exv10w3



 






Exhibit 10.3



AMENDED AND RESTATED

CREDIT AGREEMENT


Originally dated as of July 11, 2005


among


ALLIS-CHALMERS ENERGY INC.,

as the Borrower,


ROYAL BANK OF CANADA,

as Administrative Agent

and

as Collateral Agent


and


The Lenders Party Hereto


$25,000,000


SENIOR CREDIT FACILITY


RBC CAPITAL MARKETS

As Lead Arranger and Sole Bookrunner


Dated as of January 18, 2006



 









 









TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE I.

	 	     DEFINITIONS AND ACOUNTING TERMS
	 	 	1	 
	          1.01

	 	Defined Terms
	 	 	1	 
	          1.02

	 	Other Interpretive Provisions
	 	 	23	 
	          1.03

	 	Accounting Terms
	 	 	23	 
	          1.04

	 	Rounding
	 	 	23	 
	          1.05

	 	References to Agreements and Laws
	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE II.

	 	     THE COMMITMENT AND BORROWINGS
	 	 	24	 
	          2.01

	 	Loans
	 	 	24	 
	          2.02

	 	Intentionally Omitted
	 	 	24	 
	          2.03

	 	Borrowings, Conversions and Continuations of Revolving Loans
	 	 	24	 
	          2.04

	 	Prepayments
	 	 	25	 
	          2.05

	 	Reduction or Termination of Commitments
	 	 	27	 
	          2.06

	 	Repayment of Revolving Loans
	 	 	28	 
	          2.07

	 	Interest
	 	 	28	 
	          2.08

	 	Fees
	 	 	28	 
	          2.09

	 	Computation of Interest and Fees
	 	 	29	 
	          2.10

	 	Evidence of Debt
	 	 	29	 
	          2.11

	 	Payments Generally
	 	 	29	 
	          2.12

	 	Sharing of Payments
	 	 	31	 
	          2.13

	 	Priority of Hedging Obligations
	 	 	32	 
	          2.14

	 	Letters of Credit
	 	 	32	 
	 
	 	 	 	 	 	 
	ARTICLE III

	 	     TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	38	 
	          3.01

	 	Taxes
	 	 	38	 
	          3.02

	 	Illegality
	 	 	39	 
	          3.03

	 	Inability to Determine Rates
	 	 	39	 
	          3.04

	 	Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Rate Loans
	 	 	40	 
	          3.05

	 	Funding Losses
	 	 	40	 
	          3.06

	 	Matters Applicable to all Requests for Compensation
	 	 	41	 
	          3.07

	 	Survival
	 	 	41	 
	 
	 	 	 	 	 	 
	ARTICLE IV.

	 	     CONDITIONS PRECEDENT
	 	 	41	 
	          4.01

	 	Conditions Precedent
	 	 	41	 
	          4.02

	 	Deadline for First Amendment Closing Date
	 	 	44	 
	          4.03

	 	Conditions to all Revolving Loans and L/C Credit Extension
	 	 	44	 
	          4.04

	 	Conditions to all Revolving Loans to Fund Permitted Acquisitions
	 	 	45	 
	 
	 	 	 	 	 	 
	ARTICLE V

	 	     REPRESENTATIONS AND WARRANTIES
	 	 	45	 
	          5.01

	 	Existence; Qualification and Power; Compliance with Laws
	 	 	45	 






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	 	 	 	 	Page
	 
	 	 	 	 	 	 
	          5.02

	 	Authorization; No Contravention
	 	 	46	 
	          5.03

	 	Governmental Authorization
	 	 	46	 
	          5.04

	 	Binding Effect
	 	 	46	 
	          5.05

	 	Financial Statements; No Material Adverse Effect
	 	 	46	 
	          5.06

	 	Litigation
	 	 	46	 
	          5.07

	 	No Default
	 	 	47	 
	          5.08

	 	Ownership of Property; Liens
	 	 	47	 
	          5.09

	 	Environmental Compliance
	 	 	47	 
	          5.10

	 	Insurance
	 	 	47	 
	          5.11

	 	Taxes
	 	 	47	 
	          5.12

	 	ERISA Compliance
	 	 	47	 
	          5.13

	 	Subsidiaries and other Investments
	 	 	48	 
	          5.14

	 	Margin Regulations; Investment Company Act; Use of Proceeds
	 	 	48	 
	          5.15

	 	Disclosure
	 	 	48	 
	          5.16

	 	Labor Matters
	 	 	49	 
	          5.17

	 	Compliance with Laws
	 	 	49	 
	          5.18

	 	Third Party Approvals
	 	 	49	 
	          5.19

	 	Solvency
	 	 	49	 
	          5.20

	 	Collateral
	 	 	49	 
	          5.21

	 	Intellecutal Property; Licenses, Etc.
	 	 	49	 
	          5.22

	 	Leased Locations
	 	 	50	 
	          5.23

	 	Material Agreements
	 	 	50	 
	 
	 	 	 	 	 	 
	ARTICLE VI.

	 	     AFFIRMATIVE COVENANTS
	 	 	50	 
	          6.01

	 	Financial Statements
	 	 	50	 
	          6.02

	 	Certificates; Other Information
	 	 	51	 
	          6.03

	 	Notices
	 	 	52	 
	          6.04

	 	Payment of Obligations
	 	 	52	 
	          6.05

	 	Preservation of Existence, Etc.
	 	 	52	 
	          6.06

	 	Maintenance of Assets and Business; Movement of Collateral
	 	 	52	 
	          6.07

	 	Maintenance of Insurance
	 	 	53	 
	          6.08

	 	Compliance with Laws and Contractual Obligations
	 	 	53	 
	          6.09

	 	Books and Records
	 	 	53	 
	          6.10

	 	Inspection Rights
	 	 	53	 
	          6.11

	 	Compliance with ERISA
	 	 	53	 
	          6.12

	 	Use of Proceeds
	 	 	54	 
	          6.13

	 	Guaranties
	 	 	54	 
	          6.14

	 	Further Assurances; Additional Collateral
	 	 	54	 
	          6.15

	 	Approval of Certain Acquisitions
	 	 	55	 
	 
	 	 	 	 	 	 
	ARTICLE VII

	 	     NEGATIVE COVENANTS
	 	 	55	 
	          7.01

	 	Liens
	 	 	55	 
	          7.02

	 	Investments
	 	 	56	 
	          7.03

	 	Swap Contracts
	 	 	57	 






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	 	 	 	 	Page
	 
	 	 	 	 	 	 
	          7.04

	 	Indebtedness
	 	 	57	 
	          7.05

	 	Lease Obligations
	 	 	58	 
	          7.06

	 	Fundamental Changes
	 	 	58	 
	          7.07

	 	Dispositions
	 	 	58	 
	          7.08

	 	Restricted Payments; Distributions and Redemptions
	 	 	59	 
	          7.09

	 	ERISA
	 	 	59	 
	          7.10

	 	Change in Nature of Business
	 	 	59	 
	          7.11

	 	Transactions with Affiliates
	 	 	59	 
	          7.12

	 	Burdensome Agreements
	 	 	59	 
	          7.13

	 	Use of Proceeds
	 	 	60	 
	          7.14

	 	Capital Expenditures
	 	 	60	 
	          7.15

	 	Prepayments
	 	 	60	 
	          7.16

	 	Subordinated Indebtedness
	 	 	60	 
	          7.17

	 	Amendments of Constitutive Documents
	 	 	60	 
	          7.18

	 	Accounting Changes
	 	 	60	 
	          7.19

	 	Financial Covenants
	 	 	60	 
	 
	 	 	 	 	 	 
	ARTICLE VIII.

	 	     EVENTS OF DEFAULT AND REMEDIES
	 	 	61	 
	          8.01

	 	Events of Default
	 	 	61	 
	          8.02

	 	Remedies Upon Event of Default
	 	 	64	 
	 
	 	 	 	 	 	 
	ARTICLE IX.

	 	     ADMINISTRATIVE AGENT
	 	 	64	 
	          9.01

	 	Appointment and Authorization of Agents; Lender Hedging Agreements
	 	 	64	 
	          9.02

	 	Delegation of Duties
	 	 	65	 
	          9.03

	 	Default; Collateral
	 	 	65	 
	          9.04

	 	Liability of Agents
	 	 	67	 
	          9.05

	 	Reliance by Administrative Agent
	 	 	67	 
	          9.06

	 	Notice of Default
	 	 	68	 
	          9.07

	 	Credit Decision; Disclosure of Information by Administrative Agent
	 	 	68	 
	          9.08

	 	Indemnification of Agents
	 	 	68	 
	          9.09

	 	Administrative Agent in its Individual Capacity
	 	 	69	 
	          9.10

	 	Successor Administrative Agent
	 	 	69	 
	          9.11

	 	Other Agents; Arranger
	 	 	70	 
	 
	 	 	 	 	 	 
	ARTICLE X

	 	     MISCELLANEOUS
	 	 	70	 
	          10.01

	 	Amendments, Release of Collateral,
Etc
	 	 	70	 
	          10.02

	 	Notices and Other Communications; Facsimile Copies
	 	 	72	 
	          10.03

	 	No Waiver; Cumulative Remedies
	 	 	73	 
	          10.04

	 	Attorney Costs; Expenses and Taxes
	 	 	73	 
	          10.05

	 	Indemnification
	 	 	73	 
	          10.06

	 	Payments Set Aside
	 	 	74	 
	          10.07

	 	Successors and Assigns
	 	 	75	 
	          10.08

	 	Confidentiality
	 	 	77	 
	          10.09

	 	Set-off
	 	 	77	 
	          10.10

	 	Interest Rate Limitation
	 	 	78	 






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	 	 	 	 	Page
	 
	 	 	 	 	 	 
	          10.11

	 	Counterparts
	 	 	78	 
	          10.12

	 	Integration
	 	 	78	 
	          10.13

	 	Survival of Representations and Warranties
	 	 	79	 
	          10.14

	 	Severability
	 	 	79	 
	          10.15

	 	Foreign Lenders
	 	 	79	 
	          10.16

	 	Governing Law
	 	 	80	 
	          10.17

	 	Waiver of Right to Trial by Jury,
Etc
	 	 	80	 
	          10.18

	 	Termination of Commitments Under Original Credit Agreement
	 	 	81	 
	          10.19

	 	No Novations, Etc
	 	 	81	 
	          10.20

	 	ENTIRE AGREEMENT
	 	 	81	 






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SCHEDULES




	 	 	 
	2.01

	 	Commitments
	5.05

	 	Existing Indebtedness
	5.13

	 	Subsidiaries and other Equity Investments
	5.22

	 	Leased Locations
	5.23

	 	Material Agreements
	7.01

	 	Existing Liens
	7.12

	 	Agreements Restricting Liens on Leasehold Interests
	10.02

	 	Addresses for Notices to Borrower, Guarantors and Administrative Agent






EXHIBITS




	 	 	 
	Exhibit:	 	Form of:
	A-1

	 	Borrowing Notice
	A-2

	 	Conversion/Continuation Notice
	A-3

	 	Payment/Prepayment Notice
	B

	 	Revolver Note
	C

	 	Compliance Certificate pursuant to Section 6.02(a)
	D

	 	Assignment and Assumption






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Amended & Restated Credit Agreement





 










 






AMENDED AND RESTATED CREDIT AGREEMENT




     THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of January 18, 2006, among
ALLIS-CHALMERS ENERGY INC., a Delaware corporation (the “Borrower”), each lender from time to time
party hereto (collectively, the “Lenders” and individually, a “Lender”), and ROYAL BANK OF CANADA,
as Administrative Agent and L/C Issuer.



     (1) The Borrower, Royal Bank of Canada, individually and as administrative agent (“Royal
Bank”), Caterpillar Financial Services Corporation (“CFSC”), and Commercebank, N.A. (“Commerce”;
Royal Bank, CFSC and Commerce collectively called the “Original Lenders”) entered into a Credit
Agreement originally dated July 11, 2005, as amended by a First Amendment to Credit Agreement among
the Borrower and the Original Lenders dated December 9, 2005 (as amended, the “Original Credit
Agreement”).



     (2) The Borrower, Royal Bank, CSFC and Commerce have agreed to amend and restate in its
entirety the Original Credit Agreement on the terms and conditions set forth herein.



          NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree that the Original Credit Agreement is amended in its entirety to read
as follows:



ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS




     1.01 Defined Terms.



     As used in this Agreement, the terms defined in the introductory paragraph hereof shall have
the meanings therein indicated and the following terms shall have the meanings set forth below:



     Acquisition means any transaction or series of related transactions for the purpose of, or
resulting in, directly or indirectly: (a) the acquisition by the Borrower or any Subsidiary of all
or substantially all of the assets located in the United States of a Person or of any business or
division of a Person; (b) the acquisition by the Borrower or any Subsidiary of more than 50% of any
class of Voting Stock (or similar Equity Interests) of any Domestic Person; or (c) a merger,
consolidation or other combination by the Borrower or any Subsidiary with another Person if the
Borrower or any Subsidiary is the surviving entity; provided that, (i) in any merger involving the
Borrower, the Borrower must be the surviving entity; and (ii) in any merger involving a Subsidiary
which is a Loan Party and another Subsidiary which is not a Loan Party, the Subsidiary which is a
Loan Party shall be the survivor.



     AC Tubular means Allis-Chalmers Tubular Services, Inc., a Texas corporation.



     Administrative Agent means Royal Bank of Canada in its capacity as administrative agent under
any of the Loan Documents, or any successor administrative agent.



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Amended & Restated Credit Agreement









 





     Administrative Agent’s Office means the Administrative Agent’s address and, as appropriate,
account as set forth on Schedule 10.02, or such other address or account as the Administrative
Agent may from time to time notify to the Borrower and the Lenders.



     Administrative Details Form means the Administrative Details Reply Form furnished by a Lender
to the Administrative Agent in connection with this Agreement.



     Affiliate means, as to any Person, any other Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, such Person. A Person shall be
deemed to be controlled by any other Person if such other Person possesses, directly or indirectly,
power (a) to vote 10% or more of the Voting Stock (on a fully diluted basis) having ordinary voting
power for the election of directors, managing members, or managing general partner; or (b) to
direct or cause the direction of the management and policies of such Person whether by contract or
otherwise.



     Agent/Arranger Fee Letter has the meaning specified in Section 2.08(b).



     Agent-Related Persons means the Administrative Agent (including any successor administrative
agent) and its respective Affiliates (including the officers, directors, employees, agents and
attorneys-in-fact of such Person).



     Aggregate Revolving Commitment has the meaning specified in the definition of Revolving
Commitment.



     Agreement means this Credit Agreement.



     AirComp means AirComp, LLC, a Delaware limited liability company and Wholly-Owned Subsidiary.



     AirComp Related Subordinated Indebtedness means Indebtedness of the Borrower owing to M-I,
L.L.C. in connection with that certain promissory note dated July 11, 2005 in the original
principal amount of $4,000,000.00, which Indebtedness has been subordinated to the Obligations
pursuant to the AirComp Subordination Agreement.



     AirComp Subordination Agreement means that certain subordination agreement of even date
herewith among Borrower, M-I, L.L.C., and Administrative Agent for the benefit of the Lenders, in
form and substance satisfactory to the Administrative Agent, and all supplements, assignments,
amendments, and restatements thereto (or any agreement in substitution therefor).



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Amended & Restated Credit Agreement









 





     Applicable
Rate means the following percentages per annum set forth in the table below,
on any date of determination, with respect to the Type of Credit Extension or commitment fee that
corresponds to the Leverage Ratio at such date of determination, as calculated based on the
quarterly Compliance Certificate most recently delivered pursuant to Section 6.02(a):



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Commitment	 	Letter of Credit	 	 
	Pricing	 	 	 	Fee	 	and Eurodollar Rate	 	Base Rate
	Level	 	Leverage Ratio	 	+ (basis points)	 	+ (basis points)	 	+ (basis points)
	1	 	Less than 2.50:1.00
	 	50.0	 	200.0	 	100.0
	2	 	Less than
3.00:1.00 but greater than or
equal to 2.50:1.00
	 	50.0	 	225.0	 	125.0
	3	 	Less than
3.50:1.00 but greater than or
equal to 3.00:1.00
	 	50.0	 	250.0	 	150.0
	4	 	Less than
4.00:1.00 but greater than or
equal to 3.50:1.00
	 	50.0	 	275.0	 	175.0
	5	 	Greater than
or equal to 4.00:1.00
	 	50.0	 	300.0	 	200.0






     Any increase or decrease in the Applicable Rate resulting from a change in the Leverage Ratio
shall become effective as of the first day of the fiscal quarter of the Borrower immediately
following the date of a Compliance Certificate delivered pursuant to Section 6.02; provided,
however, that if no Compliance Certificate is delivered during a fiscal quarter when due in
accordance with such Section, Pricing Level 5 shall apply as of the first day of such following
fiscal quarter. The Applicable Rate in effect from the First Amendment Closing Date through March
31, 2006 shall be based Pricing Level 5.



     Approved Fund means any Fund that is administered or managed by a Lender, an Affiliate of a
Lender, or an entity or an Affiliate of an entity that administers or manages a Lender.



     Arranger means RBC Capital Markets in its capacity as lead arranger and sole bookrunner.



     Assignment and Assumption means an Assignment and Assumption substantially in the form of
Exhibit D.



     Attorney Costs means and includes the reasonable fees and disbursements of any law firm or
other external counsel and the allocated cost of internal legal services and all disbursements of
internal counsel.



     Attributable Indebtedness means, on any date, (a) in respect of any Capital Lease of any
Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared
as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the
capitalized amount of the remaining lease payments under the relevant lease that would appear on a
balance sheet of



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Amended & Restated Credit Agreement










 








such Person prepared as of such date in accordance with GAAP if such lease were accounted for
as a capital lease.



     Authorizations means all filings, recordings, and registrations with, and all validations or
exemptions, approvals, orders, authorizations, consents, franchises, licenses, certificates, and
permits from, any Governmental Authority.



     Base Rate means for any day a fluctuating rate per annum equal to the higher of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly
announced from time to time by the Administrative Agent as its “prime rate.” Such rate is a rate
set by the Administrative Agent based upon various factors including the Administrative Agent’s
costs and desired return, general economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below such announced rate. Any
change in such rate announced by the Administrative Agent shall take effect at the opening of
business on the day specified in the public announcement of such change.



     Base Rate Loan means a Revolving Loan that bears interest based on the Base Rate.



     Board means the Board of Governors of the Federal Reserve System of the United States.



     Borrower has the meaning specified in the introductory paragraph hereof.



     Borrower Affiliate means the Borrower’s Subsidiaries.



     Borrowing means a borrowing consisting of simultaneous Revolving Loans of one or more Types,
which are either Base Rate Loans or Eurodollar Rate Loans, and if Eurodollar Rate Loans have the
same Interest Period, made by each of the Lenders pursuant to Section 2.01.



     Borrowing Notice means a notice of (a) a Borrowing, (b) a conversion of Revolving Loans from
one Type to the other, or (c) a continuation of Revolving Loans as the same Type, pursuant to
Section 2.03(a), which, if in writing, shall be substantially in the form of Exhibit A-1 or A-2, as
applicable.



     Business Day means any day other than a Saturday, Sunday, or other day on which commercial
banks are authorized to close under the Laws of Texas, or are in fact closed and, if such day
relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are
conducted by and between banks in the applicable offshore Dollar interbank market.



     Capital Expenditure by a Person means an expenditure (determined in accordance with GAAP) for
any fixed asset owned by such Person for use in the operations of such Person having a useful life
of more than one year, or any improvements or additions thereto.



     Capital Lease means any capital lease or sublease which should be capitalized on a balance
sheet in accordance with GAAP.



     Cash Collateralize means to pledge and deposit with or deliver to the Administrative Agent,
for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash and
deposit account balances pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the L/C Issuer (which documents hereby are consented to by the Lenders).



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Amended & Restated Credit Agreement









 






Cash Equivalents means:




     (a) United States Dollars;



     (b) direct general obligations, or obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest by, the United
States or any agency or instrumentality thereof having remaining maturities of not more than
13 months, but excluding any such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemptions;



     (c) certificates of deposit and eurodollar-time deposits with maturities of thirteen
(13) months or less, bankers acceptances with maturities not exceeding 180 days, overnight
bank deposits and other similar short term instruments, in each case with any domestic
commercial bank having capital and surplus in excess of $250,000,000 and having a rating of
at least “A2” by Moody’s and at least “A” by S&P;



     (d) repurchase obligations with a term of not more than 13 months for underlying
securities of the types described in (b) and (c) above entered into with any financial
institution meeting the qualifications in (c) above;



     (e) commercial paper (having original maturities of not more than 270 days) of any
Person rated “P-1” or better by Moody’s or “A-1” or the equivalent by S&P; and



     (f) money market mutual or similar funds having assets in excess of $100,000,000, at
least 95% of the assets of which are comprised of assets specified in clause (a) through (e)
above.



     CERCLA has the meaning specified in the definition of Environmental Law.



     Change of Control means an event or series of events by which:



     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or
group shall be deemed to have “beneficial ownership” of all securities that such person or
group has the right to acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or indirectly, of 25%
or more of the Voting Stock of the Borrower entitled to vote for members of the board of
directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking
into account all such securities that such person or group has the right to acquire pursuant
to any option right);



     (b) during any period of 12 consecutive months, a majority of the members of the board
of directors or other equivalent governing body of the Borrower cease to be composed of
individuals (i) who were members of that board or equivalent governing body on the first day
of such period, (ii) whose election or nomination to that board or equivalent governing body
was approved by individuals referred to in clause (i) above constituting at the time of such
election or



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Amended & Restated Credit Agreement









 






nomination at least a majority of that board or equivalent governing body or (iii)
whose election or nomination to that board or other equivalent governing body was approved
by individuals referred to in clauses (i) and (ii) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing body
(excluding, in the case of both clause (ii) and clause (iii), any individual whose initial
nomination for, or assumption of office as, a member of that board or equivalent governing
body occurs as a result of an actual or threatened solicitation of proxies or consents for
the election or removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the board of
directors); or




(c) any Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon consummation
thereof, will result in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the Borrower, or
control over the Voting Stock of the Borrower entitled to vote for members of the board of
directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking
into account all such securities that such Person or group has the right to acquire pursuant
to any option right) representing 25% or more of the combined voting power of such
securities; or




(d) the Borrower ceases to own 100% of the Equity Interests of each Subsidiary which is
a Loan Party.



     Change in Law means (a) the adoption of any Law after the date of this Agreement, (b) any
change in any Law or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the L/C Issuer (or, for
purposes of Section 3.04(b), by any Lending Office of such Lender or by such Lender’s or the L/C
Issuer’s holding company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of this Agreement.



     Code means the Internal Revenue Code of 1986 as amended from time to time, and the regulations
promulgated and rulings issued thereunder.



     Collateral means all property and interests in property and proceeds thereof now owned or
hereafter acquired by the Borrower, and its Subsidiaries in or upon which a Lien now or hereafter
exists in favor of the Lenders, or the Administrative Agent on behalf of the Lenders, whether under
this Agreement, the Collateral Documents, or under any other document executed by any Borrower
Affiliate and delivered to the Administrative Agent or the Lenders.



     Collateral Agent means Royal Bank of Canada in its capacity as collateral agent under any of
the Loan Documents, or any successor collateral agent.



     Collateral Documents means (a) each Guaranty, Security Agreement, each pledge agreement,
assignment, and all other security agreements, deeds of trust, mortgages, chattel mortgages,
assignments, pledges, guaranties, financing statements, continuation statements, extension
agreements and other similar agreements or instruments executed by the Borrower or any Subsidiary
which is a Loan Party for the benefit of the Lenders now or hereafter delivered to the Lenders or
the Administrative Agent pursuant to or in connection with the transactions contemplated hereby,
and all financing statements (or comparable documents now or hereafter filed in accordance with the
UCC or comparable Law) against the Borrower



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or any Subsidiary which is a Loan Party, as debtor, in favor of the Lenders or the
Administrative Agent for the benefit of the Lenders, as secured party, to secure or guarantee the
payment of any part of the Obligations or the performance of any other duties and obligations of
Borrower under the Loan Documents, whenever made or delivered, and (b) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions, restatements, and extensions
of any of the foregoing.



     Compensation Period has the meaning set forth in Section 2.11(e)(ii).



     Compliance Certificate means a certificate substantially in the form of Exhibit C-1.




     Consolidated Cash Flow From Operations means, for a given period the sum of (i) Consolidated
Net Income, (ii) the amount of depreciation and amortization expense deducted in determining such
Consolidated Net Income, (iii) deferred income taxes, and (iv) other non-cash items, each as
determined for such period in accordance with GAAP.



     Consolidated Current Assets means at any time, all assets that should be, in accordance with
GAAP, classified as current assets on a consolidated balance sheet of the Borrower and its
Subsidiaries.



     Consolidated Current Liabilities means at any time, all liabilities that should be, in
accordance with GAAP, classified as current liabilities on a consolidated balance sheet of the
Borrower and its Subsidiaries (excluding that portion of the principal balance of any Revolving
Loans outstanding hereunder which would be classified as current liabilities in accordance with
GAAP).



     Consolidated EBITDA means, for any period, for the Borrower and its Subsidiaries on a
consolidated basis, an amount equal to the sum of (a) Consolidated Net Income, (b) Consolidated
Interest Charges, (c) the amount of taxes, based on or measured by income, used or included in the
determination of such Consolidated Net Income, (d) the amount of depreciation, depletion, and
amortization expense deducted in determining such Consolidated Net Income, and (e) other non-cash
charges and expenses, including, without limitation, non-cash charges and expenses relating to Swap
Contracts or resulting from accounting convention changes, of the Borrower and its Subsidiaries on
a consolidated basis, all determined in accordance with GAAP.



     Consolidated Interest Charges means, for any period, for the Borrower and its Subsidiaries on
a consolidated basis, the sum of (a) all interest, premium payments, fees, charges and related
expenses of the Borrower and its Subsidiaries in connection with Indebtedness (including
capitalized interest), in each case to the extent treated as interest in accordance with GAAP, and
(b) the portion of rent expense of the Borrower and its Subsidiaries with respect to such period
under Capital Leases that is treated as interest in accordance with GAAP.



     Consolidated Funded Debt means, as of any date of determination, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) the outstanding principal amount of all
obligations and liabilities, whether current or long-term, for borrowed money (including
Obligations hereunder and Indebtedness associated with the Senior Unsecured Notes), (b) all
reimbursement obligations relating to letters of credit, (c) Capital Leases, (d) Synthetic Lease
Obligations, and (e) without duplication, all Guaranty Obligations with respect to Indebtedness of
the type specified in subsections (a) through (d) above.



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     Consolidated Net Income means, for any period, for the Borrower and its Subsidiaries on a
consolidated basis, the net income or net loss of the Borrower and its Subsidiaries from continuing
operations; provided that there shall be excluded from such net income (to the extent otherwise
included therein): (a) the income (or loss) of any entity other than a Subsidiary in which the
Borrower or any Subsidiary has an ownership interest, except to the extent that any such income has
been actually received by the Borrower or such Subsidiary in the form of cash dividends or similar
cash distributions; (b) net extraordinary gains and losses, (c) any gains or losses attributable to
non-cash write-ups or write-downs of assets, (d) proceeds of any Insurance Payment other than
business interruption insurance, (e) any gain or loss, net of taxes, on the sale, retirement or
other disposition of assets (including Equity Interests of any other Person, but excluding the sale
of inventories in the ordinary course of business), and (f) the cumulative effect of a change in
accounting principles.



     Consolidated Senior Debt means, as of any date of determination, for the Borrower and its
Subsidiaries on a consolidated basis, without duplication, the sum of (a) the Outstanding Amount of
all Revolving Loans and L/C Obligations, (b) all secured Indebtedness permitted under Section 7.04,
and (c) the Outstanding Amount of all obligations owed to Lenders under Lender Hedging Agreements.



     Consolidated Tangible Net Worth means the consolidated net worth of the Borrower and its
Subsidiaries after subtracting therefrom the aggregate amount of any Intangible Assets of the
Borrower and its Subsidiaries.



     Contractual Obligation means, as to any Person, any provision of any security issued by such
Person or of any agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.



     Credit Extension means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.



     Current Maturities of Long Term Indebtedness means, in respect of the Borrower and as of any
applicable date of determination thereof, all Indebtedness which should be classified as “funded
indebtedness” or “long term indebtedness” on a balance sheet of such Person as of such date in
accordance with GAAP.



     Current Ratio means the ratio derived from dividing Consolidated Current Assets by
Consolidated Current Liabilities.



     Debt Issuance means the issuance by the Borrower or any Subsidiary of any unsecured
Indebtedness other than Indebtedness permitted under Section 7.04.



     Debtor Relief Laws means the Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or
other applicable jurisdictions from time to time in effect and affecting the rights of creditors
generally.



     Default means any event that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.



     Default Rate means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate,
if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however, that with respect
to a



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Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Rate) otherwise applicable to such Revolving Loan plus 2% per annum, in
each case to the fullest extent permitted by applicable Laws.



     Deposit Account Pledge Agreement means collectively the agreements, however styled, among one
or more Loan Parties, the Administrative Agent and Wells Fargo Bank, N.A. relating to the pledge of
deposit and similar accounts held in such financial institution by one or more Loan Parties to the
Administrative Agent, for the benefit of the Lenders, as Collateral.



     Disposition or Dispose means the sale, transfer, license or other disposition (including any
sale and leaseback transaction) of any property by any Person of property owned by such Person,
including any sale, assignment, transfer or other disposal, with or without recourse, of any notes
or accounts receivable or any rights and claims associated therewith. The terms Disposition and
Dispose shall not include any Equity Issuance.



     Dollar and $ means lawful money of the United States.



     Domestic means, with respect to an entity, that such entity is incorporated, organized or
formed under the Laws of the United States, a state in the United States or any subdivision thereof
or the District of Columbia.



     Downhole Injection means Downhole Injection Systems, LLC, a Texas limited liability company
and Wholly-Owned Subsidiary.



     Eligible Assignee means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, (d)
any institutional investor and (e) any other Person (other than a natural Person) approved in each
of the foregoing instances by the Administrative Agent, the L/C Issuer and, unless a Default has
occurred and is continuing or in connection with the settlement of a credit derivative transaction,
the Borrower (each such approval not to be unreasonably withheld, conditioned or delayed); provided
that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of
its respective Affiliates or Subsidiaries.



     Employee Equity Sales means the sale of Equity Interests in the Borrower to directors,
officers, employees and consultants to the Loan Parties (whether or not under a plan).



     Environmental Law means any applicable Law that relates to (a) the condition or protection of
air, groundwater, surface water, soil, or other environmental media, (b) the environment, including
natural resources or any activity which affects the environment, (c) the regulation of any
pollutants, contaminants, wastes, substances, and Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
§9601 et seq.) (“CERCLA”), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Federal Water
Pollution Control Act, as amended by the Clean Water Act (33 U.S.C. §1251 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §136 et seq.), the Emergency Planning and
Community Right to Know Act of 1986 (42 U.S.C. §1100 1 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. §1801 et seq.), the National Environmental Policy Act of 1969 (42
U.S.C. §4321 et seq.), the Oil Pollution Act (33 U.S.C. §2701 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. §6901 et seq.), the Rivers and Harbors Act (33 U.S.C. §401 et seq.),
the Safe Drinking Water Act (42 U.S.C. §201 and §300f et seq.), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976



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and the Hazardous and Solid Waste Amendments of 1984 (42 U.S.C. §6901 et seq.), the Toxic
Substances Control Act (15 U.S.C. §2601 et seq.), and analogous state and local Laws, as any of the
foregoing may have been and may be amended or supplemented from time to time, and any analogous
enacted or adopted Law, or (d) the Release or threatened Release of Hazardous Substances.



     Equity Interests means, with respect to any Person, all of the shares of capital stock of (or
other ownership or profit interests in) such Person, all of the warrants, options or other rights
for the purchase or acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or exchangeable for
shares of capital stock of (or other ownership or profit interests in) such Person or warrants,
rights or options for the purchase or acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting, and whether or not
such shares, warrants, options, rights or other interests are outstanding on any date of
determination.



     Equity Issuance means any issuance by the Borrower to any Person of its Equity Interests,
other than (a) any issuance of its Equity Interests pursuant to the exercise of options or
warrants, (b) any issuance of its Equity Interests pursuant to the conversion of any debt
securities to equity or the conversion of any class of equity securities to any other class of
equity securities, (c) any issuance of options or warrants relating to its Equity Interests, (d)
any issuance of its Equity Interests as consideration for all or a portion of the purchase price
for any acquisition, and (e) Employee Equity Sales.



     ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time,
and any regulations issued pursuant thereto.



     ERISA Affiliate means any trade or business (whether or not incorporated) under common control
with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions of this Agreement relating to obligations imposed under
Section 412 of the Code).



     ERISA Event means: (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by
the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Pension Plan amendment as a termination under Sections 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Borrower or any ERISA Affiliate.



     Eurodollar Rate means for any Interest Period with respect to any Eurodollar Rate Loan:




     (a) the rate per annum equal to the rate determined by the Administrative Agent to be
the offered rate that appears on the page of the LIBOR I screen (or any successor thereto)
that



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displays an average British Bankers Association Interest Settlement Rate for deposits
in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or




     (b) if the rate referenced in the preceding subsection (a) does not appear on such page
or service or such page or service shall cease to be available, the rate per annum equal to
the rate determined by the Administrative Agent to be the offered rate on such other page or
other service that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period, or




     (c) if the rates referenced in the preceding subsections (a) and (b) are not available,
the rate per annum determined by the Administrative Agent as the rate of interest (rounded
upward to the next 1/100th of 1%) at which deposits in Dollars for delivery on the first day
of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate
Loan being made, continued or converted by the Administrative Agent and with a term
equivalent to such Interest Period would be offered by the Administrative Agent’s London
Branch to major banks in the offshore Dollar market at their request at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest Period.



     Eurodollar Rate Loan means a Revolving Loan that bears interest at a rate based on the
Eurodollar Rate.



     Event of Default means any of the events or circumstances specified in Article VIII.



     Evergreen Letter of Credit has the meaning specified in Section 2.14(b)(iii).



     Federal Funds Rate means, for any day, the rate per annum (rounded upwards to the nearest
1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the next succeeding
Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent on
such day on such transactions as determined by the Administrative Agent.



     First Amendment Closing Date means the date upon which this Agreement has been executed by the
Borrower, the Lenders and the Administrative Agent and by its terms has become effective.



     Fiscal Year means each year beginning January 1st and ending the following December
31st.



     Fixed Asset Coverage Ratio means as of any determination date, the ratio derived by dividing
the orderly liquidation value of the Borrower’s and its Subsidiaries’ domestic fixed assets (as
determined by the most recently delivered asset appraisals delivered to the Administrative Agent
pursuant to Section



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6.02(e)) on which the Administrative Agent, for the benefit of the Lenders, holds a perfected,
first priority Lien divided by the sum of the Outstanding Amount on such date of the Revolver
Principal Debt.




     Foreign Lender has the meaning specified in Section 10.15.



     Fund means any Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business.



     GAAP means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or such
other principles as may be approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently applied. If at any
time any change in GAAP would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such
ratio or requirement to preserve the original intent thereof in light of such change in GAAP
(subject to the approval of the Required Lenders); provided that, until so amended, (a) such ratio
or requirement shall continue to be computed in accordance with GAAP prior to such change therein
and (b) the Borrower shall provide to the Administrative Agent and the Lenders financial statements
and other documents required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made before and after
giving effect to such change in GAAP.



     Governmental Authority means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative
tribunal, central bank or other legal entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.



     Guarantors means any Person and every present and future Subsidiary of Borrower which
undertakes to be liable for all or any part of the Obligations by execution of a Guaranty, or
otherwise.



     Guaranty means collectively a guaranty in form and substance satisfactory to the
Administrative Agent now or hereafter executed by any Guarantor in favor of the Administrative
Agent on behalf of the Lenders guaranteeing the Obligations.



     Guaranty Obligation means, as to any Person, (a) any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other
payment obligation of another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including, without limitation, any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other payment obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the obligee in respect of such Indebtedness or other payment
obligation of the payment of such Indebtedness or other payment obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or other payment
obligation, or (iv) entered into for the purpose of assuring in any other manner the obligees in
respect of such Indebtedness or other payment obligation of the payment thereof or to protect such
obligees against loss in respect thereof (in whole or in part), or (b) any Lien on any





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assets of such Person securing any Indebtedness or other payment obligation of any other
Person, whether or not such Indebtedness or other payment obligation is assumed by such Person;
provided, however, that the term “Guaranty Obligation” shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The amount of any
Guaranty Obligation shall be deemed to be the lesser of (a) an amount equal to the stated or
determinable outstanding amount of the related primary obligation and (b) the maximum amount for
which such guaranteeing Person may be liable pursuant to the terms of the instrument embodying such
Guaranty Obligation, unless the outstanding amount of such primary obligation and the maximum
amount for which such guaranteeing Person may be liable are not stated or determinable, in which
case the amount of such Guaranty Obligation shall be the maximum reasonably anticipated liability
in respect thereof as determined by the guaranteeing Person in good faith.




     Hazardous Substance means any substance that poses a threat to, or is regulated to protect,
human health, safety, public welfare, or the environment, including without limitation (a) any
“hazardous substance,” “pollutant” or “contaminant,” and any “petroleum” or “natural gas liquids”
as those terms are defined or used under Section 101 of CERCLA, (b) “solid waste” as defined by the
federal Solid Waste Disposal Act (42 U. S.C. §§ 6901 et seq.), (c) asbestos or a material
containing asbestos, (d) any material that contains lead or lead-based paint, (e) any item or
equipment that contains or is contaminated by polychlorinated biphenyls, (f) any radioactive
material, (g) urea formaldehyde, (h) putrescible materials, (i) infectious materials, (j) toxic
microorganisms, including mold, or (k) any substance the presence or Release of which requires
reporting, investigation or remediation under any Environmental Law.



     Honor Date has the meaning set forth in Section 2.14(c)(i).



     Indebtedness means, as to any Person at a particular time, all of the following:




     (a) all obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;




     (b) the face amount of all letters of credit (including standby and commercial),
banker’s acceptances, surety bonds, and similar instruments issued for the account of such
Person and, without duplication, all drafts drawn and unpaid thereunder;




     (c) net obligations under any Swap Contract in an amount equal to (i) if such Swap
Contract has been closed out, the termination value thereof, or (ii) if such Swap Contract
has not been closed out, the mark-to-market value thereof determined on the basis of
readily available quotations provided by any recognized dealer in such Swap Contract;




     (d) whether or not so included as liabilities in accordance with GAAP, all obligations
of such Person to pay the deferred purchase price of property or services, other than trade
accounts payable in the ordinary course of business not overdue by more than 90 days, and
indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse;




     (e) Capital Leases and Synthetic Lease Obligations;



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     (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interests in such Person or any other Person or
any warrants, rights or options to acquire such Equity Interests, valued, in the case of
any redeemable preferred Equity Interests, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends; and




     (g) all Guaranty Obligations of such Person in respect of any of the foregoing.



     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner, unless such Indebtedness is
expressly made non-recourse to such Person except for customary exceptions acceptable to the
Required Lenders. The amount of any Capital Lease or Synthetic Lease Obligation as of any date
shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.
In addition, the determination of Indebtedness of the Borrower and/or its Subsidiaries shall be
made on a consolidated basis without taking into account any Indebtedness owed by any such Person
to any other such Person.



     Indemnified Liabilities has the meaning set forth in Section 10.05.



     Indemnitees has the meaning set forth in Section 10.05.



     Insurance Payment means any payment by an insurance company or other surety on account of
property damage or casualty loss to any property of the Borrower or any of its Subsidiaries.



     Intangible Assets means the amount (to the extent reflected in determining consolidated net
worth) of all unamortized debt discount and expense (to the extent, if any, recorded as an
unamortized deferred charge), unamortized deferred charges, goodwill, franchises, licenses,
patents, trademarks, trade names, copyrights, service marks and brand names; provided, that for
purposes of this definition, consolidated net worth shall be adjusted to exclude non-cash items,
including foreign currency translation adjustments, unrealized gains and losses, and mark-to-market
adjustments relating to Swap Contracts, pursuant to GAAP.



     Interest Coverage Ratio means, as of any date of determination, the ratio of (a) Consolidated
EBITDA for the period of the four prior fiscal quarters ending on such date to (b) the sum of (i)
Consolidated Interest Charges during such period and (ii) imputed interest charges on Synthetic
Leases, of the Borrower and its Subsidiaries during such period, if any.



     Interest Payment Date means, (a) as to any Revolving Loan other than a Base Rate Loan, the
last day of each Interest Period applicable to such Revolving Loan; provided, however, that if any
Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall
every three months after the beginning of such Interest Period shall also be Interest Payment
Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and
December and the Maturity Date.



     Interest Period means, as to each Eurodollar Rate Loan, the period commencing on the date such
Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending
on the date one, two, three or six months thereafter, as selected by the Borrower in its Borrowing
Notice; provided that:



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     (i) any Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar
Rate Loan, such Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;




     (ii) any Interest Period pertaining to a Eurodollar Rate Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of the calendar month at the end of such Interest Period; and




     (iii) no Interest Period shall extend beyond the Maturity Date.



     Investment means, as to any Person, any acquisition or investment by such Person, whether by
means of (a) the purchase or other acquisition of Equity Interest of another Person, (b) a loan,
advance or capital contribution to, guaranty of debt of, or purchase or other acquisition of any
other debt or Equity Interest in, another Person, including any partnership or joint venture
interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a
series of transactions) of assets of another Person that constitute a business unit. For purposes
of covenant compliance, the amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such Investment, less all returns
of principal or equity thereon, and shall, if made by the transfer or exchange of property other
than cash be deemed to have been made in an amount equal to the fair market value of such property.



     Involuntary Disposition means any loss of, damage to or destruction of, or any condemnation or
other taking for public use of, any property of the Borrower or any Subsidiary.



     IRS means the United States Internal Revenue Service.



     Laws means, collectively, all applicable international, foreign, federal, state and local
statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents
or authorities, including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, licenses, authorizations and permits of, any Governmental
Authority.



     L/C Advance means, with respect to each Lender, such Lender’s participation in any L/C
Borrowing in accordance with its Pro Rata Share.



     L/C Borrowing means an extension of credit resulting from a drawing under any Letter of Credit
which has not been reimbursed on the date when made or refinanced as a Borrowing.



     L/C Credit Extension means, with respect to any Letter of Credit, the issuance thereof or
extension of the expiry date thereof, or the renewal or increase of the amount thereof.



     L/C Issuer means Royal Bank of Canada in its capacity as issuer of Letters of Credit
hereunder, or any successor issuer of Letters of Credit hereunder.



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     L/C Obligations means, as at any date of determination, the aggregate undrawn face amount of
all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C
Borrowings.



     Lender has the meaning specified in the introductory paragraph hereto and, as the context
requires, includes the L/C Issuer.



     Lender Hedging Agreement means a Swap Contract between the Borrower and a Lender or an
Affiliate of a Lender.



     Lending Office means, as to any Lender, the office or offices of such Lender set forth on its
Administrative Details Form, or such other office or offices as a Lender may from time to time
notify the Borrower and the Administrative Agent.



     Letter of Credit means any standby letter of credit issued hereunder.



     Letter of Credit Application means an application and agreement for the issuance or amendment
of a letter of credit in the form from time to time in use by the L/C Issuer.



     Letter of Credit Expiration Date means the day that is five days prior to the Maturity Date
(or, if such day is not a Business Day, the next preceding Business Day).



     Letter of Credit Sublimit means an amount equal to the lesser of (i) the Aggregate Revolving
Commitment and (ii) $5,000,000.



     Leverage Ratio means, for the Borrower and its Subsidiaries on a consolidated basis, the ratio
of (a) Consolidated Funded Debt as of the determination date to (b) Consolidated EBITDA for the
period of the four fiscal quarters ending on such date, or if such date is not the last day of a
fiscal quarter, ending on the last day of the fiscal quarter most recently ended.



     Lien means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge, or preference, priority or other security interest or
preferential arrangement of any kind or nature whatsoever to secure or provide for payment of any
obligation of any Person (including any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the UCC or comparable Laws of any jurisdiction), including
the interest of a purchaser of accounts receivable.



     Loan Documents means this Agreement, each Revolver Note, each of the Collateral Documents, the
Agent/Arranger Fee Letter, each Borrowing Notice, each Compliance Certificate, each Subordination
Agreement, each Letter of Credit Application, and each other agreement, document or instrument
delivered by the Borrower or any of its Subsidiaries from time to time in connection with this
Agreement and the Revolver Notes.



     Loan Party means each of the Borrower, each Guarantor, and each other entity that is an
Affiliate of the Borrower that executes one or more Loan Documents.



     Master Agreement has the meaning specified in the definition of Swap Contract.



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     Material Adverse Effect means: (a) a material adverse change in, or a material adverse effect
upon, the operations, business, properties or condition (financial or otherwise) or prospects of
the Borrower or any of its Subsidiaries; (b) a material impairment of the ability of the Borrower,
or any other Loan Party to perform their obligations under the Loan Documents to which it is a
party; or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Borrower or any other Loan Party of any Loan Documents or the rights and
remedies of Agent or any Lender thereunder.



     Material Agreement means each agreement set forth in Schedule 5.23.



     Maturity Date means the earlier of (a) January 18, 2010, or (b) such earlier effective date of
any other termination, cancellation, or acceleration of the Aggregate Revolving Commitment under
this Agreement.



     Maximum Amount and Maximum Rate respectively mean, for each Lender, the maximum non-usurious
amount and the maximum non-usurious rate of interest which, under applicable Law, such Lender is
permitted to contract for, charge, take, reserve, or receive on the Obligations.



     Mexican CapEx means capital expenditures by any Loan Party for the purchase of equipment or
fixed or capital assets intended for use in, or actually used in, Mexico.



     Moody’s means Moody’s Investors Service, Inc.



     Multiemployer Plan means any employee benefit plan of the type described in Section 4001(a)(3)
of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions,
or during the preceding three calendar years, has made or been obligated to make contributions.



     Net Cash Proceeds means (i) cash received in connection with any Equity Issuance, (ii) cash
received in connection with any Debt Issuance, (iii) any Insurance Payment and (iv) cash received
in connection with any Disposition (including any cash received by way of deferred payment as and
when received), in each case received by the Borrower or any of its Subsidiaries in connection with
and as consideration therefor, on or after the date of consummation of such transaction, after (i)
deduction of Taxes payable in connection with or as a result of such transaction, and (ii) payment
of all usual and customary brokerage commissions and all other reasonable fees and expenses related
to such transaction (including, without limitation, reasonable attorneys’ fees and closing costs
incurred in connection with such transaction).



     Nonrenewal Notice Date has the meaning specified in Section 2.14(b)(iii).



     Obligations means all advances to, and debts, liabilities, obligations, covenants and duties
of, any Loan Party arising under any Loan Document, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter
arising and including interest that accrues after the commencement by or against any Loan Party of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding. In
addition, all references to the “Obligations” in the Collateral Documents and in Sections 2.13 and
10.09 of this Agreement shall, in addition to the foregoing, also include all present and future
indebtedness, liabilities, and obligations (and all renewals and extensions thereof or any part
thereof now or hereafter owed to any Lender or any Affiliate of a Lender arising pursuant to any
Lender Hedging Agreement.



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     Obligor means the Borrower or any other Person (other than the Administrative Agent or any
Lender) obligated under any Loan Document.



     Organization Documents means, (a) with respect to any corporation, the certificate or articles
of incorporation and the bylaws, (b) with respect to any limited liability company, the certificate
of formation and operating agreement or limited liability company agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation and any agreement, instrument, filing or notice
with respect thereto filed in connection with its formation with the secretary of state or other
department in the state of its formation, in each case as amended from time to time.



     Other Taxes has the meaning specified in Section 3. 01(b).



     Outstanding Amount on any date (i) with respect to Revolving Loans, means the aggregate
principal amount thereof after giving effect to any Borrowings and prepayments or repayments
occurring on such date, (ii) with respect to any L/C Obligations, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under Letters of Credit taking effect on
such date, and (iii) for purposes of Section 2.11(d) with respect to Obligations under a Lender
Hedging Agreement, means the amount then due and payable under such Lender Hedging Agreement.



     Participant has the meaning specified in Section 10.07(d).



     PBGC means the Pension Benefit Guaranty Corporation.



     Pension Plan means any “employee pension benefit plan” (as such term is defined in Section
3(2)(A) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is
sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.



     Permitted Acquisitions means any Acquisition by the Borrower or a Subsidiary of the Borrower
resulting in ownership of assets inside the United States, or of equity interests in a Domestic
Person; provided, however, that the following requirements have been satisfied:




     (i) if such Acquisition results in the Borrower’s ownership of a Subsidiary, the
Borrower shall have complied with the requirements of Sections 6.13 and 6.14 as of the date
of such Acquisition;




     (ii) with respect to Acquisitions involving acquisitions of an equity interest, such
Acquisition shall have been approved or consented to by the board of directors or similar
governing entity of the Person being acquired; and




     (iii) as of the closing of such Acquisition no Default or Event of Default shall exist
or occur as a result of, and after giving effect to, such Acquisition.



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     Permitted Liens means Liens permitted under Section 7.01 as described in such Section.



     Person means any individual, trustee, corporation, general partnership, limited partnership,
limited liability company, joint stock company, trust, unincorporated organization, bank, business
association, firm, joint venture or Governmental Authority.



     Plan means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA)
established by the Borrower or any ERISA Affiliate.



     Pro Rata Share means, at any date of determination, for any Lender, the percentage (carried
out to the ninth decimal place) that its Revolving Commitment bears to the Aggregate Revolving
Commitment.



     Reduction Amount has the meaning set forth in the definition of “Triggering Sale”.



     Register has the meaning set forth in Section 10.07(c).



     Reinvested means used (or committed by the Borrower for use) for Capital Expenditures or
Acquisitions in connection with the oil field services business of the Borrower or any of its
domestic Subsidiaries.



     Reinvestment Certificate means with respect to any Triggering Sale, a certificate of a
Responsible Officer of the Borrower delivered pursuant to Section 6.02(d) detailing how the
Reduction Amount corresponding to such Triggering Sale has been Reinvested and the portion of such
Reduction Amount which has not been Reinvested.



     Related Parties means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person and such Person’s
Affiliate.



     Release means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, disposal, deposit, dispersal, migrating, or other movement
into the air, ground, or surface water, or soil.



     Reportable Event means any of the events set forth in Section 4043(c) of ERISA, other than
events for which the 30 day notice period has been waived.



     Request for Credit Extension means (a) with respect to a Borrowing, conversion or continuation
of Revolving Loans, a Borrowing Notice, and (b) with respect to an L/C Extension, a Letter of
Credit Application.



     Required Lenders means (a) on any date of determination on and after the First Amendment
Closing Date and prior to the date of the initial Borrowing under this Agreement, those Lenders
holding more than 66-2/3% of the Aggregate Revolving Commitment, (b) on any date of determination
on and after the date of the initial Borrowing under this Agreement and prior to the Maturity Date,
those Lenders holding more than 66- 2/3% of the Outstanding Amount of Revolving Loans.



     Responsible Officer means the president, chief executive officer, executive vice president,
senior vice president, vice president, chief financial officer, controller, treasurer, assistant
treasurer, secretary or



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general counsel of a Person. Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership, limited liability company, and/or other action
on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have
acted on behalf of such Loan Party.




     Restricted Payment by a Person means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interest in such Person, or any payment
(whether in cash, securities or other property), including any sinking fund or similar deposit on
account of the purchase, redemption, retirement, acquisition, cancellation or termination of any
such Equity Interest or of any option, warrant or other right to acquire any such Equity Interest.



     Revolver Facility means the revolving credit facility as described in and subject to the
limitations set forth in Section 2.01(a).



     Revolver Facility Committed Sum means for any Lender with respect to the Revolver Facility, at
any date of determination occurring prior to the Maturity Date, the amount stated beside such
Lender’s name under the heading for the Revolver Facility Commitment on the most-recently amended
Schedule 2.01 to this Agreement (which amount is subject to increase, reduction, or cancellation in
accordance with the Loan Documents).



     Revolver Note means a promissory note of Borrower in substantially the form of Exhibit B-1,
evidencing the obligation of Borrower to repay the Revolving Loans and all renewals and extensions
of all or any part thereof and “Revolver Notes” refers to all such promissory notes.



     Revolver Principal Debt means, on any date of determination, the aggregate unpaid principal
balance of all Revolving Loans under the Revolver Facility.



     Revolving Commitment means as to each Lender, its obligation to make Revolving Loans to the
Borrower pursuant to Section 2.01(a) and to purchase participations in L/C Obligations pursuant to
Section 2.14, in an aggregate principal amount at any one time outstanding not to exceed, when
aggregated with the Revolving Loans made pursuant to Section 2.01(a), its Revolver Facility
Committed Sum, in each case as such amount may be reduced or adjusted from time to time in
accordance with this Agreement (collectively, the “Aggregate Revolving Commitment”).



     Revolving Loan means an extension of credit by a Lender to the Borrower pursuant to Section
2.01(a).



     Rights means rights, remedies, powers, privileges, and benefits.



     S&P means Standard & Poor’s.



     Security Agreements means, collectively, the security agreements, or similar instruments,
executed by any of the Loan Parties in favor of the Administrative Agent for the benefit of the
Lenders, in form and substance satisfactory to the Administrative Agent and all supplements,
assignments, amendments, and restatements thereto (or any agreement in substitution therefor), and
“Security Agreement” means each of such Security Agreements.



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     Senior Leverage Ratio means, for the Borrower and its Subsidiaries on a consolidated basis,
the ratio of (a) Consolidated Senior Debt as of the determination date to (b) Consolidated EBITDA
for the period of the four fiscal quarters ending on such date, or if such date is not the last day
of a fiscal quarter, ending on the last day of the fiscal quarter most recently ended.



     Senior Unsecured Notes means the senior notes due 2014 of the Borrower in an original
principal amount no greater than $165,000,000 issued pursuant to that certain Indenture among the
Borrower, its Subsidiaries party thereto and Wells Fargo Bank, N.A., as trustee, which senior notes
are described in Borrower’s Preliminary Offering Memorandum dated December 28, 2005.



     Subordinated Indebtedness means collectively (i) the AirComp Related Subordinated
Indebtedness, and (ii) any other Indebtedness of Borrower or any of its Subsidiaries subordinated
to the Obligations pursuant to a Subordination Agreement in form and substance satisfactory to the
Administrative Agent.



     Subordination Agreements means collectively (i) the AirComp Related Subordination Agreement,
and (ii) any other subordination agreement with Borrower or any of its Subsidiaries subordinating
any Indebtedness to the Obligations pursuant to a subordination agreement in form and substance
satisfactory to the Administrative Agent and Subordination Agreement refers to any one of the
foregoing.



     Subsidiary of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which more than 50% of the Voting Stock at the time
beneficially owned, or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of the Borrower.



     Swap Contract means (a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.



     Swap Termination Value means, in respect of any one or more Swap Contracts, after taking into
account the effect of any legally enforceable netting agreement relating to such Swap Contracts,
(a) for any date on or after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior
to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for
such Swap Contracts, as determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender).



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     Synthetic Lease Obligation means the monetary obligation of a Person under (a) a so-called
synthetic or tax retention lease, or (b) an agreement for the use or possession of property
creating obligations that do not appear on the balance sheet of such Person but which are
depreciated for tax purposes by such Person. The amount of any Synthetic Lease Obligation as of
any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of
such date.



     Taxes has the meaning set forth in Section 3.01.



     Threshold Amount at any time means an amount equal to five (5%) of the Borrower’s consolidated
assets measured as of the close of the then most recent fiscal quarter end.



     Triggering Sale means receipt of any Insurance Payment and any Disposition (including sales of
stock or other equity interests of Subsidiaries) (other than a Disposition permitted by Section
7.07(a), (b) or (c)) by the Borrower or any Subsidiary to any other Person (other than to the
Borrower or to a Wholly-Owned Subsidiary of the Borrower) with respect to which the Net Cash
Proceeds realized by Borrower or any Subsidiary for such Disposition and from any Insurance
Payments, when aggregated with the Net Cash Proceeds from all such other Dispositions by the
Borrower and its Subsidiaries occurring since the First Amendment Closing Date and all Insurance
Payments received by the Borrower and its Subsidiaries since the First Amendment Closing Date,
equals or exceeds the Threshold Amount. The portion of the Net Cash Proceeds in excess of the
Threshold Amount is herein called the “Reduction Amount.”



     Triggering Sale Certificate means with respect to any Triggering Sale, a certificate of a
Responsible Officer of the Borrower delivered pursuant to Section 6.02(c) identifying such
Triggering Sale and specifying the date of receipt by Borrower or any Subsidiary of Net Cash
Proceeds realized from a Disposition or from any Insurance Payment and specifying the amount
thereof and the Reduction Amount, if any.



     Type means, with respect to a Revolving Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.



     UCC means the Uniform Commercial Code as in effect in the State of Texas or other applicable
jurisdiction.



     Unfunded Pension Liability means the excess of a Pension Plan’s benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.



     United States or U.S. means the United States of America, its fifty states and the District of
Columbia.



     Unreimbursed Amount has the meaning set forth in Section 2.14(c)(i).



     Voting Stock means the capital stock (or equivalent thereof) of any class or kind, of a
Person, the holders of which are entitled to vote for the election of directors, managers, or other
voting members of the governing body of such Person.



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     Wholly-Owned when used in connection with a Person means any Subsidiary of such Person of
which all of the issued and outstanding Equity Interests (except shares required as directors’
qualifying shares) are owned by such Person or one or more of its Wholly-Owned Subsidiaries.



1.02 Other Interpretive Provisions.




     (a) The meanings of defined terms are equally applicable to the singular and plural forms of
the defined terms.



     (b) (i) The words “herein” and “hereunder” and words of similar import when used in any Loan
Document shall refer to such Loan Document as a whole and not to any particular provision thereof.




     (ii) Unless otherwise specified herein, Article, Section, Exhibit and Schedule
references are to this Agreement.




     (iii) The term “including” is by way of example and not limitation.




     (iv) The term “documents” includes any and all instruments, documents, agreements,
certificates, notices, reports, financial statements and other writings, however evidenced.



     (c) In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;”
and the word “through” means “to and including.”



     (d) Section headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any other Loan
Document.



     1.03 Accounting Terms. All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect
from time to time, applied in a manner consistent with that used in preparing the audited financial
statements, except as otherwise specifically prescribed herein.



     1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a rounding-up if there is no
nearest number).



     1.05 References to Agreements and Laws. Unless otherwise expressly provided herein, (a) references
to agreements (including the Loan Documents) and other contractual instruments shall be deemed to
include all subsequent amendments, restatements, extensions, supplements and other modifications
thereto, but only to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by any Loan Document; and (b) references to any Law shall
include all statutory and regulatory provisions consolidating, amending, replacing, supplementing
or interpreting such Law.



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ARTICLE II.

THE REVOLVING COMMITMENT AND BORROWINGS




     2.01 Revolving Loans. Subject to and in reliance upon the terms, conditions, representations, and
warranties in the Loan Documents, each Lender severally, but not jointly, agrees to make revolving
loans (each such loan a “Revolving Loan”) to Borrower from time to time on any Business Day during
the period from the First Amendment Closing Date to the Maturity Date, in an aggregate amount not
to exceed at any time outstanding the amount of such Lender’s Pro Rata Share of one or more
Revolving Loan Borrowings not to exceed, when aggregated with the Outstanding Amount of the L/C
Obligations, such Lender’s Revolving Commitment. Revolving Loan Borrowings may be repaid and
reborrowed from time to time in accordance with the terms and provisions of the Loan Documents;
provided that, each such Revolving Loan Borrowing must occur on a Business Day and no later than
the Business Day immediately preceding the Maturity Date. Revolving Loans may be Base Rate Loans
or Eurodollar Rate Loans, as further provided herein; provided, however, all Revolving Loan
Borrowings made on the First Amendment Closing Date shall be made as Base Rate Loans.



     2.02 Intentionally Omitted.



     2.03 Borrowings, Conversions and Continuations of Revolving Loans.



     (a) Each Borrowing, each conversion of Revolving Loans from one interest rate Type to the
other, and each continuation of Revolving Loans as the same interest rate Type shall be made upon
the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone.
Each such notice must be received by the Administrative Agent not later than 11:00 a.m., New York
time, three Business Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurodollar Rate Loans, and one Business Day prior to the requested date of any
Borrowing of, conversion to or continuation of Base Rate Loans. Each such telephonic notice must
be confirmed promptly by delivery to the Administrative Agent of a written Borrowing Notice,
appropriately completed and signed by an authorized officer of the Borrower. Each Borrowing of,
conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $500,000
or a whole multiple of $500,000 in excess thereof. Each Borrowing of or conversion to Base Rate
Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.
Each Borrowing Notice (whether telephonic or written) shall specify (i) whether the Borrower is
requesting a Borrowing, a conversion of Revolving Loans from one interest rate Type to the other,
or a continuation of Revolving Loans as the same interest rate Type, (ii) the requested date of the
Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii)
the principal amount of Revolving Loans to be borrowed, converted or continued, (v) the interest
rate Type of Revolving Loans to be borrowed or to which existing Revolving Loans are to be
converted, and (vi) if applicable, the duration of the Interest Period with respect thereto. If
the Borrower fails to specify the interest rate Type for a Revolving Loan in a Borrowing Notice or
if the Borrower fails to give a timely notice requesting a conversion or continuation, then the
applicable Revolving Loans shall be made or continued as, or converted to, Base Rate Loans. Any
such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest
Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower
requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such
Borrowing Notice, but fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one month.



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     (b) Following receipt of a Borrowing Notice, the Administrative Agent shall promptly notify
each Lender of its Pro Rata Share of the applicable Revolving Loans, and if no timely notice of a
conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each
Lender of the details of any automatic conversion to Base Rate Loans described in the preceding
subsection. In the case of a Borrowing, each Lender shall make the amount of its Revolving Loan
available to the Administrative Agent in immediately available funds at the Administrative Agent’s
Office not later than 11:00 a.m., New York time, on the Business Day specified in the applicable
Borrowing Notice. Upon satisfaction of the applicable conditions set forth in Section 4.01 and
Section 4.03 (and in the case of a Revolving Loan to fund a Permitted Acquisition, Section 4.04),
the Administrative Agent shall make all funds so received available to the Borrower in like funds
as received by the Administrative Agent either by (i) crediting the account of the Borrower on the
books of the Administrative Agent with the amount of such funds or (ii) wire transfer of such
funds, in each case in accordance with instructions provided to the Administrative Agent by the
Borrower; provided, however, that if, on the date of the Borrowing there are L/C Borrowings
outstanding, then the proceeds of such Borrowing shall be applied, first, to the payment in full of
any such L/C Borrowings, and second, to the Borrower as provided above.



     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted
only on the last day of the Interest Period for such Eurodollar Rate Loan. During the existence of
a Default or Event of Default, no Revolving Loans may be requested as, converted to or continued as
Eurodollar Rate Loans without the consent of the Required Lenders, and the Required Lenders may
demand that any or all of the then outstanding Eurodollar Rate Loans be converted immediately to
Base Rate Loans.



     (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Eurodollar Rate Loan upon determination of such interest rate. The
determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence
of manifest error.



     (e) After giving effect to all Borrowings, all conversions of Revolving Loans from one
interest rate Type to the other, and all continuations of Revolving Loans as the same interest rate
Type, there shall not be more than six (6) Interest Periods in effect at any given time with
respect to Revolving Loans.



     2.04 Prepayments.



     (a) Optional Prepayments. The Borrower may, upon notice to the Administrative Agent,
at any time or from time to time voluntarily prepay in whole or in part Revolving Loans outstanding
under the Revolver Facility without premium or penalty; provided that (i) such notice must be
received by the Administrative Agent not later than 11:00 a.m., New York time, (A) three Business
Days prior to any date of prepayment of Eurodollar Rate Loans, and (B) one Business Day prior to
any date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in
a principal amount of $500,000 or a whole multiple of $500,000 in excess thereof; and (iii) any
prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof. Each such notice shall specify the date and amount of such prepayment
and the Type(s) of Revolving Loans and the interest rate Type(s) to be prepaid. The Administrative
Agent will promptly notify each Lender of its receipt of each such notice, and of such Lender’s Pro
Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower shall make
such prepayment and the payment amount specified in such notice shall be due and payable on the
date specified therein. Any prepayment of a Eurodollar Rate



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Loan shall be accompanied by all
accrued interest thereon, together with any additional amounts required pursuant to Section 3.05.
Each such prepayment shall be applied to the Revolving Loans of the Lenders in accordance with
their respective Pro Rata Shares.




     Unless a Default or Event of Default has occurred and is continuing or would arise as a result
thereof, any payment or prepayment of the Revolving Loans (including prepayments pursuant to
Section 2.04(b)) may be reborrowed by Borrower, subject to the terms and conditions hereof.



     (b) Mandatory Prepayments from Net Cash Proceeds.




     (i) If any portion of the Reduction Amount from any Triggering Sale (including any
deferred purchase price therefor) has not been Reinvested within one hundred eighty (180)
days from the receipt by Borrower or any Subsidiary of such Reduction Amount (including
receipt of any deferred payments for any such Triggering Sale or portion thereof, if and
when received), then on the Business Day following such one hundred eightieth (180th) day
the Revolving Loans shall be prepaid, in an amount equal to the portion of the Reduction
Amount that is not so Reinvested, as provided in Section 2.04(b)(v). Net Cash Proceeds
from Insurance Payments and Dispositions that equal, when aggregated with Net Cash Proceeds
from all Insurance Payments and Dispositions since the First Amendment Closing Date, an
amount less than the Threshold Amount shall not be required to be used for mandatory
prepayments reductions pursuant to this Section 2.04(b).




     (ii) Upon receipt by Borrower or any Subsidiary of any Reduction Amount, the Borrower
shall deliver a Triggering Sale Certificate to the Administrative Agent and each Lender
pursuant to Section 6.02(c). The Borrower shall apply such Reduction Amount as a
prepayment of the Revolving Loans but shall have the right to reborrow such Reduction
Amount from time to time in accordance with the terms and provisions of this Agreement
until the one hundred eightieth (180th) day following the receipt of such
Reduction Amount. If such Reduction Amount has been Reinvested within such one hundred
eighty (180) day period as reflected on the Reinvestment Certificate delivered to the
Administrative Agent pursuant to Section 6.02(d), then there shall be no prepayment of the
Revolving Loans. However, if the Reduction Amount has not been Reinvested within one
hundred eighty (180) days following its receipt by Borrower or any Subsidiary, on the
Business Day following such one hundred eightieth (180th) day, the Borrower
shall (i) prepay the Revolving Loans or Cash Collateralize the L/C Obligations if required
by Section 2.04(c) and (ii) deliver to the Administrative Agent a certificate from a
Responsible Officer of the Borrower demonstrating pro forma compliance with the Fixed Asset
Coverage Ratio covenant set forth in Section 7.19(d) after giving effect to all Triggering
Sales.




     (iii) Debt Issuances. Immediately upon receipt by the Borrower or any
Subsidiary of the Net Cash Proceeds of any Debt Issuance, the Borrower shall prepay the
Revolving Loans and/or Cash Collateralize the L/C Obligations as hereafter provided in an
aggregate amount equal to 100% of such Net Cash Proceeds (such prepayment to be applied as
set forth in clause (v) below).




     (iv) Equity Issuances. Immediately upon the receipt by the Borrower of the
Net Cash Proceeds of any Equity Issuance, the proceeds of which are not used to finance a
Permitted Acquisition, the Borrower shall prepay the Revolving Loans and/or Cash
Collateralize the L/C Obligations in an aggregate amount equal to 100% of such Net Cash
Proceeds (such prepayment to be applied as set forth in clause (v) below). Net Cash
Proceeds of any Equity Issuance, the proceeds



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of which are used to finance a Permitted
Acquisition, shall not be required to be used to prepay the Revolving Loans and/or Cash
Collateralize the L/C Obligations. Whether Net Cash Proceeds of any Equity Issuance are
used for a Permitted Acquisition or another type of acquisition, if such acquisition would
be subject to Section 6.15, the Borrower shall comply with the requirements of Section
6.15.




     (v) Application of Mandatory Prepayments. All amounts required to be paid
pursuant to this Section 2.04(b)(i), (iii) and (iv) shall be applied as follows:




     First, to the payment of any L/C Borrowing;




     Second, to the payment of any unpaid fees or expenses of the Administrative
Agent;




     Third, to the Revolving Loan (without a corresponding reduction in the
Aggregate Revolving Commitment); and




     Fourth, after all Revolving Loans have been repaid, to Cash Collateralize L/C
Obligations.



     Within the parameters of the applications set forth above, prepayments shall be applied first
to Base Rate Loans and then to Eurodollar Rate Loans in direct order of Interest Period maturities.



     (c) Prepayments by Reason of Aggregate Revolving Commitment Exceeded. If on any
date the Outstanding Amount of all Revolving Loans and L/C Obligations shall exceed the Aggregate
Revolving Commitment, then the Borrower shall immediately make mandatory prepayments of Revolving
Loans equal to such excess, and if any such excess remains after such prepayments, to the extent of
such excess the Borrower shall immediately Cash Collateralize the L/C Obligations.



     (d) Prepayments: Interest/Funding Loss. All prepayments under this Section 2.04
shall be subject to Section 3.05, but otherwise without premium or penalty, and shall be
accompanied by interest on the principal amount prepaid through the date of prepayment.



     2.05 Reduction or Termination of Commitments. The Borrower may, upon notice to the Administrative
Agent terminate the Revolving Commitment prior to the Maturity Date to an amount not less than the
sum of the Outstanding Amount of the then existing (a) Revolver Principal Debt and (b) L/C
Obligations; provided that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m., five Business Days prior to the date of termination or reduction, and (ii)
any such partial reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of
$500,000 in excess thereof. The Administrative Agent shall promptly notify the Lenders of any
such notice of reduction or termination. Once reduced in accordance with this Section, the
Revolving Commitment may not be increased. Any reduction of the Revolving Commitment shall be
applied to the corresponding Revolving Commitment of each Lender according to its Pro Rata Share.
All commitment fees on the portion of the Revolving Commitment so terminated which have accrued to
the effective date of any termination of the Revolving Commitment shall be paid on the effective
date of such termination.



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     2.06 Repayment of Revolving Loans. The Borrower shall repay to the Lenders on the Maturity Date
the aggregate Revolver Principal Debt outstanding on such date.



     2.07 Interest.



     (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall
bear interest on the outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate and (ii) each
Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.



     (b) While any Event of Default exists or after acceleration (i) the Borrower shall pay
interest on the principal amount of all outstanding Obligations at a fluctuating interest rate per
annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law, and
(ii) accrued and unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.



     (c) Interest on each Revolving Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified herein. Interest
hereunder shall be due and payable in accordance with the terms hereof before and after judgment,
and before and after the commencement of any proceeding under any Debtor Relief Law.



     (d) If the designated rate applicable to any Borrowing exceeds the Maximum Rate, the rate of
interest on such Borrowing shall be limited to the Maximum Rate, but any subsequent reductions in
such designated rate shall not reduce the rate of interest thereon below the Maximum Rate until the
total amount of interest accrued thereon equals the amount of interest which would have accrued
thereon if such designated rate had at all times been in effect. In the event that at maturity
(stated or by acceleration), or at final payment of the Outstanding Amount of any Revolving Loans
or L/C Obligations, the total amount of interest paid or accrued is less than the amount of
interest which would have accrued if such designated rates had at all times been in effect, then,
at such time and to the extent permitted by Law, the Borrower shall pay an amount equal to the
difference between (a) the lesser of the amount of interest which would have accrued if such
designated rates had at all times been in effect and the amount of interest which would have
accrued if the Maximum Rate had at all times been in effect, and (b) the amount of interest
actually paid or accrued on such Outstanding Amount.



     2.08 Fees.



     (a) Commitment Fees. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Pro Rata Share (based on its Revolving Commitment as
a percentage of the Aggregate Revolving Commitment) a Revolver Facility commitment fee equal to one
half percent (0.5%) per annum times the actual daily amount by which the Aggregate Revolving
Commitment (subject to reduction pursuant to Section 2.05) exceeds the sum of (i) the Outstanding
Amount of Revolving Loans plus (ii) the Outstanding Amount of L/C Obligations. The Revolver
Facility commitment fee shall accrue at all times from the First Amendment Closing Date until the
Maturity Date, shall be calculated quarterly in arrears and shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December, commencing with the
first such date to occur after the First Amendment Closing Date, and on the Maturity Date. The
Revolver Facility



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commitment fee shall accrue at all times, including at any time during which one
or more of the conditions in Article IV is not met; and




     (b) Arranger’s and Administrative Agent’s Fees. On the First Amendment Closing Date,
the Borrower shall pay certain fees to the Arranger and Administrative Agent to be shared between
them and the Borrower shall pay certain fees to the Administrative Agent for the Administrative
Agent’s own account as an administrative agency fee, in the amounts and at the times specified in
the letter agreement dated December 2, 2005 (the “Agent/Arranger Fee Letter”), between the
Borrower, the Arranger and the Administrative Agent. Such fees shall be fully earned when paid and
shall be nonrefundable for any reason whatsoever. Additionally, Borrower shall pay to the
Administrative Agent for the Administrative Agent’s own account the fees in the amounts and on the
dates specified in the Agent/Arranger Fee Letter.



     2.09 Computation of Interest and Fees. Computation of interest on Base Rate Loans shall be
calculated on the basis of a year of 365 or 366 days, as the case may be, and the actual number of
days elapsed. Computation of all other types of interest and all fees shall be calculated on the
basis of a year of 360 days and the actual number of days elapsed. Interest shall accrue on each
Revolving Loan for the day on which the Revolving Loan is made, and shall not accrue on a Revolving
Loan, or any portion thereof, for the day on which the Revolving Loan or such portion is paid;
provided that any Revolving Loan that is repaid on the same day on which it is made shall bear
interest for one day.



     2.10 Evidence of Debt.



     (a) The Revolving Loans made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender and by the Administrative Agent in the ordinary course of
business. The accounts or records maintained by the Administrative Agent and each Lender shall be
conclusive, absent manifest error, of the amount of the Revolving Loans made by the Lenders to the
Borrower and the interest and payments thereon. Any failure so to record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Revolving Loans or the L/C Obligations. In the event of any
conflict between the accounts and records maintained by any Lender and the accounts and records of
the Administrative Agent in respect of such matters, the accounts and records of such Lender shall
control. Upon the request of any Lender made through the Administrative Agent, such Lender’s
Revolving Loans may be evidenced by one or more Revolver Notes. Each Lender may attach schedules
to its Revolver Note(s) and endorse thereon the date, Type (if applicable), amount and maturity of
the applicable Revolving Loans and payments with respect thereto.



     (b) In addition to the accounts and records referred to in subsection (a), each Lender and the
Administrative Agent shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the
event of any conflict between the accounts and records maintained by the Administrative Agent and
the accounts and records of any Lender in respect of such matters, the accounts and records of the
Administrative Agent shall control.



     2.11 Payments Generally.



     (a) All payments to be made by the Borrower shall be made without condition or deduction for
any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein,
all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account
of the



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respective Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 11:00 a.m., New York time, on the date
specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata
Share (or other applicable share as provided herein) of such payment in like funds as received by
wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent
after 11:00 a.m., New York time, shall be deemed received on the next succeeding Business Day and
any applicable interest or fee shall continue to accrue.




     (b) Subject to the definition of “Interest Period,” if any payment to be made by the Borrower
shall come due on a day other than a Business Day, payment shall be made on the next following
Business Day, and such extension of time shall be reflected in computing interest or fees, as the
case may be.



     (c) If no Default or Event of Default exists and if no order of application is otherwise
specified in the Loan Documents, payments and prepayments of the Obligations shall be applied first
to fees, second to accrued interest then due and payable on the Outstanding Amount of Revolving
Loans and L/C Obligations, and then to the remaining Obligations in the order and manner as
Borrower may direct.



     (d) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully the Obligations, or if a Default or Event of Default exists (and Section 8.03 is
not by its terms applicable), any payment or prepayment shall be applied in the following order:
(i) to the payment of enforcement expenses incurred by the Administrative Agent, including Attorney
Costs; (ii) to the ratable payment of all other fees, expenses, and indemnities for which the
Administrative Agent or Lenders have not been paid or reimbursed in accordance with the Loan
Documents (as used in this Section 2.11(d)(ii), a “ratable payment” for any Lender or the
Administrative Agent shall be, on any date of determination, that proportion which the portion of
the total fees, expenses, and indemnities owed to such Lender or the Administrative Agent bears to
the total aggregate fees and indemnities owed to all Lenders and the Administrative Agent on such
date of determination); (iii) to the ratable payment of accrued and unpaid interest on the
Outstanding Amount of Revolving Loans, Outstanding L/C Obligations and the Outstanding Amount of
Obligations under Lender Hedging Agreements; and (iv) to the payment of the remaining Obligations,
if any, in the order and manner the Required Lenders deem appropriate.



     (e) Unless the Borrower or any Lender has notified the Administrative Agent prior to the date
any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower
or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume
that the Borrower or such Lender, as the case may be, has timely made such payment and may (but
shall not be so required to), in reliance thereon, make available a corresponding amount to the
Person entitled thereto. If and to the extent that such payment was not in fact made to the
Administrative Agent in immediately available funds, then:




     (i) if the Borrower failed to make such payment, each Lender shall forthwith on demand
repay to the Administrative Agent the portion of such assumed payment that was made
available to such Lender in immediately available funds, together with interest thereon in
respect of each day from and including the date such amount was made available by the
Administrative Agent to such Lender to the date such amount is repaid to the Administrative
Agent in immediately available funds, at the Federal Funds Rate from time to time in
effect; and



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     (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand
pay to the Administrative Agent the amount thereof in immediately available funds, together
with interest thereon for the period from the date such amount was made available by the
Administrative Agent to the Borrower to the date such amount is recovered by the
Administrative Agent (the “Compensation Period”) at a rate per annum equal to the Federal
Funds Rate from time to time in effect. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Revolving Loan,
included in the applicable Borrowing. If such Lender does not pay such amount forthwith
upon the Administrative Agent’s demand therefor, the Administrative Agent may make a demand
therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative
Agent, together with interest thereon for the Compensation Period at a rate per annum equal
to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be
deemed to relieve any Lender from its obligation to fulfill its Revolving Commitment or to
prejudice any rights which the Administrative Agent or the Borrower may have against any
Lender as a result of any default by such Lender hereunder.



     A notice of the Administrative Agent to any Lender with respect to any amount owing under this
subsection (e) shall be conclusive, absent manifest error.



     (f) If any Lender makes available to the Administrative Agent funds for any Revolving Loan to
be made by such Lender as provided in the foregoing provisions of this Article II, and the
conditions to the applicable Borrowing set forth in Article IV are not satisfied or waived in
accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds
as received from such Lender) to such Lender, without interest.



     (g) The obligations of the Lenders hereunder to make Revolving Loans are several and not
joint. The failure of any Lender to make any Revolving Loan on any date required hereunder shall
not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender
shall be responsible for the failure of any other Lender to so make its Revolving Loan or purchase
its participation.



     (h) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any
Revolving Loan in any particular place or manner or to constitute a representation by any Lender
that it has obtained or will obtain the funds for any Revolving Loan in any particular place or
manner.



     2.12 Sharing of Payments. If, other than as expressly provided elsewhere herein, any Lender shall
obtain on account of the Revolving Loans made by it, or the participations in the L/C Obligations,
any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such
Lender shall immediately (a) notify the Administrative Agent, of such fact, and (b) purchase from
the other Lenders such participations in the Revolving Loans made by them, and/or such
subparticipations in the participations in L/C Obligations held by them, as shall be necessary to
cause such purchasing Lender to share the excess payment in respect of such Revolving Loan or such
participations, as the case may be, pro rata with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing Lender, such
purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing
Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s
ratable share (according to the proportion of (i) the amount of such paying Lender’s required
repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.
The



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Borrower agrees that any Lender so purchasing a participation from another Lender may, to the
fullest extent permitted by Law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.09) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such participation. The
Administrative Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments. Each Lender that purchases a participation
pursuant to this Section shall from and after such purchase have the right to give all notices,
requests, demands, directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing Lender were the
original owner of the Obligations purchased.




     2.13 Priority of Hedging Obligations. Any amounts received in satisfaction of any Obligations
arising under the Loan Documents, including, without limitation, Obligations under this Agreement
and Obligations under any Lender Hedging Agreement shall rank pari passu in right of payment and
shall be used to repay such Obligations on a pro rata basis, unless specified otherwise in Section
2.11(d).



     2.14 Letters of Credit.



     (a) The Letter of Credit Commitment.




     (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees,
in reliance upon the agreements of the other Lenders set forth in this Section 2.14, (1)
from time to time on any Business Day during the period from the First Amendment Closing
Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account
of the Borrower or any of its Subsidiaries, and to amend or renew Letters of Credit
previously issued by it, in accordance with subsection (b) below, and (2) to honor drafts
under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters
of Credit issued for the account of the Borrower and its Subsidiaries; provided that the
L/C Issuer shall not be obligated to make any L/C Credit Extension with respect to any
Letter of Credit, and no Lender shall be obligated to participate in any Letter of Credit,
if as of the date of such L/C Credit Extension, (w) the Outstanding Amount of all L/C
Obligations and all Revolving Loans would exceed the Aggregate Revolving Commitment, (y)
the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s
Pro Rata Share of the Outstanding Amount of all L/C Obligations would exceed such Lender’s
Revolving Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed the
Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and
conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit that have expired or that have been drawn upon and
reimbursed.




     (ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if:




     (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law
applicable to the L/C Issuer or any request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request
that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall




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impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is not
otherwise compensated hereunder) not in effect on the First Amendment Closing Date,
or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was
not applicable on the First Amendment Closing Date and which the L/C Issuer in good
faith deems material to it;




     (B) subject to Section 2.14(b)(iii), the expiry date of such requested Letter
of Credit would occur more than twelve months after the date of issuance or last
renewal, unless the Required Lenders have approved such expiry date;




     (C) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such expiry
date;




     (D) the issuance of such Letter of Credit would violate one or more policies of
the L/C Issuer generally applicable to all borrowers; or




     (E) such Letter of Credit is in a face amount less than $100,000, or is to be
used for a purpose other than as described in Section 6.12 or is denominated in a
currency other than Dollars.




      (iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A)
the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its
amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does
not accept the proposed amendment to such Letter of Credit.



     (b) Procedures for Issuance and Amendment of Letters of Credit; Evergreen Letters of Credit.




      (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative
Agent) in the form of a Letter of Credit Application, appropriately completed and signed by
a Responsible Officer of the Borrower. Such Letter of Credit Application must be received
by the L/C Issuer and the Administrative Agent not later than 11:00 a.m., New York time, at
least two Business Days (or such later date and time as the L/C Issuer may agree in a
particular instance in its sole discretion) prior to the proposed issuance date or date of
amendment, as the case may be. In the case of a request for an initial issuance of a Letter
of Credit, such Letter of Credit Application shall specify in form and detail satisfactory
to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name
and address of the beneficiary thereof; (E) the documents to be presented by such
beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such other matters
as the L/C Issuer may require. In the case of a request for an amendment of any outstanding
Letter of Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date
of amendment thereof (which shall be a Business Day); (C) the nature of the proposed
amendment; and (D) such other matters as the L/C Issuer may require.



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      (ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will
confirm with the Administrative Agent (by telephone or in writing) that the Administrative
Agent has received a copy of such Letter of Credit Application from the Borrower and, if
not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt
by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance
or amendment is permitted in accordance with the terms hereof, then, subject to the terms
and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of the Borrower or enter into the applicable amendment, as the case may be,
in each case in accordance with the L/C Issuer’s usual and customary business practices.
Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a
participation in such Letter of Credit in an amount equal to the product of such Lender’s
Pro Rata Share times the amount of such Letter of Credit.




      (iii) If the Borrower so requests in any applicable Letter of Credit Application, the
L/C Issuer may, in it sole and absolute discretion, agree to issue a Letter of Credit that
has automatic renewal provisions (each, an “Evergreen Letter of Credit”); provided that any
such Evergreen Letter of Credit must permit the L/C Issuer to prevent any such renewal at
least once in each twelve-month period (commencing with the date of issuance of such Letter
of Credit) by giving prior notice to the beneficiary thereof not later than a day (the
“Nonrenewal Notice Date”) in each such twelve-month period to be agreed upon at the time
such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower
shall not be required to make a specific request to the L/C Issuer for any such renewal.
Once an Evergreen Letter of Credit has been issued, the Lenders shall be deemed to have
authorized (but may not require) the L/C Issuer to permit the renewal of such Letter of
Credit at any time to a date not later than the Letter of Credit Expiration Date; provided,
however, that the L/C Issuer shall not permit any such renewal if it has received notice at
least five Business Days immediately preceding the Nonrenewal Notice Date (1) from the
Administrative Agent that the Required Lenders have elected not to permit such renewal or
(2) from any Lender stating that one or more of the applicable conditions specified in
Section 4.03 is not then satisfied and directing the L/C Issuer not to permit such renewal.
Notwithstanding anything to the contrary contained herein, the L/C Issuer shall have no
obligation to permit the renewal of any Evergreen Letter of Credit at any time.




      (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter
of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C
Issuer will also deliver to the Borrower and the Administrative Agent a true and complete
copy of such Letter of Credit or amendment.



     (c) Drawings and Reimbursements; Funding of Participations.




      (i) Upon any drawing under any Letter of Credit, the L/C Issuer shall notify the
Borrower and the Administrative Agent thereof. Not later than 11:00 a.m., New York time,
on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an
“Honor Date”), the Borrower shall reimburse the L/C Issuer through the Administrative Agent
in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the
L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the
Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and such
Lender’s Pro Rata Share thereof. In such event, the Borrower shall be deemed to have
requested a Borrowing under



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the Revolver Facility of Base Rate Loans to be disbursed on the Honor Date in an amount
equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.03 for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Revolving Commitment and the conditions set forth in
Section 4.03 (other than the delivery of a Borrowing Notice). Any notice given by the L/C
Issuer or the Administrative Agent pursuant to this Section 2.14(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such notice.




      (ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any notice
pursuant to Section 2.14(c)(i) make funds available to the Administrative Agent for the
account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Pro
Rata Share of the Unreimbursed Amount not later than 11:00 a.m., New York time, on the
Business Day specified in such notice by the Administrative Agent, whereupon, subject to the
provisions of Section 2.14(c)(iii), each Lender that so makes funds available shall be
deemed to have made a Base Rate Revolving Loan to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the L/C Issuer.




      (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Borrowing of Base Rate Revolving Loans because the conditions set forth in Section 4.03
cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred
from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at the Default Rate. In such event, each Lender’s payment to the
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.14(c) (ii)
shall be deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation obligation
under this Section 2.14.




      (iv) Until each Lender funds its Revolving Loan or L/C Advance pursuant to this Section
2.14(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Pro Rata Share of such amount shall be solely for the
account of the L/C Issuer.




      (v) Each Lender’s obligation to make Revolving Loans or L/C Advances to reimburse the
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section
2.14(c), shall be absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other right which such
Lender may have against the L/C Issuer, the Borrower or any other Person for any reason
whatsoever, (B) the occurrence or continuance of a Default or Event of Default, or (C) any
other occurrence, event or condition, whether or not similar to any of the foregoing. Any
such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to
reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any
Letter of Credit, together with interest as provided herein.




      (vi) If any Lender fails to make available to the Administrative Agent for the account
of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.14(c) by the time specified in Section 2.14(c)(ii), the L/C
Issuer shall be entitled to recover from such Lender (acting through the Administrative
Agent), on demand,



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such amount with interest thereon for the period from the date such payment is required
to the date on which such payment is immediately available to the L/C Issuer at a rate per
annum equal to the Federal Funds Rate from time to time in effect. A certificate of the L/C
Issuer submitted to any Lender (through the Administrative Agent) with respect to any
amounts owing under this clause (vi) shall be conclusive absent manifest error.



     (d) Repayment of Participations.




      (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and
has received from any Lender such Lender’s L/C Advance in respect of such payment in
accordance with Section 2.14(c), if the Administrative Agent receives for the account of the
L/C Issuer any payment related to such Letter of Credit (whether directly from the Borrower
or otherwise, including proceeds of cash Collateral applied thereto by the Administrative
Agent), or any payment of interest thereon, the Administrative Agent will distribute to such
Lender its Pro Rata Share thereof in the same funds as those received by the Administrative
Agent.




      (ii) If any payment received by the Administrative Agent for the account of the L/C
Issuer pursuant to Section 2.14(c)(i) is required to be returned, each Lender shall pay to
the Administrative Agent for the account of the L/C Issuer its Pro Rata Share thereof on
demand of the Administrative Agent, plus interest thereon from the date of such demand to
the date such amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect.



     (e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer
for each drawing under each Letter of Credit, and to repay each L/C Borrowing and each drawing
under a Letter of Credit that is refinanced by a Borrowing of Revolving Loans, shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:




      (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other agreement or instrument relating thereto;




      (ii) the existence of any claim, counterclaim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee of such Letter of
Credit (or any Person for whom any such beneficiary or any such transferee may be acting),
the L/C Issuer or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;




      (iii) any draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under such
Letter of Credit;




      (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of
a draft or certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator,



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receiver or other representative of or successor to any beneficiary or any transferee
of such Letter of Credit, including any arising in connection with any proceeding under any
Debtor Relief Law; or




      (v) any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, that might otherwise constitute a defense available to, or a discharge of,
the Borrower.



     The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto
that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s
instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The
Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.



     The Borrower shall also promptly examine any documents sent to the L/C Issuer in connection
with a drawing under a Letter of Credit after the L/C Issuer provides copies of such documents to
the Borrower and the Borrower shall immediately notify the L/C Issuer of any objection or claim of
noncompliance of such documents with the requirements of the Letter of Credit.



     (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. No Agent-Related Person nor any
of the respective correspondents, participants or assignees of the L/C Issuer shall be liable to
any Lender for (i) any action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Required Lenders, as applicable, (ii) any action taken or omitted in
the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter of Credit or Letter
of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that
this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under any other agreement.
No Agent-Related Person, nor any of the respective correspondents, participants or assignees of the
L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.14(e); provided, however, that anything in such clauses to the contrary
notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused
by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to
pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.



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     (g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing
has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any
Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, the
Borrower shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations
(in an amount equal to such Outstanding Amount). The Borrower hereby grants the Administrative
Agent, for the benefit of the L/C Issuer and the Lenders, a Lien on all such cash and deposit
accounts at any Lender.



     (h) Applicability of ISP98. Unless otherwise expressly agreed by the L/C Issuer and
the Borrower when a Letter of Credit is issued, the rules of the “International Standby Practices
1998” published by the Institute of International Banking Law & Practice (or such later version
thereof as may be in effect at the time of issuance) shall apply to each Letter of Credit.



     (i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Pro Rata Share a letter of credit fee for each Letter
of Credit issued equal to the Applicable Rate times the actual daily undrawn amount under each
Letter of Credit. Such fee for each Letter of Credit shall be due and payable on the last Business
Day of each March, June, September and December, commencing with the first such date to occur after
the issuance of such Letter of Credit, and on the Letter of Credit Expiration Date.



     (j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The
Borrower shall pay directly to the L/C Issuer for its own account a fronting fee in an amount with
respect to each Letter of Credit issued equal to the greater of (i) $500 and (ii) 1/4 of 1%
calculated on the face amount thereof. In addition, the Borrower shall pay directly to the L/C
Issuer for its own account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from
time to time in effect. Such fees and charges are due and payable on demand and are nonrefundable.



     (k) Conflict with Letter of Credit Application. In the event of any conflict between
the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control.



ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY




     3.01 Taxes.




     (a) Any and all payments by the Borrower to or for the account of the Administrative Agent or
any Lender under any Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and all liabilities with respect thereto; excluding, in the case
of the Administrative Agent and each Lender, taxes imposed on or measured by its net income, and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case
may be, is organized or maintains its Lending Office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being
hereinafter referred to as “Taxes”). If the Borrower shall be required by any Laws to deduct any
Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or
any Lender, (i) the sum payable shall be increased as necessary



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so that after making all required deductions (including deductions applicable to additional
sums payable under this Section), each of the Administrative Agent and such Lender receives an
amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days
after the date of such payment, the Borrower shall furnish to the Administrative Agent (which shall
forward the same to such Lender) the original or a certified copy of a receipt evidencing payment
thereof.




     (b) In addition, the Borrower agrees to pay any and all present or future stamp, court or
documentary taxes and any other excise or property taxes or charges or similar levies which arise
from any payment made under any Loan Document or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as “Other Taxes”).



     (c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in
respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the
Borrower shall also pay to the Administrative Agent (for the account of such Lender) or to such
Lender, at the time interest is paid, such additional amount that such Lender specifies as
necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on
or measured by net income) such Lender would have received if such Taxes or Other Taxes had not
been imposed.



     (d) The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such
Lender, (ii) amounts payable under Section 3.01(c) and (iii) any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. Payment under this subsection
(d) shall be made within 30 days after the date the Lender or the Administrative Agent makes a
demand therefor.



     3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Eurodollar Rate Loans, or materially restricts the authority of
such Lender to purchase or sell, or to take deposits of, Dollars in the applicable offshore Dollar
market, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice
thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such
Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate
Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that
the circumstances giving rise to such determination no longer exist. Upon receipt of such notice,
the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower shall
also pay interest on the amount so prepaid or converted. Each Lender agrees to designate a
different Lending Office if such designation will avoid the need for such notice and will not, in
the reasonable judgment of such Lender, otherwise be materially disadvantageous to such Lender.



     3.03 Inability to Determine Rates. If the Administrative Agent determines in connection with any
request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar



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deposits are not being offered to banks in the applicable offshore Dollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, or adequate and reasonable means do not
exist for determining the Eurodollar Rate for such Eurodollar Rate Loan, or (b) if the Required
Lenders determine and notify the Administrative Agent that the Eurodollar Rate for such Eurodollar
Rate Loan does not adequately and fairly reflect the cost to the Lenders of funding such Eurodollar
Rate Loan, then the Administrative Agent will promptly notify the Borrower and all Lenders.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be
suspended until the Administrative Agent revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a Borrowing, conversion or continuation of Eurodollar
Rate Loans or, failing that, will be deemed to have converted such request into a request for a
Borrowing of Base Rate Loans in the amount specified therein.




     3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.



     (a) If any Lender determines that as a result of a Change in Law, or such Lender’s compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans, or a reduction in the amount received or receivable
by such Lender in connection with any of the foregoing (excluding for purposes of this subsection
(a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to
which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or
overall gross income by the United States or any foreign jurisdiction or any political subdivision
of either thereof under the Laws of which such Lender is organized or has its Lending Office, and
(iii) reserve requirements contemplated by Section 3.04(c) utilized, as to Eurodollar Rate Loans,
in the determination of the Eurodollar Rate), then from time to time upon demand of such Lender
(with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender
such additional amounts as will compensate such Lender for such increased cost or reduction.



     (b) If any Lender determines a Change in Law has the effect of reducing the rate of return on
the capital of such Lender or any corporation controlling such Lender as a consequence of such
Lender’s obligations hereunder (taking into consideration its policies with respect to capital
adequacy and such Lender’s desired return on capital, then from time to time upon demand of such
Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such
Lender such additional amounts as will compensate such Lender for such reduction.



     (c) The Borrower shall pay to each Lender, as long as such Lender shall be required under
regulations of the Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”),
additional costs on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual
costs of such reserves allocated to such Revolving Loan by such Lender (as determined by such
Lender in good faith, which determination shall be conclusive), which shall be due and payable on
each date on which interest is payable on such Revolving Loan; provided the Borrower shall have
received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such
additional interest from such Lender. If a Lender fails to give notice 10 days prior to the
relevant Interest Payment Date, such additional interest shall be due and payable 10 days from
receipt of such notice.



     3.05 Funding Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time
to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from
any loss, cost or expense incurred by it as a result of:



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     (a) any continuation, conversion, payment or prepayment of any Revolving Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such Revolving Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or



     (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a
Revolving Loan) to prepay, borrow, continue or convert any Revolving Loan other than a Base Rate
Loan on the date or in the amount notified by the Borrower; including any loss of anticipated
profits and any loss or expense arising from the liquidation or reemployment of funds obtained by
it to maintain such Revolving Loan or from fees payable to terminate the deposits from which such
funds were obtained. The Borrower shall also pay any customary administrative fees charged by
such Lender in connection with the foregoing.



     For purposes of calculating amounts payable by the Borrower to the Lenders under this Section
3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the
Eurodollar Rate for such Revolving Loan by a matching deposit or other borrowing in the applicable
offshore Dollar interbank market for a comparable amount and for a comparable period, whether or
not such Eurodollar Rate Loan was in fact so funded.



     3.06 Matters Applicable to all Requests for Compensation. A certificate of the Administrative
Agent or any Lender claiming compensation under this Article III and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error.
In determining such amount, the Administrative Agent or such Lender may use any reasonable
averaging and attribution methods.



     3.07 Survival. All of the Borrower’s obligations under this Article III shall survive termination
of the Aggregate Revolving Commitment and payment in full of all the other Obligations.



ARTICLE IV.

CONDITIONS PRECEDENT




     4.01 Conditions Precedent. This Agreement shall be effective on the First Amendment Closing Date
subject to satisfaction of the following conditions precedent on or prior to such date:



     (a) Evidence satisfactory to the Administrative Agent that a minimum of $150,000,000 of Senior
Unsecured Notes have been (or contemporaneously with the initial funding under this Agreement, will
be) issued by the Borrower on terms and conditions reasonably satisfactory to the Administrative
Agent.



     (b) Evidence satisfactory to the Administrative Agent that contemporaneously with the funding
of the initial Revolving Loan under this Agreement, Borrower will have acquired 100% of the Equity
Interest of Specialty Rental Tools, Inc. for an aggregate purchase price not exceeding $96,000,000
(including acquired working capital and fees and expenses associated with such acquisition) and
consistent with the material terms of the acquisition agreement satisfactory to the Administrative
Agent.



     (c) The Administrative Agent’s receipt of the following, each of which shall be originals or
facsimiles (followed promptly by originals) and unless otherwise specified, each properly executed
by an authorized officer of the signing Loan Party or other Person party thereto, each dated the
First Amendment Closing Date (or, in the case of certificates of governmental officials, a recent
date before the



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First Amendment Closing Date), and each in form and substance satisfactory to the Arranger,
the Administrative Agent, the Lenders and their legal counsel:





      (i) executed counterparts of this Agreement, the Guaranty, all other Collateral
Documents as deemed advisable by the Administrative Agent or its counsel, each dated as of
the First Amendment Closing Date;




      (ii) Revolver Notes executed by the Borrower in favor of each Lender requesting such
Revolver Notes, each Revolver Note in a principal amount equal to such Lender’s Revolving
Commitment and each Revolver Note dated as of the First Amendment Closing Date;




      (iii) such certificates of resolutions or other action, incumbency certificates and/or
other certificates of officers of each Loan Party as the Administrative Agent may require to
establish the identities of and verify the authority and capacity of each officer thereof
authorized to act in connection with this Agreement and the other Loan Documents to which
such Loan Party is a party;




      (iv) such evidence as the Administrative Agent may reasonably require to verify that
each Loan Party is duly organized or formed, validly existing, and in good standing in the
jurisdiction of its organization;




      (v) a certificate signed by a Responsible Officer of the Borrower certifying (A) that
all amounts under the Original Credit Agreement have been, or concurrently with the initial
funding under this Agreement will be refinanced in full and all commitments of the lenders
thereunder have been or, concurrently with the initial funding under this Agreement, will be
terminated and that all Liens securing any Indebtedness under the Original Credit Agreement
have been carried forward and secure the Obligations under this Agreement, (B) that the
representations and warranties contained in Article V are true and correct in all respects
on and as of the First Amendment Closing Date, (C) that no default or event of default under
the Original Credit Agreement has occurred and is continuing as of the day preceding the
First Amendment Closing Date, (D) that no Default or Event of Default has occurred and is
continuing under this Agreement as of the First Amendment Closing Date after the initial
funding under this Agreement, (E) since December 31, 2004 there has occurred no material
adverse change in the business, assets, liabilities (actual or contingent), operations, or
condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken
as a whole, or in the facts and information regarding the Borrower and its Subsidiaries
previously delivered to the Administrative Agent or the Lenders, (F) that as of the First
Amendment Closing Date there are no material environmental or material legal issues
affecting any Loan Party or any of the Collateral, (G) all governmental and third party
approvals necessary or, in the discretion of the Administrative Agent, advisable in
connection with any Loan Party (i) entering into this Agreement or any of the Loan Documents
or (ii) continuing its business operations have been obtained and are in full force and
effect, (H) there is no litigation, investigation or proceeding known to and affecting the
Borrower or any of its Subsidiaries for which the Borrower is required to give notice
pursuant to Section 6.03(b) (or, if there is any such litigation, investigation or
proceeding, then a notice containing the information required by Section 6.03(b) shall be
given concurrently with the delivery of the certificate given pursuant to this clause (v)),
(I) no action, suit, investigation or proceeding is pending or, to the Borrower’s knowledge,
threatened in any court or before any arbitrator or Governmental Authority by or against the
Borrower, or any of its



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Subsidiaries or any of their respective properties, that (y) could reasonably be
expected to materially and adversely affect the Borrower or any Subsidiary, or (z) seeks to
affect or pertains to any transaction contemplated hereby or the ability of the Borrower or
any Loan Party to perform its obligations under the Loan Documents,




      (vi) a certificate of a Responsible Officer of the Borrower (a) demonstrating pro forma
compliance with all financial covenants herein for the quarter ended September 30, 2005,
including a Leverage Ratio of no greater than 4.0:1.0 and pro forma EBITDA of no less than
$41,000,000, (b) as to the satisfaction of all conditions specified in this Section 4.01 and
Section 4.03, (c) attaching a four-year financial forecast for the Borrower and its
Subsidiaries on a consolidated basis, (d) attaching audited historical financial statements
for the prior two complete fiscal years for Specialty Rental Tools, Inc., and (e) attaching
audited 9-month financial statements ending September 30, 2005 for Specialty Rental Tools,
Inc.;




      (vii) a certificate of Borrower’s chief financial officer, in form and substance
satisfactory to the Administrative Agent, certifying that neither the Borrower nor any of
its Subsidiaries is “insolvent” as such term is used and defined in (i) the United States
Bankruptcy Code or (ii) the Texas Uniform Fraudulent Transfer Act, Tex. Bus. & Com. Code
Ann. §24.003;




      (viii) an opinion from counsel to each Loan Party, in form and substance satisfactory
to the Administrative Agent and its counsel;




      (ix) updated asset appraisals of the Borrower’s and its Subsidiaries’ assets from a
recognized independent third party appraiser, paid for by the Borrower, in form and
substance satisfactory to the Administrative Agent; and




      (x) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent reasonably may require.



     (d) Any fees due and payable at the First Amendment Closing Date shall have been paid
including, without limitation, payment of fees and expenses pursuant to the Agent/Arranger Fee
Letter.



     (e) The Borrower shall have paid Attorney Costs of the Administrative Agent to the extent
invoiced prior to the First Amendment Closing Date.



     (f) Loan Documents, executed by each Loan Party that has assets or conducts business, in
appropriate form for recording, where necessary, together with:




      (i) such Lien searches as the Administrative Agent shall have reasonably requested, and
such termination statements or other documents as may be necessary to confirm that the
Collateral is subject to no other Liens (other than Permitted Liens) in favor of any
Persons;




      (ii) funds sufficient to pay any filing or recording tax or fee in connection with any
and all UCC-1 financing statements or fees associated with the filing of any mortgages;




      (iii) evidence that the Administrative Agent has been named as loss payee under all
policies of casualty insurance pertaining to the Collateral;



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      (iv) certificates evidencing all of the issued and outstanding shares of capital stock,
partnership interests, or membership interests pledged pursuant to any Collateral Document
(including Specialty Rental Tools, Inc.) , which certificates shall in each case be
accompanied by undated stock powers duly executed in blank, or, if any securities pledged
pursuant thereto are uncertificated securities, confirmation and evidence satisfactory to
the Administrative Agent that the security interest in such uncertificated securities has
been transferred to and perfected by the Administrative Agent for the benefit of the Lenders
in accordance with the UCC; and




      (v) evidence that all other actions necessary or, in the opinion of the Administrative
Agent or the Lenders, desirable to perfect and protect the first priority Lien created by
the Collateral Documents (except to the extent otherwise permitted hereunder), and to
enhance the Administrative Agent’s ability to preserve and protect its interests in and
access to the Collateral, have been taken.



     (g) The Administrative Agent’s receipt (with sufficient copies for all Lenders) of the
certificate of incorporation of the Borrower, together with all amendments, certified by an
appropriate governmental officer in its jurisdiction of organization, as well as any other
information required by Section 326 of the USA Patriot Act or necessary for the Administrative
Agent or any Lender to verify the identity of Borrower as required by Section 326 of the USA
Patriot Act.



     The Administrative Agent shall notify the Borrower and the Lenders of the First Amendment
Closing Date, and such notice shall be conclusive and binding.



     4.02 Deadline for First Amendment Closing Date. If for any reason the First Amendment Closing Date
has not occurred by January 31, 2006, then, unless otherwise agreed by all Lenders, the Aggregate
Revolving Commitment shall terminate at noon, Central time, on such date.



     4.03 Conditions to all Revolving Loans and L/C Credit Extension. The obligation of each Lender to
honor any Borrowing Notice and the obligation of the L/C Issuer to issue any Letter of Credit is
subject to the following conditions precedent:



     (a) The representations and warranties of the Loan Parties contained in Article V, including
without limitation, Section 5.05(b) and Section 5.06, or which are contained in any document
furnished at any time under or in connection herewith, including, but not limited to the Collateral
Documents, shall be true and correct in all material respects on and as of the date such Revolving
Loan is made, continued or converted, as applicable, or such Letter of Credit is issued except to
the extent that such representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date.



     (b) No Default or Event of Default shall exist or would result from such proposed Revolving
Loan, continuation or conversion, or L/C Credit Extension.



     (c) The Administrative Agent and, if applicable, the L/C Issuer, shall have received a Request
for Credit Extension and, if applicable, a Letter of Credit Application in accordance with the
requirements hereof.



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     (d) The Administrative Agent shall have received, in form and substance reasonably
satisfactory to it, such other assurances, certificates, documents or consents related to the
foregoing as the Administrative Agent reasonably may require.



     Each Request for Credit Extension submitted by the Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.03(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.



     4.04 Conditions to all Revolving Loans to Fund Permitted Acquisitions. The obligation of each
Lender to honor any Borrowing Notice requesting a Revolving Loan in connection with a Permitted
Acquisition is subject to the following conditions precedent in addition to those set forth in
Section 4.03:



     (a) the Administrative Agent shall have received written notice of Borrower’s intent to make
such Acquisition at least five (5) Business Days prior to the requested funding date; provided,
however, the foregoing shall not be applicable in the case of Borrower’s acquisition of Specialty
Rental Tools, Inc.



     (b) the Administrative Agent shall have received, in form and substance reasonably
satisfactory to it, if available, historical audited financial statements of the target company’s
operations for a minimum of one year (and for up to three years if available) or if audited
historical financial statements are unavailable, then unaudited historical financial statements of
the target company’s operations for a minimum of one year (and for up to three years if available);



     (c) an asset appraisal of the target company or target line of business from a recognized
independent third party appraiser, paid for by Borrower, in form and substance satisfactory to the
Administrative Agent; and



     (d) a Compliance Certificate for the most recent quarter end demonstrating compliance with all
financial covenants on a pro forma basis giving effect to the proposed Permitted Acquisition for
which a Revolving Loan is being requested.



ARTICLE V.

REPRESENTATIONS AND WARRANTIES




     The Borrower and each Loan Party by its execution of this Agreement represents and warrants to
the Administrative Agent and the Lenders that:



     5.01 Existence; Qualification and Power; Compliance with Laws. Borrower and each Loan Party (a) is
a corporation, partnership or limited liability company duly organized or formed, validly existing
and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b)
has all requisite power and authority and all governmental licenses, authorizations, consents and
approvals to own its assets, carry on its business and to execute, deliver, and perform its
obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed
and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or license, and (d) is in
compliance with all Laws, except in each case referred to in clause (c) or this clause (d), to the
extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.



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     5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party
of each Loan Document to which such Person is party and the consummation of the transactions
described herein, have been duly authorized by all necessary corporate or other organizational
action, and do not and will not: (a) contravene the terms of any of such Person’s Organization
Documents; (b) conflict with or result in any breach or contravention of, or the creation of any
Lien under, any material Contractual Obligation to which such Person is a party or any order,
injunction, writ or decree of any Governmental Authority to which such Person or its property is
subject; or (c) violate any Law.



     5.03 Governmental Authorization. No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority, except for the filings in connection
with the granting of security interests pursuant to the Collateral Documents, is necessary or
required in connection with the execution, delivery or performance by, or enforcement against, any
Loan Party of this Agreement or any other Loan Document.



     5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms.



     5.05 Financial Statements; No Material Adverse Effect.



     (a) The audited financial statements delivered to the Lenders were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein. Such financial statements: (i) fairly present the financial condition of the
Borrower and its Subsidiaries (and to the knowledge of the Borrower in the case of financial
statements of target company delivered to pursuant to Section 4.04(b), the entities covered
thereby) on a consolidated basis as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; and (ii) fairly present the financial
condition of the Borrower and its Subsidiaries (and to the knowledge of the Borrower in the case of
financial statements of target company delivered to pursuant to Section 4.04(b), the entities
covered thereby) on a consolidated basis as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of
footnotes and to normal year-end audit adjustments. Schedule 5.05 sets forth all material
indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries on a
consolidated basis as of the date of such financial statements, including liabilities for taxes,
material commitments and Indebtedness.



     (b) Since December 31, 2004, there has been no event or circumstance that has or could
reasonably be expected to have a Material Adverse Effect.



     5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Borrower threatened or contemplated in writing, at law, in equity, in arbitration
or before any Governmental Authority, by or against the Borrower or any Loan Party or against any
of their properties or revenues which (a) seek to affect or pertain to this Agreement or any other
Loan Document, the borrowing of Revolving Loans, the use of the proceeds thereof, or the issuance
of Letters of Credit



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hereunder, or (b) if determined adversely, could reasonably be expected to have a Material Adverse
Effect.




     5.07 No Default. Neither the Borrower nor any Loan Party is in default under or with respect to
any Contractual Obligation which could be reasonably expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing or would result from the consummation
of the transactions contemplated by this Agreement or any other Loan Document.



     5.08 Ownership of Property; Liens. From and after the First Amendment Closing Date, (a) each Loan
Party has good record and marketable title in fee simple to, or valid leasehold interests in, all
its real and personal property necessary or used in the ordinary conduct of its business, except
for such defects in title as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, and (b) the property of the Borrower and Loan Parties is subject to
no Liens, other than Permitted Liens. At the First Amendment Closing Date, the only Loan Party
which owns real property is AC Tubular which owns an approximately 8 acre equipment yard in
Edinburg, Texas.



     5.09 Environmental Compliance. The Borrower has reasonably concluded that (a) there are no claims
alleging potential liability under or responsibility for violation of any Environmental Law except
any such claims that could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (b) there is no environmental condition or circumstance, such as the
presence or Release of any Hazardous Substance, on any property owned, operated or used the
Borrower or any Borrower Affiliate that could reasonably be expected to have a Material Adverse
Effect, and (c) there is no violation of or by the Borrower or any Borrower Affiliate of any
Environmental Law, except for such violations as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.



     5.10 Insurance. The properties of the Borrower and the Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrower or the Subsidiaries
operate.



     5.11 Taxes. The Borrower and the Subsidiaries have filed all federal, state and other material tax
returns and reports required to be filed for tax years ending prior to 2004, and have paid all
federal, state and other material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and payable, except those
which are being contested in good faith by appropriate proceedings and for which adequate reserves
have been provided in accordance with GAAP. There is no proposed tax assessment against Borrower
or any of its Subsidiaries that would, if made, have a Material Adverse Effect. Neither any Loan
Party nor any Subsidiary thereof is party to any tax sharing agreement.



     5.12 ERISA Compliance.



     (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state Laws except to the extent that noncompliance could not
reasonably be expected to have a Material Adverse Effect. Each Plan that is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with respect thereto and, to
the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of,
such qualification. The



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Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.




     (b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions
or lawsuits, or action by any Governmental Authority, with respect to any Plan that could
reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.



     (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan
has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could
be subject to Sections 4069 or 4212(c) of ERISA.



     5.13 Subsidiaries and other Investments. As of the First Amendment Closing Date the Borrower (i)
will have no Subsidiaries other than those specifically disclosed in Schedule 5.13, and all of the
outstanding equity interests in such Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by a Loan Party in the amounts specified in Schedule 5.13 free and
clear of all Liens, (ii) will have no equity investment in any other corporation or other entity
other than those specifically disclosed in Schedule 5.13, and (iii) will have no other Investments
except as disclosed in Schedule 5.13.



     5.14 Margin Regulations; Investment Company Act; Use of Proceeds.



     (a) Neither the Borrower nor any of its Subsidiaries is engaged nor will it engage,
principally or as one of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board), or extending credit for the purpose
of purchasing or carrying margin stock. Margin stock constitutes less than 25% of those assets of
each Loan Party which are subject to any limitation on a sale, pledge, or other restrictions
hereunder.



     (b) The Borrower will use all proceeds of Credit Extension in the manner set forth in Section
6.12.



     5.15 Disclosure. The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries
is subject, and all other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished (whether in writing or orally) by or on behalf of any
Loan Party to the Administrative Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other
Loan Document (in each case, as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances under



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which they were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.




     5.16 Labor Matters. There are no actual or threatened strikes, labor disputes, slowdowns,
walkouts, or other concerted interruptions of operations that could reasonably be expected to have
a Material Adverse Effect.



     5.17 Compliance with Laws. Each of the Borrower and each Subsidiary is in compliance in all
material respects with the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which (a) such requirement of
Law or order, writ, injunction or decree is being contested in good faith by appropriate
proceedings diligently conducted or (b) the failure to comply therewith, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse Effect.



     5.18 Third Party Approvals. No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any party that is not a party to this Agreement is necessary or required
in connection with the execution, delivery or performance by, or enforcement against, any Loan
Party of this Agreement or any other Loan Document except where obtained or where the failure to
receive such approval, consent, exemption, authorization, or the failure to do such other action
by, or provide such notice could not reasonably be expected to have a Material Adverse Effect.



     5.19 Solvency. Neither the Borrower nor any of its Subsidiaries is “insolvent” as such term
is used and defined in (i) the United States Bankruptcy Code or (ii) the Texas Uniform Fraudulent
Transfer Act, Tex. Bus. & Com. Code Ann. §24.003.



     5.20 Collateral.



     (a) The provisions of each of the Collateral Documents are effective to create in favor of the
Administrative Agent for the benefit of the Lenders, a legal, valid and enforceable first priority
security interest in all Rights, titles and interests of each Loan Party in the Collateral
described therein, except as otherwise permitted hereunder; and financing statements have been
filed in the offices in all of the jurisdictions listed in the schedule to all Security Agreements.



     (b) All representations and warranties of each Loan Party thereto contained in the Collateral
Documents are true and correct in all material respects.



     (c) None of the terms or provisions of any indenture, mortgage, deed of trust, agreement or
other instrument to which the Borrower or any Loan Party is a party or by which the Borrower or any
Loan Party or the property of the Borrower or any Loan Party is bound prohibit the filing or
recordation of any of the Loan Documents or any other action which is necessary or appropriate in
connection with the perfection of the Liens on material assets evidenced and created by any of the
Loan Documents.



     5.21 Intellectual Property: Licenses, Etc. The Borrower and its Subsidiaries own, or possess
the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent
rights, franchises, licenses and other intellectual property rights that are reasonably necessary
for the operation of their respective businesses, without conflict with the rights of any other
Person. To the best knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance,



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part or other material now employed, or now contemplated to be employed, by the Borrower or any
Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding
any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, which,
either individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.




     5.22 Leased Locations. Schedule 5.22 lists all locations where any Collateral is located.



     5.23 Material Agreements. Set forth on Schedule 5.23 are all material agreements of any Loan
Party, which for purposes of this representation are agreements (whether written or oral) relating
to Indebtedness of any Loan Party in excess of $1,000,000 or pertaining to sales or provision of
services accounting for more than 10% of any Loan Party’s aggregate Consolidated EBITDA. The
Borrower has delivered, or caused to be delivered, to the Administrative Agent and each Lender
prior to the First Amendment Closing Date a copy of each Material Agreement.



ARTICLE VI.

AFFIRMATIVE COVENANTS




     So long as any Lender shall have any Revolving Commitment hereunder, or any Revolving Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding, the Borrower shall, and shall cause each Subsidiary to:



     6.01 Financial Statements. Deliver to the Administrative Agent and each Lender, in form and detail
reasonably satisfactory to the Administrative Agent and the Required Lenders:



     (a) as soon as available, but in any event within 90 days after the end of each Fiscal Year of
the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such Fiscal Year, and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with
GAAP, audited and accompanied by (i) a report and opinion of a firm of independent certified public
accountants of nationally recognized standing reasonably acceptable to the Required Lenders, which
report and opinion shall be prepared in accordance with generally accepted auditing standards and
applicable state and federal securities laws and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the scope of such audit and
(ii) if applicable, an attestation report of such independent certified public accountants as to
the Borrower’s internal controls pursuant to Section 404 of Sarbanes-Oxley expressing a conclusion
to which the Required Lenders do not object;



     (b) as soon as available, but in any event within 45 days after the end of each of the first
three fiscal quarters of each Fiscal Year of the Borrower, a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and
for the portion of the Borrower’s Fiscal Year then ended, setting forth in each case in comparative
form the figures for the corresponding fiscal quarter of the previous Fiscal Year and the
corresponding portion of the previous Fiscal Year, all in reasonable detail, certified by a
Responsible Officer of the Borrower as fairly presenting the financial condition, results of
operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;



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     (c) within 45 days after the end of each Fiscal Year, the Borrower shall deliver a one year
projection/budget for the Borrower and its Subsidiaries on a consolidated basis for the then
current Fiscal Year.



     6.02 Certificates; Other Information. Deliver to the Administrative Agent and each Lender, in form
and detail satisfactory to the Administrative Agent and the Required Lenders:



     (a) concurrently with the delivery of the financial statements referred to in Sections 6.01(a)
and (b), a duly completed Compliance Certificate in the form of Exhibit C signed by a Responsible
Officer of the Borrower;



     (b) promptly after the same are available, copies of each annual report, proxy or financial
statement or other report or written communication sent to the equity owners of the Borrower, and
copies of all annual, regular, periodic and special reports and registration statements which the
Borrower may file or be required to file with the Securities and Exchange Commission under Section
13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to
the Administrative Agent pursuant hereto;



     (c) no later than ten (10) days after Borrower’s or any Subsidiary’s receipt of any Net Cash
Proceeds resulting from a Triggering Sale, a Triggering Sale Certificate relating to such
Triggering Sale;



     (d) no later than ten (10) days after Borrower or any Subsidiary has Reinvested any Reduction
Amount, a Reinvestment Certificate describing the amount, date and particulars relating to the
Reduction Amount so Reinvested;



     (e) within fifteen (15) days after the first anniversary of the First Amendment Closing Date
and annually thereafter, or more frequently if requested by the Required Lenders (but no more
frequently than once every six (6) months so long as no Event of Default exists), an independent
third party asset appraisal of the Borrower’s and its Subsidiaries’ domestic fixed assets;



     (f) promptly upon receipt thereof, copies of all material notices, requests and other
documents received by any Loan Party under or pursuant to any Contractual Obligation governing
Indebtedness that is outstanding in a principal amount of at least $1,000,000 and, from time to
time upon the reasonable request by the Administrative Agent, such information and reports
regarding the such Contractual Obligation as the Administrative Agent may reasonably request;



     (g) promptly after thereof, copies of all Revenue Agent Reports (IRS Form 886), or other
written proposals of the IRS, that propose, determine or otherwise set forth positive adjustments
to the Federal income tax liability of the affiliated group (within the meaning of Section
1504(a)(1) of the Code) of which the Borrower is a member aggregating $1,000,000 or more; and



     (h) promptly, such additional information regarding the business, financial or corporate
affairs of Borrower or any of its Subsidiaries as the Administrative Agent, at the request of any
Lender, may from time to time reasonably request, which information may include copies of any
detailed audit reports, if any, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of the Borrower by independent
accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any
audit of any of them.



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     6.03 Notices. Promptly notify the Administrative Agent and each Lender:



     (a) of the occurrence of any Default;



     (b) of any matter that has resulted or could reasonably be expected to result in a Material
Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual
Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension of licenses or permits between the Borrower or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any
applicable Environmental Laws;



     (c) of the occurrence of any ERISA Event; and



     (d) of any material change in accounting policies or financial reporting practices by the
Borrower.



     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 has taken and proposes to take with respect thereto. Each notice pursuant
to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement or
other Loan Document that have been breached.



     6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) the Obligations, (b) all tax liabilities, assessments
and governmental charges or levies upon it or its properties or assets and (c) all lawful claims
which, if unpaid, would by Law become a Lien upon its property; except in the case of clause (b) or
(c), where (i) the validity thereof are being contested in good faith by appropriate proceedings
and (ii) adequate reserves in accordance with GAAP are being maintained by the Borrower or a
Subsidiary; unless and until any Lien resulting therefrom attaches to its property and becomes
enforceable against its other creditors.



     6.05 Preservation of Existence, Etc. Preserve, renew and maintain in full force and effect
its legal existence and good standing under the Laws of the jurisdiction of its organization except
in a transaction permitted by Sections 7.06 and 7.07; and (b) take all reasonable action to
maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.



     6.06 Maintenance of Assets and Business; Movement of Collateral.



     (a) Maintain all material properties, equipment, licenses, permits, and franchises necessary
for its normal business; (b) keep all of its assets which are useful in and necessary to its
business in good working order and condition (ordinary wear and tear excepted) and make all
necessary repairs thereto and replacements thereof; (c) do all things necessary to obtain, renew,
extend, and continue in effect all Authorizations which may at any time and from time to time be
necessary for the operation of its business in compliance with applicable Law, except where the
failure to so maintain, renew, extend, or continue in effect could not reasonably be expected to
have a Material Adverse Effect; (d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could





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reasonably be expected to have a Material Adverse Effect; and (e) use the standard of care
typical in the industry in the operation and maintenance of its facilities.




     (b) Keep all Collateral other than Collateral located outside the United States on the First
Amendment Closing Date within the United States unless prior written notice is given to the
Administrative Agent of the intent to move such Collateral outside the United States and the
Administrative Agent consents in writing to the movement of such Collateral outside the United
States.



     6.07 Maintenance of Insurance. Maintain insurance with financially sound and reputable
insurance companies not Affiliates of Borrower with respect to its properties and business
(including business interruption insurance) against such casualties and contingencies and of such
types and in such amounts as is customary in the case of similar businesses and which is
satisfactory to the Administrative Agent and the Required Lenders and will (i) furnish to the
Administrative Agent on each anniversary of the First Amendment Closing Date a certificate or
certificates of insurance from the applicable insurance company evidencing the existence of
insurance required to be maintained by this Agreement and the other Loan Documents and evidencing
that Administrative Agent is listed as sole loss payee on property insurance and the Administrative
Agent and Lenders are additional insureds on liability insurance, and (ii) upon request of the
Administrative Agent, furnish to each Lender at reasonable intervals a certificate of an Authorized
Officer of the Borrower setting forth the nature and extent of all insurance maintained in
accordance with this Section.



     6.08 Compliance with Laws and Contractual Obligations.




     (a) Comply in all material respects with the requirements of all Laws (including Environmental
Laws and ERISA Laws) applicable to it or to its business or property, except in such instances in
which (i) such requirement of Law is being contested in good faith or a bona fide dispute exists
with respect thereto, or (ii) the failure to comply therewith could not be reasonably expected to
have a Material Adverse Effect; and (b) comply with all Contractual Obligations, except the failure
to comply therewith could not be reasonably expected to have a Material Adverse Effect.



     6.09 Books and Records. Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower or such Subsidiary, as
the case may be.



     6.10 Inspection Rights. Permit representatives and independent contractors of the Administrative
Agent and each Lender to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and independent public accountants,
all at the expense of the Borrower and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided,
however, that when an Event of Default exists the Administrative Agent or any Lender (or any of
their respective representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without advance notice.



     6.11 Compliance with ERISA. With respect to each Plan maintained by Borrower, do each of the
following: (a) maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state Laws; (b) cause each Plan which is
qualified



					
	 	 	 	 	 
	 
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under Section 401(a) of the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of the Code, except to the extent that
noncompliance, with respect to each event listed above, could not be reasonably expected to have a
Material Adverse Effect




     6.12 Use of Proceeds. Use proceeds of the Revolver Facility to (i) refinance the Indebtedness
outstanding under the Original Credit Agreement, (ii) refinance other Indebtedness, (iii) finance
working capital requirements and other general corporate purposes of the Borrower and its
Subsidiaries, including Permitted Acquisitions, (iv) issue Letters of Credit, (v) pay transaction
fees and expenses.



     6.13 Guaranties. As an inducement to the Administrative Agent and Lenders to enter into this
Agreement, each Subsidiary of Borrower shall execute a Guaranty in connection with this Agreement.
In addition, at the time of the formation or acquisition of any Subsidiary of the Borrower, the
Borrower shall cause such Subsidiary to execute and deliver to the Administrative Agent (a) a
Guaranty providing for the guaranty of payment and performance of the Obligations, (b) Collateral
Documents in form and substance satisfactory to the Administrative Agent creating liens and
security interests in the Equity Interests in such Subsidiary (such Subsidiary not being required
to create a lien or security interest in its assets to secure the Obligations), and (c) certified
copies of such Subsidiary’s Organization Documents and opinions of counsel with respect to such
Subsidiary and such Guaranty, and (d) such other documents and instruments as may be required with
respect to such Subsidiary pursuant to Section 6.14.



     6.14 Further Assurances; Additional Collateral.




     (a) The Borrower shall and shall cause each of its Subsidiaries to take such actions and to
execute and deliver such documents and instruments as the Administrative Agent shall require to
ensure that the Administrative Agent on behalf of the Lenders shall, at all times, have received
currently effective duly executed Loan Documents granting Liens and security interests in
substantially all of the assets of the Borrower and each of its Subsidiaries located in the United
States, including all fixed assets, real property, accounts receivable, inventory, Equity
Interests, equipment, general intangibles, and deposit accounts. Without limiting the forgoing, on
or before February 17, 2006 the Borrower and such of its Subsidiaries having a deposit or similar
account with Wells Fargo Bank, N.A. will execute and deliver to the Administrative Agent, and cause
Wells Fargo Bank, N.A. to execute and deliver to the Administrative Agent the Deposit Account
Pledge Agreement.



     (b) In connection with the actions required pursuant to the foregoing subsection (a), the
Borrower shall and shall cause each Subsidiary to execute and deliver such stock certificates,
blank stock powers, evidence of corporate authorization, opinions of counsel, current valuations,
evidence of title, title insurance and other documents, and shall use commercially reasonable
efforts to obtain landlord and mortgagee waivers and third party consents, as shall be requested by
the Administrative Agent, in each case in form and substance satisfactory to the Administrative
Agent.



     (c) The Liens required by this Section 6.14 shall be first priority perfected Liens in favor
of the Administrative Agent for the benefit of the Lenders, subject to no other Liens except
Permitted Liens of the type described in Section 7.01. If the Administrative Agent shall determine
that, as of any date, the Borrower shall have failed to comply with this Section 6.14, the
Administrative Agent may (and at the direction of the Required Lenders, shall) notify the Borrower
in writing of such failure and, within 30
days from and after receipt of such written notice by the Borrower, the Borrower shall execute
and deliver to the Administrative Agent supplemental or additional Loan Documents, in form and
substance



					
	 	 	 	 	 
	 
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satisfactory to the Administrative Agent and its counsel, securing payment of the
Revolver Notes and the other Obligations and covering additional assets and properties of the
Borrower or its Subsidiaries not then encumbered by any Loan Documents (together with such other
information, as may be requested by the Administrative Agent, each of which shall be in form and
substance reasonably satisfactory to the Administrative Agent) such that the Administrative Agent
shall have received currently effective duly executed and perfected Collateral Documents
encumbering substantially all of the assets of the Borrower and its Subsidiaries as required by
Section 6.14(a).




     6.15 Approval of Certain Acquisitions. If the Borrower has made cumulative acquisitions
(whether Permitted Acquisitions or otherwise) in excess of $5,000,000 over the preceding 12 months
commencing with the First Amendment Closing Date, any subsequent acquisition (whether domestic or
foreign) must be approved by the Required Lenders in writing in response to a written request for
approval delivered by the Borrower to the Administrative Agent. Such written request for approval
must be delivered by the Borrower to the Administrative Agent at least five (5) Business Days prior
to the requested funding date, if such acquisition is a Permitted Acquisition for which funding
under this Agreement will be utilized, or at least five (5) Business Days prior to the date such
acquisition is scheduled to close.



ARTICLE VII.

NEGATIVE COVENANTS




     So long as any Lender shall have any Revolving Commitment hereunder, or any Revolving Loan or
other Obligations shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding, the Borrower agrees that it shall not, nor shall it permit any Subsidiary to, directly
or indirectly:



     7.01 Liens. Create, incur, assume or suffer to exist, any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than the following:



     (a) Liens pursuant to any Loan Document;



     (b) Liens existing on the First Amendment Closing Date and listed on Schedule 7.01 to this
Agreement and any renewals or extensions thereof; provided that the property covered thereby is not
changed, (ii) the amount secured or benefited thereby is not increased, (iii) the direct or any
contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the
obligations secured or benefited thereby is permitted by Section 7.04(b);



     (c) Liens for taxes not yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;



     (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period of more than 60 days
or which are being contested in good faith and by appropriate proceedings, if adequate reserves
with respect thereto are maintained on the books of the applicable Person;



					
	 	 	 	 	 
	 
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     (e) pledges or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation, other than any Lien
imposed by ERISA;



     (f) deposits to secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or
litigation), performance bonds and other obligations of a like nature, in each case incurred in the
ordinary course of business;



     (g) easements, rights-of-way, restrictions and other encumbrances affecting real property
which, in the aggregate, are not substantial in amount and which do not, in any case, materially
detract from the value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person;



     (h) any Lien existing on any asset (other than stock of a Subsidiary) prior to acquisition
thereof by the Borrower or a Loan Party, and not created in contemplation of such acquisition;
provided that (i) no such Lien shall be extended to cover property other than the asset being
acquired, (ii) such Lien was not created in contemplation of or in connection with such
acquisition, and (iii) the Indebtedness thereby secured is permitted by Section 7.04(f);



     (i) Liens securing Capital Lease obligations permitted under Section 7.04(g); provided that no
such Lien shall extend to or cover any Collateral or assets other than the assets subject to such
Capitalized Lease obligations and Liens securing obligations to make equipment financing lease or
rental payments permitted under Section 7.04(g);



     (j) Purchase money Liens upon or in any property acquired by Borrower or any Loan Party to
secure the deferred portion of the purchase price of such property or to secure Indebtedness
incurred to finance the acquisition of such property; provided that (i) no such Lien shall be
extended to cover property other than the property being acquired, and (ii) the Indebtedness
thereby secured is permitted by Section 7.04(e);



     (k) Liens reserved in or exercisable under any lease or sublease to which the Borrower or a
Loan Party is a lessee which secure the payment of rent or compliance with the terms of such lease
or sublease; provided, that the rent under such lease or sublease is not then overdue and the
Borrower or Loan Party is in material compliance with the terms and conditions thereof; and



     (l) any interest or title of a lessor under any lease entered into by the Borrower or any Loan
Party in the ordinary course of its business and covering only the assets so leased.



     7.02 Investments. Make or own any Investments (including any Investment in any foreign
Subsidiary), except:



     (a) Investments existing on the First Amendment Closing Date and listed on Schedule 5.13;



     (b) Cash Equivalents;



					
	 	 	 	 	 
	 
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     (c) advances to officers, directors and employees of the Borrower and Subsidiaries in an
aggregate amount not to exceed $50,000 at any time outstanding, for travel, entertainment,
relocation and analogous ordinary business purposes;



     (d) Investments of the Borrower in any Domestic Subsidiary which is a Guarantor and
Investments of any Guarantor in another Guarantor;



     (e) Investments consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course of business, and
Investments received in satisfaction or partial satisfaction thereof from financially troubled
account debtors to the extent reasonably necessary in order to prevent or limit loss;



     (f) Permitted Acquisitions;



     (g) Investments consisting of (i) the acquisition of 100% of the capital stock of Specialty
Rental Tools, Inc. and (ii) other Investments made by issuance of Borrower’s Equity Interest;
provided any Investment described in clause (ii) has been approved in writing by the Administrative
Agent.



     (h) other Investments not exceeding $100,000 in the aggregate in any Fiscal Year of the
Borrower.



     7.03 Swap Contracts. Enter into any Swap Contracts other than in the ordinary course of business
for the purpose of protecting against fluctuations in interest rates or foreign exchange rates and
not for purposes of speculation; provided that the Swap Contract shall not contain any provision
exonerating the non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party.



     7.04 Indebtedness. Create, incur, or assume any Indebtedness except:



     (a) Indebtedness under the Loan Documents;



     (b) the Senior Unsecured Notes and any Indebtedness (including Subordinated Indebtedness)
outstanding on the date hereof and listed on Schedule 5.05 and any refinancings, refundings,
renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at
the time of such refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing commitments unutilized
thereunder;



     (c) Guaranty Obligations of the Borrower and/or any of its Subsidiaries in respect of
Indebtedness otherwise permitted hereunder of the Borrower;



     (d) Obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or
arising under any Swap Contract to the extent permitted by Section 7.03;



     (e) Indebtedness of the Borrower and its Subsidiaries in respect of purchase money obligations
for fixed or capital assets within the limitations set forth in Section 7.01(j); provided,
however, that the aggregate annual amount of such Indebtedness at any one time outstanding
shall not exceed $2,000,000;



					
	 	 	 	 	 
	 
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     (f) Indebtedness associated with Liens on assets acquired by the Borrower or any Loan Party or
Indebtedness assumed by the Borrower or any Loan Party, in either instance in connection with a
Permitted Acquisition; provided, however, such Indebtedness at any one time outstanding shall not
exceed $2,000,000; and



     (g) Indebtedness of the Borrower and its Subsidiaries in connection with Capital Leases and
obligations to make equipment financing lease or rental payments; provided, however, such
indebtedness at any one time outstanding shall not exceed $7,000,000.



Provided, that if any Indebtedness is incurred pursuant to this Section 7.04, both before and after
such Indebtedness is created, incurred or assumed, no Default or Event of Default shall exist.



     7.05 Lease Obligations. Create or suffer to exist any obligations for the payment of rent for any
property under lease or agreement to lease, except for operating leases (other than those
constituting Synthetic Lease Obligations) entered into or assumed by the Borrower or any Subsidiary
in the ordinary course of business prior to the First Amendment Closing Date; provided that, such
operating leases will not require the payment of an aggregate amount of payments in excess of
(excluding escalations resulting from a rise in the consumer price or similar index) $500,000
during the full remaining term of such leases, exclusive of expenses for maintenance, repairs,
insurance taxes, assessments and similar changes.



     7.06 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another
Person, or Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
Person, except that, so long as no Default exists or would result therefrom:



     (a) any Subsidiary may merge with (i) the Borrower; provided that the Borrower shall be the
continuing or surviving Person, or (ii) any one or more other Subsidiaries; provided that when any
Guarantor is merging with another Subsidiary that is not a Guarantor, a Guarantor shall be the
continuing or surviving Person; and



     (b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or to another Subsidiary; provided that if the transferor
in such a transaction is a Guarantor, then the transferee must either be the Borrower or a
Guarantor.



     7.07 Dispositions.




     Make any Disposition or enter into any agreement to make any Disposition, except:



     (a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in
the ordinary course of business;



     (b) Dispositions of inventory in the ordinary course of business;



     (c) Dispositions of property by any Subsidiary to the Borrower, or by any Subsidiary or by the
Borrower, to a Wholly-Owned Subsidiary that is a Guarantor;



					
	 	 	 	 	 
	 
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     (d) Dispositions of equipment or real property to the extent that (i) such property is
exchanged for credit against the purchase price of similar replacement property or (ii) the
proceeds of such Disposition are reasonably promptly applied to the purchase price of such
replacement property; or



     (e) Dispositions permitted by Section 7.06.



     7.08 Restricted Payments; Distributions and Redemptions. Declare or make, directly or indirectly,
any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:



     (a) each Subsidiary may make Restricted Payments to the Borrower and to Wholly-Owned
Subsidiaries of the Borrower;



     (b) the Borrower and each Subsidiary may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity Interests of such Person;



     (c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity
Interests issued by it with the proceeds received from the substantially concurrent issue of new
shares of its common stock or other common Equity Interests; and



     (d) the Borrower may engage in any Equity Issuance, so long as the Net Cash Proceeds thereof
are applied to the prepayment of the Revolving Loans pursuant to Section 2.04(b)(iv).



     7.09 ERISA. At any time engage in a transaction which could be subject to Section 4069 or 4212(c)
of ERISA, or permit any Plan maintained by Borrower or an ERISA Affiliate to: (a) engage in any
non-exempt “prohibited transaction” (as defined in Section 4975 of the Code); (b) fail to comply
with ERISA or any other applicable Laws; or (c) incur any material “accumulated funding deficiency”
(as defined in Section 302 of ERISA), which, with respect to each event listed above, could be
reasonably expected to have a Material Adverse Effect.



     7.10 Change in Nature of Business. Engage in any material line of business substantially different
from (a) those lines of business conducted by the Borrower and its Subsidiaries on the First
Amendment Closing Date, or (b) other businesses reasonably related to the business described in
clause (a).



     7.11 Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate of
the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable
terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate.



     7.12 Burdensome Agreements. Enter into any Contractual Obligation (other than this Agreement, any
other Loan Document or the indenture governing the Senior Unsecured Notes) that (a) limits the
ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to
otherwise transfer property to the Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee
the Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary to create, incur,
assume or suffer
to exist Liens on property of such Person; provided, however, that this clause (iii) shall not
prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted
under Section 7.05 solely to the extent any such negative pledge relates to the property financed
by or the subject of such



					
	 	 	 	 	 
	 
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Indebtedness; or (b) requires the grant of a Lien to secure an obligation
of such Person if a Lien is granted to secure another obligation of such Person.




     7.13 Use of Proceeds . Use the proceeds of any Revolving Loan or Letter of Credit for
purposes other than those permitted by Section 6.12, or use the proceeds of any Revolving Loan,
whether directly or indirectly, and whether immediately, incidentally or ultimately, to (i)
purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose or (ii) to finance the acquisition of 100% of the capital
stock of Casing Services and Equipment, Inc.



     7.14 Capital Expenditures. During Borrower’s Fiscal Year 2006 make capital expenditures in excess
of $15,000,000 in the aggregate (of which Mexican CapEx shall not exceed $3,000,000 for the
Borrower’s Fiscal Year 2006) or during any Fiscal Year thereafter make capital expenditures in
excess of $12,000,000 in the aggregate during any such subsequent Fiscal Year (of which Mexican
CapEx shall not exceed $3,000,000 for any such subsequent Fiscal Year); provided, however, it is
agreed and understood that capital expenditures excludes acquisitions made prior to the First
Amendment Closing Date, Permitted Acquisitions and those Investments allowed under Section 7.02(g).



     7.15 Prepayments. Except for Indebtedness incurred pursuant to the Loan Documents or except as may
be required under the indenture governing the Senior Unsecured Notes, neither Borrower nor any
Subsidiary shall prepay any Indebtedness.



     7.16 Subordinated Indebtedness. The Borrower will not amend documents governing Subordinated
Indebtedness unless approved in writing by the Required Lenders (other than ministerial amendments
and amendments to extend the time or times for payment). The Borrower shall not make any payments
of interest or any other amounts in respect of the Subordinated Indebtedness if a Default or Event
of Default shall have occurred and be continuing or would result from such payment. The Borrower
will not repay any principal, interest or other indebtedness in respect of the Subordinated
Indebtedness, or make any redemption or acquisition for value or defeasance, refinancing or
exchange thereof or therefore, or make any payments in contravention of the applicable
Subordination Agreement; provided, however, with respect to all Subordinated Indebtedness up to
$1,000,000 principal may be repaid or prepaid so long as no Default or Event of Default shall have
occurred and be continuing or would result from such payment and Borrower shall so certify to
Administrative Agent in writing prior to any such payment.



     7.17 Amendments of Constitutive Documents. Borrower shall not amend, or permit any of its
Subsidiaries to amend, its certificate of incorporation or bylaws or other constitutive documents
other than amendments that could not be reasonably expected to have a Material Adverse Effect.



     7.18 Accounting Changes. Borrower shall not make or permit, or permit any of its Subsidiaries
to make or permit, any change in (i) accounting policies or reporting practices, except as required
or permitted by GAAP, or (ii) in its Fiscal Year.



     7.19 Financial Covenants.




     (a) Minimum Tangible Net Worth. Permit the Consolidated Tangible Net Worth of the Borrower
and its Subsidiaries on a consolidated basis as of the end of any calendar quarter to be less than
the sum of (i) eighty-five percent (85%) of Borrower’s Consolidated Tangible Net Worth as of
September



					
	 	 	 	 	 
	 
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30, 2005 plus (ii) 50% of Consolidated Net Income (if positive) after September 30, 2005,
plus (c) 100% of the Net Cash Proceeds of any Equity Interest issued by Borrower or any of its
Subsidiaries after the First Amendment Closing Date. For purposes of calculating Consolidated
Tangible Net Worth, the write-off of unamortized financing costs shall not be considered.




     (b) Interest Coverage Ratio. Permit the Interest Coverage Ratio as of the end of any fiscal
quarter to be less than 2.5 to 1.0.



     (c) Current Ratio. Permit the Current Ratio as of the end of any fiscal quarter to be less
than 1.25 to 1.0.



     (d) Fixed Asset Coverage Ratio. Permit the Fixed Asset Coverage Ratio as of the end of any
fiscal quarter to be less than 1.33 to 1.0.



     (e) Leverage Ratio. Permit the Leverage Ratio as of the end of any fiscal quarter to be
greater than 4.50 to 1.0.



     (f) Senior Leverage Ratio. Permit the Senior Leverage Ratio as of the end of any fiscal
quarter to be greater than 2.50 to 1.0.



     (g) Adjustments for Permitted Acquisitions. For purposes of determining compliance with
Section 7.19(b), (e) and (f):




          (i) Consolidated EBITDA shall be calculated after giving effect, on a pro forma basis
for the four consecutive fiscal quarters most recently completed, to any Permitted
Acquisition or any acquisition pursuant to Section 7.02(g) occurring during such period, as
if such acquisition occurred on the first day of such period.




          (ii) If, in connection with a Permitted Acquisition or any acquisition pursuant to
Section 7.02(g), any Indebtedness is incurred or assumed by the Borrower or any of its
Subsidiaries, then Consolidated Interest Charges shall be calculated, on a pro forma basis
for the four quarters most recently completed, as if such Indebtedness had been incurred on
the first day of such period.



ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES




     8.01 Events of Default. Any of the following shall constitute an Event of Default:



     (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) any amount due
under the Agent/Arranger Fee Letter when and as required to be paid therein, (ii) when and as
required to be paid herein, any amount of principal of any Revolving Loan or any L/C Obligation or
(iii) within three
Business Days after the same becomes due, any interest on any Revolving Loan, any L/C
Obligation, any commitment or other fee due hereunder (other than a fee specified in the
Agent/Arranger Fee Letter), or any other amount payable hereunder or under any other Loan Document;
or



					
	 	 	 	 	 
	 
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     (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant
or agreement contained in any of Section 6.02, 6.03(a), 6.05 (with respect to any Loan Party’s
existence), 6.06, 6.10, 6.12, 6.13, 6.14, or Article VII; or



     (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part
to be performed or observed and such failure continues for 30 days after the earlier of (i) the
date notice has been given to the Borrower by the Administrative Agent or a Lender or (ii) the date
a Responsible Officer knew or reasonably should have known of such Default; or



     (d) Representations and Warranties. Any representation or warranty made or deemed
made by the Borrower or any other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith proves to have been incorrect in any material respect
when made or deemed made; or



     (e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise)
in respect of any Indebtedness or Guaranty Obligation (other than Indebtedness hereunder or under
Swap Contracts) having an aggregate principal amount (or, in the case of a Capital Lease or a
Synthetic Lease Obligation, Attributable Indebtedness) (including undrawn or available amounts and
including amounts owing to all creditors under any combined or syndicated credit arrangement) of
more than (individually or collectively) $1,000,000, or (B) fails to observe or perform any other
agreement or condition relating to any such Indebtedness or Guaranty Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the
effect of which default or other event is to cause, or to permit the holder or holders of such
Indebtedness, the lessor under such Synthetic Lease Obligation or the beneficiary or beneficiaries
of such Guaranty Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to
be demanded or to become due or to be repurchased or redeemed (automatically or otherwise) prior to
its stated maturity, or such Guaranty Obligation to become payable or cash collateral in respect
thereof to be demanded; or (ii) (A) there occurs under any Swap Contract an Early Termination Date
(as defined in such Swap Contract) resulting from any event of default under such Swap Contract as
to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract)
or any Termination Event (as so defined) under such Swap Contract to which the Borrower or any
Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value
owed by the Borrower or such Subsidiary as a result thereof is greater than $1,000,000; or



     (f) Insolvency Proceedings, Etc. (i) Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes
an assignment for the benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or
for all or any material part of its property or takes any action to effect any of the foregoing; or
(ii) any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the appointment continues
undischarged or unstayed for 30 calendar days; or (iii) any proceeding
under any Debtor Relief Law relating to any such Person or to all or any part of its property
is instituted without the consent of such Person and continues undismissed or unstayed for 30
calendar days, or an order for relief is entered in any such proceeding; or



					
	 	 	 	 	 
	 
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     (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary becomes
unable or admits in writing its inability or fails generally to pay its debts as they become due,
or (ii) any writ or warrant of attachment or execution or similar process is issued or levied
against property which is a material part of the property of such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or



     (h) Judgments. There is entered against the Borrower or any Subsidiary (i) a final
judgment or order for the payment of money in an aggregate amount exceeding (individually or
collectively) $1,000,000 (to the extent not covered by third-party insurance as to which the
insurer does not dispute coverage), or (ii) any non-monetary final judgment that has or could
reasonably be expected to have a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of
30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or



     (i) ERISA. (i) If the Borrower, any Borrower Affiliate or any of their ERISA
Affiliates maintains any Pension Plan or any Multiemployer Plan, an ERISA Event occurs with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower or any Borrower Affiliate under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $1,000,000, or
(ii) if there is any Multiemployer Plan, the Borrower, any Borrower Affiliate or any ERISA
Affiliate thereof fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of $1,000,000; or



     (j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution
and delivery and for any reason other than the agreement of all the Lenders or termination of all
Revolving Commitments and satisfaction in full of all the Obligations, ceases to be in full force
and effect, or is declared by a court of competent jurisdiction to be null and void, invalid or
unenforceable in any material respect; or any Loan Party denies that it has any or further
liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any
Loan Document; or



     (k) Change of Control. There occurs any Change of Control; or




     (l) Dissolution. The Borrower or any Loan Party shall dissolve, liquidate, or
otherwise terminate its existence, except as permitted in Section 7.06; or



     (m) Material Agreements. (i) Termination of any Material Agreement, or any material
provision of any of the foregoing if such termination could reasonably be expected to have a
Material Adverse Effect and such agreement or provision is not replaced (prior to such cessation)
in a manner satisfactory to the Administrative Agent; (ii) default by any Person in the performance
or observance of any material term of any Material Agreement which is not cured within the
applicable cure period specified in such Material Agreement, if such default could reasonably be
expected to have a Material Adverse Effect; or (iii) any event or condition occurs or exists which
in the opinion of the Administrative
Agent is reasonably likely to (x) have a material adverse effect on the ability of Borrower or
any of its Subsidiaries to perform its obligations under a Material Agreement and (y) result in a
Material Adverse Effect hereunder; or



					
	 	 	 	 	 
	 
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     (n) Collateral; Impairment of Security, etc. (i) Any provision of any Loan Document
shall for any reason cease to be valid and binding on or enforceable against a Loan Party or any
Loan Party shall so state in writing or bring an action to limit its obligations or liabilities
thereunder; or (ii) any Collateral Document shall for any reason (other than pursuant to the terms
thereof) cease to create a valid security interest in the Collateral purported to be covered
thereby or such security interest shall for any reason cease to be a perfected and first priority
security interest subject to Permitted Liens; or



     (o) Proceedings by Secured Creditors. Any secured creditor of any Loan Party which is
owed $1,000,000 or more takes any action to foreclose any Lien securing the Indebtedness owed to
such secured creditor.



     8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the
Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders,
take any or all of the following actions:



     (a) declare the Revolving Commitment of each Lender to make Revolving Loans and any obligation
of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such Revolving
Commitments and obligations shall be terminated;



     (b) declare the unpaid principal amount of all outstanding Revolving Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other
Loan Document to be immediately due and payable, without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby
expressly waived by the Borrower;



     (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to
the then Outstanding Amount thereof); and



     (d) exercise on behalf of itself and the Lenders all rights and remedies available to it and
the Lenders under the Loan Documents or applicable Law;


provided, however, that upon the occurrence of any event specified in subsection (f) of Section
8.01, the obligation of each Lender to make Revolving Loans and any obligation of the L/C Issuer to
make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all
outstanding Revolving Loans and all interest and other amounts as aforesaid shall automatically
become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C
Obligations as aforesaid shall automatically become effective, in each case without further act of
the Administrative Agent or any Lender.




ARTICLE IX.

ADMINISTRATIVE AGENT




     9.01 Appointment and Authorization of Agents; Lender Hedging Agreements. (a) Each Lender and the
L/C Issuer hereby irrevocably (subject to Section 9.10) appoints, designates and
authorizes the Administrative Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative Agent shall not have
any duties or



					
	 	 	 	 	 
	 
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responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or
participant, and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against
the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of
the term “agent” herein and in the other Loan Documents with reference to the Administrative Agent
is not intended to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative relationship between
independent contracting parties.




     (b) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit
issued by it and the documents associated therewith until such time (and except for so long) as the
Administrative Agent may agree at the request of the Required Lenders to act for the L/C Issuer
with respect thereto; provided, however, that the L/C Issuer shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Article IX with respect to any acts
taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and the application and agreements for letters of credit pertaining to
the Letters of Credit as fully as if the term “Administrative Agent” as used in this Article IX
included the L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided
herein with respect to the L/C Issuer.



     (c) To the extent any Lender or any Affiliate of a Lender is a party to a Lender Hedging
Agreement and accepts the benefits of the Liens in the Collateral arising pursuant to the
Collateral Documents, such Lender (for itself and on behalf of any such Affiliates) shall be deemed
(i) to appoint the Administrative Agent, as its nominee and agent, to act for and on behalf of such
Lender or Affiliate thereof in connection with the Collateral Documents and (ii) to be bound by the
terms of this Article IX.



     9.02 Delegation of Duties. The Administrative Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall
be entitled to advice of counsel and other consultants or experts concerning all matters pertaining
to such duties. Administrative Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct.



     9.03 Default; Collateral. (a) Upon the occurrence and continuance of a Default or Event of
Default, the Lenders agree to promptly confer in order that Required Lenders or the Lenders, as the
case may be, may agree upon a course of action for the enforcement of the rights of the Lenders;
and the Administrative Agent shall be entitled to refrain from taking any action (without incurring
any liability to any Person for so refraining) unless and until the Administrative Agent shall have
received instructions from Required Lenders. All rights of action under the Loan Documents and all
right to the Collateral, if any, hereunder may be enforced by the Administrative Agent and any suit
or proceeding instituted by the Administrative Agent in furtherance of such enforcement shall be
brought in its name as the Administrative Agent without the necessity of joining as plaintiffs or
defendants any other Lender, and the recovery of any judgment shall be for the benefit of the
Lenders (and, with respect to Lender Hedging
Agreements, Affiliates, if applicable) subject to the expenses of the Administrative Agent. In
actions with respect to any property of the Borrower or any other Obligor, the Administrative Agent
is acting for the ratable benefit of each Lender (and, with respect to Lender Hedging Agreement,
Affiliates, if applicable). Any and all agreements to subordinate (whether made heretofore or
hereafter) other indebtedness or obligations of Borrower to the Obligations shall be construed as
being for the ratable benefit of each Lender (and, with respect to Lender Hedging Agreement,
Affiliates, if applicable).



					
	 	 	 	 	 
	 
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     (b) Each Lender authorizes and directs the Administrative Agent to enter into the Collateral
Documents on behalf of and for the benefit of the Lenders (and, with respect to Lender Hedging
Agreements, Affiliates, if applicable)(or if previously entered into, hereby ratifies the
Administrative Agent’s previously entering into such agreements and Collateral Documents).



     (c) Except to the extent unanimity (or other percentage set forth in Section 10.1) is required
hereunder, each Lender agrees that any action taken by the Required Lenders in accordance with the
provisions of the Loan Documents, and the exercise by the Required Lenders of the power set forth
herein or therein, together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders.



     (d) The Administrative Agent is hereby authorized on behalf of the Lenders, without the
necessity of any notice to or further consent from any Lender, from time to time to take any action
with respect to any Collateral or Collateral Documents which may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the Collateral Documents.



     (e) The Administrative Agent shall have no obligation whatsoever to any Lender or to any other
Person to assure that the Collateral exists or is owned by any Obligor or is cared for, protected,
or insured or has been encumbered or that the Liens granted to the Administrative Agent herein or
pursuant thereto have been properly or sufficiently or lawfully created, perfected, protected, or
enforced, or are entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the
Rights granted or available to the Administrative Agent in this Section 9.03 or in any of the
Collateral Documents; it being understood and agreed that in respect of the Collateral, or any act,
omission, or event related thereto, the Administrative Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Administrative Agent’s own interest in the
Collateral as one of the Lenders and that the Administrative Agent shall have no duty or liability
whatsoever to any Lender, other than to act without gross negligence or willful misconduct.



     (f) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in
its discretion, to release any Lien granted to or held by the Administrative Agent upon any
Collateral: (i) constituting property in which no Obligor owned an interest at the time the Lien
was granted or at any time thereafter; (ii) constituting property leased to an Obligor under a
lease which has expired or been terminated in a transaction permitted under the Loan Document or is
about to expire and which has not been, and is not intended by such Obligor to be, renewed; and
(iii) consisting of an instrument evidencing Indebtedness pledged to the Administrative Agent (for
the benefit of the Lenders), if the Indebtedness evidenced thereby has been paid in full. In
addition, the Lenders irrevocably authorize the Administrative Agent to release Liens upon
Collateral as contemplated in Section 10.01(c) or (d), or if approved, authorized, or ratified in
writing by the requisite Lenders. Upon request by the Administrative Agent at
any time, the Lenders will confirm in writing the Administrative Agent’s authority to release
particular types or items of Collateral pursuant to this Section 9.03.



     (g) In furtherance of the authorizations set forth in this Section 9.03, each Lender hereby
irrevocably appoints the Administrative Agent its attorney-in-fact, with full power of
substitution, for and on behalf of and in the name of each such Lender (i) to enter into Collateral
Documents (including, without limitation, any appointments of substitute trustees under any
Collateral Documents), (ii) to take action with respect to the Collateral and Collateral Documents
to perfect, maintain, and preserve Lenders’ Liens, and (iii) to execute instruments of release or
to take other action necessary to release Liens upon



					
	 	 	 	 	 
	 
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any Collateral to the extent authorized in
paragraph (f) hereof. This power of attorney shall be liberally, not restrictively, construed so
as to give the greatest latitude to the Administrative Agent’s power, as attorney, relative to the
Collateral matters described in this Section 9.03. The powers and authorities herein conferred on
the Administrative Agent may be exercised by the Administrative Agent through any Person who, at
the time of the execution of a particular instrument, is an officer of the Administrative Agent (or
any Person acting on behalf of the Administrative Agent pursuant to a valid power of attorney).
The power of attorney conferred by this Section 9.03(g) to the Administrative Agent is granted for
valuable consideration and is coupled with an interest and is irrevocable so long as the
Obligations, or any part thereof, shall remain unpaid or the Lenders are obligated to make any
Borrowings under the Loan Documents.




     9.04 Liability of Agents. No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or any other Loan
Document or the transactions contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any
manner to any Lender or participant for any recital, statement, representation or warranty made by
any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in, or received by
Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other
Loan Document, or for the creation, perfection or priority of any Liens purported to be created by
any of the Loan Documents, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, or to make any inquiry respecting the performance by the
Borrower of its obligations hereunder or under any other Loan Document, or for any failure of any
Loan Party or any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to
ascertain or to inquire as to the observance or performance of any of the agreements contained in,
or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party or any Affiliate thereof.



     9.05 Reliance by Administrative Agent. (a) The Administrative Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to any Loan Party), independent
accountants and other experts selected by the Administrative Agent. The Administrative Agent shall
be fully justified in failing or refusing to take any action under any Loan Document unless it
shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and,
if it so requests, 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. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this Agreement or any other
Loan Document in accordance with a request or consent of the Required Lenders or all the Lenders,
if required hereunder, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders and participants. Where this Agreement expressly permits or
prohibits an action unless the Required Lenders otherwise determine, the Administrative Agent
shall, and in all other instances, the Administrative Agent may, but shall not be required to,
initiate any solicitation for the consent or a vote of the Lenders.



					
	 	 	 	 	 
	 
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     (b) For purposes of determining compliance with the conditions specified in Section 4.01, each
Lender that has funded its Pro Rata Share of the Borrowing(s) on the First Amendment Closing Date
(or, if there is no Borrowing made on such date, each Lender other than Lenders who gave written
objection to the Administrative Agent prior to such date) shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter either sent by the
Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required
hereunder to be consented to or approved by or acceptable or satisfactory to a Lender.



     9.06 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to the Administrative Agent for the
account of the Lenders, unless the Administrative Agent shall have received written 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.” The Administrative Agent will notify the Lenders
of its receipt of any such notice. The Administrative Agent shall take such action with respect to
such Default or Event of Default as may be directed by the Required Lenders in accordance with
Article VIII; provided, however, that unless and until the Administrative Agent has received any
such direction, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interest of the Lenders.



     9.07 Credit Decision; Disclosure of Information by Administrative Agent. Each Lender acknowledges
that no Agent-Related Person has made any representation or warranty to it, and that no act by the
Administrative Agent hereinafter taken, including any consent to and acceptance of any assignment
or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender as to any matter,
including whether Agent-Related Persons have disclosed material information in their possession.
Each Lender represents to the Administrative Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan Parties and their
respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the
transactions contemplated hereby, and made its own decision to enter into this Agreement and to
extend credit to the Borrower hereunder. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and the other Loan Parties. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent herein, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial and other condition
or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come
into the possession of any Agent Related Person.



     9.08 Indemnification of Agents. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not
reimbursed by or on behalf of any Loan Party and without limiting the obligation of any Loan Party
to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified



					
	 	 	 	 	 
	 
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Liabilities incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting from
such Person’s gross negligence or willful misconduct; provided, however, that no action taken in
accordance with the directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section. Without limitation of the
foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share
of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or
legal advice in respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive termination of the Revolving Commitments, the payment of
all Obligations hereunder and the resignation or replacement of the Administrative Agent.




     9.09 Administrative Agent in its Individual Capacity. Royal Bank of Canada and its Affiliates may
make loans to, accept deposits from, acquire equity interests in and generally engage in any kind
of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties
and their respective Affiliates as though Royal Bank of Canada were not the Administrative Agent or
the L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge
that, pursuant to such activities, Royal Bank of Canada or its Affiliates may receive information
regarding any Loan Party or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information to them. With
respect to its Revolving Loans, Royal Bank of Canada shall have the same rights and powers under
this Agreement as any other Lender and may exercise such rights and powers as though it were not
the Administrative Agent or the L/C Issuer, and the terms “Lender” and “Lenders” include Royal Bank
of Canada in its individual capacity.



     9.10 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent
upon 30 days’ notice to the Lenders with a copy of such notice to the Borrower and may be removed
by the Required Lenders at any time with or without cause. If the Administrative Agent resigns or
is removed under this Agreement, the Required Lenders shall appoint from among the Lenders a
successor administrative agent for the Lenders which successor administrative agent shall be
consented to by the Borrower at all times other than during the existence of an Event of Default
(which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor
administrative agent is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and
the Borrower, a successor administrative agent
from among the Lenders. Upon the acceptance of its appointment as successor administrative agent
hereunder, such successor administrative agent shall succeed to all the rights, powers and duties
of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor
administrative agent and the retiring Administrative Agent’s appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Article IX and Sections 10.04 and 10.13
shall inure to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor administrative agent has accepted
appointment as Administrative Agent by the date which is 30 days following a retiring
Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.



					
	 	 	 	 	 
	 
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     9.11 Other Agents; Arranger. None of the Lenders or other Persons identified on the facing page or
signature pages of this Agreement as any other type of agent (other than the Administrative Agent),
“arranger,” or “bookrunner” shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders so identified shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely,
on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.



ARTICLE X.

MISCELLANEOUS




     10.01 Amendments, Release of Collateral, Etc.



     (a) No amendment or waiver of any provision of this Agreement or any other Loan Document, and
no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective
unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as
the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given;
provided, however, that no such amendment, waiver or consent shall, unless in writing and signed by
each of the Lenders directly affected thereby and by the Borrower, and acknowledged by the
Administrative Agent, do any of the following:




          (i) extend or increase the Revolving Commitment of any Lender (or reinstate any
Revolving Commitment terminated pursuant to Section 8.02);




          (ii) postpone or delay any date fixed by this Agreement or any other Loan Document for
any payment of principal, interest, fees or other amounts due to the Lenders (or any of
them) hereunder or under any other Loan Document;




          (iii) reduce the principal of, or the rate of interest specified herein on, any
Revolving Loan or L/C Borrowing or (subject to clause (ii) of the proviso below) any fees or
other amounts payable hereunder or under any other Loan Document; provided, however, that
only the consent of the Required Lenders shall be necessary to amend the definition of
“Default Rate” or to waive any obligation of the Borrower to pay interest at the Default
Rate;




          (iv) change the percentage of the Aggregate Revolving Commitment or of the aggregate
unpaid principal amount of the Revolving Loans and L/C Obligations which is required for the
Lenders or any of them to take any action hereunder;




          (v) change the Pro Rata Share of any Lender;




          (vi) release more than $1,000,000 worth of Collateral or release any Guarantor from a
Guaranty (except in connection with a Disposition permitted under Section 7.07 or as
otherwise permitted under this Section 10.01); or




          (vii) amend this Section, or Section 2.12, or any provision herein providing for
unanimous consent or other action by all the Lenders;



					
	 	 	 	 	 
	 
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and, provided further: (i) no amendment, waiver or consent shall, unless in writing and signed by
the L/C Issuer in addition to the Required Lenders or all the Lenders, as the case may be, affect
the rights or duties of the L/C Issuer under this Agreement or any Letter of Credit Application
relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to the Required Lenders
or all the Lenders, as the case may be, affect the rights or duties of the Administrative Agent
under this Agreement or any other Loan Document; and (iii) the Agent/Arranger Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only by the parties
thereto. Notwithstanding anything to the contrary herein, any Lender that has failed to fund any
portion of the Revolving Loans or participation in L/C Obligations required to be funded by it
hereunder shall not have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Pro Rata Share of such Lender may not be increased without the consent
of such Lender.




     (b) Any amendment to any Loan Document which purports to (i) decrease the amount of any
mandatory prepayment or commitment reduction required by Section 2.04 or (ii) change this Section
10.01(b), must be by an instrument in writing executed by Borrower, the Administrative Agent, and
the Required Lenders.



     (c) Upon any Disposition of Collateral which is permitted pursuant to the Loan Documents, and
upon 10 Business Days’ prior written request by the Borrower (which request must be accompanied by
(i) true and correct copies of all material documents of transfer or disposition, including any
contract of sale, (ii) a preliminary closing statement and instructions to the title company, if
any, (iii) all requested release instruments in form and substance satisfactory to the
Administrative Agent and (iv) if required, written consent of the requisite Lenders), the
Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of Liens granted to the Administrative Agent
for the benefit of the Lenders pursuant hereto in such Collateral. The Administrative Agent shall
not be required to execute any release instruments on terms which, in the Administrative Agent’s
opinion, would expose the Administrative Agent to liability or create any obligation or entail any
consequence other than the release of Liens without recourse or warranty. No such release shall
impair the Administrative Agent’s Lien on the proceeds of sale of such Collateral.



     (d) If all outstanding Revolving Loans and other Obligations have been indefeasibly paid in
full and the Revolving Commitments have terminated or have been reduced to zero, and, subject to
Section 10.01(e) all Lender Hedging Agreement have terminated, the Administrative Agent agrees
to, and the Lenders hereby instruct the Administrative Agent to, at the Borrower’s expense, execute
and authorize such releases of the Collateral Documents as the Borrower shall reasonably request
and this Agreement shall be deemed terminated except that such termination shall not relieve the
Borrower of any obligation to make any payments to the Administrative Agent or any Lender required
by any Loan Document to the extent accruing, or relating to an event occurring, prior to such
termination.



     (e) Notwithstanding any provision herein to the contrary, if the Revolving Commitments have
been terminated, and the only outstanding Obligations are amounts owed pursuant to one or more
Lender Hedging Agreements, the Administrative Agent will, and is hereby authorized to, (A) release
the Liens created under the Loan Documents and (B) release all Guaranties of the Borrower;
provided, that contemporaneously with such release, (i) the Borrower (and, if applicable, the
Subsidiary that is a party to such Lender Hedging Agreements) (A) executes a margin agreement in
form and substance acceptable to such Lender(s) (or its Affiliates) that are parties to such Lender
Hedging Agreements (the “Lender



					
	 	 	 	 	 
	 
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Counterparties”) and (B), if required, provides collateral in the
form of cash or a letter of credit having an aggregate value acceptable to such Lender
Counterparties, and (ii) if such Lender Hedging Agreement is executed by a Subsidiary of the
Borrower and the Borrower is not a party thereto, the Borrower executes a guaranty covering such
Subsidiary’s obligations thereunder, such guaranty to be in form and substance satisfactory to the
Lender Counterparties. Any release under this Section 10.01(e) must be in writing and signed by
the Administrative Agent.




     10.02 Notices and Other Communications; Facsimile Copies.



     (a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder and under the other Loan Documents shall be in writing
(including by facsimile transmission) and mailed, faxed or delivered, to the address, facsimile
number or (subject to subsection (c) below) electronic mail address specified for notices on
Schedule 10.02 (for the Borrower, any Guarantor and the Administrative Agent) or on the
Administrative Details Form (for the other Lenders); or, in the case of the Borrower, the
Guarantors, the Administrative Agent, or the L/C Issuer, to such other address as shall be
designated by such party in a notice to the other parties, and in the case of any other party, to
such other address as shall be designated by such party in a notice to the Borrower, the
Administrative Agent and the L/C Issuer. All such notices and other communications shall be deemed
to be given or made upon the earlier to occur of (i) actual receipt by the intended recipient and
(ii) (A) if delivered by hand or by courier, when signed for by the intended recipient; (B) if
delivered by mail, five (5) Business Days after deposit in the mails, postage prepaid; (C) if
delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered
by electronic mail (which form of delivery is subject to the provisions of subsection (c) below),
when delivered; provided, however, that notices and other communications to the Administrative
Agent or the L/C Issuer pursuant to Article II shall not be effective until actually received by
such Person. Any notice or other communication permitted to be given, made or confirmed by
telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended
recipient at the number specified in accordance with this Section, it being understood and agreed
that a voicemail message shall in no event be effective as a notice, communication or confirmation
hereunder.



     (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures
shall, subject to applicable Law, have the same force and effect as manually-signed originals and
shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative
Agent may also require that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however, that the failure to request or deliver the same shall not
limit the effectiveness of any facsimile document or signature.



     (c) Limited Use of Electronic Mail. Electronic mail and internet and intranet
websites may be used only to distribute routine communications, such as financial statements and
other information, and to distribute Loan Documents for execution by the parties thereto, and shall
not be recognized hereunder for any other purpose.



     (d) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative
Agent, L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including
telephonic Borrowing Notices) purportedly given by or on behalf of the Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete or were not preceded or
followed by any other form



					
	 	 	 	 	 
	 
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of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied
from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each
Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person
on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and
other communications with the Administrative Agent may be recorded by the Administrative Agent, and
each of the parties hereto hereby consents to such recording.




     10.03 No Waiver; Cumulative Remedies. No failure by any Lender or the Administrative Agent to
exercise, and no delay by any such Person in exercising, 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
or therein provided are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by Law.



     10.04 Attorney Costs; Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the
Administrative Agent for all costs and expenses associated with the due diligence and background
investigation undertaken in connection with this Agreement and incurred in connection with the
development, preparation, negotiation, syndication, administration and execution of this Agreement
and the other Loan Documents, including the filing, recording, refiling or rerecording of any
pledge agreement and any Security Agreement and/or any UCC financing statements relating thereto
and all amendments, supplements and modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or refiled or rerecorded by the
terms hereof or of any mortgage, any pledge agreement or any security agreement, and any amendment,
waiver, consent or other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the consummation and
administration of the transactions contemplated hereby and thereby, including all Attorney Costs,
and (b) to pay or reimburse the Administrative Agent and each Lender for all costs and expenses
incurred in connection with the enforcement, attempted enforcement, or preservation of any rights
or remedies under this Agreement or the other Loan Documents (including all such costs and expenses
incurred during any workout or restructuring in respect of the Obligations and during any legal
proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs.
The foregoing costs and expenses shall include all search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by
the Administrative Agent and the cost of independent public accountants and other outside experts
retained by the Administrative Agent or any Lender. The agreements in this Section shall survive
the termination of the Revolving Commitments and repayment of all the other Obligations.



     10.05 Indemnification. Whether or not the transactions contemplated hereby are consummated, the
Borrower and each Guarantor (by execution of a Guaranty), jointly and severally, agrees to
indemnify, save and hold harmless each Agent-Related Person, the Administrative Agent, the
Arranger, each Lender, the L/C Issuer and their respective Affiliates, directors, officers,
employees, counsel, agents and attorneys-in-fact (collectively the “Indemnitees”) from and against:
(a) any and all claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than the Administrative Agent or any Lender) relating directly or
indirectly to a claim, demand, action or cause of action that such Person asserts or may assert
against any Loan Party, any Affiliate of any Loan Party or any of their respective officers or
directors, arising out of or relating to, the Loan Documents, the Revolving Commitments, the use or
contemplated use of the proceeds of any Revolving Loans, or the relationship of any Loan Party, the
Administrative Agent, the Lenders and the L/C Issuer under this



					
	 	 	 	 	 
	 
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Agreement or any other Loan Document; (b) any and all claims, demands, actions or causes of action
that may at any time (including at any time following repayment of the Obligations and the
resignation of the Administrative Agent or the replacement of any Lender) be asserted or imposed
against any Indemnitee by any Person or by the Borrower or any other Loan Party, arising out of or
relating to, the Loan Documents, the Revolving Commitments, the use or contemplated use of the
proceeds of any Revolving Loans, or the relationship of any Loan Party, the Administrative Agent,
the Lenders and the L/C Issuer under this Agreement or any other Loan Document; (c) without
limiting the foregoing, any and all claims, demands, actions or causes of action, judgments and
orders, penalties and fines that are asserted or imposed against any Indemnitee, (i) under the
application of any Environmental Law applicable to the Borrower or any of its Subsidiaries or any
of their properties or assets, including the treatment or disposal of Hazardous Substances on any
of their properties or assets, (ii) as a result of the breach or non-compliance by the Borrower or
any Subsidiary with any Environmental Law applicable to the Borrower or any Subsidiary, (iii) due
to past ownership by the Borrower or any Subsidiary of any of their properties or assets or past
activity on any of their properties or assets which, though lawful and fully permissible at the
time, could result in present liability, (iv) due to the presence, use, storage, treatment or
disposal of Hazardous Substances on or under, or the escape, seepage, leakage, spillage, discharge,
emission or Release from, any of the properties owned or operated by the Borrower or any Subsidiary
(including any liability asserted or arising under any Environmental Law), regardless of whether
caused by, or within the control of, the Borrower or such Subsidiary, or (v) due to any other
environmental, health or safety condition in connection with the Loan Documents; (d) any
administrative or investigative proceeding by any Governmental Authority arising out of or related
to a claim, demand, action or cause of action described in subsection (a), (b) or (c) above; and
(e) any and all liabilities (including liabilities under indemnities), losses, costs, damages or
expenses (including Attorney Costs and settlement costs) that any Indemnitee suffers or incurs as a
result of the assertion of any foregoing claim, demand, action, cause of action or proceeding, or
as a result of the preparation of any defense in connection with any foregoing claim, demand,
action, cause of action or proceeding, in all cases, WHETHER OR NOT ARISING OUT OF THE STRICT
LIABILITY OR NEGLIGENCE OF AN INDEMNITEE, and whether or not an Indemnitee is a party to such
claim, demand, action, cause of action or proceeding (all the foregoing, collectively, the
"Indemnified Liabilities”); provided that no Indemnitee shall be entitled to indemnification for
any claim to the extent caused by its own gross negligence or willful misconduct. The agreements
in this Section shall survive and continue for the benefit of the Indemnitees at all times after
the Borrower’s acceptance of the Lenders’ Revolving Commitments under this Agreement, whether or
not the First Amendment Closing Date shall occur and shall survive the termination of the Revolving
Commitments and repayment of all the other Obligations.




     10.06 Payments Set Aside. To the extent that the Borrower makes a payment to the Administrative
Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and
such payment or the proceeds of such set-off or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid
to a trustee, receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred, and (b) each Lender severally
agrees to pay to the Administrative Agent upon demand its applicable share of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such
demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from
time to time in effect.



					
	 	 	 	 	 
	 
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     10.07 Successors and Assigns.



     (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the
provisions of paragraph (d) of this Section or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of paragraph (f) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the extent provided in
paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.



     (b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of its Revolving
Commitment and the Revolving Loans (including for purposes of this subsection (b), participations
in L/C Obligations) at the time owing to it); provided that: (i) except in the case of an
assignment of the entire remaining amount of the assigning Lender’s Revolving Commitment and the
Revolving Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate
of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Revolving
Commitment (which for this purpose includes Revolving Loans outstanding thereunder) or, if the
applicable Revolving Commitment is not then in effect, the outstanding principal balance of the
Revolving Loans of the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date)
shall not be less than $1,000,000, unless each of the Administrative Agent, L/C Issuer and, so long
as no Default has occurred and is continuing, the Borrower otherwise consent (Borrower’s consent
not to be unreasonably withheld, conditioned or delayed); (ii) each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Revolving Loans and/or the Revolving Commitment assigned;
and (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of $3,500, and the
Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Details Form. Subject to acceptance and recording thereof by the Administrative
Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement
and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections 3.07, 10.04 and 10.05
with respect to facts and circumstances occurring prior to the effective date of such assignment.
Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this paragraph shall be treated for purposes of this Agreement as a



					
	 	 	 	 	 
	 
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sale by such Lender of a participation in such rights and obligations in accordance with
paragraph (d) of this Section.




     (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Revolving
Commitments of, and principal amounts of the Revolving Loans and L/C Obligations owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the
Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.



     (d) Any Lender may at any time, without the consent of, or notice to, the Borrower, the
Administrative Agent or the L/C Issuer, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all
or a portion of its Revolving Commitment and/or the Revolving Loans (including such Lender’s
participation in L/C Obligations) owing to it); provided that (i) such Lender’s obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement
or instrument pursuant to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver that would (i) postpone any date upon which any payment of money is
scheduled to be paid to such Participant, (ii) reduce the principal, interest, fees or other
amounts payable to such Participant, or (iii) extend the Maturity Date. Subject to subsection (e)
of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by Law,
each Participant also shall be entitled to the benefits of Section 10.09 as though it were a
Lender; provided such Participant agrees to be subject to Section 2.12 as though it were a Lender.



     (e) A Participant shall not be entitled to receive any greater payment under Section 3.01 or
3.04 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 10.15 as though it were a Lender.



     (f) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement (including under its Revolver Note, if any) to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided that no such pledge or assignment shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.



					
	 	 	 	 	 
	 
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     (g) If the consent of the Borrower to an assignment or to an Eligible Assignee is required
hereunder (including a consent to an assignment which does not meet the minimum assignment
threshold specified in clause (i) of the proviso to the first sentence of Section 10.07(b)), the
Borrower shall be deemed to have given its consent five Business Days after the date notice thereof
has been delivered by the assigning Lender (through the Administrative Agent) unless such consent
is expressly refused by the Borrower prior to such fifth Business Day.



     (h) Notwithstanding anything to the contrary contained herein, if at any time Royal Bank of
Canada assigns all of its Revolving Commitment and Revolving Loans pursuant to subsection (b)
above, Royal Bank of Canada may, (i) upon 30 days’ notice to the Borrower and the Lenders, resign
as L/C Issuer. In the event of any such resignation as L/C Issuer, the Borrower shall be entitled
to appoint from among the Lenders a successor L/C Issuer hereunder; provided, however, that no
failure by the Borrower to appoint any such successor shall affect the resignation of Royal Bank of
Canada as L/C Issuer. Royal Bank of Canada shall retain all the rights and obligations of the L/C
Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its
resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to
require the Lenders to make Base Rate Loans or fund participations in Unreimbursed Amounts pursuant
to Section 2.14(c)).



     10.08 Confidentiality. Each Lender agrees that it will not disclose without the prior consent of
the Borrower (other than to directors, officers, employees, auditors, accountants, counsel or other
professional advisors of the Administrative Agent or any Lender) any information with respect to
the Borrower or its Subsidiaries, which is furnished pursuant to this Agreement and which (i) the
Borrower in good faith considers to be confidential and (ii) is either clearly marked confidential
or is designated by the Borrower to the Administrative Agent or the Lenders in writing as
confidential; provided that any Lender may disclose any such information (a) as has become
generally available to the public, (b) as may be required or appropriate in any report, statement
or testimony submitted to or required by any municipal, state or federal regulatory body having or
claiming to have jurisdiction over such Lender or submitted to or required by the Board or the
Federal Deposit Insurance Corporation or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required or appropriate in response to any summons or
subpoena in connection with any litigation, (d) in order to comply with any Law, order, regulation
or ruling applicable to such Lender, (e) to any Eligible Assignee of or Participant in, or any
prospective Eligible Assignee of or Participant in, any of its rights or obligations under this
Agreement; provided that such Eligible Assignee or Participant or prospective Eligible Assignee or
Participant executes an agreement containing provisions substantially similar to those contained in
this Section 10.08, (f) in connection with the exercise of any remedy by such Lender following an
Event of Default pertaining to the Loan Documents, (g) in connection with any litigation involving
such Lender pertaining to the Loan Documents, (h) to any Lender or the Administrative Agent, or (i)
to any Affiliate of any Lender (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such information and obligated to keep such
information confidential); provided further, that notwithstanding anything in this Agreement to the
contrary, the Borrower, the Administrative Agent, the L/C Issuer, each Lender and each Related
Party may disclose to any and all Persons, without limitation of any kind, the tax treatment and
tax structure of the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analysis) that are provided to it relating to such tax treatment and tax
structure; and nothing in the foregoing authorization shall apply to any disclosure that would
constitute a violation of applicable federal or state securities Laws.



     10.09 Set-off. In addition to any rights and remedies of the Lenders provided by Law, upon the
occurrence and during the continuance of any Event of Default, each Lender is authorized at any
time and



					
	 	 	 	 	 
	 
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from time to time, without prior notice to the Borrower or any other Loan Party, any such notice
being waived by the Borrower (on its own behalf and on behalf of each Loan Party) to the fullest
extent permitted by Law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held by, and other indebtedness at any time owing by,
such Lender to or for the credit or the account of the respective Loan Parties against any and all
Obligations owing to the Administrative Agent and the Lenders, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Lender shall have made demand under
this Agreement or any other Loan Document and although such Obligations may be contingent or
unmatured. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such set-off and application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.




     10.10 Interest Rate Limitation. Regardless of any provision contained in any Loan Document,
neither the Administrative Agent nor any Lender shall ever be entitled to contract for, charge,
take, reserve, receive, or apply, as interest on all or any part of the Obligations, any amount in
excess of the Maximum Rate, and, if any Lender ever does so, then such excess shall be deemed a
partial prepayment of principal and treated hereunder as such and any remaining excess shall be
refunded to the Borrower. In determining if the interest paid or payable exceeds the Maximum Rate,
the Borrower and the Lenders shall, to the maximum extent permitted under applicable Law, (a) treat
all Borrowings as but a single extension of credit (and the Lenders and the Borrower agree that
such is the case and that provision herein for multiple Borrowings is for convenience only), (b)
characterize any nonprincipal payment as an expense, fee, or premium rather than as interest, (c)
exclude voluntary prepayments and the effects thereof, and (d) amortize, prorate, allocate, and
spread the total amount of interest throughout the entire contemplated term of the Obligations.
However, if the Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum Amount, the Lenders shall refund such excess, and, in such event, the Lenders
shall not, to the extent permitted by Law, be subject to any penalties provided by any Laws for
contracting for, charging, taking, reserving or receiving interest in excess of the Maximum Amount.
To the extent the Laws of the State of Texas are applicable for purposes of determining the
"Maximum Rate” or the “Maximum Amount,” then those terms mean the “weekly ceiling” from time to
time in effect under Texas Finance Code § 303.001, as limited by Texas Finance Code § 303.009. The
Borrower agrees that Chapter 346 of the Texas Finance Code, as amended (which regulates certain
revolving credit loan accounts and revolving tri-party accounts), does not apply to the
Obligations.



     10.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.



     10.12 Integration. This Agreement, together with the other Loan Documents, comprises the complete
and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all
prior agreements, written or oral, on such subject matter. In the event of any conflict between
the provisions of this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of
the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict
with this Agreement. Each Loan Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.



					
	 	 	 	 	 
	 
	 	78
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 





     10.13 Survival of Representations and Warranties. All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive the execution and delivery hereof and thereof.
Such representations and warranties have been or will be relied upon by the Administrative Agent
and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or
on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default or Event of Default at the time of any Borrowing, and shall continue in
full force and effect as long as any Revolving Loan or any other Obligation shall remain unpaid or
unsatisfied.



     10.14 Severability. Any provision of this Agreement and the other Loan Documents to which the
Borrower is a party that 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 thereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.



     10.15 Foreign Lenders. Each Lender that is a “foreign corporation, partnership or trust”
within the meaning of the Code (a “Foreign Lender”) shall deliver to the Administrative Agent,
prior to receipt of any payment subject to withholding under the Code (or after accepting an
assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or
any successor thereto (relating to such Person and entitling it to an exemption from, or reduction
of, withholding tax on all payments to be made to such Person by the Borrower pursuant to this
Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such
Person by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the
Borrower and the Administrative Agent that such Person is entitled to an exemption from, or
reduction of, U.S. withholding tax. Thereafter and from time to time, each such Person shall (a)
promptly submit to the Administrative Agent such additional duly completed and signed copies of one
of such forms (or such successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may then be available under then current United States Laws and
regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative
Agent of any available exemption from or reduction of, United States withholding taxes in respect
of all payments to be made to such Person by the Borrower pursuant to this Agreement, (b) promptly
notify the Administrative Agent of any change in circumstances which would modify or render invalid
any claimed exemption or reduction, and (c) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably
necessary (including the re-designation of its Lending Office) to avoid any requirement of
applicable Laws that the Borrower make any deduction or withholding for taxes from amounts payable
to such Person. If such Person fails to deliver the above forms or other documentation, then the
Administrative Agent may withhold from any interest payment to such Person an amount equivalent to
the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without reduction.
If any Governmental Authority asserts that the Administrative Agent did not properly withhold any
tax or other amount from payments made in respect of such Person, such Person shall indemnify the
Administrative Agent therefor, including all penalties and interest, any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, and costs and expenses
(including Attorney Costs) of the Administrative Agent. The obligation of the Lenders under this
Section shall survive the payment of all Obligations and the resignation or replacement of the
Administrative Agent.



					
	 	 	 	 	 
	 
	 	79
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 





     10.16 Governing Law.



     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF TEXAS APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE;
PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER UNITED
STATES FEDERAL LAW.



     (b) EACH LOAN PARTY AND OTHER PARTY HERETO, AND EACH GUARANTOR, BY EXECUTION OF A GUARANTY,
AGREES AS TO THIS SECTION 10.16(b). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS SITTING IN HARRIS
COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, AND BY
EXECUTION OF A GUARANTY, EACH GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, EACH GUARANTOR, THE ADMINISTRATIVE AGENT
AND EACH LENDER (1) IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO, AND (2) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS FOR NOTICES DESIGNATED
HEREIN. THE BORROWER, EACH GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED
BY THE LAW OF SUCH STATE.



     10.17 Waiver of Right to Trial by Jury, Etc. EACH PARTY TO THIS AGREEMENT AND EACH GUARANTOR, BY
EXECUTION OF A GUARANTY, HEREBY (a) EXPRESSLY AND IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES TO THE LOAN DOCUMENTS OR ANY
OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE;
AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE LOAN PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY; AND (b) EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY SUCH ACTION ANY



					
	 	 	 	 	 
	 
	 	80
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 




SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; PROVIDED THAT THE WAIVER CONTAINED IN THIS SECTION 10.17(b) SHALL NOT APPLY TO THE
EXTENT THAT THE PARTY AGAINST WHOM DAMAGES ARE SOUGHT HAS ENGAGED IN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.




     10.18 Termination of Commitments Under Original Credit Agreement. As of the First Amendment
Closing Date, the aggregate commitments under the Original Credit Agreement are terminated and the
Administrative Agent and the Lenders hereby waive any right to receive prior notice of such
termination. Each Lender agrees upon the First Amendment Closing Date to return to Borrower with
reasonable promptness all “Notes” as defined under the Original Credit Agreement which were
delivered by the Borrower in exchange for new Revolver Notes to be issued pursuant to this
Agreement.



     10.19 No Novations, Etc. To the extent of the aggregate commitment outstanding under the
Original Credit Agreement ($55,000,000), nothing contained herein shall be deemed a novation of or
a repayment or new advance of any obligation of the Borrower hereunder. Only to the extent of an
increase in the Aggregate Revolving Commitments over that amount shall there be deemed to be a new
advance by the Lenders to the Borrower under this Agreement. The Indebtedness owing under the
Original Credit Agreement is renewed, rearranged, extended and carried forward by this Agreement
and all of the liens and security interests securing the “Obligations” as defined in the Original
Credit Agreement are carried forward and secure, without interruption or loss or priority, the
Obligations under this Agreement.



     10.20 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.



[REMAINDER OF PAGE INTENTIONALLY BLANK;

SIGNATURES BEGIN ON NEXT PAGE]




					
	 	 	 	 	 
	 
	 	81
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 




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




	 	 	 	 	 
	 	ALLIS-CHALMERS ENERGY INC.,

a Delaware corporation, as Borrower

 	 
	 	By:  	/s/ Victor M. Perez
 	 
	 	 	Victor M. Perez 	 
	 	 	Chief Financial Officer 	 
	 



Signature Page 1




					
	 	 	 	 	 
	 
	 	 
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 





	 	 	 	 	 
	 	ROYAL BANK OF CANADA,

as Administrative Agent

 	 
	 	By:  	/s/ David Wheatley
 	 
	 	 	David Wheatley 	 
	 	 	Manager, Agency 	 
	 
	 	ROYAL BANK OF CANADA,

as Collateral Agent

 	 
	 	By:  	/s/ David Wheatley
 	 
	 	 	David Wheatley 	 
	 	 	Manager, Agency 	 
	 



Signature Page 2




					
	 	 	 	 	 
	 
	 	 
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 





	 	 	 	 	 
	 	ROYAL BANK OF CANADA, as Lender

and L/C Issuer

 	 
	 	By:  	/s/ Jason York
 	 
	 	 	Jason York 	 
	 	 	Authorized Signatory 	 
	 



Signature Page 3




					
	 	 	 	 	 
	 
	 	 
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 





	 	 	 	 	 
	 	CATERPILLAR FINANCIAL

SERVICES CORPORATION, as Lender

 	 
	 	By:  	/s/ Jennifer Coyle
 	 
	 	 	Jennifer Coyle 	 
	 	 	Manager Capital Markets 	 
	 



Signature Page 4




					
	 	 	 	 	 
	 
	 	 
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 





	 	 	 	 	 
	 	COMMERCEBANK, N.A., as Lender

 	 
	 	By:  	/s/ Mark M. Isensee
 	 
	 	 	Mark M. Isensee 	 
	 	 	Vice President-Oil & Gas Manager 	 
	 
	 	 	 
	 	By:  	                                              /s/ Francisco Rivero
 	 
	 	 	Francisco Rivero 	 
	 	 	Senior Vice President & Manager 	 
	 



Signature Page 5




					
	 	 	 	 	 
	 
	 	 
	 	Allis-Chalmers Energy

Amended & Restated Credit Agreement






 









 






SCHEDULE 2.01




REVOLVING COMMITMENTS




	 	 	 	 	 
	Lender	 	Revolving Commitment	 
	Royal Bank of Canada
	 	$	9,000,000.00	 
	Caterpillar Financial Services Corporation
	 	$	8,000,000.00	 
	Commercebank, N.A.
	 	$	8,000,000.00	 
	Total:
	 	$	25,000,000.00	 






SCHEDULE 2.01





Allis-Chalmers




 










 






SCHEDULE 5.05




EXISTING INDEBTEDNESS

($ in 000’s)




	 	 	 	 	 
	9.0% Senior Notes
	 	 	160,000	 
	 
	 	 	 	 
	Other
Indebtedness
	 	 	 	 
	M-I Subordinated Note
	 	 	4,000	 
	Capcoil/Downhole Equipment Notes
	 	 	0	 
	Capcoil Non-Compete
	 	 	330	 
	Delta Rental Seller Note
	 	 	350	 
	Jens’ Non-Compete
	 	 	267	 
	Mountain Air Seller Note
	 	 	500	 
	N/P to Former A-C Directors
	 	 	96	 
	Safco Non-Compete
	 	 	125	 
	Caterpillar Financial Notes
	 	 	1,402	 
	Total
	 	 	7,070	 
	Total
	 	$	167,070	 






Schedule 5.05




Allis-Chalmers

Amended & Restated Credit Agreement





 









 








SCHEDULE 5.13




SUBSIDIARIES

AND OTHER EQUITY INVESTMENTS





	(a)	 	Subsidiaries as of the First Amendment Closing Date:





	 	 	 	 	 
	Name	 	Jurisdiction of Organization	 	Ownership
	OilQuip Rentals, Inc.

	 	Delaware
	 	100% owned by the
Borrower
	 
	 	 	 	 
	Allis-Chalmers Tubular Services, Inc.

	 	Texas
	 	100% owned by the
Borrower
	 
	 	 	 	 
	Strata Directional Technology, Inc.

	 	Texas
	 	100% owned by the Borrower
	 
	 	 	 	 
	Downhole Injection Systems, LLC

	 	Texas
	 	100% owned by the Borrower
	 
	 	 	 	 
	AirComp, LLC

	 	Delaware
	 	100% owned by the Borrower
	 
	 	 	 	 
	Mountain Compressed Air, Inc.

	 	Texas
	 	100% owned by OilQuip Rentals, Inc.
	 
	 	 	 	 
	Delta Rental Service, Inc.

	 	Louisiana
	 	100% owned by the
Borrower
	 
	 	 	 	 
	Safco-Oil Field Products, Inc.

	 	Texas
	 	100% owned by the
Borrower
	 
	 	 	 	 
	Capcoil Tubing Services, Inc.

	 	Texas
	 	100% owned by the
Borrower
	 
	 	 	 	 
	Target Energy, Inc.

	 	Delaware
	 	100% owned by the
Borrower
	 
	 	 	 	 
	Specialty Rental Tools, Inc.

	 	Louisiana
	 	100% owned by the Borrower







	(b)	 	Other Equity Investments as of the First Amendment Closing Date:
	 
	(c)	 	Other Investments as of the First Amendment Closing Date:





Schedule 5.13




Allis-Chalmers Energy

Amended & Restated Credit Agreement




 









 








SCHEDULE 5.22




LEASED LOCATIONS




Borrower



1. Leased office space in Houston, Texas




AirComp




1. Leased site in Grand Junction, Colorado

2. Leased site in Farmington, New Mexico

3. Leased site in Fort Stockton, Texas

4. Leased site in San Angelo, Texas

5. Leased site in Carlsbad, New Mexico

6. Leased site in Denver, Colorado

7. Leased site in Houston, Texas

8. Leased site in Wilburton, Oklahoma

9. Leased site in Grandbury, Texas

10. Leased site in Sonora, Texas




AC Tubular

1. Leased site in Victoria, Texas

2. Leased site in Pearsall, Texas

3. Leased site in Edinburg, Texas

4. Leased site in Lafayette, Louisiana

5. Leased site in Houma, Louisiana

6. Leased site in Corpus Christi, Texas




Strata

1. Leased site in Houston, Texas

2. Leased site in Midland, Texas

3. Leased site in Corpus Christi, Texas

4. Leased site in Oklahoma City, Oklahoma




Safco

1. Leased site in Houston, Texas




Delta

1. Leased site in Lafayette, Louisiana




Downhole

1. Leased site in Midland, Texas

2. Leased site in Corpus Christi, Texas

3. Leased site in Carthage, Texas




Schedule 5.22




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 








Capcoil

1. Leased site in Kilgore, Texas




Target Energy, Inc.

1. Leased site in Houston, Texas




Specialty Rental Tools, Inc.

1. Leased site in Broussard, Louisiana




Schedule 5.22




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 








SCHEDULE 5.23




MATERIAL AGREEMENTS





	1	 	Lease Agreement between Materiales y Equipo Petroleo, S.A. de C.V. (Matyep) and Jens’ Oil Field
Service, now known as Allis-Chalmers Tubular Services, Inc. dated August 4, 1997.
	 
	2.	 	Indenture for Senior Unsecured Notes between Wells Fargo Bank, N.A., as trustee, and Borrower
and its Subsidiaries named therein.





Schedule 5.23




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 








SCHEDULE 7.01




EXISTING LIENS




	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Debtor	 	Creditor	 	Asset Secured	 	Filing Jurisdiction
	AC Tubular

	 	PACCAR
	 	4 Trucks
	 	Hidalgo

County, Texas
	AC Tubular

	 	Texas State Bank
	 	Yard in Edinburg,
Texas
	 	Hidalgo

County, Texas
	AC Tubular

	 	Jens H. Mortensen, Jr.
	 	Tools, machinery
and equipment
	 	Hidalgo

County, Texas
	AC Tubular

	 	Jens H. Mortensen, Jr.
	 	Equipment in
Mexico
	 	Mexico
	 
	AC Tubular

	 	Texas State Bank
	 	3 Forklifts
9 Vehicles
	 	Hidalgo
County, Texas
	 
	Downhole Injection Systems

	 	Ford Motor Credit
	 	Ford vehicle
	 	Midland County,
Texas
	 
	Capcoil Tubing Services

	 	Navistar
	 	3 Trucks
	 	Gregg County, Texas
	 
	Capcoil Tubing Services

	 	Ford Motor Credit
	 	7 Vehicles
	 	Gregg County, Texas
	 
	Borrower and AirComp

	 	Caterpillar
	 	Air compressors
	 	Delaware and Texas






Schedule 7.01




 

Allis-Chalmers
Energy
Amended & Restated Credit Agreement









 








SCHEDULE 7.12




AGREEMENTS RESTRICTING LIENS ON LEASEHOLD INTERESTS




NONE.




Schedule 7.12




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 








SCHEDULE 10.02




ADDRESSES FOR NOTICES TO BORROWER,

GUARANTORS AND ADMINISTRATIVE AGENT




ADDRESS FOR NOTICES TO BORROWER

ALLIS-CHALMERS ENERGY INC.

5075 Westheimer

Suite 890

Houston, Texas 77056

Attn: General Counsel

Telephone: (713) 369-0550

Facsimile: (713)




ADDRESS FOR NOTICES TO GUARANTORS

[Name of Guarantor]

5075 Westheimer

Suite 890

Houston, Texas 77056

Attn: General Counsel

Telephone: (713) 369-0550

Facsimile: (713)




ADDRESSES FOR ROYAL BANK OF CANADA




Royal Bank of Canada’s Lending Office:

Royal Bank of Canada

New York Branch

One Liberty Plaza, 3rd Floor

New York, New York 10006-1404

Attention: Manager, Loans Administration

Telephone: (212) 428-6332

Facsimile: (212) 428-2372




For matters related to letters of credit:

Attention: Manager, Trade Products

Telephone: (212) 428-6235

Facsimile: (212) 428-3015




Schedule 10.2 — Page 1




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 








in each case with a copy to:

Royal Bank of Canada

2800 Post Oak Boulevard

3900 Williams Tower

Houston, Texas 77056

Attention: Jason York

Telephone: (713) 403-5679

Facsimile: (713) 403-5624

Electronic Mail: Jason.York@rbccm.com




Administrative Agent’s Office:

Royal Bank of Canada

Agency Services Group

Royal Bank Plaza

P. O. Box 50, 200 Bay Street

12th Floor, South Tower

Toronto, Ontario M5J 2W7

Attention: Manager Agency

Telephone: (416) 842-3901

Facsimile: (416) 842-4023




Wiring Instructions:

JPMorgan Chase Bank, New York, New York

ABA 021-000021

For account Royal Bank of Canada, New York

Swift Code: ROYCUS3X

A/C 920-1033363

For further credit to A/C 293-746-4, Transit 1269

Ref: Allis-Chalmers Energy

Attn: Agency Services




Schedule 10.2 — Page 2




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 








EXHIBIT A-1




FORM OF BORROWING NOTICE




Date:                                         ,                    




Royal Bank of Canada,

as Administrative Agent

Global Banking Agency

Royal Bank Plaza, 200 Bay Street

12th Floor, South Tower

Toronto ON M5J 2W7



Ladies and Gentlemen:




     Reference is made to that certain Amended and Restated Credit Agreement, dated as of January
18, 2006 (as amended, restated, extended, supplemented or otherwise modified in writing from time
to time, the “Agreement;” the terms defined therein being used herein as therein defined), among
Allis-Chalmers Energy Inc., a Delaware corporation (the “Borrower”), Royal Bank of Canada, as
Administrative Agent, and the Lenders from time to time party thereto.



     The undersigned hereby requests a revolving loan:



I. REVOLVER FACILITY





	 	1.	 	Status Information for the Revolver Facility






	 	(a)	 	Amount of Revolver Facility: $25,000,000
	 
	 	(b)	 	Revolving Loans outstanding prior to the
Borrowing requested herein: $                    
	 
	 	(c)	 	Letters of Credit outstanding prior to the
Borrowing requested herein: $                    
	 
	 	(d)	 	Principal amount of Revolving Loans available
to be borrowed (1(a) minus the sum of 1(b) and 1(c)): $                    






	 	2.	 	Amount of Borrowing: $                    
	 
	 	3.	 	Requested date of Borrowing:                                         , 200_; must be
prior to Maturity Date.
	 
	 	4.	 	Requested interest rate Type of Revolving Loan and applicable Dollar amount:






	 	(a)	 	Base Rate Revolving Loan for $                    
	 
	 	(b)	 	Eurodollar Rate Revolving Loan with Interest
Period of:






	 	(i)	 	one month for $                    





Exhibit A — 1 — Page 1

Form of Borrowing Notice




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 










 






	 	 	 	 	 	 	 
	 

	 	(ii)
	 	two months for
	 	$                                        
	 

	 	(iii)
	 	three months for
	 	$                                        
	 

	 	(iv)
	 	six months for
	 	$                                        






     The undersigned hereby certifies that the following statements will be true on the date of the
proposed Borrowing(s) after giving effect thereto and to the application of the proceeds therefrom:



     (a) the representations and warranties of the Borrower contained in Article V of the Agreement
are true and correct as though made on and as of such date (except such representations and
warranties which expressly refer to an earlier date, which are true and correct as of such earlier
date);



     (b) with respect to a Borrowing of Revolving Loans, if any, the amount of the requested
Borrowing, when added to Revolving Loans outstanding prior to the Borrowing and Letters of Credit
outstanding prior to the Borrowing will not exceed the Aggregate Revolving Commitment; and



     (c) no Default or Event of Default has occurred and is continuing, or would result from such
proposed Borrowing(s).



     The Borrowing requested herein complies with Sections 2.01, 2.03, 4.01, 4.02 and 4.04 of the
Agreement, as applicable.



	 	 	 	 	 
	 	 	ALLIS-CHALMERS ENERGY INC.,

	 	 	a Delaware corporation, as Borrower
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





Exhibit A-1 — Page 2

Form of Borrowing Notice




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 








EXHIBIT A-2




FORM OF CONVERSION/CONTINUATION NOTICE




Date:                                         ,                     




Royal Bank of Canada,

as Administrative Agent

Global Banking Agency

Royal Bank Plaza, 200 Bay Street

12th Floor, South Tower

Toronto ON M5J 2W7


Ladies and Gentlemen:




     Reference is made to that certain Amended and Restated Credit Agreement, dated as of January
18, 2006 (as amended, restated, extended, supplemented or otherwise modified in writing from time
to time, the “Agreement;” the terms defined therein being used herein as therein defined), among
Allis-Chalmers Energy Inc., a Delaware corporation (the “Borrower”), Royal Bank of Canada, as
Administrative Agent, and the Lenders from time to time party thereto.



     The undersigned hereby requests:



I. REVOLVER FACILITY




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	1.	 	 	Amount of [conversion] [continuation]:	 	$                                        
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	2.	 	 	Existing rate:	 	Check applicable blank
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(a)	 	Base Rate	 	                                          
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(b)	 	Eurodollar Rate Loan with	 	 
	 	 	 	 	 	 	 	 	Interest Period of:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(i)
	 	one month	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(ii)
	 	two months	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(iii)
	 	three months	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(iv)
	 	six months	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	3.	 	 	If a Eurodollar Rate Loan, date of the last day of the Interest
	 	 	 	 	 	 	Period for such Loan:                                         , 200                    .






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	The Revolving Loan described above is to be [converted] [continued] as follows:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	   4.	  Requested date of [conversion] [continuation]:                     , 200                    .
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	   5.	  Requested Type of Loan and applicable Dollar amount:






Exhibit A-2 — Page 1

 Form of Conversion Continuation Notice




Allis-Chalmers Energy

Amended & Restated Credit Agreement



 









 







	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(a)	 	Base Rate Loan for $                                        
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(b)	 	Eurodollar Rate Loan with Interest Period of:
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(i)
	 	one month for
	 	$                                        
	 

	 	 	 	 	 	(ii)
	 	two months for
	 	$                                        
	 

	 	 	 	 	 	(iii)
	 	three months for
	 	$                                        
	 

	 	 	 	 	 	(iv)
	 	six months for
	 	$                                        






       The [conversion] [continuation] requested herein complies with Sections 2.01 and 2.03 of the
Agreement, as applicable.



	 	 	 	 	 
	 	 	ALLIS-CHALMERS ENERGY INC.,

	 	 	a Delaware corporation, as Borrower
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





Exhibit A-2 Page 2

Form of Conversion Continuation Notice




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 








EXHIBIT A-3




NOTICE IN RESPECT OF REPAYMENTS, PREPAYMENTS

AND REDUCTIONS OF REVOLVING COMMITMENT




                                        [Date]




Royal Bank of Canada,

as Administrative Agent

Global Banking Agency

Royal Bank Plaza, 200 Bay Street

12th Floor, South Tower

Toronto ON M5J 2W7



Dear Sirs:




     The undersigned, Allis-Chalmers Energy Inc. (the “Borrower”), refers to the Amended and
Restated Credit Agreement dated as of January 18, 2006 (as may be amended, restated, replaced or
supplemented from time to time, the “Credit Agreement”, the terms defined therein being used herein
as therein defined) among the Borrower, the financial institutions that are named on the signature
pages thereto, as Lenders, RBC Capital Markets as Lead Arranger and Sole Bookrunner, and Royal Bank
of Canada, as Administrative Agent, and hereby gives you notice pursuant to [Section 2.04/Section
2.05] of the Credit Agreement that on [insert proposed date of repayment, prepayment or reduction
of the Revolving Commitment], the Borrower shall [make a repayment of $                                        
under and such repayment shall apply to                                          (specify Type of Revolving Loan to be
repaid)]/[make a prepayment of/ permanently reduce the Revolving Commitment by an aggregate
principal amount of $                                         [the repayment, prepayment or reduction shall be for no
less than the minimums specified in the Credit Agreement.



	 	 	 	 	 
	 

	 	 	 	Yours truly,
	 
	 	 	 	 
	 

	 	 	 	Allis-Chalmers Energy Inc.
	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 

	 	Title:	 	 
	 

	 	 	 	 





Exhibit A-3 Page 1

Form of Repayment/Prepayment Notice




Allis-Chalmers Energy

Amended & Restated Credit Agreement




 









 





EXHIBIT B-1




FORM OF REVOLVER NOTE




			
	$                                        
	 	January                     , 2006






     FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay to the order of
                                                             (the “Lender”), on the Maturity Date (as defined in the Credit Agreement
referred to below) the principal amount of                                          Dollars ($                    ), or such lesser
principal amount of Revolving Loans made by Lender under that certain Credit Agreement dated of
even date herewith (as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein
defined), among the Borrower, the Lenders from time to time party thereto, and Royal Bank of
Canada, as Administrative Agent.



     The Borrower promises to pay interest on the unpaid principal amount of each Revolving Loan
from the date of such Revolving Loan until such principal amount is paid in full, at such interest
rates, and at such times as are specified in the Credit Agreement. All payments of principal and
interest shall be made to the Administrative Agent for the account of the Lender in Dollars in
immediately available funds to the account designated by the Administrative Agent in the Credit
Agreement. If any amount is not paid in full when due hereunder, such unpaid amount shall bear
interest, to be paid upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.



     This Note is one of the Revolver Notes referred to in the Credit Agreement, is entitled to the
benefits thereof and is subject to optional and mandatory prepayment in whole or in part as
provided therein. This Note is also entitled to the benefits of each Guaranty. Upon the
occurrence of one or more of the Events of Default specified in the Credit Agreement, all amounts
then remaining unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Credit Agreement. Revolving Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course
of business. The Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Revolving Loans and payments with respect thereto.



     This Note is a Loan Document and is subject to Section 10.10 of the Credit Agreement, which is
incorporated herein by reference the same as if set forth herein verbatim.



     The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, notice of intent to accelerate, notice of acceleration,
demand, dishonor and non-payment of this Note.



     THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.



	 	 	 	 	 
	 	ALLIS-CHALMERS ENERGY INC.,

a Delaware corporation, as Borrower

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 



Exhibit B Page 1

Form of Revolving Note




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 





EXHIBIT C-1




FORM OF COMPLIANCE CERTIFICATE

(Pursuant to Section 6.02 of the Agreement)




Financial Statement Date:                                         , 200                    




Royal Bank of Canada,

as Administrative Agent

Global Banking Agency

Royal Bank Plaza, 200 Bay Street

12th Floor, South Tower

Toronto ON M5J 2W7


Ladies and Gentlemen:




     Reference is made to that certain Amended and Restated Credit Agreement, dated as of January
18, 2006 (as amended, restated, extended, supplemented or otherwise modified in writing from time
to time, the “Agreement;” the terms defined therein being used herein as therein defined), among
Allis-Chalmers Energy Inc., a Delaware corporation (the “Borrower”), the Lenders from time to time
party thereto, and Royal Bank of Canada, as Administrative Agent. Capitalized terms used herein but
not defined herein shall have the meaning set forth in the Agreement.



     The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the
                                                             of the Borrower, and that, as such, he/she is authorized to execute and
deliver this Certificate to the Administrative Agent on the behalf of the Borrower, and that:



     [Use the following for Fiscal Year-end financial statements]



     Attached hereto as Schedule 1 are the year-end audited consolidated financial statements of
the Borrower and its Subsidiaries required by Section 6.01(a) of the Agreement for the Fiscal Year
of the Borrower ended as of the above date, together with the report and opinion of an independent
certified public accountant required by such section; and



     [Use the following for fiscal quarter-end financial statements]



     Attached hereto as Schedule 1 are the unaudited consolidated financial statements of the
Borrower and its Subsidiaries required by Section 6.01(b) of the Agreement for the first three
fiscal quarters of the Borrower ended as of the above date, together with a certificate of a
Responsible Officer of the Borrower stating that such financial statements fairly present the
financial condition, results of operations and cash flows of the Borrower and its Subsidiaries for
such fiscal quarter in accordance with GAAP as at such date and for such period, subject only to
normal year-end audit adjustments and the absence of footnotes.



     [Use the following for both Fiscal Year-end and quarter-end financial statements]



     1. The undersigned has reviewed and is familiar with the terms of the Agreement and has made,
or has caused to be made under his/her supervision, a detailed review
of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by the
attached financial statements.



Exhibit C — Page 1

Form of Compliance Certificate




Allis-Chalmers Energy

Amended & Restated Credit Agreement




 









 






     2. A review of the activities of the Borrower during such fiscal period has been made under
the supervision of the undersigned with a view to determining whether during such fiscal period the
Borrower performed and observed all its Obligations under the Loan Documents, and no Default or
Event of Default has occurred and is continuing except as follows (list of each such Default or
Event of Default and include the information required by Section 6.03 of the Agreement):



     3. During such fiscal period no casualty losses have occurred, except as described below:



     4. The covenant analyses and information set forth on Schedule 3 attached hereto are true and
accurate on and as of the date of this Certificate.



     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                                         , 200                    .



	 	 	 	 	 
	 	 	ALLIS-CHALMERS ENERGY INC.
	 	 	a Delaware corporation, as Borrower
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





Exhibit C — Page 2

Form of Compliance Certificate




Allis-Chalmers Energy

Amended & Restated Credit Agreement




 









 




For the Quarter/Year ended
                                                            (“Statement
Date”)




SCHEDULE 3

to the Compliance Certificate

($ in 000’s)




I. Section 7.04 — Indebtedness




	 	 	 	 	 	 	 	 	 
	A.

	 	Indebtedness outstanding on First Amendment Closing Date
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	and listed on Schedule 5.05 and any refinancings, etc.	 	 	 	 	 	 
	 

	 	permitted by Section 7.04(b)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	B.

	 	Indebtedness in connection with Swap Contracts permitted
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	by Section 7.04(d)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	C.

	 	Outstanding Principal Amount of Purchase Money
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Indebtedness for fixed or capital assets permitted by Section
7.04(e) (may not exceed $2,000,000)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	D.

	 	Outstanding Principal Amount of Indebtedness associated
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	with Liens on acquired assets permitted by Section 7.04(f)
(may not exceed $2,000,000)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	E.

	 	Outstanding Principal Amount of Indebtedness associated
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	with Capital Leases and obligations to make equipment
financing lease or rental payments permitted by Section
7.04(g) (may not exceed $7,000,000)	 	 	 	 	 	 






II. Section 7.19(a) – Minimum Consolidated Tangible Net Worth




	 	 	 	 	 	 	 	 	 
	A.

	 	Consolidated Tangible Net Worth at most recent Financial
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Statement Date:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	B.

	 	50% of Consolidated Net Income (if positive) after
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	September 30, 2005:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	C.

	 	100% of Net Cash Proceeds of all Equity Interests issued
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	by Borrower or any Subsidiary after First Amendment Closing

Date:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	D.

	 	Minimum Net Worth (85% of Consolidated Tangible Net Worth
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	as of September 30, 2005 + Lines II.B and C):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	E.

	 	Is Line II.A greater than or equal to Line II.D?
	 	 	Yes/No
	 	 






Exhibit C
- Page 3

Form of Compliance Certificate




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 





III. Section 7.19(b) – Interest Coverage Ratio




	 	 	 	 	 	 	 	 	 
	A.

	 	Consolidated EBITDA (subject to proforma adjustments, if
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	any, permitted by Section 7.19(g) of the Agreement) for four
consecutive fiscal quarters ending on the Financial Statement
Date (“Subject Period")(see Credit Agreement definition of
“Consolidated EBITDA”):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	B.

	 	Sum of (i) Consolidated Interest Charges (subject to
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	proforma adjustments, if any, permitted by Section 7.19(g) of
the Agreement) during Subject Period plus (ii) imputed
interest charges on Synthetic Leases during Subject Period:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	C.

	 	Is ratio of III.A. to III.B. at least 2.5 to 1.0?
	 	 	Yes/No
	 	 
	 
	 	 	 	 	 	 	 	 
	IV. Section 7.19(c) – Current Ratio	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	A.

	 	Consolidated Current Assets as at most recent Financial
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Statement Date:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	B.

	 	Consolidated Current Liabilities as at most recent
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Financial Statement Date:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	C.

	 	Is ratio of IV.A. to IV.B. at least 1.25 to 1.0?	 	 	 Yes/No	 	 
	 
	 	 	 	 	 	 	 	 
	V. Section 7.19(d) – Fixed Asset Coverage Ratio	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	A.

	 	Orderly liquidation value of Borrower’s and its
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Subsidiaries’ domestic fixed assets (determined as of most
recently delivered annual asset appraisal delivered pursuant
to Section 6.02(e) of the Credit Agreement) on which
Administrative Agent holds first priority perfected Lien:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	B.

	 	Outstanding Amount of Revolver Principal Debt on most
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	recent Financial Statement Date:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	C.

	 	Is ratio of V.A. to V.B. at least 1.33 to 1.0?	 	 	 Yes/No	 	 
	 
	 	 	 	 	 	 	 	 
	VI. Section 7.19(e) – Leverage Ratio	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	A.

	 	Consolidated Funded Debt for Subject Period (see Credit
Agreement definition of “Consolidated Funded Debt”)	 	 	$		 	 
	 
	 	 	 	 	 	 	 	 
	B.

	 	Consolidated EBITDA (subject to proforma adjustments, if
any, permitted by Section 7.19(g) of the Agreement) for
Subject Period:	 	 	$	 	 	 






Exhibit C — Page 4

Form of Compliance Certificate




Allis-Chalmers Energy

Amended & Restated Credit Agreement

-




 









 





	 	 	 	 	 	 	 	 	 
	C.

	 	Is ratio of VI.A. to VI. B. no more than 4.50 to 1.0?
	 	Yes/No
	 
	 
	 	 	 	 	 	 	 	 
	VII. Section 7.19(f) – Senior Leverage Ratio	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	A.

	 	Consolidated Senior Debt for Subject Period (see Credit
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Agreement definition of “Consolidated Senior Debt"):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	B.

	 	Consolidated EBITDA (subject to proforma adjustments, if
	 	 	$	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	any, permitted by Section 7.19(g) of the Agreement) for
Subject Period:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	C.

	 	Is ratio of VII.A. to VII. B. no more than 2.50 to 1.0?
	 	Yes/No
	 






Exhibit C — Page 5

Form of Compliance Certificate




Allis-Chalmers Energy

Amended & Restated Credit Agreement




 









 





EXHIBIT D




FORM OF ASSIGNMENT AND ASSUMPTION




     This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective
Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”)
and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement identified below (as may be amended,
the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The
Standard Terms and Conditions set forth in Annex I attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and Assumption as if set forth
herein in full.



     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under
or in connection with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned
pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “Assigned
Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty by the Assignor.



	 	 	 	 	 	 	 	 	 
	 

	 	 	1.	 	 	Assignor:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	2.	 	 	Assignee:	 	 
	 

	 	 	 	 	 	 	 	[and is an Affiliate/Approved Fund of [identify Lender]
	 
	 	 	 	 	 	 	 	 
	 

	 	 	3.	 	 	Borrower(s):
	 	Allis-Chalmers Energy Inc.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	4.	 	 	Administrative Agent:
	 	Royal Bank of Canada, as the administrative agent under
the Credit Agreement
	 
	 	 	 	 	 	 	 	 
	 

	 	 	5.	 	 	Credit Agreement:
	 	The $25,000,000 Amended and Restated Credit Agreement dated
as of January 18, 2006 among Allis-Chalmers Energy Inc., the Lenders parties thereto,
and Royal Bank of Canada, as Administrative Agent.






Exhibit D — Page 1

Form of Assignment and Assumption




Allis-Chalmers Energy

Amended & Restated Credit Agreement




 









 






          6. Assigned Interest:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Aggregate Amount of	 	 	Amount of	 	 		 
	 	 	Commitment/Loans for	 	 	Commitment/Loans	 	 	Percentage Assigned of	 
	 	 	all Lenders*	 	 	Assigned*	 	 	Commitment/Loans	 
	Revolving Loans:
	 	$	 	 	 	$	 	 	 	 	%	 
	Total:
	 	$	 	 	 	$	 	 	 	 	%	 






[7. Trade Date: ________________ ]



Effective Date:                                         , 20                     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE
THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]



The terms set forth in this Assignment and Assumption are hereby agreed to:




	 	 	 	 	 
	 	ASSIGNOR

[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 
	 	ASSIGNEE

[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 



 




*Amount to be adjusted by the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.




Consented to and Accepted:




[NAME OF ADMINISTRATIVE AGENT], as

Administrative Agent




By                                                            

     Title:




Exhibit D — Page 2

Form of Assignment and Assumption




Allis-Chalmers Energy

Amended & Restated Credit Agreement





 









 





[Consented to:]




ALLIS-CHALMERS ENERGY INC.

a Delaware corporation




By                                                            

Name:

Title:




Exhibit D — Page 3

Form of Assignment and Assumption




Allis-Chalmers Energy

Amended & Restated Credit Agreement




 









 





ANNEX 1

TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION




     1. Representations and Warranties.



     1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective obligations under any
Loan Document.



     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such
other documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the
Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms
of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it
will, independently and without reliance on the Administrative Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under the Loan Documents,
and (ii) it will perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Lender.



     2. Payments. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.



     3. General Provisions. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and assigns. This Assignment
and



Exhibit D — Page 4

Form of Assignment and Assumption




Allis-Chalmers Energy

Amended & Restated Credit Agreement




 









 





Assumption may be executed in any number of counterparts, which together shall constitute
one instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in
accordance with, the law of the State of Texas.



Exhibit D
— Page 5

Form of Assignment and Assumption




Allis-Chalmers Energy

Amended & Restated Credit Agreement