant to any merger permitted by
Section 6.03.
     SECTION 6.02 Liens. The Borrower will not, and will not permit any other
Loan Party to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
     (i) Liens created under the Loan Documents;
     (ii) Liens listed on Schedule 6.02 attached hereto and any renewals,
replacements or extensions thereof;
     (iii) Liens created pursuant to Capital Lease Obligations or purchase money
Indebtedness permitted under Section 6.01(a)(vii); provided that such Liens are
only in respect of the property or assets subject to, and secure only, the
respective Capital Lease Obligations or purchase money Indebtedness;
     (iv) any Lien securing Indebtedness permitted under Section 6.01(a)(vii)(A)
hereof existing on any property or asset of the acquired Person; provided that
(x) such Lien is not created in contemplation of or in connection with such
acquisition, (y) such Lien shall not apply to any other property or assets of
the Borrower or any Subsidiary and (z) such Lien shall secure only those
obligations which it secures on the date of such acquisition and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof;
     (v) in addition to and cumulative of the Liens permitted under the other
provisions of this Section, Liens securing Indebtedness not exceeding, in the
aggregate at any one time outstanding, $10,000,000; and
     (vi)Permitted Encumbrances.

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     SECTION 6.03 Fundamental Changes.
     (a) The Borrower will not, nor will it permit any other Loan Party to,
merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or liquidate or dissolve, other than in
connection with acquisitions permitted under Section 6.14 hereof, except that,
so long as no Default or Event of Default exists or would occur after giving
effect thereto any Subsidiary of the Borrower may merge with or into any other
wholly-owned Subsidiary of the Borrower or into the Borrower (except that if the
Borrower is a party to any such merger, the Borrower must be the survivor).
     (b) The Borrower will not, and will not permit any other Loan Party to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and the other Loan Parties on the date of execution of
this Agreement and businesses reasonably related thereto.
     SECTION 6.04 Investments, Loans, Advances and Guarantees. The Borrower will
not, and will not permit any other Loan Party to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a wholly owned
Subsidiary of Borrower prior to such merger) any Equity Interests in or
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, except:
     (a) Permitted Investments;
     (b) loans or advances made by the Borrower to any of the Borrower’s
wholly-owned Subsidiaries and loans or advances made by any of the Borrower’s
wholly-owned Subsidiaries to the Borrower or any of its other wholly-owned
Subsidiaries;
     (c) loans or advances by the Borrower or any of its Subsidiaries to their
respective employees in the ordinary course of business, not to exceed $500,000
in the aggregate at any one time outstanding;
     (d) accounts receivable owned by the Borrower or any of its Subsidiaries,
if created in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;
     (e) Guarantees constituting Indebtedness permitted by Section 6.01;
     (f) creation of additional Subsidiaries in compliance with Section 6.12;

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     (g) trade and customer accounts receivable which are for goods furnished or
services rendered in the ordinary course of business and are payable in
accordance with customary trade terms;
     (h) Capital Expenditures made by the Borrower and its Subsidiaries in
connection with their respective businesses to the extent permitted by
Section 6.13;
     (i) investments under Swap Agreements permitted by Section 6.07;
     (j) acquisitions permitted by Section 6.14;
     (k) acquisition of loans which are fully guaranteed by the Borrower or any
of its Subsidiaries (to the extent such guaranties are permitted under this
Agreement);
     (l) 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; and
     (m) other investments, loans or advances not otherwise permitted by this
Section 6.04 not to exceed $10,000,000 in the aggregate at any one time
outstanding.
     SECTION 6.05 Asset Sales. The Borrower will not, and will not permit any
other Loan Party to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrower permit any of
its Subsidiaries to issue any additional Equity Interest in such Subsidiary,
except:
     (a) sales of inventory, used or surplus equipment and Permitted Investments
in the ordinary course of business;
     (b) sales, transfers and dispositions by the Borrower to any of its
wholly-owned Subsidiaries or by any wholly-owned Subsidiary of the Borrower to
the Borrower or any other wholly-owned Subsidiary of the Borrower;
     (c) sales of the properties set forth on Schedule 6.05 attached hereto; and
     (d) other sales by the Borrower or any of its Subsidiaries (other than the
sale of less than all of the Equity Interests in and to any Subsidiary owned by
Borrower or any of its Subsidiaries) which do not exceed, in any fiscal year,
five percent (5%) of the net book value of the assets of the Borrower (on a
consolidated basis) as of the last day of the immediately preceding fiscal year;
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made to
unaffiliated third parties for fair value and, except for sellers’ notes not
exceeding twenty percent (20%) of the sales price and which constitute
investments permitted under Section 6.04 hereof, solely for cash consideration.

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     SECTION 6.06 Sale and Leaseback Transactions. Except as permitted under the
provisions of Sections 6.05 and 6.14, the Borrower will not, and will not permit
any other Loan Party to, enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereinafter acquired, and thereafter rent
or lease such property or other property that it intends to use for
substantially the same purpose or purposes as the property sold or transferred.
     SECTION 6.07 Swap Agreements. The Borrower will not, and will not permit
any other Loan Party to, enter into any Swap Agreement except as approved
(excluding any pricing terms in connection with any Swap Agreement offered by a
Lender) by Administrative Agent (such approval not to be unreasonably withheld
or delayed).
     SECTION 6.08 Restricted Payments. The Borrower will not, nor will it permit
any other Loan Party to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except (i) the Borrower may declare and pay dividends with
respect to its Equity Interests payable solely in additional shares of its
common stock, (ii) Subsidiaries of Borrower may declare and pay dividends
ratably with respect to their Equity Interests, (iii) the Borrower may declare
and pay such payments or prepayments of Subordinated Debt as may be permitted
under the terms and provisions of any applicable Subordination Agreement and
(iv) other Restricted Payments by the Borrower not to exceed $10,000,000 in the
aggregate from and after the date hereof.
     SECTION 6.09 Transactions with Affiliates. The Borrower will not, nor will
it permit any other Loan Party to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business that are
at prices and on terms and conditions not less favorable to the Borrower or such
other Loan Party than could be obtained on an arm’s-length basis from unrelated
third parties, (b) transactions between or among the Borrower and any Loan Party
not involving any other Affiliate, (c) transactions described on Schedule 6.09
attached hereto, and (d) any Restricted Payment permitted by Section 6.08.
     SECTION 6.10 Restrictive Agreements. The Borrower will not, nor will it
permit any other Loan Party to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any other Loan
Party to create, incur or permit to exist any Lien upon any of its property or
assets, or (b) the ability of any Subsidiary of Borrower to pay dividends or
other distributions with respect to any of its Equity Interests or to make or
repay loans or advances to the Borrower or any other Subsidiary of Borrower or
to Guarantee Indebtedness of the Borrower or any other Subsidiary of Borrower;
provided that the foregoing shall not apply to (x) restrictions and conditions
imposed by law, by any Loan Document or (y) the terms or provisions of any
document or agreement evidencing Indebtedness permitted under
Section 6.01(a)(vii)(B) or (C) hereof which restrict the creation or incurrence
of Liens upon any assets securing such Indebtedness or evidencing Indebtedness
permitted under Section 6.01(a)(vii)(A) hereof which restrict the creation or
incurrence of Liens upon any assets owned by the applicable Subsidiary which is
acquired.

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     SECTION 6.11 Amendment of Material Documents. The Borrower will not, nor
will it permit any other Loan Party to, amend, modify or waive any of its rights
under (a) any Subordinated Debt Document except as permitted pursuant to the
applicable subordination provisions set forth in such Subordinated Debt Document
or as permitted in any related intercreditor agreement, or (b) its
organizational documents in any manner materially adverse to the Lenders.
     SECTION 6.12 Additional Subsidiaries. The Borrower will not, and will not
permit any other Loan Party to, form or acquire any Subsidiary after the
Effective Date except that Borrower or any of its Subsidiaries may form, create
or acquire a Subsidiary so long as (a) immediately thereafter and giving effect
thereto, no event will occur and be continuing which constitutes a Default;
(b) such Subsidiary (and, where applicable, Borrower) shall execute and deliver
a Guaranty (or, at the option of Administrative Agent, a joinder to the Guaranty
executed concurrently herewith), (c) such Subsidiary shall be wholly-owned by
Borrower (directly or indirectly) except as permitted under Section 6.14, and
(d) Administrative Agent is given at least fifteen (15) Business Days’ prior
notice of such formation, creation or acquisition.
     SECTION 6.13 Capital Expenditures. The Borrower will not, and will not
permit any other Loan Party to, permit the aggregate amount of all Capital
Expenditures for Borrower and the other Loan Parties during any fiscal year of
the Borrower to exceed $25,000,000 plus, for the fiscal year 2006 and later,
seventy-five percent (75%) of any unused availability for Capital Expenditures
from the immediately preceding fiscal year (but not from any earlier year).
Acquisitions permitted under the terms and provisions of Section 6.14 hereof
shall not be treated as Capital Expenditures for purposes of this Section.
     SECTION 6.14 Acquisitions. The Borrower will not, and will not permit any
other Loan Party to, enter into any transaction or series of transactions for
the purposes of acquiring all or a substantial portion of the assets, property
and/or Equity Interests in and to any Person other than the acquisition by the
Borrower or any Loan Party of Equity Interests in and to (which may be way of a
merger with and into the Borrower or another Loan Party so long as the Borrower
or the applicable Loan Party is the surviving entity), or all or a substantial
portion of the assets, property and/or operations of, any Person provided that
     (a) the aggregate consideration paid by the Borrower and the other Loan
Parties, in the aggregate from and after the Effective Date, in connection with
such acquisitions shall not exceed $75,000,000;
     (b) the Company may acquire less than 100% of the Equity Interests of a
Person, but in no event less than 80% except as permitted under Section 6.04;
     (c) no Default or Event of Default shall have occurred and be continuing
or, on a pro forma basis, would reasonably be expected to result from such
acquisition;
     (d) such acquisition is of a Person in the restaurant business or a
reasonably-related business (or of assets used the restaurant business or a
reasonably-related business);

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     (e) the Borrower can demonstrate, on a pro forma basis, after giving effect
to such acquisition that the Total Leverage Ratio does not exceed 3.50 to 1.00;
and
     (f) the Borrower shall have delivered (or caused to be delivered) to the
Administrative Agent such other documents as may be reasonably requested by the
Administrative Agent in connection with such acquisition.
ARTICLE VII
Events of Default
     If any of the following events (“Events of Default”) shall occur:
     (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement 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 otherwise;
     (b) the Borrower shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;
     (c) any representation or warranty made or deemed made by or on behalf of
the Borrower or any other Loan Party in or in connection with any Loan Document
or any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document (other than projections)
furnished pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
in any material respect when made or deemed made;
     (d) the Borrower shall fail to observe or perform any covenant, condition
or agreement contained in Sections 5.02, 5.07, 5.10, 5.11 or 5.12 or in
Article VI;
     (e) the Borrower shall fail to observe or perform any covenant, condition
or agreement contained in Section 5.01 and such failure shall continue
unremedied for a period of 10 days.
     (f) any Loan Party shall fail to observe or perform any covenant, condition
or agreement contained in any Loan Document (other than those specified in
clauses (a), (b), (d) or (e) of this Article), and such failure shall continue
unremedied for a period of 30 days after the earlier of (i) the Borrower
becoming aware of such failure and (ii) notice thereof from the Administrative
Agent to the Borrower (which notice will be given at the request of the Required
Lenders);
     (g) the Borrower or any other Loan Party shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable and the
same shall continue beyond all applicable grace periods;

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     (h) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
     (i) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any other Loan Party or their debts, or of a
substantial part of their assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any other Loan Party or for
a substantial part of their assets, and, in any such case, 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;
     (j) the Borrower or any other Loan Party shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (i) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any other Loan Party or for a substantial
part of its assets, (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 or (vi) take any action for the purpose of
effecting any of the foregoing;
     (k) the Borrower or any other Loan Party shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
     (l) one or more judgments for the payment of money in an aggregate amount
in excess of $8,000,000 (exclusive of amounts covered by insurance) shall be
rendered against the Borrower or any other Loan Party 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 attach or levy upon any assets of the Borrower or any other Loan
Party to enforce any such judgment;
     (m) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;
     (n) a Change in Control shall occur;

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then, and in every such event (other than an event with respect to the Borrower
described in clauses (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, with the
consent of the Required Lenders and shall, at the request of the Required
Lenders, by notice to the Borrower, take either or both of the following
actions, at the same or different times: (i) terminate the Revolving
Commitments, and thereupon the Revolving Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with respect to the Borrower described in
clauses (i) or (j) of this Article, the Revolving Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
     Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
     The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any of its Subsidiaries or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
     The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the

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Lenders as shall be necessary under the circumstances as provided in
Section 9.02) or in the absence of its own gross negligence or willful
misconduct, BUT REGARDLESS OF THE PRESENCE OF ORDINARY NEGLIGENCE. The
Administrative Agent shall not be deemed to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
     The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
     The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
     Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may (and, in the
event (i) neither the Administrative Agent nor any Affiliate of the
Administrative Agent, as a Lender, has any Revolving Exposure or unused
Revolving Commitment and (ii) the Required Lenders so request, the
Administrative Agent shall) resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders and the Issuing Bank, appoint a successor
Administrative Agent which shall be a bank with an office in Houston, Texas, or
an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers,

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privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.
     Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent 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 Administrative Agent 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, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
     SECTION 9.01 Notices.
     (a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all
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:
     (i) if to the Borrower, to it at 13111 Northwest Freeway, Suite 600,
Houston, Texas 77040, Attention: Peter Tropoli, General Counsel (Telecopy:
713-329-6800);
     (ii) if to the Administrative Agent, to JPMorgan Chase Bank, National
Association, 712 Main Street, Houston, Texas 77002, Attention: Manager,
Corporate Banking (Telecopy No. 713-216-6710), with a copy to JPMorgan Chase
Bank, National Association, 1111 Fannin, 10th Floor, Houston, Texas 77002,
Attention: Loan and Agency Services;
     (iii) if to the Issuing Bank, to JPMorgan Chase Bank, National Association,
712 Main Street, Houston, Texas 77002, Attention: Manager, Corporate Banking
(Telecopy No. 713-216-6710);
     (iv) if to the Swingline Lender, to JPMorgan Chase Bank, National
Association, 712 Main Street, Houston, Texas 77002, Attention: Manager,
Corporate Banking (Telecopy No. 713-216-6710), with a copy to JPMorgan Chase
Bank, National Association, 1111 Fannin, 10th Floor, Houston, Texas 77002,
Attention: Loan and Agency Services; and

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     (v) if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
     (b) If a notice is delivered by telecopy, it shall be promptly confirmed in
a writing delivered by one of the other available delivery mechanisms provided
above. Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower 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.
     (c) Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. 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.
     SECTION 9.02 Waivers; Amendments.
     (a) No failure or delay by the Administrative Agent, the Issuing Bank or
any Lender in exercising any right or power 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 Issuing Bank 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 any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
     (b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the
Borrower and the Required Lenders or, in the case of any other Loan Document,
pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Revolving Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment (including any mandatory

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prepayment) of the principal amount of any Loan or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or reduce the amount of, waive
or excuse any such payment, or postpone the scheduled date of expiration of any
Revolving Commitment, without the written consent of each Lender affected
thereby, (iv) change Section 2.16(b) or (c) in a manner that would alter the pro
rata sharing of payments required thereby, without the written consent of each
Lender, (v) change any of the provisions of this Section or the definition of
“Required Lenders” or any other provision of any Loan Document specifying the
number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (or each Lender
of such Class, as the case may be), or (vi) change any 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 any Class differently than those
holding Loans of any other Class, without the written consent of Lenders holding
a majority in interest of the outstanding Loans and unused Revolving Commitments
of each affected Class; provided further that (A) no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent or
the Issuing Bank or the Swingline Lender without the prior written consent of
the Administrative Agent or the Issuing Bank or the Swingline Lender, as the
case may be, (B) any waiver, amendment or modification of this Agreement that by
its terms affects the rights or duties under this Agreement of the Revolving
Lenders (but not the Term Lenders) or the Term Lenders (but not the Revolving
Lenders) may be effected by an agreement or agreements in writing entered into
by the Borrower and requisite percentage in interest of the affected Class of
Lenders, and (C) no consent of the Administrative Agent or any Lender shall be
required to release any Lien or security interest on any asset or property of
the Borrower or any of its Subsidiaries in connection with a sale, transfer or
disposition of such asset or property made in compliance with this Agreement.
     SECTION 9.03 Expenses; Indemnity; Damage Waiver.
     (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

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     (b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank
and each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of any Loan
Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property currently or formerly owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or willful
misconduct of such Indemnitee, BUT THE PRESENCE OF ORDINARY NEGLIGENCE SHALL NOT
AFFECT THE AVAILABILITY OF SUCH INDEMNITY.
     (c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent or the Issuing Bank or the Swingline
Lender under paragraphs (a) or (b) of this Section, each Lender severally agrees
to pay to the Administrative Agent or the Issuing Bank or the Swingline Lender,
as the case may be, such Lender’s pro rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent or the Issuing Bank in its capacity
as such. For purposes hereof, a Lender’s “pro rata share” shall be determined
based upon (without duplication) its share of the sum of the total Revolving
Exposures and unused Revolving Commitments at the time.
     (d) To the extent permitted by applicable law, neither the Borrower nor any
other Loan Party shall assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.
     (e) All amounts due under this Section shall be payable not later than
three Business Days after written demand therefor.
     SECTION 9.04 Successors and Assigns.
     (a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may

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not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
     (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Revolving
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
     (A) the Borrower, provided that no consent of the Borrower shall be
required for an assignment to a Lender, an Affiliate of a Lender, an Approved
Fund or, if an Event of Default has occurred and is continuing, any other
assignee; and
     (B) the Administrative Agent; and
     (C) the Issuing Bank and the Swingline Lender.
     (ii) Assignments shall be subject to the following additional conditions:
     (A) except in the case of an assignment to a Lender or an Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning Lender’s
Revolving Commitment or Loans of any Class, the amount of the Revolving
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 and shall not result in the assigning Lender holding Revolving
Commitments and Loans in an aggregate amount which is less than $5,000,000
unless each of the Borrower and the Administrative Agent otherwise consent,
provided that no such consent of the Borrower shall be required if an Event of
Default has occurred and is continuing;
     (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement, provided that this clause shall not be construed to prohibit the
assignment of a proportionate part of all the assigning Lender’s rights and
obligations in respect of one Class of Revolving Commitments or Loans;

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     (C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and
     (D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.
For the purposes of this Section, the term “Approved Fund” has the following
meaning:
     “Approved Fund” means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
     (iii) Subject to acceptance and recording thereof pursuant to paragraph
(b)(iv) of this Section, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the 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
Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section shall be treated for purposes of this Agreement as a sale by such Lender
of a participation in such rights and obligations in accordance with paragraph
(c) of this Section.
     (iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Revolving Commitment of, and principal amount
of the Loans and LC Disbursements 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 Borrower, the Administrative Agent, the Issuing Bank, the
Swingline Lender 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 Borrower, the Issuing Bank, the Swingline Lender
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
     (v) Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

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     (c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Revolving Commitment and the Loans owing to
it); provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent, the Issuing Bank, the Swingline Lender and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to
Section 9.02(b) that affects such Participant. Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(c) as though it were a
Lender.
     (ii) A Participant shall not be entitled to receive any greater payment
under Sections 2.13 or 2.15 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.
     (d) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
     SECTION 9.05 Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank, the Swingline Lender or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty

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at the time any credit is extended hereunder, 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 is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Revolving
Commitments have not expired or terminated. The provisions of Sections 2.13,
2.14, 2.15 and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Letters of
Credit and the Revolving Commitments or the termination of this Agreement or any
provision hereof.
     SECTION 9.06 Counterparts; Integration; Effectiveness. 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. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
     SECTION 9.07 Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
     SECTION 9.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted 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 obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
     SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.
     (a) This Agreement shall be construed in accordance with and governed by
the law of the State of Texas.

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     (b) The Borrower hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of each court of the State of
Texas sitting in Harris County and of the United States District Court of the
Southern District of Texas (Houston Division), and any appellate court from any
thereof, in any action or proceeding arising out of or relating to any Loan
Document, 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
Texas 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 or
any other Loan Document shall affect any right that the Administrative Agent,
the Issuing Bank, the Swingline Lender or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against the Borrower or its properties in the courts of any jurisdiction.
     (c) The Borrower 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 any other Loan Document in any
court referred to in paragraph (b) of this Section. 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.
     (d) 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 or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
     SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). 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 BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
     SECTION 9.11 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 shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

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     SECTION 9.12 Interest Rate Limitation. Borrower and the Lenders intend to
strictly comply with all applicable federal and Texas laws, including applicable
usury laws (or the usury laws of any jurisdiction whose usury laws are deemed to
apply to the Notes or any other Loan Documents despite the intention and desire
of the parties to apply the usury laws of the State of Texas). Accordingly, the
provisions of this Section shall govern and control over every other provision
of this Agreement or any other Loan Document which conflicts or is inconsistent
with this Section, even if such provision declares that it controls. As used in
this Section, the term “interest” includes the aggregate of all charges, fees,
benefits or other compensation which constitute interest under applicable law,
provided that, to the maximum extent permitted by applicable law, (a) any
non-principal payment shall be characterized as an expense or as compensation
for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or
received shall be amortized, prorated, allocated and spread, using the actuarial
method, during the full term of the Notes. In no event shall Borrower or any
other Person be obligated to pay, or any Lender have any right or privilege to
reserve, receive or retain, (a) any interest in excess of the maximum amount of
nonusurious interest permitted under the laws of the State of Texas or the
applicable laws (if any) of the United States or of any other jurisdiction, or
(b) total interest in excess of the amount which such Lender could lawfully have
contracted for, reserved, received, retained or charged had the interest been
calculated for the full term of the Notes at the Ceiling Rate. The daily
interest rates to be used in calculating interest at the Ceiling Rate shall be
determined by dividing the applicable Ceiling Rate per annum by the number of
days in the calendar year for which such calculation is being made. None of the
terms and provisions contained in this Agreement or in any other Loan Document
(including, without limitation, Article VII hereof) which directly or indirectly
relate to interest shall ever be construed without reference to this Section, or
be construed to create a contract to pay for the use, forbearance or detention
of money at any interest rate in excess of the Ceiling Rate. If the term of any
Note is shortened by reason of acceleration or maturity as a result of any
Default or by any other cause, or by reason of any required or permitted
prepayment, and if for that (or any other) reason any Lender at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Ceiling Rate,
then and in any such event all of any such excess interest shall be canceled
automatically as of the date of such acceleration, prepayment or other event
which produces the excess, and, if such excess interest has been paid to such
Lender, it shall be credited pro tanto against the then-outstanding principal
balance of Borrower’s obligations to such Lender, effective as of the date or
dates when the event occurs which causes it to be excess interest, until such
excess is exhausted or all of such principal has been fully paid and satisfied,
whichever occurs first, and any remaining balance of such excess shall be
promptly refunded to its payor.
     SECTION 9.13 USA Patriot Act. Each Lender hereby notifies the Borrower 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 Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act.

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     SECTION 9.14 Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or prospective Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis from a source other
than the Borrower. For the purposes of this Section, “Information” means all
information received from the Borrower relating to the Borrower or its business,
other than any such information that is available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
the Borrower; provided that, in the case of information received from the
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
     SECTION 9.15 Amendment and Restatement. This Agreement amends and restates
in its entirety that certain Credit Agreement dated as of June 7, 2004 by and
among the Borrower, JPMorgan Chase Bank, National Association, as Administrative
Agent, and the other lenders named therein.
     SECTION 9.16 Further Assurances. The Administrative Agent hereby authorizes
the Borrower (or any designees thereof) to file or cause to be filed Uniform
Commercial Code termination statements (without the signature of the
Administrative Agent where permitted by applicable law) and other lien releases
which are delivered to the Borrower (or any designees thereof) and, in any case,
pertaining to any security interests and liens now or previously existing
against the Borrower or any of its Subsidiaries, to effectuate, or reflect of
public record, the release and discharge of all such security interests and
liens. The Administrative Agent further agrees, from and after the Effective
Date, to deliver such other termination statements, releases or documents as the
Borrower may from time to time reasonably request to effectuate, or reflect of
public record, the release and discharge of such security interests, mortgages
and liens. All of the foregoing deliveries shall be at the expense of the
Borrower.

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

            LUBY’S, INC.,
a Delaware corporation
      By:   /s/ Christopher J. Pappas       Christopher J. Pappas,       
President and Chief Executive Officer        Tax ID Number: 74-1335253
                       

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     The undersigned Subsidiaries of the Borrower hereby join in this Agreement
to evidence their consent to execution by Borrower of this Agreement, to confirm
that each Loan Document now or previously executed by the undersigned applies
and shall continue to apply to this Agreement, and to acknowledge that without
such consent and confirmation, Lenders would not execute this Agreement.

            LUBY’S HOLDINGS, INC.,
            a Delaware corporation,
LUBY’S LIMITED PARTNER, INC.,
            a Delaware corporation,
LUBCO, INC.,
            a Delaware corporation,
LUBY’S MANAGEMENT, INC.,
            a Delaware corporation,
LUBY’S BEVCO, INC., and
            a Texas corporation
      By:   /s/ Christopher J. Pappas       Christopher J. Pappas,       
President and Chief Executive Officer       

LUBY’S RESTAURANTS LIMITED
PARTNERSHIP, a Texas limited partnership
      By:   Luby’s Management, Inc.,        a Delaware corporation,
its general partner           

                  By:   /s/ Christopher J. Pappas            Christopher J.
Pappas,            President and Chief Executive Officer   

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            JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, individually and as
Administrative Agent and as Issuing Bank and Swingline Lender       By:   /s/ H.
David Jones     Name:   H. David Jones     Title:   Vice President  

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            WELLS FARGO BANK, NATIONAL ASSOCIATION, individually
and as Documentation Agent
      By:   /s/ Charles W. Randall       Charles W. Randall, Vice President     
     

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            AMEGY BANK, NATIONAL ASSOCIATION
      By:   /s/ William B. Pyle     Name:   William B. Pyle     Title:   Senior
Vice President    

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