Exhibit 10.1

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of March 7, 2006

By and Among

AMERICAN ROCK SALT COMPANY LLC

(as Borrower)

MANUFACTURERS AND TRADERS TRUST COMPANY

(as Arranger, Agent, Collateral Agent and Letters of Credit Issuer)

and

THE LENDERS PARTY HERETO

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TABLE OF CONTENTS

 

SECTION 1.

   DEFINITIONS    1

1.1

  

Definitions

   1

1.2

  

Other Defined Terms; Rules of Interpretation

   41

SECTION 2

   REVOLVING CREDIT FACILITY    42

2.1

  

Total Revolving Credit Commitment

   42

2.2

  

Revolving Loan Notes

   43

2.3

  

Procedure for Borrowing with Respect to Revolving Loans

   43

2.4

  

Disbursement of Revolving Loans

   44

2.5

  

Revolving Loans and Revolving Borrowings

   44

2.6

  

Use of Proceeds

   45

2.7

  

Termination and Reduction of Total Revolving Credit Commitment

   45

2.8

  

Release of Certain Collateral

   45

SECTION 3

   LETTERS OF CREDIT    46

3.1

  

Standby L/C Facility

   46

3.2

  

Provisions Applicable to all Letters of Credit

   49

SECTION 4

   TERM LOAN FACILITY    51

4.1

  

Term Loan Commitment

   51

4.2

  

Term Loan Note(s)

   51

4.3

  

Disbursement of Term Loans

   51

4.4

  

Use of Proceeds

   51

4.5

  

Termination and Reduction of Term Loan Commitment

   51

SECTION 5

   PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT FEES AND PAYMENTS    51

5.1

  

Upfront Commitment Fees; Revolving Credit Fee; and Unused Commitment Fee

   51

5.2

  

Prepayments and Repayments

   52

5.3

  

Interest Rates, Payments and Payment Dates

   55

5.4

  

Interest Rate Conversions

   55

5.5

  

Pro Rata Treatment and Payment Dates

   56

5.6

  

Inability to Determine LIBOR Rate

   57

5.7

  

Computation of Interest and Fees

   57

5.8

  

Illegality

   58

5.9

  

Applicable Law

   58

5.10

  

Indemnity

   59

5.11

  

Taxes

   59

5.12

  

Payments by Agent

   60

SECTION 6

   REPRESENTATIONS AND WARRANTIES    62

6.1

  

Borrower’s Existence and Business

   62

6.2

  

Compliance with Law

   62

6.3

  

Power and Authorization; Enforceable Obligations

   62

6.4

  

Governmental Approvals and Other Consents and Approvals

   63

 

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6.5

  

No Legal Bar

   63

6.6

  

No Proceeding or Litigation

   64

6.7

  

Material Contracts

   64

6.8

  

Financial Statements

   64

6.9

  

Ownership of Property; Liens

   65

6.10

  

Taxes

   65

6.11

  

Regulation U

   66

6.12

  

ERISA

   66

6.13

  

Investment Company Act

   67

6.14

  

Senior Security Documents

   67

6.15

  

Property Rights, Utilities, Etc.

   67

6.16

  

Compliance with Building Codes, Zoning Laws, Etc.

   67

6.17

  

Principal Place of Business, Etc.

   67

6.18

  

Description of Property

   68

6.19

  

Sufficiency of Mineral Rights

   68

6.20

  

Sufficiency of Access

   68

6.21

  

Locations of Site

   68

6.22

  

Environmental Matters

   68

6.23

  

Intellectual Property

   69

6.24

  

Labor Matters

   70

6.25

  

Subsidiaries

   70

6.26

  

Full Disclosure

   70

SECTION 7

   CONDITIONS PRECEDENT    71

7.1

  

Conditions Precedent to the Initial Closing

   71

7.2

  

Conditions to All Revolving Loans and Standby L/Cs

   72

SECTION 8

   AFFIRMATIVE COVENANTS    73

8.1

  

Conduct of Business, Maintenance of Existence, Etc.

   73

8.2

  

Partnership Tax Status; Corporate Existence, Etc.

   74

8.3

  

Payment of Obligations and Performance of Material Contracts

   74

8.4

  

Borrower Insurance Coverage

   75

8.5

  

Inspection of Property; Maintenance of Books and Records

   77

8.6

  

Compliance with Laws

   78

8.7

  

Financial Statements

   78

8.8

  

Certificates; Three Year Operating Budget, Other Information

   79

8.9

  

Taxes

   81

8.10

  

Maintenance of Property

   81

8.11

  

Notices

   81

8.12

  

Maintenance of Liens of the Senior Security Documents; Acquisition of Mineral
Rights; Future Mortgages

   83

8.13

  

Employee Plans

   83

8.14

  

Storage

   83

8.15

  

Environmental Matters

   83

8.16

  

Use of Proceeds

   85

8.17

  

Syndication Efforts

   85

8.18

  

Real Estate Acquisitions

   85

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8.19

  

Operating Accounts

   85

8.20

  

Future Subsidiaries

   86

SECTION 9

   NEGATIVE COVENANTS    87

9.1

  

Leverage Ratio

   87

9.2

  

Fixed Charge Coverage Ratio

   87

9.3

  

Investments

   87

9.4

  

Merger, Sale of Assets, Purchases, Etc.

   87

9.5

  

Indebtedness

   87

9.6

  

Liens

   87

9.7

  

Restricted Payments

   88

9.8

  

Capital Expenditures

   88

9.9

  

Nature of Business

   88

9.10

  

Amendment of Contracts, Etc.

   88

9.11

  

Leases

   89

9.12

  

Change of Office

   89

9.13

  

Change of Name

   89

9.14

  

Compliance with ERISA

   89

9.15

  

Transactions with Affiliates and Others

   89

9.16

  

Alteration or Abandonment of the Project

   90

9.17

  

Optional Payments and Modifications of Senior Second Secured Notes

   90

9.18

  

Materials of Environmental Concern

   90

9.19

  

Fiscal Year

   90

9.20

  

New Members

   90

9.21

  

Salt Depot Agreements

   91

9.22

  

Settlement Agreement

   91

SECTION 10

   EVENTS OF DEFAULT    91

10.1

  

Events of Default

   91

10.2

  

Remedies

   94

SECTION 11

   THE AGENT, THE COLLATERAL AGENT AND RELATIONS AMONG LENDERS, ETC.    95

11.1

  

Appointment of Agent and Collateral Agent, Powers and Immunities

   95

11.2

  

Reliance by Agent and the Collateral Agent

   96

11.3

  

Defaults

   96

11.4

  

Rights of Agent and the Collateral Agent as Lenders

   96

11.5

  

Indemnification

   97

11.6

  

Non-Reliance on Agent, the Collateral Agent and Other Lenders

   97

11.7

  

Resignation or Removal of Agent and Collateral Agent

   97

11.8

  

Authorization

   98

11.9

  

Benefit of Agreement

   98

SECTION 12

   MISCELLANEOUS    98

12.1

  

Amendments and Waivers

   98

12.2

  

Notices

   99

12.3

  

No Waiver; Cumulative Remedies

   100

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12.4

  

Survival

   100

12.5

  

Expenses and Taxes

   100

12.6

  

Indemnification

   101

12.7

  

Successors and Assigns; Transferees; Transferred Interests

   102

12.8

  

Severability

   104

12.9

  

Headings

   104

12.10

  

Counterparts

   104

12.11

  

The Lenders Sole Beneficiaries

   104

12.12

  

Governing Law

   104

12.13

  

Submission to Jurisdiction; Waivers

   105

12.14

  

Maximum Interest Rate

   105

12.15

  

Confidentiality Provision

   105

12.16

  

USA Patriot Act

   106

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THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 7, 2006, by and
among AMERICAN ROCK SALT COMPANY LLC, a limited liability company organized
under the laws of the State of New York (the “Borrower”), the financial
institutions parties hereto from time to time (the “Lenders”), MANUFACTURERS AND
TRADERS TRUST COMPANY (“M&T”), as the Letters of Credit Issuer, as arranger for
the credit facilities (in such capacity, the “Arranger”), as administrative
agent for the Lenders (as listed on Appendix A) (in such capacity, the “Agent”)
and as collateral agent for the Lenders (in such capacity, the “Collateral
Agent”). This Agreement amends, restates and replaces in its entirety the
Original Agreement (as hereafter defined).

W I T N E S S E T H :

WHEREAS, the Borrower, the Lenders, the Letters of Credit Issuer, the Arranger,
the Agent and the Collateral Agent entered into that certain Credit Agreement
dated as of March 17, 2004;

WHEREAS, the Borrower, the Lenders, the Letters of Credit Issuer, the Arranger,
the Agent and the Collateral Agent amended the terms of the Credit Agreement
dated as of March 17, 2004 pursuant to the terms of that certain Amendment No. 1
to Credit Agreement dated on or about June 29, 2005 (“Amendment No. 1”)(for
purposes of this Agreement, the Credit Agreement dated as of March 17, 2004 as
amended by Amendment No. 1 shall sometimes be collectively referred to as the
“Original Agreement”);

WHEREAS, the Borrower has requested that the Lenders, the Letters of Credit
Issuer, the Arranger, the Agent and the Collateral Agent enter into this
Agreement in order to amend and restate the Original Agreement as herein
provided; and

WHEREAS, the Lenders, the Letters of Credit Issuer, the Arranger, the Agent and
the Collateral Agent have all agreed to enter into this Agreement in order to
amend and restate the Original Agreement as herein provided;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto agree as follows:

SECTION 1

DEFINITIONS

1.1 Definitions.

(a) The following definitions shall have the following meanings:

“Adjusted Current Liabilities” means, as of the date of determination, the sum
of: (a) Current Liabilities, and (b) all amounts outstanding with respect to
Revolving Loans that are not otherwise classified as Current Liabilities in
accordance with GAAP.

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“Adjusted EBITDA” means as to any Person, as of the date of determination, the
sum of (a) the EBITDA of such Person, plus (b) all NOMIPS for the same period in
which EBITDA is determined.

“Adjusted Funded Indebtedness” means, as to any Person, as of the date of
determination, the sum of (a) the Funded Indebtedness of such Person as of such
date, minus (b) the Senior Second Secured Obligations.

“Affiliate” means, with respect to any designated Person, each Person which,
directly or indirectly, controls or is controlled by or is under common control
with such designated Person and, without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds 10% or more
of any class of voting securities of such designated Person or 10% or more of
the equity interest in such designated Person and (b) any Person which such
designated Person beneficially owns or holds 10% or more of any class of voting
securities or in which such designated Person beneficially owns or holds 10% or
more of the equity interest. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.

“Agent” means M&T, in its capacity as agent for the Lenders appointed under
Section 11 and its successors and permitted assigns in such capacity.

“Agreement” means this Amended and Restated Credit Agreement dated March 7, 2006
among Borrower, the Lenders, the Letters of Credit Issuer, the Arranger, the
Agent and Collateral Agent, as amended, restated, supplemented or otherwise
modified from time to time.

“Applicable Capital Gain Tax Rate” means a rate equal to the sum of (a) the
highest marginal federal capital gain tax rate applicable to an individual who
is a citizen of the United States (other than the capital gains rate applicable
to collectibles pursuant to Code Section 1(h)(5)), plus (b) an amount equal to
the sum of the highest marginal state and local capital gain tax rates
applicable to an individual who is a resident of the State and City of New York,
multiplied by a factor equal to 1 minus the rate described in clause (a) above.

“Applicable Income Tax Rate” means a rate equal to the sum of (a) the highest
marginal Federal income tax rate applicable to an individual who is a citizen of
the United States plus (b) an amount equal to the sum of the highest marginal
state and local income tax rates applicable to an individual who is a resident
of the State and City of New York, multiplied by a factor equal to 1 minus the
rate described in clause (a) above.

“Applicable Laws” means, with respect to any Person, all laws, treaties,
ordinances, judgments, decrees, injunctions, writs, orders, rules, regulations,
interpretations, licenses and permits, including Environmental Laws, of any
federal, state, county, municipal, regional or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its properties or
to which such Person or any of its subsidiaries’ properties is subject.

 

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“Applicable Margin” means:

(a) For any day from the Closing Date until the first available date following
the Closing Date on which the Applicable Margin is to be adjusted as provided
below, the following per annum rates: (i) 0.625% for the L/C Fee Rate, (ii) a
rate equal to 0.625% for LIBOR Loans, (iii) a rate equal to 0.00% for Base Rate
Loans, and (iv) 0.125% for the Unused Commitment Fee Rate.

(b) Upon the day of the first adjustment of the Applicable Margin as provided
below, and for any day thereafter, the per annum rate set forth below opposite
the level (the “Level”) then in effect, it being understood that the Applicable
Margin for: (i) for LIBOR Loans shall be the percentage set forth under the
column “L/C Fee Rate and LIBOR Margin”, (ii) for Base Rate Loans shall be the
percentage set forth under the column “Base Rate Margin”, (iii) the Unused
Commitment Fee Rate shall be the percentage set forth under the column “Unused
Commitment Fee Rate “ and (iv) the L/C Fee Rate shall be the percentage set
forth under the column “L/C Fee Rate and LIBOR Margin.”

 

Level

  

Pricing Grid Leverage Ratio

  

L/C Fee Rate

and LIBOR
Margin

    Base Rate
Margin    

Unused
Commitment

Fee Rate

 

I

   >2.50:1    1.375 %   0.00 %   0.25 %

II

   >2.00:1 to £ 2.50:1    1.125 %   0.00 %   0.175 %

III

   >1.50:1 to £ 2.00:1    0.875 %   0.00 %   0.15 %

IV

   >1.00:1 to £ 1.50:1    0.625 %   0.00 %   0.125 %

V

   £1.00:1    0.50 %   0.00 %   0.10 %

Following the Closing Date, the Applicable Margin shall be adjusted, on the
fifth (5th) Business Day after the Borrower provides or is required to provide
the annual and quarterly financial statements and other information pursuant to
Section 8.7, and the related Compliance Certificate, based on the Level which
corresponds to the Pricing Grid Leverage Ratio as of the Fiscal Quarter last
ended prior to such delivery. Notwithstanding anything contained in this
paragraph to the contrary, if the Borrower fails to deliver any such financial
statements and Compliance Certificate in accordance with the provisions of
Section 8.7, the Applicable Margin shall be based upon Level I beginning on the
date such financial statements and Compliance Certificate were required to be
delivered and continuing thereafter until the fifth (5th) Business Day after
such financial statements and Compliance Certificate are actually delivered,
whereupon the Applicable Margin shall be determined based on the Level which
corresponds to the Pricing Grid Leverage Ratio as of the Fiscal Quarter last
ended prior to such delivery; provided, however, no reduction to any Applicable
Margin shall become effective at any time when a Default or Event of Default has
occurred and is continuing. Furthermore, upon the occurrence of and during the
continuance of an Event of Default, the Applicable Margin shall be based upon
Level I.

 

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“Arranger” means M&T, in its capacity as sole arranger for the credit facilities
provided under this Agreement.

“Asset Sale” means any direct or indirect sale, issuance, conveyance, transfer,
lease (other than operating leases entered into in the ordinary course of
business), assignment or other transfer (other than a Permitted Lien) for value,
whether in a single transaction or a series of related transactions, by the
Borrower or any of its Subsidiaries to any Person other than the Borrower or a
Guarantor of: (a) any Capital Stock of any Subsidiary of the Borrower, or
(b) any other property or assets of the Borrower or any Subsidiary of the
Borrower other than sales of inventory and the sale and replacement of equipment
(if not covered by Section 5.2(a)(iii)), in either case, in the ordinary course
of business.

“Available Non-Extraordinary Distributions” means as of any date (a) all
Permitted Net Income Distribution Annual Allowances and Permitted Tax
Distribution Annual Allowances after the Original Closing Date minus (b) all
distributions paid by Borrower to its members as of and after the Original
Closing Date other than paid Permitted Extraordinary Distributions plus or minus
(c) once per year adjustments after the Permitted Tax Distribution Annual
Allowance is finalized.

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended and
codified as 11 U.S.C. § 101 et seq.

“Base Rate” shall mean, for any day, a floating rate equal to the sum of (a) the
higher of (i) the Federal Funds Rate plus 0.50% and (ii) the Prime Rate, plus
(b) the Applicable Margin for Base Rate Loans. Each change in any rate of
interest provided for in this Agreement and based upon the Base Rate shall take
effect at the time of such change in the Base Rate.

“Base Rate Loans” means the Loans that bear interest at the Base Rate.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Securities Exchange Act of 1934, except that in calculating the
Beneficial Ownership of any particular “person” (as that term is used in
Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have
Beneficial Ownership of all securities that such “person” has the right to
acquire by conversion or exercise of other securities, whether such right is
currently exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms “Beneficially Owns,” “Beneficially Owned” and “Beneficial
Ownership” have meanings correlative to the foregoing.

“Board of Directors” means the Borrower’s board of managers as elected pursuant
to the Operating Agreement.

“Borrower” means American Rock Salt Company LLC, a limited liability company
organized under the laws of the State of New York.

 

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“Borrowing Base” shall mean, as of any date of its determination, an amount
equal to the sum of (a) 85% of Borrower’s and Guarantors’ Eligible Accounts
Receivable as of such date, (b) 65% of the Borrower’s and Guarantors’ Eligible
Inventory, and (c) $3,000,000.00.

“Borrowing Base Certificate” means a certificate of the Borrower delivered to
the Agent pursuant to Section 2.1(b) in the form of Exhibit A.

“Borrowing Date” means any Working Day in the case of LIBOR Loans and Business
Day in the case of Base Rate Loans and Standby L/Cs, as specified in (a) a
Notice of Revolving Loan Borrowing pursuant to Section 2.3 on which Lenders make
Revolving Loans, and (b) a notice pursuant to Section 3.1(c) on which the
Letters of Credit Issuer issues a Standby L/C.

“Breakage Amount” means the amount of any losses (other than lost profit),
expenses and liabilities sustained by any Lender as a result of the repayment of
a LIBOR Loan by the Borrower on a day other than an Interest Payment Date.

“Business Day” means a day other than a Saturday, Sunday or other day which
shall be a legal holiday in Rochester, New York or on which commercial banks in
Rochester, New York are authorized or required by law to close.

“Capital Expenditures” means, for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a Capital Lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries; provided that no
portion of the Initial Settlement Payment made by the Borrower to F-K under the
Settlement Agreement shall be included in the calculation of Capital
Expenditures.

“Capital Lease” means (a) any lease of property, real or personal, if the
obligations thereunder should be capitalized and accounted for on a capital
lease basis on a balance sheet of the lessee in accordance with GAAP, and
(b) any other such lease obligations which are capitalized on a balance sheet of
the lessee. For the purposes of this Agreement, the amount of the obligations
under the Capital Lease at any time shall be determined in accordance with GAAP.

“Capital Stock” means (a) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of capital stock, including each class of
common stock and preferred stock of such Person; (b) with respect to any Person
that is not a corporation, any and all partnership, membership or other equity
interests of such Person (including any interest in the profits, losses, capital
or management of such Person); and (c) any warrants, rights or options to
purchase any of the instruments or interests referred to in clause (a) or
(b) above.

 

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“Cash Equivalents” means (a) securities issued or directly and fully guaranteed
or insured by the United States Government or any agency or instrumentality
thereof having maturities of not more than six (6) months from the date of
acquisition, (b) certificates of deposit with maturities of six (6) months or
less from the date of acquisition, bankers’ acceptances with maturities not
exceeding six (6) months and overnight bank deposits, in each case, with any
Lender having capital and surplus in excess of $250,000,000, (c) repurchase
obligations with a term of not more than seven (7) days for underlying
securities of the types described in clause (a) above entered into with any
Lender meeting the qualifications specified in clause (b) above, (d) commercial
paper issued by any Lender or the parent corporation of an Lender, and
commercial paper of any corporation incorporated under the laws of the United
States of America or any state thereof and not an Affiliate of the Borrower or
any of its Subsidiaries carrying a rating of at least A-2 or the equivalent
thereof by Standard & Poor’s Corporation (“S&P”) or at least P-2 or the
equivalent thereof by Moody’s Investors Service, Inc. (“Moody’s”) and in each
case maturing within two hundred seventy (270) days after the date of
acquisition, and (e) money market funds rated in the highest rating category by
either Moody’s or S&P.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended or any comparable successor federal statute.

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System.

“Change of Control” means the occurrence of one or more of the following events:
(a) any direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one transaction
or a series of related transactions, of all or substantially all of the assets
of the Borrower to any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act (a “Group”), other than a transaction in which
the transferee is controlled by one or more Permitted Holders; (b) the Borrower
consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Borrower, other than (i) a
transaction in which the surviving or transferee Person is a Person that is
controlled by the Permitted Holders or (ii) any such transaction where the
Voting Stock of the Borrower outstanding immediately prior to such transaction
is converted into or exchanged for Voting Stock (other than Disqualified Capital
Stock) of the surviving transferee Person constituting a majority of the
outstanding shares of Voting Stock of such surviving transferee Person
(immediately after giving effect to such issuance); (c) the approval of the
holders of Capital Stock of the Borrower of any plan or proposal for the
liquidation or dissolution of the Borrower; (d) the Permitted Holders cease for
any reason to be the Beneficial Owner, directly or indirectly, in the aggregate
of a least a majority of the Voting Stock of the Borrower held by such Permitted
Holders on the Original Closing Date, whether by virtue of the issuance, sale or
other disposition of Capital Stock of the Borrower or a direct or indirect
holder of Capital Stock of the Borrower, a merger, consolidation or sale of the
assets involving the Borrower, a Subsidiary or a direct or indirect holder of
Capital Stock of the Borrower, any voting trust or other agreement; (e) (i) any
Person or Group is or becomes the Beneficial Owner, directly or indirectly, in
the aggregate of more than 50% of the

 

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total voting power of the Voting Stock of the Borrower, and (ii) the Permitted
Holders beneficially own, directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Borrower than
such other Person or Group, and one or more Permitted Holders do not have the
right to elect managers or directors holding a majority of the voting power of
the Board of Directors of the Borrower; or (f) individuals who on the Original
Closing Date held a majority of the voting power of the Board of Directors of
the Borrower (together with any new directors whose nomination and election were
approved pursuant to a vote of a majority of the members of the Borrower (or
Related Parties of such members) entitled to vote thereon who were members of
the Borrower (or Related Parties of such members) on the Original Closing Date)
cease for any reason to hold a majority of the voting power of the Board of
Directors of the Borrower.

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986, as the same may be amended from
time to time, or any corresponding provisions of succeeding law.

“Collateral” means (a) Collateral as defined in Section 1 of the Security
Agreement, (b) all property mortgaged under the Mortgages, (c) the membership
interests and other securities and proceeds pledged to the Collateral Agent
under the Limited Liability Company Pledge Agreement, and (d) any other
property, whether now owned or hereafter acquired, upon which a Lien securing
the Credit Obligations is granted or purported to be granted to the Collateral
Agent for the benefit of the Lenders under the Senior Security Documents.

“Commitment Percentage” means as to any Lender its respective percentage
portions of the Total Revolving Credit Commitment and Total Term Loan
Commitment.

“Commitments” means the Total Revolving Credit Commitment (without duplication
of any Commitment of the Letters of Credit Issuer), the commitment of the
Letters of Credit Issuer to issue Standby L/Cs provided for hereunder, and the
Total Term Loan Commitment.

“consolidated” and “consolidating”, when used with reference to any term, means
that term as applied to the accounts of the Borrower (or other specified Person)
and all of its Subsidiaries (or other specified group of Persons), or such of
its Subsidiaries as may be specified, consolidated or consolidating, as the case
may be, in accordance with GAAP.

“Credit Documents” means this Agreement, the Notes, each of the Standby L/Cs,
the Fee Letter, the Senior Security Documents, the L/C Applications, and all
other agreements, instruments, documents and certificates now or hereafter
executed and delivered to the Agent, the Collateral Agent, the Letters of Credit
Issuer and/or all of the Lenders by the Borrower or any of its Subsidiaries with
respect to this Agreement and the transactions contemplated hereby, in each case
as amended, restated, supplemented or otherwise modified from time to time.

 

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“Credit Obligations” means all the unpaid principal amount of, and interest on
(including, to the greatest extent permitted by law, post-petition interest) on
the Loans, the Reimbursement Obligations and all other obligations and
liabilities of the Borrower and/or any of its Subsidiaries to the Agent, the
Collateral Agent, the Letters of Credit Issuer and/or all of the Lenders,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, in connection with this
Agreement, any other Credit Document, whether on account of principal, interest,
reimbursement obligation fees, indemnities, costs, expenses (including, without
limitation, all reasonable fees and disbursement of counsel to the Agent, the
Collateral Agent and the Letters of Credit Issuer, but subject to the terms of
the Fee Letter) or otherwise. Notwithstanding the foregoing, the term Credit
Obligations shall not include any obligations and liabilities of the Borrower
and/or any of its Subsidiaries to any of the Lenders under any Hedge Agreement
with any Lender other than the Agent, unless permitted by the terms of an
intercreditor agreement between the Agent, the Required Lenders and the
applicable Lender.

“Currency Exchange Agreement” means any currency swap, foreign exchange contract
or similar arrangement providing for protection against fluctuations in currency
exchange rates, either generally or under specific contingencies.

“Current Assets” means the sum of all assets of the Borrower and its
Subsidiaries, on a consolidated basis, which should, in accordance with GAAP, be
classified as current assets.

“Current Liabilities” means the sum of all liabilities of the Borrower and its
Subsidiaires, on a consolidated basis, which should, in accordance with GAAP, be
classified as current liabilities, including current maturities in respect of
the Indebtedness.

“DEC Permits” means any and all permits, licenses, approvals, certificates and
consents issued by: (a) the New York State Department of Environmental
Conservation (the “DEC”) in connection with the operation and maintenance of the
Facility and other locations leased or owned by the Borrower, including but not
limited to the State Pollutant Discharge Elimination System (“SPDES”) Permits
Nos. (i) NY 024 5879, (ii) NY 025 2051, (iii) NY 000 0167, (iv) NY 026 0843, and
(v) NY 025 7907; the Petroleum Bulk Storage Registration Certificate dated
February 5, 2001; and the Mining Permit No. 8-2428-00019/00001; and (b) the
State of Pennsylvania SPDES Permits Nos. (i) 324 805, (ii) 232 232, (iii) 008
4387, and (iv) 143 524, and all renewal, extensions and modifications thereof.

“Default” means any of the events specified as an Event of Default in
Section 10, without regard for whether any requirement for the giving of notice,
the lapse of time, or the declaration of an Event of Default, or all such
requirements, have been satisfied.

“Default Rate” means the interest rate otherwise applicable to the Credit
Obligations hereunder plus 2%. If no rate is otherwise specified with respect to
a particular Credit Obligation to which the Default Rate applies, then the
Default Rate shall be the Base Rate plus the Applicable Margin for Level I,
increased by 2%.

 

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“Disqualified Capital Stock” means that portion of any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event (other than an event that would constitute a Change of
Control), matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof (except in each case, upon the occurrence of a Change of Control) on or
prior to the first anniversary of the Term Loan Maturity Date for cash or is
convertible into or exchangeable for debt securities of the Borrower or its
Subsidiaries at any time prior to such anniversary.

“Dollars” and “$” means dollars in lawful currency of the United States of
America.

“Domestic Subsidiary” means any Subsidiary of the Borrower organized under the
laws of any jurisdiction within the United States.

“Drawing Date” means a Business Day upon which the Letters of Credit Issuer
honors a sight draft presented in accordance with the terms of a Letter of
Credit.

“EBITDA” means, with respect to any Person for any fiscal period, an amount
equal to the sum of (without duplication):

(a) Net Income of such Person during such period; and

(b) to the extent Net Income has been reduced thereby:

(i) all income taxes of such Person and its Subsidiaries paid or accrued in
accordance with GAAP for such period;

(ii) Interest Expense, net of the interest revenue of such Person and its
Subsidiaries for such period; and

(iii) the amount of non-cash charges, including depletion, depreciation and
amortization (including amortized or written-off organizational costs,
transaction costs and capitalized financing costs) of such Person and its
Subsidiaries for such period,

all as determined on a consolidated basis for such Person and its Subsidiaries
in accordance with GAAP.

“Eligible Accounts Receivable” shall mean the gross outstanding balance,
determined in accordance with GAAP and stated on a basis consistent with the
historical practices of the Borrower as of the date hereof, of accounts
receivable of the Borrower arising out of sales of goods or services made by the
Borrower in the ordinary course of business (“Accounts”) that have been invoiced
and that the Agent, in its reasonable credit judgment, shall

 

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deem eligible and acceptable in all respects, less (without duplication) all
GAAP reserves, finance charges, late fees and other fees that are unearned, and
less (without duplication) the value of such reserves as the Agent, in its
reasonable credit judgment, shall deem appropriate (including reserves
determined by the Agent, in its reasonable discretion, to reflect any deficiency
in, or absence of, landlord lien waivers and consents). Without in any way
limiting the discretion of the Agent in the exercise of its reasonable credit
judgment to deem an Account eligible or ineligible, the Agent does not currently
intend to treat an Account as an Eligible Account Receivable if:

(a) any portion of such Account has remained unpaid for a period exceeding
ninety (90) days from the due date;

(b) any portion of such Account has remained unpaid for a period exceeding one
hundred twenty (120) days from the invoice date thereof;

(c) the sale represented by such Account is to an Account debtor organized or
located outside one of the states of the United States or Canada, except (i) to
the extent covered by letters of credit acceptable to, and assigned to, the
Agent or (ii) if the Agent is furnished evidence reasonably acceptable that the
Collateral Agent and the Lenders have a valid and enforceable first priority
Lien thereon;

(d) the Borrower has not complied with all material requirements of Applicable
Law, including, without limitation, all laws, rules, regulations and orders of
any governmental or judicial authority relating to truth in lending, billing
practices, fair credit reporting, equal credit opportunity, debt collection
practices and consumer debtor protection, applicable to such Account (or any
related contracts) or affecting the collectability of such Account;

(e) the Account debtor is the Borrower or a Subsidiary, Affiliate, division or
employee of the Borrower;

(f) the Account debtor is a supplier or creditor of the Borrower (provided that
such Account would be ineligible only to the extent of amounts payable by the
Borrower to such supplier or outstanding with such creditor);

(g) the sale represented by such Account is on a guaranteed sale,
sale-or-return, consignment, or sale-on-approval basis or is subject to (but
only to the extent of) any setoff, right of return, chargeback, contra, net-out
contract, offset, deduction, dispute, credit, counterclaim or other defense to
payment based on performance by the Borrower or any of its Subsidiaries of their
respective obligations under contracts giving rise to Accounts;

(h) such an Account is an account of any United States Governmental Authority or
the government of any state of the United States or any political subdivision
thereof or any agency or instrumentality of any of the foregoing, and is covered
by the Assignment of Claims Act or any similar state or local law, as
applicable, with respect to

 

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which documentation in compliance therewith, in form and substance satisfactory
to the Agent, shall not have been executed by the Account debtors in respect
thereof;

(i) the Agent believes, in its reasonable discretion, that the collection of
such Account is insecure or that such Account may not be paid, or the Agent is
otherwise not satisfied with the credit standing of the Account debtor in
respect thereof;

(j) such Account is owed by an Account debtor (other than the United States
government, the government of any state of the United States or any political
subdivision thereof, or any agency or instrumentality of any of the foregoing)
whose Accounts constitute more than 10% of the Accounts included in determining
the Borrowing Base on such date, to the extent of such excess, except to the
extent covered by credit insurance satisfactory to the Agent and assigned to the
Agent pursuant to documentation in form and substance satisfactory to the Agent;

(k) such Account is owing by an Account debtor when 50% or more of the
outstanding amount of all invoiced Accounts from such Account debtor remain
unpaid for a period greater than one hundred twenty (120) days from the invoice
due date thereof;

(l) such Account is not assignable or a first priority security interest in such
Account in favor of the Agent has not been obtained and fully perfected by
filing Uniform Commercial Code financing statements against the Borrower or any
of its Subsidiaries;

(m) such Account is subject to any Lien whatsoever, other than Liens in favor of
(i) the Collateral Agent for the ratable benefit of the Lenders and (ii) the
Trustee as junior collateral agent for the ratable benefit of holders of the
Senior Second Secured Notes so long as such Lien is subject to the Intercreditor
Agreement, which is in full force and effect;

(n) the Borrower, in order to be entitled to collect such Account, is required
to perform any additional service for, or perform or incur any additional
obligation to, the Account debtor;

(o) such Account does not constitute a legal, valid and binding irrevocable
payment obligation of the Account debtor to pay the balance thereof in
accordance with its terms or is subject to (but only to the extent of) any
defense, setoff, recoupment or counterclaim;

(p) an estimated or actual loss has been recognized in respect of such Account,
as determined in accordance with the Borrower’s usual business practice, or such
Account is required to be charged off or written off as un-collectible in
accordance with GAAP or the customary business practices of the Borrower;

(q) the Account debtor has filed a petition for relief under the United States
Bankruptcy Code (or similar action under any successor law or under any

 

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comparable law), made a general assignment for the benefit of creditors, had
filed against it any petition or other application for relief under the United
States Bankruptcy Code (or similar action under any successor law or under any
comparable law), failed, suspended business operations, become insolvent, called
a meeting of its creditors for the purpose of obtaining any financial concession
or accommodation, or had or suffered a receiver or a trustee to be appointed for
all or a significant portion of its assets or affairs;

(r) such Account is not determined in U.S. Dollars;

(s) the Borrower or any other party to such Account, is in default in the
performance or observance of any of the terms thereof in any material respect;

(t) the Borrower does not have good and marketable title to such Account as sole
owner of such Account; or

(u) it is an Eligible Municipal Approved Exception Account, and the aggregate
outstanding amount of all invoiced Eligible Municipal Approved Exception
Accounts exceeds $5,000,000.00, but only to the extent of such excess.

“Eligible Inventory” means all salt mined, weighed and on the surface and/or
stockpiled and prepared to specifications for sale by the Borrower at the lower
of cost or market price determined in accordance with GAAP that is subject to a
first priority perfected security interest in favor of the Agent for the benefit
of the Lenders, and meets the following additional requirements:

(a) the inventory is lawfully owned by Borrower and Borrower has the right to
assign the inventory and the power to grant a security interest therein;

(b) the inventory is not subject to a Lien other than in favor of the Agent and
the Trustee as the junior collateral agent for the ratable benefit of the
holders of the Senior Second Secured Notes so long as such Lien is subject to
the Intercreditor Agreement;

(c) no account or document has been created or issued with respect to the
inventory;

(d) each representation and warranty with respect to the inventory made by
Borrower to the Agent or Collateral Agent in any Security Agreement or any other
agreement executed by Borrower is true and complete; and

(e) the Agent has not notified Borrower that any type or class of inventory is,
in Agent’s reasonable judgment, unsatisfactory.

“Eligible Municipal Approved Exception Account” means any account of Borrower or
any Guarantor where the account debtor is a municipal corporation or similar
Governmental Authority and the Borrower has entered into an agreement to sell
salt during the months of March through July of each year with deferred billing
payment terms not exceeding

 

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the lesser of seven (7) months from shipment or November 30th of the same year
for which the salt was sold, and no portion of the account remains unpaid for a
period of thirty (30) days beyond the due date, provided, however, that to be
considered an Eligible Municipal Approved Exception Account, the purchased
inventory subject to the deferred billing shall have been shipped to the
municipality and the municipality shall have taken title thereto. For purposes
of calculating Eligible Accounts Receivable, the Agent may determine in its
discretion not to include within such calculation any new Eligible Municipal
Approved Exception Accounts, when the aggregate then outstanding amount of all
invoiced Eligible Municipal Approved Exception Accounts exceeds $5,000,000, but
only to the extent of such excess. After the exclusion of the requirements of
(a) and (b) under the definition of the Eligible Accounts Receivable, all other
conditions of the definition of Eligible Accounts Receivable (i.e., those
requirements contained in (c) through (t)) shall, taken together with the
requirements outlined in this definition govern the eligibility of all Eligible
Municipal Approved Exception Accounts.

“Environmental Assessment” means each assessment, report or audit relating to
environmental conditions affecting, or compliance with any Environmental Law by,
the Borrower or the Project, each such assessment, report or audit to be
satisfactory in form and substance to the Agent and to be performed by a
consulting firm satisfactory to the Agent.

“Environmental Laws” means any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally enforceable
requirement (including, without limitation, common law) of the United States or
Canada, or any state, local, municipal or other Governmental Authority,
regulating, relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health, or employee health and safety,
or damages to natural resources, as has been, is now, or may at any time
hereafter be, in effect.

“Equity Holder” means (a) with respect to a corporation, each holder of stock of
such corporation, (b) with respect to a limited liability company or similar
entity, each member of such limited liability company or similar entity,
(c) with respect to a partnership, each partner of such partnership, (d) with
respect to an entity described in clause (a)(iv) of the definition of “Flow
Through Entity,” the owner of such entity, and (e) with respect to a trust
described in clause (a)(v) of the definition of “Flow Through Entity,” the
persons treated for Federal income tax purposes as the owners of the trust
property.

“Equity Offering” means an underwritten public offering of Capital Stock of the
Borrower or any holding company or Subsidiary of the Borrower pursuant to a
registration statement filed with the SEC (other than on Form S-8) or any
private placement of Capital Stock of the Borrower or any holding company or
Subsidiary of the Borrower to any Person other than issuances upon exercise of
options by employees of any holding company, the Borrower or any of its
Subsidiaries.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

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“ERISA Insolvency” means, with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.

“Eurocurrency Reserve Requirements” means, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) in effect from time to time
during such Interest Period, as provided by the Federal Reserve Board, or any
other Governmental Authority, applied for determining the maximum reserve
requirements (including, without limitation, basic, supplemental, marginal and
emergency reserves) applicable to M&T under Regulation D of the of the Board of
Governors of the Federal Reserve System with respect to “Eurocurrency
liabilities” within the meaning of Regulation D, or under any similar or
successor regulation with respect to Eurocurrency liabilities or Eurocurrency
funding.

“Event of Default” means any of the events specified as such in Section 10;
provided, that any requirement for the giving of notice, the lapse of time, or
both, or for the happening of any other condition, has been satisfied.

“Event of Loss” means any of the following events: (a) loss of the Facility, the
Leased Premises (in its entirety or a substantial portion thereof such that the
then remaining portion of the Facility or the Leased Premises cannot practically
be utilized at the level of operation so as to permit the Borrower to fulfill
its obligations under this Agreement, the Senior Second Secured Note Documents
or the Land Lease Agreement) or the use thereof due to destruction, damage
beyond repair or rendition of the Facility or the Leased Premises permanently
unfit for normal use by the Borrower for any reason whatsoever; (b) any damage
to the Facility or the Leased Premises that results in an insurance settlement
with respect to the Facility on the basis of a total loss; (c) the condemnation,
confiscation or seizure of, or requisition of title to, or the use of, the
Facility or the Leased Premises (in its entirety or a substantial portion
thereof such that the then remaining portion of the Facility or the Leased
Premises cannot practically be utilized at the level of operation so as to
permit the Borrower to fulfill its obligations under this Agreement, the Senior
Second Secured Note Documents or the Land Lease Agreement) for a period which
the Agent believes is more likely than not to be in excess of two hundred
seventy (270) consecutive days (or for a shorter period ending on the date on
which an insurance settlement with respect to the Facility or the Leased
Premises on the basis of a total loss shall occur); or (d) the prohibition of
the use of the Facility, the Leased Premises (in its entirety or a substantial
portion thereof such that the then remaining portion of the Facility or the
Leased Premises cannot practically be utilized at the level of operation
contemplated in the Projections and so as to permit the Borrower to fulfill its
obligations under the Credit Documents), as a result of an Applicable Law or
action by any Governmental Authority, for a period which the Agent believes is
more likely than not to be in excess of two hundred seventy (270) consecutive
days.

“Facility” means the salt mine located on the Leased Premises (including all
tunnels, galleries and shafts whether above ground or below), including all
equipment, buildings and fixtures related thereto.

 

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“Federal Funds Rate” shall mean, for any day, the per annum rate 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, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average quotations, for the day, of such transactions received by the Agent
from three federal funds brokers of recognized standing selected by the Agent.

“Fee Letter” means the letter agreement dated as of the Closing Date, relating
to certain fees payable by the Borrower to M&T for its account with respect to
the transactions contemplated by this Agreement, as amended, restated,
supplemented or otherwise modified from time to time.

“Fiscal Quarter” means the three (3) month period ending on or around
March 31, June 30, September 30 and December 31 of each year.

“Fiscal Year” means the twelve (12) month period ended September 30th of each
calender year.

“Fixed Charges” means with respect to any Person and its Subsidiaries for any
period the sum of the following, without duplication: (a) the Term Loan
Scheduled Amortization Payments (which by definition does not include mandatory
payments according to Section 5.2(a)), (b) all other principal payments on all
other Indebtedness made for such period (other than Permitted Purchases of
Senior Second Secured Notes (as hereafter defined within the definition of
Permitted Investments)), (c) all unfunded Capital Expenditures (all Capital
Expenditures funded with Revolving Loans shall be considered unfunded Capital
Expenditures) and NOMIPS payments made for such period, (d) the Projected
Distributions plus the amount of all actual distributions paid by Borrower to
its members for such period (other than Permitted Extraordinary Distributions)
(e) all Interest Expense less interest income received, and (f) Taxes paid or
accrued for the own account of such Person for such period. Notwithstanding the
foregoing, in calculating Fixed Charges, all Projected Distributions and
distributions paid by Borrower during the period from September 30th each year
until April 30th of the following year shall be reflected in the Fiscal Quarter
ending on such September 30th. Notwithstanding anything to the contrary
contained in this Agreement, the calculations to be made in accordance with this
definition of Fixed Charges will be used by the Agent and the Lenders to
determine compliance by the Borrower and its Subsidiaries (on a consolidated
basis) with the financial covenants outlined in Sections 9.1 through 9.8, and it
is not expected that the information calculated in accordance with this
definition of Fixed Charges will be reflected in the same manner on the
Borrower’s or any of its Subsidiaries financial statements for the same period.
To the extent that any obligations in respect of performance, bid or surety
bonds and completion guarantees provided by the Borrower and its Subsidiaries
are expensed in the ordinary course of business, such obligations will not be
included in the calculation of Fixed Charges as principal payments made to other
such creditors on Indebtedness during such period.

“Fixed Charge Coverage Ratio” means, with respect to any Person as of the date
of determination, the ratio of (a) the Adjusted EBITDA of such Person for the
four (4) previous Fiscal Quarters ending on such date, over (b) the Fixed
Charges of such Person for the

 

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same period. Notwithstanding the foregoing, for any Fiscal Year of the Borrower
in which there has occurred a Permitted Issuance of Senior Second Secured Notes,
the calculation of Projected Distributions and actual distributions in the
context of the determination of the Fixed Charge Coverage Ratio (and the
Borrower’s related compliance with Section 9.2 hereof) for any Fiscal Quarter
during such Fiscal Year shall be performed in the same manner as in the
determination of compliance with covenants as described in the definition of
Permitted Issuance of Senior Second Secured Notes.

“F-K” means a joint venture of Frontier Kemper Constructors, an Indiana
corporation, and Flatiron Structures LLC, a limited liability company organized
under the laws of Colorado.

“F-K Litigation” means the litigation commenced by the amended complaint filed
by F-K against the Borrower dated September 24, 2001 in the United States
District Court for the Western District of New York (case No. 01 CV 6217) and
the claims of F-K made therein and all related counterclaims, cross claims and
other proceedings of any kind, certain of which claims have been settled in
accordance with the terms of the Settlement Agreement (as hereafter defined).

“Flow Through Entity” means an entity that (a) for federal income tax purposes
constitutes (i) an “S corporation” (as defined in Section 1361(a) of the Code),
(ii) a “qualified subchapter S subsidiary” (as defined in Section 1361(b)(3)(B)
of the Code), (iii) a “partnership” (within the meaning of Section 7701(a)(2) of
the Code) other than a “publicly traded partnership” (as defined in Section 7704
of the Code), (iv) a business entity that is disregarded as an entity separate
from its owners under the Code, any Regulations, or any published administrative
guidance of the Internal Revenue Service or (v) a trust to the extent its income
is includible in the taxable income of the grantor or another person under
Sections 671 through 679 of the Code (each of the entities described in the
preceding clauses (i), (ii), (iii), (iv) and (v), a “Federal Flow Through
Entity”), and (b) for state and local jurisdictions is subject to treatment on a
basis under applicable state or local income tax law substantially similar to a
Federal Flow Through Entity.

“Foreign Subsidiary” means any Subsidiary of the Borrower that is not a Domestic
Subsidiary.

“Funding Account” means the account established at M&T into which all proceeds
of the Loans under this Agreement shall be deposited by the Agent.

“Funded Indebtedness” means as of any date, the sum of the following (without
duplication): (a) the outstanding principal amount of all Indebtedness which is
classified as “long-term debt” on a consolidated balance sheet of Borrower and
its Subsidiaries prepared as of such date in accordance with GAAP (subject to
year-end audit adjustments with respect to non-year end periods) and any current
maturities and other principal amount in respect of such Indebtedness due within
one year but which was classified as “long-term debt” at the creation thereof;
(b) the outstanding principal amount of Indebtedness for borrowed money of
Borrower and its Subsidiaries outstanding under a revolving credit, term or
similar agreement (and

 

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renewals and extensions thereof); (c) the borrowing of money or the obtaining of
credit, including the issuance of notes or bonds (but excluding surety,
performance or bid bonds), (d) the deferred purchase price of assets (other than
trade or other payables and accrued expenses incurred in the ordinary course of
business), with respect to any Synthetic Lease Obligations or any Capital Lease
obligations, (e) the outstanding principal amount of Indebtedness in respect of
such Synthetic Lease Obligations or Capital Lease obligations of Borrower and
its Subsidiaries, plus (f) Indebtedness of the type referred to in clauses
(a) through (d) above of another Person guaranteed by the Borrower or any of its
Subsidiaries.

“GAAP” means generally accepted accounting principles as from time to time in
effect, including the statements and interpretations of the United States
Financial Accounting Standards Board; provided, however, that for purposes of
compliance with Section 9 and determining the Applicable Margin and whether
distributions are permitted under Sections 9.2 and 9.7 and all related
definitions, (a) “GAAP” means such principles as in effect on December 31, 2005
as applied by the Borrower and its Subsidiaries in the preparation of the
audited financial statements referred to in Section 6.8, and consistently
followed, without giving effect to any subsequent changes thereto and (b) in the
event of a change in generally accepted accounting principles after such date,
either the Borrower or the Required Lenders may request a change in the
definition of “GAAP”, in which case the parties hereto shall negotiate in good
faith with respect to an amendment of this Agreement implementing such change,
provided, however, if no agreement is reached, then no change or amendment shall
be made.

“Governmental Approvals” means authorizations, consents, approvals, waivers,
exemptions, variances, franchises, permissions, permits and licenses of, and
filings and declarations with, any Governmental Authority.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof and any entity of competent authority exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

“Guarantee Obligation” means, with respect to the Borrower (or other specified
Person):

(a) any guarantee by the Borrower (or such specified Person), of the payment or
performance of, or any contingent obligation by the Borrower (or such specified
Person), in respect of, any Indebtedness or other obligation of any primary
obligor;

(b) any other arrangement whereby credit is extended to a primary obligor on the
basis of any promise or undertaking of the Borrower (or such specified Person),
including any binding “comfort letter” or “keep well agreement” written by the
Borrower (or such specified Person), to a creditor or prospective creditor of
such primary obligor, to (i) pay the Indebtedness of such primary obligor,
(ii) purchase an obligation owed by such primary obligor, (iii) pay for the
purchase or lease of assets or services regardless of the actual delivery
thereof, or (iv) maintain the capital, working capital, solvency or general
financial condition of such primary obligor;

 

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(c) any liability of the Borrower (or such specified Person) as a general
partner of a partnership in respect of Indebtedness or other obligations of such
partnership;

(d) any liability of the Borrower (or such specified Person) as a joint venturer
of a joint venture in respect of Indebtedness or other obligations of such joint
venture;

(e) any liability of the Borrower (or such specified Person) with respect to the
tax liability of others as a member of a group (other than a group consisting
solely of the Borrower and its Subsidiaries) that is consolidated for tax
purposes; and

(f) reimbursement obligations, whether contingent or matured, of the Borrower
(or such specified Person) with respect to letters of credit, bankers
acceptances, surety bonds, other financial guarantees and Interest Rate
Protection Agreements (without duplication of other Indebtedness supported or
guaranteed thereby), whether or not any of the foregoing are reflected on the
balance sheet of the Borrower (or such specified Person) or in a footnote
thereto; provided, however, that the term “Guarantee Obligation” shall not
include endorsements for collection or deposit in the ordinary course of
business. The amount of any Guarantee Obligation and the amount of Indebtedness
resulting from such Guarantee Obligation shall be the maximum amount that the
guarantor may become obligated to pay in respect of the obligations (whether or
not such obligations are outstanding at the time of computation).

“Guarantor” means each of the Borrower’s Domestic Subsidiaries that executes a
Subsidiary Guaranty and a Subsidiary Security Agreement pursuant to Section 8.20
in favor of Agent for the ratable benefit of the Lenders.

“Hedge Agreement” means, collectively, Currency Exchange Agreements and Interest
Rate Protection Agreements.

“IDA” means the Livingston County Industrial Development Agency, a public
benefit corporation of the State of New York.

“IDA/Borrower Mortgage” means the mortgage granted by the IDA and the Borrower
at the Original Closing on the Leased Premises and all of Borrower’s mineral
rights in favor of the Collateral Agent for the ratable benefit of the Lenders,
creating a Lien on the Leased Premises and all of Borrower’s mineral rights, as
the same may be amended, supplemented or otherwise modified from time to time.

“Immaterial Subsidiary” means, at any time, any Domestic Subsidiary of the
Borrower having total assets (as determined in accordance with GAAP) with a book
value in the amount of less than 1% of the consolidated total assets of the
Borrower and its Domestic Subsidiaries; provided, however, that (a) the total
assets (as so determined) of all Immaterial Subsidiaries shall not have a book
value in excess of $1,000,000 (in the aggregate), (b) Borrower has not provided
collateral or a guaranty to any creditor of such Subsidiary and (c) such

 

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Subsidiary has not provided collateral or a guaranty to the holders of the
Senior Second Secured Notes or to secure any credit or obligations of the
Borrower.

“Indebtedness” means, as to any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services other than trade
payables and accrued expenses incurred in the ordinary course, (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments (other than an operating lease), (d) all indebtedness
created or arising under any conditional sale or other title retention agreement
(other than an operating lease) with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease obligations of such Person, (f) all obligations
of such Person, contingent or otherwise, as an account party under acceptances,
surety bonds or similar arrangements (other than obligations arising out of
endorsements of instruments for deposit or collection in the ordinary course of
business), (g) all unpaid reimbursement obligations of such Person in respect of
drawings under letters of credit and the stated amount of all letters of credit
issued for the account of such Person, (h) all Guarantee Obligations of such
Person in respect of obligations of the kind referred to in clauses (a) through
(f) above, (i) without limitation of the foregoing, all obligations of the kind
referred to in clauses (a) through (h) above secured by (or for which the holder
of such obligation has an existing right, contingent or otherwise, to be secured
by) any Lien on property (including accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the payment
of such obligation, provided that the amount of any such obligation shall be
deemed to be the lesser of the face principal amount thereof and the fair market
value of the property subject to such Lien, (j) all obligations of such Person
in respect of Hedge Agreements and (k) all obligations of such Person related to
Disqualified Capital Stock issued by such Person.

“Initial Settlement Payment” means the payment of a sum certain required to be
made by the Borrower to F-K in accordance with Paragraph 14 of the Settlement
Agreement.

“Intercreditor Agreement” means the Intercreditor Agreement dated on or about
the date of the Original Closing Date and entered into by and between M&T, as
senior collateral agent and representative for the Lenders and U.S. Bank
National Association, as trustee (the “Trustee”), under the Senior Second
Secured Notes Indenture dated as of March 17, 2004 by and among the Trustee and
the holders of the Senior Second Secured Notes, in its capacity as junior
collateral agent for the Trustee and holders of the Senior Second Secured Notes.

“Interest Expense” means, with respect to any Person for any period, the
aggregate of the interest expense of such Person and its Subsidiaries for such
period, on a consolidated basis, as determined in accordance with GAAP, and
including, without duplication, (a) all amortization or accretion of original
issue discount or premium; (b) the interest component of Indebtedness
constituting Capital Leases paid, accrued and/or scheduled to be paid or accrued
by such Person and its Subsidiaries during such period; (c) net cash costs under
all Hedge

 

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Agreement (including amortization of fees); (d) without duplication any periodic
commitment fees and other fees payable to the Agent, the Collateral Agent or the
Lenders pursuant to the Credit Documents; and (e) without duplication, any
periodic fees paid by the Borrower to other creditors, which fees shall be
related to or arising out of any Indebtedness owed to other creditors.

“Interest Payment Date” means (a) as to Base Rate Loans, the last day of each
calendar month, commencing on the first such day to occur after any Base Rate
Loans are made or any LIBOR Loans are converted to Base Rate Loans, (b) as to
any LIBOR Loan in respect of which the Borrower has selected an Interest Period
of one, two or three months, the last day of such Interest Period, (c) as to any
LIBOR Loan in respect of which the Borrower has selected a longer Interest
Period than the periods described in clause (b), at the end of each ninety
(90) day period following the making of such a LIBOR Loan and the last day of
such Interest Period, and (d) in the case of all Loans each day of payment or
prepayment of the principal amount of the Loan.

“Interest Period” means, with respect to each LIBOR Loan:

(a) initially, the period from and including the Borrowing Date with respect to
such Loan and ending one, two, three, six or twelve months thereafter (such
period extending to, but excluding, the numerically corresponding day in such
ending month), as selected by the Borrower in (i) its Notice of Revolving Loan
Borrowing given pursuant to Section 2.3, or (ii) in writing delivered to Agent
in connection with the Closing with respect to the Term Loan; and

(b) thereafter, each period from and including the day following the last day of
the immediately preceding Interest Period applicable to such Loan and ending
one, two, three, six or twelve months thereafter (such period extending to, but
excluding, the numerically corresponding day in such ending month), as selected
by the Borrower by irrevocable notice to the Agent not less than three
(3) Business Days prior to the last day of the then current Interest Period with
respect thereto;

provided, that the foregoing provisions are subject to the following:

(i) if any Interest Period would otherwise end on a day that is not a Working
Day, such Interest Period shall be extended to the next succeeding Working Day
unless the result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Working Day;

(ii) any Interest Period with respect to a Revolving Loan that would otherwise
extend beyond the Revolving Credit Maturity Date shall end on the Revolving
Credit Maturity Date or, if such day shall not be a Working Day, on the
preceding Working Day; provided, however, that each Lender’s Revolving Credit
Commitment Percentage of a single Revolving Borrowing requested by the Borrower
shall have the same Interest Period;

 

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(iii) any Interest Period with respect to a Term Loan that would otherwise
extend beyond the Term Loan Maturity Date shall end on the Term Loan Maturity
Date or, if such day shall not be a Working Day, on the preceding Working Day;
and

(iv) any Interest Period that begins on the last Working 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 Working Day of a
calendar month.

“Interest Rate Protection Agreement” means any interest rate swap, interest rate
cap, interest rate hedge or other contractual arrangement that converts variable
interest rates into fixed interest rates, fixed interest rates into variable
interest rates or other similar arrangements.

“Investment” means

(a) with respect to the Borrower (or other specified Person):

(i) any share of capital stock, partnership or other equity interest, evidence
of Indebtedness or other security issued to the Borrower (or other specified
Person) by any other Person;

(ii) any loan, advance or extension of credit by the Borrower (or other
specified Person) to, or contribution by the Borrower (or other specified
Person) to the capital of, any other Person;

(iii) any transactions giving rise to a Guarantee Obligation by the Borrower (or
other specified Person);

(iv) any acquisition by the Borrower (or other specified Person) of all or a
material part of the business of any other Person or the assets comprising such
business or part thereof, excluding purchases of inventory and other items in
the ordinary course of business; and

(v) any other similar investment.

(b) The investments described in the clause (a) above shall be included in the
term “Investment” whether they are made or acquired by purchase, exchange,
issuance of stock or other securities, merger, reorganization or any other
method.

“Land Lease Agreement” means the Lease Agreement, dated as of September 1, 1998,
between the Borrower and the IDA, as amended, restated, supplemented or
otherwise modified from time to time.

 

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“Leased Premises” means the land on which the Facility is located (as more
particularly described in Schedule 1 attached hereto), which is owned by the IDA
in fee simple and leased to the Borrower pursuant to the Land Lease Agreement.

“L/C Application” means any application for a Letter of Credit made by Borrower
to the Letters of Credit Issuer.

“L/C Fee Rate” means the Applicable Margin then in effect with respect to the
column entitled “L/C Fee Rate” in the pricing grid contained in the definition
of Applicable Margin.

“Lender” means, at any time, any financial institution party to this Agreement
in such capacity at such time, including any such Person becoming a party hereto
pursuant to the provisions of Section 12.7, and its successors and assigns, and
“Lenders” means, at any time, all of the financial institutions party to this
Agreement in such capacity at such time, including any such Persons becoming
parties hereto pursuant to the provisions of Section 12.7, and their successors
and assigns. All Lenders party to this Agreement are listed on Appendix A, which
may from time to time be amended and modified when any Lender becomes a party to
this Agreement after the date of this Agreement and pursuant to the provisions
of Section 12.7.

“Letters of Credit” mean all Standby L/Cs.

“Letter of Credit Fees” means the Standby L/C Fees.

“Letters of Credit Exposure” means the Total Standby L/Cs Exposure.

“Letters of Credit Issuer” means M&T as the issuer of the Standby L/Cs pursuant
to the terms of this Agreement.

“Leverage Ratio” means, as to any Person as of the date of its determination,
the ratio of (a) such Person’s Adjusted Funded Indebtedness as of such date, to
(b) such Person’s Adjusted EBITDA for the four (4) Fiscal Quarters ended as of
such date.

“LIBOR” means for any LIBOR Interest Period:

(a) an interest rate per annum at which U.S. dollar deposits are offered in the
London interbank market in an amount approximately equal to the portion of the
Loan subject to the LIBOR Rate for a period of time equal to such Interest
Period that appears on Page 3750 of the Dow Jones Markets Service (or on an
successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service), as
determined by the Agent after 11:00 a.m. (London time) on the day that is two
(2) Working Days prior to the first day of such Interest Period;

(b) if no such rate appears on the Telerate Page 3750, the rate of interest
determined by the Agent to be the average of up to four interest rates per annum
at which U.S. Dollar deposits are offered in the London interbank market in an
amount

 

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approximately equal to the portion of the Loan subject to the LIBOR Rate, for a
period of time equal to such Interest Period which appear on the Reuter’s Screen
LIBO Page as of 11:00 a.m. (London time) two (2) Working Days prior to the
Working Day on which such Interest Period begins if at least two such offered
rates so appear on the Reuter’s Screen LIBO Page, or

(c) if no such rate appears on the Telerate Page 3750 and fewer than two offered
rates appear on the Reuter’s Screen LIBO Page, the rate of interest at which
deposits in an amount approximately equal to the portion of the Loan as to which
the related LIBOR Rate has been elected and which have a term corresponding to
such Interest Period are offered to the Agent by first class banks in the London
inter-bank market for delivery in immediately available funds at a LIBOR Office
on the first day of such Interest Period as determined by the Agent at
approximately 11:00 a.m. (London time) two (2) Working Days prior to the date
upon which such Interest Period is to commence (which determination by shall, in
the absence of manifest error, be conclusive).

“LIBOR Loans” means the Loans which bear an interest rate based on the LIBOR
Rate.

“LIBOR Rate” means, with respect to each LIBOR Loan for each LIBOR Interest
Period applicable thereto, the rate per annum (rounded upwards to the nearest
whole multiple of 1/100th of one percent) equal to (a) the quotient of
(i) LIBOR, divided by (ii) 1.00 minus the Eurocurrency Reserve Requirements,
plus (b) the Applicable Margin for LIBOR Loans; provided, however, that if at
any time during such Interest Period the Eurocurrency Reserve Rate applicable to
any outstanding LIBOR Rate changes, the LIBOR Rate for such LIBOR Interest
Period shall automatically be adjusted to reflect such change, effective as of
the date of such change to the extent required by the applicable Requirements of
Law implementing the change in the Eurocurrency Reserve Rate.

“Lien” means any mortgage, deed of trust, security interest, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other) preference, priority or other security agreement or preferential
arrangement of any kind whatsoever.

“Limited Liability Company Pledge Agreement” means the limited liability company
pledge agreement among the pledgors party thereto and the Collateral Agent for
the ratable benefit of the Lenders executed and delivered by the pledgors to the
Collateral Agent on or about the Original Closing Date, as the same may be
supplemented by acknowledgments to the Limited Liability Company Pledge
Agreement to be delivered to the Collateral Agent by any and all transferees of
any of the original pledgors.

“Loans” means the Revolving Loans and the Term Loans made by the Lenders
pursuant to this Agreement.

“M&T” means Manufacturers and Traders Trust Company, a New York banking
corporation, and its subsidiaries and/or affiliates, and their respective
successors and assigns. For purposes of this Agreement, Allied Irish Banks, PLC
shall not be considered an affiliate of M&T.

 

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“Material Adverse Effect” means any event or condition that has had or could in
the reasonable opinion of the Agent, be reasonably expected to have a material
adverse effect on: (a) the business, assets, financial condition or income of
the Borrower and its Subsidiaries (on a consolidated basis), or (b) the ability
of the Borrower or any of its Subsidiaries to perform their obligations in all
material respects under the Credit Documents (on a consolidated basis), or
(c) the enforceability of any Senior Security Agreement or the attachment,
perfection or priority of any material portion of the Liens intended to be
created thereby, or (d) the validity of any of the Credit Documents or the
consummation of any of the transactions contemplated therein.

“Material Contracts” means the Land Lease Agreement, the Union Contract, the
Operating Agreement, the Transamerica Guaranty, and each other contract or
arrangement to which the Borrower or any of its Subsidiaries is a party for
which breach, non-performance, cancellation or failure to renew could be
expected to have a Material Adverse Effect.

“Materials of Environmental Concern” means any gasoline or petrol (including
crude oil or any fraction thereof) or petroleum products, polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants,
radioactivity, and any other substances or forces of any kind, whether or not
any such substance or force is defined as hazardous or toxic under any
Environmental Law, that is regulated pursuant to or could give rise to liability
under any Environmental Law.

“Mortgages” means the mortgages, deeds of trust, deeds to secure the Credit
Obligations or other similar documents securing Liens on real property owned or
leased by the IDA and/or the Borrower and/or the Leased Premises (including the
IDA/Borrower Mortgage), as well as the other Collateral secured by and described
in the mortgages, deeds of trust, deeds to secure the Credit Obligations or
other similar documents.

“Multiemployer Plan” means a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

“Net Capital Gain” has the meaning set forth in Code Section 1222.

“Net Long-Term Capital Loss” has the meaning set forth in Code Section 1222.

“Net Short-Term Capital Gain” has the meaning set forth in Code Section 1222.

“Net Income” means, with respect to any Person, for any period, the aggregate
net income (or loss) of such Person and its Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided, however, that
there shall be excluded therefrom:

(a) after-tax gains and losses from Asset Sales or abandonments or reserves
relating thereto;

 

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(b) after-tax items classified as extraordinary gains or losses;

(c) the net income (but not loss) of any Subsidiary of such Person to the extent
that the declaration of dividends or similar distributions by that Subsidiary of
that income is restricted by a contract, operation of law or otherwise;

(d) the net income of any other Person, except to the extent of cash dividends
or distributions paid to such Person with respect to whom the Net Income
calculation is being determined or to a wholly-owned Subsidiary of the such
Person by such Person;

(e) any restoration to income of any material contingency reserve or accrued
liability, except to the extent that provision for such reserve was made out of
Net Income accrued at any time following the Original Closing Date;

(f) the cumulative effect of a change in accounting principles;

(g) non-cash charges resulting from the impairment of intangible assets;

(h) in the case of a successor to such Person by consolidation or merger or as a
transferee of the such Person’s assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets; and

(i) (1) any payments received from the Non-Released F-K Litigants, net of the
Second Settlement Payment (if applicable), or (2) any payments made to F-K or
received from F-K in accordance with Paragraphs 15, 16 and/or 17 of the
Settlement Agreement.

“NOMI Holders” means those Persons defined as such in Section 2.8 of the
Operating Agreement.

“NOMIPS” means amounts calculated as 2.5% of gross income from the salt mine
located on the Leased Premises operated by the Borrower that have been earned by
the NOMI Holders with respect to non-operating mineral interests pursuant to
Section 2.8 of the Operating Agreement.

“NOMIPS Subordination Agreement” means the agreement executed and delivered on
or about the Original Closing Date by and between the Collateral Agent and the
NOMI Holders.

 

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“Non-Released F-K Litigants” means Willis Corroon Corporation of Missouri;
Willis Limited; Willis Faber and Dumas and Lloyd’s U/W at London, Sponsoring
Syndicates, and their successors and assigns.

“Notes” means any or all of the Revolving Loan Notes and the Term Loan Notes.

“Notice of Revolving Loan Borrowing” means a notice in substantially the form of
Exhibit B.

“Operating Agreement” means the Amended and Restated Operating Agreement of the
Borrower, dated as of October 30, 1998, as amended through the Original Closing
Date, but not thereafter without the consent of the Agent.

“Original Closing” means the consummation of the transactions described in the
Original Agreement, effective as of March 17, 2004.

“Original Closing Date” means March 17, 2004.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Permitted Extraordinary Distributions” means any distributions to any member of
the Borrower to the extent funded from: (a) the net proceeds of the Senior
Second Secured Notes issued on or about the Original Closing Date, (b) the net
proceeds received in connection with a Permitted Issuance of Senior Second
Secured Notes (as hereafter defined within the definition of Senior Second
Secured Notes), (c) the net proceeds of the Term Loan extended on or about the
date of Amendment No. 1, and (d) any Permitted Willis Distributions.

“Permitted Holders” means Gunther K. Buerman, Joseph G. Bucci and Neil L. Cohen
and any of their respective Related Parties.

“Permitted Indebtedness” means:

(a) Indebtedness in respect of the Credit Obligations;

(b) Indebtedness under the Senior Second Secured Notes (the aggregate
outstanding principal amount of which may from time to time be increased or
reduced in accordance with the terms of the Senior Second Secured Notes
Indenture) and the related Guarantee Obligations under the Senior Second Secured
Notes Indenture, provided, however, with respect to the issuance of additional
Senior Second Secured Notes or the reissuance of previously purchased Senior
Second Secured Notes, issued or resissued (as the case may be) on and after the
Closing Date, each such issuance or reissuance (as the case may be) of
additional Senior Second Secured Notes shall be a Permitted Issuance of Senior
Second Secured Notes (as defined within the defintion of Senior Second Secured
Notes below);

 

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(c) Indebtedness outstanding on the date hereof and described in Schedule 2 and
all refinancings and extensions thereof not in excess of the amount thereof
outstanding immediately prior to such refinancing or extension, trade payables
or other similar short term indebtedness incurred in the ordinary course of
business not representing obligations for borrowed money;

(d) trade payables and accrued expenses incurred in the ordinary course of
business , including NOMIPS;

(e) obligations in respect of performance, bid and surety bonds and completion
guarantees provided by the Borrower and its Subsidiaries in the ordinary course
of business;

(f) Interest Rate Protection Agreements of the Borrower or any Subsidiary of the
Borrower entered into in the ordinary course of business covering Permitted
Indebtedness of the Borrower or any of its Subsidiaries; provided, however, that
such Interest Rate Protection Agreements are entered into for the purpose of
fixing or hedging interest rates with respect to any fixed or variable rate
Permitted Indebtedness that is permitted by the Agreement to be outstanding to
the extent that the notional amount of any such Interest Rate Protection
Agreements does not exceed the principal amount of Permitted Indebtedness to
which such Interest Rate Protection Agreement relates;

(g) Indebtedness under Currency Exchange Agreements entered into in the ordinary
course of business; provided that in the case of Currency Exchange Agreements
which relate to Permitted Indebtedness, such Currency Agreements do not increase
the Permited Indebtedness of the Borrower and its Subsidiaries outstanding other
than as a result of fluctuations in foreign currency exchange rates or by reason
of fees, indemnities and compensation payable thereunder;

(h) intercompany Indebtedness of the Borrower or a Guarantor for so long as such
Indebtedness is held by the Borrower or a Guarantor; provided that if as of any
date any Person other than the Borrower or a Guarantor owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be
deemed the incurrence of Indebtedness not constituting Permitted Indebtedness
under this clause (h) by the issuer of such Indebtedness;

(i) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is extinguished
within three (3) Business Days of incurrence;

(j) Indebtedness represented by Capital Lease obligations and Purchase Money
Indebtedness of the Borrower and its Subsidiaries incurred in the ordinary
course of business (including refinancings thereof that do not result in an
increase in the aggregate principal amount of Indebtedness of such Person as of
the date of such proposed

 

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refinancing (plus the amount of any premium required to be paid under the terms
of the instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Borrower in connection with such refinancing)) not to
exceed $5,000,000 at any time outstanding;

(k) Indebtedness of the Borrower or any of its Subsidiaries represented by
letters of credit for the account of the Borrower or such Subsidiary, as the
case may be, in order to provide security for workers’ compensation claims,
payment obligations in connection with self-insurance or similar requirements in
the ordinary course of business;

(l) Indebtedness arising from agreements of the Borrower or a Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred in connection with the disposition of any
business, assets or Subsidiary (other than guarantees of Indebtedness incurred
by any Person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition); provided that the
maximum aggregate liability in respect of all such Indebtedness shall at no time
exceed the gross proceeds actually received by the Borrower and the Subsidiary
in connection with such disposition; and

(m) additional Indebtedness of the Company and its Subsidiaries in an aggregate
principal amount not to exceed $5,000,000 at any time outstanding.

“Permitted Investments” means the following:

(a) Investments by the Borrower or any Guarantor in any Person that is a
Guarantor or Immaterial Subsidiary, provided all of the requirements for an
Immaterial Subsididary have otherwise been satisifed;

(b) Investments in the Borrower by any of its Subsidiaries; provided that any
Indebtedness evidencing such Investment is unsecured and subordinated, pursuant
to a written agreement, to the Borrower’s Credit Obligations;

(c) Investments in cash and Cash Equivalents;

(d) loans and advances, including advances for travel and moving expenses, to
employees, officers and directors of the Borrower and its Subsidiaries in the
ordinary course of business for bona fide business purposes not in excess of
$1,000,000 at any one time outstanding;

(e) Hedge Agreements entered into in the ordinary course of business;

(f) payments of principal on, purchases of or investments in Senior Second
Secured Notes provided, however, that as a condition to, and in advance of any
such payments of principal on, purchases of or investments in said Senior Second
Secured Notes, the Borrower shall provide the Agent with (i) notice of its
intention to make such payments on,

 

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purchases of or investments in said Senior Second Secured Notes, and (ii) a
representation that following such payments on, purchases of or investments in
said Senior Second Secured Notes, the Borrower projects sufficient Working
Capital and Borrowing Base availability to fund its projected needs based upon
the most recent operating budget timely delivered to the Agent (with all such
permitted payments on, purchases of or investments in Senior Second Secured
Notes being collectively referred to herein as the “Permitted Purchases of
Senior Second Secured Notes”);

(g) investments in securities of vendors, customers and other trade parties
received through a plan of reorganization in exchange for accounts receivable or
other ordinary course indebtedness;

(h) advances to suppliers and customers in the ordinary course of business; and

(i) additional Investments not exceeding $5,000,000 (in the aggregate) at any
one time outstanding, provided that the aggregate amount of such Investments
permitted pursuant to this clause (i), when added to the principal amount of all
Permitted Purchases of Senior Second Secured Notes, does not at any time or from
time to time exceed the then maximum Permitted Purchases of Senior Second
Secured Notes in accordance with sub-section (f) above.

For purposes of calculating the amount of any Permitted Investment, the Borrower
shall use the original value or amount of the Permitted Investment.

“Permitted Liens” means:

(a) Liens for taxes, assessments or governmental charges or claims either
(i) not delinquent or (ii) contested in good faith by appropriate proceedings
and as to which the Borrower or its Subsidiaries shall have set aside on its
books such reserves as may be required pursuant to GAAP;

(b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen and other Liens imposed by law or pursuant to
customary reservations or retentions of title incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made in respect thereof;

(c) Liens incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types of
social security, including any Lien securing letters of credit issued in the
ordinary course of business consistent with past practice in connection
therewith, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);

 

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(d) any judgment Lien (i) in an amount which together with all other judgment
Liens is less than $1,500,000, or (ii) which (A) has been in force for less than
the applicable appeal period or (B) in respect of which the Borrower or any
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and, in the case of each of clauses (A) and (B), the
Borrower or such Subsidiary shall have taken appropriate reserves therefor in
accordance with GAAP and execution of such judgment or award shall not be
levied.

(e) easements, rights-of-way, zoning restrictions and other similar charges or
encumbrances in respect of real property not interfering in any material respect
with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;

(f) any interest or title of a lessor under any Capital Lease obligation
permitted pursuant to clause (j) of the definition of “Permitted Indebtedness;”
provided that such Liens do not extend to any property or assets which is not
leased property subject to such Capital Lease obligation;

(g) Liens securing Purchase Money Indebtedness permitted pursuant to clause
(j) of the definition of “Permitted Indebtedness;” provided, however, that
(i) the Indebtedness shall not exceed the cost of the property or assets
acquired, together, in the case of real property, with the cost of the
construction thereof and improvements thereto, and shall not be secured by a
Lien on any property or assets of the Borrower or any Subsidiary of the Borrower
other than such property or assets so acquired or constructed and improvements
thereto and (ii) the Lien securing such Indebtedness shall be created within one
hundred eighty (180) days of such acquisition or construction or, in the case of
a refinancing of any Purchase Money Indebtedness, within one hundred eighty
(180) days of such refinancing;

(h) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Borrower or
any of its Subsidiaries, including rights of offset and set-off;

(i) Liens securing the Senior Second Secured Notes and all other monetary
obligations under the Senior Second Secured Notes Indenture and the related
Guarantee Obligations thereunder so long as such Lien is subject to the
Intercreditor Agreement which is in full force and effect;

(j) Liens listed on Schedule 6(a) attached hereto; and

(k) Liens secured by the Credit Documents.

“Permitted Net Income Distribution Annual Allowance” means, as of the end of the
twelve (12) month period ending as of each September 30th, an annual allowance
equal to the lesser of: (a) 50% of the Net Income for the Borrower and its
Subsidiaries (prepared on a consolidated basis) for such period, or
(b) (i) 62.5% of the Net Income of the Borrower and its Subsidiaries (prepared
on a consolidated basis) for such period, minus (ii) the Permitted Tax
Distribution Annual Allowance for the same calendar year which contains the
September 30th

 

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calculation of Permitted Net Income Distribution Annual Allowance.
Notwithstanding the foregoing, the Permitted Net Income Distribution Annual
Allowance for any given year cannot be calculated unless and until the Borrower
and Guarantors, have, on a consolidated basis, calculated their Permitted Tax
Distribution Annual Allowance.

“Permitted Tax Distribution Annual Allowance” except as otherwise noted in this
definition below, means, with respect to any taxable year ending December 31st,
the sum of: (i) the product of: (1) the difference, if any, of (A) all items of
taxable income or gain (other than capital gain) allocated by the Borrower or
its Susbsidiaires to its Equity Holders for such year, minus (B) the sum of all
items of taxable deduction or loss (but not including any capital loss)
allocated to such Equity Holders by the Borrower or its Subsdiaries for such
year and any Tax Loss Amount (other than a Tax Loss Amount attributable to
capital losses), and (2) the Applicable Income Tax Rate, plus (ii) the product
of: (1) the Net Capital Gain (including, for this purpose, any Tax Loss Amount
attributable to Net Long-Term Capital Loss), if any, allocated by the Borrower
or its Susbsidiaries to its Equity Holders for such year and (2) the Applicable
Capital Gain Tax Rate, plus (c) the product of: (1) the Net Short-Term Capital
Gain (including for this purpose any Tax Loss Amount attributable to short-term
capital loss), if any, allocated by the Borrower or its Subsdiaries to its
Equity Holders for such year, and (2) the Applicable Income Tax Rate. The amount
of the Permitted Tax Distribution Annual Allowance shall be computed promptly
after the filing by the Borrower of its annual income tax return and after the
deliveries required pursuant to Section 8.7(b) have been made. Prior to the
final determination of the Permitted Tax Distribution Annual Allowance, the
Borrower may calculate an estimated Permitted Tax Distribution Annual Allowance
which will remain unchanged and may be utilized until a final Permitted Tax
Distribution Annual Allowance can be calculated. Once a final determination of
the Permitted Tax Distribution Annual Allowance has been made, all necessary
adjustments will be made to Available Non-Extraordinary Distributions.

“Permitted Willis Distributions” means any distributions to any member of the
Borrower to the extent funded with the amounts, if any, received by the Borrower
from: (a) the Non-Released F-K Litigants in satisfaction or settlement in whole
of the claims asserted against them by the Borrower in the F-K Litigation less
the second Settlement Payment paid or required to be paid to F-K, or (b) F-K in
accordance with the terms of the Settlement Agreement.

“Person” means an individual, partnership, corporation, business trust, stock
company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

“Plan” means at a particular time, any employee benefit plan which is by ERISA
and in respect of which the Borrower is (or, if such plan were terminated time,
would under Section 4069 of ERISA be deemed to be) an “employer” as define
Section 3(5) of ERISA.

“Preferred Stock” of any Person means any Capital Stock of such Person that has
preferential rights to any other Capital Stock of such Person with respect to
dividends or redemptions or upon liquidation.

 

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The phrase “prepared on a pro forma basis” shall whenever appropriate and
without duplication, mean that any required proforma calculations with respect
to Permitted Issuance of Senior Second Secured Notes and for which this phrase
is used, shall give effect to the appropriate issuance or reissuance (as
appropriate) as if consumated on the first day of the immediately preceding
Fiscal Quarter then ended, with any related calculations then determined on a
trailing twelve (12) months basis from such date.

“Pricing Grid Leverage Ratio” means as to any Person, as of the date of
determination, the ratio of (a) such Person’s Adjusted Funded Indebtedness as of
such date, over (b) such Person’s EBITDA for the previous four (4) Fiscal
Quarters ended as of such date.

“Prime Rate” means, for any day, the rate of interest in effect for such day as
publicly announced from time to time by the Agent as its prime rate (whether or
not such rate is actually charged by the Agent), which is not intended to be the
Agent’s lowest or most favorable rate of interest at any one time. Any change in
the Prime Rate announced by the Agent shall take effect at the opening of
business on the day specified in the public announcement of such change;
provided that the Agent shall not be obligated to give notice of any change in
the Prime Rate.

“Project” means the Facility, the Leased Premises, and all easements, leasehold
interests, licenses, permits, contract rights and other real and personal
property interests now owned or hereafter acquired by the Borrower or any of its
Subsidiaries or in which the Borrower or which any of its Subsidiaries has any
rights.

“Projected Distributions” means an amount that is identified as such in the
Compliance Certificate last delivered to Agent for the Fiscal Quarters ending
September 30th, December 31st or March 31st pursuant to Section 8.8(c) as the
amount which Borrower’s Board of Directors anticipates declaring and
distributing to the Borrower’s members with respect to their membership interest
(other than Permitted Extraordinary Distributions) during the period between
such September 30th and April 30th of the following year, provided that (a) such
amount may not exceed the amount of the Available Non-Extraordinary
Distributions and (b) such amount (i) shall be reduced in each Compliance
Certificate delivered for the Fiscal Quarters ending December 31st and
March 31st by the amount of actual distributions paid by Borrower as of but
delivered after the immediately preceding September 30th (other than Permitted
Extraordinary Distributions) and (ii) may, at Borrower’s election, be reduced or
increased (but in no event shall the Projected Distributions plus the amount of
all actual distributions paid by the Borrower to its members for such period,
exceed the amount reported in the Compliance Certificate delivered for the
Fiscal Quarter ended as of September 30th) in any subsequent Compliance
Certificate from the amount reported in the Compliance Certificate delivered to
Agent for the previous Fiscal Quarter. Borrower acknowledges that the Projected
Distributions reported in the Compliance Certificate delivered for the Fiscal
Quarter ended as of September 30th may not under any circumstances be increased
from the amount reported in such certificate, as subsequently reduced by actual
distributions, or otherwise at Borrower’s election.

“Projections” means the Initial Projections and the last Annual Operating Budget
delivered to the Agent by the Borrower.

 

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“Purchase Money Indebtedness” means any Indebtedness which is secured with a
purchase money first priority Lien.

“Qualified Capital Stock” means Capital Stock other than Disqualified Capital
Stock.

“Related Parties” means, with respect to any Person, any (a) spouse or lineal
descendent (whether natural or adopted) of such Person or (b) trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or persons beneficially holding an 80% or more controlling
interest of which consist of such Person and/or any of the persons referred to
in the immediately preceding clause (a).

“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.

“Regulations” means the temporary and final regulations under the Code and any
successor provisions thereto.

“Reimbursement Obligations” means the Standby L/C Reimbursement Obligations.

“Reorganization” means, with respect to any Multiemployer Plan, the condition
that such Plan is in reorganization within the meaning of such term as used in
Section 4241 of ERISA.

“Reportable Event” means any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty (30) day notice period is
waived under Sections .13, .14, .16, .18, .19, or .20 of PBGC Reg. 2615.

“Required Lenders” means, at any time, three (3) Lenders who, in the aggregate,
hold at least fifty-one percent (51%) of the Total Revolving Credit Commitment
and Total Term Loan Commitment.

“Requirements of Law” means, as to any Person, the certificate of incorporation
and by-laws, partnership agreement, certificate of formation, articles of
organization or limited liability company operating agreement or other
organizational or governing documents of such Person, and any Applicable Law.

“Responsible Officer” of a Person, means in the case of a Person which is a
limited liability company, the chairman, chief executive officer, president, or
any vice chairman of such Person, or with respect to financial matters, the
chief financial officer or chief accounting officer of such Person and in the
case of any Person which is a corporation, the chairman, any vice chairman,
chief executive officer, president or any vice president of such Person or with
respect to financial matters, the chief financial officer of such Person.

 

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“Restricted Payment” means with respect to any Person the following:

(a) the declaration or payment of any dividend or the making of any distribution
(other than dividends or distributions payable in Qualified Capital Stock of the
Person and dividends and distributions payable to the Person or another
Subsidiary of the Person) on or in respect of shares of Capital Stock of the
Person or its Subsidiaries to holders of such Capital Stock;

(b) the purchase, redemption or other type of acquisition or retirement for
value of any Capital Stock of the Person or any of its Subsidiaries, other than
any such Capital Stock held by the Person or any of its Subsidiaries;

(c) the payment of or on, purchase, defeasement, redemption, prepayment,
decrease or other type of acquisition or retirement for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
of any Indebtedness of the Borrower or any Subsidiary that is subordinate or
junior in right of payment to the Credit Obligations;

(d) the payment of any principal of or on, purchase, defeasement, redemption,
prepayment, decrease or other type of acquisition or retirement for value
(including upon the occurrence of a Change of Control), prior to the scheduled
final maturity or scheduled repayment, of the Senior Second Secured Notes (other
than the Permitted Purchases of the Senior Second Secured Notes); or

(e) the making of any Investment (other than Permitted Investments).

“Revolving Borrowing” means any Revolving Loans made at the same time and as to
which a single Interest Period is in effect.

“Revolving Commitment Period” means the period from and including the Closing
Date to but excluding the Revolving Credit Termination Date.

“Revolving Credit Availability” means, as of any date, (a) the lesser of (i) the
Total Revolving Credit Commitment or (ii) the Borrowing Base then in effect,
each minus (b) the aggregate principal amount of all outstanding Revolving Loans
and the Total Standby L/C Exposure.

“Revolving Credit Commitment” means, with respect to each Lender, the commitment
of such Lender to make Revolving Loans pursuant to Section 2.1(a) and to
participate in Standby L/Cs pursuant to Section 3.1(a) in an aggregate principal
and/or Stated Amount not to exceed the amount set forth opposite such Lender’s
name on Schedule 3 attached hereto (collectively, as to all Lenders, the “Total
Revolving Credit Commitment”). As of the Closing Date and unless and until
terminated or reduced in accordance with Section 2.7 of this Agreement, the
Total Revolving Credit Commitment is $30,000,000. If the Agent and all

 

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Lenders agree, the Total Revolving Credit Commitment may be increased from time
to time, provided that the Commitments shall not at any time in the aggregate
exceed $62,140,113.50.

“Revolving Credit Commitment Percentage” means, as to any Lender, at any time,
the percentage that such Lender’s Revolving Credit Commitment then constitutes
of the Total Revolving Credit Commitment.

“Revolving Credit Maturity Date” means the date which is the fifth
(5th) anniversary of the Closing Date. Such Revolving Credit Maturity Date may
be extended at the Borrower’s request with the approval of the Agent or all of
the Required Lenders as outlined in Section 2.8 below.

“Revolving Credit Termination Date” means the Revolving Credit Maturity Date or
such earlier date of termination of each of the Revolving Credit Commitments
pursuant to Section 2.7(b) or Section 10.

“Revolving Loan Notes” means the amended and restated promissory notes of the
Borrower, delivered pursuant to Section 2.2 which shall be substantially in the
form of Exhibit C, as the same may be amended, modified or restated from time to
time.

“Revolving Loans” means any loans made to the Borrower pursuant to Section 2.

“Salt Depot Agreements” means the agreements between Borrower and third parties
pursuant to which Borrower or a Subsidiary stores inventory of the Borrower or
the Subsidiary.

“Second Settlement Payment” means any payment made by or on behalf of the
Borrower to F-K of an agreed upon percentage as required in accordance with
Paragraphs 15 or 16 of the Settlement Agreement.

“Securities Act” means the Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder, all as the same shall be in effect at the time.

“Security Agreement” means the Security Agreement executed and delivered by the
Borrower in favor of the Collateral Agent, for the ratable benefit of the
Lenders, and dated on or about the date of the Original Closing Date.

“Senior Second Secured Notes” means the 9.5% Senior Second Secured Notes due
2014, dated on or about the date of the Original Closing Date, and issued or
reissued pursuant to the Senior Second Secured Notes Indenture in the original
principal amount of $100,000,000, and any additional Senior Second Secured Notes
issued or reissued after the Original Closing Date pursuant to the Senior Second
Secured Notes Indenture, provided, however: (i) that any Senior Second Secured
Notes issued or reissued on or after the Closing Date must be: (a) issued or
reissued on terms no less favorable to the Borrower in any material

 

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respect as determined by the Agent (with comparison made to the Senior Second
Secured Notes in existence as of the Original Closing Date), and (b) subordinate
and subject to the terms of the Intercreditor Agreement, (ii) that prior to the
issuance or reissuance of any additional Senior Second Secured Notes issued or
reissued (as the case may be) on or after the Closing Date, and as a condition
to, any such issuance or reissuance of Senior Second Secured Notes, the Borrower
shall provide the Agent with: (a) financial statements prepared on a pro forma
basis reflecting the issuance or reissuance (as the case may be) of such Senior
Second Secured Notes and demonstrating the Borrower’s continued compliance with
the financial covenants set forth in Sections 9.1 and 9.2 of this Agreement
(and, with respect to the Borrower’s compliance with the Fixed Charge Coverage
Ratio and the necessary calculation of any Projected Distributions or the actual
amount of any distributions made during the applicable measurement period, such
distributions shall be deemed to be the lesser of: (1) the Projected
Distributions reduced by the actual amount of such distributions made during the
applicable measurement period (provided, that any reduction to Projected
Distributions or actual distributions made cannot at any time or from time to
time reduce the level of Projected Distributions or actual distributions made to
an amount less than $0.00), and (2) provided the maximum amount is an amount
equal to or greater than $0.00, the maximum amount of distributions that would
have been permitted if the additional Senior Second Secured Notes had in fact
been outstanding on the first day of the immediately preceding Fiscal Quarter
then ended, with any related calculations then determined on a trailing twelve
(12) months basis from such date), and (b) an operating budget prepared on a pro
forma basis for the ensuing twelve (12) months prepared in good faith based upon
reasonable assumptions which demonstrate that the Borrower has adequate Working
Capital and availability under the Borrowing Base to fund the Borrower’s
projected Working Capital needs for the ensuing twelve (12) months, all as set
forth in the operating budget provided to the Agent in accordance with this
section (with any such permitted issuances or reissuances (as the case may be)
being collectively referred to herein as the “Permitted Issuance of Senior
Second Secured Notes”).

“Senior Second Secured Note Documents” means all documents, agreements and
instruments evidencing or relating to the Senior Second Secured Notes, including
the Senior Second Secured Notes Indenture and the Senior Second Secured Notes.

“Senior Second Secured Notes Indenture” means the Indenture dated as of
March 17, 2004 among the Borrower, as issuer, the guarantors party thereto and
U.S. Bank National Association, in its capacity a trustee and collateral agent
under the Indenture, pursuant to which the Senior Second Secured Notes were
previously and may hereafter be issued, together with all instruments and other
agreements entered into by the Borrower or such Subsidiaries in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with Section 9.17 of this Agreement.

“Senior Second Secured Obligations” means the unpaid principal and interest on
the Senior Second Secured Notes and all other obligations and liabilities of the
Borrower and/or its Subsidiaries, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, or in connection with, under the Senior Second Secured Note
Documents, whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise.

 

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“Senior Security Documents” means, collectively, the Intercreditor Agreement,
the Security Agreement, the Limited Liability Company Pledge Agreement, the
Mortgages, each Subsidiary Guaranty and each Subsidiary Security Agreement and
all other documents and instruments, now existing or hereafter arising, which
create or purport to create and grant a Lien to the Agent, the Collateral Agent
and the Lenders in property to secure payment or performance of the Credit
Obligations.

“Settlement Agreement” means the Settlement Agreement dated on or about June 29,
2005 among Frontier-Kemper Constructors, Inc., Flatiron Structures LLC (a/k/a
Flatiron Constructors, LLC, d/b/a Frontier Kemper/Flatiron Joint Venture,
Travelers Casualty and Surety Company of America, Liberty Mutual Insurance
Company, and the Borrower.

“Single Employer Plan” means any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan.

“Solvent” means at a point in time, that the fair salable value of the assets of
a Person, on a going concern basis, is greater than the total amount of
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of the Person; the fair salable value of the assets of the Person,
on a going concern basis, is not less than the amount that will be required to
pay its probable liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) as they become absolute and matured; the Person is not
engaged in a business or a transaction, and is not about to be engaged in a
business or a transaction, for which its properties would constitute an
unreasonably small capital; and the Person does not intend to, and does not
believe that it will, incur debts or liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) beyond its ability to pay
as such debts and liabilities mature in the ordinary course of business. For
purposes of the foregoing, the amount of contingent liabilities are to be
computed as the amount that, in light of all the facts and circumstances
existing at that point in time, can reasonably be expected to become an actual
or matured liability.

“Standby L/C” means the irrevocable standby letters of credit in the form of
Exhibit D (as may be modified in accordance with Section 3.1 of this Agreement)
issued by the Letters of Credit Issuer.

“Standby L/C Exposure” means with respect to any Lender at any time and without
duplication, such Lender’s Revolving Credit Commitment Percentage of the sum of
(a) the aggregate Stated Amount of all Standby L/Cs outstanding at any such time
and (b) the aggregate amount of all unpaid Standby L/C Reimbursement Obigations
at any such time (with the aggregate amount of all Standby L/Cs outstanding at
any such time plus the aggregate amount of all unpaid Standby L/C Reimbursement
Obligations being referred to collectively as the “Total Standby L/C Exposure”)

“Stated Amount” means, with respect to any Letter of Credit, the stated or face
amount available at the time for drawing (subject to presentment of all
requested documents), regardless of whether any conditions to such drawing could
then be met. For

 

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purposes of calculating the Stated Amount of any Letter of Credit at any time
any reduction in the Stated Amount of any Letter of Credit by reason of any
amendment to any Letter of Credit shall be deemed effective under this Agreement
as of the later of (x) the date that the issuer of such Letter of Credit
actually issues an amendment purporting to reduce the Stated Amount of such
Letter of Credit, whether or not the amendment provides that the reduction be
given effect as of an earlier date, or (y) the date the issuer of such Letter of
Credit receives the written consent of the Letter of Credit beneficiary or
beneficiaries to such reduction, whether written consent must be dated on or
after the date of the amendment issued by the issuer of such Letter of Credit
purporting to effect such reduction.

“Subsidiary” means, as to any Person, a corporation of which shares of stock
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person, or a limited partnership of which such
Person or any of its Subsidiaries is a general partner or a business trust in
which such Person holds a majority interest (comparable to that for a
corporation as described above).

“Subsidiary Guaranty” means any guaranty delivered by a Subsidiary to the Agent
for the benefit of the Lenders. The term “Subsidiary Guarantee” means
collectively each and every Subsidiary Guaranty.

“Subsidiary Security Agreement” means any security agreement delivered by a
Subsidiary to the Agent for the benefit of the Lenders. The term “Subsidiary
Security Agreements” means collectively each and every Subsidiary Security
Agreement.

“Synthetic Lease Obligations” means an arrangement treated as an operating lease
for financial accounting purposes and a financing lease for tax purposes.

“Tax Loss Amount” means with respect to any taxable year, the amount which would
be available to the Borrower as a net operating loss or net capital loss from a
prior taxable year of the Borrower ending subsequent to the Original Closing
Date if the Borrower were taxable as a corporation and not as a Flow Through
Entity; provided, that for such purpose the amount of any such net operating
loss or net capital loss shall be used only once to reduce Permitted Tax
Distribution Annual Allowance and in each case shall be carried forward to the
next succeeding taxable year until so used. For purposes of calculating the Tax
Loss Amount, the proportionate part of the items of taxable income, gain,
deduction, or loss (including capital gain or loss) of any Subsidiary that is a
Flow Through Entity for a taxable year of such Subsidiary ending subsequent to
the Original Closing Date shall be included in determining the amount of net
operating loss or net capital loss of the Borrower.

“Term Loans” means a Loan that is made pursuant to Section 4.1.

“Term Loan Commitment” means, as to any Lender, its commitment to make a Term
Loan pursuant to Section 4.1 in an aggregate principal amount not to exceed the

 

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amount set forth opposite such Lender’s name in Schedule 3 under the heading
“Term Loan Commitment” (all such commitments being referred to collectively as
the “Total Term Loan Commitment”). The Total Term Loan Commitment of
$24,026,622.50 shall be reduced from time to time and at any time by the portion
(if any) of the payments made under the terms of this Agreement (including the
Term Loan Scheduled Amortization Payments and all mandatory and voluntary
prepayments) which are applied by the Agent to reduce the amounts due in
connection with any outstanding Term Loans due under the terms of this
Agreement. If the Agent and all Lenders agree, the Total Term Loan Commitment
may be increased from time to time, provided that the Commitments shall not at
any time in the aggregate exceed $62,140,113.50.

“Term Loan Commitment Percentage” means, as to any Lender at any time, the
percentage that such Lender’s Term Loan Commitment then constitutes of the Total
Term Loan Commitment.

“Term Loan Facility” means the facility described in Section 4 of this
Agreement.

“Term Loan Scheduled Amortization Payment” means the payment required to be made
on the last day of each Fiscal Quarter commencing on September 30, 2006 and
continuing on the last day of each Fiscal Quarter thereafter as set forth on the
amortization schedule in Exhibit E attached hereto with such payment to be a
payment of Term Loan principal to the extent of the unpaid principal amount of
any outstanding Term Loans.

“Term Loan Termination Date” means the Term Loan Maturity Date or such earlier
date of termination of the Total Term Loan Commitments pursuant to Section 10.

“Term Loan Maturity Date” means the date that is the eighth (8th) anniversary of
the Closing Date.

“Term Loan Notes” means the amended and restated promissory notes of the
Borrower, delivered pursuant to Section 4.2 which shall be substantially in the
form of Exhibit F, as the same may be amended from time to time.

“Title Company” means the title insurance company approved by the Agent to
insure the priority of the Lien of the Mortgages.

“Title Insurance Policy” means the policy of title insurance received by the
Lenders on the Closing Date.

“Transfer” means, as a noun, any voluntary or involuntary transfer, sale,
pledge, hypothecation, encumbrance or other disposition and, as a verb,
voluntarily or involuntarily to transfer, sell, pledge, hypothecate, encumber or
otherwise dispose of.

“Uniform Commercial Code” and “UCC” means the Uniform Commercial Code as in
effect from time to time in any applicable jurisdiction.

 

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“Union Contract” means the labor agreement, dated as of October 29, 2005,
between the Borrower and the United Steelworkers International Union AFL-CIO,
CLC and its local 763, covering matters related to the Project.

“Unused Commitment Fee Rate” means the Applicable Margin then in effect with
respect to the column entitled “Unused Commitment Fee Rate” in the pricing grid
contained in the definition of Applicable Margin.

“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

“Voting Stock” means, with respect to any Person, securities of any class or
classes of Capital Stock of such Person entitling the holders thereof (whether
at all times or only so long as no senior class of stock has voting power by
reason of any contingency) to vote in the election of members of the Board of
Directors (or equivalent governing body) of such Person.

“Working Capital” means, as of any date of determination, the Current Assets
less Adjusted Current Liabilities.

“Working Capital Assets” means the Borrower’s and Guarantors’ accounts
receivable and inventory and the future proceeds and products thereof in
existence as of the date of any release in accordance with Section 2.8 below.

“Working Day” means any Business Day on which dealings in foreign currency and
exchange between banks may be carried on in London, England.

(b) Additional capitalized terms used herein and not otherwise defined in
Section 1.1(a) shall have the meanings given thereto in the Sections of this
Agreement set opposite such term as follows:

 

Term

  

Section

Affected Lender

  

Section 5.6

Annual Operating Budget

  

Section 8.8(d)

Commitment Transfer Supplement

  

Section 12.7(b)(ii)

Compliance Certificate

  

Section 8.8(c)

Environmental Consultant

  

Section 8.15(f)

Environmental Program

  

Section 8.15(d)

Fair Value Basis Balance Sheet

  

Section 6.8(e)

Group

  

Definition of Change in Control

Indemnified Liabilities

  

Section 12.6

Indemnitee/Indemnitees

  

Section 8.15(e)

Information

  

Section 12.15

Initial Projections

  

Section 6.8(d)

Intellectual Property

  

Section 6.24

 

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L/C Participation Obligation

   Section 5.12(b)

Level

  

Definition of Applicable Margin

Material Adverse Change

  

Section 6.8(b)

Non Advancing Lender

  

Section 5.12(b)

Other Consultants

  

Section 8.5(b)

Participations

  

Section 12.7(c)

Permitted Assignee

  

Section 12.7(b)(i)

Permitted Issuance of Senior Second Secured Notes

  

Definition of Senior Second Secured Notes

Permitted Purchases of Senior Second Secured Notes

  

Definition of Permitted Investments

Pro Forma Balance Sheet

  

Section 6.8(c)

Register

  

Section 12.7(b)

Rejecting Lender

  

Section 2.8

Standby L/C Fee

  

Section 3.1(e)

Standby L/C Participant

  

Section 3.1(f)

Standby L/C Reimbursement Obligations

  

Section 3.1(d)

Substitute LIBOR Rate

  

Section 5.6

Taxes

  

Section 5.11(a)

Transferees

  

Section 12.7(c)

Total Revolving Credit Commitment

  

Definition of Revolving Credit Commitment

Total Standby L/C Exposure

  

Definition of Standby L/C Exposure

Total Term Loan Commitment

  

Definition of Term Loan Commitment

Trustee

  

Definition of Intercreditor Agreement

Unused Commitment Fee

  

Section 5.1(b)

1.2 Other Defined Terms; Rules of Interpretation.

(a) All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto,
unless otherwise expressly provided therein.

(b) As used herein and in any certificate or other document made or delivered
pursuant hereto, accounting terms not defined herein and accounting terms partly
defined herein to the extent not defined, shall have the respective meanings
given to them under GAAP.

(c) The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.”
Unless the context in which used herein otherwise clearly requires, “or” has the
inclusive meaning represented by the phrase “and/or.”

 

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(d) Terms defined in this Agreement by reference to any other agreement,
document or instrument shall have the meanings assigned to them in such
agreement, document or instrument, whether or not such agreement, document or
instrument is then in effect.

(e) All terms defined in the UCC and not otherwise defined herein have the
meanings assigned to them in the UCC.

(f) References to Articles, Sections, subsections, Exhibits, Schedules and the
like, are to Articles, Sections, subsections of, or Exhibits or Schedules
attached to, this Agreement (as amended, restated, supplemented or otherwise
modified from time to time) unless otherwise expressly provided.

(g) Defined terms include in the singular number the plural and in the plural
number the singular.

(h) Reference to any law, rule, regulation, order, decree, requirement, policy,
guideline, directive or interpretation means as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect on the determination
date, including rules and regulations promulgated thereunder.

(i) All references herein to the Lenders or any of them shall be deemed to
include the Letter of Credit Issuer unless specifically provided otherwise or
the context otherwise requires.

SECTION 2

REVOLVING CREDIT FACILITY

2.1 Total Revolving Credit Commitment.

(a) Subject to the terms and conditions set forth herein, each Lender agrees,
severally and not jointly, to make, from time to time after the date hereof
until the Revolving Credit Termination Date, Revolving Loans to the Borrower in
an aggregate principal amount not to exceed its Revolving Credit Commitment
Percentage of the Revolving Credit Availability. If at any time the aggregate
outstanding amount of the Revolving Loans and the Total Standby L/C Exposure
exceeds the lesser of (i) the Total Revolving Credit Commitment and (ii) the
Borrowing Base then in effect, the Borrower shall immediately repay the
Revolving Loans to the extent of such excess amount. No more than five
(5) Revolving Borrowings shall be outstanding at any given time. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow Revolving Loans.

(b) The Borrower shall deliver a Borrowing Base Certificate to the Agent and
each Lender sufficiently in advance of the Closing Date to permit the Agent to
determine

 

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the Borrowing Base to be in effect on the Closing Date and, thereafter, shall
deliver Borrowing Base Certificates to the Agent and each Lender at least once a
month but no more frequently than on a weekly basis. Promptly following its
receipt of each such Borrowing Base Certificate, the Agent shall determine or,
as the case may be, redetermine the Borrowing Base in its reasonable discretion
and shall notify the Borrower and each Lender of the Borrowing Base so
determined or redetermined. Each Borrowing Base so determined or redetermined by
the Agent shall remain in effect until notice of a redetermined Borrowing Base
shall have been given by the Agent in accordance with the provisions of this
Section 2.1.

2.2 Revolving Loan Notes. The Revolving Loans made by each Lender pursuant to
Section 2.1 shall be evidenced by a Revolving Loan Note executed by the
Borrower. The Revolving Loan Notes shall have appropriate insertions and be
payable to the order of such Lender. Each Revolving Loan Note shall (a) be dated
the Closing Date, (b) represent the obligation of the Borrower to pay the amount
of such Lender’s Revolving Credit Commitment, (c) be stated to mature on the
Revolving Credit Maturity Date, (d) provide for the payment of principal and
interest in accordance with Section 5.3, and (e) be entitled to the benefits of
this Agreement and the Senior Security Documents. Each Lender is hereby
authorized to record the date and amount of each Revolving Loan made by such
Lender, the date and amount of each payment or repayment of principal of the
Revolving Loans made by the Borrower, on the schedules annexed to and
constituting a part of the Revolving Loan Notes held by such Lender, and any
such recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, that the failure by any Lender to make any
such recordation shall not limit or otherwise affect the Credit Obligations of
the Borrower.

2.3 Procedure for Borrowing and Payment of Revolving Loans. Whenever the
Borrower desires the Lenders to make a Revolving Loan pursuant to Section 2.1,
the Borrower shall notify in writing by the delivery of a Notice of Revolving
Loan Borrowing by hand, telecopy or by electronic correspondence (with any
electronic correspondence to be sent to the appropriate address as specified by
the Agent from time to time) to the Agent of such request by not later than
11:00 a.m., Rochester, New York time, three (3) Business Days before the date of
the proposed Revolving Borrowing. Each such Notice of Revolving Loan Borrowing
shall be irrevocable. Each Notice of Revolving Loan Borrowing shall specify the
following information:

(a) the aggregate amount of the requested Revolving Borrowing;

(b) the Borrowing Date of such Revolving Borrowing which shall only be on a
Wednesday of every week so long as it is considered a Business Day and the
Borrower is open for business that day. If any Wednesday is not considered a
Business Day (or Working Day, for any portion of the Revolving Borrowing that is
to be a LIBOR Loan), or the Borrower is not open for business that day, the
applicable Borrowing Date in that week shall be the last Business Day (or
Working Day, for any portion of the Revolving Borrowing that is to be a LIBOR
Loan) immediately preceding such Wednesday that both the Borrower and the Agent
are open for business;

 

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(c) whether such requested Revolving Borrowing is to be a LIBOR Loan, a Base
Rate Loan or a combination thereof and, if a combination thereof, the amount
allocable to each; and

(d) the requested Interest Period to be applicable to each LIBOR Loan. The
Borrowing Date shall be a Working Day if the requested Revolving Borrowing is to
be a LIBOR Loan (or a combination of LIBOR Loans and Base Rate Loans) and a
Business Day if the Revolving Borrowing is to be a Base Rate Loan.

Promptly following receipt of a Notice of Revolving Loan Borrowing in accordance
with this Section 2.3, the Agent shall advise each Lender of the details thereof
and of the amount of such Lender’s Revolving Loan to be made as part of the
requested Revolving Borrowing.

With the exception of any payments required on the Revolving Credit Maturity
Date or Revolving Credit Termination Date and any other mandatory prepayments
required by the terms of this Agreement, all voluntary repayments of principal
on Revolving Loans shall be made on a Wednesday of every week so long as it is
considered a Business Day and the Borrower is open for business that day. If
(i) any Wednesday is not considered a Business Day, or (ii) the Borrower is not
open for business that day, the applicable payment date in that week shall be
the last Business Day immediately preceding such Wednesday that both the
Borrower and the Agent are open for business. If the applicable Interest Period
for any applicable LIBOR Loan does not end on a Wednesday, the applicable
payment date in that week shall be the last day of the applicable Interest
Period or if such date is not a Working Day the immediately preceding Working
Day. Notwithstanding the foregoing, any voluntary repayment of a Revolving Loan
that is a Base Rate Loan may also be made on a Friday, provided such day is a
Business Day.

2.4 Disbursement of Revolving Loans. Subject to the terms and conditions herein,
each Lender will make an amount equal to its Revolving Credit Commitment
Percentage multiplied by the requested Revolving Borrowing available to the
Agent in immediately available funds prior to 11:00 a.m. Rochester, New York
Time, on the Borrowing Date set forth in the Notice of Revolving Loan Borrowing.
Requested Revolving Borrowings which are made available by the Agent shall be
deposited into the Funding Account by wire transfer or other appropriate method,
not later than 1:00 p.m. Rochester, New York Time on the requested Borrowing
Date.

2.5 Revolving Loans and Revolving Borrowings.

(a) Each Revolving Loan shall be made as part of a Revolving Borrowing
consisting of Revolving Loans made by the Lenders ratably in accordance with
their respective Revolving Credit Commitment Percentages. The failure of any
Lender to make any Revolving Loan required to be made by it shall not relieve
any other Lender of its obligations hereunder; provided that no Lender shall be
responsible for any other Lender’s failure to make a Revolving Loan as required
hereby.

 

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(b) Each Revolving Borrowing shall be comprised of either Base Rate Loans or, to
the extent permitted or required by the terms hereof, LIBOR Loans, as selected
by Borrower and set forth in the Notice of Revolving Loan Borrowing with respect
to which the Revolving Loan is made. Each Lender at its option may make any Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Revolving Loan in accordance with the
terms of this Agreement.

(c) Each Revolving Borrowing that is a LIBOR Loan shall be in an integral
multiple of $100,000 and not less than $2,000,000. Each Revolving Borrowing that
is a Base Rate Loan shall be in an aggregate amount that is an integral multiple
of $10,000 and not less than $500,000. Notwithstanding the foregoing, a
Revolving Borrowing may be less than the required amount, but in such case must
be in an aggregate amount that is equal to the Revolving Credit Availability.

(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Revolving
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Credit Maturity Date.

2.6 Use of Proceeds . Borrower may use proceeds of Revolving Loans for working
capital and any other corporate purposes.

2.7 Termination and Reduction of Total Revolving Credit Commitment.

(a) Unless previously terminated, each Revolving Credit Commitment shall
terminate on the Revolving Credit Termination Date.

(b) The Borrower may at any time terminate, or from time to time reduce, the
Total Revolving Credit Commitment in accordance with Section 5.2(d). The
Borrower shall notify the Agent of any election to terminate or reduce the Total
Revolving Credit Commitment under Section 5.2(d) at least five (5) Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any
notice, the Agent shall advise the Lenders of the contents thereof. Each notice
delivered by the Borrower pursuant to this Section 2.7(b) shall be irrevocable.
Any termination or reduction of the Total Revolving Credit Commitment shall be
permanent. Each reduction of the Total Revolving Credit Commitment shall be made
ratably among the Lenders in accordance with their respective Revolving Credit
Commitments.

2.8 Release of Certain Collateral and Procedure for the Possible Extension of
the Revolving Credit Commitment.

Provided: (a) no Default or Event of Default has occurred and is continuing, and
all Credit Obligations have not been accelerated (b) the Revolving Credit
Maturity Date has not been extended by either the Agent or all Lenders beyond
the fifth (5th) anniversary of the Closing Date, with any such notice of any
intent to extend the Revolving Credit Maturity Date

 

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beyond the fifth (5th) anniversary of the Closing Date to be irrevocable and
given no less than six (6) months prior to the Revolving Credit Maturity Date,
which irrevocable notice shall, among other things, (i) commit to the extension
of the Revolving Credit Maturity Date for a period of not less than three
(3) years, and (ii) commit to the extension of the Revolving Credit Commitments
on comparable terms to the existing Revolving Credit Commitments (including an
extension fee of fifty (50) basis points), and (c) the Borrower replaces the
Total Revolving Credit Commitment with another revolving credit facility
provided by another lender or another group of lenders as of the Revolving
Credit Maturity Date, or within ninety (90) days thereafter, the Collateral
Agent shall release from its Collateral the Working Capital Assets, provided
that immediately prior to the release: (i) the Total Revolving Credit Commitment
shall have been terminated and the Revolving Loans and all accrued interest
thereon and related fees have been paid in full, and (ii) all Standby L/Cs and
any contingent obligations related thereto have been terminated and all Standby
L/C Reimbursement Obligations have been irrevocably paid in full.
Notwithstanding anything to the contrary contained herein, if the appropriate
irrevocable notice described in this paragraph is delivered to the Borrower,
then the Borrower shall not have the option to replace the existing Total
Revolving Credit Commitment with another credit facility, and no Collateral
(including but not limited to the Working Capital Assets) shall be released.
Furthermore, should the Borrower elect to prepay in full the Total Revolving
Credit Commitment prior to the Revolving Credit Maturity Date, no Collateral
(including but not limited to the Working Capital Assets) shall be released
unless and until the Total Term Loan Commitment and Total Revolving Credit
Commitment are irrevocably paid in full and terminated, and all Letters of
Credit issued pursuant to the terms of this Agreement and terminated in
accordance with the terms of this Agreement.

If any Lender decides not to participate in any proposed extension (each called
a “Rejecting Lender”), then the Agent shall demand that such Rejecting Lender,
and upon such demand such Rejecting Lender shall be obligated to, assign its
Revolving Credit Commitment to Agent, or at the direction of the Agent, to a
Permitted Assignee subject to and in accordance with the provisions of
Section 12.7 for a purchase price equal to the aggregate principal balance of
the Rejecting Lender’s Revolving Credit Commitment, plus any accrued but unpaid
interest thereon and accrued but unpaid fees owing to such Rejecting Lender, any
such assignment to be effective as of the current Revolving Credit Maturity Date
(without taking account of the requested extension).

SECTION 3

LETTERS OF CREDIT

3.1 Standby L/C Facility.

(a) Commitment. Subject to and upon the terms and conditions set forth herein,
the Letters of Credit Issuer agrees at any time on or after the date hereof and
prior to the Revolving Credit Termination Date to execute and deliver stand-by
letters of credit (each a “Standby L/C” and, collectively, the “Standby L/Cs”)
for the account of the Borrower to secure the payment or performance of the
Borrower’s obligations and other company requirements of the Borrower, provided,
that at any time, the Total Standby L/C Exposure shall in no event exceed
$7,000,000.00. In addition, the sum of the Total Standby L/C Exposure plus the

 

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aggregate amount of the outstanding Revolving Loans shall not at any time, or
from time to time, exceed the lesser of: (i) the Total Revolving Credit
Commitment, or (ii) the Borrowing Base. The Letters of Credit Issuer’s
commitment to issue Standby L/Cs shall terminate on the Revolving Credit
Termination Date.

(b) Standby L/Cs. The Standby L/Cs issued pursuant to this Section 3.1 shall
(i) expire on a date certain, no later than the Revolving Credit Maturity Date,
(ii) be denominated in Dollars, (iii) provide for the payment of a sight draft
when presented for honor thereunder in accordance with the terms thereof and
(iv) be in such form requested by the Borrower and reasonably acceptable to the
Letters of Credit Issuer. Each Standby L/C shall be governed by the laws of the
State of New York and issued in accordance with the Uniform Customs and
Practices for Documentary Credits of the International Chamber of Commerce
(Publication 500).

(c) Procedure for Issuing Standby L/C. Prior to the proposed issuance of a
Standby L/C pursuant to this Section 3.1, the Borrower shall provide to the
Letters of Credit Issuer and the Agent a written request and a form of Standby
L/C therefore. Such request shall set forth the proposed issuance date of such
Standby L/C (which shall be a Business Day) and the Stated Amount of such
Standby L/C. The Borrower shall also provide the other certificates, documents
and papers and information as the Letters of Credit Issuer may reasonably
request. Upon such receipt, the Letters of Credit Issuer will process such form
of Standby L/C and the other certificates, documents and other papers delivered
to the Letters of Credit Issuer in connection therewith and in accordance with
its customary procedures and, subject to the terms and conditions hereof, shall
promptly issue such Standby L/C (but in no event shall the Letters of Credit
Issuer be required to issue any Standby L/C earlier than three (3) Business Days
after receipt by the Letters of Credit Issuer of the request relating thereto)
by issuing the original of such Standby L/C to the beneficiary identified to the
Letters of Credit Issuer in the Borrower’s request to the Letters of Credit
Issuer and furnishing a copy thereof to the Borrower.

(d) Reimbursements and Other Payments by the Borrower. The Borrower agrees to:
(i) pay immediately to the Agent for the account of the Letters of Credit Issuer
the aggregate amount of any drawing under any Standby L/C made by the
beneficiary of such Standby L/C on any Drawing Date and, at the election of the
Borrower, any such amount may be paid on such date by the proceeds of Revolving
Loans, and (ii) discharge all obligations with respect to any amount available
to be drawn under the Standby L/Cs on the Revolving Credit Maturity Date
(collectively referred to herein as the “Standby L/C Reimbursement
Obligations”). The Borrower’s obligations in respect of any amount available to
be drawn under the Standby L/Cs on the Revolving Credit Maturity Date may be so
discharged only by (i) paying or prepaying any amount due or to become due by
the Borrower to the beneficiaries under the Standby L/Cs, (ii) if the Letters of
Credit Issuer so agrees, providing the Letters of Credit Issuer with cash
collateral, pursuant to documentation in form and substance satisfactory to the
Letters of Credit Issuer, in an amount equal to the aggregate Stated Amount of
the Standby L/Cs or (iii) causing the termination of the Standby L/Cs in a
manner satisfactory to the Letters of Credit Issuer.

 

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(e) Standby L/C Fees. For each Standby L/C issued in accordance with the terms
of this Agreement, the Borrower shall be obligated to pay quarterly in arrears a
Standby L/C Fee (the “Standby L/C Fee”) to the Letters of Credit Issuer for its
account and the account of the Standby L/C Participants equal to the L/C Fee
Rate multiplied by the Stated Amount of the applicable Standby L/C, all of which
shall be multiplied by the number of days outstanding in such Fiscal Quarter and
divided by three hundred sixty (360), payable commencing on the last Business
Day of the Fiscal Quarter during which the applicable Standby L/C is issued and
continuing on the last Business Day of each Fiscal Quarter thereafter for each
Fiscal Quarter in which a Standby L/C was outstanding. In addition and for each
Standby L/C issued pursuant to the terms of this Agreement, the Borrower agrees
to pay quarterly in arrears to the Letters of Credit Issuer for its account
only, a per annum fronting fee equal to 0.125% of the Stated Amount of each
Standby L/C issued, payment commencing on the last Business Day of the Fiscal
Quarter during which the Standby L/C is issued and continuing on the last
Business Day of each Fiscal Quarter thereafter for each Fiscal Quarter in which
the applicable Standby L/C remains outstanding.

(f) Standby L/C Participations.

(i) The Letters of Credit Issuer irrevocably agrees to grant and hereby grants
to each Lender that participates in the issuance of any Standby L/C as indicated
on Schedule 3 attached hereto (each a “Standby L/C Participant”), and, to induce
the Letters of Credit Issuer to issue the Standby L/Cs hereunder, each Standby
L/C Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Letters of Credit Issuer, on the terms and conditions
hereinafter stated, for such Standby L/C Participant’s own account risk, an
undivided interest in the Standby L/Cs equal to such Standby L/C Participant’s
Revolving Credit Commitment Percentage in the Letters of Credit Issuer’s
obligations and rights under each Standby L/C issued hereunder and the amount of
each draft paid by the Letters of Credit Issuer thereunder. Each Standby L/C
Participant unconditionally and irrevocably agrees with the Letters of Credit
Issuer that, if a draft is paid under any Standby L/C for which the Letters of
Credit Issuer is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such Standby L/C Participant shall pay to the Letters
of Credit Issuer upon demand to the Letters of Credit Issuer’s address for
notices specified herein an amount equal to such Standby L/C Participant’s
Revolving Credit Commitment Percentage of the amount of such draft, or part
thereof, which is not so reimbursed.

(ii) If any amount required to be paid by any Standby L/C Participant to the
Letters of Credit Issuer pursuant to Section 3.1(f)(i) in respect of any
unreimbursed portion of any payment made by the Letters of Credit Issuer under
any Standby L/C is paid to the Letters of Credit Issuer within three
(3) Business Days after the date such payment is due, such Standby L/C
Participant shall, together with such payment, pay an amount equal to (A) the
product of (1) such amount, times (2) the daily average Federal Funds Rate, as
quoted by the Letters of Credit Issuer, during the period from and including the
date such payment is required to but including the date on which such payment is
immediately available to the Letters of Credit Issuer, multiplied by (B) a
fraction the numerator of which is the number of days that elapse during such
period the denominator of which is 360. If any such amount required to be paid
by any Standby L/C Participant pursuant to Section 3.1(f)(i) is not in fact made
available to the Letters of Credit

 

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Issuer by such Standby L/C Participant within three (3) Business Days after the
date such payment is due, the Letters of Credit Issuer shall be entitled to
recover from such Standby L/C Participant, on demand, an amount equal to (A) the
product of (1) such amount, times (2) the maximum per annum Base Rate applicable
to Revolving Loans hereunder, plus two percent (2%) multiplied by (B) a fraction
the numerator of which is the number of days that elapse during such period and
the denominator of which is 360.

(iii) A certificate of the Letters of Credit Issuer submitted to any Standby L/C
Participant with respect to any amounts owing under this section shall be
conclusive in the absence of manifest error.

(iv) Whenever, at any time after the Letters of Credit Issuer has made payment
under any Standby L/C and has received from any Standby L/C Participant the
payment required of it in accordance with Section 3.1(f)(i), the Letters of
Credit Issuer receives any payment related to such Standby L/C (whether directly
from the Borrower or otherwise, including proceeds of Collateral applied
thereto), or any payment of interest on account thereof, the Letters of Credit
Issuer will distribute to such Standby L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
the Letters of Credit Issuer shall be required to be returned by the Letters of
Credit Issuer, then such Standby L/C Participant shall return to the Letters of
Credit Issuer the portion thereof previously distributed by Letters of Credit
Issuer to it.

3.2 Provisions Applicable to all Letters of Credit.

(a) Obligations Absolute. The obligations of the Borrower in respect of all
Letters of Credit issued under this Agreement shall be absolute, unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, under all circumstances whatsoever, including, without limitation,
the following circumstances:

(i) any lack of validity or enforceability of any Letter of Credit or any
agreement or instrument related thereto;

(ii) any amendment or waiver of or any consent to departure from the terms of
any Letter of Credit, provided, that any such amendment shall have been
effectuated in accordance with Section 12.1;

(iii) the existence of any claim, set-off, defense or other rights which the
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Letter of Credit Issuer, the Agent, or any other
Person, whether in connection with such Letter of Credit, this Agreement, any
other Credit Document or any agreement or instrument related thereto, the
transactions contemplated herein, or any unrelated transaction;

(iv) any statement or any other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever;

 

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(v) payment by the Letter of Credit Issuer under any Letter of Credit issued by
it against presentation of a draft or certificate that does not comply with the
terms of such Letter of Credit; and

(vi) any other circumstances or happening whatsoever, whether or not similar to
any of the foregoing, provided that the Letter of Credit Issuer acted in good
faith and used due care in the examination of any draft or certificate presented
under any Letter of Credit in ascertaining whether on its face it appeared to
comply with the terms of such Letter of Credit.

(b) Indemnification. The Borrower hereby indemnifies and holds harmless the
Letter of Credit Issuer from and against any and all claims, damages, losses,
liabilities, reasonable costs and expenses whatsoever which the Letter of Credit
Issuer may incur (or which may be claimed against the Letter of Credit Issuer by
any Person) by reason of or in connection with the execution and delivery or
transfer of, or payment or failure to pay under, any Letter of Credit; provided,
that the Borrower shall not be required to indemnify the Letter of Credit Issuer
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by the failure of the Letter of Credit Issuer to
act in good faith or to use due care in the examination of any draft or
certificate presented under any Letter of Credit in ascertaining whether on its
face it appeared to comply with the terms of such Letter of Credit. Nothing in
this Section 3.2(b) is intended to limit the reimbursement obligations of the
Borrower contained herein.

(c) Liability of the Letter of Credit Issuer. The Borrower assumes all risks of
the acts or omissions of the beneficiary and any transferee of any Letter of
Credit with respect to its use of such Letter of Credit. The Agent, Collateral
Agent and the Letter of Credit Issuer (or any of their respective officers or
directors) shall not be liable or responsible for: (i) the use which may be made
of any Letter of Credit or for any acts or omissions of the beneficiary and any
transferee in connection therewith; (ii) the validity, sufficiency or
genuineness of documents, or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) payment by the Letter of Credit Issuer against
presentation of documents which do not comply with the terms of any Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit; or (iv) any other circumstances whatsoever
in making or failing to make payment under any Letter of Credit, except only
that the Borrower shall have a claim against the Letter of Credit Issuer, and
the Letter of Credit Issuer shall be liable to the Borrower, to the extent, but
only to the extent, of any direct, as opposed to consequential, damages suffered
by the Borrower which the Borrower proves were caused by the failure of the
Letter of Credit Issuer to act in good faith or to use due care in the
examination of any draft or certificate presented under any Letter of Credit in
ascertaining whether on its face it appeared to comply with the terms of such
Letter of Credit. In furtherance and not in limitation of the foregoing, the
Letter of Credit Issuer may accept documents that appear on their face to be in
order, without responsibility for further investigation.

 

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SECTION 4

TERM LOAN FACILITY

4.1 Term Loan Commitment. Subject to and upon the terms and conditions set forth
herein, the Borrower may borrow from the Lenders and each Lender severally
agrees to make to the Borrower, Term Loans in an aggregate principal amount not
to exceed the Total Term Loan Commitment, with each Lender making Term Loans
equal to the Term Loan Commitment amount multiplied by the Lender’s Term Loan
Commitment Percentage. The Term Loans shall be Base Rate Loans and, to the
extent permitted or required by the terms hereof, LIBOR Loans, as selected by
the Borrower.

4.2 Term Loan Note(s). The Term Loans shall be evidenced by Term Notes and the
Borrower shall execute a Term Loan Note in favor of each Lender for Term Loans
made by each Lender to the Borrower pursuant to Section 4.1 of this Agreement.
The Term Loan Note of each Lender shall have appropriate insertions and be
payable to the order of such Lender. Each Term Loan Note shall: (i) be dated the
Closing Date, (ii) represent the obligation of the Borrower to pay the amount of
such Lender’s Term Loan Commitment, (iii) be stated to mature on the Term Loan
Maturity Date, (iv) provide for the payment of principal and interest in
accordance with Section 5.3, and (v) be entitled to the benefits of this
Agreement and the Senior Security Documents. If the Agent and all Lenders agree,
payments made on a Term Loan may be reborrowed, but only upon such terms as may
be acceptable to the Agent and all Lenders in their sole discretion. Each Lender
is hereby authorized to record the date and amount of each payment or prepayment
of principal of the Term Loans made by the Borrower, on the schedules annexed to
and constituting a part of the Term Loan Note held by such Lender, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, that the failure by any Lender to make any
such recordation shall not limit or otherwise affect the Credit Obligations of
the Borrower.

4.3 Disbursement of Term Loans. On the Closing Date and after an accounting of
the net amounts due under the Term Loan Notes delivered to the Agent or about
the date of Amendment No. 1, each Lender shall extend a Term Loan equal in
amount to its pro rata share of the Total Term Loan Commitment.

4.4 Use of Proceeds. Proceeds from the Terms Loans may be used by Borrower for
general corporate purposes, including repayment of indebtedness.

4.5 Termination of Term Loans. Each Term Loan Commitment shall terminate on the
Term Loan Termination Date.

SECTION 5

PROVISIONS RELATING TO ALL

EXTENSIONS OF CREDIT FEES AND PAYMENTS

5.1 Upfront Commitment Fees; Revolving Credit Fee; and Unused Commitment Fee.

(a) Agent’s Upfront Fee. On the Closing Date, Borrower shall pay to the Agent,
for its own account and not for the account of anyone else, the remaining unpaid
upfront fees agreed in the Fee Letter to be paid to the Agent on or before the
Closing Date by Borrower. Such upfront fees are fully earned on the date paid.

 

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(b) Revolving Credit Commitment Fee. The Borrower shall pay to the Agent for the
account of the Lenders a commitment fee (the “Unused Commitment Fee”) in respect
of the Revolving Loans and Total Standby L/C Exposure for the period commencing
on the Closing Date and ending on the Revolving Credit Termination Date equal to
the Unused Commitment Fee Rate in effect on the date such payment is due
multiplied by the difference between (i) the Total Revolving Credit Commitment
and (ii) the average daily balance of the Revolving Loans and the Total Standby
L/C Exposure during the Fiscal Quarter ending on the date such payment is due.,
provided that such fees shall not be payable to any particular Lender or Lenders
(as the case may be), during any period in which any such Lender or Lenders, in
violation of its/their obligations under this Agreement, fails to make any
Revolving Loan or to issue and/or participate in the issuance of any Standby
L/C. The Unused Commitment Fee shall be payable in arrears on the last Business
Day of each Fiscal Quarter.

(c) Annual Administrative Fee. The Borrower shall pay to the Agent for its own
account, and not for the account of any other Lenders the annual administrative
fee described in the Fee Letter, on the terms, in the amount and at the times
set forth therein.

5.2 Prepayments and Repayments.

(a) (i) Immediately upon receipt by the Borrower or any of its Subsidiaries (or
any third party for any of their benefit) the Borrower shall deliver any and all
proceeds (net of reasonable fees and expenses incurred in connection therewith)
derived from the issuance by the Borrower or any of its Subsidiaries of
Indebtedness after the Closing Date, excluding any Indebtedness represented by
Permitted Issuances of Senior Second Secured Notes, any permitted Capital
Leases, or any permitted Purchase Money Indebtedness.

(ii) Immediately upon receipt by the Borrower or any of its Subsidiaries (or any
their party for any of their benefit), the Borrower shall deliver to the Agent
75% of the proceeds (net of reasonable fees and expenses incurred in connection
therewith) from any Equity Offering after the Closing Date.

(iii) Provided no Event of Default has occurred and is continuing, upon the
consummation of any Assets Sales in excess of $100,000, the Borrower shall,
within sixty (60) days provide to the Agent a plan for the use of proceeds which
plan shall be acceptable to the Agent in its reasonable opinion. Thereafter,
within one hundred eighty (180) days from the consummation of any such Assets
Sales, Borrower shall execute on the plan or obtain a purchase order for the
acquisition, repurchase, substitution or replacement of assets in the ordinary
course of business if such substitute or replacement assets automatically would
become part of the Collateral without further action of the Borrower or any
Lender upon the acquisition thereof by the Borrower, provided, however, the
purchase order shall in all events be paid utilizing the proceeds of the Asset
Sale. If the Borrower does not repurchase or acquire the replacement or

 

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substitute assets, then the proceeds of the Asset Sale shall be delivered to the
Agent and applied in accordance with the provisions of Section 5.2(a)(v) below.
In addition, any excess proceeds from the Asset Sale after the acquisition of
any replacement or substitution Assets (net of reasonable fees and expenses)
shall be paid and delivered to the Agent within sixty (60) days or Borrower
shall provide to the Agent a plan for the use of proceeds. Thereafter, within
one hundred eighty (180) days from the consummation of any such Assets Sales,
Borrower shall execute on the plan or obtain a purchase order for the
acquisition, repurchase, subsitution or replacement of assets in the ordinary
course of business if such substitute or replacement assets automatically would
become part of the Collateral without further action of the Borrower or any
Lender upon the acquisition thereof by the Borrower, provided, however, the
purchase order shall in all events be paid utilizing the proceeds of the Asset
Sale. If a Default or an Event of Default has occurred and is continuing, the
Borrower shall immediately pay to the Agent all proceeds of the Asset Sale (net
of reasonable fees and expenses).

(iv) Promptly and in any event not more than three (3) days following the
receipt by the Agent or the Borrower or any subsidiary of the Borrower of any
net proceeds (or, if there shall be continuing an Event of Default, of the full
amount of net proceeds) of any business interruption insurance required to be
maintained pursuant to Section 8.4(a)(ii) hereof on account of any business
interruption event, the applicable party receiving such proceeds shall notify
the Agent (if other than the Agent) of such receipt in writing, by facsimile or
by telephone (promptly confirmed by written or facsimile notice), and not later
than one Business Day following receipt by the the Borrower or any Subsidiary of
the Borrower of any such proceeds, such proceeds shall be remitted first to the
Agent for application to all payments and fees due hereunder during this period
of the business interruption event before they are applied to any other purpose
and any remaining proceeds shall be returned and made available to the Borrower.
If an Event of Default has occurred and is continuing, the Borrower shall
immediately pay to the Agent all proceeds of the business interruption insurance
to the Agent to be applied to the Credit Obligations.

(v) Except as otherwise provided in Section 5.2(b) below or in any other Credit
Document, upon the receipt by Borrower or any of its Subsidiaries of any
proceeds of insurance referred to in Section 8.4(a)(i), the Borrower shall at
its option either apply such net proceeds to replace the damaged or destroyed
property, or pay the net proceeds to the Agent to be applied as provided below;
provided, however, that upon and during the continuance of a Default or Event of
Default, the application of such net proceeds shall be at the option of the
Agent rather than the option of the Borrower. Any proceeds which are applied to
replace or rebuild damaged property shall be applied pursuant to the written
plan outlining the application of the proceeds towards the replacement of the
damaged or destroyed property as delivered in advance to the Agent, which plan
shall be acceptable to the Agent in its reasonable discretion. Until the
proceeds are so used, they shall be deposited in an account with Collateral
Agent and held as Collateral by the Collateral Agent for the Credit Obligations
pursuant to documentation satisfactory to Agent or the Collateral Agent, and the
Borrower or its Subsidiary, as appropriate, shall take such actions as may be
necessary for the Collateral Agent to maintain a perfected first priority
security interest therein.

 

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Any funds paid to Agent (or if applicable, the Collateral Agent) pursuant to
this Section 5.2(a) shall be applied by the Agent to prepay in full any
outstanding Term Loans, together with accrued interest thereon to the date of
prepayment and remaining amounts (if any) shall be applied to the outstanding
Revolving Loans with a corresponding permanent reduction of the Total Revolving
Credit Commitment. If in such circumstances a Default or Event of Default
exists, then such funds shall be released as determined by Agent, including as
provided in Section 10. All prepayments made pursuant to this Section 5.2(a)
shall be applied in the inverse order of maturity and subject to the applicable
Breakage Amount.

(b) If the Required Lenders have delivered a notice in writing to the Borrower
declaring that an Event of Loss has occurred, (i) the Commitments shall
terminate forthwith, and (ii) the Borrower shall prepay in full the unpaid
principal amount of the then outstanding Notes, together with accrued interest
thereon to the date of prepayment, and the applicable prepayment premiums and/or
Breakage Amounts, and shall satisfy its obligations in respect to all
outstanding Letters of Credit by (A) paying or prepaying any amount due or to
become due by the Borrower to the beneficiaries under the Standby L/Cs, or
(B) causing the termination of all outstanding Letters of Credit, and in all
cases stated paying any unpaid Unused Commitment Fees accrued to the date of
termination, and any unpaid Letter of Credit Fees and other fees accrued
hereunder to the date of prepayment, on the earlier of (1) the date occurring
ninety (90) days after the date of receipt of such notice from the Required
Lenders, and (2) the date on which insurance proceeds are received with respect
to such Event of Loss.

(c) Subject to applicable Breakage Amounts (if any), the Borrower may, from time
to time, prepay the Total Term Loan Commitment, in whole or in part, without
premium or penalty, provided that the amount of any such partial prepayment
shall be in a minimum amount of $400,000, together with interest thereon to the
date of prepayment. Except as otherwise described in Section 4.1 above, optional
prepayments pursuant to this Section 5.2(c) shall be made upon at least five
(5) Business Days’ prior written irrevocable notice by the Borrower to the
Agent, specifying the date and amount of such prepayment. If any such notice is
given, the Borrower will make payment specified therein and such prepayment
shall be due and payable on the date specified therein, together with interest
accrued thereon to the date of prepayment, plus the Breakage Amount, if
applicable. Optional prepayments shall be applied to the principal amount of the
Term Loans pro rata and in the stated order of maturity.

(d) Subject to applicable Breakage Amounts (if any), the Borrower may, from time
to time, make voluntary permanent reductions to the Total Revolving Credit
Commitment, without reduction premium or other penalty, provided that the amount
of any such permanent reduction shall be in an amount not less than $1,000,000
or whole multiples thereof.

(e) The Borrower’s obligations in respect of the Standby L/Cs may be satisfied
by (i) paying or prepaying any amount due or to become due by the Borrower to
the beneficiaries under the Standby L/Cs and causing the termination of the
Standby L/Cs pursuant to a written consent of the beneficiary thereof
satisfactory to the Letters of Credit Issuer (which shall include a complete
release of the Letters of Credit Issuer of all claims, obligations or
liabilities to the Standby L/C beneficiary) or (ii) if the Letters of Credit
Issuer so agrees, providing the Letters of Credit Issuer with cash collateral,
pursuant to documentation in form

 

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and substance satisfactory to the Letters of Credit Issuer, in an amount equal
to the aggregate Stated Amount of the Standby L/Cs, plus solely in connection
with sub-section (ii) above, an amount equal to all applicable Standby L/C Fees
in the appropriate amount for the respective remaining terms of the applicable
Standby L/Cs until their respective stated expirations, together with all other
fees the Letters of Credit Issuer deems appropriate.

(f) Upon payment in full of the Credit Obligations, the termination of all
Commitments and the satisfaction of the Borrower’s obligations with respect to
the Standby L/Cs as provided in Section 5.2(e), all to the satisfaction of the
Agent, the Agent and/or Collateral Agent (as appropriate) shall deliver to the
Borrower, at the Borrower’s expense, such documents reasonably requested by the
Borrower to evidence the release of the Lenders’ Liens on the Collateral
pursuant to the Senior Security Documents.

5.3 Interest Rates; Payments and Payment Dates.

(a) All Loans that are LIBOR Loans shall bear interest for each Interest Period
on the unpaid principal amount thereof at the LIBOR Rate. All Loans that are
Base Rate Loans shall bear interest on the unpaid principal amount thereof at
the Base Rate in effect from time to time. Notwithstanding the foregoing, upon
the occurrence and during the continuance of a Default or Event of Default, all
Loans shall bear interest at the Default Rate.

(b) If all or a portion of the principal amount of any LIBOR Loan made hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such LIBOR Loan shall be converted to a Base Rate Loan at the end of
the Interest Period therefor.

(c) Interest on the aggregate unpaid principal amount of the Loans shall be paid
in arrears on each Interest Payment Date.

(d) The principal amount of all outstanding Revolving Loans, together with all
accrued interest thereon, shall be due and payable in full on the Revolving
Credit Termination Date.

(e) Commencing on September 30, 2006, and continuing on the last day of each
Fiscal Quarter thereafter until the Term Loan is paid in full, the Borrower
shall make the Term Loan Scheduled Amortization Payment due on that day with
respect to Term Loans. All Term Loans shall be due and payable in full on the
Term Loan Termination Date.

5.4 Interest Rate Conversions. Unless the Borrower otherwise elects to continue
any LIBOR Loan by written notice to the Agent not less than three (3) days in
advance, any LIBOR Loan will be continued such upon the expiration of the
Interest Period with respect thereto; provided, that, no LIBOR Loan will be
continued as such when any Event of Default has occurred and is continuing, but
shall automatically be converted to a Base Rate Loan on the last day of the
Interest Period with respect thereto. The Interest Period for any such continued
LIBOR Loan shall be of the same duration as the Interest Period of the LIBOR
Loan so continued, unless otherwise specified by the Borrower in a Notice of
Term Loan Borrowing or

 

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Notice of Revolving Loan Borrowing or (x) in the case of Revolving Loans, if
such Interest Period would extend beyond the Revolving Credit Maturity Date,
then such Interest Period will end on the Revolving Credit Maturity Date and
(y) in the case of Term Loans, if such Interest Period would extend beyond the
Term Loan Maturity Date, then such Interest Period will end on the Term Loan
Maturity Date.

5.5 Pro Rata Treatment and Payment Dates.

(a) Each borrowing by the Borrower from the Lenders, each payment (including
each prepayment) by the Borrower on account of the principal of and interest on
the Notes and on account of any prepayment premium, Breakage Amounts, extension
fee, Unused Commitment Fee or Letter of Credit Fee hereunder, shall (subject to
the provisions of Section 11) be made pro rata according to the respective
Revolving Credit Commitment Percentages and Term Loan Commitment Percentages of
such Lenders, as the case may be. All payments (including prepayments) due
hereunder or under the Notes on account of principal, interest, fees, and any
other obligation incurred hereunder shall be paid to the Agent by wire or
electronic transfer for deposit and credit to its account, in freely
transferable Dollars and in immediately available funds without set-off or
counterclaim. The Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. No such payment, however, shall be
deemed to be a waiver of any claims the Borrower may assert against the Agent or
the Lenders. All payments hereunder shall be made without any presentment of the
Notes to the Borrower, but upon payment in full of the Notes and the termination
of the Commitments, the holders thereof shall cancel them and, return them to
the Borrower.

(b) If any payment hereunder (other than payments on LIBOR Loans) becomes due
and payable on a day other than a Business Day, such payment shall be extended
to next succeeding Business Day and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on LIBOR Loans becomes due and payable on a day other
than a Working Day, the maturity thereof shall be extended to the next
succeeding Working Day unless the result of such extension would be to end such
payment into another calendar month, in which event such payment shall be made
on the immediately preceding Working Day.

(c) If any Lender shall, by exercising any right of set-off or counterclaim
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in the Letters of Credit resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
or participations in the Letters of Credit and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
or participations in the Letters of Credit of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans or participations in the Letters of
Credit; provided that (i) if any such participations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations
shall be rescinded (and the purchase price restored) to the extent of such
recovery, without interest, and (ii) the provisions of this subsection shall not
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by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for assignment of
or sale of a participation in any of its Loans or participations in the Letters
of Credit to any assignee or participant, other than to the Borrower (as to
which the provisions of this paragraph shall apply). The Borrower consents to
the foregoing and agrees, to the extent it may effectively do so under
Applicable Laws, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

5.6 Inability to Determine LIBOR Rate. In the event that any Lender (each an
“Affected Lender”) shall have individually determined (which determination shall
be conclusive and binding upon the Borrower) that by reason of circumstances
affecting the interbank LIBOR market, adequate and reasonable means do not exist
for ascertaining the LIBOR Rate applicable for any Interest Period with respect
to (a) proposed Loans that the Borrower has requested be made as LIBOR Loans, or
(b) the continuation of LIBOR Loans beyond the expiration of the then current
Interest Period therefor, the Affected Lender through the Agent shall give
notice of such event to the Borrower. Within thirty (30) days following the date
of such notice by the Agent (after consultation with each Affected Lender) and
the Borrower shall enter into negotiations in good faith with a view to agreeing
on an alternative basis acceptable to the Borrower and the Affected Lender for,
determining the interest rate (the “Substitute LIBOR Rate”) which shall be
applicable during such Interest Period for the LIBOR Loans to which such
Interest Period applies and which shall reflect the cost to the Affected Lender
of funding such LIBOR Loans for such Interest Period from alternate sources plus
the Applicable Margin for LIBOR Loans. If, at the expiration of thirty (30) days
from the giving of such notice by the Agent, (i) the Agent, the Affected Lender
and the Borrower have agreed to such Substitute LIBOR Rate, such Substitute
LIBOR Rate shall take effect with respect to such Interest Period from the
beginning of such Interest Period with respect to such affected Lender’s Loans
so affected, or (ii) Agent, the Affected Lender and Borrower have not agreed to
a Substitute LIBOR Rate, (x) any requested LIBOR Loans of such Affected Lender
shall be deemed to have been made as Base Rate Loans, (y) any Loans of such
Affected Lender that were to have been converted to LIBOR Loans shall be
continued Base Rate Loans, as the case may be, and (z) any outstanding LIBOR
Loans of such Affected Lender shall be converted, on the last day of the then
current Interest Period therefor, to Base Rate Loans. Until such notice has been
withdrawn by the Affected Lender, no further LIBOR Loans of such Affected Lender
shall be made nor shall any Base Rate Loans of such Affected Lender be converted
to LIBOR Loans pursuant to Section 5.4.

5.7 Computation of Interest and Fees.

(a) Interest in respect of LIBOR Loans shall be calculated on the basis of a
three hundred sixty (360) day year for the actual days elapsed (including the
first but excluding the last day). Interest in respect of Base Rate Loans, and
all fees hereunder, shall be calculated on the basis of a three hundred
sixty-five (365) (or three hundred sixty-six (366), as the case may be) day year
for the actual days elapsed (including the first but excluding the last day).

 

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(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrowers and
the Lenders in the absence of manifest error.

5.8 Illegality. Notwithstanding any other provision herein, if any change in any
Applicable Law or in the interpretation or application thereof shall make it
unlawful for any Lender to make or maintain Loans at the LIBOR Rate as
contemplated by this Agreement, (a) the commitment of such Lender hereunder to
make or maintain Loans at the LIBOR Rate, shall forthwith be cancelled, and
(b) such Lender’s Loans then outstanding at the LIBOR Rate, if any, shall bear
interest at the Base Rate and all Loans made hereafter by such Lender shall bear
interest at the Base Rate.

5.9 Applicable Law.

(a) In the event that any change in any Applicable Law or interpretation or
application thereof or compliance by any Lender with any request or directive
whether or not having the force of law from any central bank or other
Governmental Authority made subsequent to the date hereof:

(i) shall subject any Lender to any tax of any kind whatsoever with respect to
this Agreement, any Note or any Loan bearing interest at the LIBOR Rate made by
it, or change the basis of taxation of payments to such Lender in respect
thereof (except for taxes covered by Section 5.11 and changes in the rate of tax
on the overall net income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities of or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender which
is not otherwise included in the determination of the LIBOR Rate hereunder; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender of
making, or maintaining LIBOR Loans or to reduce any amount receivable hereunder
in respect thereof then, in any such case, the Borrower shall promptly pay such
Lender, within five (5) Working Days of demand therefor, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower, through the
Agent of the event by reason of which it has become so entitled; provided, that
the failure of such Lender to so notify the Borrower shall not act as a waiver
of the right of such Lender to receive such additional amounts when such Lender
provides the required notice to the Borrower. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender, through the
Agent to the Borrower shall be conclusive in the absence of manifest error. This
covenant shall survive termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.

 

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(b) In the event that any Lender shall have determined that any change in any
Applicable Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof does or shall have the effect of reducing the rate of return on
such Lender’s or such corporation’s capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have
achieved but for such change or compliance (taking into consideration such
Lender’s or such corporation’s policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Agent) of a
written request therefor, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction. A
certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender, through the Agent to the Borrower shall be conclusive
in the absence of manifest error.

5.10 Indemnity. The Borrower agrees to indemnify each Lender and to hold each
Lender harmless from any loss or expense which such Lender may sustain or incur
as a consequence of (a) default by the Borrower in making a borrowing or
continuation of Loans after the Borrower has given a notice requesting the same
in accordance with the provisions of this Agreement or (b) the making of a
prepayment of a Loan (including a voluntary repayment of principal of a
Revolving Loan) on a day which is not the last day of an Interest Period with
respect thereto, including, without limitation, any such loss or expense arising
from the reemployment of funds obtained by it for the then current Interest
Period or from fees payable to terminate the deposits from which such funds were
obtained. Each Lender agrees to use reasonable efforts to minimize any such loss
or expense. This covenant shall survive the termination of this Agreement and
the payment of the Notes and all other amounts payable hereunder and the
expiration of the Letters of Credit.

5.11 Taxes.

(a) All payments made by the Borrower under this Agreement, the Notes or with
respect to Letters of Credit shall be made free and clear of, and without
deduction or withholding for or on account of, any future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings and
all liabilities with respect thereto, now or hereafter posed, levied, collected,
withheld or assessed by any Governmental Authority, excluding, in case of the
Agent, the Collateral Agent, the Lenders or the Letters of Credit Issuer, taxes
imposed on or measured by net income, overall gross receipts, or capital of the
Agent, the Collateral Agent, the Lenders or the Letters of Credit Issuer or any
franchise tax imposed in lieu thereof as a result of a present or former
connection between the jurisdiction of the government or taxing authority
imposing such tax and the Agent, the Collateral Agent, the Lenders or the
Letters of Credit Issuer (excluding a connection arising solely from the Agent,
the Collateral Agent, the Lenders or the Letters of Credit Issuer having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement, the Notes or the Letters of Credit) or any political
subdivision or taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, ties, charges, fees, deductions, liabilities and withholdings
being hereinafter called “Taxes”). If

 

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any Taxes are required to be withheld from any amounts payable to the Agent, the
Collateral Agent, the Lenders or the Letters of Credit Issuer hereunder or under
the Notes or the Letters of Credit, the amounts so payable to the Agent, the
Collateral Agent, the Lenders or the Letters of Credit Issuer shall be increased
to the extent necessary to yield to the Agent, the Collateral Agent, the Lenders
or the Letters of Credit Issuer (after payment of all Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the Notes. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Agent, the
Collateral Agent, the Lenders and the Letters of Credit Issuer affected thereby
a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent, the Collateral
Agent, the Lenders and the Letters of Credit Issuer affected thereby the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent, the Collateral Agent, the Lenders and the Letters of Credit
Issuer affected thereby for any incremental taxes, interest or penalties that
may become payable by the Agent, the Collateral Agent, the Lenders or the
Letters of Credit Issuer as a result of such failure. This indemnification
payment shall be made promptly following written demand by the Agent, the
Collateral Agent, the Lenders or the Letters of Credit Issuer affected thereby
(as the case may be). This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder
and the expiration of the Letters of Credit.

(b) Each Lender that is not incorporated under the laws of the United States of
America or a state thereof agrees that it will deliver to the Borrower and the
Agent (i) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may be, and (ii) an
Internal Revenue Service Form W-8 or W-9 or successor applicable form. Each such
Lender also agrees to deliver to the Borrower and the Agent two further copies
of the said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms
or other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower, and such extensions or renewals thereof as may reasonably be requested
by the Borrower or the Agent unless in any such case an event (including,
without limitation, any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises the Borrower and the Agent. Such Lender shall certify (i) in the case of
a Form 1001 or 4224, that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes and (ii) in the case of a Form W-8 or W-9, that it is entitled to an
exemption from United States backup withholding tax.

5.12 Payments by Agent.

(a) Unless the Agent shall have been notified in writing by any Lender prior to
a Borrowing Date that such Lender will not make the amount which would
constitute its Commitment Percentage of the borrowing on such date available to
the Agent, the Agent may assume that such Lender has made such amount available
to the Agent on such Borrowing

 

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Date and the Agent may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such amount is made available to the Agent
by such Lender on a date after such Borrowing Date, such Lender shall pay to the
Agent on demand an amount equal to the product of (i) the daily average Federal
Funds Rate during such period, times (ii) the amount of such Lender’s Commitment
Percentage of such borrowing, times (iii) the number of days from and including
such Borrowing Date to but excluding the date on which such Lender’s Commitment
Percentage of such borrowing shall have become immediately available to the
Agent. A certificate of the Agent submitted to any Lender with respect to any
amounts owing under this Section 5.12(a) shall be conclusive, absent manifest
error. If such Lender’s Commitment Percentage is not in fact made available to
the Agent by such Lender within three (3) Business Days of such Borrowing Date,
the Agent shall be entitled to demand repayment of such amount with interest
thereon at the rate per annum applicable to Base Rate Loans hereunder from the
Borrower. Payments by the Borrower made pursuant to this Section 5.12(a) are not
subject to the payment penalties or limitations set forth in Section 5.2(d).

(b) Should any Lender (a “Non-Advancing Lender”), in violation of its
obligations under this Agreement, fail to make any Loan, or fund when due the
purchase price of any Letter of Credit participations hereunder (each a “L/C
Participation Obligation”), (i) the Agent may in its discretion (but with no
obligation) fund the Loan on behalf of the Non-Advancing Lender if it has not
received notice that the Non-Advancing Lender does not intend to fund the Loan,
and/or (ii) the Agent shall cooperate with the Borrower to find a Permitted
Assignee that shall be willing to assume the Non-Advancing Lender’s obligations
under this Agreement (including the obligation to make the Loan which the
Non-Advancing Lender failed to make but without assuming any liability for
damages for failing to have made any previous Loans). Subject to the provisions
of the next succeeding sentence, such Permitted Assignee shall be substituted
for the Non-Advancing Lender hereunder upon execution and delivery of a
Commitment Transfer Supplement. Nothing in (and no action taken pursuant to)
this Section 5.12 shall relieve the Non-Advancing Lender from any liability it
might have to the Borrower or to the other Lenders as a result of its failure to
make any Loan or to fund a L/C Participation Obligation. If a Permitted Assignee
is not substituted for the Non-Advancing Lender then, subject to the other
provisions of this Agreement, the Borrower shall have the right to prepay in
full the Loans made by such Non-Advancing Lender, and such prepayment in full
shall not be subject to any premium or fee. The failure of a Lender to make a
Loan or to fund a L/C Participation Obligation hereunder shall not, in and of
itself, relieve any other Lender of its obligation to make its Loans hereunder
or to fund a L/C Participation Obligation, but the other Lenders shall not have
any obligation to increase the amount of their respective Loans, Commitments or
L/C Participation Obligations.

 

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SECTION 6

REPRESENTATIONS AND WARRANTIES

In order to induce the Agent, the Collateral Agent and the Lenders to enter into
this Agreement and to make the Loans and to induce the Letters of Credit Issuer
to issue the Letters of Credit, the Borrower represents and warrants to the
Lenders under Sections 6.1 through 6.26 that:

6.1 Borrower’s Existence and Business.

(a) The Borrower is a limited liability company duly organized and validly
existing and in good standing under the limited liability company law of the
State of New York. The Borrower is duly qualified to do business under the laws
of each other jurisdiction, if any, in which the conduct of its business or the
ownership, lease or operation of property so requires except where the failure
to so qualify would not have a Material Adverse Effect. The articles of
organization of the Borrower have been duly filed in the office of the Secretary
of State of New York and no other filing, recording, publishing or other act is
necessary or appropriate in connection with the existence or the business of the
Borrower except those which have been duly made or performed. Prior to the date
hereof, the Borrower has engaged in no business other than the development and
operation of the Project, the purchase, marketing and sale of salt.

(b) The only members of the Borrower on the date of the execution and delivery
of this Agreement are those listed on Schedule 4 attached hereto. All
outstanding Capital Stock of the Borrower has been duly issued, fully paid, is
non-assessable and has not been issued in violation of any preemptive rights.

6.2 Compliance with Law. Both the Borrower and the Project are in compliance
with all Requirements of Law applicable to them, respectively, except with
respect to matters that, individually or in the aggregate, do not constitute a
Material Adverse Effect.

6.3 Power and Authorization; Enforceable Obligations.

(a) The Borrower has full power and authority and the legal right (subject to
the receipt of the approvals referred to in Section 6.4) to own and operate the
Project, to conduct its business as now conducted and as proposed to be
conducted by it, to execute, deliver and perform this Agreement and the Credit
Documents to which it is or is to become a party, to take all action as may be
necessary to complete the transactions contemplated hereunder and thereunder, to
grant the Liens provided for in the Senior Security Documents to which it is a
party and to borrow hereunder. The Borrower has taken all necessary company and
legal action to authorize the borrowings hereunder on the terms and conditions
of this Agreement and the Credit Documents to which it is a party, to grant the
Liens provided for in the Senior Security Documents to which it is a party and
to authorize the execution, delivery and performance of this Agreement, the
Notes, and the other Credit Documents to which it is a party or is to become a
party. No consent or authorization of, filing with, or other act by or in
respect of any other Person that has not been made, obtained or complied with,
is required in connection with the borrowings hereunder or with the execution,
delivery or performance by the Borrower or the validity or enforceability as to
the Borrower of this Agreement, the Notes, or the other Credit Documents. Each
of this Agreement and the other Credit Documents to which the Borrower is a
party has been duly executed and delivered by the Borrower and, assuming the due
authorization and delivery hereof and thereof by the other parties hereto and
thereto, constitutes, and each of the Notes and the other Credit Documents to
which the Borrower is to become a party will upon execution and delivery thereof
by the Borrower and, assuming due authorization thereof, by the other parties
thereto (if any) constitute, a legal,

 

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valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity (whether such
enforcement is sought in a proceeding at law or in equity).

(b) The Borrower has provided the Agent complete copies of all Material
Contracts which exist on the date hereof. Borrower shall deliver to Agent copies
of each Material Contract entered into by the Borrower after the date of this
Agreement within five (5) Business Days of its effective date.

6.4 Governmental Approvals and Other Consents and Approvals.

(a) No Governmental Approvals are required for (i) the participation by the
Borrower in the transactions contemplated by this Agreement and the other Credit
Documents, (ii) the validity and enforceability against the Borrower of the
Credit Documents to which it is a party, and (iii) the grant by the Borrower of
the Liens created pursuant to the Senior Security Documents to which it is a
party and the validity, perfection and enforceability thereof and the exercise
by the Agent, the Collateral Agent and the Lenders of their rights and remedies
thereunder (except any Governmental Approvals or other consents or approvals
applicable to the Agent, the Collateral Agent, the Lenders or the Letters of
Credit Issuer).

(b) No other Governmental Approvals (except as set forth on Schedule 5 attached
hereto), or other consents or approvals (other than those already obtained or
that are obtainable in due course and will be obtained when necessary) are
required in connection with the validity and enforceability of the IDA/Borrower
Mortgage.

(c) The Borrower possesses all Governmental Approvals presently required or
necessary to own or lease, as the case may be, and to operate its properties and
to carry on its business as now or proposed to be conducted, except where the
failure to obtain such Permits would not, individually or in the aggregate, have
a Material Adverse Effect. A list of all such Governmental Approvals is set
forth in Schedule 5 attached hereto. The Borrower has fulfilled and performed
all of its obligations with respect to such Governmental Approvals and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the holder of any such Governmental Approval; and the Borrower has
not received any notice of any proceeding relating to revocation or modification
of any such Governmental Approval except where such revocation or modification
would not, individually or in the aggregate, have a Material Adverse Effect.

6.5 No Legal Bar. The execution, delivery and performance of this Agreement, the
Notes and the other Credit Documents as contemplated in accordance with the
terms thereof, the borrowings by the Borrower hereunder, the use of the proceeds
thereof or the issuances of the Letters of Credit (a) will not violate,
constitute a breach of or a default (with the passage of time or otherwise)
under, require the consent of any person (other than consents already obtained
and in full force and effect) under (i) any Requirement of Law or any agreement,
instrument or other

 

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contractual obligation of the Borrower or by which any of its properties or
assets are bound that relates to ownership, operation and/or maintenance of the
Project (each an “Applicable Agreement”) or (ii) any other Requirement of Law as
to which any such violations, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect and (b) will not result in, or
require, the creation or imposition of any Lien on any of the properties or
revenues of the Borrower pursuant to any Requirement of Law or Applicable
Agreement or (c) result in an acceleration of any Indebtedness

6.6 No Proceeding or Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the best
knowledge of the Borrower, after due inquiry, threatened against or affecting
the Borrower or against or affecting any of its properties, rights, revenues or
assets, or the Project, as the case may be that would individually or in the
aggregate, have a Material Adverse Effect. The Borrower is not subject to any
judgment, order, decree, rule or regulation of any Governmental Authority that
would, individually or in the aggregate, have a Material Adverse Effect.

6.7 Material Contracts.

Each Material Contract has been duly authorized, executed and delivered by all
parties thereto, has not been amended or otherwise modified, is in full force
and effect and is binding upon and enforceable against all parties thereto in
accordance with its terms. Neither the Borrower nor any of its Subsidiaries is
in default in any material respect under or with respect to any Material
Contract except as otherwise disclosed to the Agent. No notice of breach or
default has been given to the Borrower or any of its Subsidiaries under any
Material Contract except as otherwise disclosed to the Agent. To the best
knowledge of the Borrower after due inquiry, no other party to a Material
Contract is in breach or default in any material respect thereunder except as
otherwise disclosed to the Agent. No Default or Event of Default exists and is
continuing under the Senior Second Secured Note Documents. As of the Closing
Date, the Senior Second Secured Note Documents have not been amended, restated,
supplemented or otherwise modified, remain in full force and effect and are
binding upon and enforceable against all parties thereto in accordance with its
terms. No Event of Loss exists.

6.8 Financial Statements.

(a) The Borrower has heretofore furnished to the Agent copies of the Borrower’s
audited balance sheet as of September 30, 2005 and 2004, and statements of
operations, changes in members’ equity and cash flows for the Fiscal Year then
ended. These financial statements have been prepared in accordance with GAAP,
and present fairly, in all material respects, the financial condition of the
Borrower as of the respective dates thereof and the results of operations,
changes in members’ capital and cash flow of the Borrower for the respective
periods then ended. Except for liabilities and obligations disclosed or provided
for in the September 30, 2005 balance sheet, the Borrower did not have as of
that date any material liabilities or obligations of any nature whatsoever
(whether absolute, contingent or otherwise and whether or not due) that, in
accordance with GAAP, would have been required to have been disclosed or
provided for in such balance sheet. All books of account of Borrower fully and

 

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fairly disclose all of its material transactions, properties, assets,
investments, liabilities and obligations, are in its possession and are true,
correct and complete in all material respects.

(b) Since September 30, 2005, (i) the Borrower has not incurred any liabilities,
direct or contingent, that are material, individually or in the aggregate, to
the Borrower, nor (except for transactions relating to this Agreement) has the
Borrower entered into any transactions that are material, individually or in the
aggregate, outside of the ordinary course of business, (ii) there has not been
any material decrease in the Capital Stock or any material increase in long-term
debt or any material increase in short-term debt of the Borrower, or any payment
of or declaration to pay any dividend or any other distribution with respect to
the Borrower except as permitted by the Original Agreement, and (iii) there has
not been any material adverse change in the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of the Borrower (each of clauses (i), (ii) and (iii), a “Material Adverse
Change”). To the knowledge of the Borrower after due inquiry, there is no event
that is reasonably likely to occur, which if it were to occur, would,
individually or in the aggregate, have a Material Adverse Effect.

(c) As of the Closing Date, and after giving effect on the Closing Date to the
the extensions of credit made under this Agreement, and the consummation of the
other transactions contemplated hereby, including all distributions to be made
by the Borrower to its members, the Borrower will be Solvent based upon the
Borrower’s fair value basis balance sheet (the “Fair Value Basis Balance
Sheet”).

6.9 Ownership of Property; Liens. The IDA has been granted fee title to, and the
Mortgages constitute a Lien upon, the Leased Premises free and clear of all
Liens except Permitted Liens. The Borrower has good title to or a valid
leasehold interest in or license of, all property purportedly owned or used by
it, and a valid leasehold interest in the Leased Premises, free and clear of all
Liens other than Permitted Liens. No mortgage or financing statement or other
instrument or recordation covering all or any part of the Collateral which has
been executed by, or with the permission of, the Borrower or the IDA is on file
in any recording office, except such as has been filed, or has been delivered to
the Agent for filing, in favor of the Agent for the benefit of the Lenders or as
evidence of Permitted Liens. The IDA has all rights purported to be given to it
under any easements, leases and other title instruments described in the Title
Insurance Policy, subject only to the Liens specified therein and other
Permitted Liens, and the IDA’s rights thereunder are not subject to any contest
or challenge and are encumbered only by the Mortgages as a perfected Lien and
other Permitted Liens. All such easements, leases and other title instruments
are valid and subsisting and are in full force and effect. The IDA is not in
default under any such easement, lease or title instrument, and no event has
occurred which, with the giving of notice or the passage of time, or both, would
constitute a default thereunder.

6.10 Taxes.

(a) The Borrower has filed or caused to be filed all tax returns which are
required to be filed by it, and has paid or caused to be paid all taxes shown to
be due and payable on such returns or on any assessments made against it, or any
of its property and all other taxes,

 

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fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any of the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the
Borrower, as the case may be, and to the extent non-payment thereof could not be
reasonably expected to materially impair the value of the security granted under
the Senior Security Documents); no tax Lien has been filed, and, to the
knowledge of the Borrower no claim is being asserted, with respect to any such
tax, fee or other charge.

(b) Except for (i) transfer taxes and registration, recordation and other
miscellaneous fees payable in connection with the recordation of the Mortgages,
if any, and the filing of financing statements required to perfect the Agent’s
rights (and where appropriate the Collateral Agent’s rights) under the Senior
Security Documents and with respect to the Senior Second Secured Notes, all of
which taxes and fees except to the extent not yet due as of the date of the
execution and delivery of this Agreement have been paid in full by the Borrower
on or before the date of the execution and delivery of this Agreement and
(ii) income, capital, any receipts or franchise taxes imposed with respect to
the Agent, the Collateral Agent or Lenders by the jurisdiction in which the
Agent, the Collateral Agent or any Lender is organized, in which an office of
the Agent, the Collateral Agent or such Lender is located or in which the
Project is located or any political subdivision or taxing authority thereof or
therein, neither the execution and delivery of this Agreement, the Notes or any
other Credit Document, nor the consummation of any of the transactions
contemplated hereby or thereby, will result in any tax, levy, impost, duty,
charge or withholding imposed by the United States or any agency or taxing
authority thereof, or by any state of the United States or any political
subdivision or taxing authority thereof or therein, on or with respect to such
execution, delivery or consummation.

6.11 Regulation U. No part of the proceeds of any Loans will be used for
“purchasing” or “carrying” any “margin stock” within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect or for
any purpose which violates the provisions of the Regulations of such Board of
Governors. If requested by any Lender or the Agent, the Borrower will furnish to
the Agent and each Lender a statement to the foregoing effect in conformity with
the requirements of FR Form U-1 referred to in said Regulation U.

6.12 ERISA. Neither the Borrower nor any of its Subsidiaries have or participate
in a Multiemployer Plan. No Reportable Event has occurred during the five-year
period prior to the date on which this representation is made or deemed made
with respect to any Plan, and each Plan has complied in all material respects
with the applicable provisions of ERISA and the Code. The present value of all
accrued benefits under each Single Employer Plan maintained by the Borrower
(based on those assumptions used to fund the Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits. The Borrower has not had a complete or partial withdrawal from
any Multiemployer Plan, and the Borrower would not become subject to any
liability under ERISA if the Borrower were to withdraw completely from the
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. No such Multiemployer Plan is
in reorganization (within the meaning of Section 4241 of ERISA) or insolvent
(within the meaning of Section 441

 

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of ERISA). The Borrower’s most recent financial statements delivered to the
Agent accurately reflect, as of the date of such statements, any liability of
the Borrower for post-retirement benefits to be provided to their current and
former employees under Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA).

6.13 Investment Company Act. The Borrower is not an “investment company” or a
company “controlled” by an “investment company” or an “investment adviser”,
within the meaning of the Investment Company Act of 1940, as amended.

6.14 Senior Security Documents. The Senior Security Documents are in full force
and effect and create, in favor of the Collateral Agent (or as appropriate the
Agent) for the benefit of the Lenders, legal, valid and enforceable liens on and
first perfected security interests in all right, title, estate and interest of
the Borrower or the IDA, as the case may be, in and to the Collateral and all
necessary and appropriate recordings (including those shown on Schedule 6
attached hereto) and filings have been duly effected in all appropriate public
offices so that the Liens created by each of the Senior Security Documents to
which the Borrower is a party constitute perfected Liens on and first perfected
security interests in all right, title, estate and interest of the Borrower in
and to the Collateral described therein, prior and superior to all other Liens,
except certain of the Permitted Liens as indicated on Schedule 6(a) attached
hereto. As of the date of this Agreement, the recordings, filings and other
actions shown on Schedule 6 attached hereto or on Schedule 6(a) also attached
hereto are all the recordings, filings and other actions necessary to establish,
protect and perfect the Agent’s Lien (or as appropriate the Collateral Agent’s
Lien) on and perfected security interest in the right, title, estate and
interest of the Borrower in and to the Collateral.

6.15 Property Rights, Utilities, Etc.

(a) All utility services, means of transportation, facilities, other materials
and easements that are necessary for the operation of the Project, if any
(including, without limitation, gas, electrical, water and sewage services and
facilities), are available to the Project.

(b) The Borrower and its Subsidiaries possess all easements necessary for the
Borrower or its Subsidiaries to perform their respective obligations under all
Material Contracts.

6.16 Compliance with Building Codes, Zoning Laws, Etc. The Project has been
constructed and is maintained and operated in compliance with all applicable
zoning, environmental protection, use and building codes, laws, regulations and
ordinances and other Requirements of Law. The Borrower has not received notice
of and has no knowledge, after due inquiry, of any violations of any laws,
ordinances, codes, requirements or orders of any Governmental Authority or of
any other Requirements of Law affecting the Project which are reasonably likely
to have a Material Adverse Effect.

6.17 Principal Place of Business, Etc. As of the date of this Agreement: (i) the
chief executive office of the Borrower and the office where the Borrower keeps
certain of its records concerning the Project and all contracts relating
thereto, is located at 3846 Retsof Road,

 

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Retsof, New York 14539, and (ii) the principal place of business of the Borrower
is located at 5520 Route 63, Mount Morris, New York 14510, and the office where
the Borrower keeps all other records concerning the Project and all contracts
relating thereto.

6.18 Description of Property. The descriptions of the Leased Premises set forth
in Schedule 1 attached hereto, are true and accurate in all respects, and are
adequate descriptions for the purpose of establishing, preserving, protecting
and perfecting the interests and rights, and the priority of the Liens (subject
to certain Permitted Liens as described on Schedule 6(a) attached hereto),
intended to be created and provided in such property by the Mortgages.

6.19 Sufficiency of Mineral Rights. The mineral rights described on Schedule 7
attached hereto, constitute a supply of salt reserves sufficient for operation
of the Project at its designed capacity for approximately sixty-eight (68) years
after the Closing Date in accordance with the current practices. No other
mineral rights are required in order for the Borrower to exploit the salt
reserves set forth in Schedule 7 attached hereto in an economically efficient
manner and in accordance with current practices.

6.20 Sufficiency of Access. The Borrower has adequate ingress and egress from
the Leased Premises for any reasonable purpose in connection with the operation
and maintenance of the Facility.

6.21 Locations of the Leased Premises. The Leased Premises does not lie within
an area identified by the Secretary of Housing and Urban Development as an area
having special flood hazards, except as disclosed on the surveyor’s certificate
delivered in connection with the Title Insurance Policy.

6.22 Environmental Matters.

(a) Except as set forth in Schedule 8(a) attached hereto:

(i) no proceeding is pending, no notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed, and no investigation or review is pending
and, to the Borrower’s knowledge after due inquiry, none of the foregoing is
threatened by any Governmental Authority or other Person:

(x) with respect to any violation or alleged violation of any Environmental Law
in connection with the property, operations or conduct of business of the
Borrower or the Project; or

(y) with respect to any failure or alleged failure under any Governmental
Approval relating to Materials of Environmental Concern or relating to
compliance with any Environmental Law required in connection with the property,
operations or conduct of the business of the Borrower or the Project; or

 

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(z) with respect to any presence, generation, treatment, storage, discharge,
recycling, transportation or disposal or release, of any Materials of
Environmental Concern generated by the operations of business, or located on,
under or at any property of, the Borrower or the Project, or any allegation or
conduct thereon.

(ii) Materials of Environmental Concern are not emanating from any property now
or previously owned by the Borrower, to the knowledge of the Borrower, after due
inquiry, leased by the Borrower (including the Project), in either case in such
quantities or conditions so as to require removal or other response or remedial
action which has not yet been taken, or give rise to liability under any
applicable Environmental Law; and none of such properties has been used by the
Borrower or any other Person as a dump site or as a treatment, disposal or
storage site (whether permanent or temporary for any Materials of Environmental
Concern:

(iii) there are no underground storage tanks which have been used to store or
have contained any Materials of Environmental Concern, active or abandoned at
any property now or previously owned or leased by the Borrower (including the
Project).

(b) Except as set forth in Schedule 8(b) attached hereto, neither the Borrower
nor any business conducted by it has transported or arranged for the
transportation and/or disposal (directly or indirectly) of any Materials of
Environmental Concern to or at any location which is listed or proposed for
listing under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (“CERCLA”), the Comprehensive Environment Response,
Compensation and Liability System (“CERCLIS”) or any similar state list or which
is the subject of federal, state or local enforcement actions or other
investigations, nor is any property now or previously owned or leased by the
Borrower (including any portion of Project) listed or proposed for listing on
any such list.

(c) Except as set forth in Schedule 8(c) attached hereto, there are no Liens
with respect to any Environmental Law or any Materials of Environmental Concern,
on any property owned or leased by the Borrower (including any portion of the
Project) and the Borrower has received no written notice of any actions taken by
any Governmental Authority that could subject any of such properties to such
Liens.

(d) None of the matters identified on Schedules 8(a), (b), or (c) attached
hereto, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.

6.23 Intellectual Property. No licenses, trademarks, patents or agreements with
respect to the usage of technology (other than any thereof which have been
obtained and are in full force and effect and have been collaterally assigned to
the Collateral Agent) are necessary for the ownership, operation and maintenance
of the Project. The Borrower owns, or is licensed to use, all trademarks, trade
names, copyrights, technology, know-how and processes necessary for the conduct
of its business as currently conducted that are material to the condition
(financial or other), business, or operations of the Borrower (the “Intellectual
Property”). No claim has been asserted and is pending by any Person with respect
to the use of any such Intellectual

 

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Property in connection with the Project, or challenging or questioning the
validity or effectiveness of any such Intellectual Property and the Borrower
does not know of any valid basis for any such claim. The use of such
Intellectual Property by the Borrower does not infringe on the rights of any
Person.

6.24 Labor Matters. No labor strike, work stoppage, slowdown, or other material
labor dispute is pending against the Borrower, or, to the knowledge of the
Borrower, after due inquiry, threatened against the Borrower; (ii) there is no
worker’s compensation liability, experience or matter that could be reasonably
expected to have a Material Adverse Effect; (iii) to the knowledge of the
Borrower, after due inquiry, there is no threatened or pending liability against
the Company pursuant to the Worker Adjustment Retraining and Notification Act of
1988, as amended (“WARN”), or any similar state or local law; (iv) there is no
employment-related charge, complaint, grievance, investigation, unfair labor
practice claim, or inquiry of any kind, pending against the Borrower that could,
individually or in the aggregate, have a Material Adverse Effect; (v) to the
knowledge of the Borrower, after due inquiry, no employee or agent of the
Borrower has committed any act or omission giving rise to liability for any
violation identified in subsection (iii) and (iv) above, other than such acts or
omissions that would not, individually or in the aggregate, have a Material
Adverse Effect; and (vi) no term or condition of employment exists through
arbitration awards, settlement agreements, or side agreements that is contrary
to the express terms of any applicable collective bargaining agreement.

6.25 Subsidiaries. As of the date hereof, the Borrower has no Subsidiaries and
after the date hereof the Borrower shall not have any Subsidiaries (other than
Immaterial Subsidiaries) unless they have complied with Section 8.20. As of the
Closing Date, except as provided herein, there will be no encumbrances or
restrictions on the ability of any Subsidiary of the Borrower (x) to pay
dividends or make other distributions on such Subsidiary’s Capital Stock or to
pay any indebtedness to the Borrower or any other Subsidiary of the Borrower,
(y) to make loans or advances or pay any indebtedness to, or investments in, the
Borrower or any other Subsidiary of the Borrower or (z) to transfer any of its
property or assets to the Borrower or any other Subsidiary of the Borrower.

6.26 Full Disclosure. No representation, warranty or other statement made by the
Borrower in any Credit Document or in any certificate, written statement or
other document furnished to the Agent, the Collateral Agent, any Lender or the
Letters of Credit Issuer by or on behalf of the Borrower pursuant to or in
connection with the Credit Documents contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading. There is no fact known to the Borrower whether related to
Governmental Approvals or otherwise, that has not been disclosed in writing to
the Agent prior to the date of the execution and delivery of this Agreement that
has had a Material Adverse Effect or which is reasonably likely to have a
Material Adverse Effect.

 

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SECTION 7

CONDITIONS PRECEDENT

7.1 Conditions Precedent to Closing. The obligations of the Lenders to make the
Loans, and of the Letters of Credit Issuer to issue Standby L/Cs are subject to
the satisfaction of each of the following conditions:

(a) Authorizing Actions. All limited liability company and other proceedings in
connection with the transactions contemplated by this Agreement and the Credit
Documents then contemplated by this Agreement to be in effect, and all documents
and instruments incident thereto, shall be reasonably satisfactory in form and
substance to the Agent and its counsel and the Agent and its counsel shall have
received such counterpart originals or certified or other copies of all such
documents and instruments and of all records and company proceedings in
connection with such transactions, and such incumbency and signature
certificates of officers of the Borrower as the Agent or its counsel may
reasonably request, together with certificates of good standing and payment of
franchise taxes in the State of New York.

(b) Agreement. The Agent shall have received a counterpart of this Agreement for
itself and each other Lender, duly executed and delivered by the Borrower.

(c) Revolving Loan Notes. Each Lender shall have received Revolving Loan Notes
conforming to the requirements of Section 2.2 and duly executed and delivered by
the Borrower.

(d) Term Loan Notes. Each Lender shall have received a Term Loan Note conforming
to the requirements of Section 4.2 and duly executed and delivered by the
Borrower.

(e) Perfection of Liens and Security Interests. All filings, recordings,
deliveries of securities and instruments and other actions that are necessary or
desirable in order to establish, protect, preserve and perfect the Collateral
Agent’s Lien on and perfected security interest in all right, title, estate and
interest of the Borrower, the IDA and Borrower’s members, as the case may be, in
and to all Collateral covered by the Senior Security Documents, prior and
superior to all other Liens (other than Permitted Liens listed on Schedule 6(a)
attached hereto), existing or future, shall have been duly made or taken and all
fees, taxes and other charges relating to such filings and recordings and other
actions shall have been paid by the Borrower or filings for exemptions therefrom
shall have been made.

(f) Material Contracts. The Agent shall have received a certificate of an
officer of the Borrower that, on the Closing Date, all Material Contracts are in
full force and effect and no default exists thereunder.

(g) Financial Statements. The Agent shall have received a copy of Borrower’s
audited financial statements for the fiscal year ended September 30, 2005.

(h) Real Property Search. The Collateral Agent has received the results of a
recent search of the appropriate indexes, including but not limited to all
applicable real property indexes, for the premises described on Schedule A-I and
Schedule A-II under Chicago Title Insurance Company Policy No. 2416-40008 dated
March 17, 2004. The search shall be

 

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conducted by a Person reasonably satisfactory to the Agent and shall at a
minimum date back to a period beginning on March 17, 2004.

(i) Lien Searches. The Collateral Agent shall have received the results of a
recent search, by a Person reasonably satisfactory to the Agent, of the Uniform
Commercial Code filings and tax and judgment liens which may have been filed
with respect to the property of the Borrower subject to the UCC in such filing
offices as the Agent may request.

(j) Legal Opinion. The Agent shall have received the opinion of counsel to the
Borrower in form and substance reasonably satisfactory to the Agent, dated the
Closing Date and addressed to the Agent, the Letters of Credit Issuer and the
Lenders.

(k) Fees. Payment of all fees, including without limitation the $45,000.00
amendment fee, all up-front fees, commitment fees and administrative agent fees,
expenses and costs required to be paid by Borrower under any Credit Document.

(l) Additional Documents. The Agent (or as appropriate the Collateral Agent)
shall have received such other documents and opinions related to the
transactions contemplated hereby as may be reasonably requested by it.

(m) Additional Matters. All other documents and legal matters in connection with
the transactions contemplated hereby shall be satisfactory in form and substance
to the Agent and counsel to the Agent.

7.2 Conditions to All Revolving Loans and Standby L/Cs. The obligations of the
Lenders to make any Revolving Loan and the obligation of the Letters of Credit
Issuer to issue any Standby L/C, are subject to the satisfaction, on the
Borrowing Date with respect to such Revolving Loan or on the date of issuance of
such Standby L/C of the following conditions precedent:

(a) Borrowing Base Certificate. The Agent shall have received the Borrowing Base
Certificate and each of the Lenders shall have received a copy thereof
sufficiently in advance of the proposed Borrowing, in form and substance
satisfactory to the Agent, pursuant to Section 2.1(b) above, and the total
amount of Revolving Loans to be outstanding and any Standby L/Cs to be issued
after giving effect to such Revolving Loans and/or Standby L/Cs shall be less
than or equal to the Revolving Credit Availability.

(b) Notice of Revolving Loan Borrowing. The Agent shall have received from the
Borrower, a Notice of Revolving Loan Borrowing with respect to any proposed
Revolving Borrowing or a written request in respect of a proposed Standby L/C.

(c) Representations and Warranties. The representations and warranties made by
the Borrower and the Subsidiaries herein or of the Borrower or any of its
Subsidiaries in any other Credit Document to which it is a party, or which are
contained in any certificate, document, financial or other statement furnished
by the Borrower or any of its Subsidiaries hereunder or thereunder or in
connection herewith or therewith, shall be (i) true and correct on

 

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and as of such Borrowing Date as if made on and as of such date, (ii) except to
the extent that such representations and warranties relate specifically to an
earlier date (in which case such representations or warranties shall have been
true and correct on and as of such earlier date), unless the circumstances that
made any such representation false or misleading at the time when made shall no
longer be continuing and the existence of such circumstances has not had a
Material Adverse Effect.

(d) No Default, Event of Default or Event of Loss. No Default or Event of
Default shall be in existence on such Borrowing Date and no event shall exist on
such Borrowing Date that, with the giving of notice or the passage of time, or
both, would constitute a Default or Event of Default. Furthermore, no Default or
Event of Default shall occur after giving effect to the Revolving Loan to be
made or the Standby L/C to be issued on such Borrowing Date. No Event of Loss
shall be in existence on such Borrowing Date. Satisfaction of this condition
with respect to any particular Default, Event of Default or Event of Loss shall
not constitute satisfaction of this condition with respect to any other Default,
Event of Default or Event of Loss, including, without limitation, a subsequent
Default, Event of Default or Event of Loss which arises out of identical or
similar circumstances.

(e) No Material Adverse Change. There shall have been no Material Adverse Change
since the Original Closing Date, and no other event or condition shall have
occurred or existed since the Original Closing Date and which continues to
exist, which would constitute a Material Adverse Effect.

SECTION 8

AFFIRMATIVE COVENANTS

The Borrower agrees that, so long as the Commitments remain in effect, any Note
or Letter of Credit remains outstanding and unpaid or any Credit Obligations are
owing to the Agent, Collateral Agent or any Lender hereunder or under the Senior
Security Documents, the Borrower shall, and shall cause each of its Subsidiaries
to:

8.1 Conduct of Business, Maintenance of Existence, Etc. At all times (a) engage
solely in the purchase, mining, brokerage, bagging, and sale of salt and related
and ancillary business activities, (b) preserve and maintain in full force and
effect its existence as a limited liability company in the case of the Borrower
and as the form of entity that it was formed for each Subsidiary, in each case
under the laws of the jurisdiction of its organization, its qualification to do
business in each jurisdiction in which the conduct of its business requires such
qualification except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect, and all of its rights, privileges
and franchises necessary for the ownership and operation of the Project,
(c) obtain and maintain in full force and effect all Governmental Approvals and
other consents and approvals required at any time in connection with the
construction, ownership, operation or maintenance of the Project.

 

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8.2 Partnership Tax Status; Corporate Existence, Etc.

(a) In the case of the Borrower only, maintain its status as a partnership for
United States federal income tax purposes and no election to the contrary will
be made. In the case of each of the Borrower’s Subsidiaries, the Borrower will
cause each of its Subsidiaries to maintain and preserve in full force and effect
its current tax status.

(b) Obtain, maintain and preserve in full force and effect all other rights,
franchises, licenses, permits, certifications, approvals and authorizations
required by Governmental Authorities and necessary to the ownership, occupation
or use of its properties or the conduct of its business, except to the extent
the failure to do so would not be reasonably likely to have a Material Adverse
Effect, and keep all material properties in good working order and condition
(normal wear and tear excepted) and from time to time make all necessary repairs
to and renewals and replacements of such properties, except to the extent that
any of such properties are obsolete or are being replaced.

8.3 Payment of Obligations and Performance and Modification of Material
Contracts.

(a) Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, all of its material Indebtedness and other material
obligations of whatever nature (subject to applicable subordination provisions);
provided, however, if Borrower or any of its Subsidiaries is not paying and
disputing any Indebtedness or obligations, it shall maintain adequate reserves
with respect thereto in accordance with GAAP.

(b) Pay and discharge all taxes, assessments and governmental charges or levies
imposed upon it, upon its income or profits or upon any of its properties, prior
to the date on which penalties would attach thereto, and all lawful claims that,
if unpaid, might become a Lien upon any of the properties of the Borrower or any
of its Subsidiaries; provided, that, if no Event of Default shall have occurred
or be continuing, or if an Event of Default shall have occurred and be
continuing, then, with the prior written consent or the Lenders, the Borrower
may contest in good faith the validity or amount of any such tax, assessment,
charge, levy or claim by proper proceedings timely instituted and may permit the
taxes, assessments, charges, levies or claims so contested to remain unpaid
during the period of contest if: (a) the Borrower diligently prosecutes such
contests, (b) the Borrower sets aside on its books adequate reserves with
respect to the contested items and (c) during the period of such contest the
enforcement of any contested item is effectively stayed. In addition, Borrower
shall promptly pay or cause to be paid any valid, final judgment enforcing any
such tax, assessment, charge, levy or claim and cause the same to be satisfied
of record.

(c) Perform and observe all the terms and provisions of each Material Contract
to be performed or observed by it, maintain each such Material Contract in full
force and effect, enforce each such Material Contract in accordance with its
terms, except, in any case, where the failure to do so, either individually or
in the aggregate, could not be reasonably likely to have a Material Adverse
Effect.

 

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(d) Notwithstanding anything to the contrary contained in this Agreement or any
of the Credit Documents, the Borrower shall be permitted to amend and modify the
Union Contract without any interference from the Agent and/or the Lenders.

8.4 Borrower Insurance Coverage. In the case of the Borrower:

(a) Without limiting any of the obligations of the Borrower under this
Agreement, the Borrower shall carry and maintain the following minimum
insurances. Such insurance shall be provided by the insurers, in such form and
amounts, and with such deductibles as are acceptable to the Agent. Each insurer
will be A.M. Best rated A-(X) or higher and any deviation from this rating must
have the prior written approval of the Agent, Collateral Agent and the Required
Lenders.

(i) All Risk Property Insurance. The Borrower shall maintain all risk property
insurance (excluding only the perils excluded as of the date of this Agreement)
covering the Facility, including tunnels, galleries, shafts and all equipment,
whether above ground or below, against direct physical loss or damage, including
but not limited to fire and extended coverage, collapse, forced abandonment,
inundation, earth movement and comprehensive boiler and machinery coverage
including production equipment, in an amount not less than $100,000,000, with a
$55,000,000 sublimit with respect to underground property. Coverage shall be
written on a replacement cost basis and include costs to reopen the mine. Such
insurance policy shall contain an agreed amount endorsement waiving any
coinsurance penalty. During the first year of this Agreement, ten percent
(10%) of the Borrower’s all risk property insurance may be maintained with
Commonwealth Insurance Company which is rated A-(VIII).

(ii) Business Interruption. The Borrower shall maintain business interruption
insurance in an amount equal to twelve (12) months projected debt service
payments and other fixed cash expenses of the Project and shall contain an
agreed amount endorsement waiving any coinsurance penalty. Coverage shall be
included for expediting expenses in an amount not less than $5,000,000. Such
insurance shall also cover service interruption. Deductibles shall not exceed
thirty (30) days.

(iii) Commercial General Liability Insurance. The Borrower shall maintain
commercial general liability insurance written on an occurrence basis in an
amount not less than $1,000,000. Such coverage shall include but not be limited
to premises and operations, explosion, collapse and underground hazards, broad
form contractual, independent contractors, products and completed operations,
hostile fire and related pollution, broad form property and personal injury
liability. Such insurance shall not contain an exclusion for punitive or
exemplary damages where insurable under law.

(iv) Workers’ Compensation Insurance. The Borrower shall maintain workers’
compensation for all employees of the Borrower, insurance written with statutory
limits and employer’s liability insurance written in an amount not less than
$1,000,000. Such policy shall not contain an exclusion for occupational disease.

 

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(v) Automobile Liability Insurance. The Borrower shall maintain automobile
liability insurance covering owned, non-owned and hired vehicles in an amount
not less than $1,000,000 combined single limit and $1,000,000
underinsured/uninsured motorist.

(vi) Excess/Umbrella Liability. The Borrower shall maintain excess or umbrella
liability insurance in an amount not less than $50,000,000 written on an
occurrence basis providing coverage limits in excess of the insurance limits
required under sections (a)(iii), (a)(iv), and (a)(v). Such insurance shall
follow the form of the primary insurances and contain a drop down provision in
case of exhaustion of underlying limits and/or aggregates. Such insurance shall
not contain an exclusion of punitive or exemplary damages where insurable under
law. Such policy shall not contain an exclusion for occupational disease.

(vii) Pollution Liability. The Borrower shall maintain pollution liability
insurance in an amount not less than $5,000,000 per occurrence and $5,000,000 in
the aggregate.

(b) Endorsements. Policies of insurance carried in accordance with this
Section 8.4 shall be endorsed to provide that:

(i) The Agent, the Collateral Agent and the Lenders shall be additional named
insureds with respect to the insurance provided in accordance with paragraphs
(a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(v) and (a)(vi) with the understanding
that the Agent or the Lenders shall not be responsible for any of the
obligations of Borrower, including, but not limited to, payment of premiums; and

(ii) in accordance with paragraphs (a)(i) and (a)(ii) the Collateral Agent shall
be the sole loss payee for losses in excess of $250,000; and

(iii) with respect to insurance provided in accordance with paragraphs (a)(iii),
(a)(iv), (a)(v) and (a)(vi) shall be endorsed to provide that, inasmuch as the
policies are written to cover more than one insured, all terms, conditions,
insuring agreements and endorsements, with the exception of the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured; and

(iv) with respect to the insurance provided in accordance with paragraphs (a)(i)
and (a)(ii), the interest of the Agent, the Collateral Agent and the Lenders
shall not be invalidated nor suspended by any breach of warranty, act, omission,
neglect, or non-compliance with any of the provisions of the insurance polices,
including any and all riders and/or endorsements now or hereafter attached
thereto, by the Borrower or any other person or by the happening of any event
permitted by them or which they failed to prevent or whether before or after a
loss, which under the provisions of the policy of insurance or any rider or
endorsement attached thereto would invalidate or suspend the insurance as to the
Borrower, and

 

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(v) the insurers waive all rights of subrogation against the Agent, the
Collateral Agent and the Lenders, any right of setoff or counterclaim and any
other right to deduction, whether by attachment or otherwise; and

(vi) such insurance shall be primary without right of contribution of any other
insurance carried by the Agent, the Collateral Agent and the Lenders; and

(vii) if such insurance is cancelled for any reason whatsoever, including
non-payment of premium, or any substantial change is made which affects the
interest of the Agent, the Collateral Agent and the Lenders, such cancellation
or change shall not be effective as to the Agent and the Lenders until thirty
(30) days after receipt by the Agent of written notice sent by registered mail.

(c) Adjustment of Losses. Losses, if any, under any insurance required to be
carried by paragraphs (a)(i) and (a)(ii), shall be adjusted with the insurance
companies or otherwise collected, including the filing of appropriate
proceedings by the Borrower subject to the approval of the Agent.

(d) Report. The Collateral Agent, at its option, may obtain such insurance as
specified by this Section 8.4 if not provided by the Borrower and, in such
event, the Borrower shall reimburse the Collateral Agent upon demand for the
cost thereof. To the extent that the Collateral Agent has placed such insurance
coverage as required to be maintained by the Borrower pursuant to this
Section 8.4 and provided that there are no other existing Defaults or Events of
Default, the Collateral Agent will cancel such insurance coverage upon the
Borrower providing satisfactory evidence that the replacement coverage has
become effective and is in compliance with this Section 8.4. The Borrower shall
also immediately reimburse the Collateral Agent for any additional costs,
including, but not limited to, short rate cancellation penalties, which are
incurred by the Collateral Agent.

8.5 Inspection of Property; Maintenance of Books and Records.

(a) Keep proper books, records and accounts in which full, true and accurate
entries shall be made of all financial transactions and otherwise shall be
complete and maintained in accordance with sound accounting practice.

(b) Permit the Collateral Agent and the Agent and other consultants engaged by
the Collateral Agent or the Agent that have delivered confidentiality agreements
reasonably acceptable to the Borrower and that are not under the control of or
affiliated with any of the Borrower’s competitors (the “Other Consultants”) and
the Lenders (at such Lender’s own expense) to visit the Project and the other
properties of the Borrower or any Subsidiary during regular business hours after
reasonable notice. The Collateral Agent, the Agent and each Lender each agrees
that it will not, in the course of any such visit, interfere in the operation or
maintenance of the Project and the Collateral Agent and the Agent each agree
that it will instruct the Other Consultants not so to interfere. The Borrower
authorizes the Collateral Agent, the Agent and each Lender to disclose to any
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possession concerning the Project or the Facility in connection with such
agent’s or consultant’s evaluation of the Project or visit to the Project.

(c) Permit the Agent, the Collateral Agent and/or their respective designated
representatives to conduct an audit and/or collateral examination of Borrower’s
and its Subsidiaries’ working papers and the accounts receivable, inventories
and Borrowing Base and an independent appraisal of the property of the Borrower
and its Subsidiaries and to discuss its affairs, finances and accounts with its
officers and employees and, upon notice to the Borrower, the independent public
accountants of the Borrower and its Subsidiaries (and by this provision the
Borrower authorizes such accountants to discuss the finances and affairs of the
Borrower and its Subsidiaries), all at such times and from time to time, upon
reasonable notice and during business hours, as may be reasonably requested by
the Agent. The Borrower hereby agrees that the audits described in this
Section 8.5(c) may, at a minimum, occur on an annual basis. The Borrower also
hereby agrees that the audits described in this Section 8.5(c) may, at the
discretion of the Agent or Required Lenders occur on a greater frequency (with
such frequency to be determined by the Agent or the Required Lenders not to
exceed four times per year). Any such audit or collateral examination shall be
at the Borrower’s expense up to a maximum of $5,000 per audit or collateral
examination and capped at $10,000 (in the aggregate) per year.

8.6 Compliance with Laws. Comply with all Requirements of Law, and from time to
time obtain and comply with all Governmental Approvals as shall now or hereafter
be necessary under all Applicable Laws, in connection with the ownership,
operation or maintenance of the Project or the making and performance by the
Borrower and its Subsidiaries of this Agreement or any Credit Documents to which
it is a party, except where the failure to comply or obtain would not, as
determined by the Agent or the Required Lenders, reasonably be expected to have
a Material Adverse Effect.

8.7 Financial Statements. Furnish or cause to be furnished to each Lender:

(a) as soon as available, but in any event within ninety (90) days after the end
of each Fiscal Year of the Borrower and its Subsidiaries, a copy of the
consolidated balance sheet of the Borrower as of the end of such Fiscal Year and
the related consolidated and consolidating statements of income, retained
earnings or members’ capital and changes in cash flows of the Borrower and its
Subsidiaries for such fiscal year, setting forth in each case in comparative
form the figures for the previous Fiscal Year, certified without qualification
or exception as to the scope of its audit by independent certified public
accountants of national standing reasonably acceptable to the Agent, and such
financial statements shall be satisfactory in scope to the Agent together with
if and when available, copies of all management letters prepared by such
accountants;

(b) as soon as possible after the end of each calendar year, the Borrower’s Tax
returns, and such information as may be necessary to establish to Agent’s
satisfaction the Borrower’s taxable income, gain, deduction or loss for such
calendar year, together with a certificate in such form as may be required by
the Agent setting forth the calculation of the Permitted Tax Distribution Annual
Allowance based on the taxable income, gain, deduction and loss for such
calendar year signed by a Responsible Officer of Borrower;

 

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(c) as soon as available, but in any event within forty-five (45) days after the
end of each Fiscal Quarter of the Borrower and its Subsidiaries, the
consolidated and consolidating unaudited balance sheet of the Borrower and its
Subsidiaries as of the end of such quarterly period and the consolidated and
consolidating related unaudited statements of income and retained earnings (or
members’ capital) and changes in cash flows of the Borrower and its Subsidiaries
for such quarterly period and for the portion of the fiscal year then ended,
setting forth in each case in comparative form the cumulative figures for the
previous period (previous comparable Fiscal Quarter and previous comparable
fiscal year to date), certified by a Responsible Officer of the Borrower
(subject to normal year-end audit adjustments);

(d) notwithstanding anything in this Section 8.7 to the contrary, upon
reasonable notice, the Borrower and its Subsidiaries shall, during the business
hours of the Facility, allow access to any officer, employee, attorney or
accountant for the Agent to audit, review, make extracts from and copy any and
all financial books and records; and

(e) as soon as available, but in any event within forty-five (45) days after the
end of each Fiscal Quarter of the Borrower and its Subsidiaries, the
consolidating unaudited balance sheet of the Borrower and its Subsidiaries as of
the end of such quarterly period and the consolidating related unaudited
statements of income and retained earnings (or members’ capital) and changes in
cash flows of the Borrower and its Subsidiaries for such quarterly period and
for the portion of the fiscal year then ended, setting forth in each case in
comparative form the cumulative figures for the previous period (previous
comparable Fiscal Quarter and previous comparable fiscal year to date),
certified by a Responsible Officer of the Borrower (subject to normal year-end
audit adjustments).

All financial statements shall be prepared in reasonable detail and with the
exception of tax returns required pursuant to Section 8.7(b), in accordance with
GAAP applied consistently throughout the periods reflected therein (except for
changes approved by the Agent or required by the independent certified public
accountants certifying such statements and disclosed therein). In addition, the
Borrower shall authorize its independent certified public accountants to
communicate directly with the Agent and to disclose to the Agent the Borrower’s
financial statements and other financial documents including a copy of the
independent certified public accountant’s opinion and any management letters.

8.8 Certificates; Annual Operating Budget, Other Information. Furnish or cause
to be furnished to the Agent and the Lenders:

(a) Unless otherwise required by the Agent on a more frequent basis in
accordance with the terms of this Agreement, no later than twenty (20) days
after the end of each month, a Borrowing Base Certificate and reports of aged
accounts receivable, aged accounts payable and inventory of Borrower and its
Subsidiaries as of the end of the previous month, in a form satisfactory to
Agent.

(b) The annual financial statements shall be accompanied by a written report of
the Borrower’s independent accountants (who shall be a firm of established
national

 

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reputation) that in conducting their audit of such financial statements nothing
has come to their attention that would lead them to believe that the Borrower
has violated any provisions hereof insofar as they relate to accounting matters
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of such
violation;

(c) concurrently with the delivery of the financial statements of the Borrower
referred to in Sections 8.7(a) to (c), a certificate of a Responsible Officer of
the Borrower stating that, to the best of such Responsible Officer’s knowledge
after due inquiry, the Borrower and its Subsidiaries during the period covered
by such financial statements, have observed and performed all of its covenants
and other agreements hereunder, and satisfied every condition, contained in this
Agreement and the other Credit Documents to be observed, performed or satisfied
by it, and that such Responsible Officer has obtained no knowledge of any
Default or Event of Default hereunder at any time during such period or on the
date of such certificate and no knowledge of any default or event which with the
giving of notice or the lapse of time or both would constitute a Default or an
Event of Default under any of the other Credit Documents at any time during such
period or on the date of such certificate (or, if any such Default or Event of
Default or default or event shall have occurred, a statement setting forth the
nature thereof and the steps being taken by the Borrower to remedy the same) and
setting forth a detailed calculation of Borrower’s compliance with, among other
things, the financial covenants contained in Sections 9.1 through 9.8 (the
“Compliance Certificate”) and the amount of the Projected Distributions for
compliance certificates delivered with respect to the Fiscal Quarter ending
September 30th, December 31st and March 31st;

(d) as soon as available, but in any event prior to September 30th of each year
an annual operating budget for the Borrower and its Subsidiaries for the
immediately succeeding Fiscal Year, setting forth their projected operating
expenses (including proposed Capital Expenditures) and cash flow for such Fiscal
Year prepared on a consolidated and consolidating basis and in accordance with
GAAP (the “Annual Operating Budget”) (Notwithstanding the foregoing, after the
occurrence and during the continuance of a Default or an Event of Default, the
Agent may request a revised Annual Operating Budget and, within fifteen
(15) days after receipt by the Borrower of such request, the Agent shall have
received a revised Annual Operating Budget);

(e) promptly after the filing thereof, the “Annual Returns” (Form 5500 series)
and attachments filed annually with the Internal Revenue Service with respect to
each Single Employer Plan, if any, of the Borrower;

(f) with respect to any Single Employer Plan adopted or amended by the Borrower
on or after the first Borrowing Date, any determination letters received from
the Internal Revenue Service with respect to the qualification of such Plan, as
initially adopted or amended under Section 401(a) of the Code;

 

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(g) promptly after delivery or receipt thereof, a copy of each material notice,
demand or other communication delivered or received by the Borrower pursuant to
any Credit Document;

(h) copies of each Governmental Approval or other consent or approval obtained
or made by the Borrower pursuant to this Agreement;

(i) upon request, periodic reports and information with respect to any claims or
counterclaims involving the Non-Released F-K Litigants;

(j) promptly, such additional financial and other information with respect to
the Borrower and its Subsidiaries as the Agent or the Required Lenders may from
time to time reasonably request.

8.9 Taxes. Pay and discharge all taxes, assessments and governmental charges or
levies imposed on the Borrower or any of its Subsidiaries or on any of their
income or profits or on any of their property prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien upon the property of the Borrower or any of its Subsidiaries provided,
that, if no Event of Default shall have occurred and be continuing, or if an
Event of Default shall have occurred and be continuing with the prior written
consent of the Required Lenders, the Borrower may contest in good faith the
validity or amount of any such tax, assessment, charge, levy or claim by proper
proceedings timely instituted, and may permit the taxes, assessments, charges,
levies or claims so contested to remain unpaid during the period of such contest
if: (a) the Borrower diligently prosecutes such contest, (b) the Borrower sets
aside on its books adequate reserves with respect to the contested items and
(c) during the period of such contest the enforcement of any contested item is
effectively stayed. In addition, the Borrower shall promptly pay or cause to be
paid any valid, final judgment enforcing any such tax, assessment, charge, levy
or claim and cause the same to be satisfied of record.

8.10 Maintenance of Property. At its expense, maintain, operate and keep the
Facility in good working order and condition and make all repairs, replacements
and renewals with respect thereto and additions and betterments thereto which
are necessary for the Facility to operate in compliance with the terms of any
applicable agreement affecting it, including, but not limited to, the Land Lease
Agreement, and in a manner consistent with prudent management and sound business
practice (except where any failure would not reasonably be likely to have a
Material Adverse Effect), and in compliance with all Applicable Laws affecting
the Project and Facility (except where any failure would not reasonably be
likely to have a Material Adverse Effect), and to ensure enforceability of
remedies under insurance policies. The Borrower shall, and shall cause its
Subsidiaries to, comply with all manufacturer’s warranties and suggested
maintenance procedures in respect of the Facility.

8.11 Notices. Promptly upon obtaining knowledge of any of the following, give
notice to the Agent:

(a) of the occurrence of any Default or Event of Default;

 

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(b) of any material default or event of default under any Material Contract;

(c) of any substantial litigation, investigation or proceeding which may exist
at any time between the Borrower and any Governmental Authority, or any other
license or Governmental Approval required for the ownership or operation of the
Project; provided, however, that the Borrower shall provide the Agent with
notice of any action by a Governmental Authority regarding the mining permits
(without regarding to any substantiality of amounts);

(d) of any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $1,000,000 or more or in which
injunctive or similar relief is sought;

(e) of the following events, as soon as possible and in any event within thirty
(30) days after the Borrower knows or has reason to know thereof (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan, or (ii) the institution of proceedings or the taking or expected taking of
any other action by PBGC, the Borrower to terminate, withdraw or partially
withdraw from any Plan, or (iii) the reorganization or insolvency of any
Multiemployer Plan, and, in addition to such notice, deliver to the Agent
whichever of the following may be applicable: (A) a certificate of a Responsible
Officer of the Borrower setting forth details as to such Reportable Event and
the action that the Borrower proposes to take with respect thereto, together
with a copy of any notice of such Reportable Event that may be required to be
filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent to
institute such proceedings or any notice to PBGC that such Plan is to be
terminated, or (C) any notice of the reorganization or insolvency of a
Multiemployer Plan received by the Borrower;

(f) of any loss or damage to the Project or the Collateral in excess of
$250,000;

(g) to the best knowledge of the Borrower, after due inquiry, of any litigation,
investigation or proceeding affecting the Borrower or any of its Subsidiaries
which if adversely determined could reasonably be expected to have a Material
Adverse Effect;

(h) of any litigation or proceeding relating to environmental matters concerning
the Borrower, any of its Subsidiaries or the Project (including receipt by
Borrower of any notice of any pending, threatened, or contemplated proceeding
involving any Environmental Law or any discharge of Materials of Environmental
Concern);

(i) any material breach by any party thereto of the terms, conditions,
representations, warranties and/or covenants contained in the Settlement
Agreement;

(j) of any stop-work order issued by a Governmental Authority; and

 

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(k) of anything else that could reasonably be expected to constitute a Material
Adverse Effect or that the Borrower’s management believes in good faith is
likely to result in a Material Adverse Effect.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto. For all purposes of clause (e) of this Section, the Borrower
shall be deemed to have all knowledge or knowledge of all facts attributable to
the administrator of such Plan.

8.12 Maintenance of Liens of the Senior Security Documents; Acquisition of
Mineral Rights; Future Mortgages. As to the Project, promptly upon the request
of the Agent or the Collateral Agent and at the Borrower’s expense, execute and
deliver, or cause the execution and delivery of, and thereafter register, file
or record in each appropriate governmental office, any document or instrument
supplemental to or confirmatory of the Senior Security Documents or otherwise
reasonably deemed by the Agent or the Collateral Agent to be necessary or
desirable for the creation, perfection or maintenance of the Liens and security
interests purported to be created by the Senior Security Documents or to protect
the Borrower’s title in and to any of the Collateral.

8.13 Employee Plans. For each pension, profit-sharing and stock bonus Plan
adopted by the Borrower that is intended to be a qualified Plan within the
meaning of Section 401(a) of the Code, (a) use its best efforts to seek and
receive determination letters from the Internal Revenue Service to the effect
that such Plan is qualified within the meaning of Section 401(a) of the Code;
and (b) from and after the date of adoption of any pension, profit-sharing and
stock bonus Plan, cause such Plan to be qualified within the meaning of
Section 401(a) of the Code and to be administered in all material respects in
accordance with the requirements of ERISA and Section 401(a) of the Code.

8.14 Storage. Cause all materials owned or controlled by or for the account of
the Borrower or any of its Subsidiaries and supplied for, or intended to be
utilized in, the construction, operation or maintenance of the Project but not
affixed to or incorporated into the Project to be suitably stored in accordance
with all applicable Environmental Laws with adequate safeguards to prevent loss,
theft, damage or commingling with other materials.

8.15 Environmental Matters.

(a) Provide such information as is reasonably requested by the Agent or the
Collateral Agent about all Materials of Environmental Concern and the presence,
storage, handling or disposal thereof which may exist at or which are involved
in the Project. The Agent and the Collateral Agent shall have the right, but
shall not have any duty, to obtain such information.

(b) In connection with environmental issues, retain only those third-party
independent contractors who are properly licensed by each applicable
Governmental Authority and any other applicable licensing authority to provide
the services they are retained to perform.

 

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(c) Comply in all material respects with all applicable Environmental Laws ;
provided, that, upon learning of any actual or suspected noncompliance, Borrower
shall promptly undertake all reasonable efforts to achieve full compliance.

(d) Have on record a program to promote compliance with, and to minimize
prudently any liabilities or potential liabilities under, any Environmental Law
to the extent required by any of the permits and in accordance with, but not
limited to, the best management practices announced by the Salt Institute from
time to time (the “Environmental Program”). Upon the Agent’s request, a
reasonably detailed written description of the Environmental Program shall be
provided to the Agent. The Agent shall have the right, but shall not have any
duty, to obtain any such description at any time.

(e) Defend, indemnify and hold harmless the Agent, the Collateral Agent and the
Lenders, and their respective employees, agents, officers and directors (each an
“Indemnitee” and collectively, the “Indemnitees”), from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to the violation of, noncompliance with or
liability under any Environmental Laws with respect to the operations of the
Borrower, or to the Project, including, without limitation, reasonable
attorney’s and consultant’s fees, investigation and laboratory fees,
environmental audits, response costs, court costs and litigation expenses,
except to the extent that any of the foregoing arise out of the gross negligence
or willful misconduct of the party seeking indemnification therefor. Without
limiting the foregoing, and to the extent permitted by applicable law, the
Borrower agrees not to assert, and hereby waives, all rights for contribution or
any other rights of recovery with respect to all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or
nature arising out of, or in any way relating to the operations of the Borrower,
or the Project, under or related to Environmental Laws, that it now or hereafter
may have by statute or otherwise against any Indemnitee. This indemnity shall
continue in full force and effect regardless of the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.

(f) (i) Prior to acquiring any fee interest in real property other than mineral
rights, as reported in accordance with Section 8.18, obtain a written report by
a reputable independent environmental consulting firm reasonably acceptable to
the Agent (the “Environmental Consultant”) of the Environmental Consultant’s
assessment of the presence or potential presence of significant levels of any
Materials of Environmental Concern on, under, in, or about the property, or of
other conditions that could give rise to potentially significant liability under
or violations of Environmental Law relating to such acquisition; and (ii) upon
the request of the Agent or Collateral Agent, provide the Agent or Collateral
Agent with a copy of such report certified to the Agent on behalf of the
Lenders. The Agent or Collateral Agent shall have the right, but shall not have
any duty, to obtain any such report at any time.

 

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(g) Permit the Agent or Collateral Agent to have a supplemental Environmental
Assessment of the Facility conducted periodically at the Borrower’s expense;
provided, that such supplemental Environmental Assessment is not conducted more
than once every other year, unless, following review of the Borrower’s
environmental monitoring reports and any supplemental Environmental Assessment,
the Agent or Collateral Agent has a reasonable basis to believe that a problem
has been identified and that appropriate measures are not being taken to correct
such problem. The Agent or Collateral Agent shall have the right, but shall not
have any duty, to have such supplemental Environmental Assessment conducted.

8.16 Use of Proceeds. Use the proceeds of the Loans for the purposes set forth
in Sections 2.6 and 4.4.

8.17 Syndication Efforts. The Borrower and its Subsidiaries will use their best
efforts to cooperate with the Arranger who has syndicated the credit facilities
pursuant to this Agreement, including, but not limited to, participation of the
Borrower’s management in meetings and telephonic conferences with participants
as the Arranger shall reasonably request. In addition, the Borrower and its
Subsidiaries will use their best efforts to cooperate with the Arranger in
future syndication efforts with respect to the possible extension of the Total
Revolving Credit Commitment as described in Section 2.8.

8.18 Real Estate Acquisitions. Within thirty (30) days after the end of any
Fiscal Quarter in which the Borrower has acquired any interests in real property
having an aggregate purchase price or fair market value in excess of $500,000,
or when aggregated with previous calendar quarters now exceeds $500,000, the
Borrower shall advise the Agent as to such additional interests in real property
it has acquired, and shall execute, acknowledge and deliver such other
mortgages, instruments and agreements reasonably necessary or desirable by the
Agent and/or the Collateral Agent to include such new acquired real property
interest as part of the Collateral. Upon the execution of mortgages, instruments
and agreements as contemplated in the preceding sentence, the Borrower shall
then begin to aggregate all thereafter acquired interests in real property until
such time as the aggregate purchase price or fair market value of such
thereafter acquired interests exceeds $500,000, at which time it will advise the
Agent of such thereafter acquired interests and again execute, acknowledge and
deliver such other mortgages, instruments and agreements reasonably necessary or
desirable by the Agent and/or the Collateral Agent.

8.19 Operating Accounts. The Borrower will make all reasonable efforts to
maintain all of its operating accounts with the Agent and Agent will make all
reasonable efforts to offer Borrower the most efficient and cost effective cash
management configuration available. To the extent that any operating accounts
are not maintained with the Agent, such operating accounts must be maintained
with one of the other Lenders. Moreover, prior to the transfer of any operating
account from the Agent to one of the other Lenders, the Borrower, Agent and
applicable Lender shall execute a control agreement, in form and substance
reasonably acceptable to the Collateral Agent in its sole discretion, for the
purpose of perfecting a security interest in the applicable operating account.
Moreover, in the event that M&T ceases to operate as both the Agent and the
Collateral Agent under the terms of this Agreement, all control

 

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agreements deemed necessary by the Agent and/or the Collateral Agent will be
executed prior to any such change.

8.20 Future Subsidiaries. Within ten (10) days after the formation or
acquisition of any new direct or indirect Subsidiary other than the Immaterial
Subsidiaries by the Borrower or any of its Subsidiaries, the Borrower shall:

(a) cause each such Domestic Subsidiary, to duly execute and deliver to the
Collateral Agent a guaranty in form and substance satisfactory to the Collateral
Agent, guaranteeing repayment of the Credit Obligations;

(b) take and cause each Domestic Subsidiary to duly execute and deliver, and
cause each such Subsidiary and each direct and indirect parent of such
Subsidiary (if it has not already done so) to duly execute and deliver, to the
Collateral Agent pledges, assignments, security agreement supplements and other
security agreements, as specified by and in form and substance satisfactory to
the Collateral Agent, securing payment of all of the Credit Obligations, such
Domestic Subsidiary or such parent, as the case may be, and creating Liens on
all such personal property;

(c) take, and cause such Subsidiary or such parent to take, whatever action
(including, without limitation, the filing of Uniform Commercial Code financing
statements) may be necessary or advisable in the opinion of the Collateral Agent
to vest in the Collateral Agent (or in any representative of the Collateral
Agent designated by it) valid and subsisting Liens on and security interests in
the personal property purported to be subject to the pledges, assignments,
security agreement supplements and security agreements delivered pursuant to
this Section 8.20 enforceable against all third parties in accordance with their
terms;

(d) pledge to Collateral Agent, or cause the Subsidiary holding such new Foreign
Subsidiary’s Capital Stock to pledge to the Collateral Agent, 66 2/3% of the
outstanding Capital Stock of each such new Foreign Subsidiary along with undated
stock powers for such certificates, executed in blank (or if any such shares of
capital stock are uncertificated, confirmation and evidence reasonably
satisfactory to Collateral Agent that the security interest in such
uncertificated securities has been transferred to and perfected by the
Collateral Agent), for the benefit of the Lenders, in accordance with the
applicable Sections under Articles 8 and 9 of the UCC or any other Applicable
Laws.

(e) deliver to the Collateral Agent, upon the request of the Collateral Agent, a
signed copy of a favorable opinion, addressed to the Collateral Agent and the
Lenders, of counsel for the Borrower acceptable to the Collateral Agent: (i) as
to the matters contained in clauses (a) through (d) above, as to such
guarantees, pledges, assignments, security agreement supplements and security
agreements being legal, valid and binding obligations of the Subsidiary which is
a party thereto enforceable in accordance with their terms, (ii) as to the
matters contained in clause (c) above, as to such recordings, filings, and other
actions being sufficient to create valid perfected Liens on such properties, and
(iii) as to such other matters as the Agent or the Collateral Agent may
reasonably request;

 

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(f) at any time and from time to time, promptly execute and deliver any and all
further instruments and documents and take all such other action as the Agent or
the Collateral Agent may deem necessary or desirable in obtaining the full
benefits of, or in perfecting and preserving the Liens of, such guarantees,
pledges, assignments, security agreement supplements and security agreements;
and

(g) each of the Subsidiaries shall make all representations and warranties under
Section 6 as deemed appropriate by the Agent.

SECTION 9

NEGATIVE COVENANTS

The Borrower agrees that, so long as the Commitments remain in effect, any Note
or Letter of Credit remains outstanding and unpaid or any Credit Obligations are
owing to the Agent, the Collateral Agent or any Lender hereunder or under the
Senior Security Documents, the Borrower and its Subsidiaries (on a consolidated
basis) shall not:

9.1 Leverage Ratio. Have as of the last day of any Fiscal Quarter a Leverage
Ratio of more than 3.00 to 1.00.

9.2 Fixed Charge Coverage Ratio. Have as of the last day of any Fiscal Quarter a
Fixed Charge Coverage Ratio of less than 1.10 to 1.00.

9.3 Investments. Make any Investments other than Permitted Investments.

9.4 Merger, Sale of Assets, Purchases, Etc.

(a) Except as provided in Section 9.4(b), merge into or consolidate with any
other Person, change its form of organization or its business, or liquidate or
dissolve itself (or suffer any liquidation or dissolution), or sell, lease,
transfer or otherwise dispose of any assets other than (i) sales of salt in the
ordinary course of business and (ii) sales of those assets disposed of in the
ordinary course of business and not in excess of $5,000,000 in the aggregate in
any year.

(b) Any Subsidiary of the Borrower may be merged or consolidated with or into
the Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or with or into any wholly-owned Subsidiary that is a Guarantor
(provided that the wholly-owned Subsidiary that is a Guarantor shall be the
continuing or surviving corporation).

9.5 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
except Permitted Indebtedness.

9.6 Liens. Create or suffer to exist any Lien on any of its properties or assets
securing any Indebtedness or other obligation of the Borrower or any of its
Subsidiaries other than Permitted Liens. In addition, the Borrower and it
Subsidiaries shall at all times protect and defend its interests in and the
Collateral Agent’s Liens on the Collateral and the Borrower

 

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will pay or cause to be paid promptly any valid, final and non-appealable
judgment enforcing any Lien (other than Permitted Liens), cause the Lien (other
than Permitted Liens) relating thereto to be removed and otherwise cause such
Lien (other than Permitted Liens) to be satisfied of record.

9.7 Restricted Payments. Declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payments except that so long as no Default or Event
of Default exists and is continuing and no Default or Event of Default would be
created as a result of the following, Borrower may declare and pay:

(a) Permitted Extraordinary Distributions, provided they are paid within thirty
(30) Business Days after: (i) in the case of an additional issuance of Senior
Second Secured Notes issued or resissued on or after the Closing Date, receipt
of the net proceeds of any Permitted Issuance of Senior Second Secured Notes, or
(ii) in the case of Permitted Willis Distributions, receipt of the proceeds
funding such distribution; and

(b) During the period from September 30th of each year until April 30th of the
following year, distributions to its members to the extent they are Projected
Distributions at the time of payment, provided that such distributions may only
be paid if the Borrower would have been in compliance with the covenants
contained in Sections 9.1 through 9.11 as of the last day of the Fiscal Quarter
immediately preceding the date on which the distributions are actually paid,
provided, however, if the Borrower is, after the last day of the Fiscal Quarter,
in compliance with any of the covenants contained in Sections 9.3 through 9.11
and continues to be in compliance with covenants on the proposed date of
payments then the applicable Restricted Payments will be permitted under the
terms of this Section 9.7(b),

provided, in case of any distribution proposed under this Section 9.7, at least
five (5) Business Days prior to making the distribution, Borrower shall deliver
to Agent a certificate executed by a Responsible Officer stating that Borrower
intends to make a distribution, whether the distribution is permitted under this
Section 9.7, the amount thereof, the date on which it will be declared and paid,
that no Default or Event of Default exists and none will be created thereby and
otherwise be in form acceptable to the Agent.

9.8 Capital Expenditures. Directly or indirectly, make or commit to make any
Capital Expenditure, net (without duplication) of value trade-ins of equipment
and any insurance proceeds resulting from the damage of capital assets received,
of more than $7,500,000 in any Fiscal Year.

9.9 Nature of Business. Engage in any business other than the purchase, mining,
bagging, brokerage and sale of salt and related and ancillary business
activities.

9.10 Amendment of Contracts, Etc. Without the prior written consent of the
Required Lenders, agree to or permit (a) the amendment, supplement,
modification, cancellation, suspension or termination of any Material Contract
(except upon the expiration of the stated term thererof), or (b) the assignment
of the rights or obligations of any party to any Material Contract, as the case
may be, except (i) as contemplated by this Agreement or the

 

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Senior Security Documents or (ii) as permitted without the consent of the
Borrower by the terms of such Material Contract.

9.11 Leases. Enter into, or be or become liable under, any non-cancelable
agreement (defined as any leases other than those leases which are cancelable
without penalty) for the lease or use for more than twelve (12) months of any
real property or of any personal property except for the Land Lease Agreement
and other leases of real or personal property which are not Capital Leases, and
only to the extent that the aggregate annual rental under all leases described
above, shall not exceed $7,500,000 in any Fiscal Year of the Borrower through
and until the Fiscal Year ending September 30, 2009, and $10,000,000 in any
Fiscal Year of the Borrower thereafter.

9.12 Change of Office. Change the location of its chief executive office or
principal place of business or the office where it keeps its records concerning
the Project and all contracts relating thereto from that existing on the date of
this Agreement and specified in Section 6.17, unless the Borrower shall have
given the Agent and the Collateral Agent at least thirty (30) days prior written
notice thereof and all action requested by the Agent and the Collateral Agent
necessary or advisable in the Agent’s and the Collateral Agent’s opinion to
protect and perfect the Liens and security interests with respect to the right,
title, estate and interest of the Borrower in and to the Collateral created by
the Senior Security Documents to which the Borrower or any Subsidiary is a party
shall have been taken.

9.13 Change of Name. Change its name except on sixty (60) days prior written
notice to the Agent and the Collateral Agent.

9.14 Compliance with ERISA. (a) Terminate any Single Employer Plan so as to
result in any material liability to PBGC, (b) engage in or permit any Affiliate
to engage in any “prohibited transaction” (as defined in Section 406 of ERISA or
Section 4975 of the Code) involving any Plan which would subject the Borrower to
any material tax, penalty or other liability, (c) incur or suffer to exist any
material “accumulated funding deficiency” (as defined in Section 302 of ERISA),
whether or not waived, involving any Plan subject to Section 412 of the Code or
Part 3 of Title I(b) of ERISA, (d) allow or permit to exist any event (including
a Reportable Event) or condition which represents a material risk of incurring a
material liability to PBGC, or (e) permit the present value of all benefits
vested under all Single Employer Plans subject to Title IV of ERISA, based on
those assumptions used to fund the Plans, as of any valuation date with respect
to such Plans to exceed the value of the assets of the Plans allocable to such
benefits.

9.15 Transactions with Affiliates and Others. Directly or indirectly, purchase,
acquire, exchange or lease any property from, or sell, transfer or lease any
property to, or borrow any money from, enter into loans with, enter into any
management or similar fee arrangement with, or engage in any business operation
with, any Affiliate of the Borrower or any Subsidiary or any officer, director,
employee of the Borrower or any Subsidiary of the Borrower except for
(a) transactions in the ordinary course of business and upon fair and reasonable
terms no less favorable than the Borrower could obtain, or could become entitled
to, in an arm’s length transaction with a Person which is not an Affiliate of
the Borrower, (b)

 

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loans to employees in connection with employee relocations or long-term
incentive plans for operating employees, and (c) payments made in the ordinary
course of business and upon fair and reasonable terms to managers serving on the
executive committee; provided, that no payments shall be made to any of the
Borrower’s Affiliates so long as an Event of Default has occurred and is
continuing except for payments made to the Borrower’s counsel, Cohen & Company
and Joseph Bucci (in his capacity as manager of the Facility only) in connection
with transactions in the ordinary course of business and upon fair and
reasonable terms no less favorable than the Borrower could obtain, or could
become entitled to, in an arm’s length transaction with a Person which is not an
Affiliate of the Borrower.

9.16 Alteration or Abandonment of the Project. (a) Alter, remodel, add to,
reconstruct, improve or demolish any part of the Project or any other Collateral
covered by the Senior Security Documents in any manner that would reasonably be
expected to materially impair the value of the security provided by the Credit
Documents, or (b) abandon the Project.

9.17 Optional Payments and Modifications of Senior Second Secured Notes. Except
for regularly scheduled interest payments and any additional interest to the
extent required under the registration rights agreement delivered in connection
with the Indenture: (a) make or offer to make any optional, mandatory or
voluntary payment, prepayment, repurchase or redemption of or otherwise
optionally or voluntarily defease or segregate funds with respect to the Senior
Second Secured Notes (other than a Permitted Investment), (b) amend, modify,
waive or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Senior Second Secured Notes
or the Senior Second Secured Notes Indenture (other than any such amendment,
modification, waiver or other change that (i) would (A) permit the issuance of
additional Senior Second Secured Notes, or (B) extend the maturity or reduce the
amount of any payment of principal thereof or reduce the rate or extend any date
for payment of interest thereon and (ii) does not involve the payment of a
consent or other fee unless it is paid with a portion of the proceeds of or a
discount against the Senior Second Secured Notes).

9.18 Materials of Environmental Concern. Cause or permit the location,
production, treatment, storage, transportation, incorporation, discharge,
emission, released deposit or disposal of any Materials of Environmental Concern
in, upon, under, over or from any, part of the Project except in compliance in
all material respects with all applicable Environmental Laws; provided, that,
upon learning of any actual or suspected noncompliance, Borrower shall promptly
undertake all reasonable efforts to achieve full compliance.

9.19 Fiscal Year. Change the Fiscal Year of the Borrower or any of its
Subsidiaries.

9.20 New Members. The Borrower shall not admit any new members unless they
become a party to the Limited Liabiltiy Company Pledge Agreement and take the
actions necessary to grant to the Agent a first priority security interest in
his membership interest and other collateral described therein and if the member
will become a NOMI Holder, such Person shall have executed a NOMIPS
Subordination Agreement in favor of the Collateral Agent.

 

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9.21 Salt Depot Agreements . Neither the Borrower nor its Subsidiaries shall
enter into any new Salt Depot Agreement unless it is in form and substance
reasonably satisfactory to the Agent or consistent with the historical practices
of the Borrower, including but not limited to the inclusion of express
provisions for the rights of Lenders similar to the provisions currently in use
under the majority of the Salt Depot Agreements in effect as of the date of this
Agreement, and provide for the assignment thereof to Agent and Borrower does
assign such agreement and all of its rights thereunder to Agent.

9.22 Settlement Agreement . Borrower shall not amend, modify or supplement the
Settlement Agreement or waive any conditions thereunder or release any rights
provided for therein without the prior written consent of the Required Lenders
or Lenders (as appropriate).

SECTION 10

EVENTS OF DEFAULT

10.1 Events of Default.

(a) If any of the circumstances listed below in Section 10(b) shall occur and be
continuing, the Agent may declare an Event of Default and may (and upon the
written request of the Required Lenders, shall), do any one or more of the
following: (i) by notice to the Borrower, declare the Commitments to be
terminated, whereupon the same shall forthwith terminate; and/or (ii) declare
the entire unpaid principal amount of the Loans and the then outstanding Notes,
all interest accrued and unpaid thereon, and all other Credit Obligations
(including, without limitation, upon notice from the Letters of Credit Issuer,
obligations in respect of the Standby L/Cs, although contingent and unmatured)
to be forthwith due and payable, whereupon such amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or notice of
any kind, all of which are hereby expressly waived by the Borrower; (iii) demand
that the Borrower discharge any or all the obligations supported by the Standby
L/Cs by paying or prepaying any amount due or to become due by the Borrower to
the beneficiaries of such Standby L/Cs, together with the payment of all
applicable Standby L/C Fees in the appropriate amount for the respective
remaining terms of the applicable Standby L/Cs until their respective stated
expirations, together with all other fees the Letters of Credit Issuer deems
appropriate; (iv) foreclose on any or all of the Collateral; and/or (v) proceed
to enforce all other remedies available to it under applicable law.
Notwithstanding the foregoing, if an Event of Default referred to in paragraphs
(b)(viii) and (ix) below shall occur, automatically and without notice the
actions described in clauses (i) and (ii) of this Section 10.1(a) shall be
deemed to have occurred. All payments under this Section 10 on account of the
Standby L/Cs shall be made by the Borrower directly to a cash collateral account
established by the Agent for such purpose for application to: (1) the Borrower’s
Standby L/C Reimbursement Obligations as drafts are presented under the Standby
L/Cs, and (2) the payment of all applicable Standby L/C Fees in the appropriate
amount for the respective remaining terms of the applicable Standby L/Cs until
their respective stated expirations, together with all other fees the Letters of
Credit Issuer deems appropriate, with the balance, if any, to be applied to the
Borrower’s obligations under this Agreement, the Notes and the other Credit
Documents as the Agent shall determine with the approval of the Required
Lenders. The Collateral Agent shall be authorized to release from the cash
collateral account described

 

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in the preceding sentence, for its account and the Standby L/C Participants all
other fees (including but not limited to any Standby L/C Fees) the Letters of
Credit Issuer deems appropriate.

(b) The following shall constitute Events of Defaults hereunder:

(i) Any principal on any Credit Obligations shall not be paid when due and
payable; or any interest on any Credit Obligations or any fee or any other
amount payable to Agent, the Collateral Agent or any Lender hereunder or under
any other Credit Documents shall not be paid when due; or

(ii) Any representation or warranty made by the Borrower or any of its
Subsidiaries in any Credit Document to which the Borrower or any of its
Subsidiaries is a party, or any representation, warranty or statement in any
certificate, financial statement or other document furnished to the Agent by or
on behalf of the Borrower or any of its Subsidiaries, shall prove to have been
false or misleading in any material respect as of the time made or deemed made
unless the circumstances that made any such representation false or misleading
at the time when made shall no longer be continuing; or

(iii) (A) The Borrower or any of its Subsidiaries shall fail to perform or
observe any of its covenants contained in Sections 8.1, 8.2, 8.3, 8.6, 9.10,
9.12 and 9.13 (and with respect to the corporate existence of any Subsidiary
Section 8.20), and such failure shall continue unremedied or unwaived for any
period of thirty (30) days, (B) the Borrower or any of its Subsidiaries shall
fail to perform any of its covenants contained in Sections 8.5, 8.7, 8.8
(excluding the Borrowing Base Certificate described in 8.8(a)), 8.10 and 8.14,
and such failure shall continue unremedied or unwaived for any period of ten
(10) days, (C) Borrower shall fail to perform or observe any other of its
covenants contained in this Agreement, (D) the Borrower, IDA, any member of the
Borrower holding ten percent (10%) of the Capital Stock of the Borrower who is a
party to the Limited Liability Company Agreement or any NOMI Holder holding at
least ten percent (10%) of the NOMIPS who is a party to the NOMIPS Subordination
Agreement or the other Credit Documents (other than the covenants and
obligations referred to in paragraph (A) or above of this clause) shall fail to
perform or observe any covenants contained in the applicable Credit Documents to
which they are a party, and such failure shall continue unremedied or unwaived
until the end of the applicable grace period), or (E) an event of default
(however defined) shall occur under any Credit Document; or

(iv) The Borrower shall fail to perform or observe any of its covenants or
obligations (other than the covenants and obligations referred to in paragraphs
(i), (ii) and (iii) above) contained in the Land Lease Agreement and such
failure shall continue unremedied or unwaived until the earlier of (A) the end
of the applicable grace period, if any, contained in such agreement and
(B) thirty (30) days after notice thereof by the Agent to the Borrower;

(v) Except as provided in Section 10(b)(vii) below, the Borrower shall
(A) default in any payment of principal of or interest on any Indebtedness
(other than the

 

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Notes), the principal amount of which exceeds $1,500,000 (other than payments in
respect of operating leases relating to railcars, the aggregate amount of which
payments do not exceed $2,500,000), for a period in excess of the lesser of
twenty (20) days or the period of grace, if any, provided in the instrument and
agreement under which such Indebtedness was created; or (B) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness to become due
prior to its stated maturity or to realize upon any collateral given as security
therefor;

(vi) Any Change of Control or a “Change of Control” as such term is
alternatively defined in the Senior Second Secured Note Documents shall occur;

(vii) a default or event of default (however defined) shall occur under any of
the Senior Second Secured Note Documents or an acceleration under the Senior
Second Secured Notes or pursuant to the terms of the Senior Second Secured Note
Documents occurs (and with respect to any default or event of default, such
default or event of default shall not have been cured or waived within any
applicable grace or cure period);

(viii) Borrower: (A) generally does not pay, or shall be unable to pay, or shall
admit in writing its inability to pay its debts as such debts become due; or
(B) shall make an assignment for the benefit of Creditors, or petition or apply
to any tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (C) shall commence any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,
or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect;

(ix) A proceeding or case shall be commenced without the application or consent
of Borrower or any Subsidiary in any court of competent jurisdiction, seeking
(A) its liquidation, reorganization, dissolution, winding-up, or the composition
or readjustment of debts, (B) the appointment of a trustee, receiver, custodian,
liquidator or the like of the Borrower or any Subsidiary under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts or (C) a warrant of attachment, execution or similar process
against all or a substantial part of the assets of the Borrower or any of its
Subsidiaries, and such proceeding or case shall continue undismissed, or any
order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of sixty (60) or more
days, or any order for relief against the Borrower or any of its Subsidiaries
shall be entered in an involuntary case under the Bankruptcy Code;

(x) A judgment or judgments for the payment of money in excess of $1,500,000
shall be rendered against the Borrower or any of its Subsidiaries and such
judgment or judgments shall remain in effect and unstayed and unbonded and
unsatisfied for a period of thirty (30) or more consecutive days;

 

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(xi) (A) Any provision of any Material Contract shall at any time for any reason
cease to be valid and binding or in full force and effect or Borrower or any of
its Subsidiaries is in material breach thereof or any party thereto shall assert
either of the foregoing circumstances exist in writing and the effect thereof
shall, in the reasonable judgment of the Agent, be a Material Adverse Effect; or
(B) any provision of this Agreement, any other Credit Document or any Material
Contract shall be declared to be null and void or the validity or enforceability
thereof shall be contested by any party thereto; or

(xii) Any Senior Security Document at any time for any reason shall cease to be
in full force and effect in all material respects, or ceases to give the
Collateral Agent the Liens, rights, powers and privileges purported to be
created thereby, superior to and prior to the rights of all third Persons and
subject to no other Liens except as expressly permitted by the applicable Senior
Security Document or the Borrower, any Subsidiary, or any of the Permitted
Holders contest in any manner the effectiveness, validity, binding nature or
enforceability of any Senior Security Document;

(xiii) (A) Any Person shall engage in any “prohibited transaction” (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (B) any
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan, or (C) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate any
Single Employer Plan, which Reportable Event or institution of proceedings is,
in the reasonable opinion of the Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, or (D) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, or (E) the Borrower shall, or
is, in the reasonable opinion of the Agent, likely to incur any liability in
connection with a withdrawal from, or the insolvency or reorganization of, a
Multiemployer Plan, or (F) any other event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (A) through (E) above, such
event or condition, together with all other such events or conditions, if any,
could subject the Borrower to any tax, penalty or other liabilities in the
aggregate material in relation to the business, operations, property or
financial or other condition of the Borrower;

(xiv) An Event of Loss shall have occurred; or

(xv) The DEC Permits or any other Governmental Approval that materially affects
the Project shall be revoked, terminated, withdrawn, suspended, modified or
withheld or shall cease to be in full force and effect, and such revocation,
termination, withdrawal, suspension, modification, withholding or cessation.

10.2 Remedies. If any Event of Default shall have occurred and be continuing,
the Agent and/or the Collateral Agent, in addition to any other remedies which
it may have under this Agreement or any Senior Security Document or by statute
or by rule of law, may exercise the rights, powers and privileges provided in
this Section and all other remedies available to the Agent, the Collateral Agent
or any Lender under this Agreement or any Credit Document or by statute or by
rule of law at any time and from time to time (subject to the terms of any
intercreditor agreement) whether or not the Credit Obligations shall be due and
payable, and

 

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whether or not the Agent shall have instituted any foreclosure or other action
for the enforcement of any of the Credit Documents. For the purpose of carrying
out the provisions and exercising the rights, powers and privileges granted by
this Section, the Borrower hereby irrevocably constitutes and appoints the Agent
and the Collateral Agent its true and lawful attorney-in-fact to execute,
acknowledge and deliver any instruments and to do and to perform any acts such
as are referred to in this Section in the name and on behalf of the Borrower.
This power of attorney is a power coupled with an interest and cannot be
revoked.

In the event that the Agent or the Collateral Agent shall have foreclosed on or
sold any or all of the Collateral, the Agent or the Collateral Agent shall apply
the proceeds of any such foreclosure or sale as follows:

first, to the payment in full of the expenses of such sale, disposition or
realization, including all expenses, liabilities and advances incurred or made
by the Agent or the Collateral Agent in connection therewith, including
reasonable attorneys’ fees;

second, to the payment of the Credit Obligations owing to the Lenders, under the
Credit Documents, on a pro-rata basis in accordance with the terms of this
Agreement and in accordance with the Total Term Loan Commitment and Total
Revolving Credit Commitment; and

third, to the Trustee for the benefit of the holders of the Senior Second
Secured Notes to the extent and as provided in the Intercreditor Agreement; and

fourth, to or for the account of the Borrower.

SECTION 11

THE AGENT THE

COLLATERAL AGENT AND RELATIONS AMONG LENDERS, ETC.

11.1 Appointment of Agent and Collateral Agent, Powers and Immunities. Each
Lender hereby irrevocably appoints and authorizes the Agent, and each Lender
hereby irrevocably appoints and authorizes the Collateral Agent, to act as its
agent hereunder and under the other Credit Documents with such powers as are
expressly delegated to the Agent, and the Collateral Agent, as the case may be,
by the terms of this Agreement and the other Credit Documents, together with
such other powers as are reasonably incidental thereto. Each of the Agent and
the Collateral Agent shall not have any duties or responsibilities except those
expressly set forth in this Agreement or in any other Credit Document, or be a
trustee for any Lender. Notwithstanding anything to the contrary contained
herein, the Agent and the Collateral Agent shall not be required to take any
action which is contrary to this Agreement or any other Credit Document or
applicable law. None of the Agent, the Collateral Agent, any Lender or any of
their respective Affiliates shall be responsible to any other Lender for any
recitals, statements, representations or warranties made by the Borrower
contained in this Agreement or any other Credit Document or in any certificate
or other document referred to or provided for in, or received by any Lender
under, this Agreement or any other Credit Document, for the value, validity,
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this Agreement, the Notes, the other Credit Documents or any other document
referred to or provided for herein or therein or for any failure by the Borrower
or any Subsidiary to perform its obligations hereunder or thereunder. Each of
the Agent and the Collateral Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct any such agents or
attorneys-in-fact selected by it with reasonable care. None of the Agent, the
Collateral Agent or any of their respective directors, officers, employees or
agents shall be responsible for any action taken or omitted to be taken by it or
them hereunder or under any other Credit Document or in connection herewith or
therewith, except for or their own gross negligence or willful misconduct.

11.2 Reliance by Agent and the Collateral Agent. Each of the Agent and the
Collateral Agent shall be entitled to rely upon any certificate, notice or other
document (including any cable, telegram, telecopy or telex) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent and the
Collateral Agent. As to any matters not expressly provided for by this
Agreement, the Agent and the Collateral Agent shall not be required to take any
action or exercise any discretion, but the Agent and the Collateral Agent shall
be required to act or to refrain from acting upon instructions of the Required
Lenders, in which case the Agent and Collateral Agent, shall in all cases be
fully protected in acting, or in refraining from acting, hereunder or under any
other Credit Document in accordance with such instructions of the Required
Lenders and any action taken or failure to act pursuant thereto shall be binding
on all of the Lenders.

11.3 Defaults. None of the Agent or the Collateral Agent shall be deemed to have
knowledge or notice of the occurrence of a Default or an Event of Default unless
the Agent or the Collateral Agent, as the case may be, has received notice from
a Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “Notice of Default.” In the
event that the Agent or the Collateral Agent receives such a notice of the
occurrence of a Default or an Event of Default the Agent, the Collateral Agent
shall give notice thereof to the Lenders. The Agent or the Collateral Agent, as
the case may be, shall take such action with respect to such Default or Event of
Default as (which, subject to Section 11.4) shall be reasonably directed by the
Required Lenders; provided, that, unless and until the Agent or the Collateral
Agent, as the case may be, shall have received such directions, the Agent or the
Collateral Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders, with
respect to either the Agent or the Collateral Agent.

11.4 Rights of Agent and the Collateral Agent as Lenders. With respect to their
commitments to make Loans, the Agent and the Collateral Agent shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though they were not acting as the Agent or Collateral Agent, respectively,
and the term “Lender” or “Lenders” include or includes, unless the context
otherwise indicates, each of the Agent and the Collateral Agent in their
individual capacity. The Agent and the Collateral Agent and their Affiliates may
(without having to account therefore to any Lender) extend credit (on a secured
or

 

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unsecured basis) to and generally engage in any kind of lending, trust or other
business with the Borrower or any of its Affiliates, if it were not acting as
the Agent or the Collateral Agent, respectively.

11.5 Indemnification. Without limiting the obligations of the Borrower under
Sections 11.5 and 12.6, the Lenders agree to indemnify the Agent and the
Collateral Agent, ratably in accordance with the aggregate principal amount of
the Credit Obligations and remaining Commitments held by such Lender or, if no
Loans are then outstanding, the respective amounts of their Commitments, for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements or any kind or nature
whatsoever which may at any time (including, without limitation, at any time
following the payment of principal of and/or interest on the Loans) be imposed
on, incurred by or asserted against the Agent and the Collateral Agent in any
way relating to or arising out of this Agreement or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (including the costs and expenses which the Borrower is obligated to pay
under Sections 11.5 and 12.6) or the enforcement of any of the terms hereof or
thereof or of any such other documents to the extent the Agent and, the
Collateral Agent are not reimbursed therefore by the Borrower, provided, that no
Lender shall be liable for any of the foregoing to the extent they arise from
the Agent’s or the Collateral Agent’s fraud, gross negligence or willful
misconduct. Each of the Agent and the Collateral Agent shall be fully justified
in refusing to take or to continue to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

11.6 Non-Reliance on Agent, the Collateral Agent and Other Lenders. Each Lender
represents that it has, independently and without reliance on the Agent, the
Collateral Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of the
financial condition and affairs of the Borrower and the IDA and its own decision
to enter into this Agreement and agrees that it will, independently and without
reliance upon the Agent, the Collateral Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own appraisals and decisions in taking or not taking action
under this Agreement. Neither the Agent, the Collateral Agent nor any Lender
shall be required to keep informed as to the performance or observance by the
Borrower under this Agreement or any other document referred to or provided for
herein or to make inquiry of, or to inspect the properties or books of, the
Borrower or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished hereunder to the
Lenders by the Agent or the Collateral Agent, as the case may be, neither the
Agent, the Collateral Agent, nor any Lender shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the Borrower, or any Affiliate of the Borrower, which may come into
the possession of the Agent, the Collateral Agent or such Lender or any of its
or their Affiliates.

11.7 Resignation or Removal of Agent and Collateral Agent. Subject to the
appointment and acceptance of a successor Agent or Collateral Agent as provided
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of the Agent or Collateral Agent may resign at any time by giving notice thereof
to the Lenders and the Borrower, and the Agent or the Collateral Agent may be
removed at any time without cause by the Required Lenders or with cause for
gross negligence and willful misconduct by the Agent or Collateral Agent. Upon
any such resignation or removal, the Required Lenders shall have the right to
appoint a successor Agent or Collateral Agent, as the case may be. If no
successor Agent or Collateral Agent, as the case may be, shall have been
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent’s or Collateral Agent’s giving
of notice of resignation or the Lenders’ removal of the retiring Agent or
Collateral Agent, then the retiring Agent or Collateral Agent may, on behalf of
the Lenders, appoint a successor Agent or Collateral Agent, which shall be:
(a) a bank with an office (or having an Affiliate with an office) in New York
having a combined capital and surplus of not less than $250,000,000 and (b) a
Permitted Assignee. Upon the acceptance of any appointment as Agent or
Collateral Agent hereunder by a successor Agent or Collateral Agent, such
successor Agent or Collateral Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent or
Collateral Agent, and the retiring Agent or Collateral Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent’s or
Collateral Agent’s resignation or removal hereunder, the provisions of this
Section 11 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent or Collateral
Agent. Notwithstanding anything to the contrary contained herein, prior to the
appointment of any successor to the Collateral Agent as permitted pursuant to
the terms of this Section 11.7, the Borrower, the Agent, the Collateral Agent
and all necessary Lenders will execute any and all agreements deemed necessary
by the Agent and/or the Collateral Agent to maintain a perfected security
interest in the Collateral, including but not limited to any control agreements
as contemplated under Section 8.19 above.

11.8 Authorization. The Agent and the Collateral Agent are hereby authorized by
the Lenders to execute, deliver and perform each of the Credit Documents to
which the Agent, and the Collateral Agent (whether as “Agent”, “Grantee” or
“Mortgagee”) are or are intended to be a party in their capacities as Agent and
Collateral Agent for the ratable benefit of the Lenders provided herein and each
Lender agrees to be bound by all of the agreements of the Agent and the
Collateral Agent contained in the Credit Documents.

11.9 Benefit of Agreement. Nothing in this Section 11, expressed or implied,
shall be construed to confer upon any Person (other than the Agent, the
Collateral Agent, the Lenders and the Letters of Credit Issuer and their
respective permitted successors and/or any Permitted Assignee) any legal or
equitable right, remedy or claim under or by reason of this Section 11.

SECTION 12

MISCELLANEOUS

12.1 Amendments and Waivers. No provision of this Agreement or of any other
Credit Document to which the Agent is a party may be amended, supplemented,
modified or waived, except in accordance with the terms of this Section 12.1.
With the written consent of the Required Lenders, the Borrower and the Agent
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amendments, supplements or modifications hereto for the purpose of adding any
provisions to this Agreement or the Notes or any other Credit Document to which
any Lender is a party or changing in any manner the rights of the Agent, the
Collateral Agent, the Lenders or of the Borrower hereunder or thereunder. The
Agent, with the consent of the Required Lenders, may also execute and deliver to
the Borrower a written instrument waiving, on such terms and conditions as the
Agent may (at the direction of the Required Lenders) specify in such instrument,
any of the requirements of this Agreement or the Notes or any other Credit
Document to which the any of the Lenders is a party, or any Default or Event of
Default and its consequences. Any such waiver and any such amendment, supplement
or modification shall be binding upon the Borrower, the Lenders and all future
holders of the Credit Documents; provided, however, that no such waiver and no
such amendment, supplement or modification shall: (a)(i) extend the maturity of
any Notes, (ii) reduce the rate of interest, (iii) reduce any Unused Commitment
Fee or any of the Letter of Credit Fees, (iv) extend the time of any payment due
in connection with or under the Total Term Loan Commitment and/or the Total
Revolving Credit Commitment, (v) reduce the principal amount of any Credit
Obligation (excluding any Standby L/C), or (vi) except as otherwise permitted
under Section 12.7 below, change the percentage, amount or terms of any Lender’s
Commitments, without (in each case) the consent of each Lender affected thereby,
or (b) amend, modify or waive any provision of this Section 12.l, or change in
any respect the definition of Required Lenders or any other definition to the
extent incorporated therein or release any Collateral or amend any provision
hereof which would result in borrowings or payments by the Borrower hereunder on
a basis other than pro rata among all the Lenders to the extent provided herein
or which limits the liability of any Lenders hereunder, in each case without the
written approval of all the Lenders. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the Lenders, the Agent, the Collateral Agent and
all future holders of the Credit Obligations. Notwithstanding the foregoing, to
the extent that any of the actions described in this Section 12.1 are already
expressly permitted under the terms of this Agreement, including but not limited
to the possible release of the Working Capital Assets under Section 2.8, the
provisions of this Section 12.1 will not be operative.

12.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing, by telecopier or, if
available, by telex and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or when deposited
in the mail, first class postage prepaid, or in the case of transmission by
telecopier, when confirmation of receipt is obtained, or in the case of telex
notice, when sent, answerback received, addressed as follows in the case of the
Borrower, the Agent and as set forth in Schedule 9 attached hereto in the case
of the Lenders, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:

 

 

The Borrower:

   American Rock Salt Company LLC  

(if by FedEx)

   3846 Retsof Road     

Retsof, New York 14389

     Attention: Ray Martel, CFO     

Telecopy: (585) 243-9626

 

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(if by mail)

   P.O. Box 190      Mount Morris, New York 14510      Attention: Ray Martel,
CFO  

with a copy to:

   Harris Beach PLLC      99 Garnsey Road      Pittsford, New York 14534     
Attention: Christopher Jagel, Esq.      Telecopy: (585) 419-8818  

The Agent:

   Manufacturers and Traders Trust Company      255 East Avenue      Rochester,
New York 14604      Attention: Jon Fogle, Vice President      Telecopy: (585)
325-5105  

with a copy to:

   Woods Oviatt Gilman, LLP      Two State Street      Rochester, NY 14601     
Attention: Gordon E. Forth, Esq.      Telecopy: (585) 454-3968

12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or the Lenders, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

12.4 Survival. All representations and warranties made in this Agreement and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the Notes.

12.5 Expenses and Taxes. Whether or not any Loan is made or any of the other
transactions contemplated by this Agreement are consummated, the Borrower shall:

(a) pay all reasonable expenses incurred by the Agent and the Arranger with
respect to the negotiation, preparation, execution and delivery of this
Agreement and the other Credit Documents, any and all transactions contemplated
hereby or thereby and the preparation of any document reasonably required
hereunder or thereunder, including (without limiting the generality of the
foregoing) all reasonable fees and expenses of counsel (with the reasonable fees
of counsel with respect to the negotiation, preparation, execution and delivery
of this Agreement and any other matters occurring on or before, or relating to
the consummation of the transactions described herein on, the Closing Date be
limited to $5,000 in the aggregate),

 

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all title and conveyancing charges, recording and filing fees and taxes,
mortgage taxes, intangible personal property taxes, escrow fees, revenue and tax
stamp expenses, insurance premiums (including title insurance premiums), court
costs, and surveyors’, appraisers’, architects’, engineers’, environmental
consultants’ and accountants’ reasonable fees and disbursements,

(b) pay all reasonable third party expenses incurred by the Agent, the
Collateral Agent and the Lenders in connection with the administration of this
Agreement and the other Credit Documents, including (without limiting the
generality of the foregoing) all related reasonable attorneys’ fees and expenses
and related costs, with respect to (i) any amendments, waivers or supplements to
any of the Credit Documents, or (ii) any request of the Borrower for a consent,
waiver or other action with respect to enforcement of their rights and remedies
hereunder,

(c) pay each of the Agent and the Collateral Agent for all its reasonable costs
and expenses incurred in connection with, and to pay, indemnify and hold the
Agent and the Collateral Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever arising out of
or in connection with, the enforcement or preservation of any rights under this
Agreement and the other Credit Documents and any such other documents, including
without limitation, reasonable fees and disbursements of counsel to the Agent
and the Collateral Agent incurred in connection with the foregoing and in
connection with advising the Agent with respect to its rights and
responsibilities under this Agreement, the other Credit Documents and the
documentation relating thereto, and

(d) pay, indemnify, and hold each Lender harmless from and against any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other similar taxes (and
not taxes imposed on or measured by net income, overall gross receipts or
capital of such Lender or any franchise tax imposed on such Lender), if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement and the other Credit Documents
and any such other documents; provided, that the Borrower shall have no
obligation hereunder with respect to indemnified liabilities of each of the
Agent, the Collateral Agent or any Lender or their Affiliates or any of their
respective officers and directors to the extent that such indemnified liability
resulted from the respective gross negligence or willful misconduct of the
Agent, the Collateral Agent or any Lender. The Agent may pay or deduct from the
Loan proceeds any of such expenses and any Loan proceeds so applied shall be
deemed advances under this Agreement and secured by the Senior Security
Documents. The agreements in this subsection shall survive repayment of the
Notes and all other amounts payable hereunder.

12.6 Indemnification. The Borrower agrees to pay, indemnify and hold each
Indemnitee harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including without
limitation at any time following the payment of the

 

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Notes) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or the other Credit Documents, or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (all of the foregoing, collectively,
the “Indemnified Liabilities”), provided, that the Borrower shall have no
obligation hereunder to any with respect to indemnified liabilities arising from
(a) the gross negligence or willful misconduct of any such Indemnitee, (b) legal
proceedings commenced against any such Indemnitee by any security holder or
creditor of any such Indemnitee arising out of and based upon rights afforded
any such security holder or creditor solely in its capacity as such, or
(c) legal proceedings commenced against any such Indemnitee by any Permitted
Assignee or Transferee. Without limiting the foregoing, and to the extent
permitted by applicable law, the Borrower agrees not to assert, and hereby
waives, all rights for contribution or any other rights of recovery with respect
to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to Environmental
Laws, that it now or hereafter may have by statute or otherwise against any
Indemnitee. The agreements in this Section shall survive repayment of the Notes
and all other amounts payable hereunder.

12.7 Successors and Assigns; Transferees; Transferred Interests.

(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Agent, the Lenders, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of all the Lenders.

(b) (i) Each Lender, in accordance with all Applicable Laws and upon the prior
written consent of the Agent, may at any time assign to one or more Persons (a
“Permitted Assignee”) all or a portion of its interests, rights and obligations
under this Agreement (including, without limitation, a portion of its
Commitments, participation interests in Standby L/Cs, Loans at the time owing to
it and the Notes); provided, that (i) no such assigned interest shall be in an
amount less than $5,000,000 and each such assigning Lender that does not assign
its entire interest shall maintain a Commitment in an amount not less than
$5,000,000, (ii) such assignment shall be to a bank or financial institution
having a combined capital and surplus of not less than $100,000,000, (iii) no
assignment shall be made to any of the following named entities or their
Affiliates or their respective successors: Cargill, Detroit Salt, Rohm and Haas
(Morton International), Compass Minerals, Inc. (IMC Global (NAMSCO)), Mahoney
Brothers, U.S. Salt and International Salt and (iv) no assignment of any
interest in any Revolving Loan, Standby L/C or Term Loan shall be made without
making a corresponding ratable assignment of the Commitments, Loans and Letter
of Credit interests then held by such assigning Lender.

(ii) The parties to each such assignment shall execute and deliver to the.
Agent, for its acceptance and recording in the Register referred to in paragraph
(iii) of this Section 12.7(b), an assignment substantially in the form of
Exhibit G (a “Commitment Transfer Supplement”), together with a processing fee
of $3,500 and any Note or Notes subject to such assignment. Upon its receipt of
a Commitment Transfer Supplement executed by an assigning Lender and a Permitted
Assignee, together with a processing fee of $3,500 and any Note or Notes subject
to such assignment and the written consent to such assignment, if

 

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required, the Agent shall, if such Commitment Transfer Supplement has been
completed, (x) accept such Commitment Transfer Supplement, (y) record the
information contained therein in the Register and (z) give prompt notice thereof
to the Borrower. Notwithstanding the foregoing, the fees described in this
Section 12.7(b)(ii) shall not apply to any transfer by a Lender to any Affiliate
of any such transferring Lender. Within five (5) Business Days after notice of
execution and delivery of such assignment, the Borrower, at its own expense,
shall execute and deliver to the Agent in exchange for the assigning Lender’s
surrendered Note or Notes a new Note or Notes to the order of such Permitted
Assignee in an amount reflecting the portion of the Commitments assumed by it
pursuant to such assignment and a new Note or Notes to the order of the
assigning Lender in an amount reflecting the portion of the Commitments retained
by it hereunder. Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note or
Notes, shall be dated the date of such surrendered Note or Notes and shall
otherwise be in substantially the form of surrendered Notes. Cancelled Notes
shall be returned to the Borrower. In addition, the Borrower shall use its
reasonable efforts to provide to the Agent reliance letters covering the
opinions and reports required to be delivered on or prior to the Closing Date.
Upon (x) the execution, delivery and recording of such assignment, (y) delivery
of an executed copy thereof to the Borrower and (z) payment by the Permitted
Assignee of the purchase price specified therein, (1) such Permitted Assignee
shall be a Lender party hereto and, to the extent provided in such assignment
(but in no event in excess of the amount assigned), shall have the rights and
obligations of a Lender hereunder and (2) the assigning Lender shall, to the
extent provided in such assignment with respect to the interests, rights and
obligations of such Lender so assigned, be released from its obligations under
this Agreement.

(iii) The Agent shall maintain at its address referred to in Section 12.2 a copy
of each Commitment Transfer Supplement delivered to it and a register for the
recordation of the names and addresses of the Lenders and the Commitments of
each Lender from time to time (the “Register”). The entries in the Register
shall be conclusive in the absence of manifest error, and the Borrower, the
Agent, and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

(c) The Borrower acknowledges that each Lender may at any time grant
participations in the Standby L/Cs or in this Agreement and the Senior Security
Documents (collectively, “Participations”) to one or more Persons (such Persons
being herein called “Transferees”); provided, however, that (i) such Lender’s
obligations under this Agreement and under any Senior Security Document 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
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and under any Senior
Security Documents.

(d) The Borrower authorizes each Lender to disclose to any prospective Permitted
Assignee pursuant to paragraph (b) of this Section 12.7 or prospective
Transferee pursuant to paragraph (c) of this Section 12.7 all financial or other
necessary information in

 

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such Lender’s possession concerning the Borrower and its Subsidiaries which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or any other Credit Document or which has been delivered to such
Lender by or on behalf of the Borrower or any Affiliate of the Borrower in
connection with such Lender’s credit evaluation of the Borrower and its
Subsidiaries prior to or after entering into this Agreement; provided, however,
that if any such information furnished to such Lender, prospective Permitted
Assignee or prospective Transferee is marked in writing as being confidential
information, such Lender, prospective Permitted Assignee or prospective
Transferee shall hold such information confidential, except that such
information may be disclosed (i) to the Agent’s and Lenders’, prospective
Assignee’s or prospective Transferee’s employees, officers, directors and other
personnel engaged in the transactions contemplated by the Credit Documents from
time to time, (ii) to the Agent’s and Lenders’ prospective Assignee’s or
prospective Transferee’s counsel, independent certified public accountants or
independent insurance advisors or insurance examiners or engineers or
consultants who agree to hold such information confidential, (iii) as may be
required by any statute, court or administrative order or decree or governmental
ruling or regulation, (iv) as may be requested by any Governmental Authority or
(v) as may be necessary in connection with the enforcement of any provision of
any Credit Document.

12.8 Severability. Any provision hereof which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof and without affecting the validity or enforceability of any
provision in any other jurisdiction.

12.9 Headings. The headings of the various sections and paragraphs of this
Agreement are for convenience of reference only, do not constitute a part hereof
and shall not affect the meaning or construction of any provision hereof.

12.10 Counterparts. This Agreement may be executed by one or more of the parties
hereto on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.

12.11 The Lenders Sole Beneficiaries. All conditions of the obligations of the
Lenders to make Loans and issue Standby L/Cs hereunder are imposed solely and
exclusively for the benefit of the Lenders and their assigns and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that the Lenders will refuse to make
Loans and to take participating interests in Standby L/Cs in the absence of
strict compliance with any or all of such conditions and no Person shall, under
any circumstances, be deemed to be a beneficiary of such conditions, any or all
of which may be freely waived in whole or in part by the Lenders at any time if
in their sole discretion it deems it advisable to do so. The Lenders are
obligated hereunder solely to make Loans and to issue Standby L/Cs if and to the
extent required by this Agreement.

12.12 Governing Law. This Agreement and the Notes and the rights and obligations
of the parties under this Agreement and the Notes shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.

 

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12.13 Submission to Jurisdiction; Waivers.

(a) The Borrower hereby irrevocably and unconditionally:

(i) Submits for itself and its property in any legal action or proceeding
relating to this Agreement or any other Credit Document, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York located in either Monroe
County or Livingston County, the courts of the United States of America for the
Western District of New York, and Appellate Courts from any thereof;

(ii) Consents that any such action or proceeding may be brought in such courts,
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in any inconvenient court and agrees not to plead or claim the same;

(iii) Agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 12.2 or at such other address of which the Agent
shall have been notified pursuant thereto; and

(iv) Agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.

(b) The Borrower, the Agent and each Lender hereby irrevocably and
unconditionally waive trial by jury in any legal action or proceeding referred
to in Section 12.13(a) above.

12.14 Maximum Interest Rate. Anything to the contrary notwithstanding, the
Lenders shall not charge, take or receive and the Borrower shall not be
obligated to pay to the Lenders, any amounts constituting interest on the Loans
in excess of the maximum rate permitted by applicable law.

12.15 Confidentiality Provision. Each of the Agent, the Collateral Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to any assignee of or

 

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Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section 12.15 or (ii) becomes available to the
Agent, the Collateral Agent or any Lender on a non-confidential basis from a
source other than the Borrower. For the purposes of this Section, “Information”
means all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the Agent, the
Collateral Agent or any Lender on a non-confidential basis prior to disclosure
by the Borrower; provided that, in the case of information received from the
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 12.15 shall be
considered to have complied with its obligations 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.

12.16 USA Patriot Act. Each Lender hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act, it is required to obtain, verify and
record information that identifies the Borrower and all Subsidiaries, which
information includes the name and address of the Borrower and all Subsidiaries
and other information that will allow such Lender to identify the Borrower and
all Subsidiaries in accordance with the requirements of the USA Patriot Act. The
Borrower hereby agrees to cooperate (and to cause each Subsidiary to cooperate)
with each Lender to provide such information promptly following a request
therefor from such Lender.

[SIGNATURE PAGES FOLLOW]

 

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

 

AMERICAN ROCK SALT COMPANY LLC By:  

/s/ Gunther K. Buerman

 

Name: Gunther K. Buerman

Title:   Manager

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

 

MANUFACTURERS AND TRADERS TRUST COMPANY,

as Arranger, Agent, Collateral Agent, Letters of Credit Issuer and as a Lender

By:   

/s/ Jon M. Fogle

Name: Jon M. Fogle

Title:   Vice President

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

 

CITIZENS BANK, N.A. By:   

/s/ Nancy O’Brien

Name: Nancy O’Brien

Title:   Vice President

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

 

COMERICA BANK By:   

/s/ Kathleen M. Kasparek

Name: Kathleen M. Kasparek

Title:   Vice President

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

 

THE BANK OF CASTILE By:   

/s/ David N. DeLaVergne

Name: David N. DeLaVergne

Title:   Senior Vice President

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APPENDIXES, SCHEDULES AND EXHIBITS

 

        Appendixes

Appendix A

   -     

List of Lenders

        Exhibits

Exhibit A

   -     

Borrowing Base Certificate

Exhibit B

   -     

Notice of Revolving Loan Borrowing

Exhibit C

   -     

Revolving Loan Note

Exhibit D

   -     

Standby L/C

Exhibit E

   -     

Term Loan Scheduled Amortization Payment Schedule

Exhibit F

   -     

Term Loan Note

Exhibit G

   -     

Commitment Transfer Supplement

        Schedules

Schedule 1

   -     

Description of the Leased Premises

Schedule 2

   -     

Permitted Indebtedness

Schedule 3

   -     

Total Revolving Credit and Term Loan Commitments

Schedule 4

   -     

Borrower’s Members

Schedule 5

   -     

Governmental Approvals

Schedule 6

   -     

UCC Statement Filings

Schedule 6(a)

   -     

Permitted Liens

Schedule 7

   -     

Mineral Rights

Schedules 8(a), (b) and (c)

   -     

Environmental Matters

Schedule 9

   -     

Notices

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APPENDIX A

LIST OF LENDERS

Manufacturers and Traders Trust Company

Citizens Bank, N.A.

Comerica Bank

The Bank of Castile