Exhibit 10
 
CREDIT AGREEMENT
dated as of June 23, 2008
among
ROWAN COMPANIES, INC.,
as Borrower,
THE LENDERS PARTY HERETO FROM TIME TO TIME
as Lenders
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Administrative Agent, Issuing Lender and Swingline Lender
BAYERISCHE HYPO-UND VEREINSBANK AG,
as Syndication Agent,
and
AMEGY BANK NATIONAL ASSOCIATION,
as Documentation Agent
$155,000,000
 
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Lead Arranger and Sole Bookrunner

 

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TABLE OF CONTENTS

              Page  
ARTICLE I            DEFINITIONS AND ACCOUNTING TERMS
    1  
 
       
Section 1.1 Certain Defined Terms
    1  
Section 1.2 Accounting Terms; Changes in GAAP
    14  
Section 1.3 Classes and Types of Advances
    14  
Section 1.4 Other Interpretive Provisions
    14  
 
       
ARTICLE II            CREDIT FACILITIES
    15  
 
       
Section 2.1 Commitments
    15  
Section 2.2 Evidence of Indebtedness
    16  
Section 2.3 Letters of Credit
    16  
Section 2.4 Swingline Advances
    20  
Section 2.5 Borrowings; Procedures and Limitations
    22  
Section 2.6 Prepayments
    25  
Section 2.7 Repayment
    26  
Section 2.8 Fees
    26  
Section 2.9 Interest
    27  
Section 2.10 Illegality
    27  
Section 2.11 Breakage Costs
    28  
Section 2.12 Increased Costs
    28  
Section 2.13 Payments and Computations
    30  
Section 2.14 Taxes
    31  
Section 2.15 Mitigation Obligations
    33  
 
       
ARTICLE III            CONDITIONS PRECEDENT
    34  
 
       
Section 3.1 Conditions Precedent to Initial Credit Extension
    34  
Section 3.2 Conditions Precedent to Each Credit Extension
    35  
 
       
ARTICLE IV            REPRESENTATIONS AND WARRANTIES
    36  
 
       
Section 4.1 Organization
    36  
Section 4.2 Authorization
    36  
Section 4.3 Enforceability
    36  
Section 4.4 Financial Condition
    36  
Section 4.5 Ownership and Liens
    37  
Section 4.6 True and Complete Disclosure
    37  
Section 4.7 Litigation
    37  
Section 4.8 Compliance with Agreements
    37  

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              Page  
Section 4.9 Pension Plans
    37  
Section 4.10 Environmental Condition
    38  
Section 4.11 Material Subsidiaries
    38  
Section 4.12 Investment Company Act
    38  
Section 4.13 Taxes
    38  
Section 4.14 Permits, Licenses, etc
    39  
Section 4.15 Use of Proceeds
    39  
Section 4.16 Condition of Property; Casualties
    39  
Section 4.17 Insurance
    39  
Section 4.18 Foreign Assets Control Regulations, etc
    39  
 
       
ARTICLE V            AFFIRMATIVE COVENANTS
    40  
 
       
Section 5.1 Organization
    40  
Section 5.2 Reporting
    40  
Section 5.3 Insurance
    43  
Section 5.4 Compliance with Laws
    43  
Section 5.5 Taxes
    43  
Section 5.6 Additional Guarantors
    43  
Section 5.7 Records; Inspection
    44  
Section 5.8 Maintenance of Property
    44  
 
       
ARTICLE VI            NEGATIVE COVENANTS
    44  
 
       
Section 6.1 Debt
    44  
Section 6.2 Liens
    45  
Section 6.3 [Reserved]
    46  
Section 6.4 Acquisitions
    46  
Section 6.5 Agreements Restricting Liens; Negative Pledge
    46  
Section 6.6 Use of Proceeds; Use of Letters of Credit
    46  
Section 6.7 Corporate Actions; Fundamental Changes
    46  
Section 6.8 Sale of Assets
    47  
Section 6.9 Restricted Payments
    47  
Section 6.10 Affiliate Transactions
    47  
Section 6.11 Line of Business
    47  
Section 6.12 Compliance with ERISA
    47  
Section 6.13 Limitation on Accounting Changes or Changes in Fiscal Periods
    48  
Section 6.14 Hedging Arrangements
    48  

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              Page  
Section 6.15 Funded Leverage Ratio
    48  
Section 6.16 Interest Coverage Ratio
    48  
 
       
ARTICLE VII            DEFAULT AND REMEDIES
    48  
 
       
Section 7.1 Events of Default
    48  
Section 7.2 Optional Acceleration of Maturity
    50  
Section 7.3 Automatic Acceleration of Maturity
    50  
Section 7.4 Set-off
    50  
Section 7.5 Remedies Cumulative, No Waiver
    51  
Section 7.6 Application of Payments
    51  
 
       
ARTICLE VIII            THE ADMINISTRATIVE AGENT AND ISSUING LENDERs
    52  
 
       
Section 8.1 Appointment and Authority
    52  
Section 8.2 Rights as a Lender
    52  
Section 8.3 Exculpatory Provisions
    52  
Section 8.4 Reliance by Administrative Agent
    53  
Section 8.5 Delegation of Duties
    53  
Section 8.6 Resignation of Administrative Agent or Issuing Lender
    54  
Section 8.7 Non-Reliance on Administrative Agent and Other Lenders
    54  
Section 8.8 No Other Duties, etc
    54  
 
       
ARTICLE IX            MISCELLANEOUS
    55  
 
       
Section 9.1 Expenses; Indemnity; Damage Waiver
    55  
Section 9.2 Waivers and Amendments
    56  
Section 9.3 Severability
    57  
Section 9.4 Survival of Representations and Obligations
    57  
Section 9.5 Successors and Assigns Generally
    57  
Section 9.6 Lender Assignments and Participations
    58  
Section 9.7 Notices, Etc
    60  
Section 9.8 Confidentiality
    61  
Section 9.9 Business Loans
    61  
Section 9.10 Usury Not Intended
    61  
Section 9.11 Usury Recapture
    62  
Section 9.12 Payments Set Aside
    62  
Section 9.13 Governing Law; Submission to Jurisdiction
    63  
Section 9.14 Execution and Effectiveness
    63  
Section 9.15 Waiver of Jury
    64  

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              Page  
Section 9.16 USA PATRIOT ACT Notice
    64  

         
EXHIBITS:
       
 
       
Exhibit A
  —   Assignment and Assumption
Exhibit B
  —   Compliance Certificate
Exhibit C
  —   Guaranty
Exhibit D
  —   Notice of Borrowing
Exhibit E
  —   Notice of Conversion or Continuance
 
       
SCHEDULES:
       
 
       
Schedule I
  —   Pricing Schedule
Schedule II
  —   Revolving Commitments
Schedule III
  —   Notice Information
Schedule 4.11
  —   Material Subsidiaries
Schedule 6.1
  —   Existing Debt
Schedule 6.2
  —   Existing Liens

iv

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CREDIT AGREEMENT
     This CREDIT AGREEMENT dated as of June 23, 2008 (“Agreement”) is among (a)
Rowan Companies, Inc., a Delaware corporation (“Borrower”), (b) the Lenders (as
defined below), and (c) Wells Fargo Bank, National Association, as Swingline
Lender, an Issuing Lender, and as the Administrative Agent (each as defined
below) for the Lenders.
     The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
     Section 1.1 Certain Defined Terms. As used in this Agreement, the defined
terms set forth in the recitals above shall have the meanings set forth above
and the following terms shall have the following meanings:
     “Acquisition” means the purchase by the Borrower or any of its Subsidiaries
of any business, including the purchase of associated assets or operations or
the Equity Interests of a Person.
     “Additional Lender” shall have the meaning assigned to such term in
Section 2.1(c).
     “Adjusted Base Rate” means, for any day, a fluctuating rate per annum of
interest equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Rate in effect on such day plus 0.5%. Any change in the
Adjusted Base Rate due to a change in the Prime Rate or the Federal Funds Rate
shall be effective on the effective date of such change in the Prime Rate or
Federal Funds Rate.
     “Administrative Agent” means Wells Fargo in its capacity as agent for the
Lenders pursuant to Article VIII and any successor agent pursuant to
Section 8.6.
     “Administrative Questionnaire” means an administrative questionnaire in a
form supplied by the Administrative Agent.
     “Advance” means a Revolving Advance or a Swingline Advance.
     “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.
     “Applicable Margin” means, at any time, with respect to each Type of
Advance, the Letters of Credit and the Commitment Fees, the percentage rate per
annum which is applicable at such time with respect to such Advance, Letter of
Credit or Commitment Fee as set forth in Schedule I.
     “Applicable Percentage” means, with respect to any Lender, (i) the ratio
(expressed as a percentage) of such Lender’s Revolving Commitment at such time
to the aggregate Revolving Commitments of the Lenders at such time or (ii) if
the Revolving Commitments have been terminated or expired, the ratio (expressed
as a percentage) of such Lender’s Revolving Commitment most recently in effect
to the aggregate Revolving Commitments most recently in effect, in each case,
after giving effect to any assignments.
     “Approved Fund” means any Fund 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.

 

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     “Assignee Group” means two or more Eligible Assignees that are Affiliates
of one another or two or more Approved Funds managed by the same investment
advisor.
     “Assignment and Assumption” means an assignment and assumption executed by
a Lender and an Eligible Assignee and accepted by the Administrative Agent and
in substantially the form set forth in Exhibit A.
     “Base Rate Advance” means an Advance which bears interest based upon the
Adjusted Base Rate as provided in Section 2.9(a).
     “Business Day” means any day (a) other than a Saturday, Sunday or other day
on which commercial banks are authorized to close under the Legal Requirements
of, or are in fact closed in, Texas or Colorado and (b) if the applicable
Business Day relates to any Eurodollar Advances, on which dealings are carried
on by commercial banks in the London interbank market.
     “Capital Leases” means, for any Person, any lease of any Property by such
Person as lessee which would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on the balance sheet of such
Person.
     “Cash Collateral Account” means a special cash collateral account pledged
to the Administrative Agent containing cash deposited pursuant to the terms
hereof to be maintained with the Administrative Agent in accordance with
Section 2.3(g).
     “CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, state and local analogs, and all rules and regulations
and requirements thereunder.
     “Change in Control” means the occurrence of any of the following events:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 50% or more of the equity securities of the Borrower entitled to
vote for members of the board of directors or equivalent governing body of the
Borrower on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right), or (b) during any period of 12 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of the
Borrower cease to be composed of individuals (i) who were members of that board
or equivalent governing body on the first day of such period, (ii) whose
election or nomination to that board or equivalent governing body was approved
by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body.
     “Change in Law” means the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the interpretation or application thereof by any Governmental Authority or
(c) the making or issuance of any request, guideline or directive (whether or
not having the force of law) by any Governmental Authority.

 

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     “Class” has the meaning set forth in Section 1.3.
     “Closing Date” means the first date all the conditions precedent in
Section 3.1 are satisfied or waived in accordance with Section 9.2.
     “Code” means the Internal Revenue Code of 1986, and the regulations and
published interpretations thereof.
     “Commitment Fee” means the fees required under Section 2.8(a).
     “Commitment Increase” has the meaning set forth in Section 2.1(c).
     “Commitments” means, as to any Lender, its Revolving Commitment and as to
the Swingline Lender, its Swingline Commitment.
     “Compliance Certificate” means a compliance certificate executed by a
senior financial officer of the Borrower in substantially the same form as
Exhibit B.
     “Contingent Debt” means, with respect to any Person, without duplication,
any contingent liabilities, obligations or indebtedness of such Person (other
than endorsements in the ordinary course of business of negotiable instruments
for deposit or collection), including (a) any obligations or similar
undertakings to guarantee any Indebtedness of any other Person in any manner,
whether direct or indirect, and including any obligation to purchase any such
Debt or any Property constituting security therefor, to advance or provide funds
or other support for the payment or purchase of any such Debt or to maintain
working capital, solvency or other balance sheet condition of such other Person
(including keep well agreements, maintenance agreements, comfort letters or
similar agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, to lease or purchase Property, securities or
services primarily for the purpose of assuring the holder of such Indebtedness,
or otherwise to assure or hold harmless the holder of such Debt against loss in
respect thereof, (b) obligations to indemnify other Persons against liability or
loss, to the extent not arising in the ordinary course of business, and
(c) warranty obligations and other contractually assumed obligations, to the
extent not arising in the ordinary course of business.
     “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.
     “Controlled Group” means all members of a controlled group of corporations
and all businesses (whether or not incorporated) under common control which,
together with the Borrower or any Subsidiary (as applicable), are treated as a
single employer under Section 414 of the Code.
     “Convert”, “Conversion” and “Converted” each refers to a conversion of
Revolving Advances of one Type into a Revolving Advances of another Type
pursuant to Section 2.5(b).
     “Credit Documents” means this Agreement, the Notes, the Letter of Credit
Documents, the Guaranty, the Fee Letter, and each other agreement, instrument,
or document executed at any time in connection with this Agreement.
     “Credit Extension” means an Advance or a Letter of Credit Extension.
     “Credit Parties” means the Borrower and the Guarantors.

 

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     “Debt” means, for any Person, without duplication: (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments upon which interest
payments are customarily made; (c) all obligations of such Person under
conditional sale or other title retention agreements relating to any Properties
purchased by such Person (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary course of
business), (d) all obligations of such Person issued or assumed as the deferred
purchase price of Property or services purchased by such Person (other than
trade debt, accrued compensation, claims, taxes and related obligations incurred
in the ordinary course of business on normal terms) which would appear as
liabilities on a balance sheet of such Person, (e) all obligations of such
Person under take-or-pay or similar arrangements or under commodities
agreements, (f) all Debt of others secured by (or for which the holder of such
Debt has an existing right, contingent or otherwise, to be secured by) any Lien
on, or payable out of the proceeds of production from, Property owed by such
Person, whether or not the obligation secured thereby have been assumed (to the
extent of the fair market value of such Property), (g) all Contingent Debt of
such Person with respect to Debt of another Person, (h) the principal portion of
all obligations of such Person under Capital Leases, (i) all net obligations of
such Person under Hedging Arrangements, (j) the maximum amount of all standby
letters of credit issued or bankers’ acceptances facilities created for the
account of such Person and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (k) all preferred Equity Interests issued by such
Person and which by the terms thereof could be (at the request of the holders
thereof or otherwise) subject to mandatory sinking fund payments, repurchase,
redemption or other acceleration any time during the period ending on the term
of the Agreement, (l) the principal portion of all obligations of such Person
under Synthetic Leases, and (m) the Debt of any partnership or unincorporated
joint venture in which such Person is a general partner or a joint venturer, but
only to the extent to which there is recourse to such Person for the payment of
such Debt.
     “Debtor Relief Laws” means (a) the Bankruptcy Code of the United States,
and (b) all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
     “Default” means (a) an Event of Default or (b) any event or condition which
with notice or lapse of time or both would, unless cured or waived, become an
Event of Default.
     “Dollars” and “$” means lawful money of the United States.
     “Domestic Subsidiary” means, with respect to any Person, any of its
Subsidiaries that is incorporated or organized under the laws of the United
States, any State thereof or the District of Columbia.
     “EBITDA” means, without duplication, for the Borrower and its consolidated
Subsidiaries, the sum of (a) its Net Income for such period plus (b) to the
extent deducted in determining Net Income, Interest Expense, income taxes,
depreciation, amortization and other non-recurring, non-cash charges and other
non-cash extraordinary items for such period minus (c) to the extent included in
determining Net Income, non-recurring gains, and excluding any results of
discontinued operations, in each case determined in accordance with GAAP;
provided that such EBITDA shall be subject to pro forma adjustments for
Acquisitions and Nonordinary Course Asset Sales assuming that such transactions
had occurred on the first day of the determination period, which adjustments
shall be made in accordance with the guidelines for pro forma presentations set
forth by the SEC.
     “Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent, (ii) each

 

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Issuing Lender; and (iii) unless an Event of Default has occurred and is
continuing at the time any assignment is effected in accordance with
Section 9.6, the Borrower (each such approval not to be unreasonably withheld or
delayed); provided, however, that neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee.
     “Environment” or “Environmental” shall have the meanings set forth in 42
U.S.C. 9601(8) (1988).
     “Environmental Claim” means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
     “Environmental Law” means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements,
including common law theories, now or hereafter in effect and relating to, or in
connection with the Environment, health, or safety, including without limitation
CERCLA, relating to (a) pollution, contamination, injury, destruction, loss,
protection, cleanup, reclamation or restoration of the air, surface water,
groundwater, land surface or subsurface strata, or other natural resources;
(b) solid, gaseous or liquid waste generation, treatment, processing, recycling,
reclamation, cleanup, storage, disposal or transportation; (c) exposure to
pollutants, contaminants, hazardous, medical infections, or toxic substances,
materials or wastes; (d) the safety or health of employees; or (e) the
manufacture, processing, handling, transportation, distribution in commerce,
use, storage or disposal of hazardous or toxic substances, materials or wastes.
     “Environmental Permit” means any permit, license, order, approval,
registration or other authorization under Environmental Law.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
     “Equity Interest” means with respect to any Person, any shares, interests,
participation, or other equivalents (however designated) of corporate stock,
membership interests or partnership interests (or any other ownership interests)
of such Person.
     “Eurodollar Advance” means a Revolving Advance that bears interest based
upon the Eurodollar Rate.
     “Eurocurrency Liabilities” has the meaning assigned to that term in
Regulation D of the Federal Reserve Board as in effect from time to time.
     “Eurodollar Rate” means, for the Interest Period for each Eurodollar
Advance comprising the same Revolving Borrowing, the interest rate per annum
(rounded upward to the nearest whole multiple of 1/100 of 1%) equal to (a) the
applicable London interbank offered rate for deposits in Dollars for such
Revolving Borrowing appearing on the applicable Telerate British Bankers
Association Interest Settlement Rate page for Dollars as of 11:00 a.m. (London,
England time) two Business Days prior to the first day of such Interest Period,
and having a maturity equal to such Interest Period, (b) if the rate as
determined under clause (a) is not available at such time for any reason, the
London interbank offered rate for deposits in Dollars appearing on Reuters
Screen FRBD as of 11:00 a.m. (London, England time) two Business Days prior to
the first day of such Interest Period, and having a maturity equal to such
Interest Period), and (c) if the rate as determined under clause (a) or clause
(b) is not available at such time for any

 

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reason, then the rate determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period
in immediately available funds in the approximate amount of the Eurodollar
Advance being made, continued or converted by the Administrative Agent and with
a term equivalent to such Interest Period would be offered by the Administrative
Agent’s London Branch (or other branch or Affiliate of the Administrative Agent)
to major banks in the London or other offshore interbank market for such
currency at their request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
     “Event of Default” has the meaning specified in Section 7.1.
     “Excluded Taxes” means, with respect to any Lender Party or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) taxes imposed on or measured by its net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes),
by the jurisdiction (or any political subdivision thereof) 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 or any
similar tax imposed by any other jurisdiction in which the Borrower is located
and (c) except as provided in the following sentence, in the case of a Foreign
Lender, any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party hereto (or designates a
new Lending Office) or is attributable to such Foreign Lender’s failure or
inability (other than as a result of a Change in Law) to comply with
Section 2.14(d), 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 2.14. Notwithstanding anything to the
contrary contained in this definition, “Excluded Taxes” shall not include any
withholding tax imposed at any time on payments made by or on behalf of a
Foreign Subsidiary to any Lender Party hereunder or under any other Credit
Document, provided that such Lender, the Administrative Agent and such Issuing
Lender shall have complied with Section 2.14(d)(iii).
     “Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
the Administrative Agent (in its individual capacity) on such day on such
transactions as determined by the Administrative Agent.
     “Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any of its successors.
     “Fee Letter” means that certain fee letter dated April 23, 2008 between the
Borrower and Wells Fargo.
     “Financial Statements” means, for any period, the consolidated financial
statements of the Borrower and its consolidated Subsidiaries, including
statements of income and cash flow for such period as well as a balance sheet as
of the end of such period, and accompanying footnotes, all prepared in
accordance with GAAP.

 

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     “Foreign Lender” means, with respect to the Borrower, any Lender that is
organized under the laws of a jurisdiction other than that in which the Borrower
is resident for tax purposes. For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.
     “Foreign Subsidiary” means any Subsidiary of a Person that is not a
Domestic Subsidiary.
     “Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
     “Funded Debt” means all Debt of the Borrower and its consolidated
Subsidiaries of the types described in clauses (a), (b), (c), (d), (f), (g),
(h), (j), (l) and (m) of the definition of “Debt” (but with respect to Debt
described such clauses (f) and (g), only to the extent such Debt relates to the
types of other Debt described in this definition and excluding any intercompany
Debt of the Borrower and its Subsidiaries).
     “Funded Leverage Ratio” means, as of the end of any fiscal quarter, the
ratio (expressed as a percentage) of (a) all Funded Debt to (b) the sum of
(i) all Funded Debt plus (ii) the consolidated Net Worth of the Borrower, each
as of the last day of such fiscal quarter.
     “GAAP” means United States generally accepted accounting principles as in
effect from time to time, applied on a basis consistent with the requirements of
Section 1.2.
     “Governmental Authority” means the government of the United States or any
other nation, or of 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 (including
any supra-national bodies such as the European Union or the European Central
Bank).
     “Guarantors” means any Person that now or hereafter executes a Guaranty or
a joinder or supplement to a Guaranty.
     “Guaranty” means a guaranty substantially in the form of Exhibit C made by
the Material Subsidiaries of the Borrower party thereto from time to time in
favor of the Administrative Agent for the benefit of the Lender Parties.
     “Hazardous Substance” means any substance or material identified as such
pursuant to CERCLA and those regulated under any other Environmental Law,
including without limitation pollutants, contaminants, petroleum, petroleum
products, radionuclides, and radioactive materials.
     “Hazardous Waste” means any substance or material regulated or designated
as such pursuant to any Environmental Law, including without limitation,
pollutants, contaminants, flammable substances and materials, explosives,
radioactive materials, oil, petroleum and petroleum products, chemical liquids
and solids, polychlorinated biphenyls, asbestos, toxic substances, and similar
substances and materials.
     “Hedging Arrangement” means a hedge, call, swap, collar, floor, cap,
option, forward sale or purchase or other contract or similar arrangement
(including any obligations to purchase or sell any commodity or security at a
future date for a specific price) which is entered into to reduce or eliminate
or otherwise protect against the risk of fluctuations in prices or rates,
including interest rates, foreign exchange rates, commodity prices and
securities prices.

 

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     “Increase Date” means the effective date of a Commitment Increase as
provided in Section 2.1(c).
     “Increasing Lender” shall have the meaning assigned to such term in
Section 2.1(c).
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Indemnitees” has the meaning specified in Section 9.1.
     “Interest Expense” means, for any period and with respect to any Person,
total interest expense (net of interest income) whether paid or accrued, all as
determined in conformity with GAAP.
     “Interest Period” means for each Eurodollar Advance comprising part of the
same Revolving Borrowing, the period commencing on the date of such Eurodollar
Advance is made or deemed made and ending on the last day of the period selected
by the Borrower pursuant to the provisions below and Section 2.5, and
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and Section 2.5. The duration of
each such Interest Period shall be one, two, three, or six months, in each case
as the Borrower may select, provided that:
     (a) Interest Periods commencing on the same date for Advances comprising
part of the same Revolving Borrowing shall be of the same duration;
     (b) whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and
     (c) any Interest Period which begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month.
     “Issuing Lender” means Wells Fargo and any other Lender designated in
writing to the Administrative Agent by the Borrower (and consented to by such
Lender) as an issuer of Letters of Credit, each in their respective capacity as
an issuer of Letters of Credit hereunder.
     “Legal Requirement” means any law, statute, ordinance, decree, requirement,
order, judgment, rule, treaty, code, administrative or judicial precedents or
authorities, regulation (or official interpretation of any of the foregoing) of,
and the terms of any license, authorization or permit issued by, and any
agreement with, any Governmental Authority, including, but not limited to,
Regulations T, U and X.
     “Lender Parties” means Lenders, the Issuing Lenders, the Swingline Lender
and the Administrative Agent.
     “Lenders” means the Persons listed on Schedule II 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.

 

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     “Lending Office” means, as to any Lender, the office or offices of such
Lender described as such in such Lender’s Administrative Questionnaire, or such
other office or offices as a Lender may from time to time notify the Borrower
and the Administrative Agent.
     “Letter of Credit” means any standby or commercial letter of credit issued
by an Issuing Lender for the account of the Borrower or any Subsidiary thereof
pursuant to the terms of this Agreement, in such form as may be agreed by the
Borrower and such Issuing Lender.
     “Letter of Credit Application” means the applicable Issuing Lender’s
standard form letter of credit application for standby or commercial letters of
credit which has been executed by the Borrower and accepted by such Issuing
Lender in connection with the issuance of a Letter of Credit.
     “Letter of Credit Documents” means all Letters of Credit, Letter of Credit
Applications and amendments thereof, and agreements, documents, and instruments
entered into in connection therewith or relating thereto.
     “Letter of Credit Extension” means, with respect to any Letter of Credit,
the issuance thereof, extension of the expiry date thereof, or the increase of
the amount thereof.
     “Letter of Credit Exposure” means the aggregate outstanding undrawn amount
of Letters of Credit plus the aggregate unpaid amount of all of the Borrower’s
payment obligations under drawn Letters of Credit.
     “Letter of Credit Obligations” means any obligations of the Borrower under
this Agreement in connection with the Letters of Credit.
     “Lien” means any mortgage, lien, pledge, charge, deed of trust, security
interest, or encumbrance to secure or provide for the payment of any obligation
of any Person, whether arising by contract, operation of law, or otherwise
(including the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease, or other title retention agreement).
     “Majority Lenders” means Lenders holding at least 51% of the sum of the
unutilized Revolving Commitments plus the Outstandings (with the aggregate
amount of each Lender’s risk participation and funded participation in the
Letter of Credit Obligations and Swingline Advances being deemed “held” by such
Lender for purposes of this definition).
     “Material Adverse Change” means a material adverse change (a) in the
condition (financial or otherwise), operations, business, assets or liabilities
of the Borrower and its Subsidiaries, taken as a whole; (b) on the validity or
enforceability of this Agreement, any Note, the Guaranty or any of the other
material Credit Documents or the rights, benefits or remedies of the
Administrative Agent or the Lenders under this Agreement, any Note, the Guaranty
or any of the other material Credit Documents; or (c) on the Borrower’s or any
other Credit Party’s ability to perform its obligations under this Agreement,
any Note, the Guaranty or any other material Credit Document.
     “Material Subsidiary” means, as of a determination date, any Domestic
Subsidiary whose (a) EBITDA for the immediately preceding fiscal quarter as
determined in accordance with GAAP, or (b) book value of total assets as
established in accordance with GAAP, is equal to or greater than 5% of any of
the Borrower’s (i) consolidated EBITDA for the immediately preceding fiscal
quarter as determined in accordance with GAAP or (ii) consolidated book value of
total assets as established in accordance with GAAP, respectively, and in each
case as reflected in the Financial Statements covering such immediately

 

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preceding fiscal quarter and delivered to the Administrative Agent and the
Lenders pursuant to the terms hereof.
     “Maturity Date” means the earlier of (a) June 23, 2011, and (b) the earlier
termination in whole of the Revolving Commitments pursuant to Section 2.1(b) or
Article VII.
     “Maximum Rate” means the maximum nonusurious interest rate under applicable
law.
     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto
which is a nationally recognized statistical rating organization.
     “Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any member of the
Controlled Group is making or accruing an obligation to make contributions.
     “Net Income” means, for any period and with respect to any Person, the net
income for such period for such Person after taxes as determined in accordance
with GAAP, excluding, however, (a) extraordinary items and (b) the cumulative
effect of any change in GAAP.
     “Net Worth” means as of the date of its determination, consolidated
shareholders’ equity of the Borrower and its consolidated Subsidiaries, as
determined in accordance with GAAP.
     “Non-Guarantor Subsidiary” means any Subsidiary that is not Credit Party.
     “Nonordinary Course Asset Sales” means, any sales, conveyances, or other
transfers of Property made by the Borrower or any Subsidiary (a) of any division
of the Borrower or any Subsidiary, (b) of the Equity Interest in a Subsidiary by
the Borrower or any other Subsidiary or (c) of any assets of the Borrower or any
Subsidiary, whether in a transaction or related series of transactions, outside
the ordinary course of business.
     “Notes” means the Revolving Notes and the Swingline Note.
     “Notice of Borrowing” means a notice of borrowing signed by the Borrower in
substantially the same form as Exhibit D or such other form as shall be
reasonably approved by the Administrative Agent.
     “Notice of Continuation or Conversion” means a notice of continuation or
conversion signed by the Borrower in substantially the same form as Exhibit E or
such other form as shall be reasonably approved by the Administrative Agent.
     “Obligations” means all principal, interest, fees, reimbursements,
indemnifications, and other amounts now or hereafter owed by any Credit Party to
any Lender, Swingline Lender, Issuing Lender, or Administrative Agent under this
Agreement and the Credit Documents, including, the Letter of Credit Obligations,
all interest and fees that accrue after the commencement by or against any
Credit Party of any proceeding under any Debtor Relief Laws naming such Person
as the debtor in such proceeding, regardless of whether such interest and fees
are allowed claims in such proceeding, and any increases, extensions, and
rearrangements of any of the foregoing obligations under any amendments,
supplements, and other modifications of the documents and agreements creating
those obligations.
     “Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
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Credit Document or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement or any other Credit Document.
     “Outstandings” means, as of any date of determination, the sum of (a) the
aggregate outstanding amount of all Revolving Advances plus (b) the Letter of
Credit Exposure plus (c) the aggregate outstanding amount of all Swingline
Advances.
     “Overnight Rate” means, for any day, the greater of (i) the Federal Funds
Rate and (ii) an overnight rate determined by the Administrative Agent, the
applicable Issuing Lender, or Swingline Lender, as the case may be, in
accordance with banking industry rules on interbank compensation.
     “Participant” has the meaning assigned to such term in Section 9.6.
     “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
     “Person” means any natural person, partnership, corporation (including a
business trust), joint stock company, trust, limited liability company,
unlimited liability company, limited liability partnership, unincorporated
association, joint venture, or other entity, or Governmental Authority, or any
trustee, receiver, custodian, or similar official.
     “Plan” means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Borrower or any member of the Controlled Group
and covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code.
     “Prime Rate” means the per annum rate of interest established from time to
time by the Administrative Agent at its principal office as its prime rate,
which rate may not be the lowest rate of interest charged by the Administrative
Agent to its customers.
     “Property” of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
     “Register” has the meaning set forth in Section 9.6(b).
     “Regulations T, U, and X” means Regulations T, U, and X of the Federal
Reserve Board, as each is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
     “Related Parties” means, with respect to any Person, such Person’s
Affiliates and the partners, directors, officers, employees and agents of such
Person and of such Person’s Affiliates.
     “Release” shall have the meaning set forth in CERCLA or under any other
Environmental Law.
     “Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA (other than any such event not subject to the provision for 30-day notice
to the PBGC under the regulations issued under such section).
     “Response” shall have the meaning set forth in CERCLA or under any other
Environmental Law.
     “Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer or controller of a Credit
Party.

 

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     “Restricted Payment” means, with respect to any Person, (a) any direct or
indirect dividend or distribution (whether in cash, securities or other
Property) or any direct or indirect payment of any kind or character (whether in
cash, securities or other Property) in consideration for or otherwise in
connection with any retirement, purchase, redemption or other acquisition of any
Equity Interest of such Person, or any options, warrants or rights to purchase
or acquire any such Equity Interest of such Person or (b) principal or interest
payments (in cash, Property or otherwise) on, or redemptions of, subordinated
debt of such Person; provided that the term “Restricted Payment” shall not
include any dividend or distribution payable solely in Equity Interests of such
Person, or warrants, options or other rights to purchase such Equity Interests.
     “Revolving Advance” means an advance by a Lender to the Borrower as a part
of a Revolving Borrowing pursuant to Section 2.1(a) and refers to either a Base
Rate Advance or a Eurodollar Advance.
     “Revolving Borrowing” means a borrowing consisting of simultaneous
Revolving Advances of the same Type made by the Lenders pursuant to
Section 2.1(a) or Converted by each Lender to Revolving Advances of a different
Type pursuant to Section 2.5(b).
     “Revolving Commitment” means, for each Lender, the obligation of such
Lender to advance to Borrower the amount set opposite such Lender’s name on
Schedule II as its Revolving Commitment, or if such Lender has entered into any
Assignment and Assumption, set forth for such Lender as its Revolving Commitment
in the applicable Register, as such amount may be reduced or increased pursuant
to Section 2.1. The initial aggregate amount of the Revolving Commitments on the
Closing Date is $155,000,000.
     “Revolving Note” means a promissory note of the Borrower payable to the
order of a Lender in the amount of such Lender’s Revolving Commitment, in the
form provided by the Administrative Agent and acceptable to the Borrower.
     “Same Day Funds” means immediately available funds.
     “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.
     “S&P” means Standard & Poor’s Ratings Service, a division of The
McGraw-Hill Companies, Inc., or any successor thereof which is a nationally
recognized statistical rating organization.
     “SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
     “Securities Laws” means the Securities Act of 1933, the Securities Exchange
Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing
principles, rules, standards and practices promulgated, approved or incorporated
by the SEC or the Public Company Accounting Oversight Board, as each of the
foregoing may be amended and in effect on any applicable date hereunder.
     “Solvent” means, as to any Person, on the date of any determination (a) the
fair value of the Property of such Person is greater than the total amount of
debts and other liabilities (including without limitation, contingent
liabilities) of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts and other liabilities (including,
without limitation, contingent liabilities) as they become absolute and matured,
(c) such Person is able to realize upon its assets and pay its debts and other
liabilities (including, without limitation, contingent liabilities) as they
mature in the normal course of business, and (d) such Person is not engaged in,
a business or a transaction for which such Person’s Property would constitute
unreasonably small capital.

 

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     “Subsidiary” means, with respect to any Person (the “parent”) at any date,
any other Person 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
Person, a majority of whose outstanding Voting Securities (other than directors’
qualifying shares) shall at any time be owned by such parent or one or more
Subsidiaries of such parent. Unless otherwise specified, all references herein
to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of the Borrower.
     “Swingline Advance” means an advance by the Swingline Lender to the
Borrower pursuant to Section 2.4.
     “Swingline Commitment” means $35,000,000.
     “Swingline Lender” means Wells Fargo.
     “Swingline Note” means the promissory note made by the Borrower payable to
the order of the Swingline Lender in the form provided by the Administrative
Agent and acceptable to the Borrower.
     “Swingline Payment Date” means the last Business Day of each calendar
month.
     “Synthetic Lease” means any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease under GAAP.
     “Taxes” means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
     “Termination Event” means (a) a Reportable Event with respect to a Plan,
(b) except with respect to any Plan of LeTourneau Technologies, Inc., the
withdrawal of the Borrower or any member of the Controlled Group from a Plan
during a plan year in which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section 4041(c)
of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or
(e) any other event or condition which constitutes grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan. Notwithstanding the foregoing, a standard termination of a Plan under
Section 4041(b) of ERISA (including the filing of a notice of intent to
terminate) shall not constitute a Termination Event.
     “Type” has the meaning set forth in Section 1.3.
     “United States” means the United States of America.
     “Voting Securities” means (a) with respect to any corporation, capital
stock of such corporation having general voting power under ordinary
circumstances to elect directors of such corporation (irrespective of whether at
the time stock of any other class or classes shall have or might have special
voting power or rights by reason of the happening of any contingency), (b) with
respect to any partnership, any partnership interest or other ownership interest
having general voting power to elect the general partner or other management of
the partnership or other Person, and (c) with respect to any limited liability
company, membership certificates or interests having general voting power under
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     "Wells Fargo” means Wells Fargo Bank, National Association.
     Section 1.2 Accounting Terms; Changes in GAAP.
     (a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with the most recent Financial
Statements delivered pursuant to Section 5.2.
     (b) Unless otherwise indicated, all Financial Statements of the Borrower,
all calculations for compliance with covenants in this Agreement, all
determinations of the Applicable Margin, and all calculations of any amounts to
be calculated under the definitions in Section 1.1 shall be based upon the
consolidated accounts of the Borrower and its Subsidiaries in accordance with
GAAP.
     Section 1.3 Classes and Types of Advances. Advances are distinguished by
“Class” and “Type”. The “Class”, when used in reference to any Advance, refers
to whether such Advance, or the Advances comprising such Borrowing are Revolving
Advances or Swingline Advances. The “Type” of an Advance refers to the
determination whether such Advance is a Eurodollar Advance or a Base Rate
Advance.
     Section 1.4 Other Interpretive Provisions. With reference to this Agreement
and each other Credit Document, unless otherwise specified herein or in such
other Credit Document:
     (a) 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 “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document 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 or in any other Credit Document), (ii) any reference to any
Person shall be construed to include such Person’s successors and assigns,
(iii) the words “herein,” “hereof” and “hereunder,” and words of similar import
when used in any Credit Document, shall be construed to refer to such Credit
Document in its entirety and not to any particular provision thereof, (iv) all
references in a Credit Document to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Credit Document in which such references appear, (v) any
reference to any law shall include all statutory and regulatory provisions
consolidating, amending, replacing or interpreting such law and any reference to
any law or regulation shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, and (vi) 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.
     (b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”
     (c) Section headings herein and in the other Credit Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Credit Document.

 

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ARTICLE II
CREDIT FACILITIES
     Section 2.1 Commitments.
     (a) Revolving Commitment. Each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Advances to the
Borrower from time to time on any Business Day during the period from the
Closing Date until the Maturity Date; provided that after giving effect to such
Revolving Advances, the Outstandings shall not exceed the aggregate Revolving
Commitments in effect at such time. Within the limits of each Lender’s Revolving
Commitment, the Borrower may from time to time borrow, prepay pursuant to
Section 2.6, and reborrow under this Section 2.1(a).
     (b) Reduction of Revolving Commitments. The Borrower shall have the right,
upon at least three Business Days’ irrevocable notice to the Administrative
Agent, to terminate in whole or reduce ratably in part the unused portion of the
Revolving Commitments; provided that each partial reduction shall be in the
aggregate amount of $10,000,000 and in integral multiples of $1,000,000 in
excess thereof. Any reduction or termination of the Revolving Commitments
pursuant to this Section shall be permanent, with no obligation of the Lenders
to reinstate such Revolving Commitments, and the Commitment Fees shall
thereafter be computed on the basis of the Revolving Commitments, as so reduced.
     (c) Increase in Revolving Commitments.
     (i) At any time prior to the Maturity Date, the Borrower may effectuate up
to three separate increases in the aggregate Revolving Commitments (each such
increase being a “Commitment Increase”), by designating either one or more of
the existing Lenders (each of which, in its sole discretion, may determine
whether and to what degree to participate in such Commitment Increase) or one or
more other banks or other financial institutions (reasonably acceptable to the
Administrative Agent) that at the time agree, in the case of any such bank or
financial institution that is an existing Lender to increase its Revolving
Commitment as such Lender shall so select (an “Increasing Lender”) and, in the
case of any other such bank or financial institution (an “Additional Lender”),
to become a party to this Agreement; provided, however, that (A) each such
Commitment Increase shall be at least $25,000,000, (B) the aggregate amount of
all Commitment Increases shall not exceed $95,000,000, and (C) all Revolving
Commitments and Revolving Advances provided pursuant to a Commitment Increase
shall be available on the same terms as those applicable to the existing
Revolving Commitments and Revolving Advances. The sum of the increases in the
Revolving Commitments of the Increasing Lenders plus the Revolving Commitments
of the Additional Lenders upon giving effect to a Commitment Increase shall not,
in the aggregate, exceed the amount of such Commitment Increase. The Borrower
shall provide prompt notice of any proposed Commitment Increase pursuant to this
clause (c) to the Administrative Agent and the Lenders. This Section 2.1(c)
shall not be construed to create any obligation on any of the Administrative
Agent or any of the Lenders to advance or to commit to advance any credit to the
Borrower or to arrange for any other Person to advance or to commit to advance
any credit to the Borrower.
     (ii) A Commitment Increase shall become effective upon (A) the receipt by
the Administrative Agent of (1) an agreement in form and substance reasonably
satisfactory to the Administrative Agent signed by the Borrower, each Increasing
Lender and each Additional Lender, setting forth the Commitments, if any, of
each such Lender and setting forth the agreement of each Additional Lender to
become a party to this Agreement and to be bound by all the terms and provisions
hereof binding upon each Lender, and (2) such evidence of appropriate
authorization on the part of the Borrower with respect to such Commitment
Increase as the

 

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Administrative Agent may reasonably request, (B) the funding by each Increasing
Lender and Additional Lender of the Revolving Advances to be made by each such
Lender to effect the prepayment requirement set forth in Section 2.6(b)(ii), and
(C) receipt by the Administrative Agent of a certificate of a Responsible
Officer of the Borrower stating that, both before and after giving effect to
such Commitment Increase, no Default has occurred and is continuing, and that
all representations and warranties made by the Borrower in this Agreement are
true and correct in all material respects, unless such representation or
warranty relates to an earlier date which remains true and correct as of such
earlier date.
     (iii) Notwithstanding any provision contained herein to the contrary, from
and after the date of any Commitment Increase, all calculations and payments of
interest on the Revolving Advances shall take into account the actual Revolving
Commitment of each Lender and the principal amount outstanding of each Revolving
Advance made by such Lender during the relevant period of time.
     Section 2.2 Evidence of Indebtedness. The Advances made by each Lender,
including the Swingline Lender, shall be evidenced by one or more accounts or
records maintained by such Lender or the Swingline Lender and by the
Administrative Agent. The accounts or records maintained by the Administrative
Agent, the Lenders and the Swingline Lender shall be conclusive absent manifest
error of the amount of the Advances made by such Lenders or the Swingline Lender
to the Borrower and the interest and payments thereon. Any failure to so record
or any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and records
maintained by any Lender or the Swingline Lender and the accounts and records of
the Administrative Agent in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error. Upon
the request of any Lender to the Borrower made through the Administrative Agent,
the Borrower shall execute and deliver to such Lender or the Swingline Lender
(through the Administrative Agent) a Note which shall evidence such Lender’s
Revolving Advances or Swingline Advances to the Borrower in addition to such
accounts or records. Each Lender may attach schedules to such Note and endorse
thereon the date, Type (if applicable), amount, currency and maturity of its
Revolving Advances or Swingline Advances and payments with respect thereto.
     Section 2.3 Letters of Credit.
     (a) Commitment for Letters of Credit. Subject to the terms and conditions
set forth in this Agreement and in reliance upon the agreements of the other
Lenders set forth in this Section, each Issuing Lender agrees to, from time to
time on any Business Day during the period from the Closing Date until the
Maturity Date, issue, increase or extend the expiration date of, the Letters of
Credit for the account of the Borrower or any Subsidiary thereof.
     (b) Limitations. Notwithstanding the foregoing, no Letter of Credit will be
issued, increased, or extended:
     (i) if such issuance, increase, or extension would cause the Letter of
Credit Exposure to exceed an amount equal to (A) the aggregate Revolving
Commitments in effect at such time minus (B) the Outstandings.
     (ii) unless such Letter of Credit has an expiration date not later than the
earlier of (A) sixty months from the initial issuance of such Letter of Credit
and (B) twenty-four months beyond the Maturity Date;

 

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     (iii) unless such Letter of Credit is a standby or commercial letter of
credit not supporting the repayment of indebtedness for borrowed money of any
Person;
     (iv) unless such Letter of Credit is in form and substance acceptable to
such Issuing Lender in its sole discretion;
     (v) unless the Borrower has delivered to such Issuing Lender a completed
and executed Letter of Credit Application; provided that, if the terms of any
Letter of Credit Application conflicts with the terms of this Agreement, the
terms of this Agreement shall control; and
     (vi) unless such Letter of Credit is (A) governed by the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor to such publication, in case of a
commercial letter of credit and (B) the International Standby Practices 1998
published by the Institute of International Banking Law & Practice (or such
later version thereof as may be in effect at the time of issuance), in case of
standby letter of credit.
     (c) Requesting Letters of Credit. Each Letter of Credit Extension shall be
made pursuant to a Letter of Credit Application, or if applicable, amendments to
such Letter of Credit Applications, given by the Borrower to the Administrative
Agent for the benefit of the applicable Issuing Lender by telecopy or in writing
not later than 2:00 p.m. (Houston, Texas, time) on the third Business Day before
the proposed date of the Letter of Credit Extension. Each Letter of Credit
Application, or if applicable, amendments to such Letter of Credit Applications,
shall be fully completed and shall specify the information required therein.
Each Letter of Credit Application, or if applicable, amendments to such Letter
of Credit Applications, shall be irrevocable and binding on the Borrower.
Subject to the terms and conditions hereof, the applicable Issuing Lender shall
on the date of such Letter of Credit Extension, make such Letter of Credit
Extension to the beneficiary of such Letter of Credit.
     (d) Reimbursements for Letters of Credit; Funding of Participations. Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing
under such Letter of Credit with the accompanying documentation required
thereby, an Issuing Lender shall notify the Administrative Agent thereof. No
later than 2:00 p.m. on the date of any payment to be made by the applicable
Issuing Lender under a Letter of Credit, the Borrower agrees to pay to such
Issuing Lender an amount equal to any amount paid by such Issuing Lender under
or in respect of such Letter of Credit. In the event an Issuing Lender makes a
payment pursuant to a request for draw presented under a Letter of Credit and
such payment is not promptly reimbursed by the Borrower as required herein, such
Issuing Lender shall give notice of such payment to the Administrative Agent. In
such event, the Borrower shall be deemed to have requested a Base Rate Advance
(notwithstanding any minimum size or increment limitations on individual
Advances). Each Lender (including the Lender acting as an Issuing Lender) shall,
upon notice from the Administrative Agent that the Borrower has requested or is
deemed to have requested an Advance pursuant to Section 2.5 and regardless of
whether (A) the conditions in Section 3.2 have been met, (B) such notice
complies with Section 2.5, or (C) a Default exists, make funds available to the
Administrative Agent for the account of such Issuing Lender in an amount equal
to such Lender’s Applicable Percentage of the amount of such Advance not later
than 1:00 p.m. (Houston, Texas, time) on the Business Day specified in such
notice by the Administrative Agent, whereupon (i) each Lender that so makes
funds available shall be deemed to have made a Base Rate Advance under to the
Borrower in such amount. The Administrative Agent shall remit the funds so
received to the applicable Issuing Lender. If any such Lender shall not have so
made such Advance available to the Administrative Agent pursuant to this
Section 2.3, such Lender agrees to pay interest thereon for each day from such
date until the date such amount is paid at the lesser of (A) the Overnight Rate
for such day for the first three days and thereafter

 

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the interest rate applicable to such Base Rate Advances and (B) the Maximum
Rate. The Borrower hereby unconditionally and irrevocably authorizes, empowers,
and directs the Administrative Agent and the Lenders to record and otherwise
treat each payment under a Letter of Credit not immediately reimbursed by the
Borrower as a Revolving Borrowing comprised of Base Rate Advances to the
Borrower. If for any reason any payment pursuant to a request for draw presented
under a Letter of Credit is not refinanced by a Revolving Borrowing in
accordance with this Section 2.3(d), the Issuing Bank shall be deemed to have
requested that each of the applicable Lenders fund its risk participation in the
relevant Letter of Credit Obligations and each such Lender’s payment to the
Administrative Agent for the account of the Issuing Bank pursuant to this
Section 2.3(d) shall be deemed payment in respect of such participation.
     (e) Participations. Upon the date of the issuance or increase of a Letter
of Credit, the applicable Issuing Lender shall be deemed to have sold to each
other Lender and each other Lender shall have been deemed to have purchased from
such Issuing Lender a participation in the related Letter of Credit Obligations
equal to such Lender’s Applicable Percentage at such date and such sale and
purchase shall otherwise be in accordance with the terms of this Agreement. The
applicable Issuing Lender shall promptly notify each such participant Lender by
telex, telephone, or telecopy of each Letter of Credit issued or increased and
the actual dollar amount of such Lender’s participation in such Letter of
Credit. Each Lender’s obligation to purchase participating interests pursuant to
this Section and to reimburse the Issuing Lenders for such Lender’s Applicable
Percentage of any payment under a Letter of Credit by an Issuing Lender not
reimbursed in full by the Borrower shall be absolute and unconditional and shall
not be affected by any circumstance, including (i) any of the circumstances
described in paragraph (f) below, (ii) the occurrence and continuance of a
Default, (iii) an adverse change in the financial condition of the Borrower or
(iv) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing, except for any such circumstance, happening or
event constituting or arising from gross negligence or willful misconduct on the
part of such Issuing Lender.
     (f) Obligations Unconditional. The obligations of the Borrower under this
Agreement in respect of each Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, notwithstanding the following circumstances:
     (i) any lack of validity or enforceability of any Letter of Credit
Documents;
     (ii) any amendment or waiver of or any consent to departure from any Letter
of Credit Document;
     (iii) the existence of any claim, set-off, defense or other right which any
Credit Party may have at any time against any beneficiary or transferee of such
Letter of Credit (or any Persons for whom any such beneficiary or any such
transferee may be acting), any Issuing Lender, any Lender or any other Person,
whether in connection with this Agreement, the transactions contemplated in this
Agreement or in any Letter of Credit Documents or any unrelated transaction;
     (iv) any statement or any other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect to the extent
any Issuing Lender would not be liable therefor pursuant to the following
paragraph (h); or
     (v) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing;

 

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provided, however, that nothing contained in this paragraph (f) shall be deemed
to constitute a waiver of any remedies of the Borrower in connection with the
Letters of Credit, including those specified in Section 2.3(h).
     (g) Cash Collateralization. The Borrower shall deposit into the Cash
Collateral Account in accordance with paragraph (i) below cash in an amount
equal to 103% of the Letter of Credit Exposure of (i) each Letter of Credit
which has an expiration date beyond the Maturity Date, on or prior to the 5th
day prior to the Maturity Date or (ii) all outstanding Letters of Credit, if the
Revolving Commitments are terminated in whole pursuant to Section 2.1(b) or
Article VII, on the date of such termination. If the Borrower has deposited 103%
of the Letter of Credit Exposure into the Cash Collateral Account as of the
Maturity Date and no other Default or Event of Default has occurred and is
continuing, each Lender’s obligation to purchase participating interests
pursuant to this Section and to reimburse an Issuing Lender for such Lender’s
Applicable Percentage of any payment under a Letter of Credit by such Issuing
Lender not reimbursed in full by the Borrower shall be terminated as of the
Maturity Date.
     (h) Liability of Issuing Lenders. The Borrower assumes all risks of the
acts or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its or any Credit Party’s use of such Letter of Credit. Neither an
Issuing Lender nor any of their respective officers or directors shall be liable
or responsible for:
     (i) the use which may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith;
     (ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or
     (iii) any other circumstances whatsoever in making or failing to make
payment under any Letter of Credit (INCLUDING SUCH ISSUING LENDER’S OWN
NEGLIGENCE),
except that the Borrower shall have a claim against an Issuing Lender, and such
Issuing Lender shall be liable to, and shall promptly pay to, the Borrower, to
the extent of any direct, as opposed to consequential, damages suffered by the
Borrower which the Borrower proves were caused by (A) such Issuing Lender’s
willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (B) such Issuing Lender’s willful failure to make lawful payment under
any Letter of Credit after the presentation to it of a draft and certificate
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, an Issuing Lender may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
     (i) Cash Collateral Account.
     (i) If the Borrower is required to deposit funds in the Cash Collateral
Account pursuant to the terms hereof, then the Borrower and the Administrative
Agent shall establish the Cash Collateral Account and the Borrower shall execute
any documents and agreements, including the Administrative Agent’s standard form
assignment of deposit accounts, that the Administrative Agent requests in
connection therewith to establish the Cash Collateral Account and grant the
Administrative Agent a first priority security interest in such account and the
funds therein and giving the Administrative Agent “control” over the Cash
Collateral Account as such term is defined in the applicable Uniform Commercial
Code. The Borrower hereby pledges to the Administrative Agent and grants the
Administrative Agent a security interest in the Cash

 

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Collateral Account, whenever established, all funds held in the Cash Collateral
Account from time to time, and all proceeds thereof as security for the payment
of the Letter of Credit Obligations. Except as provided in Section 2.3(i)(ii)
below, the Borrower shall have no access and no rights of withdrawal from the
Cash Collateral Account.
     (ii) Funds held in the Cash Collateral Accounts shall be held as cash
collateral for obligations with respect to Letters of Credit. Such funds shall
be promptly applied by the Administrative Agent at the request of an Issuing
Lender to any reimbursement or other obligations under the applicable Letters of
Credit that exist or occur. To the extent that any surplus funds are held in the
Cash Collateral Account above the Letter of Credit Exposure during the existence
of an Event of Default the Administrative Agent may (A) hold such surplus funds
in the Cash Collateral Account as cash collateral for the Obligations or
(B) apply such surplus funds to any Obligations in any manner directed by the
Majority Lenders. If no Event of Default exists, the Administrative Agent shall
immediately release to the Borrower at the Borrower’s written request any funds
held in the Cash Collateral Account in excess of 103% of the then existing
Letter of Credit Exposure. The Administrative Agent shall invest the funds in
the Cash Collateral Account in an interest-bearing account or other investment
approved by the Borrower. The Administrative Agent shall exercise reasonable
care in the custody and preservation of any funds held in the Cash Collateral
Account and shall be deemed to have exercised such care if such funds are
accorded treatment substantially equivalent to that which the Administrative
Agent accords its own property or in accordance with the Borrower’s instructions
or as otherwise approved by the Borrower, it being understood that the
Administrative Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any such funds.
     (j) Letters of Credit Issued for Subsidiaries. Notwithstanding that a
Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary of the Borrower, the
Borrower shall be obligated to reimburse each Issuing Lender hereunder for any
and all drawings under such Letter of Credit issued (or deemed issued)
hereunder. The Borrower hereby acknowledges that the issuance of Letters of
Credit for the account of its Subsidiaries inures to the benefit of the
Borrower, and that the Borrower’s business derives substantial benefits from the
businesses of such Subsidiaries.
     Section 2.4 Swingline Advances.
     (a) Commitment. On the terms and conditions set forth in this Agreement,
the Swingline Lender agrees to, from time-to-time on any Business Day from the
Closing Date until the last Business Day occurring before the Maturity Date,
make Swingline Advances to the Borrower in an aggregate principal amount not to
exceed the Swingline Commitment at any time, provided that (i) after giving
effect to such Swingline Advance, the Outstandings shall not exceed the
aggregate Revolving Commitments in effect at such time, (ii) no Swingline
Advance may mature after the Maturity Date, and (iii) no Swingline Advance shall
be made by the Swingline Lender if the conditions set forth in Section 3.2 have
not been met as of the date of such Swingline Advance. The Borrower agrees that
the giving of the applicable Notice of Borrowing and the acceptance by the
Borrower of the proceeds of such Swingline Advance shall constitute a
representation and warranty by the Borrower that on the date of such Swingline
Advance the conditions set forth in Section 3.2 have been met. Immediately upon
the making of a Swingline Advance, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Swingline Lender a
risk participation in such Swingline Advance in an amount equal to its
Applicable Percentage of such Swingline Advance.

 

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     (b) Evidence of Indebtedness. The indebtedness of the Borrower to the
Swingline Lender resulting from Swingline Advances shall be evidenced as set
forth in Section 2.2.
     (c) Prepayment. Within the limits expressed in this Agreement, amounts
advanced pursuant to Section 2.4(a) may from time to time be borrowed, prepaid
without penalty, and reborrowed. If the amount of aggregate outstanding amount
of Swingline Advances ever exceeds the Swingline Commitment, the Borrower shall,
upon receipt of written notice of such condition from the Swingline Lender and
to the extent of such excess, prepay to the Swingline Lender outstanding
principal of the Swingline Commitment such that such excess is eliminated.
     (d) Refinancing of Swingline Advances.
     (i) The Swingline Lender at any time in its sole and absolute discretion
may request, on behalf of the Borrower (which hereby irrevocably authorizes the
Swingline Lender to so request on its behalf), that each Lender make a Base Rate
Advance in an amount equal to such Lender’s Applicable Percentage of the amount
of Swingline Advances then outstanding. Such request shall be made in writing
(which written request shall be deemed to be a Notice of Borrowing for purposes
hereof), without regard to the minimum and multiples specified in Section 2.5(c)
for the principal amount of Revolving Borrowings but subject to the unutilized
portion of the Revolving Commitments and the conditions set forth in
Section 3.2. The Swingline Lender shall furnish the Borrower with a copy of the
applicable Notice of Borrowing promptly after delivering such notice to the
Administrative Agent. Regardless of whether the request for such Base Rate
Advance complies with Section 2.5, each Lender shall make an amount equal to its
Applicable Percentage of the amount specified in such Notice of Borrowing
available to the Administrative Agent in Same Day Funds for the account of the
Swingline Lender at the Administrative Agent’s Lending Office not later than
1:00 p.m. (Houston, Texas, time) on the day specified in such Notice of
Borrowing, whereupon, subject to Section 2.4(d)(iii), each Lender that so makes
funds available shall be deemed to have made a Base Rate Advance to the Borrower
in such amount. The Administrative Agent shall remit the funds so received to
the Swingline Lender.
     (ii) If for any reason any Swingline Advance cannot be refinanced by such a
Revolving Borrowing in accordance with Section 2.4(d)(i), the applicable Notice
of Borrowing submitted by the Swingline Lender as set forth herein shall be
deemed to be a request by the Swingline Lender that each of the applicable
Lenders fund its risk participation in the relevant Swingline Advances and each
such Lender’s payment to the Administrative Agent for the account of the
Swingline Lender pursuant to Section 2.4(d)(i) shall be deemed payment in
respect of such participation.
     (iii) If any Lender fails to make available to the Administrative Agent for
the account of the Swingline Lender any amount required to be paid by such
Lender pursuant to the foregoing provisions of this Section 2.4(d) by the time
specified in Section 2.4(d)(i), the Swingline Lender shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand,
such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the
Swingline Lender at a rate per annum equal to the applicable Overnight Rate from
time to time in effect. A certificate of the Swingline Lender submitted to any
Lender (through the Administrative Agent) with respect to any amounts owing
under this clause (iii) shall be conclusive absent manifest error.
     (iv) Each Lender’s obligation to make Advances or to purchase and fund risk
participations in Swingline Advances pursuant to this Section 2.4(d) shall be
absolute and

 

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unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may
have against any Swingline Lender, the Borrower, or any other Person for any
reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any
other occurrence, event or condition, whether or not similar to any of the
foregoing; provided, however, that each Lender’s obligation to make Advances
pursuant to Section 2.4(d)(i) is subject to the conditions set forth in
Section 3.2. No such funding of risk participations shall relieve or otherwise
impair the obligation of the Borrower to repay the Swingline Advances, together
with interest as provided herein.
     (e) Repayment of Participations.
     (i) At any time after any Lender has purchased and funded a risk
participation in a Swingline Advance, if the Swingline Lender receives any
payment on account of such Swingline Advance, the Swingline Lender will
distribute to such Lender its Applicable Percentage of such payment
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender’s risk participation was funded) in the same
funds as those received by the Swingline Lender.
     (ii) If any payment received by the Swingline Lender in respect of
principal or interest on any Swingline Advance is required to be returned by the
Swingline Lender under any of the circumstances described in Section 9.12
(including pursuant to any settlement entered into by the Swingline Lender in
its discretion), each Lender shall pay to the Swingline Lender its Applicable
Percentage thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned, at a rate per
annum equal to the applicable Overnight Rate. The Administrative Agent will make
such demand upon the request of the Swingline Lender. The obligations of the
Lenders under this clause shall survive the payment in full of the Obligations
and the termination of this Agreement.
     (f) Interest for Account of Swingline Lender. The Swingline Lender shall be
responsible for invoicing the Borrower for interest on the Swingline Advances.
Until each Lender funds its Advances or risk participation pursuant to this
Section to refinance such Lender’s Applicable Percentage of the applicable
Swingline Advances, interest in respect of such Applicable Percentage shall be
solely for the account of the Swingline Lender.
     (g) Payments Directly to Swingline Lender. The Borrower shall make all
payments of principal and interest in respect of the Swingline Advances directly
to the Swingline Lender.
     (h) Method of Borrowing. Except as provided in the clause (c) above, each
request for a Swingline Advance shall be made pursuant to telephone notice to
the Swingline Lender given no later than 1:00 p.m. (Houston, Texas time) on the
date of the proposed Swingline Advance, promptly confirmed by a completed and
executed Notice of Borrowing facsimiled to the Administrative Agent and the
Swingline Lender. The Swingline Lender will promptly make such Swingline Advance
available to the Borrower at the Borrower’s account with the Administrative
Agent.
     Section 2.5 Borrowings; Procedures and Limitations.
     (a) Notice of Borrowings. Each Revolving Borrowing shall be made pursuant
to a Notice of Borrowing and given by the Borrower to the Administrative Agent
not later than 12:00 p.m. (Houston, Texas time) on the third Business Day before
the date of the proposed Revolving Borrowing in the case of a Eurodollar
Advance, and by the Borrower to the Administrative Agent not later than
12:00 p.m. (Houston, Texas time) one Business Day before the date of the
proposed Revolving Borrowing in the case

 

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of a Base Rate Advance. The Administrative Agent shall give each applicable
Lender prompt notice on the day of receipt of timely Notice of Borrowing of such
proposed Revolving Borrowing by facsimile. Each Notice of Borrowing shall be by
facsimile specifying the (i) requested date of such Revolving Borrowing (which
shall be a Business Day), (ii) requested Type of Advances comprising such
Revolving Borrowing, (iii) aggregate amount of such Revolving Borrowing, and
(iv) if such Revolving Borrowing is to be comprised of Eurodollar Advances, the
Interest Period for such Advances. In the case of a proposed Revolving Borrowing
comprised of Eurodollar Advances, the Administrative Agent shall promptly notify
each applicable Lender of the applicable interest rate under Section 2.9, as
applicable. Each Lender shall before 11:00 a.m. (Houston, Texas time) on the
date of the proposed Revolving Borrowing, make available for the account of its
Lending Office to the Administrative Agent at its address referred to in
Section 9.7, or such other location as the Administrative Agent may specify by
notice to the Lenders, in Same Day Funds, such Lender’s Applicable Percentage of
such Revolving Borrowing. Promptly upon the Administrative Agent’s receipt of
such funds (but in any event not later than 3:00 p.m. (Houston, Texas time) on
the date of the proposed Revolving Borrowing) and provided that the applicable
conditions set forth in Article III have been satisfied, the Administrative
Agent will make such funds available to the Borrower at its account with the
Administrative Agent.
     (b) Conversions and Continuations. In order to elect to Convert or continue
Advances comprising part of the same Revolving Borrowing under this Section, the
Borrower shall deliver an irrevocable Notice of Conversion or Continuation to
the Administrative Agent at the Administrative Agent’s office no later than 2:00
p.m. (Houston, Texas time) (i) at least one Business Day in advance of the
proposed Conversion date in the case of a Conversion of such Advances to Base
Rate Advances, and (ii) at least three Business Days in advance of the proposed
Conversion or continuation date in the case of a Conversion to, or a
continuation of, Eurodollar Advances. Each such Notice of Conversion or
Continuation shall be in writing or facsimile, specifying (A) the requested
Conversion or continuation date (which shall be a Business Day), (B) the
Revolving Borrowing amount and Type of the Advances to be Converted or
continued, (C) whether a Conversion or continuation is requested, and if a
Conversion, into what Type of Advances, and (D) in the case of a Conversion to,
or a continuation of, Eurodollar Advances, the requested Interest Period.
Promptly after receipt of a Notice of Conversion or Continuation under this
paragraph, the Administrative Agent shall provide each applicable Lender with a
copy thereof and, in the case of a Conversion to or a continuation of Eurodollar
Advances, notify each applicable Lender of the applicable interest rate under
Section 2.9 as applicable. For purposes other than the conditions set forth in
Section 3.2, the portion of Advances comprising part of the same Revolving
Borrowing that are Converted to Advances of another Type shall constitute a new
Revolving Borrowing.
     (c) Certain Limitations. Notwithstanding anything in paragraphs (a) and
(b) above:
     (i) Each Revolving Borrowing shall (A) be in an aggregate amount not less
than $3,000,000 and in integral multiples of $1,000,000 in excess thereof in
case of Eurodollar Advances and in an aggregate amount not less than $500,000
and in integral multiples of $100,000 in excess thereof in case of Base Rate
Advances, (B) consist of Advances of the same Type made, Converted or continued
on the same day by the Lenders according to their Applicable Percentage, and
(C) denominated only in Dollars.
     (ii) At no time shall there be more than eight Interest Periods applicable
to outstanding Eurodollar Advances.
     (iii) The Borrower may not select Eurodollar Advances for any Revolving
Borrowing to be made, Converted or continued if an Event of Default has occurred
and is continuing.

 

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     (iv) If any Lender shall, at least one Business Day prior to the requested
date of any Revolving Borrowing comprised of Eurodollar Advances, notify the
Administrative Agent and the Borrower that the introduction of or any change in
or in the interpretation of any Legal Requirement makes it unlawful, or that any
central bank or other Governmental Authority asserts that it is unlawful, for
such Lender or its Lending Office to perform its obligations under this
Agreement to make Eurodollar Advances or to fund or maintain Eurodollar
Advances, or any Governmental Authority has imposed material restrictions on the
authority of such Lender to purchase or sell, or take deposits of, Dollars in
the applicable interbank market, then (1) such Lender’s Applicable Percentage of
the amount of such Revolving Borrowing shall be made as a Base Rate Advance of
such Lender, (2) such Base Rate Advance shall be considered part of the same
Revolving Borrowing and interest on such Base Rate Advance shall be due and
payable at the same time that interest on the Eurodollar Advances comprising the
remainder of such Revolving Borrowing shall be due and payable, and (3) any
obligation of such Lender to make, continue, or Convert to, Eurodollar Advances,
including in connection with such requested Revolving Borrowing, shall be
suspended until such Lender notifies the Administrative Agent and the Borrower
that the circumstances giving rise to such determination no longer exist.
     (v) If the Administrative Agent is unable to determine the Eurodollar Rate
for Eurodollar Advances comprising any requested Revolving Borrowing, the right
of the Borrower to select Eurodollar Advances for such Revolving Borrowing or
for any subsequent Revolving Borrowing shall be suspended until the
Administrative Agent shall notify the Borrower and the applicable Lenders that
the circumstances causing such suspension no longer exist, and each Revolving
Advance comprising such Revolving Borrowing shall be made as a Base Rate
Advance.
     (vi) If the Majority Lenders shall, at least one Business Day before the
date of any requested Revolving Borrowing, notify the Administrative Agent that
(A) the Eurodollar Rate for Eurodollar Advances comprising such Revolving
Borrowing will not adequately reflect the cost to such Lenders of making or
funding their respective Eurodollar Advances, as the case may be, for such
Revolving Borrowing, or (B) deposits are not being offered to banks in the
applicable offshore interbank market for Dollars for the applicable amount and
Interest Period of such Eurodollar Advance, then the Administrative Agent shall
give notice thereof to the Borrower and the Lenders and the right of the
Borrower to select Eurodollar Advances for such Revolving Borrowing or for any
subsequent Revolving Borrowing shall be suspended until the Administrative Agent
shall notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist, and each Advance comprising such Revolving Borrowing
shall be made as a Base Rate Advance.
     (vii) If the Borrower shall fail to select the duration or continuation of
any Interest Period for any Eurodollar Advance in accordance with the provisions
contained in the definition of “Interest Period” in Section 1.1 and paragraph
(a) or (b) above, the Administrative Agent will forthwith so notify the Borrower
and the applicable Lenders and such affected Advances will be made available to
the Borrower on the date of such Revolving Borrowing as Eurodollar Advances with
a one month Interest Period or, if such affected Advances are existing Advances,
will be Converted into Base Rate Advances at the end of Interest Period then in
effect.
     (viii) Swingline Advances may not be Converted or continued.
     (d) Notices Irrevocable. Each Notice of Borrowing and Notice of Conversion
or Continuation shall be irrevocable and binding on the Borrower.

 

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     (e) Lender Obligations Several. The failure of any Lender to make the
Advance to be made by it as part of any Revolving Borrowing shall not relieve
any other Lender of its obligation, if any, to make its Advance on the date of
such Revolving Borrowing. No Lender shall be responsible for the failure of any
other Lender to make the Advance to be made by such other Lender on the date of
any Revolving Borrowing.
     (f) Funding by Lenders; Administrative Agent’ Reliance. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Revolving Borrowing of Eurodollar Advances, or prior to
noon on the date of any Revolving Borrowing of Base Rate Advances, that such
Lender will not make available to the Administrative Agent such Lender’s share
of such Revolving Borrowing, the Administrative Agent may assume that such
Lender has made such share available in accordance with and at the time required
in Section 2.5 and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Revolving 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 in Same Day
Funds 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 (A) in the case of a payment to be made by such
Lender, the Overnight Rate and (B) in the case of a payment to be made by the
Borrower, the interest rate applicable to the requested Revolving Borrowing. If
the Borrower and such Lender shall pay such interest to the Administrative Agent
for the same or an overlapping period, the Administrative Agent shall promptly
remit to the Borrower the amount of such interest paid by the Borrower for such
period. If such Lender pays its share of the applicable Revolving Borrowing to
the Administrative Agent, then the amount so paid shall constitute such Lender’s
Advance included in such Revolving Borrowing. Any payment by the Borrower shall
be without prejudice to any claim the Borrower may have against a Lender that
shall have failed to make such payment to the Administrative Agent. A notice of
the Administrative Agent to any Lender or Borrower with respect to any amount
owing under this subsection (f) shall be conclusive, absent manifest error.
     Section 2.6 Prepayments. No Borrower shall have any right to prepay any
principal amount of any Advance except as provided in this Section 2.6.
     (a) Optional. The Borrower may elect to prepay any Revolving Borrowing, in
whole or in part, without penalty or premium except as set forth in Section 2.11
and after giving by 2:00 p.m. (Houston, Texas time) (i) in the case of
Eurodollar Advances, at least three Business Days’ or (ii) in case of Base Rate
Advances, one Business Day’s prior written notice to the Administrative Agent
stating the proposed date and aggregate principal amount of such prepayment. If
any such notice is given, the Borrower shall prepay Advances comprising part of
the same Revolving Borrowing in whole or ratably in part in an aggregate
principal amount equal to the amount specified in such notice, together with
accrued interest to the date of such prepayment on the principal amount prepaid
in case of Base Rate Advances and amounts, if any, required to be paid pursuant
to Section 2.11 as a result of such prepayment being made on such date; provided
that each optional partial prepayment of a Revolving Borrowing shall be in a
minimum amount not less than $3,000,000 and in multiple integrals of $1,000,000
in excess thereof in case of Eurodollar Advances and in an aggregate amount not
less than $500,000 and in integral multiples of $100,000 in excess thereof in
case of Base Rate Advances.
     (b) Mandatory. (i) On any date that Outstandings exceeds the aggregate
amount of Revolving Commitments, the Borrower shall, within one Business Day, to
the extent of such excess, first prepay to the Swingline Lender the outstanding
principal amount of the Swingline Advances, second, prepay to the Lenders on a
pro rata basis the outstanding principal amount of the Revolving Advances and
third, make deposits into the Cash Collateral Account to provide cash collateral
in the amount of such

 

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excess for the Letter of Credit Exposure. (ii) If a Commitment Increase is
effected as permitted under Section 2.1(c), the Borrower shall prepay any
Revolving Advances outstanding on such Increase Date to the extent necessary to
keep the outstanding Revolving Advances ratable to reflect the revised
Applicable Percentages arising from such Commitment Increase. Any prepayment
made by Borrower in accordance with this clause (b)(ii) may be made with the
proceeds of Revolving Advances made by all the Lenders in connection the
Commitment Increase occurring simultaneously with the prepayment.
     (c) Interest; Costs. Each prepayment pursuant to this Section 2.6 shall be
accompanied by accrued interest on the amount prepaid to the date of such
prepayment and amounts, if any, required to be paid pursuant to Section 2.11 as
a result of such prepayment being made on such date.
     Section 2.7 Repayment.
     (a) Revolving Advances. The Borrower hereby unconditionally promises to pay
to the Administrative Agent for the account of and ratable benefit of each
Lender the aggregate outstanding principal amount of all Revolving Advances on
the Maturity Date.
     (b) Swingline Advances. The Borrower hereby unconditionally promises to pay
to the Swingline Lender (i) the aggregate outstanding principal amount of all
Swingline Advances on each Swingline Payment Date, and (ii) the aggregate
outstanding principal amount of all Swingline Advances outstanding on the
Maturity Date.
     Section 2.8 Fees.
     (a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a Commitment Fee on the average daily amount by
which such Lender’s Revolving Commitment exceeds such Lender’s outstanding
Revolving Advances plus such Lender’s Applicable Percentage of the Letter of
Credit Exposure at the per annum rate equal to the Applicable Margin for
Commitment Fees for such period. The Commitment Fee is due quarterly in arrears
on March 31, June 30, September 30, and December 31 of each year commencing on
June 30, 2008, and on the Maturity Date. For purposes of this Section 2.8(a)
only, amounts advanced as Swingline Advances shall not reduce the amount of the
unused Revolving Commitment.
     (b) Fees for Letters of Credit. The Borrower agrees to pay the following:
(i) to the Administrative Agent for the pro rata benefit of the Lenders a per
annum letter of credit fee for each Letter of Credit issued hereunder in an
amount equal to the Applicable Margin for Eurodollar Advances on the face amount
of such Letter of Credit for the period such Letter of Credit is outstanding,
which fee shall be due and payable quarterly in arrears on March 31, June 30,
September 30, and December 31 of each year, and on the Maturity Date; (ii) to
the applicable Issuing Lender, a fronting fee for each Letter of Credit equal to
the greater of (A) .125% per annum on the face amount of such Letter of Credit
(and in the case of an increase, on the amount of such increase) and (B)
$600.00, which fee shall be due and payable annually in advance on the date of
the issuance or increase of each Letter of Credit and on the earlier of each
annual anniversary thereafter or the Maturity Date; and (iii) to the applicable
Issuing Lender such other usual and customary fees associated with any
transfers, amendments, drawings, negotiations or reissuances of any Letter of
Credit, which fees shall be due and payable as requested by such Issuing Lender
in accordance with such Issuing Lender’s then current fee policy. The Borrower
shall have no right to any refund of letter of credit fees previously paid by
the Borrower, including any refund claimed because the Borrower cancels any
Letter of Credit prior to its expiration date.
     (c) Administrative Agent Fee. The Borrower agrees to pay the fees to the
Administrative Agent as set forth in the Fee Letter.

 

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     Section 2.9 Interest.
     (a) Base Rate Advances. Each Base Rate Advance shall bear interest at the
Adjusted Base Rate in effect from time to time plus the Applicable Margin for
Base Rate Advances for such period, provided that while an Event of Default is
continuing the Base Rate Advances shall bear interest at the Adjusted Base Rate
in effect from time to time plus the Applicable Margin plus 2%. The Borrower
shall pay to Administrative Agent for the ratable benefit of each Lender all
accrued but unpaid interest on such Lender’s Base Rate Advances on each
March 31, June 30, September 30, and December 31 commencing on June 30, 2008,
and on the Maturity Date; provided that if an Event of Default is continuing,
interest shall be payable on demand.
     (b) Eurodollar Advances. Each Eurodollar Advance shall bear interest during
its Interest Period equal to at all times the Eurodollar Rate for such Interest
Period plus the Applicable Margin for Eurodollar Advances for such period;
provided that while an Event of Default is continuing, each Eurodollar Advance
shall bear interest at the Eurodollar Rate in effect from time to time plus the
Applicable Margin plus 2%. The Borrower shall pay to the Administrative Agent
for the ratable benefit of each Lender all accrued but unpaid interest on each
of such Lender’s Eurodollar Advances on the last day of the Interest Period
therefor (provided that for Eurodollar Advances with six month Interest Periods,
accrued but unpaid interest shall also be due on the day three months from the
first day of such Interest Period), on the date any Eurodollar Advance is repaid
in full, and on the Maturity Date; provided that if an Event of Default is
continuing, interest shall be payable on demand.
     (c) Swingline Advances. Swingline Advances shall bear interest at the
Adjusted Base Rate in effect from time to time plus the Applicable Margin for
Base Rate Advances; provided that while an Event of Default is continuing the
Swingline Advances shall bear interest at the Adjusted Base Rate in effect from
time to time plus the Applicable Margin for Base Rate Advances plus 2%. The
Borrower shall pay to the Swingline Lender for its own account subject to
Section 2.4(f) all accrued but unpaid interest on each Swingline Advance on each
Swingline Payment Date, on the date any Swingline Advance is repaid (or
refinanced) in full, and on the Maturity Date.
     (d) Other Amounts Overdue. If any amount payable under this Agreement other
than the Advances is not paid when due and payable, including accrued interest
and fees, then such overdue amount shall accrue interest at a rate per annum
equal to the Adjusted Base Rate plus two percent (2%), from the date such amount
became due until the date such amount is paid in full and shall be due and
payable on demand at the request of the Majority Lenders.
     Section 2.10 Illegality. If any Lender shall notify the Borrower that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank or other governmental
authority asserts that it is unlawful, for such Lender or its Lending Office to
perform its obligations under this Agreement to make, maintain, or fund any
Eurodollar Advances of such Lender then outstanding hereunder, (a) the Borrower
shall, no later than 11:00 a.m. (Houston, Texas, time) (i) if not prohibited by
law, on the last day of the Interest Period for each outstanding Eurodollar
Advance, or (ii) if required by such notice, on the second Business Day
following its receipt of such notice, prepay all of the Eurodollar Advances of
such Lender then outstanding, together with accrued interest on the principal
amount prepaid to the date of such prepayment and amounts, if any, required to
be paid pursuant to Section 2.11 as a result of such prepayment being made on
such date, (b) such Lender shall simultaneously make a Base Rate Advance to the
Borrower on such date in an amount equal to the aggregate principal amount of
the Eurodollar Advances prepaid to such Lender, and (c) the right of the
Borrower to select Eurodollar Advances from such Lender for any subsequent
Revolving Borrowing shall be suspended until such Lender shall notify the
Borrower that the circumstances causing such suspension no longer exist.

 

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     Section 2.11 Breakage Costs.
     (a) Funding Losses. In the case of any Revolving Borrowing which the
related Notice of Borrowing specifies is to be comprised of Eurodollar Advances,
the Borrower hereby indemnifies each Lender against any loss, out-of-pocket
cost, or expense incurred by such Lender as a result of any failure to fulfill
on or before the date specified in such Notice of Borrowing for such Revolving
Borrowing the applicable conditions set forth in Article III, including, without
limitation, any loss (excluding any loss of anticipated profits), cost, or
expense incurred by reason of the liquidation or redeployment of deposits or
other funds acquired by such Lender to fund the Eurodollar Advance to be made by
such Lender as part of such Revolving Borrowing when such Eurodollar Advance as
a result of such failure, is not made on such date.
     (b) Prepayment Losses. If (i) any payment of principal of any Eurodollar
Advance is made other than on the last day of the Interest Period for such
Advance as a result of any prepayment, payment pursuant to Section 2.6, the
acceleration of the maturity of the Obligations, or for any other reason,
(ii) the Borrower fails to make a principal or interest payment with respect to
any Eurodollar Advance on the date such payment is due and payable, or (iii) any
failure by the Borrower to make payment of any Advance or reimbursement of
drawing under any Letter of Credit (or interest due thereon) on its scheduled
due date; the Borrower shall, within 10 days of any written demand sent by the
Administrative Agent on behalf of a Lender to the Borrower, pay to the
Administrative Agent for the benefit of such Lender any amounts determined in
good faith by such Lender to be required to compensate such Lender for any
additional losses, out-of-pocket costs, or expenses which it may reasonably
incur as a result of such payment or nonpayment, including, without limitation,
any loss (excluding loss of anticipated profits), cost, or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
any Lender to fund or maintain such Advance.
     Section 2.12 Increased Costs.
     (a) Increased Costs Generally. If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement contemplated by Section 2.12(e)) or
any Issuing Lender;
     (ii) subject any Lender or Issuing Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any participation in a
Letter of Credit, any Eurodollar Advance made by it, or change the basis of
taxation of payments to such Lender or Issuing Lender in respect thereof (except
for Indemnified Taxes or Other Taxes covered by Section 2.14 and the imposition
of, or any change in the rate of, any Excluded Tax payable by such Lender or
Issuing Lender); or
     (iii) impose on any Lender or Issuing Lender or the London interbank market
any other condition, cost or expense affecting this Agreement or Eurodollar
Advances 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 Advance (or of maintaining its
obligation to make or accept and purchase any such Advance), or to increase the
cost to such Lender or Issuing Lender of participating in, issuing or
maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit), or to reduce the amount of any
sum received or receivable by such Lender or Issuing Lender

 

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hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or Issuing Lender, the Borrower will pay to such Lender
or Issuing Lender, such additional amount or amounts as will compensate such
Lender or Issuing Lender, as the case may be, for such additional costs incurred
or reduction suffered.
     (b) Capital Adequacy. If any Lender or Issuing Lender determines that any
Change in Law affecting such Lender or Issuing Lender or any lending office of
such Lender or such Lender’s or Issuing Lender’s holding company, if any,
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or Issuing Lender’s capital or on the capital of such
Lender’s or Issuing Lender’s holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Advances made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such Issuing Lender, to a level below that which such Lender or
Issuing Lender or such Lender’s or Issuing Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
Issuing Lender’s policies and the policies of such Lender’s or Issuing Lender’s
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender or Issuing Lender, such additional amount or
amounts as will compensate such Lender or Issuing Lender or such Lender’s or
Issuing Lender’s holding company for any such reduction suffered.
     (c) Certificates for Reimbursement. A certificate of a Lender or Issuing
Lender setting forth the amount or amounts necessary to compensate such Lender
or Issuing Lender or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section and delivered to the Borrower shall be
conclusive absent manifest error. The Borrower shall pay such Lender or Issuing
Lender, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.
     (d) Delay in Requests. Failure or delay on the part of any Lender or
Issuing Lender to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender’s or Issuing Lender’s right to demand such
compensation; provided that Borrower shall not be required to compensate a
Lender or an Issuing Lender pursuant to this Section for any reserve, tax, lost
compensation, increased costs or reductions suffered or incurred more than
180 days prior to the date that such Lender or the Issuing Lender, as the case
may be, notifies Borrower of the cause giving rise to such reserve, tax, lost
compensation, increased costs or reductions and of such lender’s or the Issuing
Bank’s intention to claim compensation therefor.
     (e) Additional Reserve Requirement. The Borrower shall pay to each Lender
Party, (i) as long as such Lender Party shall be required to maintain reserves
with respect to liabilities or assets consisting of or including Eurodollar
funds or deposits (currently known as Eurocurrency Liabilities), additional
interest on the unpaid principal amount of each Eurodollar Advance equal to the
actual costs of such reserves allocated to such Advance by such Lender Party (as
determined by such Lender Party in good faith, which determination shall be
conclusive in the absence of manifest error), and (ii) as long as such Lender
Party shall be required to comply with any reserve ratio requirement or
analogous requirement of any other central banking or financial regulatory
authority imposed in respect of the maintenance of the Commitments or the
funding of the Eurodollar Advances, such additional costs (expressed as a
percentage per annum and rounded upwards, if necessary, to the nearest five
decimal places) equal to the actual costs allocated to such Commitments or
Advances by such Lender Party (as determined by such Lender Party in good faith,
which determination shall be conclusive in the absence of manifest error), which
in each case, shall be due and payable on each date on which interest is payable
on such Advance.

 

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     Section 2.13 Payments and Computations.
     (a) Payments. All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed in Dollars and in Same Day
Funds. Subject to Section 2.5(c), each payment of any Advance pursuant to this
Section or any other provision of this Agreement shall be made in a manner such
that all Advances comprising part of the same Revolving Borrowing are paid in
whole or ratably in part.
     (b) Payments by Borrower; Presumptions by Administrative Agent. 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 applicable Lenders or Issuing Lender 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 applicable Issuing Lender, as
the case may be, the amount due. In such event, if the Borrower has not in fact
made such payment, then each of the applicable Lenders or Issuing Lender, 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 Lender, in Same Day
Funds 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 Overnight Rate. A notice of the Administrative
Agent to any Lender or Borrower with respect to any amount owing under this
subsection (b) shall be conclusive, absent manifest error.
     (c) Payment Procedures. The Borrower shall make each payment of any amount
under this Agreement and under any other Credit Document not later than
11:00 a.m. (Houston, Texas time) on the day when due to the Administrative Agent
at the Administrative Agent’s address (or such other location as the
Administrative Agent shall designate in writing to the Borrower) in Same Day
Funds. Without limiting the generality of the foregoing, the Administrative
Agent may require that any payments due under this Agreement be made in the
United States. The Administrative Agent will promptly thereafter, and in any
event prior to the close of business on the day any timely payment is made,
cause to be distributed like funds relating to the payment of principal,
interest or fees ratably (other than amounts payable solely to any specific
Lender Party pursuant to Sections 2.4, 2.10, 2.11, 2.12, 2.14, and 9.1 but after
taking into account payments effected pursuant to Section 2.13(f)) in accordance
with each Lender’s Applicable Percentage to the Lenders for the account of their
respective Lending Offices, and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Lending
Office, in each case to be applied in accordance with the terms of this
Agreement. Upon receipt of other amounts due solely to the Administrative Agent,
Issuing Lender, Swingline Lender, or a specific Lender, the Administrative Agent
shall distribute such amounts to the appropriate party to be applied in
accordance with the terms of this Agreement.
     (d) Non-Business Day Payments. Whenever any payment shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided that if such extension would cause payment of interest on or principal
of Eurodollar Advances to be made in the next following calendar month, such
payment shall be made on the next preceding Business Day.
     (e) Computations. All computations of interest for Base Rate Advances shall
be made by the Administrative Agent on the basis of a year of 365/366 days and
on the basis of a year of 360 days for all other interest and fees, in each case
for the actual number of days (including the first day, but excluding

 

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the last day) occurring in the period for which such interest or fees are
payable. Each determination by the Administrative Agent of an amount of interest
or fees shall be conclusive and binding for all purposes, absent manifest error.
     (f) Sharing of Payments, Etc. Each Lender agrees that if it shall, through
the exercise of a right of banker’s lien, setoff, counterclaim or otherwise
against the Borrower or any other Credit Party, obtain payment (voluntary or
involuntary) in respect of any Advance or the participations in the Letter of
Credit Obligations or in the Swingline Advances held by it, as a result of which
the unpaid portion of its Advances shall be proportionately less than the unpaid
portion of the Advances or the participations in the Letter of Credit
Obligations or in the Swingline Advances held by any other Lender, it shall be
deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Advances, the participations in the Letter of Credit
Obligations and in the Swingline Advances held by it of such other Lender, so
that the aggregate unpaid amount of the Advances and participations in Advances,
Letter of Credit Obligations and Swingline Advances held by each Lender shall be
in the same proportion to the aggregate unpaid amount of all Advances, Letter of
Credit Obligations and Swingline Advances then outstanding as the amount of its
Advances, and participations in Letter of Credit Obligations and Swingline
Advances prior to such exercise of banker’s lien, setoff or counterclaim or
other event was to the amount of all Advances and participations in Letter of
Credit Obligations and Swingline Advances, outstanding prior to such exercise of
banker’s lien, setoff or counterclaim or other event; provided, however, that if
any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.13 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. The 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 setoff 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.
     Section 2.14 Taxes.
     (a) Generally. Any and all payments by or on account of any obligation of
the Borrower or any Guarantor hereunder or under any other Credit Document shall
be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes, provided that if the Borrower shall be
required by applicable law to deduct any Indemnified Taxes (including any 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 Lender, as the case may be, receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall timely pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.
     (b) Payment of Other Taxes by the Borrower. Without limiting the provisions
of the terms set forth in this Section above, the Borrower shall timely pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.
     (c) Indemnification by the Borrower. The Borrower shall, and does hereby,
indemnify the Administrative Agent, each Lender and Issuing Lender, in any case,
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the
Administrative Agent, such Lender or Issuing Lender, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, except as a result of the gross negligence or

 

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willful misconduct of the Administrative Agent, such Lender or Issuing Lender,
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
an Issuing Lender (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or an Issuing
Lender, shall be conclusive absent manifest error.
     (d) Evidence of Payments. 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 any available receipt issued by such Governmental Authority
evidencing such payment, a copy of the return (if any) reporting such payment or
other evidence of such payment reasonably satisfactory to the Administrative
Agent.
     (e) Status of Lenders.
     (i) 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
resident for tax purposes, or any treaty to which such jurisdiction is a party,
with respect to payments hereunder or under any other Credit Document shall
deliver to the Borrower (with a copy to the Administrative Agent), prior to the
Closing Date (or upon becoming a Lender by assignment or participation) and at
any time or times prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, any
Lender, if requested by the Borrower or the Administrative Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested by
the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.
     (ii) Without limiting the generality of the foregoing, in the event that
the Borrower is resident for tax purposes in the United States, any Foreign
Lender shall deliver to the Borrower and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the request of the Borrower or the Administrative
Agent, but only if such Foreign Lender is legally entitled to do so), whichever
of the following is applicable:
     (A) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,
     (B) duly completed copies of Internal Revenue Service Form W-8ECI,
     (C) in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under section 881(c) of the Code, (x) a certificate to
the effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly
completed copies of Internal Revenue Service Form W-8BEN, or

 

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     (D) Any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit the Borrower to determine the withholding or deduction
required to be made.
     (iii) Without limiting the obligations of the Lenders set forth above
regarding delivery of certain forms and documents to establish each Lender’s
status for U.S. withholding tax purposes, each Lender agrees promptly to deliver
to the Administrative Agent or the Borrower, as the Administrative Agent or the
Borrower shall reasonably request, on or prior to the Closing Date, and in a
timely fashion thereafter, such other documents and forms required by any
relevant taxing authorities under any Legal Requirement of any other
jurisdiction, duly executed and completed by such Lender, as are required under
such Legal Requirements to confirm such Lender’s entitlement to any available
exemption from, or reduction of, applicable withholding taxes in respect of all
payments to be made to such Lender outside of the U.S. by the Borrower pursuant
to this Agreement or otherwise to establish such Lender’s status for withholding
tax purposes in such other jurisdiction.
     (iv) Each Lender shall promptly (i) notify the Administrative Agent of any
change in circumstances which would modify or render invalid any such claimed
exemption or reduction, and (ii) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Legal Requirements of any such jurisdiction
that the Borrower make any deduction or withholding for taxes from amounts
payable to such Lender. Additionally, the Borrower shall promptly deliver to the
Administrative Agent or any Lender, as the Administrative Agent or such Lender
shall reasonably request, on or prior to the Closing Date, and in a timely
fashion thereafter, such documents and forms required by any relevant taxing
authorities under the Laws of any jurisdiction, duly executed and completed by
the Borrower, as are required to be furnished by such Lender or the
Administrative Agent under such Laws in connection with any payment by the
Administrative Agent or any Lender of Taxes or Other Taxes, or otherwise in
connection with the Credit Documents, with respect to such jurisdiction.
     (f) Treatment of Certain Refunds. If any Lender Party determines, in its
sole discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent, such Lender or Issuing
Lender, as the case may be, and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund), provided
that the Borrower, upon the request of the Administrative Agent, such Lender or
Issuing Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or Issuing Lender in the
event the Administrative Agent, such Lender or Issuing Lender is required to
repay such refund to such Governmental Authority. This subsection shall not be
construed to require any Lender Party to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrower or any other Person.
     Section 2.15 Mitigation Obligations. If any Lender requests compensation
under Section 2.12, or requires the Borrower to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.14, or defaults on or suspends its obligation to continue, or Convert
Advances into, Eurodollar Advances pursuant to Section 2.5(c)(iv) or Section

 

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2.10, then such Lender (an “Affected Lender”) shall use reasonable efforts to
designate a different lending office for funding or booking its Credit
Extensions hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the reasonable judgment
of such Affected Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.12 or 2.14, as the case may be, in
the future or if applicable, would avoid the effect of Section 2.5(c)(iv) or
Section 2.10, (ii) would not subject such Affected Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Affected
Lender. The Borrower hereby agrees to pay all costs and expenses incurred by any
Lender in connection with any such designation or assignment. Further, provided
that no Event of Default has occurred and is continuing, in the event of any
such circumstances Borrower shall have the right, at its sole cost and expense,
to replace the Affected Lender with one or more Eligible Assignees in which
event, not later than 30 Business Days after notice to the Administrative Agent
and the Affected Lender designating the Eligible Assignee or Assignees and the
percentage interest in the Affected Lender’s interest to be assigned to each
Eligible Assignee or Assignees, (i) the Affected Lender and the designated
Eligible Assignee or Assignees shall enter into an Assignment and Assumption
Agreement and otherwise conclude such assignment in accordance with the
provisions of Section 9.6(a) (with the Borrower or the Assignee paying any
applicable processing and recordation fee), and (ii) each Eligible Assignee
shall remit to the Affected Lender, in immediately available funds, an amount
equal to the product of (a) the percentage interest of the Affected Lender’s
interest being assigned and (b) the outstanding principal, accrued interest,
fees and other Obligations owed by the Borrower to the Affected Lender
hereunder.
ARTICLE III
CONDITIONS PRECEDENT
     Section 3.1 Conditions Precedent to Initial Credit Extension. The
obligation of each Issuing Lender, the Swingline Lender and each Lender to make
its initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent:
     (a) Documentation. The Administrative Agent shall have received the
following, duly executed by all the parties thereto, in form and substance
reasonably satisfactory to the Administrative Agent and the Lenders:
     (i) this Agreement and all attached Exhibits and Schedules;
     (ii) the Notes payable to the order of each Lender, as requested by such
Lender;
     (iii) the Guaranty;
     (iv) a certificate from a Responsible Officer of the Borrower dated as of
the date hereof stating that as of such date (A) all representations and
warranties of the Credit Parties set forth in this Agreement are true and
correct in all material respects and (B) no Default has occurred and is
continuing;
     (v) a secretary’s certificate from each Credit Party certifying such
Person’s (A) officers’ incumbency, (B) authorizing resolutions, and
(C) organizational documents;
     (vi) certificates of good standing for each Credit Party in (a) the state
or territory of the United States of America in which each such Person is
organized and (b) each state or territory of the United States of America in
which such good standing is necessary except where the failure to be in good
standing could not reasonably be expected to result in a Material Adverse
Change, which certificates shall be dated a date not earlier than 30 days prior
to date hereof;

 

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     (vii) a legal opinion of Andrews Kurth LLP, outside counsel to the Credit
Parties, in form and substance reasonably acceptable to the Administrative
Agent; and
     (viii) such other documents, governmental certificates, and agreements as
any Lender Party may reasonably request.
     (b) Representations and Warranties. The representations and warranties
contained in Article IV and in each other Credit Document shall be true and
correct on and as of the Closing Date before and after giving effect to the
initial Revolving Borrowings or issuance (or deemed issuance) of Letters of
Credit, as though made on and as of such date.
     (c) No Default. No Default shall have occurred and be continuing.
     (d) Payment of Fees. The Borrower shall have paid the fees and expenses
required to be paid as of the Closing Date by Section 9.1 and the Fee Letter.
     (e) Other Proceedings. No action, suit, investigation or other proceeding
(including, without limitation, the enactment or promulgation of a statute or
rule) by or before any arbitrator or any Governmental Authority shall be
threatened or pending and no preliminary or permanent injunction or order by a
state or federal court shall have been entered (i) in connection with this
Agreement or any transaction contemplated hereby or (ii) which, in any case, in
the judgment of the Administrative Agent could reasonably be expected to result
in a Material Adverse Change.
     (f) Material Adverse Change. No event or circumstance that could reasonably
be expected to result in a material adverse change in the business, condition
(financial or otherwise), prospects, or results of operations of the Borrower
and its Subsidiaries, taken as a whole, shall have occurred since December 31,
2007.
     (g) Solvency. The Administrative Agent shall have received a certificate in
form and substance reasonably satisfactory to the Administrative Agent from a
senior financial officer of the Borrower certifying that, before and after
giving effect to the initial Revolving Borrowings made hereunder, the Borrower
is Solvent and the Credit Parties on a consolidated basis are Solvent.
     Section 3.2 Conditions Precedent to Each Credit Extension. The obligation
of each Lender to make any Credit Extension on the occasion of each Revolving
Borrowing (including the initial Revolving Borrowing), the obligation of each
Issuing Lender to make any Credit Extension and the obligation of the Swingline
Lender to make Swingline Advances, in any such case, shall be subject to the
further conditions precedent that on the date of such Revolving Borrowing or
such Credit Extension:
     (a) Representations and Warranties. As of the date of the making of such
Credit Extension, the representations and warranties made by any Credit Party in
the Credit Documents shall be true and correct in all material respects on such
date, except that any representation and warranty which by its terms is made as
of a specified date shall be required to be true and correct only as of such
specified date and each request for the making of any Credit Extension and the
making of such Credit Extension shall be deemed to be a reaffirmation of such
representations and warranties.
     (b) Event of Default. As of the date of the Credit Extension, there shall
exist no Default or Event of Default, and the making of such Credit Extension
would not cause a Default or Event of Default.

 

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
     The Borrower hereby represents and warrants as follows:
     Section 4.1 Organization. Each of the Borrower and its Subsidiaries is duly
and validly organized and existing and in good standing under the laws of its
jurisdiction of incorporation or formation and is authorized to do business and
is in good standing in all jurisdictions in which such qualifications or
authorizations are necessary except where the failure could not reasonably be
expected to result in a Material Adverse Change.
     Section 4.2 Authorization. The execution, delivery, and performance by each
Credit Party of each Credit Document to which such Credit Party is a party and
the consummation of the transactions contemplated thereby (a) are within such
Credit Party’s powers, (b) have been duly authorized by all necessary corporate,
limited liability company or partnership action, (c) do not contravene any
organizational documents of such Credit Party, (d) do not contravene any law or
any contractual restriction binding on or affecting such Credit Party except
where such contravention could not reasonably be expected to result in a
Material Adverse Change, (e) do not result in or require the creation or
imposition of any Lien prohibited by this Agreement except where such creation
or imposition could not reasonably be expected to result in a Material Adverse
Change, and (f) do not require any authorization or approval or other action by,
or any notice or filing with, any Governmental Authority, except notices to or
filings with the SEC that may be required from time to time and where the
failure to obtain such authorizations or approvals could not reasonably be
expected to result in a Material Adverse Change. At the time of each Credit
Extension, such Credit Extension and the use of the proceeds of such Credit
Extension are within the Borrower’s corporate powers, have been duly authorized
by all necessary corporate action, don’t contravene (i) the Borrower’s
organizational documents or (ii) any law or any contractual restriction binding
on or affecting the Borrower, will not result in or require the creation or
imposition of any Lien prohibited by this Agreement, and do not require any
authorization or approval or other action by, or any notice or filing with, any
Governmental Authority, in each case except where such contravention, creation,
imposition or requirement could not reasonably be expected to result in a
Material Adverse Change.
     Section 4.3 Enforceability. The Credit Documents have each been duly
executed and delivered by each Credit Party that is a party thereto and each
Credit Document constitutes the legal, valid, and binding obligation of each
Credit Party that is a party thereto enforceable in accordance with its terms,
except as limited by applicable Debtor Relief Laws or similar laws at the time
in effect affecting the rights of creditors generally and to the effect of
general principles of equity whether applied by a court of law or equity.
     Section 4.4 Financial Condition.
     (a) The Borrower has delivered to the Lenders the Financial Statements for
the fiscal year ended December 31, 2007 and the fiscal quarter ended March 31,
2008 and such Financial Statements are true and correct in all material respects
and present fairly the consolidated financial condition of the Borrower and its
Subsidiaries as of the date thereof. As of the date of the financial statements
referred in the preceding sentence, there were no material contingent
obligations, liabilities for taxes, unusual forward or long-term commitments, or
unrealized or anticipated losses of the applicable Persons, except as disclosed
therein and adequate reserves for such items have been made in accordance with
GAAP.
     (b) Since December 31, 2007, no event or condition has occurred that could
reasonably be expected to result in Material Adverse Change.

 

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     Section 4.5 Ownership and Liens. The Borrower and each Subsidiary have good
title to, or valid interests in, all its real and personal property material to
its business, except for minor defects in title that do not materially interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes.
     Section 4.6 True and Complete Disclosure. All written factual information
(whether delivered before or after the date of this Agreement) prepared by or on
behalf of the Borrower or a Subsidiary and furnished to any Lender Party for
purposes of or in connection with this Agreement, any other Credit Document or
any transaction contemplated hereby or thereby is true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not materially misleading at such time, in light
of the circumstances under which they were made. There is no fact known to any
Responsible Officer of the Borrower on the date of this Agreement that has not
been disclosed to the Administrative Agent that could reasonably be expected to
result in a Material Adverse Change.
     Section 4.7 Litigation. Except as disclosed in the Financial Statements
provided in Section 4.4(a), there are no actions, suits, or proceedings pending
or, to the Borrower’s knowledge, threatened against the Borrower or any
Subsidiary, at law, in equity, or in admiralty, or by or before any Governmental
Authority, which could reasonably be expected to result in a Material Adverse
Change. Additionally, except as disclosed in writing to the Lender Parties,
there is no pending or, to the best of the knowledge of the Borrower, threatened
action or proceeding instituted against the Borrower or any Subsidiary which
seeks to adjudicate the Borrower or any Subsidiary as bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its Property.
     Section 4.8 Compliance with Agreements. Neither the Borrower nor any
Subsidiary is a party to any indenture, loan or credit agreement or any lease or
any other types of agreement or instrument or subject to any charter or
corporate restriction or provision of applicable law or governmental regulation,
in each case, the performance of or compliance with which could reasonably be
expected to cause a Material Adverse Change. Neither the Borrower nor any
Subsidiary is in default under or with respect to any contract, agreement, lease
or any other types of agreement or instrument to which the Borrower or such
Subsidiary is a party and which could reasonably be expected to cause a Material
Adverse Change. No Default has occurred and is continuing.
     Section 4.9 Pension Plans. Except for matters that individually or in the
aggregate could not reasonably be expected to result in a Material Adverse
Change, (a) all Plans are in compliance in all material respects with all
applicable provisions of ERISA and the Code, (b) no Termination Event has
occurred with respect to any Plan, (c) each Plan has at all times satisfied the
minimum funding standard under Section 302 of ERISA and there has been no excise
tax imposed upon the Borrower or any Subsidiary under Section 4971 of the Code,
(d) no Reportable Event has occurred with respect to any Multiemployer Plan,
(e) the present value of all benefits vested under each Plan (based on the
assumptions used to fund such Plan) did not, as of the last annual valuation
date applicable thereto, exceed the value of the assets of such Plan allocable
to such vested benefits, (f) neither the Borrower nor any member of the
Controlled Group has had a complete or partial withdrawal from any Multiemployer
Plan for which there is any unsatisfied withdrawal liability, and (g) neither
the Borrower nor any member of the Controlled Group during the last six years
has been a participating employer in a Multiemployer Plan during the last six
years. Based upon GAAP existing as of the date of this Agreement and current
factual circumstances, the Borrower has no reason to believe that the annual
accrual expense during any

 

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fiscal year to the Borrower or any Subsidiary for post-retirement benefits to be
provided, except as required by law, to the current and former employees of the
Borrower or any Subsidiary under Plans that are welfare benefit plans (as
defined in Section 3(1) of ERISA) could reasonably be expected to exceed
$25,000,000.00.
     Section 4.10 Environmental Condition. Except to the extent that any
inaccurancy could not reasonably be expected to result in a Material Adverse
Change:
     (a) Permits, Etc. Except as disclosed in the Financial Statements provided
in Section 4.4(a), the Borrower and the Subsidiaries (i) have obtained all
material Environmental Permits necessary for the ownership and operation of
their respective Properties and the conduct of their respective businesses;
(ii)  have at all times been and are in material compliance with all terms and
conditions of such Permits and with all other material requirements of
applicable Environmental Laws; (iii) have not received written notice of any
material violation or alleged material violation of any Environmental Law or
Environmental Permit; and (iv) are not subject to any actual or contingent
Environmental Claim.
     (b) Certain Liabilities. None of the present or previously owned or
operated Property of the Borrower or any Subsidiary, wherever located, (i) has
been placed on or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System
list, or their state or local analogs, or have been otherwise investigated,
designated, listed, or identified as a potential site for removal, remediation,
cleanup, closure, restoration, reclamation, or other response activity under any
Environmental Laws; (ii) is subject to a Lien, arising under or in connection
with any Environmental Laws, that attaches to any revenues or to any Property
owned or operated by any Credit Party or any Subsidiary, wherever located; or
(iii) has been the site of any Release of Hazardous Substances or Hazardous
Wastes from present or past operations which has caused at the site or at any
third-party site any condition that has resulted in or could reasonably be
expected to result in the need for Response.
     (c) Certain Actions. Without limiting the foregoing, (i) all notices have
been properly filed, and no further action is required under current applicable
Environmental Law as to each Response or other restoration or remedial project
undertaken by the Borrower, any Subsidiary, or any Person’s former Subsidiaries
on any of their presently or formerly owned or operated Property and (ii) the
present and, to the Borrower’s best knowledge, future liability, if any, of the
Borrower or of any Subsidiary which could reasonably be expected to arise in
connection with requirements under Environmental Laws.
     Section 4.11 Material Subsidiaries. As of the Closing Date, the Borrower
does not have any Material Subsidiaries other than those listed on
Schedule 4.11. The Equity Interests of each Material Subsidiary are validly
issued, fully paid and non-assessable. Each Material Subsidiary, to the extent
required, has complied with the requirements of Section 5.6.
     Section 4.12 Investment Company Act. Neither the Borrower nor any
Subsidiary is an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. Neither the Borrower nor any Subsidiary is subject to regulation
under any Federal or state statute, regulation or other Legal Requirement which
limits its ability to incur Debt.
     Section 4.13 Taxes. Proper and accurate federal, state, local and foreign
tax returns, reports and statements required to be filed (after giving effect to
any extension granted in the time for filing) by the Borrower, any Subsidiary,
or any member of the Affiliated Group as determined under Section 1504 of the
Code (hereafter collectively called the “Tax Group”) have been filed with the
appropriate Governmental Authorities, and all Taxes due and payable have been
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which any fine, penalty, interest, late charge or loss may be added thereto for
non-payment thereof except (a) where contested in good faith and by appropriate
proceeding and for which full or adequate provisions therefor is included on the
books of the appropriate member of the Tax Group and (b) where the failure to do
so could not reasonably be expected to result in a Material Adverse Change.
Proper and accurate amounts have been withheld (including withholdings from
employee wages and salaries relating to income tax and employment insurance) by
the Borrower and all other members of the Tax Group from their employees for all
periods to comply with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Change. Timely payment of all material sales and use taxes required by
applicable law have been made by the Borrower and all other members of the Tax
Group except where the failure to do so could not reasonably be expected to
result in a Material Adverse Change.
     Section 4.14 Permits, Licenses, etc. The Borrower and each Subsidiary
possesses all permits, licenses, patents, patent rights or licenses, trademarks,
trademark rights, trade names rights, and copyrights which are material to the
conduct of its respective business except where the failure to maintain the same
could not reasonably be expected to result in a Material Adverse Change. The
Borrower and each Subsidiary manages and operates its business in accordance
with all applicable Legal Requirements except where the failure to so manage or
operate could not reasonably be expected to result in a Material Adverse Change.
     Section 4.15 Use of Proceeds. No Credit Party is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U). No proceeds of any Advance will be used to
purchase or carry any margin stock in violation of Regulation  T, U or X.
     Section 4.16 Condition of Property; Casualties. The material Properties
used or to be used in the continuing operations of the Borrower or any
Subsidiary, are in good working order and condition, normal wear and tear
excepted, except for certain deficiencies that could not reasonably be expected
to result in a Material Adverse Change. Except as disclosed in the Financial
Statements provided in Section 4.4(a), neither the business nor the material
Properties of the Borrower or any Subsidiary has been affected as a result of
any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, permits or concessions by a Governmental Authority,
riot, activities of armed forces or acts of God or of any public enemy, which
effect could reasonably be expected to cause a Material Adverse Change.
     Section 4.17 Insurance. The Borrower and each Subsidiary carry insurance
(which may be carried by the Borrower on a consolidated basis) or maintain
appropriate risk management programs in such amounts, covering such risks and
liabilities and with such deductibles or self-insurance retentions as are
reasonable or customary given the nature of its business, its ability to
self-insure, the circumstances and geographic area in which such business is
being conducted and the availability of insurance coverage at commercially
reasonable rates.
     Section 4.18 Foreign Assets Control Regulations, etc.
     (a) Neither any Letter of Credit nor any part of the proceeds of the
Advances will violate the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.

 

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     (b) Neither the Borrower nor any Subsidiary (i) is, or will become, a
Person described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of the
Anti-Terrorism Order or (ii) engages or will engage in any dealings or
transactions, or is or will be otherwise associated, with any such Person. The
Borrower and the Subsidiaries are in compliance, in all material respects, with
the USA Patriot Act.
     (c) The Borrower and its Subsidiaries is in compliance with any laws or
regulations relating to money laundering or terrorist financing, including,
without limitation, the Bank Secrecy Act, 31 U.S.C. sections 5301 et seq.; the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA
Patriot Act); Laundering of Monetary Instruments, 18 U.S.C. section 1956;
Engaging in Monetary Transactions in Property Derived from Specified Unlawful
Activity, 18 U.S.C. section 1957; the Financial Recordkeeping and Reporting of
Currency and Foreign Transactions Regulations, 31 C.F.R. Part 103; and any
similar laws or regulations currently in force or hereafter enacted.
     (d) Neither any Letter of Credit nor any part of the proceeds of the
Advances will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended, assuming in all cases that such Act applies to the Borrower or
one of the Subsidiaries.
ARTICLE V
AFFIRMATIVE COVENANTS
     So long as any Obligation shall remain unpaid (except for Obligations which
by their terms survive termination), any Lender shall have any Commitment
hereunder, or there shall exist any Letter of Credit Exposure, the Borrower
agrees to comply with the following covenants.
     Section 5.1 Organization. The Borrower shall, and shall cause each
Subsidiary to, preserve and maintain its partnership, limited liability company
or corporate existence, rights, franchises and privileges in the jurisdiction of
its organization, and qualify and remain qualified as a foreign business entity
in each jurisdiction in which qualification is necessary or desirable in view of
its business and operations or the ownership of its Properties and where failure
to qualify could reasonably be expected to cause a Material Adverse Change;
provided, however, that nothing herein contained shall prevent any transaction
permitted by Section 6.7 or Section 6.8.
     Section 5.2 Reporting.
     (a) Annual Financial Reports. The Borrower shall provide, or shall cause to
be provided, to the Administrative Agent with sufficient copies for the Lenders,
as soon as available after the end of each fiscal year of the Borrower, but in
any event no more than five Business Days after the date required under
Securities Laws for the filing of its Form 10-K, the unqualified audited annual
Financial Statements, all prepared in conformity with GAAP consistently applied
and all as audited by the Borrower’s certified public accountants of nationally
recognized standing or otherwise reasonably acceptable to the Administrative
Agent, together with a duly completed Compliance Certificate.
     (b) Quarterly Financial Reports. The Borrower shall provide to the
Administrative Agent with sufficient copies for the Lenders, as soon as
available after the end of the first three fiscal quarters of each fiscal year
of the Borrower, but in any event no more than five Business Days after the date
required under Securities Laws for the filing of its Form 10-Q Financial
Statements as of the close of such fiscal

 

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quarter which shall be certified as accurate by a senior financial officer of
the Borrower, and a duly completed Compliance Certificate.
     (c) Annual Budget. As soon as available and in any event within 60 days
after the end of each fiscal year of the Borrower, the Borrower shall provide to
the Administrative Agent an annual operating and capital budget for the current
fiscal year.
     (d) Defaults. The Borrower shall provide to the Administrative Agent
promptly, but in any event within three Business Days after knowledge of the
occurrence thereof, a notice of each Default or Event of Default known to the
Borrower or to any other Subsidiary, together with a statement of a Responsible
Officer of the Borrower setting forth the details of such Default or Event of
Default and the actions which the Borrower or such other Subsidiary has taken
and proposes to take with respect thereto.
     (e) Other Creditors. The Borrower shall provide to the Administrative Agent
promptly after the giving or receipt thereof, copies of any default notices
given or received by the Borrower or by any other Subsidiary pursuant to the
terms of any indenture, loan agreement, credit agreement, or similar agreement
evidencing or relating to Debt in a principal amount equal to or greater than
$25,000,000.
     (f) Litigation. The Borrower shall provide to the Administrative Agent
promptly after the commencement thereof, notice of all actions, suits, and
proceedings before any Governmental Authority, affecting the Borrower or any
Subsidiary, in each case, that could reasonably be expected to result in a
Material Adverse Change.
     (g) Environmental Notices. Promptly upon, and in any event no later than
15 days after, the receipt thereof, or the acquisition of knowledge thereof, by
the Borrower or any other Subsidiary, the Borrower shall provide the
Administrative Agent with a copy of any form of request, claim, complaint,
order, notice, summons or citation received from any Governmental Authority or
any other Person, (i) concerning violations or alleged violations of
Environmental Laws, which seeks to impose liability therefore in excess of
$25,000,000, or (ii) concerning any action or omission on the part of the
Borrower or any of its Subsidiaries in connection with Hazardous Waste or
Hazardous Substances which could reasonably result in the imposition of
liability in excess of $25,000,000 or requiring that action be taken to respond
to or clean up a Release of Hazardous Substances or Hazardous Waste into the
environment and such action or clean-up could reasonably be expected to exceed
$25,000,000, including without limitation any information request related to, or
notice of, potential responsibility under CERCLA.
     (h) Material Changes. The Borrower shall provide to the Administrative
Agent prompt written notice of any condition or event of which the Borrower or
any other Subsidiary has knowledge, which condition or event has resulted or may
reasonably be expected to result in (i) a Material Adverse Change or (ii) a
breach of or noncompliance with any material term, condition, or covenant of any
material contract to which the Borrower or any other Subsidiary is a party or by
which their Properties may be bound which breach or noncompliance could
reasonably be expected to result in a Material Adverse Change.
     (i) Termination Events. As soon as possible and in any event (i) within
30 days after the Borrower or any member of the Controlled Group knows or has
reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect to any Plan has occurred, and
(ii) within 10 days after the Borrower or any member of the Controlled Group
knows or has reason to know that any other Termination Event with respect to any
Plan has occurred, the Borrower shall provide to the Administrative Agent a
statement of a Responsible Officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower or any Affiliate of the
Borrower proposes to take with respect thereto;

 

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     (j) Termination of Plans. Promptly and in any event within five Business
Days after receipt thereof by the Borrower or any other member of the Controlled
Group from the PBGC, the Borrower shall provide to the Administrative Agent
copies of each notice received by the Borrower or any such other member of the
Controlled Group of the PBGC’s intention to terminate any Plan or to have a
trustee appointed to administer any Plan, except with respect to any Plan of
LeTourneau Technologies, Inc.;
     (k) Other ERISA Notices. (i) Promptly and in any event within five Business
Days after receipt thereof by the Borrower or any other member of the Controlled
Group from a Multiemployer Plan sponsor, the Borrower shall provide to the
Administrative Agent a copy of each notice received by the Borrower or any other
member of the Controlled Group concerning the imposition or amount of withdrawal
liability imposed on the Borrower or any other member of the Controlled Group
pursuant to Section 4202 of ERISA; (ii) as soon as possible and in any event no
later than 30 days prior to the occurrence of such event, the Borrower shall
provide to the Administrative Agent written notice of an assumption by the
Borrower, any Subsidiary, or any member of the Controlled Group of an obligation
to contribute to any Multiemployer Plan; and (iii) as soon as possible and in
any event no later than 30 days prior to the occurrence of such event, the
Borrower shall provide to the Administrative Agent written notice of an
acquisition by the Borrower, any Subsidiary, or any member of the Controlled
Group of an interest in any Person that causes such Person to become a member of
the Controlled Group if such Person sponsors, maintains or contributes to, or at
any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other Plan
that is subject to Title IV of ERISA under which the actuarial present value of
the benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities;
     (l) Other Governmental Notices. Promptly and in any event within five
Business Days after receipt thereof by the Borrower or any other Subsidiary, the
Borrower shall provide to the Administrative Agent a copy of any notice,
summons, citation, or proceeding seeking to modify in any material respect,
revoke, or suspend any material contract, license, permit, or agreement with any
Governmental Authority if such modification, revocation or suspension could
reasonably be expected to result in a Material Adverse Change;
     (m) Disputes; etc. Promptly and in any event within five Business Days
after knowledge thereof by the Borrower or any other Subsidiary, the Borrower
shall provide to the Administrative Agent written notice of (i) any claims,
legal or arbitration proceedings, proceedings before any Governmental Authority,
or disputes, or to the knowledge of the Borrower or any other Subsidiary, any
such actions threatened, or affecting the Borrower or any other Subsidiary,
which, if adversely determined, could reasonably be expected to cause a Material
Adverse Change, or any material labor controversy of which the Borrower or any
other Subsidiary has knowledge resulting in or reasonably considered to be
likely to result in a strike against the Borrower or any other Subsidiary if
such strike could reasonably be expected to result in a Material Adverse Change,
and (ii) any claim, judgment, Lien or other encumbrance (other than a Permitted
Lien) affecting any Property of the Borrower or any other Subsidiary, if the
value of the claim, judgment, Lien, or other encumbrance affecting such Property
shall exceed $25,000,000;
     (n) SEC. Promptly after the same become publicly available, the Borrower
shall provide to the Administrative Agent copies of all periodic and other
reports, proxy statements and other materials (other than filings under
Section 16 of the Securities Exchange Act of 1934) filed by the Borrower or any
other Subsidiary with the SEC, or any Governmental Authority succeeding to any
or all of the functions of said Commission, or with any national securities
exchange, or distributed by the Borrower or any other Subsidiary to its
shareholders generally, as the case may be; and

 

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     (o) Other Information. Subject to the confidentiality provisions of
Section 9.8, the Borrower shall provide to the Administrative Agent such other
information respecting the business, operations, or Property of the Borrower or
any other Subsidiary, financial or otherwise, as any Lender through the
Administrative Agent may reasonably request.
     Documents required to be delivered pursuant to Section 5.2(a), (b), or (m)
(to the extent any such documents are included in materials otherwise filed with
the SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date (i) on which the Borrower posts such documents,
or provides a link thereto on the Borrower’s website on the Internet at the
website address listed on Schedule III; or (ii) on which such documents are
posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant
website (including, without limitation, the SEC’s website), if any, to which
each Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
that: the Borrower shall notify (which may be by facsimile or electronic mail)
the Administrative Agent (and the Administrative Agent shall promptly notify the
Lenders thereof) of the posting of any such documents. The Administrative Agent
shall not have an obligation to request the delivery or to maintain copies of
the documents referred to above, and in any event shall have no responsibility
to monitor compliance by the Borrower with any such request for delivery, and
each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.
     Section 5.3 Insurance. The Borrower shall, and shall cause each Subsidiary
to, carry insurance (which may be carried by the Borrower on a consolidated
basis) or maintain appropriate risk management programs in such amounts,
covering such risks and liabilities and with such deductibles or self-insurance
retentions as are reasonable or customary given the nature of its business, its
ability to self-insure, the circumstances and geographic area in which such
business is being conducted, and the availability of insurance coverage at
commercially reasonable rates and as are consistent with past practices.
     Section 5.4 Compliance with Laws. The Borrower shall, and shall cause each
Subsidiary to, comply with all federal, state, provincial, territorial and local
laws and regulations (including Environmental Laws) which are applicable to the
operations and Property of the Borrower or such Subsidiary and maintain all
related permits necessary for the ownership and operation of the Borrower’s and
such Subsidiary’s Property and business, except in any case where the failure to
so comply or maintain could not reasonably be expected to result in a Material
Adverse Change, provided that this Section 5.4 shall not prevent the Borrower or
any of its Subsidiaries from, in good faith and with reasonable diligence,
contesting the validity or application of any such laws or regulations by
appropriate legal proceedings for which adequate reserves have been established.
     Section 5.5 Taxes. The Borrower shall, and shall cause each Subsidiary to
pay and discharge all Taxes imposed on the Borrower or any of its Subsidiaries,
respectively, prior to the date on which penalties attach, except in any case
where the failure to so comply could not reasonably be expected to result in a
Material Adverse Change; provided that nothing in this Section 5.5 shall require
the Borrower or any of its Subsidiaries to pay any Tax which is being contested
in good faith and for which adequate reserves have been established in
accordance with GAAP.
     Section 5.6 Additional Guarantors. Immediately upon the creation of any new
Material Subsidiary permitted by this Agreement and within 30 days after the
purchase by the Borrower or any of its Subsidiaries of the Equity Interests of
any Person, which purchase results in such Person becoming a Material
Subsidiary, the Borrower shall (a) cause such Subsidiary to execute and deliver
to the Administrative Agent, a joinder to the Guaranty, and (b) cause such
Subsidiary to deliver such evidence of corporate authority to enter into such
Credit Documents and favorable opinions of counsel to such

 

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Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to in clause (a)) as the
Administrative Agent may reasonably request.
     Section 5.7 Records; Inspection. The Borrower shall, and shall cause each
Subsidiary to maintain proper, complete and consistent books of record with
respect to such Person’s operations, affairs, and financial condition. From time
to time upon reasonable prior notice, the Borrower shall permit any Lender and
shall cause each Subsidiary to permit any Lender to (a) visit and inspect the
Property of the Borrower or such Subsidiary, (b) discuss the business operations
and Property of the Borrower or such Subsidiary with the officers and directors
thereof and (c) after the occurrence and during the continuance of an Event of
Default, subject to any applicable confidentiality considerations, examine the
books and records of the Borrower or such Subsidiary, in each case at such
reasonable times and intervals and to a reasonable extent and under the
reasonable guidance of officers of or employees delegated by officers of the
Borrower or such Subsidiary.
     Section 5.8 Maintenance of Property. The Borrower shall, and shall cause
each Subsidiary to, maintain their owned, leased, or operated Property in good
condition and repair, normal wear and tear excepted, except to the extent any
failure to so maintain could not reasonably be expected to result in a Material
Adverse Change; and shall abstain from, and cause each Subsidiary to abstain
from, knowingly or willfully permitting the commission of waste or other injury,
destruction, or loss of natural resources, or the occurrence of pollution,
contamination, or any other condition in, on or about the owned or operated
Property involving the Environment that could reasonably be expected to result
in Response activities and that could reasonably be expected to cause a Material
Adverse Change.
ARTICLE VI
NEGATIVE COVENANTS
     So long as any Obligation shall remain unpaid (except for Obligations which
by their terms survive termination), any Lender shall have any Commitment
hereunder, or there shall exist any Letter of Credit Exposure, the Borrower
agrees to comply with the following covenants.
     Section 6.1 Debt. The Borrower shall not, nor shall it permit any
Subsidiary to, create, assume, incur, suffer to exist, or in any manner become
liable, directly, indirectly, or contingently in respect of, any Debt, other
than the following:
     (a) Debt existing on the Closing Date and described in Schedule 6.1;
provided that such Debt may not be increased in principal amount except to the
extent such additional principal amount would be permitted pursuant to
Section 6.1(c) below;
     (b) unsecured Debt provided that the Borrower shall be in compliance, on a
pro forma basis after giving effect to such transactions, with the remaining
covenants contained in this Article VI recomputed as of the last day of the most
recently ended fiscal quarter of the Borrower as if the incurrence of the
unsecured Debt in question had occurred on the first day of each relevant period
for testing such compliance; provided that the aggregate principal amount of
Debt outstanding for all Subsidiaries permitted by this subsection (b), when
taken together with Debt permitted by subsection (c) below, shall not exceed at
the time of incurrence thereof 10% of Net Worth;
     (c) secured Debt not otherwise permitted under this Section 6.1; provided
that (i) the aggregate principal amount of all such Debt does not exceed 5% of
the Net Worth of the Borrower and its consolidated Subsidiaries at any time, and
(ii) the Borrower and its Subsidiaries are in compliance with the covenants set
forth in this Agreement, both before and after giving effect to each incurrence
of such Debt; provided that the aggregate principal amount of Debt outstanding
for all Subsidiaries permitted by

 

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this subsection (c), when taken together with Debt permitted by subsection
(b) above, shall not exceed at the time of incurrence thereof 10% of Net Worth;
and
     (d) intercompany Debt.
     Section 6.2 Liens. The Borrower shall not, nor shall it permit any of its
Subsidiaries to, create, assume, incur, or suffer to exist any Lien on the
Property of the Borrower or any other Subsidiary of the Borrower, whether now
owned or hereafter acquired, or assign any right to receive any income, other
than the following:
     (a) Liens securing the Obligations;
     (b) Liens existing on the Closing Date and described in Schedule 6.2;
     (c) Liens imposed by law, such as materialmen’s, mechanics’, builder’s,
carriers’, workmen’s and repairmen’s liens, and other similar liens arising in
the ordinary course of business securing obligations which are not overdue for a
period of more than 60 days or are being contested in good faith by appropriate
procedures or proceedings and for which adequate reserves have been established;
     (d) Liens arising in the ordinary course of business out of pledges or
deposits under workers compensation laws, unemployment insurance, old age
pensions, or other social security or retirement benefits, or similar
legislation to secure public or statutory obligations;
     (e) Liens for taxes, assessment, or other governmental charges which are
not yet due and payable or which are being actively contested in good faith by
appropriate proceedings and for which adequate reserves for such items have been
made in accordance with GAAP;
     (f) Liens arising from precautionary UCC financing statements regarding
leases to the extent such leases are permitted hereby;
     (g) encumbrances consisting of minor easements, zoning restrictions, or
other restrictions on the use of real property that do not (individually or in
the aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of the Borrower or such other Subsidiary to use
such assets in its business, and none of which is violated in any material
aspect by existing or proposed structures or land use to the extent such
violation could reasonably be expected to result in a Material Adverse Change;
     (h) Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies and
burdening only deposit accounts or other funds maintained with a depository
institution;
     (i) Liens on cash or securities pledged to secure performance of tenders,
surety and appeal bonds, government contracts, performance and return of money
bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations and other obligations of a like nature incurred in the ordinary
course of business;
     (j) judgment and attachment Liens not giving rise to an Event of Default,
provided that (i) any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally terminated
or the period within which such proceeding may be initiated shall not have
expired and (ii) no action to enforce such Lien has been commenced;

 

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     (k) Liens securing Debt and not otherwise permitted under this Section 6.2;
provided that (i) the aggregate principal amount of all Debt secured by such
Liens does not exceed 5% of the Net Worth of the Borrower and its consolidated
Subsidiaries at any time, and (ii) the Borrower and its Subsidiaries are in
compliance with the covenants set forth in this Agreement, both before and after
giving effect to each incurrence of such Debt; and
     (l) Liens on property of a person existing at the time such person is
acquired or merged with or into or consolidated with the Borrower as a
Subsidiary (and not created in anticipation or contemplation thereof); provided
that such Liens (i) do not extend to property not subject to such Liens at the
time of acquisition (other than improvements thereof), and (ii) secure Debt
permitted by Section 6.1(c).
     Section 6.3 [Reserved].
     Section 6.4 Acquisitions. The Borrower shall not, nor shall it permit any
Subsidiary to, make an Acquisition in a transaction or related series of
transactions; provided that, an Acquisition may be made so long as no Event of
Default exists both before and after giving effect to such Acquisition and such
Acquisition is in accordance with Section 6.11.
     Section 6.5 Agreements Restricting Liens; Negative Pledge. The Borrower
shall not, nor shall it permit any Subsidiary to, create, incur, assume or
permit to exist any contract, agreement or understanding (other than this
Agreement and agreements governing secured Debt permitted by Sections 6.1 and
6.2) which in any way prohibits or restricts the granting, conveying, creation
or imposition of any Lien on any of its Property, whether now owned or hereafter
acquired, to secure the Obligations, restricts any Subsidiary from paying
Restricted Payments or making or paying intercompany loans and advances to the
Borrower, or which requires the consent of or notice to other Persons in
connection therewith.
     Section 6.6 Use of Proceeds; Use of Letters of Credit. The Borrower shall
not, nor shall it permit any Subsidiary to use the proceeds of Advances and
Letters of Credit for any purposes other than (a) for working capital and other
general corporate purposes, (b) fund capital expenditures and (c) the payment of
fees and expenses related to the entering into of this Agreement and the other
Credit Documents. The Borrower shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly use any part of the proceeds of Advances
or Letters of Credit for any purpose which violates, or is inconsistent with,
Regulations T, U, or X.
     Section 6.7 Corporate Actions; Fundamental Changes.
     (a) The Borrower shall not, nor shall it permit any Credit Party to, merge,
amalgamate or consolidate with or into any other Person, except that (i) the
Borrower may merge or amalgamate with any Person provided that (A) no Change in
Control occurs and (B) immediately after giving effect to any such proposed
transaction no Default would exist, (ii) the Borrower may merge or amalgamate
with any of its wholly-owned Subsidiaries, provided that immediately after
giving effect to any such proposed transaction no Default would exist and the
Borrower is the surviving entity, (iii) any Subsidiary of the Borrower may
merge, amalgamate or be consolidated with or into any other Person, provided
that immediately after giving effect to any such proposed transaction no Event
of Default would exist and (iv) LeTourneau Technologies, Inc. may merge,
amalgamate or be consolidated with or into any other Person, provided that
immediately after giving effect to any such proposed transaction no Event of
Default would exist.
     (b) The Borrower shall not, nor shall it permit any Credit Party to, sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
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substantial part of its assets, or all or substantially all of the stock of any
of its Material Subsidiaries (in each case, whether now owned or hereafter
acquired), or liquidate or dissolve, except that, if at the time thereof and
immediately after giving effect thereto no Event of Default shall have occurred
and be continuing (i) the Borrower may sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or
substantially all of the stock or assets of LeTourneau Technologies, Inc. and
its subsidiaries to any Person, and (ii) any Subsidiary of the Borrower may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders.
     Section 6.8 Sale of Assets. The Borrower shall not, nor shall it permit any
Subsidiary to, sell, convey, or otherwise transfer any of its assets outside the
ordinary course of business; provided that, any such sale, conveyance or
transfer may be effected if (a) no Event of Default exists both prior to and
after giving effect to such sale, conveyance or transfer and (b) such sale,
conveyance or transfer is not prohibited under Section 6.7 above.
     Section 6.9 Restricted Payments. The Borrower shall not, nor shall it
permit any Subsidiary to make any Restricted Payments if at the time of the
making of such Restricted Payments a Default exists or an Default would result
from the making of such Restricted Payment.
     Section 6.10 Affiliate Transactions. The Borrower shall not, nor shall it
permit any Subsidiary to, directly or indirectly, enter into or permit to exist
any transaction or series of transactions (including, but not limited to, the
purchase, sale, lease or exchange of Property, the making of any investment, the
giving of any guaranty, the assumption of any obligation or the rendering of any
service) with any of their Affiliates unless such transaction or series of
transactions is on terms no less favorable to the Borrower or any Subsidiary, as
applicable, than those that could be obtained in a comparable arm’s length
transaction with a Person that is not such an affiliate, provided that the
foregoing restriction shall not apply to transactions between or among the
Borrower and any of its wholly-owned Subsidiaries or between and among any
wholly-owned Subsidiaries.
     Section 6.11 Line of Business. The Borrower shall not, nor shall it permit
any Subsidiary to, change the character of its business such that the principal
business of the Borrower and its Subsidiaries is not contract drilling
substantially as conducted on the date of this Agreement.
     Section 6.12 Compliance with ERISA. Except for matters that individually or
in the aggregate could not reasonably be expected to result in a Material
Adverse Change, the Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly: (a) engage in any transaction in connection with which
the Borrower or any Subsidiary could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed by
Chapter 43 of Subtitle D of the Code; (b) fail to make, or permit any member of
the Controlled Group to fail to make, full payment when due of all amounts
which, under the provisions of any Plan, agreement relating thereto or
applicable law, the Borrower, a Subsidiary or member of the Controlled Group is
required to pay as contributions thereto; (c) fail to cause, or allow any
Subsidiary or any member of the Controlled Group to cause, any Plan to comply
with the minimum funding standard under Section 302 of ERISA or Section 412 of
the Code; (d) permit, or allow any member of the Controlled Group to permit, the
actuarial present value of the benefit liabilities (as “actuarial present value
of the benefit liabilities” shall have the meaning specified in section 4041 of
ERISA) under any Plan that is regulated under Title IV of ERISA to exceed the
current value of the assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such benefit liabilities;
(e) incur, or permit any member of the Controlled Group to incur, a liability to
or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA; or (f) amend or permit any member of the Controlled Group to amend, a
Plan

 

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resulting in an increase in current liability such that the Borrower, any
Subsidiary or any member of the Controlled Group is required to provide security
to such Plan under section 401(a)(29) of the Code.
     Section 6.13 Limitation on Accounting Changes or Changes in Fiscal Periods.
The Borrower shall not, nor shall it permit any of its Subsidiaries to permit
(a) any change in any of its accounting policies affecting the presentation of
financial statements or reporting practices, except as required or permitted by
GAAP or (b) the fiscal year of the Borrower or any of its Subsidiaries to end on
a day other than December 31 or change the Borrower’s method of determining
fiscal quarters.
     Section 6.14 Hedging Arrangements. The Borrower shall not, nor shall it
permit any Subsidiary to, (a) purchase, assume, or hold a speculative position
in any commodities market or futures market or enter into any Hedging
Arrangement for speculative purposes; or (b) be party to or otherwise enter into
any Hedging Arrangement which is entered into for reasons other than as a part
of its normal business operations as a risk management strategy and/or hedge
against changes resulting from market conditions related to the Borrower’s or
its Subsidiaries’ operations.
     Section 6.15 Funded Leverage Ratio. The Borrower shall not permit the
Funded Leverage Ratio, at the end of each fiscal quarter of the Borrower, to be
greater than 35%.
     Section 6.16 Interest Coverage Ratio. The Borrower shall not permit the
ratio of, as of the last day of each fiscal quarter, (a) the consolidated EBITDA
of the Borrower, for the four-fiscal period then ended, to (b) the consolidated
Interest Expense of the Borrower for the four-fiscal period then ended, to be
less than 3.00 to 1.00.
ARTICLE VII
DEFAULT AND REMEDIES
     Section 7.1 Events of Default. The occurrence of any of the following
events shall constitute an “Event of Default” under this Agreement and any other
Credit Document:
     (a) Payment Failure. Any Credit Party (i) fails to pay any principal when
due under this Agreement or (ii) fails to pay, within three Business Days of
when due, any other amount due under this Agreement or any other Credit
Document, including payments of interest, fees, reimbursements, and
indemnifications;
     (b) False Representation or Warranties. Any representation or warranty made
or deemed to be made by any Credit Party or any Responsible Officer thereof in
this Agreement, in any other Credit Document or in any certificate delivered in
connection with this Agreement or any other Credit Document is incorrect, false
or otherwise misleading in any material respect at the time it was made or
deemed made;
     (c) Breach of Covenant. (i) Any breach by any Credit Party of any of the
covenants in Section 5.2(a), Section 5.2(b), Section 5.2(d), or Article VI of
this Agreement or (ii) any breach by any Credit Party of any other covenant
contained in this Agreement or any other Credit Document and such breach is not
cured within 30 days after the earlier of the date notice thereof is given to
the Borrower by any Lender Party or the date any Responsible Officer of the
Borrower or any other Subsidiary obtained actual knowledge thereof;
     (d) Guaranty. The Guaranty shall at any time (before its expiration
according to its terms) and for any reason cease to be in full force and effect
and valid and binding on the Guarantors party thereto or shall be contested by
any party thereto; any Guarantor shall deny it has any liability or

 

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obligation under such Guaranty; or any Guarantor shall cease to exist other than
as expressly permitted by the terms of this Agreement;
     (e) Cross-Default. (i) The Borrower or any Subsidiary shall fail to pay any
principal of or premium or interest on its Debt which is outstanding in a
principal amount of at least $25,000,000.00 individually or when aggregated with
all such Debt of such Persons so in default (but excluding Debt constituting
Obligations) when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; (ii) any other event shall
occur or condition shall exist under any agreement or instrument relating to
Debt which is outstanding in a principal amount of at least $25,000,000.00
individually or when aggregated with all such Debt of such Persons so in default
(other than Debt constituting Obligations), and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt prior to the stated maturity thereof;
or (iii) any such Debt which is outstanding in a principal amount of at least
$25,000,000.00 individually or when aggregated with all such Debt of such
Persons so in default shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment); provided
that, for purposes of this subsection 7.1(f), the “principal amount” of the
obligations in respect of any Hedging Arrangements at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that would be
required to be paid if such Hedging Arrangements were terminated at such time;
     (f) Bankruptcy and Insolvency. (i) The Borrower shall terminate its
existence or dissolve or (ii) any Credit Party (A) admits in writing its
inability to pay its debts generally as they become due; makes an assignment for
the benefit of its creditors; consents to or acquiesces in the appointment of a
receiver, liquidator, fiscal agent, or trustee of itself or any of its Property;
files a petition under any Debtor Relief Law; or consents to any reorganization,
arrangement, workout, liquidation, dissolution, or similar relief under any
Debtor Relief Law, (B) shall have had, without its consent, any court enter an
order appointing a receiver, liquidator, fiscal agent, or trustee of itself or
any of its Property; any petition filed against it seeking reorganization,
arrangement, workout, liquidation, dissolution or similar relief under any
Debtor Relief Law and such petition shall not be dismissed, stayed, or set aside
for an aggregate of 60 days, whether or not consecutive or (C) shall have had
any order for relief entered by a court under any Debtor Relief Law;
     (g) Adverse Judgment. The Borrower or any Subsidiary suffers final
judgments against any of them since the date of this Agreement in an aggregate
amount, less any insurance proceeds covering such judgments which are received
or as to which the insurance carriers admit liability, greater than
$25,000,000.00 and either (i) execution and/or seizure proceedings shall have
been commenced by any creditor upon such judgments or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of such
judgments, by reason of a pending appeal or otherwise, shall not be in effect;
     (h) Termination Events. Any Termination Event with respect to a Plan shall
have occurred, and, 30 days after notice thereof shall have been given to the
Borrower by the Administrative Agent, such Termination Event shall not have been
corrected and shall have created and caused to be continuing a material risk of
Plan termination or liability for withdrawal from the Plan as a “substantial
employer” (as defined in Section 4001(a)(2) of ERISA), which termination could
reasonably be expect to result in a liability of, or liability for withdrawal
could reasonably be expected to be, greater than $25,000,000.00;
     (i) Plan Withdrawals. The Borrower or any member of the Controlled Group as
employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer

 

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Plan and such withdrawing employer shall have incurred a withdrawal liability in
an annual amount exceeding $25,000,000.00; or
     (j) Change in Control. The occurrence of a Change in Control.
     Section 7.2 Optional Acceleration of Maturity. If any Event of Default
(other than an Event of Default pursuant to Section 7.1(f)) shall have occurred
and be continuing, then, and in any such event,
     (a) the Administrative Agent (i) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrower, declare that the
obligation of each Lender, the Swingline Lender and each Issuing Lender to make
Credit Extensions shall be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Majority Lenders, by notice to the Borrower, declare all outstanding Advances,
all interest thereon, and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon such Advances, all such interest, and all
such amounts shall become and be forthwith due and payable in full, without
presentment, demand, protest or further notice of any kind (including, without
limitation, any notice of intent to accelerate or notice of acceleration), all
of which are hereby expressly waived by the Borrower,
     (b) the Borrower shall, on demand of the Administrative Agent at the
request or with the consent of the Majority Lenders, deposit with the
Administrative Agent into the Cash Collateral Account an amount of cash equal to
103% of the outstanding Letter of Credit Exposure as security for the
Obligations to the extent the Letter of Credit Obligations are not otherwise
paid or cash collateralized at such time, and
     (c) the Administrative Agent shall at the request of, or may with the
consent of, the Majority Lenders proceed to enforce its rights and remedies
under the Guaranty or any other Credit Document by appropriate proceedings.
     Section 7.3 Automatic Acceleration of Maturity. If any Event of Default
pursuant to Section 7.1(f) shall occur,
     (a) the obligation of each Lender, the Swingline Lender and each Issuing
Lender to make Credit Extensions shall immediately and automatically be
terminated and all Advances, all interest on the Advances, and all other amounts
payable under this Agreement shall immediately and automatically become and be
due and payable in full, without presentment, demand, protest or any notice of
any kind (including, without limitation, any notice of intent to accelerate or
notice of acceleration), all of which are hereby expressly waived by the
Borrower,
     (b) the Borrower shall deposit with the Administrative Agent into the Cash
Collateral Account an amount of cash equal to 103% of the outstanding Letter of
Credit Exposure as security for the Obligations to the extent the Letter of
Credit Obligations are not otherwise paid or cash collateralized at such time,
and
     (c) the Administrative Agent shall at the request of, or may with the
consent of, the Majority Lenders proceed to enforce its rights and remedies
under the Guaranty or any other Credit Document by appropriate proceedings.
     Section 7.4 Set-off. If an Event of Default shall have occurred and be
continuing, the Administrative Agent, each Lender, each Issuing Lender, and each
of their respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by applicable law, to set off

 

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and apply any and all deposits (general or special, time or demand, provisional
or final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by the Administrative Agent, such Lender,
such Issuing Lender or any such Affiliate to or for the credit or the account of
any Credit Party against any and all of the obligations of such Credit Party now
or hereafter existing under this Agreement or any other Credit Document to the
Administrative Agent, such Lender or such Issuing Lender, irrespective of
whether or not the Administrative Agent, such Lender or such Issuing Lender
shall have made any demand under this Agreement or any other Credit Document and
although such obligations of any Credit Party may be contingent or unmatured or
are owed to a branch or office of the Administrative Agent, such Lender or such
Issuing Lender different from the branch or office holding such deposit or
obligated on such indebtedness. The rights of the Administrative Agent, each
Lender, each Issuing Lender and their respective Affiliates under this Section
are in addition to other rights and remedies (including other rights of setoff)
that the Administrative Agent, such Lender, such Issuing Lender or their
respective Affiliates may have. Each Lender and each Issuing Lender agrees to
notify the Borrower and the Administrative Agent promptly after any such setoff
and application, provided that the failure to give such notice shall not affect
the validity of such setoff and application.
     Section 7.5 Remedies Cumulative, No Waiver. No right, power, or remedy
conferred to any Lender, Administrative Agent, or Issuing Lender in this
Agreement or the Credit Documents, or now or hereafter existing at law, in
equity, by statute, or otherwise shall be exclusive, and each such right, power,
or remedy shall to the full extent permitted by law be cumulative and in
addition to every other such right, power or remedy. No course of dealing and no
delay in exercising any right, power, or remedy conferred to any Lender,
Administrative Agent, or Issuing Lender in this Agreement and the Credit
Documents or now or hereafter existing at law, in equity, by statute, or
otherwise shall operate as a waiver of or otherwise prejudice any such right,
power, or remedy. Any Lender, Administrative Agent, or Issuing Lender may cure
any Event of Default without waiving the Event of Default. No notice to or
demand upon the Borrower shall entitle the Borrower to similar notices or
demands in the future.
     Section 7.6 Application of Payments.
     (a) Prior to Event of Default. Prior to an Event of Default, all payments
made hereunder shall be applied as directed by the Borrower, but such payments
are subject to the terms of this Agreement.
     (b) After Event of Default. If an Event of Default has occurred and is
continuing, any amounts received or collected from, or on account of assets held
by, any Credit Party shall be applied to the Obligations by the Administrative
Agent in the following order and manner:
     (i) First, to payment of that portion of such Obligations constituting
fees, indemnities, expenses, and other amounts (other than principal and
interest but including fees, charges, and disbursements of counsel to the
Administrative Agent and amounts payable under Sections 2.11, 2.12, and 2.14)
payable by any Credit Party to the Administrative Agent in its capacity as such;
     (ii) Second, to payment of that portion of such Obligations constituting
fees, indemnities and other amounts (other than principal and interest) payable
by any Credit Party to the Lender Parties (including fees, charges and
disbursements of counsel to the respective Lender Parties and amounts payable
under Article II), ratably among Lender Parties;
     (iii) Third, to payment of that portion of such Obligations constituting
accrued and unpaid interest, allocated ratably among the Lender Parties;

 

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     (iv) Fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Obligations payable by any Credit Party allocated
ratably among the Lender Parties;
     (v) Fifth, to the Administrative Agent for the account of the Issuing
Lenders, ratably among the Issuing Lenders, to cash collateralize that portion
of the Letter of Credit Obligations comprised of the aggregate undrawn amount of
Letters of Credit;
     (vi) Sixth, to the remaining Obligations owed by any Credit Party including
all Obligations for which the Borrower is liable as a Guarantor, allocated among
such remaining Obligations as determined by the Administrative Agent and the
Majority Lenders and applied to such Obligations in the order specified in this
clause (b); and
     (vii) Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, the Letters of Credit have been terminated or cash
collateralized and all Commitments have been terminated, to Borrower or as
otherwise required by any Legal Requirement.
Subject to Section 2.3(i), amounts used to cash collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Sixth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as cash collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND ISSUING LENDERS
     Section 8.1 Appointment and Authority. Each Lender and each Issuing Lender
hereby irrevocably (a) appoints Wells Fargo to act on its behalf as the
Administrative Agent hereunder and under the other Credit Documents, and
(b) 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 hereof or thereof, together with such actions and powers as are reasonably
incidental thereto. The provisions of this Article VIII are solely for the
benefit of the Lender Parties, and neither the Borrower nor any other Credit
Party shall have rights as a third party beneficiary of any of such provisions.
     Section 8.2 Rights as a Lender. The Person 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 the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any other Subsidiary or other
Affiliate thereof as if such Person were not the Administrative Agent hereunder
and without any duty to account therefor to the Lenders.
     Section 8.3 Exculpatory Provisions. The Administrative Agent shall not have
any duties or obligations except those expressly set forth herein and in the
other Credit Documents. Without limiting the generality of the foregoing,
Administrative Agent:
     (a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;

 

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     (b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Credit Documents that the Administrative
Agent is required to exercise as directed in writing by the Majority Lenders (or
such other number or percentage of the Lenders as shall be expressly provided
for herein or in the other Credit Documents), provided that Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Credit Document or applicable law; and
     (c) shall not, except as expressly set forth herein and in the other Credit
Documents, have any duty to disclose, nor shall it be liable for the failure to
disclose, any information relating to the Borrower, any other Credit Party or
any of their respective Affiliates that is communicated to or obtained by the
Person serving as the Administrative Agent or any of its Affiliates in any
capacity.
     (d) The Administrative Agent shall not be liable for any action taken or
not taken by it (i) with the consent or at the request of the Majority Lenders
(or such other number or percentage of the Lenders as shall be necessary, or as
the Administrative Agent shall believe in good faith shall be necessary, under
the circumstances as provided in Sections 9.2 and 7.1) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
not be deemed to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower, a
Lender or an Issuing Lender.
     (e) 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 this Agreement or any other Credit Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Credit
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article III or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.
     Section 8.4 Reliance by 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 (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated 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 have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition
hereunder to the making of a Credit Extension that by its terms must be
fulfilled to the satisfaction of a Lender or an Issuing Lender, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or Issuing Lender unless the Administrative Agent shall have received
notice to the contrary from such Lender or Issuing Lender prior to the making of
such Credit Extension. 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.
     Section 8.5 Delegation of Duties. The Administrative Agent may perform any
and all of its duties and exercise its rights and powers hereunder or under any
other Credit Document 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 of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent

 

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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.
     Section 8.6 Resignation of Administrative Agent or Issuing Lender. The
Administrative Agent or an Issuing Lender may at any time give notice of its
resignation to the other Lender Parties and the Borrower. Upon receipt of any
such notice of resignation, the Majority Lenders shall have the right, with the
approval of the Borrower unless an Event of Default has occurred and is
continuing, to appoint a successor Administrative Agent and/or a successor
Issuing Lender. If no such successor shall have been so appointed and shall have
accepted such appointment within 30 days after Wells Fargo gives notice of its
resignation, then Wells Fargo may on behalf of the Lenders, appoint a successor
agent with the approval of the Borrower (such approval not to be unreasonably
withheld or delayed) unless an Event of Default has occurred and is continuing.
Once a Person has accepted such appointment, then such resignation shall become
effective in accordance with such notice and such Person shall be discharged
from its duties and obligations as Administrative Agent and/or Issuing Lender
hereunder and under the other Credit Documents (except that such Issuing Lender
shall remain the Issuing Lender with respect to any Letters of Credit
outstanding on the effective date of its resignation and the provisions
affecting the Issuing Lender with respect to such Letters of Credit shall inure
to the benefit of such Person until the termination of all such Letters of
Credit issued by such Person). Upon the acceptance of a successor’s appointment
as Administrative Agent or Issuing Lender hereunder, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent or Issuing Lender, as
applicable, and the retiring Administrative Agent or Issuing Lender, as
applicable, shall be discharged from all of its duties and obligations hereunder
or under the other Credit Documents (if not already discharged therefrom as
provided above in this paragraph). The fees payable by the Borrower to a
successor Administrative Agent or Issuing Lender, as applicable shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the retiring Administrative Agent’s or
Issuing Lender’s resignation hereunder and under the other Credit Documents, the
provisions of this Article and Sections 9.1(b), (c), and (d) and Section 2.3(h)
shall continue in effect for the benefit of such retiring Administrative Agent
and Issuing Lender, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring Administrative Agent or Issuing Lender, as applicable, was acting as
Administrative Agent or Issuing Lender.
     Section 8.7 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender Party acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender Party or any of their Related
Parties 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 Party also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender Party or any
of their Related Parties 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 Credit
Document or any related agreement or any document furnished hereunder or
thereunder.
     Section 8.8 No Other Duties, etc. Anything herein to the contrary
notwithstanding, none of the Sole Bookrunner, Lead Arranger, Syndication Agent
and Documentation Agent listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Credit
Documents, except in its capacity, as applicable, as the Administrative Agent, a
Lender or an Issuing Lender hereunder.

 

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ARTICLE IX
MISCELLANEOUS
     Section 9.1 Expenses; Indemnity; Damage Waiver.
     (a) Costs and Expenses. The Borrower shall pay (i) all reasonable and
documented 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, negotiation, execution,
delivery and administration of this Agreement and the other Credit Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by Issuing
Lender 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 any Lender Party (including the fees, charges
and disbursements of any counsel for any Lender Party), in connection with the
enforcement or protection of its rights (A) in connection with this Agreement
and the other Credit Documents, including its rights under this Section, or
(B) in connection with the Advances 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 Advances or Letters of Credit.
     (b) Indemnification by the Borrower. The Borrower shall, and does hereby
indemnify, the Administrative Agent (and any sub-agent thereof), each Lender and
each Issuing 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 any Indemnitee or asserted against any
Indemnitee by any third party arising out of, in connection with, or as a result
of (i) the execution or delivery of this Agreement, any other Credit Document or
any agreement or instrument contemplated hereby or thereby, the performance by
the parties hereto of their respective obligations hereunder or thereunder, the
consummation of the transactions contemplated hereby or thereby, or, in the case
of the Administrative Agent (and any sub-agent thereof) and its Related Parties
only, the administration of this Agreement and the other Credit Documents,
(ii) any Advance or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by an Issuing Lender 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 owned or operated by the Borrower or any Subsidiary, or any
Environmental Liability related in any way to the Borrower or any Subsidiary, 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, whether brought by a third party or by the Borrower or any other Credit
Party, and regardless of whether any Indemnitee is a party thereto, IN ALL
CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE
COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (i) are determined
by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of or material breach
of the Credit Documents by, such Indemnitee, if the Borrower or such other
Credit Party has obtained a final and nonappealable judgment in its favor on
such claim as determined by a court of competent jurisdiction or (ii) arise
solely as the result of a dispute among or between Indemnitees.
     (c) Reimbursement by Lenders. To the extent that the Borrower for any
reason fail to indefeasibly pay any amount required under subsection (a) or (b)
of this Section to be paid by it to the

 

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Administrative Agent (or any sub-agent thereof), any Issuing Lender or any
Related Party of any of the foregoing (and without limiting its obligation to do
so), each Lender severally agrees to pay to the Administrative Agent (or any
such sub-agent), the Issuing Lenders or such Related Party, as the case may be,
such Lender’s Applicable Percentage (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 any such sub-agent) or an Issuing
Lender in its capacity as such, or against any Related Party of any of the
foregoing acting for the Administrative Agent (or any such sub-agent) or an
Issuing Lender in connection with such capacity. The obligations of the Lenders
under this subsection (c) are subject to the provisions of Section 2.5(e).
     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted
by applicable law, no Credit Party shall assert, and each such party hereto
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, any other Credit Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Advance or Letter
of Credit or the use of the proceeds thereof.
     (e) Electronic Communications. No Indemnitee referred to in subsection
(b) above shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Credit Documents or the transactions
contemplated hereby or thereby unless such damages result from a breach of the
confidentiality provisions of Section 9.8 or except where the same are a result
of such party’s gross negligence or willful misconduct.
     (f) Payments. All amounts due under this Section shall be payable not later
than ten Business Days after written demand therefor.
     (g) Survival. The agreements in this Section shall survive the resignation
of the Administrative Agent and any Issuing Lender, the replacement of any
Lender, the termination of the Commitments, termination or expiration of all
Letters of Credit, and the repayment, satisfaction or discharge of all the other
Obligations.
     Section 9.2 Waivers and Amendments.
     (a) No amendment or waiver of any provision of this Agreement, the Notes,
or any other Credit Document, nor consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Lenders and the Borrower, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that, no such agreement shall (a) increase the
Commitment of any Lender without the written consent of such Lender,
(b) increase the aggregate Revolving Commitments other than pursuant to
Section 2.1(c) as in effect on the date hereof without the written consent of
each Lender, (c) reduce the principal amount of any Advance (other than
prepayments or repayments in accordance with the terms of this Agreement) or
reduce the amount of or rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby,
(d) postpone the scheduled date of payment of the principal amount of any
Advance, 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 Commitment, without the written consent of each Lender
affected thereby, (e) change Section 2.13(f), Section 2.5(e), Section 7.6, this
Section 9.2 or any other provision in any Credit Document which expressly
requires the consent of, or action or waiver by, all of the Lenders, (f) amend,
modify or waive any provision in a manner that would alter the pro rata sharing
of payments to

 

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or disbursements by Lenders required thereby, without the written consent of
each Lender, (g) release any Guarantor from its obligation under any Guaranty
except any Guarantor sold as permitted by Sections 6.7 and 6.8, without the
written consent of each Lender or (h) change any of the provisions of this
Section or the definition of “Majority Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent, the Issuing Lenders or the Swingline Lender hereunder
without the prior written consent of the Administrative Agent, the Issuing
Lenders or the Swingline Lender, as the case may be.
     (b) Notwithstanding anything to the contrary contained in this Section 9.2
Credit Documents executed by Subsidiaries in connection with this Agreement may
be in a form reasonably determined by the Administrative Agent and may be,
together with this Agreement, amended and waived with the consent of the
Administrative Agent at the request of the Borrower without the need to obtain
the consent of any other Lender if such amendment or waiver is delivered in
order (i) to comply with local Law or advice of local counsel, (ii) to cure
ambiguities or defects or (iii) to cause such Credit Documents to be consistent
with this Agreement and the other Credit Documents.
     Section 9.3 Severability. In case one or more provisions of this Agreement
or the other Credit Documents shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality, and enforceability of
the remaining provisions contained herein or therein shall not be affected or
impaired thereby. The invalidity of a provision in a particular jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
     Section 9.4 Survival of Representations and Obligations. All
representations and warranties contained in this Agreement or made in writing by
or on behalf of the Borrower in connection herewith shall survive the execution
and delivery of this Agreement and the other Credit Documents, the making Credit
Extensions and any investigation made by or on behalf of the Lenders, none of
which investigations shall diminish any Lender’s right to rely on such
representations and warranties. All obligations of the Borrower provided for in
Sections 2.11, 2.12, 2.14(b), and 9.1(a), (b) and (d) and all of the obligations
of the Lenders in Section 9.1(c) and Section 9.8 shall survive any termination
of this Agreement, repayment in full of the Obligations, and termination or
expiration of all Letters of Credit.
     Section 9.5 Successors and Assigns Generally. 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, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender Party and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder
except (a) to an Eligible Assignee in accordance with the provisions of
Section 9.6(a), (b) by way of participation in accordance with the provisions of
Sections 9.6(c) and 9.6(d) or (c) by way of pledge or assignment of a security
interest subject to the restrictions of Section 9.6(e) (and any other attempted
assignment or transfer by any party hereto shall be null and void). 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, Participants to the extent provided in Section 9.6(c) and, to
the extent expressly contemplated hereby, the Related Parties of the
Administrative Agent and each Lender) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

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     Section 9.6 Lender Assignments and Participations.
     (a) Assignments by Lenders. Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Advances at
the time owing to it); provided that
     (i) except in the case of an assignment of the entire remaining amount of
the assigning Lender’s Commitment and the Advances under such Commitment at the
time owing to it or in the case of an assignment to a Lender or an Affiliate of
a Lender or an Approved Fund with respect to a Lender, the aggregate amount of
the Commitment (which for this purpose includes Advances outstanding thereunder)
or, if the Commitment is not then in effect, the principal outstanding balance
of the Advances 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 or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date) shall not be
less than $10,000,000, unless the Administrative Agent and, so long as no Event
of Default has occurred and is continuing, the Borrower otherwise consents (each
such consent not to be unreasonably withheld or delayed); provided, however,
that concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such minimum amount has
been met;
     (ii) 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 with respect to the applicable Class of Advances or the
Commitment assigned;
     (iii) any assignment of a Commitment must be approved by the Administrative
Agent and the Issuing Lenders unless the Person that is the proposed assignee is
itself a Lender with a Revolving Commitment (whether or not the proposed
assignee would otherwise qualify as an Eligible Assignee); and
     (iv) 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 (it being understood that only one such processing
fee is payable for the series of concurrent assignments to members of an
Assignee Group or the series of concurrent assignments from members of an
Assignee Group to a single Eligible Assignee or to an Eligible Assignee and
members of its Assignee Group) and the Eligible Assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to paragraph (b) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement 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 2.11, 2.12, 2.14(b), 9.1(a), 9.1(b),
9.1(c), and 9.1(d) with respect to facts and circumstances occurring prior to
the effective date of such assignment. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
paragraph shall be treated for purposes of this

 

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Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.
     (b) Register. The Administrative Agent, acting solely for this purpose as
an agent of the Borrower, shall maintain at one of its offices in Denver,
Colorado or Houston, Texas 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 Commitments of, and principal amounts of the Advances owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).
The entries in the Register shall be conclusive absent manifest error, and the
Borrower and the Lender Parties 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. At any reasonable
time and from time to time upon reasonable prior notice, the Register shall be
available (i) for inspection by the Borrower and (ii) for inspection by each
Lender as to its Revolving Commitment and principal amount of Advances owing to
it.
     (c) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower, any other Credit Party or the Administrative Agent,
sell participations to any Person (other than a natural person or the Borrower
or any of the Borrower’s Affiliates or other Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitments and/or the
Advances owing to it); provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower and the Lender Parties shall continue to deal solely and
directly with such Lender Party in connection with such Lender Party’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 clauses (a), (b), (c) or
(d) of this Section 9.6 (that adversely affects such Participant). Subject to
paragraph (d) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of, and subject to the requirements of,
Sections 2.11, 2.12 and 2.14 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (a) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 7.4 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.13(f) as though it were a Lender.
     (d) Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Section 2.12 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 2.14 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 2.14(d), in which case Section 2.14 shall be
applied as if such Participant had become a Lender and had acquired its interest
by assignment pursuant to paragraph (a) of this Section; provided that, in no
event shall such Participant be entitled to receive any greater payment under
Section 2.14 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant.
     (e) Certain Pledges. 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 any pledge

 

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or assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
     Section 9.7 Notices, Etc.
     (a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in 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 facsimile as
follows: (i) if to the Borrower or any other Credit Party, at the applicable
address (or facsimile numbers) set forth on Schedule III; (ii) if to the
Administrative Agent or an Issuing Lender, at the applicable address (or
facsimile numbers) set forth on Schedule III; and (iii) if to a Lender, to it at
its address (or facsimile number) set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by facsimile shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).
     (b) Electronic Communications.
     (i) The Borrower and the Lenders agree that the Administrative Agent may
make any material delivered by the Borrower or any other Credit Party to the
Administrative Agent, as well as any amendments, waivers, consents, and other
written information, documents, instruments and other materials relating to the
Borrower, any other Subsidiary, or any other materials or matters relating to
this Agreement, the Notes or any of the transactions contemplated hereby
(collectively, the “Communications”) available to the Lenders by posting such
notices on an electronic delivery system (which may be provided by the
Administrative Agent, an Affiliate of the Administrative Agent, or any Person
that is not an Affiliate of the Administrative Agent), such as IntraLinks, or a
substantially similar electronic system (the “Platform”); provided that the
foregoing shall not apply to notices to any Lender or Issuing Lender pursuant to
Article II if such Lender or Issuing Lender, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Borrower acknowledges that (i) the
distribution of material through an electronic medium is not necessarily secure
and that there are confidentiality and other risks associated with such
distribution, (ii) the Platform is provided “as is” and “as available” and
(iii) none of the Administrative Agent nor any of their respective Affiliates
warrants the accuracy, completeness, timeliness, sufficiency, or sequencing of
the Communications posted on the Platform. The Administrative Agent and their
respective Affiliates expressly disclaim with respect to the Platform any
liability for errors in transmission, incorrect or incomplete downloading,
delays in posting or delivery, or problems accessing the Communications posted
on the Platform and any liability for any losses, costs, expenses or liabilities
that may be suffered or incurred in connection with the Platform. No warranty of
any kind, express, implied or statutory, including, without limitation, any
warranty of merchantability, fitness for a particular purpose, non-infringement
of third party rights or freedom from viruses or other code defects, is made by
the Administrative Agent or any of its Affiliates in connection with the
Platform. Nothing in this Section 9.7(b) shall relieve the Administrative Agent
or any Lender from their obligations under Section 9.8.
     (ii) Each Lender agrees that notice to it (as provided in the next
sentence) (a “Notice”) specifying that any Communication has been posted to the
Platform shall for purposes

 

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of this Agreement constitute effective delivery to such Lender of such
information, documents or other materials comprising such Communication. Each
Lender agrees (i) to notify, on or before the date such Lender becomes a party
to this Agreement, the Administrative Agent in writing of such Lender’s e-mail
address to which a Notice may be sent (and from time to time thereafter to
ensure that the Agent has on record an effective e-mail address for such Lender)
and (ii) that any Notice may be sent to such e-mail address.
     (c) Change of Address, Etc. Any party hereto may change its address or
facsimile number for notices and other communications hereunder by notice to the
other parties hereto.
     Section 9.8 Confidentiality. The Administrative Agent, each Lender and each
Issuing Lender 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’ respective partners, directors, officers,
employees, agents, advisors and other representatives (the “Representatives”)
(it being understood that the Representative 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 purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Credit
Document or any action or proceeding relating to this Agreement or any other
Credit Document or the enforcement of rights hereunder or thereunder,
(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 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 or any
other Subsidiary and their respective obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
any Lender Party or any of their respective Affiliates on a nonconfidential
basis from a source other than a Credit Party. For purposes of this Section,
“Information” means all information received from the Borrower or any other
Subsidiary relating to the Borrower or any other Subsidiary or any of their
respective businesses, other than any such information that is available to
Lender Party on a nonconfidential basis prior to disclosure by the Borrower or
any other Subsidiary. 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. The Administrative Agent, each
Lender and each Issuing Lender agrees to be responsible for any breaches of this
Section 9.8 by its Representatives.
     Section 9.9 Business Loans. The Borrower warrants and represents that the
Obligations are and shall be for business, commercial, investment or other
similar purposes and not primarily for personal, family, household or
agricultural use, as such terms are used in Chapter One (“Chapter One”) of the
Texas Credit Code. At all such times, if any, as Chapter One shall establish a
Maximum Rate, the Maximum Rate shall be the “indicated rate ceiling” (as such
term is defined in Chapter One) from time to time in effect.
     Section 9.10 Usury Not Intended. It is the intent of the Borrower and each
Lender in the execution and performance of this Agreement and the other Credit
Documents to contract in strict compliance with applicable usury laws, including
conflicts of law concepts, governing the Advances of each Lender including such
applicable laws of the State of Texas, the United States from time to time in
effect, and any other jurisdiction whose laws may be mandatorily applicable to
such Lender notwithstanding the other provisions of this Agreement. In
furtherance thereof, the Lenders and the

 

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Borrower stipulate and agree that none of the terms and provisions contained in
this Agreement or the other Credit Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes of
this Agreement and all other Credit Documents, “interest” shall include the
aggregate of all charges which constitute interest under such laws that are
contracted for, charged or received under this Agreement or any other Credit
Document; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Obligations, include amounts which by applicable law are deemed interest
which would exceed the Maximum Rate, then such excess shall be deemed to be a
mistake and each Lender receiving same shall credit the same on the principal of
the Obligations owing to such Lender (or if all such Obligations shall have been
paid in full, refund said excess to the Borrower). In the event that the
maturity of the Obligations are accelerated by reason of any election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the Maximum
Rate, and excess interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the applicable
Obligations (or, if the applicable Obligations shall have been paid in full,
refunded to the Borrower of such interest). In determining whether or not the
interest paid or payable under any specific contingencies exceeds the Maximum
Rate, the Borrower and the Lenders shall to the maximum extent permitted under
applicable law amortize, prorate, allocate and spread in equal parts during the
period of the full stated term of the Advances all amounts considered to be
interest under applicable law at any time contracted for, charged, received or
reserved in connection with the Obligations. The provisions of this Section
shall control over all other provisions of this Agreement or the other Credit
Documents which may be in apparent conflict herewith.
     Section 9.11 Usury Recapture. In the event the rate of interest chargeable
under this Agreement or any other Credit Document at any time is greater than
the Maximum Rate, the unpaid principal amount of the Obligations shall bear
interest at the Maximum Rate until the total amount of interest paid or accrued
on the Obligations equals the amount of interest which would have been paid or
accrued on the Advances if the stated rates of interest set forth in this
Agreement or applicable Credit Document had at all times been in effect. In the
event, upon payment in full of the Obligations, the total amount of interest
paid or accrued under the terms of this Agreement and the Obligations is less
than the total amount of interest which would have been paid or accrued if the
rates of interest set forth in this Agreement or such Credit Document had, at
all times, been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Administrative Agent for the account of the applicable
Lender Party an amount equal to the difference between (i) the lesser of (A) the
amount of interest which would have been charged on Obligations owed to it if
the Maximum Rate had, at all times, been in effect and (B) the amount of
interest which would have accrued on such Obligations if the rates of interest
set forth in this Agreement had at all times been in effect and (ii) the amount
of interest actually paid under this Agreement or any Credit Document on
Obligations owed to it. In the event the any Lender Party ever receive, collect
or apply as interest any sum in excess of the Maximum Rate, such excess amount
shall, to the extent permitted by law, be applied to the reduction of the
principal balance of the Obligations, and if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to the
Borrower.
     Section 9.12 Payments Set Aside. To the extent that any payment by or on
behalf of the Borrower or any other Credit Party is made to any Lender Party, or
any Lender Party exercises its right of setoff, and such payment or the proceeds
of such setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by any Lender Party in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding under
any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such setoff had not occurred, and (b) each

 

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Lender and each Issuing Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the applicable Overnight Rate from time to time in effect, in the
applicable currency of such recovery or payment. The obligations of the Lenders
and the Issuing Lenders under clause (b) of the preceding sentence shall survive
the payment in full of the Obligations and the termination of this Agreement.
     Section 9.13 Governing Law; Submission to Jurisdiction.
     (a) Governing Law. This Agreement, the Notes and the other Credit Documents
(unless otherwise expressly provided therein) shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas.
Without limiting the intent of the parties set forth above, (a) Chapter 346 of
the Texas Finance Code, as amended (relating to revolving loans and revolving
tri-party accounts (formerly Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch. 15)),
shall not apply to this Agreement, the Notes, or the transactions contemplated
hereby and (b) to the extent that any Lender may be subject to Texas law
limiting the amount of interest payable for its account, such Lender shall
utilize the indicated (weekly) rate ceiling from time to time in effect.
     (b) Submission to Jurisdiction. The Borrower irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any Federal or Texas state court sitting in Harris County, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or any other Credit Document, or for recognition
or enforcement of any judgment, and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Texas State court or, to the
fullest extent permitted by applicable 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 in
any other Credit Document shall affect any right that any Lender Party may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Credit Document against any Credit Party or its properties in the
courts of any jurisdiction.
     (c) Waiver of Venue. The Borrower irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, any objection that it may now
or hereafter have to the laying of venue of any action or proceeding arising out
of or relating to this Agreement or any other Credit 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 applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
     (d) Service of Process. Each party hereto irrevocably consents to service
of process in any manner permitted by applicable law.
     Section 9.14 Execution and Effectiveness.
     (a) Execution in Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Credit
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. This Agreement shall become effective when it shall have been executed
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when the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.
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.
     (b) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, or any state laws based on the Uniform Electronic
Transactions Act.
     Section 9.15 Waiver of Jury. EACH PARTY HERETO HEREBY IRREVOCABLY 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 OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
     Section 9.16 USA PATRIOT ACT Notice. Each Lender that is subject to the Act
(as hereinafter defined) and the Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies the 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 or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Act. Promptly following a request from the Administrative Agent, a
Lender, or Issuing Lender, the Borrower hereby agree to deliver all
documentation and other information that the Administrative Agent, a Lender, or
an Issuing Lender, as applicable, may reasonably request in order to comply with
its ongoing obligations under applicable “know your customer” and anti-money
laundering rules and regulations, including the Act.
     PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, A LOAN
AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE LOAN AGREEMENT EXCEEDS $50,000.00
IN VALUE IS NOT ENFORCEABLE UNLESS THE LOAN AGREEMENT IS IN WRITING AND SIGNED
BY THE PARTY TO BE BOUND OR THAT PARTY’S AUTHORIZED REPRESENTATIVE.
     THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS
DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH

 

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RESPECT TO THE SUBJECT MATTERS SET FORTH HEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
     THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
     EXECUTED as of the date first above written.

              BORROWER:   ROWAN COMPANIES, INC.    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

              LENDER PARTIES:   WELLS FARGO BANK,                   NATIONAL
ASSOCIATION
as Administrative Agent, Swingline Lender,
Issuing Lender and a Lender    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

                  BAYERISCHE HYPO-UND VEREINSBANK AG
as Syndication Agent and a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

                  AMEGY BANK NATIONAL ASSOCIATION
as Documentation Agent and a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

 

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                  ABU DHABI INTERNATIONAL BANK INC.
as a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

                  LEHMAN BROTHERS COMMERCIAL BANK
as a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

                  DEUTSCHE BANK AG NEW YORK BRANCH
as a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

[Schedules Omitted]