exv10w1



 





Exhibit 10.1




SECOND AMENDED AND RESTATED CREDIT AGREEMENT




Dated as of February 28, 2007




Among




THE FINANCIAL INSTITUTIONS NAMED HEREIN




as the Lenders




and




BANK OF AMERICA, N.A.




as the Administrative Agent




and




PARAMOUNT PETROLEUM CORPORATION




as the Borrower,

and certain of its Affiliates

party hereto from time to time

as the Obligated Parties




BANC OF AMERICA SECURITIES LLC,

as the Sole Lead Arranger and Book Manager





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Section	 	 	 	Page
	ARTICLE 1
	 	LOANS AND LETTERS OF CREDIT	 	 	2	 
	 
	 	 	 	 	 	 
	1.1
	 	Total Facility	 	 	2	 
	1.2
	 	Revolving Loans	 	 	2	 
	1.3
	 	Letters of Credit	 	 	6	 
	1.4
	 	Bank Products	 	 	9	 
	1.5
	 	Borrower as Representative for Obligated Parties	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE 2
	 	INTEREST AND FEES	 	 	10	 
	 
	 	 	 	 	 	 
	2.1
	 	Interest	 	 	10	 
	2.2
	 	Continuation and Conversion Elections	 	 	11	 
	2.3
	 	Maximum Interest Rate	 	 	12	 
	2.4
	 	Fee Letter	 	 	12	 
	2.5
	 	Unused Line Fee	 	 	12	 
	2.6
	 	Letter of Credit Fee	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE 3
	 	PAYMENTS AND PREPAYMENTS	 	 	13	 
	 
	 	 	 	 	 	 
	3.1
	 	Revolving Loans	 	 	13	 
	3.2
	 	Termination of Facility	 	 	13	 
	3.3
	 	Reserved	 	 	13	 
	3.4
	 	LIBOR Revolving Loan Prepayments	 	 	13	 
	3.5
	 	Payments by the Obligated Parties	 	 	13	 
	3.6
	 	Payments as Revolving Loans	 	 	13	 
	3.7
	 	Apportionment, Application and Reversal of Payments	 	 	14	 
	3.8
	 	Indemnity for Returned Payments	 	 	14	 
	3.9
	 	Agent’s and Lenders’ Books and Records; Monthly Statements	 	 	15	 
	3.10
	 	Joint and Several Liability of Obligated Parties	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE 4
	 	TAXES, YIELD PROTECTION AND ILLEGALITY	 	 	19	 
	 
	 	 	 	 	 	 
	4.1
	 	Taxes	 	 	19	 
	4.2
	 	Illegality	 	 	20	 
	4.3
	 	Increased Costs and Reduction of Return	 	 	21	 
	4.4
	 	Funding Losses	 	 	21	 
	4.5
	 	Inability to Determine Rates	 	 	22	 
	4.6
	 	Certificates of Agent	 	 	22	 
	4.7
	 	Survival	 	 	22	 





Table of Contents




i









 






	 	 	 	 	 	 	 
	Section	 	 	 	Page
	ARTICLE 5
	 	BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES	 	 	22	 
	 
	 	 	 	 	 	 
	5.1
	 	Books and Records	 	 	22	 
	5.2
	 	Financial Information	 	 	22	 
	5.3
	 	Notices to the Lenders	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE 6
	 	GENERAL WARRANTIES AND REPRESENTATIONS	 	 	29	 
	 
	 	 	 	 	 	 
	6.1
	 	Authorization, Validity, and Enforceability	 	 	29	 
	6.2
	 	Validity and Priority of Security Interest	 	 	30	 
	6.3
	 	Organization and Qualification	 	 	30	 
	6.4
	 	Corporate Name; Prior Transactions	 	 	30	 
	6.5
	 	Subsidiaries	 	 	30	 
	6.6
	 	Financial Statements and Projections	 	 	30	 
	6.7
	 	Capitalization	 	 	31	 
	6.8
	 	Solvency	 	 	31	 
	6.9
	 	Debt	 	 	31	 
	6.10
	 	Distributions	 	 	31	 
	6.11
	 	Real Estate; Leases	 	 	31	 
	6.12
	 	Proprietary Rights	 	 	32	 
	6.13
	 	Trade Names	 	 	32	 
	6.14
	 	Litigation	 	 	32	 
	6.15
	 	Labor Disputes	 	 	32	 
	6.16
	 	Environmental Laws	 	 	32	 
	6.17
	 	No Violation of Law	 	 	34	 
	6.18
	 	No Default	 	 	34	 
	6.19
	 	ERISA Compliance	 	 	34	 
	6.20
	 	Taxes	 	 	35	 
	6.21
	 	Regulated Entities	 	 	35	 
	6.22
	 	Use of Proceeds; Margin Regulations	 	 	35	 
	6.23
	 	Copyrights, Patents, Trademarks and
Licenses, etc.	 	 	35	 
	6.24
	 	No Material Adverse Effect	 	 	35	 
	6.25
	 	Full Disclosure	 	 	36	 
	6.26
	 	Material Agreements	 	 	36	 
	6.27
	 	Bank Accounts	 	 	36	 
	6.28
	 	Governmental Authorization	 	 	36	 
	6.29
	 	First Purchaser Liens	 	 	36	 
	6.30
	 	Richmond Pier	 	 	36	 
	 
	 	 	 	 	 	 
	ARTICLE 7
	 	AFFIRMATIVE AND NEGATIVE COVENANTS	 	 	36	 
	 
	 	 	 	 	 	 
	7.1
	 	Taxes and Other Obligations	 	 	36	 
	7.2
	 	Legal Existence and Good Standing	 	 	37	 
	7.3
	 	Compliance with Law and Agreements; Maintenance of Licenses	 	 	37	 





Table of Contents




ii









 







	 	 	 	 	 	 	 
	Section	 	 	 	Page
	7.4
	 	Maintenance of Property; Inspection of Property	 	 	37	 
	7.5
	 	Insurance	 	 	38	 
	7.6
	 	Insurance and Condemnation Proceeds	 	 	39	 
	7.7
	 	Environmental Laws	 	 	40	 
	7.8
	 	Compliance with ERISA	 	 	41	 
	7.9
	 	Mergers, Consolidations or Sales	 	 	41	 
	7.10
	 	Distributions; Capital Change; Restricted Investments	 	 	42	 
	7.11
	 	Transactions Affecting Collateral or Obligations	 	 	42	 
	7.12
	 	Guaranties	 	 	42	 
	7.13
	 	Debt	 	 	42	 
	7.14
	 	Prepayment	 	 	43	 
	7.15
	 	Transactions with Affiliates	 	 	43	 
	7.16
	 	Investment Banking and Finder’s Fees	 	 	43	 
	7.17
	 	Business Conducted	 	 	44	 
	7.18
	 	Liens	 	 	44	 
	7.19
	 	Sale and Leaseback Transactions	 	 	44	 
	7.20
	 	New Subsidiaries	 	 	44	 
	7.21
	 	Fiscal Year	 	 	45	 
	7.22
	 	Capital Expenditures	 	 	45	 
	7.23
	 	Fixed Charge Coverage Ratio	 	 	45	 
	7.24
	 	Use of Proceeds	 	 	45	 
	7.25
	 	Bank Products	 	 	46	 
	7.26
	 	Richmond Pier	 	 	46	 
	7.27
	 	Further Assurances	 	 	46	 
	 
	 	 	 	 	 	 
	ARTICLE 8
	 	CONDITIONS OF LENDING	 	 	46	 
	 
	 	 	 	 	 	 
	8.1
	 	Conditions Precedent to Making of Loans on the Closing Date	 	 	46	 
	8.2
	 	Conditions Precedent to Each Loan	 	 	48	 
	 
	 	 	 	 	 	 
	ARTICLE 9
	 	DEFAULT; REMEDIES	 	 	49	 
	 
	 	 	 	 	 	 
	9.1
	 	Events of Default	 	 	49	 
	9.2
	 	Remedies	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE 10
	 	TERM AND TERMINATION	 	 	53	 
	 
	 	 	 	 	 	 
	10.1
	 	Term and Termination	 	 	53	 
	 
	 	 	 	 	 	 
	ARTICLE 11
	 	AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS	 	 	54	 
	 
	 	 	 	 	 	 
	11.1
	 	Amendments and Waivers	 	 	54	 
	11.2
	 	Participations and Assignments	 	 	56	 





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iii









 









	 	 	 	 	 	 	 
	Section	 	 	 	Page
	ARTICLE 12
	 	THE AGENT	 	 	57	 
	 
	 	 	 	 	 	 
	12.1
	 	Appointment and Authorization	 	 	57	 
	12.2
	 	Delegation of Duties	 	 	58	 
	12.3
	 	Liability of Agent	 	 	58	 
	12.4
	 	Reliance by Agent	 	 	58	 
	12.5
	 	Notice of Default	 	 	58	 
	12.6
	 	Credit Decision	 	 	59	 
	12.7
	 	Indemnification	 	 	59	 
	12.8
	 	Agent in Individual Capacity	 	 	60	 
	12.9
	 	Successor Agent	 	 	60	 
	12.10
	 	Withholding Tax	 	 	60	 
	12.11
	 	Collateral Matters	 	 	62	 
	12.12
	 	Restrictions on Actions by Lenders; Sharing of Payments	 	 	63	 
	12.13
	 	Agency for Perfection	 	 	63	 
	12.14
	 	Payments by Agent to Lenders	 	 	64	 
	12.15
	 	Settlement	 	 	64	 
	12.16
	 	Letters of Credit; Inter-Lender Issues	 	 	67	 
	12.17
	 	Concerning the Collateral and the Related Loan Documents	 	 	70	 
	12.18
	 	Field Audit and Examination Reports; Disclaimer by Lenders	 	 	70	 
	12.19
	 	Relation Among Lenders	 	 	71	 
	12.20
	 	Co-Agents	 	 	71	 
	12.21
	 	CS Intercreditor Agreement	 	 	71	 
	 
	 	 	 	 	 	 
	ARTICLE 13
	 	MISCELLANEOUS	 	 	71	 
	 
	 	 	 	 	 	 
	13.1
	 	No Waivers; Cumulative Remedies	 	 	71	 
	13.2
	 	Severability	 	 	72	 
	13.3
	 	Governing Law; Choice of Forum; Service of Process	 	 	72	 
	13.4
	 	Waiver of Jury Trial	 	 	73	 
	13.5
	 	Survival of Representations and Warranties	 	 	74	 
	13.6
	 	Other Security and Guaranties	 	 	74	 
	13.7
	 	Fees and Expenses	 	 	74	 
	13.8
	 	Notices	 	 	75	 
	13.9
	 	Waiver of Notices	 	 	76	 
	13.10
	 	Binding Effect	 	 	76	 
	13.11
	 	Indemnity of the Agent and the Lenders by the Obligated Parties	 	 	77	 
	13.12
	 	Limitation of Liability	 	 	77	 
	13.13
	 	Final Agreement	 	 	78	 
	13.14
	 	Counterparts	 	 	78	 
	13.15
	 	Captions	 	 	78	 
	13.16
	 	Right of Setoff	 	 	78	 
	13.17
	 	Confidentiality	 	 	78	 
	13.18
	 	Conflicts with Other Loan Documents	 	 	79	 





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iv









 







	 	 	 	 	 	 	 
	Section	 	 	 	Page
	13.19
	 	USA Patriot Act Notice	 	 	79	 
	13.20
	 	Amendment and Restatement; Waiver of Claims	 	 	80	 






ANNEXES, EXHIBITS AND SCHEDULES




	 	 	 	 	 
	Annex A

	 	-
	 	Definitions
	Exhibit A

	 	-
	 	Form of Revolving Loan Note
	Exhibit B

	 	-
	 	Form of Borrowing Base Certificate
	Exhibit C

	 	-
	 	Financial Statements
	Exhibit D

	 	-
	 	Form of Notice of Borrowing
	Exhibit E

	 	-
	 	Form of Notice of Continuation/Conversion
	Exhibit F

	 	-
	 	Form of Assignment and Acceptance






Schedule A-1 – Commitments

Schedule A-2 – Marked-to-Market Basis

Schedule 6.3 – Organization and Qualifications

Schedule 6.4 – Organizational Name

Schedule 6.5 – Subsidiaries and Affiliates

Schedule 6.7 – Ownership

Schedule 6.9 – Debt

Schedule 6.11 – Real Estate; Leases

Schedule 6.12 – Proprietary Rights

Schedule 6.13 – Trade Names

Schedule 6.14 – Litigation

Schedule 6.15 – Labor Disputes

Schedule 6.16 – Environmental Law

Schedule 6.19 – ERISA Compliance

Schedule 6.26 – Material Agreements

Schedule 6.27 – Bank Accounts

Schedule 7.18 – Permitted Liens




Table of Contents




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SECOND AMENDED AND RESTATED CREDIT AGREEMENT




     This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 28, 2007, (this
“Agreement”) is entered into by and among the financial institutions from time to time parties
hereto (such financial institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), BANK OF
AMERICA, N.A., with an office at 55 South Lake Avenue, Suite 900, Pasadena, California 91101, as
administrative agent for the Lenders (in its capacity as administrative agent, the “Agent”) and as
the lead arranger and bookmaker, PARAMOUNT PETROLEUM CORPORATION, a Delaware corporation, with
offices at 14700 Downey Avenue, Paramount, California 90723 (the “Borrower”), and the other
Obligated Parties party to this Agreement from time to time.



W I T N E S S E T H:




     WHEREAS, the Borrower owns and operates a petroleum refinery located at 14700 Downey Avenue in
Paramount, California (the “Paramount Refinery”) and is engaged in the business of petroleum
refining, including the manufacture of asphalt and the distribution and wholesale marketing of such
refined petroleum products;



     WHEREAS, the Borrower, Bank of America, N.A., and certain other financial institutions entered
into that certain Credit Agreement dated as of December 18, 2003 (as amended, the “Original Credit
Agreement”), whereby certain credit facilities were made available to the Borrower on the terms and
conditions set forth therein;



     WHEREAS, the Borrower, Bank of America, N.A., and certain other financial institutions are
party to that certain Amended and Restated Credit Agreement dated as of July 26, 2005, (as amended,
the “Amended and Restated Credit Agreement”), which amended and restated in its entirety the
Original Credit Agreement;



     WHEREAS, pursuant to the Stock Purchase Agreement and the Agreement and Plan of Merger, each
dated as of April 28, 2006, Alon USA Energy, Inc., a Delaware corporation, through its
subsidiaries, acquired all of the issued and outstanding shares of capital stock of the Borrower,
Edgington Oil Company, LLC, and certain of the other Obligated Parties.



     WHEREAS, Edgington owns and operates a petroleum refinery located at 2400 East Artesia
Boulevard in Long Beach, California and is engaged in the business of petroleum refining;



     WHEREAS, the Obligated Parties have requested that the Amended and Restated Credit Agreement
be further amended and restated to make available to the Borrower a revolving line of credit for
loans and letters of credit in the aggregate principal amount of Three Hundred Million Dollars
($300,000,000), and to amend and restate certain other provisions of the Original Credit Agreement
as set forth herein;



1









 






     WHEREAS, the Agent and the Lenders have agreed to amend and restate the Amended and Restated
Credit Agreement and make available to the Borrower a revolving credit facility upon the terms and
conditions set forth in this Agreement, it being understood and agreed that this Agreement does not
constitute a novation of the indebtedness described in the Amended and Restated Credit Agreement;



     WHEREAS, initially capitalized terms used in this Agreement and not otherwise defined herein
have the respective meanings set forth in Annex A, which is attached hereto and
incorporated herein; the rules of construction contained therein govern the interpretation of this
Agreement, and all Annexes, Exhibits, and Schedules attached hereto are incorporated herein by
reference.



     NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this
Agreement, and for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Lenders, the Agent, the Bank, and the Obligated Parties hereby agree as follows:



ARTICLE 1

LOANS AND LETTERS OF CREDIT




     1.1 Total Facility. Subject to all of the terms and conditions of this Agreement, the
Lenders agree to make available a credit facility of up to Three Hundred Million Dollars
($300,000,000) to the Borrower from time to time during the term of this Agreement (the “Total
Facility”). The Total Facility shall be composed of a revolving line of credit consisting of
Revolving Loans and Letters of Credit described herein.



     1.2 Revolving Loans.



          (a) Amounts.





          (i) Subject to the satisfaction of the conditions precedent set forth in Article
8, each Lender severally, but not jointly, agrees, upon the Borrower’s request from time
to time on any Business Day during the period from the Closing Date to the Termination Date,
to make revolving loans (the “Revolving Loans”) to the Borrower in amounts not to exceed
such Lender’s Pro Rata Share of Availability, except for Non-Ratable Loans and Agent
Advances. The Lenders, however, in their unanimous discretion, may elect to make Revolving
Loans or issue or arrange to have issued Letters of Credit in excess of Availability on one
or more occasions, but if they do so, neither the Agent nor the Lenders shall be deemed
thereby to have changed the limits of the Borrowing Base or to be obligated to exceed such
limits on any other occasion. If the making of any proposed Borrowing would cause
Availability to be less than zero, the Lenders may refuse to make or may otherwise restrict
the making of Revolving Loans as the Lenders determine until such excess has been
eliminated, subject to the Agent’s



2









 








authority, in its sole discretion, to make Agent Advances pursuant to the terms of
Section 1.2(i).




          (ii) The Borrower shall, upon demand by the Agent, execute and deliver to each Lender a
promissory note to evidence the Revolving Loan of that Lender. Each note shall be in the
principal amount of the Lender’s Pro Rata Share of the Revolving Loan Commitments, dated the
date hereof and substantially in the form of Exhibit A (each a “Revolving Loan Note”
and, collectively, the “Revolving Loan Notes”). Each Revolving Loan Note shall represent
the obligation of the Borrower to pay the amount of Lender’s Pro Rata Share of the Revolving
Loan Commitments, or, if less, such Lender’s Pro Rata Share of the aggregate unpaid
principal amount of all Revolving Loans to the Borrower, together with interest thereon as
prescribed in this Section 1.2. The entire unpaid balance of the Revolving Loans
and all other non-contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Termination Date.



          (b) Procedure for Borrowing.





          (i) Each Borrowing shall be made upon the Borrower’s irrevocable written notice
delivered to the Agent in the form of a notice of borrowing (“Notice of Borrowing”), which
must be received by the Agent prior to: (1) 12:00 noon (Pacific time) three (3) Business
Days prior to the requested Funding Date in the case of LIBOR Revolving Loans; and (2) 11:00
a.m. (Pacific time) on the requested Funding Date in the case of Base Rate Revolving Loans,
specifying:




     (A) the amount of the Borrowing, which in the case of a LIBOR
Revolving Loan must be in an integral multiple of One Million Dollars
($1,000,000);




     (B) the requested Funding Date, which must be a Business Day;




     (C) whether the Revolving Loans requested are to be Base Rate
Revolving Loans or LIBOR Revolving Loans (and if not specified, it
shall be deemed a request for a Base Rate Revolving Loan); and




     (D) the duration of the Interest Period for LIBOR Revolving
Loans (and if not specified, it shall be deemed a request for an
Interest Period of one month).




          (ii) In lieu of delivering a Notice of Borrowing, the Borrower may give the Agent
telephonic notice of such request for advances to the Designated Account on or before the
deadline set forth above. The Agent at all times shall be entitled to rely on



3









 








such telephonic notice in making such Revolving Loans, regardless of whether any
written confirmation is received.




          (iii) The Borrower shall have no right to request a LIBOR Revolving Loan while a
Default or an Event of Default has occurred and is continuing.



          (c) Reliance upon Authority. On or prior to the Closing Date, the Borrower shall
deliver to the Agent a notice setting forth the account of the Borrower (the “Designated Account”)
to which the Agent is authorized to transfer the proceeds of the Revolving Loans requested
hereunder. The Borrower may designate a replacement account from time to time by written notice to
the Agent. All such Designated Accounts must be reasonably satisfactory to the Agent. The Agent
is entitled to rely conclusively on any person’s request for Revolving Loans on behalf of the
Borrower, so long as the proceeds thereof are to be transferred to the Designated Account. The
Agent has no duty to verify the identity of any individual representing himself or herself as a
person authorized by the Borrower to make such requests on its behalf.




          (d) No Liability. The Agent shall not incur any liability to any Obligated Party as a
result of acting upon any notice referred to in Sections 1.2(b) and (c) that the
Agent reasonably believes to have been given by an officer or other person duly authorized by the
Borrower to request Revolving Loans on the Borrower’s behalf. The crediting of Revolving Loans to
the Designated Account conclusively establishes the obligation of the Borrower to repay such
Revolving Loans as provided herein.




          (e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice in lieu
thereof) made pursuant to Section 1.2(b) shall be irrevocable. The Borrower shall be bound
to borrow the funds requested therein in accordance therewith.




          (f) Agent’s Election. Promptly after receipt of a Notice of Borrowing (or telephonic
notice in lieu thereof), the Agent shall elect to have the terms of Section 1.2(g) or the
terms of Section 1.2(h) apply to such requested Borrowing. If the Bank declines in its
sole discretion to make a Non-Ratable Loan pursuant to Section 1.2(h), the terms of
Section 1.2(g) shall apply to the requested Borrowing.




          (g) Making of Revolving Loans. If the Agent elects to have the terms of this
Section 1.2(g) apply to a requested Borrowing, then promptly after receipt of a Notice of
Borrowing or telephonic notice in lieu thereof, the Agent shall notify the Lenders by telecopy,
telephone or e-mail of the requested Borrowing. Each Lender shall transfer its Pro Rata Share of
the requested Borrowing available to the Agent in immediately available funds, to the account from
time to time designated by the Agent, not later than 12:00 noon (Pacific time) on the applicable
Funding Date. After the Agent’s receipt of all proceeds of each such Lender’s Pro Rata Share of
the requested Borrowing, the Agent shall make the proceeds of such Revolving Loans available to the
Borrower on the applicable Funding Date by transferring same day funds to the Designated Account;
provided, however, that the amount of Revolving Loans so made on any date shall not cause
Availability to be less than zero.




4









 











          (h) Making of Non-Ratable Loans.





          (i) If the Agent elects, with the consent of the Bank, to have the terms of this
Section 1.2(h) apply to a requested Borrowing, the Bank shall make a Revolving Loan
in the amount of that Borrowing available to the Borrower on the applicable Funding Date by
transferring same day funds to the Designated Account. Each Revolving Loan made solely by
the Bank pursuant to this Section is herein referred to as a “Non-Ratable Loan”, and such
Revolving Loans are collectively referred to as the “Non-Ratable Loans”. Each Non-Ratable
Loan shall be subject to all the terms and conditions applicable to other Revolving Loans
except that all payments thereon shall be payable to the Bank solely for its own account.
The aggregate amount of Non-Ratable Loans outstanding at any time shall not exceed Fifteen
Million Dollars $15,000,000. The Agent shall not request the Bank to make any Non-Ratable
Loan if: (1) the Agent has received written notice from any Lender that one or more of the
applicable conditions precedent set forth in Article 8 will not be satisfied on the
requested Funding Date for the applicable Borrowing; or (2) the making of the requested
Borrowing would cause Availability to be less than zero.




          (ii) The Non-Ratable Loans shall be secured by the Agent’s Liens in and to the
Collateral and shall constitute Base Rate Revolving Loans and Obligations hereunder.



          (i) Agent Advances.





          (i) Subject to the limitations set forth below, the Agent is authorized by the
Obligated Parties and the Lenders, from time to time in the Agent’s sole discretion: (1)
after the occurrence of a Default or an Event of Default; or (2) at any time that any of the
other conditions precedent set forth in Article 8 have not been satisfied, to make
Base Rate Revolving Loans to the Borrower on behalf of the Lenders in an aggregate amount
outstanding at any time not to exceed ten percent (10%) of the Borrowing Base (but not in
excess of the Maximum Revolver Amount) that the Agent, in its business judgment, reasonably
exercised, deems necessary or desirable: (A) to preserve or protect the Collateral, or any
portion thereof; (B) to enhance the likelihood of, or maximize the amount of, repayment of
the Loans and other Obligations; or (C) to pay any other amount chargeable to the Obligated
Parties pursuant to the terms of this Agreement and the other Loan Documents, including
costs, fees, and expenses as described in Section 13.7 (any of such advances are
herein referred to as “Agent Advances”); provided, that the Majority Lenders may at any time
revoke the Agent’s authorization to make Agent Advances. Any such revocation must be in
writing and shall become effective prospectively upon the Agent’s receipt thereof.




          (ii) The Agent Advances shall be secured by the Agent’s Liens in and to the Collateral
and shall constitute Base Rate Revolving Loans and Obligations hereunder.



5









 







     1.3 Letters of Credit.



          (a) Agreement to Issue or Cause To Issue. Subject to the terms and conditions of this
Agreement, the Agent agrees: (I) to cause the Letter of Credit Issuer to issue for the account of
any of the Obligated Parties one or more commercial/documentary or standby letters of credit (each
a “Letter of Credit”); and/or (ii) to provide credit support or other enhancement on behalf of the
Lenders to a Letter of Credit Issuer acceptable to the Agent, that issues a Letter of Credit for
the account of any Obligated Party (any such credit support or enhancement being herein referred to
as a “Credit Support”) from time to time during the term of this Agreement.




          (b) Amounts; Outside Expiration Date. The Agent shall not have any obligation to
issue or cause to be issued any Letter of Credit or to provide Credit Support for any Letter of
Credit at any time if: (i) the Maximum Drawing Amount of the requested Letter of Credit and all
commissions, fees, and charges due from the Borrower in connection with the opening thereof exceeds
Availability at such time; (ii) such Letter of Credit has an expiration date less than thirty (30)
days prior to the Stated Termination Date or more than twelve (12) months from the date of issuance
for standby letters of credit and one hundred eighty (180) days for commercial/documentary letters
of credit; or (iii) the relevant Letter of Credit is a standby letter of credit securing
performance and bonding requirements and, upon issuance of such Letter of Credit, the aggregate
undrawn face amount of all Letters of Credit securing performance and bonding requirements as
described in this Section 1.3(b)(iii) would exceed the Maximum Revolver Amount. With
respect to any Letter of Credit that contains any “evergreen” or automatic renewal provision, each
Lender shall be deemed to have consented to any such extension or renewal unless any such Lender
shall have provided to the Agent written notice that it declines to consent to any such extension
or renewal at least thirty (30) days prior to the date on which the Letter of Credit Issuer is
entitled to decline to extend or renew the Letter of Credit. If all of the requirements of this
Section 1.3 are met and no Default or Event of Default has occurred and is continuing, no
Lender shall decline to consent to any such extension or renewal.




          (c) Other Conditions. In addition to conditions precedent contained in Article
8, the obligation of the Agent to cause to be issued any Letter of Credit or to provided Credit
Support for any Letter of Credit is subject to the following conditions precedent having been
satisfied in a manner reasonably satisfactory to the Agent:





          (i) The Obligated Parties shall have delivered to the Letter of Credit Issuer, at such
times and in such manner as such Letter of Credit Issuer may prescribe, an application in
form and substance satisfactory to such Letter of Credit Issuer and reasonably satisfactory
to the Agent for the issuance of the Letter of Credit and such other documents as may be
required pursuant to the terms thereof, and the form, terms, and purpose of the proposed
Letter of Credit shall be reasonably satisfactory to the Agent and the Letter of Credit
Issuer; and




          (ii) As of the date of issuance, no order of any court, arbitrator, or Governmental
Authority shall purport by its terms to enjoin or restrain money center



6









 









banks generally from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit, and no law, rule, or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally shall prohibit or
request that the proposed Letter of Credit Issuer refrain from the issuance of letters of
credit generally or the issuance of such Letters of Credit.



          (d) Issuance of Letters of Credit.





          (i) Request for Issuance. Unless the Agent otherwise agrees in its sole
discretion on a case-by-case basis, the Borrower must notify the Agent of a requested Letter
of Credit at least three (3) Business Days prior to the proposed issuance date. Such notice
shall be irrevocable and must specify: (A) the original face amount of the Letter of Credit
requested; (B) the Business Day of issuance of such requested Letter of Credit; (C) whether
such Letter of Credit may be drawn in a single or in partial draws; (D) the Business Day on
which the requested Letter of Credit is to expire; (E) the purpose for which such Letter of
Credit is to be issued (including whether the Letter of Credit is to be a
commercial/documentary Letter of Credit or a standby Letter of Credit); and (F) the
beneficiary of the requested Letter of Credit. The Borrower shall attach to such notice the
proposed form of the Letter of Credit.




          (ii) Responsibilities of the Agent; Issuance. As of the Business Day
immediately preceding the requested issuance date of the Letter of Credit, the Agent shall
determine the amount of Availability. If the amount of such requested Letter of Credit and
all commissions, fees, and charges due from the Borrower in connection with the issuance
thereof does not exceed Availability, the Agent shall cause the Letter of Credit Issuer to
issue the requested Letter of Credit on the requested issuance date so long as the other
conditions hereof are met.




          (iii) No Extensions or Amendment. The Agent shall not be obligated to cause
the Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant hereto
unless the requirements of this Section 1.3 are met as though a new Letter of Credit
were being requested and issued.



          (e) Payments Pursuant to Letters of Credit. The Obligated Parties agree to reimburse
immediately the Letter of Credit Issuer for any draw under any Letter of Credit and the Agent, for
the account of the Lenders, upon any payment pursuant to any Credit Support and to pay the Letter
of Credit Issuer the amount of all other charges and fees payable to the Letter of Credit Issuer in
connection with any Letter of Credit immediately when due, irrespective of any claim, setoff,
defense, or other right that the Obligated Parties may have at any time against the Letter of
Credit Issuer or any other Person. Each drawing under any Letter of Credit shall constitute a
request by the Borrower to the Agent for a Borrowing of a Base Rate Revolving Loan in the amount of
such drawing. The Funding Date with respect to such Borrowing shall be the date of such drawing.




7









 










          (f) Indemnification; Exoneration; Power of Attorney.





          (i) Indemnification. In addition to amounts payable as elsewhere provided in
this Section 1.3, the Obligated Parties agree to protect, indemnify, pay, and save
the Lenders and the Agent harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges, and expenses (including reasonable attorneys’
fees) that any Lender or the Agent (other than a Lender in its capacity as Letter of Credit
Issuer) may incur or be subject to as a consequence, direct or indirect, of the issuance of
any Letter of Credit or the provision of any Credit Support or enhancement in connection
therewith. The Obligated Parties’ obligations under this Section shall survive termination
of this Agreement and Payment in Full of all other Obligations.




          (ii) Assumption of Risk by the Obligated Parties. As among the Obligated
Parties, the Lenders, and the Agent, the Obligated Parties assume all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the foregoing, the Lenders
and the Agent shall not be responsible for any of the following as it relates to Letters of
Credit: (A) the form, validity, sufficiency, accuracy, genuineness, or legal effect of any
document submitted by any Person in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit, even if it should prove
to be in any or all respects invalid, insufficient, inaccurate, fraudulent, or forged; (B)
the validity or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or ineffective for any reason;
(C) the failure of the beneficiary of any Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions,
or delays in transmission or delivery of any messages by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing
under such Letter of Credit; (H) any consequences arising from causes beyond the control of
the Lenders or the Agent, including any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto Governmental Authority; or (I) the Letter of
Credit Issuer’s honor of a draw for which the draw or any certificate fails to comply in any
respect with the terms of the Letter of Credit. None of the foregoing shall affect, impair
or prevent the vesting of any rights or powers of the Agent or any Lender under this
Section 1.3(f).




          (iii) Exoneration. Without limiting the foregoing, no action or omission
whatsoever by the Agent or any Lender as it relates to Letters of Credit (excluding any
Lender in its capacity as a Letter of Credit Issuer) shall result in any liability of the
Agent or any Lender to the Obligated Parties, or relieve the Obligated Parties of any of
their obligations hereunder to any such Person.



8









 







          (iv) Rights Against Letter of Credit Issuer. Nothing contained in this
Agreement shall limit the Obligated Parties’ rights, if any, with respect to the Letter of
Credit Issuer that arise as a result of the letter of credit application and related
documents executed by and between the Obligated Parties and the Letter of Credit Issuer.




          (v) Account Party. The Obligated Parties hereby authorize and direct any
Letter of Credit Issuer to name the Borrower as the “Account Party” therein and to deliver
to the Agent all instruments, documents and other writings and property received by the
Letter of Credit Issuer pursuant to the Letter of Credit, and to accept and rely upon the
Agent’s instructions and agreements with respect to all matters arising in connection with
the Letter of Credit or the application therefor.



          (g) Cash Collateralization of Letters of Credit and Credit Support. If,
notwithstanding the provisions of Section 1.3(b) and Section 10.1, any Letter of
Credit or Credit Support is outstanding upon the termination of this Agreement, then upon such
termination, the Obligated Parties shall cause each such Letter of Credit and any Credit Support to
be Cash Collateralized.




     1.4 Bank Products. Without limiting the provisions of Section 7.25, the
Obligated Parties may request and the Agent may, in its sole and absolute discretion, arrange for
the Obligated Parties to obtain Bank Products from the Bank or the Bank’s Affiliates. If Bank
Products are provided by the Bank or an Affiliate of the Bank, the Obligated Parties agree to
indemnify and hold the Agent, the Bank and the Lenders harmless from any and all costs and
obligations now or hereafter incurred by the Agent, the Bank or any of the Lenders that arise from
any indemnity given by the Agent to its Affiliates related to such Bank Products; provided,
however, that nothing contained herein is intended to limit the Obligated Parties’ rights with
respect to the Bank or its Affiliates, if any, that arise as a result of the execution of documents
by and between the Obligated Parties and the Bank or the Bank’s Affiliates and that relate to Bank
Products. The agreement contained in this Section shall survive the termination of this Agreement
and the Payment in Full of all other Obligations. The Obligated Parties acknowledge and agree that
the obtaining of Bank Products from the Bank or the Bank’s Affiliates: (a) is in the sole and
absolute discretion of the Bank or the Bank’s Affiliates; and (b) is subject to all rules and
regulations of the Bank or the Bank’s Affiliates.



     1.5 Borrower as Representative for Obligated Parties. Each Obligated Party hereby
designates the Borrower as its representative and agent for all purposes under the Loan Documents,
including delivery or receipt of communications, preparation and delivery of Borrowing Base
Certificates, the Financial Statements, the Latest Projections, and all other financial reports,
receipt and payment of the Obligations, requests for waivers, amendments or other accommodations,
actions under the Loan Documents (including in respect of compliance with covenants), and all other
dealings with the Agent, the Lenders, the Letter of Credit Issuer, and the Bank. The Borrower
hereby accepts such appointment. The Agent, the Lenders, the Letter of Credit Issuer, and the Bank
shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or
communication (including any notice of borrowing) delivered by the Borrower on behalf of any
Obligated Party. The Agent, the Lenders, the Letter of Credit Issuer,



9









 









and the Bank may give any notice or communication with any Obligated Party hereunder to the
Borrower on behalf of such Obligated Party. Each of the Agent, the Lenders, the Letter of Credit
Issuer, and the Bank shall have the right, in its discretion, to deal exclusively with the Borrower
for any or all purposes under the Loan Documents. Each Obligated Party agrees that any notice,
election, communication, representation, agreement or undertaking made on its behalf by the
Borrower shall be binding upon and enforceable against it.



ARTICLE 2

INTEREST AND FEES




     2.1 Interest.



          (a) Interest Rates. All outstanding Obligations shall bear interest on the unpaid
principal amount thereof (including, to the extent permitted by law, on interest thereon not paid
when due) from the date made until paid in full in cash at a rate determined by reference to the
Base Rate or the LIBOR Rate plus the Applicable Margins as set forth below, but not to exceed the
Maximum Rate. If at any time Loans are outstanding with respect to which the Borrower has not
delivered to the Agent a notice specifying the basis for determining the interest rate applicable
thereto in accordance herewith, those Loans shall bear interest at a rate determined by reference
to the Base Rate plus the Applicable Margin until notice to the contrary has been given to the
Agent in accordance with Section 2.2 and such notice has become effective. Except as
otherwise provided herein, the outstanding Obligations shall bear interest as follows:





          (i) For all Base Rate Revolving Loans and other Obligations (other than LIBOR Revolving
Loans) at a fluctuating per annum rate equal to the Base Rate plus the Applicable
Margin; and




          (ii) For all LIBOR Revolving Loans at a per annum rate equal to the LIBOR Rate
plus the Applicable Margin.


Each change in the Base Rate shall be reflected in the interest rate applicable to Base Rate
Revolving Loans as of the effective date of such change. All interest charges shall be computed on
the basis of a year of 360 days and actual days elapsed (which results in more interest being paid
than if computed on the basis of a 365-day year). The Borrower shall pay to the Agent, for the
ratable benefit of Lenders, interest accrued on all Base Rate Revolving Loans in arrears on the
first day of each month hereafter and on the Termination Date. The Borrower shall pay to the
Agent, for the ratable benefit of Lenders, interest accrued on all LIBOR Revolving Loans in arrears
on each LIBOR Interest Payment Date.




          (b) Default Rate. If any Default or Event of Default occurs and is continuing and the
Agent or the Required Lenders in their discretion so elect, then, while any such Default or Event
of Default is continuing, all of the Obligations shall bear interest at the Default Rate applicable
thereto.




10









 








     2.2 Continuation and Conversion Elections.



          (a) The Borrower may:





          (i) elect, as of any Business Day, in the case of Base Rate Revolving Loans to convert
any Base Rate Revolving Loans (or any part thereof in an amount not less than $1,000,000, or
that is in an integral multiple of $1,000,000 in excess thereof) into LIBOR Revolving Loans;
or




          (ii) elect, as of the last day of the applicable Interest Period, to continue any LIBOR
Revolving Loans having Interest Periods expiring on such day (or any part thereof in an
amount not less than $1,000,000, or that is in an integral multiple of $1,000,000 in excess
thereof); provided, that if at any time the aggregate amount of LIBOR Revolving Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof
to be less than $1,000,000, such LIBOR Revolving Loans shall automatically convert into Base
Rate Revolving Loans; provided, further, that if the notice shall fail to specify the
duration of the Interest Period, such Interest Period shall be one month.



          (b) The Borrower shall deliver a notice of continuation/conversion (“Notice of
Continuation/Conversion”) to the Agent not later than 12:00 noon (Pacific time) at least three (3)
Business Days in advance of the Continuation/Conversion Date, if the Loans are to be converted into
or continued as LIBOR Revolving Loans and specifying:





          (i) the proposed Continuation/Conversion Date;




          (ii) the aggregate amount of Loans to be converted or renewed;




          (iii) the type of Loans resulting from the proposed conversion or continuation; and




          (iv) the duration of the requested Interest Period, provided, however, that the
Borrower may not select an Interest Period that ends after the Stated Termination Date.



          (c) If upon the expiration of any Interest Period applicable to LIBOR Revolving Loans, the
Borrower has failed to select timely a new Interest Period to be applicable to LIBOR Revolving
Loans or if any Default or Event of Default then exists, the Borrower shall be deemed to have
elected to convert such LIBOR Revolving Loans into Base Rate Revolving Loans effective as of the
expiration date of such Interest Period.




          (d) The Agent will promptly notify each Lender of its receipt of a Notice of
Continuation/Conversion. All conversions and continuations shall be made ratably according to the
respective outstanding principal amounts of the Loans with respect to which the notice was given.




11









 









          (e) There may not be more than three (3) different LIBOR Revolving Loans in effect hereunder
at any time.




     2.3 Maximum Interest Rate. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by Applicable Law (“Maximum Rate”). If the Agent
or any Lender receives interest in an amount that exceeds the Maximum Rate, the excess interest
shall be applied to the principal of the Obligations or, if it exceeds such unpaid principal,
refunded to the Borrower. In determining whether the interest contracted for, charged or received
by the Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by any
Requirement of Law: (a) characterize any payment that is not principal as an expense, fee or
premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c)
amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.



     2.4 Fee Letter. The Borrower shall pay to the Agent, as and when due and payable
under the terms of the Fee Letter, all fees set forth in the Fee Letter.



     2.5 Unused Line Fee. On the first day of each month and on the Termination Date the
Borrower agrees to pay to the Agent, for the account of the Lenders in accordance with their
respective Pro Rata Shares, an unused line fee (the “Unused Line Fee”) equal to the Unused Line Fee
Percentage multiplied by the amount by which the Maximum Revolver Amount exceeded the sum of the
average daily outstanding amount of Revolving Loans and the average daily undrawn face amount of
outstanding Letters of Credit, during the immediately preceding month (or shorter period if
calculated for the first month after the Closing Date or on the Termination Date). The Unused Line
Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. All
principal payments received by the Agent shall be deemed to be credited to the Loan Account
immediately upon receipt for purposes of calculating the Unused Line Fee pursuant to this
Section 2.5.



     2.6 Letter of Credit Fee. The Borrower agrees to pay: (i) to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata Shares, for each Letter of
Credit, a fee (the “Letter of Credit Fee”) equal to the Applicable Margin, or during the existence
of any Event of Default, the Default Rate, in each case, multiplied by the average daily stated
amount of each such Letter of Credit; and (ii) to the Agent for the benefit of the Letter of Credit
Issuer a customary “fronting fee” of not more than one tenth of one percent (0.10%) per annum of
the stated amount of each Letter of Credit, and to the Letter of Credit Issuer, all out-of-pocket
costs, fees and expenses incurred by the Letter of Credit Issuer in connection with the application
for, processing of, issuance of, or amendment to any Letter of Credit. The Letter of Credit Fee
shall be payable monthly in arrears on the first day of each calendar month following any month in
which a Letter of Credit is outstanding and on the Termination Date. The Letter of Credit Fee
shall be computed on the basis of a 360-day year for the actual number of days elapsed.



12









 







ARTICLE 3

PAYMENTS AND PREPAYMENTS




     3.1 Revolving Loans. The Borrower shall repay the outstanding principal balance of
the Revolving Loans, plus all accrued but unpaid interest thereon, on the Termination Date. The
Borrower may prepay Revolving Loans at any time and may re-borrow such prepaid amounts, subject to
the terms of this Agreement. In addition, and without limiting the generality of the foregoing,
the Borrower shall promptly pay to the Agent on demand the amount, if any, by which Availability is
less than zero at such time.



     3.2 Termination of Facility. Subject to Section 10.1, the Obligated Parties
may terminate this Agreement following at least thirty (30) Business Days’ prior written notice to
the Agent and the Lenders of the Obligated Parties’ intention to terminate this Agreement and to
arrange for the Payment in Full of the Obligations.



     3.3 Reserved.



     3.4 LIBOR Revolving Loan Prepayments. In connection with any prepayment, if any LIBOR
Revolving Loans are prepaid prior to the expiration date of the Interest Period applicable thereto
for any reason, the Borrower shall pay to the Lenders the amounts described in Section 4.4.



     3.5 Payments by the Obligated Parties.



          (a) All payments to be made by the Obligated Parties shall be made without setoff, recoupment,
or counterclaim. Except as otherwise expressly provided herein, all payments by the Obligated
Parties shall be made to the Agent for the account of the Lenders, at the account designated by the
Agent and shall be made in Dollars and in immediately available funds, no later than 12:00 noon
(Pacific time) on the date specified herein. Any payment received by the Agent after such time
shall be deemed (for purposes of calculating interest only) to have been received on the following
Business Day and any applicable interest shall continue to accrue.




          (b) Subject to the provisions set forth in the definition of “Interest Period”, whenever any
payment is due on a day other than a Business Day, such payment shall be due on the following
Business Day, and such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.




     3.6 Payments as Revolving Loans. At the election of the Agent, all payments of
principal, interest, reimbursement obligations in connection with Letters of Credit and Credit
Support for Letters of Credit, fees, premiums, reimbursable expenses, and other sums payable
hereunder, may be paid from the proceeds of Revolving Loans made hereunder. The Obligated Parties
hereby irrevocably authorize the Agent to charge the Loan Account for the purpose of paying all
amounts from time to time due hereunder and agrees that all such amounts charged shall constitute
Revolving Loans (including Non-Ratable Loans and Agent Advances).



13









 







     3.7 Apportionment, Application and Reversal of Payments. Principal and interest
payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance
of the Loans to which such payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders, except for fees payable: (i) solely to the
Agent as set forth herein; (ii) to the Agent, for its own benefit, and certain Lenders as set forth
in the Fee Letter; (iii) solely to the Letter of Credit Issuer as set forth in Section 2.6,
and (iv) to certain Lenders as set forth in Section 11.1(b). All payments shall be
remitted to the Agent and all such payments not relating to principal or interest of specific
Loans, or not constituting payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably, subject to the provisions of this
Agreement: first, to pay any fees, indemnities, or expense reimbursements (including any
obligations and liabilities of whatever kind or nature relating to Bank Products) then due to the
Agent from the Obligated Parties; second, to pay any fees or expense reimbursements then due to the
Lenders from the Obligated Parties; third, to pay interest due in respect of all Loans, including
Non-Ratable Loans and Agent Advances; fourth, to pay or prepay principal of the Non-Ratable Loans
and Agent Advances; fifth, to pay or prepay principal of the Revolving Loans (other than
Non-Ratable Loans and Agent Advances) and unpaid reimbursement obligations in respect of Letters of
Credit; sixth, to pay to the Agent and/or the applicable Letter of Credit Issuer(s) an aggregate
amount equal to all outstanding Letter of Credit Obligations to be held as cash collateral for such
Obligations; and seventh, to the payment of all other Obligations, if any. Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by the Borrower, or unless
an Event of Default has occurred and is continuing, neither the Agent nor any Lender shall apply
any payments that it receives to any LIBOR Revolving Loan, except: (a) on the expiration date of
the Interest Period applicable to any such LIBOR Revolving Loan; or (b) in the event, and only to
the extent, that there are no outstanding Base Rate Revolving Loans and, in any event, the
Obligated Parties shall pay LIBOR breakage losses in accordance with Section 4.4. Each
Obligated Party irrevocably waives the right to direct the application of any payments or
Collateral proceeds, and agrees that the Agent shall have the continuing, exclusive right to apply
and reapply same against the Obligations and to retain proceeds of Collateral or payments and
prepayments in respect of the Obligations to Cash Collateralize Letters of Credit and Credit
Support during the continuation of an Event of Default, all in such manner as the Agent deems
advisable, notwithstanding any entry by the Agent in its records.



     3.8 Indemnity for Returned Payments. If after receipt of any payment that is applied
to the payment of all or any part of the Obligations, the Agent, any Lender, the Bank or any
Affiliate of the Bank is for any reason compelled to surrender such payment or proceeds to any
Person because such payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of
trust funds, or for any other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force as if such payment
or proceeds had not been received by the Agent, such Lender, the Bank, or such Affiliate of the
Bank and the Obligated Parties shall be liable to pay to the Agent, and hereby does indemnify the
Indemnified Parties harmless for the amount of such payment or proceeds surrendered; provided that
interest on any Obligations or part thereof revived and continued pursuant to this Section
3.8 shall begin to accrue from the date of surrender of the applicable payments or proceeds.
The



14









 







provisions of this Section 3.8 shall be and remain effective notwithstanding any
contrary action that may have been taken by any Indemnified Person in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without prejudice to the
Indemnified Parties’ rights under this Agreement and shall be deemed to have been conditioned upon
such payment or application of proceeds having become final and irrevocable. The provisions of
this Section 3.8 shall survive the termination of this Agreement and the Payment in Full of
all other Obligations.



     3.9 Agent’s and Lenders’ Books and Records; Monthly Statements. The Agent shall
record the principal amount of the Loans owing to each Lender, the undrawn face amount of all
outstanding Letters of Credit and Credit Support and the aggregate amount of unpaid reimbursement
obligations outstanding with respect to the Letters of Credit and Credit Support from time to time
on its books. In addition, each Lender may note the date and amount of each payment or prepayment
of principal of such Lender’s Loans in its books and records. Failure by the Agent or any Lender
to make such notation shall not affect the obligations of the Obligated Parties with respect to the
Loans or the Letters of Credit and Credit Support. The Obligated Parties agree that the Agent’s
and each Lender’s books and records showing the Obligations and the transactions pursuant to this
Agreement and the other Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute rebuttably presumptive proof thereof, irrespective of whether any
Obligation is also evidenced by a promissory note or other instrument. If there is a discrepancy
between the Agent’s books and records and those of another Lender, then the Agent shall first
attempt to reconcile such discrepancy, but if no reconciliation can be made, then the Agent’s books
and records shall control. The Agent will provide to the Borrower a monthly statement of Loans,
payments, and other transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on the Obligated Parties and an account stated (except for reversals
and reapplications of payments made as provided in Section 3.7 and corrections of errors
discovered by the Agent), unless the Borrower notifies the Agent in writing to the contrary within
thirty (30) days after such statement is rendered. If timely written notice of objections is given
by the Borrower, only the items to which exception is expressly made in writing will be considered
to be disputed by the Obligated Parties.



     3.10 Joint and Several Liability of Obligated Parties.



          (a) Each Obligated Party hereby guarantees, becomes surety for, and is accepting joint and
several liability hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Secured Parties under this Agreement, for the mutual benefit,
directly and indirectly, of each Obligated Party and in consideration of the undertakings of the
other Obligated Parties to guarantee, become a surety for, and accept joint and several liability
for the Obligations. The foregoing is a guaranty and assurance of payment and not of collection
and is an absolute, unconditional, irrevocable, and continuing guaranty and assurance and will
remain in full force and effect until all of the Obligations have been Paid in Full.




15









 









          (b) Each Obligated Party, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a guarantor and surety, but also as a co-debtor, joint and several liability
with the other Obligated Parties, with respect to the payment and performance of all of the
Obligations (including, without limitation, any Obligations arising under this Section
3.10), it being the intention of the parties hereto that all the Obligations shall be the joint
and several obligations of each Obligated Party without preferences or distinction among them.




          (c) If and to the extent that any Obligated Party fails to make any payment with respect to
any of the Obligations as and when due or to perform any of the Obligations in accordance with the
terms thereof, then in each such event the other Obligated Parties will make such payment with
respect to, or perform, such Obligation.




          (d) The Obligations of each Obligated Party under the provisions of this Section 3.10
constitute the absolute and unconditional, full recourse Obligations of each Obligated Party
enforceable against each Obligated Party to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.




          (e) Except as otherwise expressly required to be given to the Borrower as provided in this
Agreement, each Obligated Party hereby waives notice of acceptance of its joint and several
liability, notice of any Loans or Letters of Credit issued under or pursuant to this Agreement,
notice of the occurrence of any Default, Event of Default, or of any demand for any payment under
this Agreement, notice of any action at any time taken or omitted by the Agent or the Lenders under
or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and other formalities of
every kind in connection with this Agreement (except as otherwise expressly provided in this
Agreement). Each Obligated Party hereby assents to, and (except as otherwise expressly required to
be given to the Borrower as provided in this Agreement) waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the acceptance of any payment
of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or
other action or acquiescence by the Agent or the Lenders at any time or times in respect of any
default by any Obligated Party in the performance or satisfaction of any term, covenant, condition
or provision of this Agreement, any and all other indulgences whatsoever by the Agent or the
Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in
whole or in part, at any time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Obligated Party. Without limiting the
generality of the foregoing, each Obligated Party assents to any other action or delay in acting or
failure to act on the part of the Agent or any Lender with respect to the failure by any Obligated
Party to comply with any of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply fully with
applicable laws or regulations thereunder, that might, but for the provisions of this Section
3.10 afford grounds for terminating, discharging or relieving any Obligated Party, in whole or
in part, from any of its Obligations under this Section 3.10, it being the intention of
each Obligated Party that, so long as any of the Obligations hereunder have not been Paid in Full,
the Obligations of each Obligated Party under this Section 3.10 shall not be discharged




16









 







except by performance and then only to the extent of such performance. The Obligations of
each Obligated Party under this Section 3.10 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to any Obligated Party or the Agent or any Lender.




          (f) Each Obligated Party represents and warrants to the Agent and the Lenders that such
Obligated Party is currently informed of the financial condition of the Obligated Parties and of
all other circumstances that a diligent inquiry would reveal and that may bear upon the risk of
nonpayment of the Obligations. Each Obligated Party further represents and warrants to the Agent
and the Lenders that such Obligated Party has read and understands the terms and conditions of the
Loan Documents. Each Obligated Party hereby covenants that such Obligated Party will continue to
keep informed of the Obligated Parties financial condition, the financial condition of other
guarantors, if any, and of all other circumstances that may bear upon the risk of nonpayment or
nonperformance of the Obligations.




          (g) Each Obligated Party waives all rights and defenses arising out of an election of remedies
by the Agent or any Lender, even though that election of remedies, such as a non-judicial
foreclosure with respect to security for a guaranteed obligation, has destroyed the Agent’s or such
Lender’s rights of subrogation and reimbursement against such Obligated Party by the operation of
Section 580(d) of the California Code of Civil Procedure or otherwise:




          (h) Each Obligated Party waives all rights and defenses that such Obligated Party may have
because the Obligations are or may be secured by Real Estate at any time. This means, among other
things:





          (i) the Agent and Lenders may collect from such Obligated Party without first
foreclosing on any Real Estate or other Property Collateral pledged by the Obligated
Parties.




          (ii) If the Agent or any Lender forecloses on any Real Estate pledged by the Obligated
Parties:




     (A) the amount of the Obligations may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even
if the collateral is worth more than the sale price;




     (B) the Agent and the Lenders may collect from such Obligated
Party even if the Agent or the Lenders, by foreclosing on the Real
Estate, have destroyed any right such Obligated Party may have to
collect from the other Obligated Parties.



          (i) This is an unconditional and irrevocable waiver of any rights and defenses such Obligated
Party may have because the Obligations are secured by Real Estate. These rights and defenses
include, but are not limited to, any rights or defenses based upon Sections 580a, 580b, 580d or 726
of the California Code of Civil Procedure.




17









 








          (j) The provisions of this Section 3.10 are made for the benefit of the Secured
Parties, and may be enforced by them from time to time against any or all of the Obligated Parties
as often as occasion therefor may arise and without requirement on the part of any such Secured
Party first to marshal any of its or their claims or to exercise any of its or their rights against
any Obligated Party or to exhaust any remedies available to them against any Obligated Party or to
resort to any other source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this Section 3.10 shall remain in effect until
all of the Obligations have been Paid in Full. If at any time, any payment, or any part thereof,
made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned
by any Secured Party upon the insolvency, bankruptcy or reorganization of any Obligated Party, or
otherwise, the provisions of this Section 3.10 will forthwith be reinstated in effect, as
though such payment had not been made.




          (k) Each Obligated Party hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Obligated Party with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments made by it to the
Agent with respect to any of the Obligations or any collateral security therefor until such time as
all of the Obligations have been Paid in Full. Any claim that any Obligated Party may have against
any other Obligated Party with respect to any payments to the Agent hereunder or under any other
Loan Documents are hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior
Payment in Full cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Obligated Party, its debts or its assets, whether voluntary or
involuntary, all such Obligations shall be Paid in Full before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any other Obligated
Party therefor.




          (l) Each Obligated Party, to the extent permitted by applicable law, waives any rights,
benefits, and defenses that are or may become available to such Obligated Party by reason of
California Civil Code §§2845 and 2850, which would otherwise require the Agent to proceed against
another Obligated Party or any other Person, or to proceed against or exhaust any security held by
the Agent at any time, or to first apply any security of any Obligated Party to the discharge of
the Obligations, or to pursue any other remedy in the Agent’s power before proceeding against such
Obligated Party hereunder.




          (m) Each Obligated Party, to the extent permitted by applicable law, waives any and all
rights, benefits and defenses under California Civil Code §2849, which provides that a surety is
entitled to the benefit of every security for the performance of the principal obligation held by
the creditor.




          (n) Each Obligated Party, to the extent permitted by applicable law, waives any rights and
defenses that are or may become available to such Obligated Party by reason of California Civil
Code Section 2856(a)(1)-(3), inclusive, which includes, without limitation, any




18









 








rights and defenses that are or may become available to such Obligated Party by reason of
California Civil Code Sections 2787 to 2855.




          (o) Each Obligated Party, to the extent permitted by applicable law, waives any right or
defense it may have at law or equity, including California Code of Civil Procedure Section 580a, to
a fair market value hearing or action to determine a deficiency judgment after a foreclosure.




          (p) Each Obligated Party, to the extent permitted by applicable law, waives any rights,
benefits, and defenses that are or may become available to such Obligated Party by reason of
California Civil Code Section 2810 (which generally provides that a surety is not liable if for
certain reasons there is no liability upon the part of the principal or if the principal ceases to
become liable) and under California Civil Code Section 2809 (which generally provides that the
obligation of a surety must not be larger nor more burdensome than that of the principal).




ARTICLE 4

TAXES, YIELD PROTECTION AND ILLEGALITY




     4.1 Taxes.



          (a) Any and all payments by the Obligated Parties to each Lender or the Agent under this
Agreement and any other Loan Document shall be made free and clear of, and without deduction or
withholding for any Taxes. In addition, the Obligated Parties shall pay all Other Taxes.




          (b) The Obligated Parties agree to indemnify and hold harmless each Lender and the Agent for
the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by any Lender or the Agent and any
liability (including penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within thirty (30) days after the date such Lender
or the Agent makes written demand to the Borrower therefor.




          (c) If the Obligated Parties are required by law to deduct or withhold any Taxes or Other
Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, then:





          (i) the sum payable shall be increased as necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to additional
sums payable under this Section) such Lender or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or withholdings been
made;




          (ii) the Obligated Parties shall make such deductions and withholdings;



19









 






          (iii) the Obligated Parties shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable law; and




          (iv) the Obligated Parties shall also pay to each Lender or the Agent for the account
of such Lender, at the time interest is paid, all additional amounts that the respective
Lender specifies as necessary to preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been imposed.



          (d) At the Agent’s request, within thirty (30) days after the date of any payment by the
Obligated Parties of Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory
to the Agent.




          (e) If the Obligated Parties are required to pay additional amounts to any Lender or the Agent
pursuant to Section 4.1(c), then such Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by the Obligated Parties that may thereafter accrue, if such
change in the judgment of such Lender is not otherwise disadvantageous to such Lender.




     4.2 Illegality.



          (a) If any Lender determines that the introduction of any Requirement of Law, or any change in
any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has
made it unlawful, or that any central bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable lending office to make LIBOR Revolving Loans, then, on
notice thereof by that Lender to the Borrower through the Agent, any obligation of that Lender to
make LIBOR Revolving Loans shall be suspended until that Lender notifies the Agent and the Borrower
that the circumstances giving rise to such determination no longer exist.




          (b) If a Lender determines that it is unlawful to maintain any LIBOR Revolving Loan, the
Obligated Parties shall, upon its receipt of notice of such fact and demand from such Lender (with
a copy to the Agent), prepay in full such LIBOR Revolving Loans of that Lender then outstanding,
together with interest accrued thereon and any amounts required under Section 4.4, either
on the last day of the Interest Period thereof, if that Lender may lawfully continue to maintain
such LIBOR Revolving Loans to such day, or immediately, if that Lender may not lawfully continue to
maintain such LIBOR Revolving Loans until such last day of the Interest Period. If the Obligated
Parties are required to so prepay any LIBOR Revolving Loans, then concurrently with such
prepayment, the Borrower shall borrow from the affected Lender, in the amount of such repayment, a
Base Rate Revolving Loan.




20









 








     4.3 Increased Costs and Reduction of Return.



          (a) If any Lender determines that due to either: (i) the introduction of or any change in the
interpretation of any law or regulation; or (ii) the compliance by that Lender with any guideline
or request from any central bank or other Governmental Authority (whether or not having the force
of law), there shall be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining any LIBOR Revolving Loans, then the Obligated Parties shall be liable for,
and shall from time to time, upon demand (with a copy of such demand to be sent to the Agent), pay
to the Agent for the account of such Lender, additional amounts as are sufficient to compensate
such Lender for such increased costs.




          (b) If any Lender shall have determined that: (i) the introduction of any Capital Adequacy
Regulation; (ii) any change in any Capital Adequacy Regulation; (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration thereof; or (iv)
compliance by such Lender or any corporation or other entity controlling such Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to
be maintained by such Lender or any corporation or other entity controlling such Lender and (taking
into consideration such Lender’s or such corporation’s or other entity’s policies with respect to
capital adequacy and such Lender’s desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitments, loans, credits or obligations under this
Agreement, then, upon demand of such Lender to the Borrower through the Agent, the Obligated
Parties shall pay to such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such increase.




     4.4 Funding Losses. The Obligated Parties shall reimburse each Lender and hold each
Lender harmless from any loss or expense that such Lender may sustain or incur as a consequence of:



          (a) the failure of the Obligated Parties to make on a timely basis any payment of principal of
any LIBOR Revolving Loan;




          (b) the failure of the Borrower to borrow, continue or convert a Loan after the Borrower has
given (or is deemed to have given) a Notice of Borrowing or a Notice of Continuation/Conversion; or




          (c) the prepayment or other payment (including after acceleration thereof) of any LIBOR
Revolving Loans on a day that is not the last day of the relevant Interest Period, including any
such loss of anticipated profit and any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its LIBOR Revolving Loans or from fees payable to
terminate the deposits from which such funds were obtained. The Obligated Parties shall also pay
any customary administrative fees charged by any Lender in connection with the foregoing.




21









 








     4.5 Inability to Determine Rates. If the Agent determines that for any reason
adequate and reasonable means do not exist for determining the LIBOR Rate for any requested
Interest Period with respect to a proposed LIBOR Revolving Loan, or that the LIBOR Rate for any
requested Interest Period with respect to a proposed LIBOR Revolving Loan does not adequately and
fairly reflect the cost to the Lenders of funding such Loan, the Agent will promptly so notify the
Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR
Revolving Loans hereunder shall be suspended until the Agent revokes such notice in writing. Upon
receipt of such notice, the Borrower may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then submitted by it. If the Borrower does not revoke such notice, the
Lenders shall make, convert or continue the Loans, as proposed by the Borrower, in the amount
specified in the applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Revolving Loans instead of LIBOR Revolving Loans.



     4.6 Certificates of Agent. If any Lender claims reimbursement or compensation under
this Article 4, the Agent shall determine the amount thereof and shall deliver to the
Borrower (with a copy to the affected Lender) a certificate setting forth in reasonable detail the
amount payable to the affected Lender, and such certificate shall be conclusive and binding on the
Obligated Parties in the absence of manifest error.



     4.7 Survival. The agreements and obligations of the Obligated Parties in this
Article 4 shall survive the termination of this Agreement and the Payment in Full of all
other Obligations.



ARTICLE 5

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES




     5.1 Books and Records. The Obligated Parties shall maintain at all times, correct and
complete books, records, and accounts in which complete, correct, and timely entries are made of
its transactions in accordance with GAAP (applied consistently with the audited Financial
Statements required to be delivered pursuant to Section 5.2(a)). The Obligated Parties
shall, by means of appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for depreciation, amortization
of property, and bad debts, all in accordance with GAAP. The Obligated Parties shall maintain at
all times books and records pertaining to the Collateral in such detail, form, and scope as the
Agent or any Lender shall reasonably require, including, but not limited to, records of: (a) all
payments received and all credits and extensions granted with respect to the Accounts; (b) the
return, rejection, repossession, stoppage in transit, loss, damage, or destruction of any
Inventory; and (c) all other dealings affecting the Collateral.



     5.2 Financial Information. The Obligated Parties shall promptly furnish to each
Lender all such financial information as the Agent shall reasonably request. Without limiting the
foregoing, the Obligated Parties will furnish to the Agent, in sufficient copies for distribution
by



22









 







the Agent to each Lender and in such detail as the Agent or the Lenders shall request, the
following:




     (a) (i) As soon as available, but in any event not later than ninety (90) days after the
close of each Fiscal Year, consolidated reviewed and consolidating unaudited balance sheets,
and income statements, cash flow statements and changes in stockholders’ equity for Holdings
and its Subsidiaries for such Fiscal Year, and the accompanying notes to such consolidated
statements (such consolidating statements to include the unaudited balance sheets, and income
statements, cash flow statements and changes in stockholders’ equity for the Borrower for
such Fiscal Year, and the accompanying notes to such statements); setting forth in each case
in comparative form figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of Holdings and its
Subsidiaries or the Borrower (as applicable) as at the date thereof and for the Fiscal Year
then-ended, and prepared in accordance with GAAP. The statements required to be delivered
pursuant to clause (a)(i) above shall be reviewed in accordance with generally accepted
standards by and accompanied by a report thereon unqualified in any respect of independent
certified public accountants selected by Holdings and the Borrower and reasonably
satisfactory to the Agent. The Borrower shall cause Holdings, simultaneously with retaining
such independent public accountants to conduct such annual review, to send a letter to such
accountants, with a copy to the Agent and the Lenders, notifying such accountants that one of
the primary purposes for retaining such accountants’ services and having reviewed financial
statements prepared by them is for use by the Agent and the Lenders;




          (ii) As soon as available, but in any event not later than ninety (90) days after the
close of each Fiscal Year, consolidated audited and consolidating unaudited balance sheets,
and income statements, cash flow statements and changes in stockholders’ equity for Alon and
its consolidated Subsidiaries for such Fiscal Year, and the accompanying notes to such
consolidated statements, setting forth in each case in comparative form figures for the
previous Fiscal Year, all in reasonable detail, fairly presenting the financial position and
the results of operations of Alon and its consolidated Subsidiaries as at the date thereof
and for the Fiscal Year then-ended, and prepared in accordance with GAAP. Such statements
shall be examined in accordance with generally accepted auditing standards by and, in the
case of such statements performed on a consolidated basis, accompanied by a report thereon
unqualified in any respect of independent certified public accountants selected by Alon;




          (iii) At reasonable times and upon reasonable advance notice and the provision of an
opportunity for a representative of Holdings and the Obligated Parties to participate or
accompany the Agent, the Obligated Parties hereby authorize the Agent to communicate
directly with its and Holdings’ certified public accountants and, by this provision,
authorize those accountants to disclose to the Agent any and all financial statements and
other supporting financial documents and schedules relating to the Obligated Parties and
their respective Subsidiaries, and to discuss directly with the Agent the finances and
affairs of the Obligated Parties and their respective Subsidiaries; and



23









 






          (iv) The Obligated Parties hereby authorize the Agent to communicate directly with Alon
and, if Alon’s public accountants are different from Holdings’ public accountants, with
Alon’s certified public accountants, subject to satisfaction of the following conditions:
(A) the Agent shall provide written notice of its desire to communicate with Alon’s
certified public accountants; (B) Alon shall arrange for a mutually acceptable time and, if
necessary, place for any such communications, such date to be not greater than seven
Business Days following any such written notice to Alon under clause (A) above, or, if such
certified public accountants are not available until some time following seven Business
Days, on the first date on which such accountants are available; and (C) a representative of
Alon shall be permitted to participate or accompany the Agent in connection with any such
communications; provided that if Alon fails to arrange any such meeting, the Agent may
contact Alon’s accountant’s directly. The Obligated Parties hereby direct Alon to provide
the Agent with access in accordance with the foregoing to Alon’s certified public
accountants and authorize those accountants to disclose to the Agent any and all financial
statements and other supporting financial documents and schedules relating to Alon to the
extent affecting Holdings, the Obligated Parties and their respective Subsidiaries, and to
discuss directly with the Agent the finances and affairs of Alon to the extent affecting
Holdings, the Obligated Parties and their respective Subsidiaries.



          (b) As soon as available, but in any event not later than forty-five (45) days after the end
of each month, consolidated and consolidating unaudited balance sheets of Holdings and its
consolidated Subsidiaries as at the end of such month, and consolidated and consolidating unaudited
income statements and cash flow statements for Holdings and its consolidated Subsidiaries for such
month and for the period from the beginning of the Fiscal Year to the end of such month, all in
reasonable detail, fairly presenting the financial position and results of operations of Holdings
and its consolidated Subsidiaries as at the date thereof and for such periods, and prepared in
accordance with GAAP (applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 5.2(a)). Holdings shall certify by a certificate signed by
its chief financial officer that all such statements have been prepared in accordance with GAAP and
present fairly in all material respects Holdings’ and its Subsidiaries’ financial position as at
the dates thereof and their results of operations for the periods then ended, subject to normal
year-end adjustments and the absence of footnotes;




          (c) With each of the annual audited Financial Statements delivered pursuant to Section
5.2(a), and within forty-five (45) days after the end of each month (the “subject month”), a
certificate of the chief financial officer of the Borrower setting forth in reasonable detail (i)
the calculations required to establish whether or not a Low Availability Trigger Date occurred
during the subject month and whether or not a Low Availability Period should have been instituted
during the subject month or based on the average Availability during the subject month; (ii) if a
Low Availability Period was in effect during the subject month, the calculations required to
establish that the Obligated Parties were in compliance with the covenants set forth in
Sections 7.22 and 7.23 during the period covered in such Financial Statements and
as at the end thereof; and (iii) if a Low Availability Period was not in effect during the subject
month, the




24









 







calculations required to determine the amounts used in determining the Fixed Charge Coverage
Ratio during the period covered in such Financial Statements and as at the end thereof.




          (d) Within forty-five (45) days after the end of each quarter, a certificate of the chief
financial officer of the Borrower stating that, except as explained in reasonable detail in such
certificate: (i) all of the representations and warranties of the Obligated Parties contained in
this Agreement and the other Loan Documents are correct and complete in all material respects as at
the date of such certificate as if made at such time, except for those that speak as of a
particular date (which representations and warranties shall be correct and complete in all material
respects as of such date); (ii) the Obligated Parties are, at the date of such certificate, in
compliance in all material respects with all of their respective covenants and agreements in this
Agreement and the other Loan Documents; and (iii) no Default or Event of Default then exists or
existed during the period covered by the Financial Statements for such quarter. If such
certificate discloses that a representation or warranty is not correct or complete, that a covenant
has not been complied with, or that a Default or Event of Default existed or exists, such
certificate shall set forth what action the Obligated Parties have taken or propose to take with
respect thereto;




          (e) No sooner than sixty (60) days and not later than thirty (30) days prior to the beginning
of each Fiscal Year, annual forecasts (to include forecasted consolidated and consolidating balance
sheets, income statements and cash flow statements) for Holdings and its Subsidiaries as at the end
of and for each quarter of such Fiscal Year;




          (f) Promptly after filing with the IRS, a copy of each annual report or other filing filed
with respect to each Plan of any Obligated Party;




          (g) Promptly upon the filing thereof, copies of (i) all reports, if any, to or other documents
filed by any Obligated Party or any of its Subsidiaries with the Securities and Exchange Commission
under the Exchange Act, (ii) all reports, notices, or statements sent or received by any Obligated
Party or any of its Subsidiaries to or from the holders of any equity interests of such Obligated
Party (other than routine non-material correspondence sent by shareholders of such Obligated Party
to such Obligated Party) or any such Subsidiary or of any Debt of any Obligated Party or any of its
Subsidiaries registered under the Securities Act of 1933 or to or from the trustee under any
indenture under which the same is issued, and (iii) to the extent applicable to any Obligated Party
or any of its Subsidiaries, all filings made by such Obligated Party or any of its Subsidiaries,
and any of its respective principal executive officers and principal financial officers (or
individuals performing similar functions) under the Sarbanes-Oxley Act;




          (h) As soon as available, but in any event not later than fifteen (15) days after any
Obligated Party’s receipt thereof, a copy of all management reports and management letters prepared
for such Obligated Party by any independent certified public accountants of the Obligated Parties;




25









 








          (i) Promptly after their preparation, copies of any and all proxy statements, financial
statements, and reports that any of the Obligated Parties or Alon makes available to its
shareholders;




          (j) If requested by the Agent, promptly after the filing thereof, a copy of each income tax
return and any amendments thereto filed with the IRS by the Obligated Parties or by any of their
Subsidiaries;




          (k) (i) If no Low Availability Period is in effect, then on or before the 15th day of each
month, a Borrowing Base Certificate as of the end of the previous month, or (ii) if a Low
Availability Period is in effect, then on or before the 10th day of each month, a Borrowing Base
Certificate as of the end of the previous month and, in addition thereto, on or before the 25th day
of each month, a Borrowing Base Certificate as of the 15th of such month, together with
such additional Borrowing Base Certificates as and when requested by the Agent in writing.
Together with each such Borrowing Base Certificate, the Borrower shall deliver: (1) a schedule of
the Borrower’s Accounts created, credits given, cash collected, and other adjustments to Accounts
since the last such schedule; (2) an ageing of the Borrower’s Accounts, together with a
reconciliation to the corresponding Borrowing Base and to the Borrower’s general ledger; (3) an
ageing of the Borrower’s accounts payable; (4) a detailed calculation and description of Eligible
Petroleum Inventory, Eligible Cash and Cash Equivalents, Eligible Investments, Eligible Margin
Deposits, Eligible Petroleum Inventory in Transit, Paid but Unexpired Letters of Credit, First
Purchaser Liens, and Eligible Exchange Balances; (5) a schedule in reasonable detail setting forth
the additions and reductions in the Borrower’s accounts receivable since delivery of the previous
Borrowing Base Certificate with a reconciliation to the corresponding accounts receivable ageing;
(6) Inventory reports by category and location, together with reconciliation to the corresponding
Borrowing Base and to the Borrower’s general ledger. Upon request of the agent, the Borrower shall
deliver: (A) inventory reports by category and location; (B) copies of invoices in connection with
the Borrower’s Accounts, customer statements, credit memos, remittance advices and reports, deposit
slips, shipping and delivery documents in connection with the Borrower’s Accounts and for Inventory
and Equipment acquired by the Borrower, purchase orders, and invoices; (C) a statement of the
balance of each intercompany Account, if any; (D) such other reports as to the Collateral as the
Agent shall reasonably request from time to time; and (E) with the delivery of each of the
foregoing, a certificate of the Borrower executed by an officer thereof certifying as to the
accuracy and completeness of the foregoing. If the Borrower’s records or reports of the Collateral
are prepared by an accounting service or other agent, the Borrower hereby authorizes such service
or agent to deliver such records, reports, and related documents to the Agent, for distribution to
the Lenders.




          (l) If requested by the Agent, a list, certified by an officer of the applicable Obligated
Party, of such Obligated Party’s suppliers of Petroleum Product and such information about such
suppliers and source of such Inventory as the Agent may reasonably request; and




          (m) Such additional information as the Agent and/or any Lender may from time to time
reasonably request regarding the financial and business affairs of the Obligated Parties or any of
their Subsidiaries.




26









 








     5.3 Notices to the Lenders. The Obligated Parties shall notify the Agent and the
Lenders in writing of the following matters at the following times:



          (a) Immediately after becoming aware of any Default or Event of Default;




          (b) Immediately after becoming aware of the assertion by the holder of any capital stock of
any Obligated Party or of any of its Subsidiaries or the holder of any Debt of any Obligated Party
or of any of its Subsidiaries, in either case, that involves a face amount in excess of One Hundred
Thousand Dollars ($100,000) that a default exists with respect thereto or that such Obligated Party
or such Subsidiary is not in compliance with the terms thereof, or the threat or commencement by
such holder of any enforcement action because of such asserted default or non-compliance;




          (c) Immediately after becoming aware of any event or circumstance that could have a Material
Adverse Effect;




          (d) Immediately after becoming aware of any pending or threatened action, suit, or proceeding,
by any Person, or any pending or threatened investigation by a Governmental Authority, which could
reasonably be expected to have a Material Adverse Effect;




          (e) Immediately after becoming aware of any pending or threatened strike, work stoppage,
unfair labor practice claim, or other labor dispute affecting the Obligated Parties or any of their
Subsidiaries in a manner that could reasonably be expected to have a Material Adverse Effect;




          (f) Immediately after becoming aware of any violation of any law, statute, regulation, or
ordinance of a Governmental Authority affecting the Borrower or any Subsidiary that could
reasonably be expected to have a Material Adverse Effect;




          (g) Immediately after receipt of any notice of any violation by any Obligated Party or any of
its Subsidiaries of any Environmental Law that could reasonably be expected to have a Material
Adverse Effect or that any Governmental Authority has asserted in writing that either (i) any
Obligated Party or any of its Subsidiaries is not in compliance with any Environmental Law or (ii)
such Governmental Authority is investigating any Obligated Party’s or such Subsidiary’s compliance
with any Environmental Law;




          (h) Immediately after receipt of any written notice that any Obligated Party or any of its
Subsidiaries is or may be liable to any Person as a result of the Release or threatened Release of
any Contaminant or that any Obligated Party or any of its Subsidiaries is subject to investigation
by any Governmental Authority evaluating whether any remedial action is needed to respond to the
Release or threatened Release of any Contaminant that, in either case, is reasonably likely to give
rise to liability in excess of Five Hundred Thousand Dollars ($500,000);




          (i) Immediately after receipt of any written notice of the imposition of any Environmental
Lien against any property of any Obligated Party or any of its Subsidiaries;




27









 








          (j) Any change in any Obligated Party’s name, type of entity, organizational identification
number, state of organization, locations of Collateral, form of organization, trade names under
which such Obligated Party will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, in each case at least thirty (30) days prior thereto;




          (k) Five (5) Business Days before the initial purchase during the term of this Agreement by
any Obligated Party of any Petroleum Product from a Person who may be the beneficiary of a First
Purchaser Lien or may belong to the class of Persons intended to be protected by a statute or other
law providing for a First Purchaser Lien;




          (l) (i) Within ten (10) Business Days after any Obligated Party knows or has reason to know,
that an ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of
the Code) has occurred, and, when known, any action taken or threatened by the IRS, the DOL or the
PBGC with respect thereto; and (ii) within thirty (30) Business Days after any ERISA Affiliate
knows or has reason to know, that an ERISA Event or a prohibited transaction (as defined in
Sections 406 of ERISA and 4975 of the Code) has occurred, and, when known, any action taken or
threatened by the IRS, the DOL or the PBGC with respect thereto;




          (m) Upon request, or, if such filing reflects a significant change with respect to the matters
covered thereby, copies of the following: (i) each annual report (form 5500 series), including
Schedule B thereto, filed with the PBGC, the DOL or the IRS with respect to each Plan; (ii) a copy
of each funding waiver request filed with the PBGC, the DOL or the IRS with respect to any Plan and
all communications received by any Obligated Party or any ERISA Affiliate from the PBGC, the DOL or
the IRS with respect to such request; and (iii) a copy of each other filing or notice filed with
the PBGC, the DOL or the IRS, with respect to each Plan by any Obligated Party or any ERISA
Affiliate; in each case, within three (3) Business Days after the filing thereof by any Obligated
Party with the PBGC, the DOL or the IRS, as applicable, and within fifteen (15) Business Days after
the filing thereof by any ERISA Affiliate with the PBGC, the DOL or the IRS, as applicable;




          (n) Upon request, copies of each actuarial report for any Plan or Multi-employer Plan and
annual report for any Multi-employer Plan; and within three (3) Business Days after receipt thereof
by any Obligated Party and within fifteen (15) Business Days after receipt thereof by any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC’s intention to terminate a Plan or
to have a trustee appointed to administer such Plan; (ii) any favorable or unfavorable
determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the
Code; or (iii) any notice from a Multi-employer Plan regarding the imposition of withdrawal
liability;




          (o) Within three (3) Business Days after the occurrence thereof: (i) any changes in the
benefits of any existing Plan that increase the Obligated Parties’ annual costs with respect
thereto by an amount in excess of $1,000,000, or the establishment of any new Plan or the
commencement of contributions to any Plan to which any Obligated Party was not previously
contributing; or (ii) any failure by any Obligated Party or any ERISA Affiliate to make a




28









 







required installment or any other required payment under Section 412 of the Code on or before
the due date for such installment or payment;




          (p) Within fifteen (15) Business Days after the occurrence thereof: (i) the establishment of
any new Plan or the commencement of contributions to any Plan to which any ERISA Affiliate was not
previously contributing; or (ii) any failure by any ERISA Affiliate to make a required installment
or any other required payment under Section 412 of the Code on or before the due date for such
installment or payment;




          (q) Within three (3) Business Days after any Obligated Party knows or has reason to know that
any of the following events has or will occur, and within fifteen (15) Business Days after any
ERISA Affiliate knows or has reason to know that any of the following events has or will occur:
(i) a Multi-employer Plan has been or will be terminated; (ii) the administrator or plan sponsor of
a Multi-employer Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has instituted
or will institute proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan.



Each notice given under this Section shall describe the subject matter thereof in reasonable
detail, and shall set forth the action that the Obligated Parties, their Subsidiaries, or any ERISA
Affiliate, as applicable, has taken or proposes to take with respect thereto.




ARTICLE 6

GENERAL WARRANTIES AND REPRESENTATIONS




     The Obligated Parties warrant and represent to the Agent, the Lenders, and the Bank that
except as hereafter disclosed to and accepted by the Agent and the Required Lenders in writing:



     6.1 Authorization, Validity, and Enforceability. Each Obligated Party has the power
and authority to execute, deliver, and perform this Agreement and the other Loan Documents to which
it is a party, to incur the Obligations, and to grant to the Agent, for the benefit of the Lenders,
Liens upon and security interests in the Collateral. Each Obligated Party has taken all necessary
action (including without limitation, obtaining approval of its stockholders if necessary) to
authorize its execution, delivery, and performance of this Agreement and the other Loan Documents
to which it is a party. This Agreement and the other Loan Documents to which each Obligated Party
is a party have been duly executed and delivered by such Obligated Party and constitute the legal,
valid, and binding obligations of such Obligated Party enforceable against it in accordance with
their respective terms. Each Obligated Party’s execution, delivery, and performance of this
Agreement and the other Loan Documents to which it is a party do not and will not conflict with,
constitute a violation or breach of, or result in the imposition of any Lien upon the property of
such Obligated Party or any of its Subsidiaries by reason of the terms of: (a) any contract,
mortgage, lease, agreement, indenture, or instrument to which such Obligated Party is a party or
that is binding upon it; (b) any Requirement of Law applicable to such Obligated Party or any of
its Subsidiaries; or (c) the certificate or articles of incorporation



29









 







or by-laws or the limited liability company or limited partnership agreement of such Obligated
Party or any of its Subsidiaries, as applicable.



     6.2 Validity and Priority of Security Interest. The provisions of the Loan Documents
create legal and valid Liens on all the Collateral in favor of the Agent, for the ratable benefit
of the Agent and the Lenders. Such Liens constitute perfected and continuing Liens on all the
Collateral, having priority over all other Liens on the Collateral, except for those Liens
identified in clauses (c), (d), (e), and (f) of the definition of
“Permitted Liens”. Such Liens secure all the Obligations, and are enforceable against the
Obligated Parties and all third parties.



     6.3 Organization and Qualification. Each Obligated Party: (a) is duly organized or
incorporated and validly existing and in good standing under the laws of the state of its
organization or incorporation; (b) is qualified to do business and is in good standing in the
jurisdictions set forth on Schedule 6.3, which are the only jurisdictions in which
qualification is necessary in order for it to own or lease its property and conduct its business;
and (c) has all requisite power and authority to conduct its business and to own its property.



     6.4 Corporate Name; Prior Transactions. Other than as set forth on Schedule
6.4, no Obligated Party has, during the past five (5) years, been known by or used any
corporate, organizational, or fictitious name, or been a party to any merger or consolidation
(other than any Unrestricted Merger and Acquisition entered into after the Closing Date), acquired
all or substantially all of the assets of any Person, or acquired any of its property outside of
the ordinary course of business.



     6.5 Subsidiaries. Schedule 6.5 is a correct and complete list of the name of
Holdings and all of Holdings’ Subsidiaries and a description of their relationship to Holdings.
Holdings and each Obligated Party is: (a) duly incorporated or organized and validly existing in
good standing under the laws of its state of incorporation or organization set forth on
Schedule 6.5; and (b) qualified to do business and in good standing in each jurisdiction in
which the failure to so qualify or be in good standing could reasonably be expected to have a
material adverse effect on any such Person’s business, operations, prospects, property, or
condition (financial or otherwise); and (c) has all requisite power and authority to conduct its
business and own its property.



     6.6 Financial Statements and Projections.



          (a) The Obligated Parties have delivered the following to the Agent: (i) the audited balance
sheet and related statements of income, retained earnings, cash flows, and changes in stockholders
equity for the Borrower and its consolidated Subsidiaries as of December 31, 2005, and for the
Fiscal Year then-ended, accompanied by the report thereon of the Borrower’s independent certified
public accountants; and (ii) the unaudited balance sheet and related statements of income and cash
flows for the Borrower and its consolidated Subsidiaries as of September 30, 2006. Such financial
statements are attached hereto as Exhibit C. All such financial statements have been
prepared in accordance with GAAP and fairly present in all




30









 







material respects the financial position of the Borrower and its consolidated Subsidiaries as
at the dates thereof and their results of operations for the periods then-ended.




          (b) The Latest Projections when submitted to the Lenders as required herein represent the
Obligated Parties’ best estimate of the future financial performance of Holdings and its
Subsidiaries for the periods set forth therein. The Latest Projections have been prepared on the
basis of the assumptions set forth therein, which the Obligated Parties believe are fair and
reasonable in light of current and reasonably foreseeable business conditions at the time submitted
to the Lenders.




          (c) The pro forma balance sheet of the Obligated Parties as at December 31, 2006, attached
hereto as Exhibit C, fairly presents in all material respects the Obligated Parties’
financial condition as at such date after giving effect to the transactions contemplated by this
Agreement as if the closing of such transactions had occurred on such date and the Closing Date had
been such date, and has been prepared in accordance with GAAP.




     6.7 Capitalization. The authorized capital stock of each Obligated Party is as set
forth on Schedule 6.7. All of the Obligated Parties’ authorized stock is issued and
outstanding and held beneficially and of record by the stockholders and in the amounts set forth on
Schedule 6.7. All such outstanding shares of the Obligated Parties’ stock have been duly
authorized and validly issued, are fully paid and non-assessable, have been issued in compliance
with all applicable federal and state securities laws, and are not subject to any preemptive rights
or rights of first refusal created by statute, the charter documents of the Obligated Parties or
any agreement to which any Obligated Party is a party or by which it is bound.



     6.8 Solvency. Each Obligated Party is Solvent prior to and after giving effect to the
Borrowings to be made on the Closing Date and the issuance of the Letters of Credit to be issued on
the Closing Date, and shall remain Solvent during the term of this Agreement.



     6.9 Debt. After giving effect to the making of the Loans to be made on the Closing
Date, the Obligated Parties and their Subsidiaries have no Debt, except: (a) the Obligations; (b)
Subordinated Debt, including the Subordinated Term Loan Debt; (c) Guaranties permitted by
Section 7.12; and (d) other Debt described on Schedule 6.9 (as such Schedule may be
amended by delivery to the Agent from time to time of a revised schedule to reflect the incurrence
of Unrestricted Debt).



     6.10 Distributions. Since August 4, 2006, no Distribution has been declared, paid, or
made upon or in respect of any capital stock or other securities of any Obligated Party or any of
its Subsidiaries, except for Permitted Distributions made after the Closing Date.



     6.11 Real Estate; Leases. Schedule 6.11 sets forth a correct and complete
list of all Real Estate owned by the Obligated Parties and all Real Estate owned by any of their
Subsidiaries, all leases and subleases of real or personal property held by any Obligated Party as
lessee or sublessee (other than leases of personal property as to which such Obligated Party is
lessee or sublessee for which the value of such personal property in the aggregate is less than



31









 




$250,000), and all leases and subleases of real or personal property held by the Obligated
Parties as lessor, or sublessor. Each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and no default by any party to any such
lease or sublease exists. Each Obligated Party has good and marketable title in fee simple to the
Real Estate identified on Schedule 6.11 as “owned” by such Obligated Party, or valid
leasehold interests in all Real Estate designated therein as “leased” by such Obligated Party and
each Obligated Party has good, indefeasible, and merchantable title to all of its other property
reflected on the Financial Statements as of September 30, 2006, delivered to the Agent and the
Lenders, except as disposed of in the ordinary course of business since the date thereof, free of
all Liens except Permitted Liens.




     6.12 Proprietary Rights. Schedule 6.12 sets forth a correct and complete list
of all of the Obligated Parties’ Proprietary Rights. None of the Proprietary Rights is subject to
any licensing agreement or similar arrangement except as set forth on Schedule 6.12. To
the best of the Obligated Parties’ knowledge, none of the Proprietary Rights infringes on or
conflicts with any other Person’s property, and no other Person’s property infringes on or
conflicts with the Proprietary Rights. The Proprietary Rights described on Schedule 6.12
constitute all of the property of such type necessary to the current and anticipated future conduct
of the Obligated Parties’ business.



     6.13 Trade Names. All trade names or styles under which Obligated Parties or any of
their Subsidiaries will sell Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, are listed on Schedule 6.13.



     6.14 Litigation. Except as set forth on Schedule 6.14, there is no pending,
or to the best of the Obligated Parties’ knowledge threatened, action, suit, proceeding, or
counterclaim by any Person, or to the best of the Obligated Parties’ knowledge, investigation by
any Governmental Authority, or any basis for any of the foregoing, that could reasonably be
expected to have a Material Adverse Effect.



     6.15 Labor Disputes. Except as set forth on Schedule 6.15: (a) there is no
collective bargaining agreement or other labor contract covering employees of any Obligated Party
or any of its Subsidiaries; (b) no such collective bargaining agreement or other labor contract is
scheduled to expire during the term of this Agreement; (c) no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of employees of any
Obligated Party or any of its Subsidiaries or for any similar purpose; and (d) there is no pending
or (to the best of the Obligated Parties’ knowledge) threatened, strike, work stoppage, material
unfair labor practice claim, or other material labor dispute against or affecting any Obligated
Party or any of its Subsidiaries or their respective employees.



     6.16 Environmental Laws. Except as otherwise disclosed on Schedule 6.16.:



          (a) Except as could not reasonably be expected to result in a Material Adverse Effect, each
Obligated Party and its Subsidiaries have complied in all material respects with all Environmental
Laws and neither any Obligated Party nor any of its Subsidiaries nor any of their




32









 







presently owned or leased real property or presently conducted operations, nor their
previously owned real property or prior operations, are subject to any enforcement order from or
liability agreement with any Governmental Authority or private Person respecting: (i) compliance
with any Environmental Law; or (ii) any potential liabilities and costs or remedial action arising
from the Release or threatened Release of a Contaminant.




          (b) Except as could not reasonably be expected to result in a Material Adverse Effect, each
Obligated Party and its Subsidiaries have obtained all permits necessary for their current
operations under Environmental Laws, and all such permits are in good standing and each Obligated
Party and its Subsidiaries are in compliance with all material terms and conditions of such
permits.




          (c) Except as could not reasonably be expected to result in a Material Adverse Effect, neither
any Obligated Party nor any of its Subsidiaries, nor, to the best of the Obligated Parties’
knowledge, any of their predecessors in interest, has stored, treated or disposed of any hazardous
waste in violation of applicable law.




          (d) Except as could not reasonably be expected to result in a Material Adverse Effect, neither
any Obligated Party nor any of its Subsidiaries has received any unresolved summons, complaint,
order or similar written notice indicating that it is not currently in compliance with, or that any
Governmental Authority is investigating its compliance with, any Environmental Laws or that it is
or may be liable to any other Person as a result of a Release or threatened Release of a
Contaminant.




          (e) None of the present or past operations of the Obligated Parties and their Subsidiaries is
the subject of any investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a Contaminant, except where any
such Release or the determination that such remedial action is needed in could not reasonably be
expected to result in a Material Adverse Effect.




          (f) There is not now, nor to the best of the Obligated Parties’ knowledge has there ever been,
on or in the Real Estate:





          (i) any underground storage tanks or surface impoundments;




          (ii) any asbestos-containing material;




          (iii) any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical
transformers or other equipment;




          (iv) any Release in concentrations or amounts likely to give rise to liability under
any Environmental Law, except as could not reasonably be expected to result in a Material
Adverse Effect.



          (g) Except as could not reasonably be expected to result in a Material Adverse Effect, neither
any Obligated Party nor any of its Subsidiaries has filed any notice under any




33









 







requirement of Environmental Law reporting a spill or accidental and unpermitted Release or
discharge of a Contaminant into the environment.




          (h) Neither any Obligated Party nor any of its Subsidiaries has entered into any negotiations
or settlement agreements with any Person (including the prior owner of any of its property)
imposing obligations or liabilities on any Obligated Party or any of its Subsidiaries with respect
to any remedial action in response to the Release of a Contaminant or environmentally related
claim, except where the failure to comply with such obligations or liabilities could not reasonably
be expected to result in a Material Adverse Effect.




          (i) No Environmental Lien has attached to the Real Estate.




     6.17 No Violation of Law. Neither any Obligated Party nor any of its Subsidiaries is
in violation of any law, statute, regulation, ordinance, judgment, order, or decree applicable to
it, which violation could reasonably be expected to have a Material Adverse Effect. To the extent
applicable to any Obligated Party or any of its Subsidiaries, each Obligated Party and its
Subsidiaries and their respective principal executive officers and principal financial officers
(and any individuals performing similar functions) are in compliance with any certification
requirements of the Sarbanes-Oxley Act.



     6.18 No Default. Neither any Obligated Party nor of any of its Subsidiaries is in
default with respect to any note, indenture, loan agreement, mortgage, lease, deed, or other
agreement to which it is a party or by which it is bound, which default could reasonably be
expected to have a Material Adverse Effect.



     6.19 ERISA Compliance. Except as specifically disclosed on Schedule 6.19:



          (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from the IRS and, to the
best knowledge of the Obligated Parties, nothing has occurred that would cause the loss of such
qualification. Each Obligated Party and each ERISA Affiliate has made all required contributions
to any 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 Obligated Parties, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that
has resulted or could reasonably be expected to result in 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 any Obligated Party nor




34









 







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 any Obligated Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred that, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of
ERISA with respect to a Multi-employer Plan; and (v) neither any Obligated Party nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.




     6.20 Taxes. Each Obligated Party and its Subsidiaries have filed all federal and
other tax returns and reports required to be filed, and have paid all federal and other taxes,
assessments, fees and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable unless such unpaid taxes and assessments would
constitute a Permitted Lien.



     6.21 Regulated Entities. None of Obligated Parties, any Person controlling any
Obligated Party, or any of their Subsidiaries, is an “Investment Company” within the meaning of the
Investment Company Act of 1940. Neither any Obligated Party nor any of its Subsidiaries is subject
to regulation under the Federal Power Act, the Interstate Commerce Act, any state public utilities
code or law, or any other federal or state statute or regulation limiting its ability to incur
indebtedness.



     6.22 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be used
solely to repay existing indebtedness and for working capital and other corporate purposes to the
extent not prohibited by the organizational documents of the Borrower, this Agreement or any other
Loan Document. Neither any Obligated Party nor any of its Subsidiaries is engaged in the business
of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.



     6.23 Copyrights, Patents, Trademarks and Licenses, etc. The Obligated Parties own or
are licensed or otherwise have the right to use all of the patents, trademarks, service marks,
trade names, copyrights, contractual franchises, licenses, rights of way, authorizations and other
rights that are reasonably necessary for the operation of their businesses, without conflict with
the rights of any other Person. To the best knowledge of the Obligated Parties, no slogan or other
advertising device, product, process, method, substance, part or other material now employed, or
now contemplated to be employed, by any Obligated Party or any of its Subsidiaries infringes upon
any rights held by any other Person. No claim or litigation regarding any of the foregoing is
pending or threatened, and no patent, invention, device, application, principle or any statute,
law, rule, regulation, standard or code is pending or, to the knowledge of the Obligated Parties,
proposed, that, in either case, could reasonably be expected to have a Material Adverse Effect.



     6.24 No Material Adverse Effect. No Material Adverse Effect has occurred since August
30, 2006.



35









 





     6.25 Full Disclosure. None of the representations or warranties made by any Obligated
Party or any of its Subsidiaries in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of any Obligated Party or any of its
Subsidiaries in connection with the Loan Documents (including any offering and disclosure materials
delivered by or on behalf of any Obligated Party or any of its Subsidiaries to the Agent prior to
the Closing Date), contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made or delivered.



     6.26 Material Agreements. All agreements, contracts, and leases for the purchase,
sale, storage or shipment of Petroleum Product or Inventory (including any terminal leases) to
which any Obligated Party or any of its Subsidiaries (in each case, other than an Immaterial
Company) is a party or is bound and that involve greater than $5,000,000 in obligations and are for
greater than 90 day terms are set forth on Schedule 6.26 (as such Schedule may be amended
by delivery to the Agent from time to time of a revised schedule together with the certificate
required to be delivered pursuant to Section 5.2(a)).



     6.27 Bank Accounts. Schedule 6.27 contains a complete and accurate list as of
the Closing Date of all bank accounts maintained by the Obligated Parties with any bank or other
financial institution.



     6.28 Governmental Authorization. No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any Governmental Authority or other Person is
necessary or required in connection with the execution, delivery or performance by, or enforcement
against, the Obligated Parties or any of their Subsidiaries of this Agreement or any other Loan
Document.



     6.29 First Purchaser Liens. None of the Petroleum Product owned or purchased by the
Obligated Parties is subject to a First Purchaser Lien except as the Obligated Parties may have
previously notified the Agent in accordance with Section 5.3(k).



     6.30 Richmond Pier. The Obligated Parties do not use the pier and dock facilities
located offshore of the Richmond Pier for any use other than the shipment and receipt of Petroleum
Product. The Obligated Parties do not store any Petroleum Product at such pier or dock facilities.



ARTICLE 7

AFFIRMATIVE AND NEGATIVE COVENANTS




     The Obligated Parties covenant to the Agent, the Bank, and each Lender that so long as any of
the Obligations remain outstanding or this Agreement is in effect:



     7.1 Taxes and Other Obligations. Each Obligated Party shall, and shall cause each of
its Subsidiaries to: (a) file when due all tax returns and other reports that it is required to
file;



36









 




(b) pay or provide for the payment, when due, of all taxes, fees, assessments, and other
governmental charges against it or upon its property, income, and franchises, make all required
withholding and other tax deposits, and establish adequate reserves for the payment of all such
items, and provide to the Agent and the Lenders, upon request, satisfactory evidence of its timely
compliance with the foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors, and other like Persons, and
all other indebtedness owed by it and perform and discharge in a timely manner all other
obligations undertaken by it; provided, however, that neither the Obligated Parties nor any of
their Subsidiaries need pay any claims or indebtedness, tax, fee, assessment, or governmental
charge: (i) that is being contesting in good faith by appropriate proceedings diligently pursued;
(ii) as to which the applicable Obligated Party or Subsidiary, as the case may be, has established
proper reserves as required under GAAP; (iii) the nonpayment of which does not result in the
imposition of a Lien (other than a Permitted Lien); (iv) does not consist of Obligations; and (v)
in the case of claims and indebtedness, so long as the aggregate amount of such claims and
indebtedness does not exceed Three Million Dollars ($3,000,000).




     7.2 Legal Existence and Good Standing. Each Obligated Party shall, and shall cause
each of its Subsidiaries to, maintain its legal existence and its qualification and good standing
in all jurisdictions in which the failure to maintain such existence and qualification or good
standing could reasonably be expected to have a Material Adverse Effect.



     7.3 Compliance with Law and Agreements; Maintenance of Licenses. Each Obligated Party
(other than any Immaterial Company) shall comply, and shall cause each of its Subsidiaries (other
than any Immaterial Company) to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business (including the Federal Fair
Labor Standards Act, all Environmental Laws, and, to the extent applicable to such Obligated Party
or its Subsidiaries, the Sarbanes-Oxley Act). Each Obligated Party (other than any Immaterial
Company) shall, and shall cause each of its Subsidiaries (other than any Immaterial Company) to,
obtain and maintain all licenses, permits, franchises, and governmental authorizations necessary to
own its property and to conduct its business as conducted on the Closing Date. No Obligated Party
shall modify, amend, or alter its certificate or articles of incorporation, as applicable, or its
Bylaws or operating agreement, other than in a manner that does not adversely affect the rights of
the Lenders or the Agent and, in such event, only after giving written notice of the proposed
change to the Agent. To the extent applicable to the Obligated Parties, the Obligated Parties
shall cause their principal executive officers and principal financial officers (or other
individuals performing similar functions) to comply with all provisions of the Sarbanes-Oxley Act.



     7.4 Maintenance of Property; Inspection of Property.



          (a) Each Obligated Party (other than any Immaterial Company) shall, and shall cause each of
its Subsidiaries (other than any Immaterial Company) to, maintain all of its property (including
its leased properties) necessary and useful in the conduct of its business in good operating
condition and repair, ordinary wear and tear excepted.




37









 








          (b) Each Obligated Party shall permit representatives and independent contractors of the Agent
to visit and inspect any of the Obligated Parties’ 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 during
normal business hours, and the Obligated Parties shall provide at their own cost and expense any
assistance reasonably requested by the Agent’s representatives and independent contractors in
connection with such examinations, subject to the following:





          (i) If no Event of Default has occurred and is continuing: (x) the Agent shall provide
the Borrower with reasonable advance notice of any such examination; and (y) subject to
clause (ii) below, the Agent shall not conduct more than one (1) such examination in
any year so long as Average Monthly Availability was greater than $100,000,000 at all times
during the previous twelve consecutive month period, and not more than two (2) such
examinations per year if Average Monthly Availability was less than $100,000,000 at any
times during the previous twelve consecutive month period; and




          (ii) If an Event of Default has occurred and is continuing: (x) Agent shall not be
required to provide advance notice of any such examination to the Borrower or any other
Obligated Party or conduct any such examination during normal business hours; (y) any such
examination commenced at any time during which an Event of Default has occurred and is
continuing shall not be counted as one of the examinations described in clause (i)
above (even if the Event of Default ceases to be continuing during the course of such
examination), and (z) any costs incurred by the Agent in connection with such examinations
shall be paid in full by the Obligated Parties (which cost reimbursement shall apply even if
the Event of Default ceases to be continuing during the course of an examination).



     7.5 Insurance.



          (a) Each Obligated Party shall maintain insurance with respect to the Collateral, covering
casualty, hazard, public liability, theft, malicious mischief, flood and other risks, in amounts
that are normal and customary for companies with similar industry risks, with endorsements and with
insurers (with a Best Rating of at least A7 or equivalent, unless otherwise approved by the Agent)
satisfactory to the Agent. All proceeds under each property damage or casualty policy and all
business interruption proceeds shall, subject to the CS Intercreditor Agreement, be paid to the
Agent (it being understood and agreed that instruments of payment issued by any insurer may be made
payable jointly to the Agent and the Borrower). From time to time upon request, the Obligated
Parties shall deliver to the Agent copies of its insurance policies and updated flood plain
searches. Unless the Agent agrees otherwise, each policy shall include satisfactory endorsements
(i) showing the Agent as loss payee or additional insured, as appropriate; (ii) requiring 30 days
prior written notice to the Agent in the event of cancellation of the policy for any reason other
than non-payment of premiums, and 10 days notice for cancellation due to non-payment; and (iii)
specifying that the interest of the Agent shall not be impaired or invalidated by any act or
neglect of any Obligated Party or the owner of any Real




38









 







Estate, nor by the occupation of the premises for purposes more hazardous than are permitted
by the policy. Without limiting the foregoing, in the event that any portion of the Real Estate is
determined to be located within an area that has been identified by the Director of the Federal
Emergency Management Agency as a Special Flood Hazard Area (“SFHA”), the Obligated Parties shall
purchase and maintain flood insurance on the Real Estate and any Equipment and Inventory located on
the Real Estate. The amount of said flood insurance will be reasonably determined by the Agent,
and shall, at a minimum, comply with applicable federal regulations as required by the Flood
Disaster Protection Act of 1973, as amended. The Obligated Parties shall also maintain flood
insurance for its Inventory and Equipment that is, at any time, located in a SFHA.




          (b) If any Obligated Party fails to provide and pay for any insurance, the Agent may, at its
option, but shall not be required to, procure the insurance and charge the Loan Account therefor.
The Agent will endeavor to provide the Borrower with concurrent notice of any such procurement of
insurance, but the failure to provide any such notice shall not result in any liability on the part
of the Agent or the Lenders and shall not otherwise affect any such insurance sop procured. Each
Obligated Party agrees to deliver to the Agent, promptly as rendered, copies of all reports made to
insurance companies. While no Event of Default is continuing, the Obligated Parties may settle,
adjust or compromise any insurance claim, as long as the proceeds are delivered to the Agent. If
an Event of Default has occurred and is continuing, only the Agent shall be authorized to settle,
adjust and compromise such claims.




          (c) Subject to the CS Intercreditor Agreement, any proceeds of any property damage or casualty
insurance and business interruption insurance and any awards arising from condemnation of any
Collateral shall be paid to the Agent; provided, however, that, so long as any amounts guarantied
pursuant to the CS Guarantee and Collateral Agreement are outstanding, CS may also be listed as an
insured or loss payee in accordance with the CS Intercreditor Agreement.




     7.6 Insurance and Condemnation Proceeds. The Obligated Parties shall promptly notify
the Agent of any loss, damage, or destruction to the Collateral in an aggregate amount in excess of
$1,000,000 in any year, whether or not covered by insurance. The Agent is hereby authorized to
collect all property damage and casualty insurance, business interruption insurance, and
condemnation proceeds in respect of Collateral directly and to apply or remit them as follows:



          (a) With respect to insurance and condemnation proceeds not relating to Collateral that serves
as first priority collateral for CS in accordance with the CS Intercreditor Agreement, after
deducting from such proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds, ratably, to the reduction of
the Obligations in the order provided for in Section 3.7.




          (b) With respect to insurance and condemnation proceeds relating to any Collateral that serves
as first priority collateral for CS in accordance with the CS Intercreditor Agreement, the Agent
shall: (i) only so long as any amounts guarantied pursuant to the CS





39









 




Guarantee and Collateral Agreement are outstanding, permit the Obligated Parties to use
such proceeds in accordance with the CS Guarantee and Collateral Agreement; and (ii) if the amounts
guarantied pursuant to the CS Guarantee and Collateral Agreement have been paid in full (whether by
application of insurance and/or condemnation proceeds pursuant to the immediately preceding
clause (i) or otherwise), permit or require the Obligated Parties to use such proceeds, or
any part thereof, to replace, repair, restore, or rebuild any such Collateral consisting of Fixed
Assets in a diligent and expeditious manner with materials and workmanship of substantially the
same quality as existed before the loss, damage, or destruction so long as: (x) no Default or
Event of Default has occurred and is continuing; (y) the aggregate proceeds do not exceed
$5,000,000, and (iii) the Obligated Parties first: (x) provide the Agent and the Required Lenders
with plans and specifications for any such repair or restoration in form and substance reasonably
satisfactory to the Agent and the Required Lenders; and (y) demonstrate to the reasonable
satisfaction of the Agent and the Required Lenders that the funds available to the Obligated
Parties will be sufficient to complete such project in the manner provided therein. In all other
circumstances, the Agent shall apply such insurance and condemnation proceeds, ratably, to the
reduction of the Obligations in the order provided for in Section 3.7.




     7.7 Environmental Laws.



          (a) Each Obligated Party shall, and shall cause each of its Subsidiaries to, conduct its
business in material compliance with all Environmental Laws applicable to it, including those
relating to the generation, handling, use, storage, and disposal of any Contaminant. Each
Obligated Party shall, and shall cause each of its Subsidiaries to, take prompt and appropriate
action to respond to any material non-compliance with Environmental Laws and shall regularly report
to the Agent on such response.




          (b) Without limiting the generality of the foregoing, the Obligated Parties shall submit to
the Agent and the Lenders (i) annually on each Anniversary Date, an update of the status of each
such environmental material non-compliance or liability issue, and (ii) within 5 Business Days
after receipt thereof, a copy of any environmental audits or reports delivered or deliverable to CS
that relate to the Collateral. The Agent may request copies of technical reports prepared by the
Obligated Parties and their communications with any Governmental Authority to determine whether the
Obligated Parties or any of their Subsidiaries are proceeding reasonably to correct, cure, or
contest in good faith any alleged non-compliance or environmental liability. If requested by the
Agent following an alleged material non-compliance with Environmental Laws, or upon the Agent
having a reasonable belief that any such material non-compliance with Environmental Laws may exist,
the Obligated Parties shall, at the Agent’s request and at the Obligated Parties’ expense: (1)
retain an independent environmental engineer acceptable to the Agent to evaluate the site,
including tests if appropriate, where the material non-compliance or alleged material
non-compliance with Environmental Laws has occurred and prepare and deliver to the Agent, in
sufficient quantity for distribution by the Agent to the Lenders, a report setting forth the
results of such evaluation, a proposed plan for responding to any environmental problems described
therein, and an estimate of the costs thereof; and (2) provide to the Agent a supplemental report
of such engineer whenever the scope of the environmental problems, or the response thereto or the
estimated costs thereof, shall increase in any material respect.




40









 





          (c) At any time during the continuance of an Event of Default, and at any other time during
which the Obligated Parties have not complied with the requirements of clause (b) above,
the Agent and its representatives will have the right at any reasonable time to enter and visit the
Real Estate and any other place where any property of the Obligated Parties is located for the
purposes of observing the Real Estate, taking and removing soil or groundwater samples, and
conducting tests on any part of the Real Estate, all at the Obligated Parties’ expense. The Agent
is under no duty, however, to visit or observe the Real Estate or to conduct tests, and any such
acts by the Agent will be solely for the purposes of protecting the Agent’s Liens and preserving
the Agent and the Lenders’ rights under the Loan Documents. No site visit, observation, or testing
by the Agent and the Lenders will result in a waiver of any default of the Obligated Parties or
impose any liability on the Agent or the Lenders. In no event will any site visit, observation, or
testing by the Agent be a representation that hazardous substances are or are not present in, on,
or under the Real Estate, or that there has been or will be compliance with any Environmental Law.
Neither any Obligated Party nor any of its Subsidiaries nor any other party is entitled to rely on
any site visit, observation, or testing by the Agent. The Agent and the Lenders owe no duty of
care to protect the Obligated Parties or any other party against, or to inform the Obligated
Parties or any other party of, any Hazardous Substances or any other adverse condition affecting
the Real Estate. The Agent may in its discretion disclose to the Obligated Parties or to any other
party if so required by law any report or findings made as a result of, or in connection with, any
site visit, observation, or testing by the Agent. The Obligated Parties understand and agree that
the Agent makes no warranty or representation to the Obligated Parties or any other party regarding
the truth, accuracy, or completeness of any such report or findings that may be disclosed. The
Obligated Parties also understand that depending on the results of any site visit, observation, or
testing by the Agent and disclosed to the Obligated Parties, the Obligated Parties may have a legal
obligation to notify one or more environmental agencies of the results. The Obligated Parties also
understand that such reporting requirements are site-specific and are to be evaluated by the
Obligated Parties without advice or assistance from the Agent. In each instance, the Agent will
give the Obligated Parties reasonable notice before entering the Real Estate or any other place the
Agent is permitted to enter under this Section 7.7(c). The Agent will make reasonable
efforts to avoid interfering with the Obligated Parties’ use of the Real Estate or any other
property in exercising any rights provided hereunder and will repair any damage to the Real Estate
or any other property of the Obligated Parties caused by the Agent in exercising any rights,
ordinary wear and tear excepted.




     7.8 Compliance with ERISA. Each Obligated Party shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan that
is qualified under Section 401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to any Plan; and (e)
not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.



     7.9 Mergers, Consolidations or Sales. Neither any Obligated Party nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization, or consolidation, or, with
respect to any Obligated Party, change its status as of the Closing Date from that of a corporation



41









 







or limited liability company, to another type of entity, or transfer, sell, assign, lease, or
otherwise dispose of all or any part of its property, or wind up, liquidate or dissolve, or agree
to do any of the foregoing, except: (a) sales of Inventory in the ordinary course of its business;
(b) Unrestricted Mergers and Acquisitions; (c) sales or other dispositions of Equipment in the
ordinary course of business that are obsolete or no longer useable by the Obligated Parties in
their business with an orderly liquidation value not to exceed $250,000 in any Fiscal Year.
Subject to the rights granted to CS and the CS Intercreditor Agreement, within thirty (30) days
following each such Equipment sale or disposition described in clause (c) above, the
Obligated Parties shall either (i) apply such proceeds to the Loans in accordance with Section
3.7, or (ii) reinvest the proceeds of that sale or disposition in other Equipment, such
Equipment to be free and clear of all Liens, except the Agent’s Liens; and (d) Unrestricted Sales.



     7.10 Distributions; Capital Change; Restricted Investments. Neither any Obligated
Party nor any of its Subsidiaries shall: (a) make any change in its capital structure that could
have a Material Adverse Effect; (b) make any Restricted Investment; or (c) directly or indirectly
declare or make, or incur any liability to make, any Distribution, except Permitted Distributions,
it being agreed and understood that if any Obligated Party or any of its Subsidiaries makes a
Distribution believed to be a Permitted Distribution when made, but later determined to have been
impermissible as of such date, such Obligated Party shall cause the return to it or its Subsidiary,
as applicable, of such amount of the Distribution so that the balance of the Distribution would
have been a Permitted Distribution when made. The foregoing adjustment shall occur no later than
fifteen (15) days of the earlier to occur of (i) written notice by the Agent to the Borrower that
such Distribution was impermissibly made, or (i) the date upon which the Borrower knows or should
have known that such Distribution was impermissibly made.



     7.11 Transactions Affecting Collateral or Obligations. Neither any Obligated Party
nor any of its Subsidiaries shall enter into any transaction that would be reasonably expected to
have a Material Adverse Effect.



     7.12 Guaranties. Neither any Obligated Party nor any of its Subsidiaries shall make,
issue, or become liable on any Guaranty, except: (i) Guaranties of the Obligations in favor of the
Agent; (ii) the CS Guarantee and Collateral Agreement; and (iii) Guaranties of Unrestricted Debt,
Unrestricted Sales & Leasebacks, Unrestricted Mergers and Acquisitions, and Debt described on
Schedule 6.9.



     7.13 Debt. Neither any Obligated Party nor any of its Subsidiaries shall incur or
maintain any Debt, other than: (a) the Obligations; (b) Subordinated Debt, including the
Subordinated Term Loan Debt; (c) Debt described on Schedule 6.9 (as such Schedule may be
amended by delivery to the Agent from time to time of a revised schedule to reflect the incurrence
of Unrestricted Debt); (d) Unrestricted Debt to the extent described on Schedule 6.9 (as
such Schedule may be amended by delivery to the Agent from time to time); (e) Capital Leases of
Equipment and purchase money secured Debt incurred to purchase Equipment; provided that: (i) Liens
securing the same attach only to the Equipment acquired by the incurrence of such Debt; and (ii)
the aggregate amount of such Debt (including Capital Leases) outstanding does not exceed Five
Hundred Thousand Dollars ($500,000) at any time; (f) Debt



42









 







evidencing a refunding, refinancing, replacement, renewal, or extension of the Debt described
on Schedule 6.9 (as such Schedule may be amended by delivery to the Agent from time to time
of a revised schedule to reflect the incurrence of Unrestricted Debt); provided that: (i) the
principal amount thereof is not increased; (ii) the Liens, if any, securing such refunded,
refinanced, replaced, renewed, or extended Debt do not attach to any assets in addition to those
assets, if any, securing the Debt to be refunded, refinanced, replaced, renewed, or extended; (iii)
no Person that is not an obligor or guarantor of such Debt as of the Closing Date shall become an
obligor or guarantor thereof; and (iv) the terms of such refunding, refinancing, replacement,
renewal, or extension are no less favorable to the Obligated Parties, the Agent, or the Lenders
than the original Debt; and (g) Debt permitted pursuant to Section 7.12.



     7.14 Prepayment. Neither any Obligated Party nor any of its Subsidiaries shall make
any payments on any Debt, other than regularly scheduled payments of principal and interest that
are due and payable and made in the ordinary course of business, except that (a) the Obligations
shall be paid and prepaid in accordance with the terms of this Agreement, (b) so long as no Low
Availability Period is in effect or would result from the making of such prepayment, the Obligated
Parties may make prepayments under the CS Guarantee and Collateral Agreement in accordance with the
CS Intercreditor Agreement, Permitted Subordinated Debt Payments, and prepayments of any
Unrestricted Debt, and (c) the Obligated Parties may make prepayments under the CS Guarantee and
Collateral Agreement out of the proceeds (including insurance proceeds) of any Collateral that
serves as first priority collateral for CS in accordance with the CS Intercreditor Agreement.



     7.15 Transactions with Affiliates. Except as set forth below, neither any Obligated
Party nor any of its Subsidiaries shall, sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including, but not limited to,
any fees or expenses for management services), to any Affiliate, or lend or advance money or
property to any Affiliate, or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any property, of any Affiliate, or become liable on any
Guaranty of the indebtedness, dividends, or other obligations of any Affiliate (other than any
Guaranty permitted by Section 7.12). Notwithstanding the foregoing, while no Event of
Default has occurred and is continuing, the Obligated Parties and their Subsidiaries may (a) engage
in transactions with Affiliates in the ordinary course of business consistent with past practices,
in amounts and upon terms fully disclosed to the Agent and the Lenders, and no less favorable to
the Obligated Parties and their Subsidiaries than would be obtained in comparable arm’s-length
transactions with a third party who is not an Affiliate, and (b) make (i) Unrestricted
Distributions, (ii) Permitted Subordinated Debt Payments, and (iii) Permitted Affiliate Property
Transfers.



     7.16 Investment Banking and Finder’s Fees. Neither any Obligated Party nor any of its
Subsidiaries shall pay or agree to pay, or reimburse any other party (other than the Bank, the
Agent, or the Lenders) with respect to, any investment banking or similar or related fee,
underwriter’s fee, finder’s fee, or broker’s fee to any Person in connection with this Agreement,
except for any such fees expressly provided for in this Agreement or the Fee Letter. The Obligated
Parties shall defend and indemnify the Indemnified Parties against and hold them



43









 







harmless from all claims of any Person that the Obligated Parties are obligated to pay for any
such fees, and all costs and expenses (including attorneys’ fees) incurred by the Indemnified
Parties in connection therewith.



     7.17 Business Conducted. The Obligated Parties shall not and shall not permit any of
their respective Subsidiaries to engage, directly or indirectly, in any line of business other than
the businesses in which the Obligated Parties or each respective Subsidiary was engaged on the
Closing Date, and any business reasonably related, ancillary, or complementary to such business as
conducted on the Closing Date.



     7.18 Liens. Neither any Obligated Party nor any of its Subsidiaries shall create,
incur, assume, or permit to exist any Lien on any property now owned or hereafter acquired by any
of them, except Permitted Liens, and Liens, if any, in effect as of the Closing Date described on
Schedule 7.18, securing Debt described on Schedule 6.9 and Liens securing Capital
Leases and purchase money Debt permitted by Section 7.13.



     7.19 Sale and Leaseback Transactions. Neither any Obligated Party nor any of its
Subsidiaries shall, directly or indirectly, enter into any arrangement with any Person providing
for such Obligated Party or such Subsidiary to lease or rent property that such Obligated Party or
such Subsidiary has sold or will sell or otherwise transfer to such Person, except for Unrestricted
Sale and Leasebacks.



     7.20 New Subsidiaries. No Obligated Party shall, directly or indirectly, organize,
create, acquire, or permit to exist any Subsidiary of such Obligated Party or of Holdings, in each
case, other than those listed on Schedule 6.5 (as such Schedule may be amended by delivery
to the Agent from time to time of a revised schedule to reflect the organization, creation,
acquisition, or existence of Subsidiaries in connection with Unrestricted Mergers and Acquisitions)
and unless, within 15 days after the organization, creation, or acquisition of any such Subsidiary,
the Obligated Parties, at the Obligated Parties’ expense:



          (a) furnish to the Agent and each Lender such information regarding the real and personal
property of such Subsidiary (and to the extent not previously provided to the Agent and the
Lenders, of each direct and indirect parent of such Subsidiary) as would have been required under
the Loan Documents had such Subsidiary existed as of the Closing Date;




          (b) cause such Subsidiary to become a party to this Agreement and the other Loan Documents as
an Obligated Party and to guaranty the payment and performance of the Obligations in a manner and
pursuant to documentation reasonably satisfactory to the Agent (including the execution and
delivery of such documents, instruments, agreements, and certificates as the Agent may reasonably
require);




          (c) cause such Subsidiary to take such other actions as the Agent may reasonably require to
evidence and perfect a first-priority Lien in favor of the Agent on all assets of such Person,
subject only to Permitted Liens (including the preparation and filing of Uniform Commercial Code
financing statements and delivery of all pledged equity interests in and of such




44









 




Person, and other instruments of the type specified in Section 15 of the Security Agreement),
securing payment of all the Obligations under the Loan Documents; in each case in a manner and
pursuant to documentation reasonably satisfactory to the Agent (including the execution and
delivery of such documents, instruments, and agreements as the Agent may reasonably require);




          (d) deliver to the Agent, upon the request of the Agent in its sole discretion, a signed copy
of a favorable opinion of counsel for the Obligated Parties and each such Subsidiary, addressed to
the Agent and the Lenders and addressing such matters as the Agent may reasonably request; and




          (e) upon request of the Agent, execute and deliver any and all further instruments and
documents and take all such other action as the Agent may reasonably deem necessary or desirable in
obtaining the full benefits of all such guaranties, security agreement supplements and other
security and pledge agreements, or in perfecting and preserving the Agent’s Liens, as applicable.



For the avoidance of doubt, no Accounts, Inventory, or other property of any Person joining this
Agreement pursuant to this Section 7.20 may be included in the Borrowing Base without the
prior written consent of the Agent, the Lenders, the Letter of Credit Issuer, and the Bank, such
consent to be given or withheld in each such Person’s sole discretion, and which consent may be
conditioned upon, among other things, the execution and delivery of such documents, instruments,
and agreements as the Agent may require and the receipt of satisfactory appraisals, audits and
field examinations of such Accounts, Inventory, and other property.




     7.21 Fiscal Year. Neither any Obligated Party nor any of its Subsidiaries may change
its Fiscal Year.



     7.22 Capital Expenditures. Neither any Obligated Party nor any of its Subsidiaries
shall make or incur any Capital Expenditure during any Low Availability Period if, after giving
effect thereto, the aggregate amount of all Capital Expenditures by the Obligated Parties and their
Subsidiaries on a consolidated basis would exceed $10,000,000 in the aggregate during any Fiscal
Year.



     7.23 Fixed Charge Coverage Ratio. The Obligated Parties will cause the Fixed Charge
Coverage Ratio to be greater than 1.1 to 1.0 at all times during each Low Availability Period.



     7.24 Use of Proceeds. The Borrower shall not, and shall not suffer or permit any
Obligated Party or any of their respective Subsidiaries to, use any portion of the Loan proceeds,
directly or indirectly: (a) to purchase or carry Margin Stock; (b) to repay or otherwise refinance
indebtedness of the Obligated Parties or others incurred to purchase or carry Margin Stock; (c) to
extend credit for the purpose of purchasing or carrying any Margin Stock; (d) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange Act; (e) to fund
any personal loan to or for the benefit of a director or executive officer of any Obligated Party
or for any purpose that, to the extent applicable to the Obligated Parties or any of their
respective



45









 







Subsidiaries, is prohibited by the Sarbanes-Oxley Act; or (f) for any purpose that is
prohibited by any Requirement of Law.



     7.25 Bank Products. Except as expressly provided herein or in another Loan Document,
the Obligated Parties are not required to obtain Bank Products from the Bank or the Bank’s
Affiliates; provided that the Obligated Parties hereby agree to negotiate in good faith with the
Agent and the Bank to maintain the Bank as the Obligated Parties’ principal depository bank,
including for the maintenance of operating, administrative, cash management, collection activity
and other deposit accounts for the conduct of the Obligated Parties’ business.



     7.26 Richmond Pier. The Obligated Parties shall use their best efforts to obtain, on
or before June 30, 2007, a consent and access agreement with respect to the Richmond Pier in form
and substance reasonably acceptable to the Agent; provided that the failure to timely obtain such
agreement shall not result in a Default or Event of Default, but shall entitle the Agent to
implement such reserves as the Agent may determine to be necessary or desirable from time to time
with respect to Inventory in transit to the pier and the dock facilities located offshore at the
Richmond Pier.



     7.27 Further Assurances. The Obligated Parties shall execute and deliver, or cause to
be executed and delivered, to the Agent and/or the Lenders such documents and agreements, including
Consent Agreements, Mortgages, amendments, and any title policies and/or endorsements relating to
any such Mortgage or amendment, and shall take or cause to be taken such actions, as the Agent or
any Lender may, from time to time, request to carry out the terms and conditions of this Agreement
and the other Loan Documents.



ARTICLE 8

CONDITIONS OF LENDING




     8.1 Conditions Precedent to Making of Loans on the Closing Date. The obligations of
the Lenders to make the Revolving Loans on or after the Closing Date, and the obligation of the
Agent to cause the Letter of Credit Issuer to issue a Letter of Credit on or after the Closing
Date, are subject to the following conditions precedent having been satisfied in a manner
satisfactory to the Agent and each Lender:



          (a) This Agreement and the other Loan Documents shall have been executed by each party thereto
and the Obligated Parties shall have performed and complied with all covenants, agreements and
conditions contained herein and the other Loan Documents that are required to be performed or
complied with by the Obligated Parties before or on the Closing Date.




          (b) All representations and warranties made hereunder and in the other Loan Documents shall be
true and correct as if made on such date.




          (c) No Default or Event of Default shall have occurred and be continuing after giving effect
to the Loans to be made and the Letters of Credit to be issued on the Closing Date.




46









 





          (d) The Agent and the Lenders shall have received such opinions of counsel for the Obligated
Parties, their Subsidiaries and any other obligors on the Obligations as the Agent or any Lender
shall request, each such opinion to be in a form, scope, and substance satisfactory to the Agent,
the Lenders, and their respective counsel.




          (e) The Agent shall have received:





          (i) acknowledgment copies of proper financing statements, duly filed on or before the
Closing Date under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the Agent’s Liens; and




          (ii) duly authorized UCC-3 Termination Statements and such other instruments, in form
and substance satisfactory to the Agent, as shall be necessary to terminate and satisfy all
Liens on the Property of the Obligated Parties, their Subsidiaries and all other Collateral
except Permitted Liens.



          (f) The Obligated Parties shall have paid all fees and expenses of the Agent and the Attorney
Costs incurred in connection with any of the Loan Documents and the transactions contemplated
thereby to the extent invoiced.




          (g) The Agent shall have received evidence, in form, scope, and substance, reasonably
satisfactory to the Agent, of all insurance coverage as required by this Agreement.




          (h) The Agent and the Lenders shall have had an opportunity, if they so choose, to examine the
books of account and other records and files of the Obligated Parties and to make copies thereof,
and to conduct a pre-closing audit that shall include without limitation, verification of
Inventory, Accounts, and the Borrowing Base, and the results of such examination and audit shall
have been satisfactory to the Agent and the Lenders in all respects.




          (i) All proceedings taken in connection with the execution of this Agreement, and all other
Loan Documents and all documents and papers relating thereto shall be satisfactory in form, scope,
and substance to the Agent and the Lenders.




          (j) The Agent shall have received a reaffirmation of each of the documents or instruments
executed in connection with the Original Credit Agreement or the Amended and Restated Credit
Agreement, or has received a replacement therefor, in either case, duly executed and delivered by
an authorized officer of each party thereto, and in form and substance satisfactory to the Agent.




          (k) The Agent shall have received an executed Revolving Loan Note from the Obligated Parties
for each of the Lenders to reflect their respective Commitments.




          (l) The Obligated Parties shall have delivered to the Agent an executed original of the Fee
Letter.




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          (m) Without limiting the generality of the items described above, the Obligated Parties shall
have delivered or caused to be delivered to the Agent (in form and substance reasonably
satisfactory to the Agent), the financial statements, instruments, resolutions, documents,
agreements, certificates, opinions and other items set forth herein and on the “Closing Checklist”
delivered by the Agent to the Borrower on and prior to the Closing Date, together with any other
documents or other items reasonably requested by the Agent or any Lender.




     The acceptance by the Borrower of any Loans made or Letters of Credit issued on or after the
Closing Date shall be deemed to be a representation and warranty made by the Obligated Parties to
the effect that all of the conditions precedent to the making of such Loans or the issuance of such
Letters of Credit have been satisfied, with the same effect as delivery to the Agent and the
Lenders of a certificate signed by a Responsible Officer, dated the Closing Date, to such effect.



     Execution and delivery to the Agent by a Lender of a counterpart of this Agreement shall be
deemed confirmation by such Lender that: (i) all conditions precedent in this Section 8.1
have been fulfilled to the satisfaction of such Lender; (ii) the decision of such Lender to execute
and deliver to the Agent an executed counterpart of this Agreement was made by such Lender
independently and without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 8.1; and (iii) all documents sent to such
Lender for approval consent, or satisfaction were acceptable to such Lender.



     8.2 Conditions Precedent to Each Loan. The obligation of the Lenders to make each
Loan, including the Revolving Loans on the Closing Date, and the obligation of the Agent to cause
the Letter of Credit Issuer to issue any Letter of Credit shall be subject to the further
conditions precedent that on and as of the date of any such extension of credit:



          (a) The following statements shall be true, and the acceptance by the Borrower of any
extension of credit shall be deemed to be a statement to the effect set forth in clauses
(i), (ii) and (iii) below with the same effect as the delivery to the Agent and
the Lenders of a certificate signed by a Responsible Officer, dated the date of such extension of
credit, stating that:





          (i) The representations and warranties contained in this Agreement and the other Loan
Documents are correct and complete in all material respects on and as of the date of such
extension of credit as though made on and as of such date, other than any such
representation or warranty that relates to a specified prior date (which representations and
warranties are correct and complete in all material respects as of such date) and except to
the extent the Agent and the Lenders have been notified in writing by the Borrower that any
representation or warranty is not correct and the Agent and the Required Lenders have
explicitly waived in writing compliance with such representation or warranty; and



48









 






          (ii) No event has occurred and is continuing, or would result from such extension of
credit, that constitutes (or would constitute) a Default or an Event of Default; and




          (iii) No event has occurred and is continuing, or would result from such extension of
credit, that has had (or would have) a Material Adverse Effect.



          (b) No such Borrowing shall cause Availability to be less than zero, provided, however, that
the foregoing conditions precedent are not conditions to each Lender participating in or
reimbursing the Bank or the Agent for such Lenders’ Pro Rata Share of any Non-Ratable Loan or Agent
Advance made in accordance with the provisions of Sections 1.2(h) and (i).




ARTICLE 9

DEFAULT; REMEDIES




     9.1 Events of Default. It shall constitute an event of default (“Event of Default”)
if any one or more of the following shall occur for any reason:



          (a) any failure by the Obligated Parties to pay the principal of or interest or premium on any
of the Obligations or any fee or other amount owing hereunder when due, whether upon demand or
otherwise;




          (b) any representation or warranty made or deemed made by the Obligated Parties in this
Agreement or by the Obligated Parties or any of their Affiliates or Subsidiaries in any of the
other Loan Documents, any Financial Statement, or any certificate furnished by the Obligated
Parties or any of their Affiliates or Subsidiaries at any time to the Agent or any Lender shall
prove to be untrue in any material respect as of the date on which made, deemed made, or furnished;




          (c) (i) any default shall occur in the observance or performance of any of the covenants and
agreements contained in Sections 5.2(k), 7.2, 7.5, 7.9 through
7.27 hereof, or Section 11 of the Security Agreement; (ii) any default shall occur in the
observance or performance of any of the covenants and agreements contained in Sections 5.2
(other than 5.2(k)) or 5.3 and such default shall continue for three (3) days or
more; or (iii) any default shall occur in the observance or performance of any of the other
covenants or agreements contained in any other Section of this Agreement or any other Loan
Document, any other Loan Documents, or any other agreement entered into at any time to which any
Obligated Party or any of its Subsidiaries and the Agent or any Lender are party (including in
respect of any Bank Products) and such default shall continue for fifteen (15) days or more;




          (d) any default shall occur with respect to any Debt (other than the Obligations) of any
Obligated Party or any of its Subsidiaries (in each case, other than an Immaterial Company) in an
outstanding principal amount that exceeds $3,000,000 in any single instance, or $5,000,000 in the
aggregate for all such defaults, or under any agreement or instrument under or pursuant to which
any such Debt may have been issued, created, assumed, or




49









 




guaranteed by any Obligated Party or any of its Subsidiaries, and such default shall continue
for more than the period of grace, if any, therein specified, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is to accelerate, or to permit the
holders of any such Debt to accelerate, the maturity of any such Debt; or any such Debt shall be
declared due and payable or be required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof. For the avoidance of doubt, the Obligated
Parties and their Subsidiaries shall be deemed to be in default of their Debt arising under the CS
Guarantee and Collateral Agreement only if there has been a demand for payment by CS or CS has
commenced any enforcement action under the CS Guarantee and Collateral Agreement;




          (e) any Obligated Party or any of its Subsidiaries, in each case, other than any Immaterial
Company: (i) files a voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commences any action or proceeding seeking reorganization, arrangement or readjustment of
its debts or for any other relief under the federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter existing, or consents to,
approves of, or acquiesces in, any such petition, action or proceeding; (ii) applies for or
acquiesces in the appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for it or for all or any part of its property; (iii) makes an
assignment for the benefit of creditors; or (iv) becomes unable generally to pay its debts as they
become due;




          (f) an involuntary petition is filed or an action or proceeding otherwise commenced seeking
reorganization, arrangement, consolidation or readjustment of the debts of any Obligated Party
(other than any Immaterial Company) or any of its Subsidiaries (other than any Immaterial Company)
or for any other relief under the federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter existing and such petition
or proceeding is not be dismissed within thirty (30) days after the filing or commencement thereof
or an order of relief shall be entered with respect thereto;




          (g) (i) a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee or similar
officer for any Obligated Party (other than any Immaterial Company) or any of its Subsidiaries
(other than any Immaterial Company) or for all or any part of its property shall be appointed; or
(ii) a warrant of attachment, execution or similar process shall be issued against any part of the
property of any Obligated Party (other than any Immaterial Company) or any of its Subsidiaries
(other than any Immaterial Company);




          (h) any Obligated Party (other than any Immaterial Company) or any of its Subsidiaries (other
than any Immaterial Company) files a certificate of dissolution under applicable state law or is
liquidated, dissolved or wound-up or commences or has commenced against it any action or proceeding
for dissolution, winding-up or liquidation, or takes any corporate action in furtherance thereof;




          (i) all or any material part of the property of any Obligated Party (other than any Immaterial
Company) or any of its Subsidiaries (other than any Immaterial Company) is nationalized,
expropriated or condemned, seized or otherwise appropriated, or custody or control




50









 




of such property or of any Obligated Party (other than any Immaterial Company) or any of its
Subsidiaries (other than any Immaterial Company) is assumed by any Governmental Authority or any
court of competent jurisdiction at the instance of any Governmental Authority, except where
contested in good faith by proper proceedings diligently pursued where a stay of enforcement is in
effect;




          (j) any Loan Document, including the CS Intercreditor Agreement or the Intercompany
Subordination Agreement, is terminated, revoked or declared void or invalid or unenforceable or
challenged or breached by any Obligated Party or any of its Subsidiaries, any other obligor or any
other party to a Loan Document (other than the Agent or any Lender); provided, however, that the
termination of the CS Intercreditor Agreement or Intercompany Subordination Agreement resulting
from the release of the CS Guarantee and Collateral Agreement or the payment in full of the
Subordinated Term Loan Debt, respectively, shall not be an Event of Default hereunder or under any
other Loan Document;




          (k) there occurs under the Alon Loan Documents one or more monetary “event(s) of default” (as
defined in the Alon Loan Documents) in the amount of $40,000,000 or more either individually for
any single event of default or in the aggregate for all such monetary events of default, or a
non-monetary event of default, in each case, unless and until each such event of default has either
been waived in writing in accordance with the requirements of the Alon Loan Documents or such
event(s) of default has been cured to the extent permitted by, and in compliance with, the terms of
the Alon Loan Documents;




          (l) one or more judgments, orders, decrees, or arbitration awards is entered against any
Obligated Party (other than any Immaterial Company) or any of its Subsidiaries (other than any
Immaterial Company) involving in the aggregate liability (to the extent not covered by independent
third-party insurance and as to which the insurer does not dispute coverage) as to any single or
related or unrelated series of transactions, incidents or conditions, of $3,000,000 or more for any
individual judgment, order, decree, or arbitration award, or of $5,000,000 or more in the aggregate
for all such judgments, orders, decrees, or arbitration awards and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of thirty (30) days after the entry
thereof;




          (m) any loss, theft, damage or destruction of any item or items of Collateral or other
property of any Obligated Party or any of its Subsidiaries occurs that could reasonably be expected
to cause a Material Adverse Effect and is not adequately covered by insurance;




          (n) there is filed by a Governmental Authority against any Obligated Party or any of its
Subsidiaries any action, suit or proceeding under any federal or state racketeering statute
(including the Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit or
proceeding: (i) is not dismissed within one hundred twenty (120) days; and (ii) could reasonably
be expected to result in the confiscation or forfeiture of any material portion of the Collateral;




51









 





          (o) for any reason other than the failure of the Agent to take any action available to it to
maintain perfection of the Agent’s Liens, pursuant to the Loan Documents, any Loan Document ceases
to be in full force and effect or any Lien with respect to any material portion of the Collateral
intended to be secured thereby ceases to be, or is not, valid, perfected and prior to all other
Liens (other than Permitted Liens) or is terminated, revoked, or declared void;




          (p) (i) an ERISA Event shall occur with respect to a Pension Plan or Multi-employer Plan that
has resulted or could reasonably be expected to result in liability of the Borrower under Title IV
of ERISA to the Pension Plan, Multi-employer Plan, or the PBGC in an aggregate amount in excess of
$2,500,000; (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans at any
time exceeds $2,500,000; or (iii) any Obligated Party or any ERISA Affiliate 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 Multi-employer Plan in an aggregate amount
in excess of $2,500,000;




          (q) there occurs a Change of Control; or




          (r) there occurs an event having a Material Adverse Effect.




     9.2 Remedies.



          (a) If a Default or an Event of Default exists, the Agent may, in its discretion, and shall,
at the direction of the Required Lenders, do one or more of the following at any time or times and
in any order, without notice to or demand on any Obligated Party or any of its Subsidiaries: (i)
reduce the Maximum Revolver Amount, the advance rates against Eligible Accounts and/or Eligible
Petroleum Inventory used in computing the Borrowing Base, or one or more of the other elements used
in computing the Borrowing Base; (ii) restrict the amount of or refuse to make Revolving Loans; and
(iii) restrict or refuse to provide Letters of Credit and/or Credit Support. If an Event of
Default exists, the Agent shall, at the direction of the Required Lenders, do one or more of the
following, in addition to the actions described in the preceding sentence, at any time or times and
in any order, without notice to or demand on any Obligated Party or any of its Subsidiaries: (w)
terminate the Commitments and/or this Agreement; (x) declare any or all Obligations to be
immediately due and payable; provided, however, that upon the occurrence of any Event of Default
described in Sections 9.1(e), 9.1(f), 9.1(g)(i), or 9.1(h), the
Commitments shall automatically and immediately expire and all Obligations shall automatically
become immediately due and payable without notice or demand of any kind; (y) require the Obligated
Parties to Cash Collateralize all outstanding Letter of Credit Obligations; and (z) pursue its
other default rights and remedies under the Loan Documents and applicable law.




          (b) If an Event of Default has occurred and is continuing: (i) the Agent shall have for the
benefit of the Lenders, in addition to all other rights of the Agent and the Lenders, the default
rights and remedies of a secured party under the Loan Documents and the UCC; (ii) the Agent may, at
any time, take possession of the Collateral and keep it on the Obligated




52









 




Parties’ premises, at no cost to the Agent or any Lender, or remove any part of it to such
other place or places as the Agent may desire, or the Obligated Parties shall, upon the Agent’s
demand, at the Obligated Parties’ cost, assemble the Collateral and make it available to the Agent
at a place reasonably convenient to the Agent; and (iii) the Agent may sell and deliver any
Collateral at public or private sales, for cash, upon credit or otherwise, at such prices and upon
such terms as the Agent deems advisable, in its sole discretion, and may, if the Agent deems it
reasonable, postpone or adjourn any sale of the Collateral by an announcement at the time and place
of sale or of such postponed or adjourned sale without giving a new notice of sale. Without in any
way requiring notice to be given in the following manner, the Obligated Parties agree that any
notice by the Agent of sale, disposition or other intended action hereunder or in connection
herewith, whether required by the UCC or otherwise, shall constitute reasonable notice to the
Obligated Parties if such notice is mailed by registered or certified mail, return receipt
requested, postage prepaid, or is delivered personally against receipt, at least ten (10) days
prior to such action to the Borrower’s address specified in or pursuant to Section 13.8.
If any Collateral is sold on terms other than payment in full in cash at the time of sale, no
credit shall be given against the Obligations until the Agent receives payment therefor in cash,
and if the buyer defaults in payment, the Agent may resell the Collateral without further notice to
the Obligated Parties. If the Agent seeks to take possession of all or any portion of the
Collateral by judicial process, the Obligated Parties irrevocably waive: (1) the posting of any
bond, surety or security with respect thereto that might otherwise be required; (2) any demand for
possession prior to the commencement of any suit or action to recover the Collateral; and (3) any
requirement that the Agent retain possession and not dispose of any Collateral until after trial or
final judgment. The Obligated Parties agree that the Agent has no obligation to preserve rights to
the Collateral or marshal any Collateral for the benefit of any Person. The Agent is hereby
granted a license or other right to use, without charge, the Obligated Parties’ labels, patents,
copyrights, name, trade secrets, trade names, trademarks, and advertising matter or any similar
property in completing production of, advertising, or selling any Collateral, and the Obligated
Parties’ rights under all licenses and all franchise agreements shall inure to the Agent’s benefit
for such purpose. The proceeds of sale shall be applied first to all expenses of sale, including
attorneys’ fees, and then to the Obligations. The Agent will return any excess to the Person
entitled thereto and the Obligated Parties shall remain liable for any deficiency.




          (c) If an Event of Default occurs, the Obligated Parties hereby waive all rights to notice and
hearing prior to the exercise by the Agent of the Agent’s rights to repossess the Collateral
without judicial process and/or to reply, attach or levy upon the Collateral without notice or
hearing.




ARTICLE 10

TERM AND TERMINATION




     10.1 Term and Termination. The term of this Agreement shall end on the Stated
Termination Date unless sooner terminated in accordance with the terms hereof. Upon the occurrence
of an Event of Default, the Agent, upon direction from the Required Lenders, may terminate this
Agreement without notice to the Obligated Parties or any other Person. Upon the



53









 




effective date of termination of this Agreement for any reason whatsoever, all Obligations
(including all unpaid principal, accrued and unpaid interest, and any early termination or
prepayment fees or penalties) shall become immediately due and payable and the Obligated Parties
shall immediately arrange for the cancellation and return of Letters of Credit then outstanding or
the Cash Collateralization of all Letter of Credit Obligations pursuant to Section 1.3(g)
hereof. Notwithstanding the termination of this Agreement, until all Obligations are Paid in Full,
the Obligated Parties shall remain bound by the terms of this Agreement and shall not be relieved
of any of its Obligations hereunder or under any other Loan Document, and the Agent and the Lenders
shall retain all their rights and remedies hereunder (including the Agent’s Liens in and all rights
and remedies with respect to all then existing and after-arising Collateral). The Agent shall
provide to the Borrower, upon the request of the Borrower made concurrently with the satisfaction
of each of the requirements set forth in clauses (a), (b) and (d) of the
definition of “Paid in Full”, a written statement identifying the amounts or other actions required
to satisfy clause (c) of such definition.




ARTICLE 11

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS




     11.1 Amendments and Waivers.



          (a) No amendment or waiver of any provision of this Agreement or any other Loan Document, and
no consent with respect to any departure by the Obligated Parties therefrom, shall be effective
unless the same shall be in writing and signed by the Borrower and the Required Lenders (or by the
Agent at the written request of the Required Lenders). Any 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 waiver, amendment, or consent shall, unless in writing and signed by all the
Lenders and the Borrower and acknowledged by the Agent, do any of the following:





          (i) increase or extend the Commitment of any Lender;




          (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 Loan,
or any fees or other amounts payable hereunder or under any other Loan Document;




          (iv) change either the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans that is required for the Lenders or any of them to take any
action hereunder;




          (v) increase any of the percentages set forth in the definition of the Borrowing Base;



54









 






          (vi) amend this Section or any provision of this Agreement providing for consent or
other action by all Lenders;




          (vii) release any Guaranties of the Obligations or release Collateral other than as
permitted by Section 12.11;




          (viii) change the definitions of “Majority Lenders” or “Required Lenders”; or




          (ix) increase the Maximum Revolver Amount; provided, however, that the Agent may, in
its sole discretion and notwithstanding the limitations contained in clause (v)
above and any other terms of this Agreement, make Agent Advances in accordance with
Section 1.2(i) and, provided, further, that no amendment, waiver or consent shall,
unless in writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document and provided, further, that Schedule A-1
hereto (Commitments) may be amended from time to time by the Agent alone to reflect
assignments of Commitments in accordance herewith.



          (b) If any fees are paid to the Lenders as consideration for amendments, waivers or consents
with respect to this Agreement, at the Agent’s election, such fees may be paid only to those
Lenders that agree to such amendments, waivers or consents within the time specified for submission
thereof.




          (c) If, in connection with any proposed amendment, waiver or consent (a “Proposed Change”):





          (i) requiring the consent of all Lenders, the consent of Required Lenders is obtained,
but the consent of other Lenders is not obtained (any such Lender whose consent is not
obtained as described in this clause (i) and in clause (ii) below being
referred to as a “Non-Consenting Lender”); or




          (ii) requiring the consent of Required Lenders, the consent of Majority Lenders is
obtained;


then, so long as the Agent is not a Non-Consenting Lender, at the Borrower’s request, the Agent or
an Eligible Assignee shall have the right (but not the obligation) with the Agent’s approval, to
purchase from the Non-Consenting Lenders, and the Non-Consenting Lenders agree that they shall
sell, all the Non-Consenting Lenders’ Commitments for an amount equal to the principal balances
thereof and all accrued interest and fees payable with respect thereto through the date of sale
pursuant to Assignment and Acceptance Agreement(s), without premium or discount.




          (d) No amendment of Sections 12.21(a) or (b) shall be effective unless the
same shall be in writing and signed by the Borrower and the Required Lenders (or by the Agent at
the written request of the Required Lenders) and consented to in writing by the CS.




55









 








          (e) The agreement of the Obligated Parties shall not be necessary to the effectiveness of any
modification of a Loan Document that deals solely with the rights and duties of the Lenders, the
Agent, the Letter of Credit Issuer, or the Bank as among themselves.




     11.2 Participations and Assignments.



          (a) Participations. Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to a financial institution (a “Participant”) a
participating interest in the rights and obligations of such Lender under any Loan Documents.
Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations
under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for performance of such obligations, such Lender shall remain the holder of
its Loans and Commitments for all purposes, all amounts payable by the Obligated Parties shall be
determined as if such Lender had not sold such participating interests, and the Obligated Parties
and the Agent shall continue to deal solely and directly with such Lender in connection with the
Loan Documents. Each Lender shall be solely responsible for notifying its Participants of any
matters under the Loan Documents, and the Agent and the other Lenders shall not have any obligation
or liability to any such Participant. Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, waiver or other modification of any Loan Documents
other than that which forgives principal, interest or fees, reduces the stated interest rate or
fees payable with respect to any Loan or Commitment in which such Participant has an interest,
postpones the Commitment Termination Date or any date fixed for any regularly scheduled payment of
principal, interest or fees on such Loan or Commitment, or releases any Obligated Party, other
guarantor of the Obligations, or any substantial portion of the Collateral. The Obligated Parties
agree that each Participant shall have a right of set off in respect of its participating interest
to the same extent as if such interest were owing directly to a Lender, and each Lender shall also
retain the right of set off with respect to any participating interests sold by it. By exercising
any right of set off, a Participant agrees to share with the Lenders all amounts received through
its set off, in accordance with Section 12.12 as if such Participant were a Lender.




          (b) Assignments. A Lender may assign to an Eligible Assignee any of its rights and
obligations under the Loan Documents, as long as (i) each assignment is of a constant, and not a
varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and,
in the case of a partial assignment, is in a minimum principal amount of $10,000,000 (unless
otherwise agreed by the Agent in its discretion) and integral multiples of $1,000,000 in excess of
that amount; (ii) except in the case of an assignment in whole of a Lender’s rights and
obligations, the aggregate amount of the Commitments retained by the transferor Lender is at least
$15,000,000 (unless otherwise agreed by the Agent in its discretion); and (iii) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and recording, an
Assignment and Acceptance in the form of Exhibit F (“Assignment and Acceptance”) together
with any note or notes subject to such assignment. Nothing herein shall limit the right of a
Lender to pledge or assign any rights under the Loan Documents to (1) any Federal Reserve Bank or
the United States Treasury as collateral security pursuant to Regulation A of the Board of
Governors and any Operating Circular issued by such




56









 




Federal Reserve Bank, or (2) counterparties to swap agreements relating to any Loans;
provided, however, that any payment by the Obligated Parties to the assigning Lender in respect of
any Obligations assigned as described in this sentence shall satisfy the Obligated Parties’
obligations hereunder to the extent of such payment, and no such assignment shall release the
assigning Lender from its obligations hereunder. Upon delivery to the Agent of an assignment
notice in the form attached to the Assignment and Acceptance, and a processing fee of $3,500
(unless otherwise agreed by the Agent in its discretion), the assignment shall become effective as
specified in the notice, if it complies with this Section 11.2(b). From such effective
date, the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall
have all rights and obligations of a Lender thereunder and the assignor Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).




ARTICLE 12

THE AGENT




     12.1 Appointment and Authorization. Each Lender hereby designates and appoints Bank
of America, N.A. as its agent under this Agreement and the other Loan Documents and each Lender
hereby irrevocably authorizes the 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. The Agent agrees to act as such on the
express conditions contained in this Article 12. The provisions of this Article 12
shall survive Payment in Full of the Obligations and are solely for the benefit of the Agent and
the Lenders and the Obligated Parties shall have no rights as a third party beneficiaries or
otherwise of any of the provisions contained herein. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be
deemed to have any fiduciary relationship with any Lender, 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 Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” in this Agreement with reference to the 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. Except as expressly otherwise provided in this Agreement, the
Agent shall have and may use its sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining from taking any actions that the Agent
is expressly entitled to take or assert under this Agreement and the other Loan Documents,
including: (a) the determination of the applicability of ineligibility criteria with respect to
the calculation of the Borrowing Base; (b) the making of Agent Advances



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pursuant to Section 1.2(i); and (c) the exercise of remedies pursuant to Section
9.2; and any action so taken or not taken shall be deemed consented to by the Lenders.




     12.2 Delegation of Duties. The 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 concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful misconduct.



     12.3 Liability of Agent. None of the Agent-Related Persons 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); or (b) be responsible in any manner to any of the Lenders for
any recital, statement, representation, or warranty made by any Obligated Party or any of its
Subsidiaries or any other Affiliate of any Obligated Party, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report, statement, Financial
Statement, or other document referred to or provided for in, or received by the 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
any failure of any Obligated 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 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 Obligated Party or any of its Subsidiaries or Affiliates.



     12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement, or other document or
conversation 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 the
Obligated Parties), independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this Agreement or any
other 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 that may be incurred by it by
reason of taking or continuing to take any such action. The 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 Lenders if so required by
Section 11.1) and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.



     12.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default, unless the Agent shall have received written
notice from a Lender or the Borrower referring to this Agreement, describing such Default or



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Event of Default and stating that such notice is a “notice of default”. The Agent will notify
the Lenders of its receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until the Agent has received any such
request, the 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.




     12.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons
has made any representation or warranty to it, and that no act by the Agent hereinafter taken,
including any review of the affairs of the Obligated Parties and their Affiliates, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the 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 Obligated Parties and their Affiliates,
and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the Obligated Parties. 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 Obligated Parties. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent, the 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 the Obligated Parties that may come into the possession of any of the
Agent-Related Persons.



     12.7 Indemnification. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify, upon demand, the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Obligated Parties and without limiting the obligation of the
Obligated Parties to do so), in accordance with their Pro Rata Shares, from and against any and all
Indemnified Liabilities as such term is defined in Section 13.11; provided, however, that
no Lender shall be liable for the payment to the Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Agent-Related Person’s gross negligence or
willful misconduct as determined by a final, non-appealable order of a court of competent
jurisdiction. Without limitation of the foregoing, each Lender shall reimburse the Agent upon
demand for its Pro Rata Share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the 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
Agent is not reimbursed for such expenses by or on behalf of the Obligated Parties. The



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undertaking in this Section shall survive the termination of this Agreement, the payment of
all Obligations hereunder and the resignation or replacement of the Agent.




     12.8 Agent in Individual Capacity. Bank of America, N.A. and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from, acquire equity
interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting,
or other business with the Obligated Parties and their Subsidiaries and Affiliates as though Bank
of America, N.A. were not the Agent hereunder and without notice to or consent of the Lenders.
Bank of America, N.A. or its Affiliates may receive information regarding the Obligated Parties,
their Affiliates, and Account Debtors (including information that may be subject to confidentiality
obligations in favor of the Obligated Parties or such Affiliate) and acknowledge that Bank of
America, N.A. shall be under no obligation to provide such information to them. With respect to
its Loans, Bank of America, N.A. shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the Agent, and the terms “Lender” and
“Lenders” include Bank of America, N.A. in its individual capacity as a Lender.



     12.9 Successor Agent. The Agent may resign as the Agent upon at least thirty (30)
days’ prior notice to the Lenders and the Borrower, such resignation to be effective upon the
acceptance of a successor agent to its appointment as the Agent. In the event the Bank sells all
of its Commitment and Revolving Loans as part of a sale, transfer or other disposition by the Bank
of a substantial portion of its loan portfolio, the Bank shall resign as the Agent and such
purchaser or transferee shall become the successor agent hereunder. Subject to the foregoing, if
the Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to the effective date of
the resignation of the Agent, the Agent may appoint, after consulting with the Lenders and the
Borrower, a successor agent from among the Lenders. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties
of the retiring agent and the term “Agent” shall mean such successor agent and the retiring agent’s
appointment, powers, and duties as the Agent shall be terminated. After any retiring agent’s
resignation hereunder as the Agent, the provisions of this Article 12 shall continue to
inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent
under this Agreement.



     12.10 Withholding Tax.



          (a) If any Lender is a “foreign corporation, partnership or trust” within the meaning of the
Code and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Sections
1441 or 1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver to the
Agent:





          (i) if such Lender claims an exemption from, or a reduction of, withholding tax under a
United States of America tax treaty, properly completed IRS Forms W-8BEN and W-8ECI before
the payment of any interest in the first calendar year



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and before the payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;




          (ii) if such Lender claims that interest paid under this Agreement is exempt from
United States of America withholding tax because it is effectively connected with a United
States of America trade or business of such Lender, two properly completed and executed
copies of IRS Form W-8ECI before the payment of any interest is due in the first taxable
year of such Lender and in each succeeding taxable year of such Lender during which interest
may be paid under this Agreement, and IRS Form W-9; and




          (iii) such other form or forms as may be required under the Code or other laws of the
United States of America as a condition to exemption from, or reduction of, United States of
America withholding tax.


Such Lender agrees to promptly notify the Agent of any change in circumstances that would modify or
render invalid any claimed exemption or reduction.




          (b) If any Lender claims exemption from, or reduction of, withholding tax under a United
States of America tax treaty by providing IRS Form FW-8BEN and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to notify the Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of the Obligated Parties to such Lender. To the extent of such percentage
amount, the Agent will treat such Lender’s IRS Form W-8BEN as no longer valid.




          (c) If any Lender claiming exemption from United States of America withholding tax by filing
IRS Form W-8ECI with the Agent sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations owing to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.




          (d) If any Lender is entitled to a reduction in the applicable withholding tax, the Agent may
withhold from any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other documentation
required by Section 12.10(b) are not delivered to the Agent, then the Agent may withhold
from any interest payment to such Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.




          (e) If the IRS or any other Governmental Authority of the United States of America or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in circumstances that
rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify the Agent fully for all amounts




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paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent
under this Section, together with all costs and expenses (including Attorney Costs). The
obligation of the Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.




     12.11 Collateral Matters.



          (a) The Lenders hereby irrevocably authorize the Agent, at its option and in its sole
discretion, to release any Agent’s Liens upon any Collateral: (i) upon the termination of the
Commitments and Payment in Full of all Obligations; (ii) constituting property being sold or
disposed of if the Borrower certifies to the Agent that the sale or disposition is made in
compliance with Section 7.9 (and the Agent may rely conclusively on any such certificate,
without further inquiry); (iii) constituting property in which the Obligated Parties owned no
interest at the time the Lien was granted or at any time thereafter; or (iv) constituting property
leased to any Obligated Party under a lease that has expired or been terminated in a transaction
permitted under this Agreement. Except as provided above, the Agent will not release any of the
Agent’s Liens without the prior written authorization of the Lenders; provided that the Agent may,
in its discretion, release the Agent’s Liens on Collateral valued in the aggregate not in excess of
$2,000,000 during each Fiscal Year without the prior written authorization of the Lenders and the
Agent may release the Agent’s Liens on Collateral valued in the aggregate not in excess of
$5,000,000 during each Fiscal Year with the prior written authorization of Required Lenders. Upon
request by the Agent or the Borrower at any time, the Lenders will confirm in writing the Agent’s
authority to release any Agent’s Liens upon particular types or items of Collateral pursuant to
this Section 12.11.




          (b) Upon receipt by the Agent of any authorization required pursuant to Section
12.11(a) from the Lenders of the Agent’s authority to release Agent’s Liens upon particular
types or items of Collateral, and upon at least five (5) Business Days’ prior written request by
the Borrower, the Agent may (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent’s Liens upon such Collateral;
provided, however, that: (i) the Agent shall not be required to execute any such document on terms
that, in the Agent’s opinion, would expose any Agent-Related Person to liability or create any
obligation or entail any consequence other than the release of such Liens without recourse or
warranty; and (ii) such release shall not in any manner discharge, affect or impair the Obligations
or any Liens (other than those expressly being released) upon (or obligations of the Obligated
Parties in respect of) all interests retained by the Obligated Parties, including the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.




          (c) The Agent shall have no obligation whatsoever to any of the Lenders to assure that the
Collateral exists or is owned by the Obligated Parties or is cared for, protected or insured or has
been encumbered, or that the Agent’s Liens 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, authorities and powers granted or available to the Agent




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pursuant to any of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in any manner it may
deem appropriate, in its sole discretion given the Agent’s own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no other duty or liability whatsoever
to any Lender as to any of the foregoing.




     12.12 Restrictions on Actions by Lenders; Sharing of Payments.



          (a) Each of the Lenders agrees that it shall not, without the express consent of all Lenders,
and that it shall, to the extent it is lawfully entitled to do so, upon the request of all Lenders,
set off against the Obligations, any amounts owing by such Lender to the Obligated Parties or any
accounts of the Obligated Parties now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so by the Agent, take
or cause to be taken any action to enforce its rights under this Agreement or against the Obligated
Parties, including the commencement of any legal or equitable proceedings, to foreclose any Lien
on, or otherwise enforce any security interest in, any of the Collateral. No Lender shall set off
against any Payment Account without the prior consent of Agent.




          (b) If at any time or times any Lender shall receive: (i) by payment, foreclosure, setoff or
otherwise, any proceeds of Collateral or any payments with respect to the Obligations of the
Obligated Parties to such Lender arising under, or relating to, this Agreement or the other Loan
Documents, except for any such proceeds or payments received by such Lender from the Agent pursuant
to the terms of this Agreement; or (ii) payments from the Agent in excess of such Lender’s ratable
portion of all such distributions by the Agent, such Lender shall promptly: (x) turn such excess
over to the Agent, in kind, and with such endorsements as may be required to negotiate the same to
the Agent, or in same day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of this Agreement; or
(y) purchase, without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided, however, that if all or
part of such excess payment received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such purchasing party,
but without interest except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.




     12.13 Agency for Perfection. Each Lender hereby appoints each other Lender as agent
for the purpose of perfecting the Lenders’ security interest in assets that, in accordance with
Article 8 or 9 of the UCC can be perfected only by possession or control. Should any Lender (other
than the Agent) obtain possession or control of any such Collateral, such Lender shall notify the
Agent thereof, and, promptly upon the Agent’s request therefor shall deliver such Collateral to the
Agent or in accordance with the Agent’s instructions.



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     12.14 Payments by Agent to Lenders. All payments to be made by the Agent to the
Lenders shall be made by bank wire transfer or internal transfer of immediately available funds to
each Lender pursuant to wire transfer instructions delivered in writing to the Agent on or prior to
the Closing Date (or if such Lender is an Assignee, as designated in the applicable Assignment and
Acceptance), or pursuant to such other wire transfer instructions as each party may designate for
itself by written notice to the Agent. Concurrently with each such payment, the Agent shall
identify whether such payment (or any portion thereof) represents principal, premium or interest on
the Revolving Loans or otherwise. Unless the Agent receives notice from the Borrower, prior to the
date on which any payment is due to the Lenders, that the Obligated Parties will not make such
payment in full as and when required, the Agent may assume that the Obligated Parties have made
such payment in full to the Agent on such date in immediately available funds and the Agent may
(but shall not be so required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the extent that the
Obligated Parties have not made such payment in full to the Agent, each Lender shall repay to the
Agent on demand such amount distributed to such Lender, together with interest thereon at the
Federal Funds Rate for each day from the date such amount is distributed to such Lender until the
date repaid.



     12.15 Settlement.



          (a) Procedure for Settlement.





          (i) Each Lender’s funded portion of the Revolving Loans is intended by the Lenders to
be equal at all times to such Lender’s Pro Rata Share of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, the Bank, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Obligated Parties) that in
order to facilitate the administration of this Agreement and the other Loan Documents,
settlement among them as to the Revolving Loans, (including the Non-Ratable Loans and the
Agent Advances) shall take place on a periodic basis in accordance with the following
provisions:




          (ii) The Agent shall request settlement (“Settlement”) with the Lenders on at least a
weekly basis, or on a more frequent basis at the Agent’s election: (1) on behalf of the
Bank, with respect to each outstanding Non-Ratable Loan; (2) for itself, with respect to
each Agent Advance; and (3) with respect to collections received, in each case, by notifying
the Lenders of such requested Settlement by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 12:00 noon (Pacific time) on the
date of such requested Settlement (the “Settlement Date”). Each Lender (excluding, however
the Bank, in the case of Non-Ratable Loans and the Agent in the case of Agent Advances)
shall transfer the amount of such Lender’s Pro Rata Share of the outstanding principal
amount of the Non-Ratable Loans and Agent Advances with respect to each Settlement to the
Agent, to the Agent’s account, not later than 2:00 p.m. (Pacific time) on the Settlement
Date applicable thereto. Settlements may occur during the continuation of a Default or an
Event of Default and whether or not the applicable conditions precedent set forth in
Article 8 have then been satisfied. Such



64









 






amounts made available to the Agent shall be applied against the amounts of the
applicable Non-Ratable Loan or Agent Advance and, together with the portion of such
Non-Ratable Loan or Agent Advance representing the Bank’s Pro Rata Share thereof, shall
constitute Revolving Loans of such Lenders. If any such amount is not transferred to the
Agent by any Lender on the Settlement Date applicable thereto, the Agent shall be entitled
to recover such amount on demand from such Lender, together with interest thereon at the
Federal Funds Rate for the first three (3) days from and after the Settlement Date and
thereafter at the Interest Rate then applicable to the Revolving Loans: (A) on behalf of
the Bank, with respect to each outstanding Non-Ratable Loan; and (B) for itself, with
respect to each Agent Advance.




          (iii) Notwithstanding the foregoing, not more than one (1) Business Day after demand is
made by the Agent (whether before or after the occurrence of a Default or an Event of
Default and regardless of whether the Agent has requested a Settlement with respect to a
Non-Ratable Loan or Agent Advance), each other Lender: (x) shall irrevocably and
unconditionally purchase and receive from the Bank or the Agent, as applicable, without
recourse or warranty, an undivided interest and participation in such Non-Ratable Loan or
Agent Advance equal to such Lender’s Pro Rata Share of such Non-Ratable Loan or Agent
Advance; and (y) if Settlement has not previously occurred with respect to such Non-Ratable
Loans or Agent Advances, upon demand by the Bank or the Agent, as applicable, shall pay to
the Bank or the Agent, as applicable, as the purchase price of such participation an amount
equal to one-hundred percent (100%) of such Lender’s Pro Rata Share of such Non-Ratable
Loans or Agent Advances. If such amount is not in fact made available to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the first three (3) days from
and after such demand and thereafter at the Interest Rate then applicable to Base Rate
Revolving Loans.




          (iv) From and after the date, if any, on which any Lender purchases an undivided
interest and participation in any Non-Ratable Loan or Agent Advance pursuant to Section
12.15(a)(iii), the Agent shall promptly distribute to such Lender, such Lender’s Pro
Rata Share of all payments of principal and interest and all proceeds to be distributed in
respect of Collateral received by the Agent in respect of such Non-Ratable Loan or Agent
Advance.




          (v) Between Settlement Dates, the Agent, to the extent no Agent Advances are
outstanding, may pay over to the Bank any payments received by the Agent, that in accordance
with the terms of this Agreement would be applied to the reduction of the Revolving Loans,
for application to the Bank’s Revolving Loans including Non-Ratable Loans. If, as of any
Settlement Date, collections received since the then immediately preceding Settlement Date
have been applied to the Bank’s Revolving Loans (other than to Non-Ratable Loans or Agent
Advances in which such Lender has not yet funded its purchase of a participation pursuant to
clause (iii) above), as provided for in the previous sentence, the Bank shall pay to
the Agent for the accounts



65









 






of the Lenders, to be applied to the outstanding Revolving Loans of such Lenders, an
amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement
Date, its Pro Rata Share of the Revolving Loans. During the period between Settlement
Dates, the Bank with respect to Non-Ratable Loans, the Agent with respect to Agent Advances,
and each Lender with respect to the Revolving Loans other than Non-Ratable Loans and Agent
Advances, shall be entitled to interest at the applicable rate or rates payable under this
Agreement on the actual average daily amount of funds employed by the Bank, the Agent, and
the other Lenders.




          (vi) Unless the Agent has received written notice from a Lender to the contrary, the
Agent may assume that the applicable conditions precedent set forth in Article 8
have been satisfied and the requested Borrowing will not exceed Availability on any Funding
Date for a Revolving Loan or Non-Ratable Loan.



          (b) Lenders’ Failure to Perform. All Revolving Loans (other than Non-Ratable Loans
and Agent Advances) shall be made by the Lenders simultaneously and in accordance with their Pro
Rata Shares. It is understood that: (i) no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make any Revolving Loans hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by any other Lender
to perform its obligation to make any Revolving Loans hereunder; (ii) no failure by any Lender to
perform its obligation to make any Revolving Loans hereunder shall excuse any other Lender from its
obligation to make any Revolving Loans hereunder; and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.




          (c) Defaulting Lenders. Unless the Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing Date, at least one (1)
Business Day prior to the date of such Borrowing, that such Lender will not make available, as and
when required hereunder, to the Agent that Lender’s Pro Rata Share of a Borrowing, the Agent may
assume that each Lender has made such amount available to the Agent in immediately available funds
on the Funding Date. Furthermore, the Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If any Lender has not transferred its full
Pro Rata Share to the Agent in immediately available funds and the Agent has transferred
corresponding amount to the Borrower on the Business Day following such Funding Date that Lender
shall make such amount available to the Agent, together with interest at the Federal Funds Rate for
that day. A notice by the Agent submitted to any Lender with respect to amounts owing shall be
conclusive, absent manifest error. If each Lender’s full Pro Rata Share is transferred to the
Agent as required, the amount transferred to the Agent shall constitute that Lender’s Revolving
Loan for all purposes of this Agreement. If that amount is not transferred to the Agent on or
before the Business Day following the Funding Date, the Agent will notify the Borrower of such
failure to fund and, upon demand by the Agent, the Obligated Parties shall pay such amount to the
Agent for the Agent’s account, together with interest thereon for each day elapsed since the date
of such Borrowing, at a rate per annum equal to the Interest Rate applicable at the time to the
Revolving Loans comprising that particular Borrowing. The failure of any Lender to make any
Revolving Loan on any Funding Date (any such Lender, prior to the cure of such failure, being
hereinafter




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referred to as a “Defaulting Lender”) shall not relieve any other Lender of its obligation
hereunder to make a Revolving Loan on that Funding Date. No Lender shall be responsible for any
other Lender’s failure to advance such other Lenders’ Pro Rata Share of any Borrowing.




          (d) Retention of Defaulting Lender’s Payments. The Agent shall not be obligated to
transfer to a Defaulting Lender any payments made by the Obligated Parties to the Agent for the
Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by
the Agent. In its discretion, the Agent may loan the Borrower the amount of all such payments
received or retained by the Agent for the account of such Defaulting Lender. Any amounts so loaned
to the Borrower shall bear interest at the rate applicable to Base Rate Revolving Loans and for all
other purposes of this Agreement shall be treated as if they were Revolving Loans; provided,
however, that for purposes of voting or consenting to matters with respect to the Loan Documents
and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender”.
Until a Defaulting Lender cures its failure to fund its Pro Rata Share of any Borrowing: (i) such
Defaulting Lender shall not be entitled to any portion of the Unused Line Fee; and (ii) the Unused
Line Fee shall accrue in favor of the Lenders that have funded their respective Pro Rata Shares of
such requested Borrowing and shall be allocated among such performing Lenders ratably based upon
their relative Commitments. This Section shall remain effective with respect to such Lender until
such time as the Defaulting Lender shall no longer be in default of any of its obligations under
this Agreement. The terms of this Section shall not be construed to increase or otherwise affect
the Commitment of any Lender or relieve or excuse the performance by the Obligated Parties of their
duties and obligations hereunder.




          (e) Removal of Defaulting Lender. At the Borrower’s request, the Agent or an Eligible
Assignee reasonably acceptable to the Agent and the Borrower shall have the right (but not the
obligation) to purchase from any Defaulting Lender, and each Defaulting Lender shall, upon such
request, sell and assign to the Agent or such Eligible Assignee, all of the Defaulting Lender’s
outstanding Commitments hereunder. Such sale shall be consummated promptly after the Agent has
arranged for a purchase by the Agent or an Eligible Assignee pursuant to an Assignment and
Acceptance, and at a price equal to the outstanding principal balance of the Defaulting Lender’s
Loans, plus accrued interest and fees, without premium or discount.




     12.16 Letters of Credit; Inter-Lender Issues.



          (a) Notice of Letter of Credit Balance. On each Settlement Date the Agent shall
notify each Lender of the issuance of all Letters of Credit and Credit Support since the prior
Settlement Date.




          (b) Participations in Letters of Credit.





          (i) Purchase of Participations. Immediately upon issuance of any Letter of
Credit in accordance with Section 1.3(d), each Lender shall be deemed to have
irrevocably and unconditionally purchased and received without recourse or warranty, an



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undivided interest and participation equal to such Lender’s Pro Rata Share of the face
amount of such Letter of Credit or the Credit Support provided through the Agent to the
Letter of Credit Issuer, if not the Bank, in connection with the issuance of such Letter of
Credit (including all obligations of the Obligated Parties with respect thereto, and any
security therefor or guaranty pertaining thereto).



          (ii) Sharing of Reimbursement Obligation Payments. Whenever the Agent receives
a payment from the Obligated Parties on account of reimbursement obligations in respect of a
Letter of Credit or Credit Support as to which the Agent has previously received for the
account of the Letter of Credit Issuer thereof payment from a Lender, the Agent shall
promptly pay to such Lender such Lender’s Pro Rata Share of such payment from the Obligated
Parties. Each such payment shall be made by the Agent on the next Settlement Date.




          (iii) Documentation. Upon the request of any Lender, the Agent shall furnish
to such Lender copies of any Letter of Credit, Credit Support for any Letter of Credit,
reimbursement agreements executed in connection therewith, applications for any Letter of
Credit, and such other documentation as may reasonably be requested by such Lender.




          (iv) Obligations Irrevocable. The obligations of each Lender to make payments
to the Agent with respect to any Letter of Credit or with respect to their participation
therein or with respect to any Credit Support for any Letter of Credit or with respect to
the Revolving Loans made as a result of a drawing under a Letter of Credit and the
obligations of the Obligated Parties to make payments to the Agent, for the account of the
Lenders, shall be irrevocable and shall not be subject to any qualification or exception
whatsoever, including any of the following circumstances:





     (A) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;




     (B) the existence of any claim, setoff, defense or other right
that the Obligated Parties may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), any
Lender, the Agent, the issuer of such Letter of Credit, or any other
Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the
Obligated Parties or any other Person and the beneficiary named in
any Letter of Credit);




     (C) any draft, certificate, or any other document presented
under the Letter of Credit proving to be forged,



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fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;




     (D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;




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




     (F) the failure of the Obligated Parties to satisfy the
applicable conditions precedent set forth in Article 8.



          (c) Recovery or Avoidance of Payments; Refund of Payments In Error. In the event any
payment by or on behalf of the Obligated Parties received by the Agent with respect to any Letter
of Credit or Credit Support provided for any Letter of Credit and distributed by the Agent to the
Lenders on account of their respective participations therein is thereafter set aside, avoided or
recovered from the Agent in connection with any receivership, liquidation or bankruptcy proceeding,
the Lenders shall, upon demand by the Agent, pay to the Agent their respective Pro Rata Shares of
such amount set aside, avoided, or recovered, together with interest at the rate required to be
paid by the Agent upon the amount required to be repaid by it. Unless the Agent receives notice
from the Borrower prior to the date on which any payment is due to the Lenders that the Obligated
Parties will not make such payment in full as and when required, the Agent may assume that the
Obligated Parties have made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Obligated Parties have not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.




          (d) Indemnification by Lenders. To the extent not reimbursed by or on behalf of the
Obligated Parties and without limiting the obligations of the Obligated Parties hereunder, the
Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance with their respective
Pro Rata Shares, for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys’ fees) or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against the Letter of Credit
Issuer in any way relating to or arising out of any Letter of Credit or the transactions
contemplated thereby or any action taken or omitted by the Letter of Credit Issuer under any Letter
of Credit or any Loan Document in connection therewith; provided that no Lender shall be liable for
any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the
Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse the
Letter of Credit Issuer promptly upon demand for its Pro Rata Share of any costs or expenses
payable by the Obligated Parties to the Letter of Credit Issuer, to the extent that the Letter of
Credit Issuer is not promptly reimbursed for such costs and expenses by the




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Obligated Parties. The agreement contained in this Section shall survive termination of this
Agreement and Payment in Full of all other Obligations.




     12.17 Concerning the Collateral and the Related Loan Documents. Without limiting
Section 12.21, each Lender authorizes and directs the Agent to enter into the other Loan
Documents, for the ratable benefit and obligation of the Agent and the Lenders. Each Lender agrees
that any action taken by the Agent, Majority Lenders or Required Lenders, as applicable, in
accordance with the terms of this Agreement or the other Loan Documents, and the exercise by the
Agent, the Majority Lenders, or the Required Lenders, as applicable, of their respective powers set
forth therein or herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders. The Lenders acknowledge that the Revolving Loans, Agent
Advances, Non-Ratable Loans, Hedge Agreements, Bank Products and all interest, fees and expenses
hereunder constitute one Debt, secured pari passu by all of the Collateral.



     12.18 Field Audit and Examination Reports; Disclaimer by Lenders. By signing this
Agreement, each Lender:



          (a) is deemed to have requested that the Agent furnish such Lender, promptly after it becomes
available, a copy of each field audit or examination report (each a “Report” and collectively,
“Reports”) prepared by or on behalf of the Agent;




          (b) expressly agrees and acknowledges that neither the Bank nor the Agent: (i) makes any
representation or warranty as to the accuracy of any Report; or (ii) shall be liable for any
information contained in any Report;




          (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that the Agent or the Bank or other party performing any audit or examination will
inspect only specific information regarding the Obligated Parties and will rely significantly upon
the Obligated Parties’ books and records, as well as on representations of the Obligated Parties’
personnel;




          (d) agrees to keep all Reports confidential and strictly for its internal use, and not to
distribute (except to its Participants) or use any Report in any other manner; and




          (e) without limiting the generality of any other indemnification provision contained in this
Agreement, agrees: (i) to hold the Agent and any such other Lender preparing a Report harmless
from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Obligated Parties, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of the Borrower; and
(ii) to pay and protect, and indemnify, defend and hold the Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs,
expenses and other amounts (including Attorney Costs) incurred by the Agent and any such other
Lender preparing a Report as the direct or indirect




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result of any third parties who might obtain all or part of any Report through the
indemnifying Lender.




     12.19 Relation Among Lenders. The Lenders are not partners or co-venturers, and no
Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in
case of the Agent) authorized to act for, any other Lender.



     12.20 Co-Agents. None of the Lenders identified on the facing page or signature pages
of this Agreement as a “co-agent” or “documentation agent”, if any, shall have any right, power,
obligation, liability, or responsibility or duty under this Agreement other than those applicable
to all Lenders as such. Without limiting the generality of 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.



     12.21 CS Intercreditor Agreement.



          (a) Each of the Lenders irrevocably authorizes the Agent, at its option and in its discretion,
to enter into the CS Intercreditor Agreement and to take such actions as required or permitted
thereunder from time to time.




          (b) Each Lender hereby agrees to be bound by the terms of the CS Intercreditor Agreement and
acknowledges that CS and the lenders represented by CS in connection with the CS Guarantee and
Collateral Agreement are third party beneficiaries of this Section 12.21(b).




          (c) In the event that the CS Guarantee and Collateral Agreement is replaced due to the
refinancing of the obligations of the Obligated Parties to CS in a bona fide third party
transaction, the Lenders hereby authorize and direct the Agent to enter into a replacement
intercreditor agreement conforming in substance to the CS Intercreditor.




ARTICLE 13

MISCELLANEOUS




     13.1 No Waivers; Cumulative Remedies. No failure by the Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any present or future supplement
thereto, or in any other agreement between or among the Obligated Parties and the Agent and/or any
Lender, or delay by the Agent or any Lender in exercising the same, will operate as a waiver
thereof. No waiver by the Agent or any Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by the Agent or the Lenders on any occasion
shall affect or diminish the Agent’s and each Lender’s rights thereafter to require strict
performance by the Obligated Parties of any provision of this Agreement. The Agent and the Lenders
may proceed directly to collect the Obligations without any prior recourse to the Collateral. The
Agent’s and each Lender’s rights under this Agreement will be cumulative and not exclusive of any
other right or remedy that the Agent or any Lender may have.




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     13.2 Severability. The illegality or unenforceability of any provision of this
Agreement or any Loan Document or any instrument or agreement required hereunder shall not in any
way affect or impair the legality or enforceability of the remaining provisions of this Agreement
or any instrument or agreement required hereunder.



     13.3 Governing Law; Choice of Forum; Service of Process.



          (a) This Agreement shall be interpreted and the rights and liabilities of the parties hereto
determined in accordance with the internal laws (as opposed to the conflict of laws provisions,
provided that perfection issues with respect to Article 9 of the UCC may give effect to applicable
choice or conflict of law rules set forth in Article 9 of the UCC) of the State of California;
provided that the Agent and the Lenders shall retain all rights arising under federal law.




          (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 California or of the United States of America located
in Los Angeles County, California, or in the courts of the State of New York or of the United
States of America located in the City of New York, Borough of Manhattan and by execution and
delivery of this Agreement, each of the Obligated Parties, the Agent, the Bank and the Lenders
consents, for itself and in respect of its property, to the exclusive jurisdiction (subject only to
the provisions of clause (d) below) of those courts. Each of the Obligated Parties, the
Agent, the Bank and the Lenders irrevocably waives any objection, including any objection to the
laying of venue or based on the grounds of forum non conveniens, that it may now or hereafter have
to the bringing of any action or proceeding in such jurisdiction in respect of this Agreement, any
other Loan Document, or any document related thereto. Notwithstanding the foregoing: (i) the
Agent, the Bank and the Lenders shall have the right to bring any action or proceeding against the
Obligated Parties or their property in the courts of any other jurisdiction the Agent, the Bank, or
the Lenders deem necessary or appropriate in order to realize on the Collateral or other security
for the Obligations; and (ii) each of the parties hereto acknowledges that any appeals from the
courts described in the first sentence of this paragraph may have to be heard by a court located
outside those jurisdictions.




          (c) The Obligated Parties hereby waive personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return receipt requested)
directed to the Borrower at its address set forth in Section 13.8 and service so made shall
be deemed to be completed five (5) days after the same shall have been so deposited in the U.S.
Mail, postage prepaid. Nothing contained herein shall affect the right of the Agent, the Bank, or
the Lenders to serve legal process by any other manner permitted by law.




          (d) Notwithstanding any other provision of this Agreement to the contrary, any controversy or
claim between or among the parties, arising out of or relating to this Agreement or any other Loan
Document, including any claim based on or arising from an alleged tort, shall at the request of any
party hereto be determined by binding arbitration. The arbitration shall be conducted in
accordance with the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice
of law provision in this Agreement, and under the




72









 







Commercial Rules of the American Arbitration Association (“AAA”). The arbitrator(s) shall
give effect to statutes of limitation in determining any claim. Any controversy concerning whether
an issue is arbitrable shall be determined by the arbitrator(s). Judgment upon the arbitration
award may be entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuant to a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.




          (e) Notwithstanding the provisions of Section 13.3(d), no controversy or claim shall
be submitted to arbitration without the consent of all parties if, at the time of the proposed
submission, such controversy or claim arises from or related to an Obligation secured by real
estate property collateral (exclusive of real estate space lease assignments). If all the parties
do not consent to submission of such a controversy or claim to arbitration, the controversy or
claim shall be determined as provided in Section 13.3(f).




          (f) At the request of any party a controversy or claim that is not submitted to arbitration as
provided and limited in Section 13.3(d) and (e) shall be determined by judicial
reference. If such an election is made, the parties shall designate to the court a referee or
referees selected under the auspices of the AAA in the same manner as arbitrators are selected in
AAA-sponsored proceedings. The presiding referee of the panel, or the referee if there is a single
referee, shall be an active attorney or retired judge. Judgment upon the award rendered by such
referee or referees shall be entered in the court in which such proceeding was commenced.




          (g) No provision of Sections 13.3(d) through (f) shall limit the right of the
Agent, the Bank, or the Lenders to exercise self-help remedies such as setoff, foreclosure against
or sale of any real or personal property collateral or security, or obtaining provisional or
ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of
any arbitration or other proceeding. The exercise of a remedy does not waive the right of any
party to resort to arbitration or reference. At the Agent’s option, foreclosure under a deed of
trust or mortgage may be accomplished either by exercise of power of sale under the deed of trust
or mortgage or by judicial foreclosure.




     13.4 Waiver of Jury Trial. Subject to the provisions of Section 13.3(d),
the Obligated Parties, the Lenders, the Bank, and the Agent each irrevocably waive, to the maximum
extent not prohibited by applicable law, their respective rights to a trial by jury of any claim or
cause of action based upon or arising out of or related to this Agreement, the other Loan
Documents, or the transactions contemplated hereby or thereby, in any action, proceeding or other
litigation of any type brought by any of the parties against any other party or any Agent-Related
Person, Participant or Assignee, whether with respect to contract claims, tort claims, or
otherwise. The Obligated Parties, the Lenders, the Bank, and the Agent each agree that any such
claim or cause of action shall be tried by a court trial without a jury. Without limiting the
foregoing, the parties further agree that their respective right to a trial by jury is waived by
operation of this Section as to any action, counterclaim or other proceeding that seeks, in whole
or in part, to challenge the 



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validity or enforceability of this Agreement or any other Loan Document or any provision
hereof or thereof. This waiver shall apply to any subsequent amendments, renewals, supplements or
modifications to this Agreement or the other Loan Documents.




     13.5 Survival of Representations and Warranties. All of the Obligated Parties’
representations and warranties contained in this Agreement shall survive the execution, delivery,
and acceptance thereof by the parties, notwithstanding any investigation by the Agent, the Bank, or
the Lenders or their respective agents.



     13.6 Other Security and Guaranties. The Obligated Parties’ obligations hereunder
shall not be affected if the Agent, without notice to or demand on the Obligated Parties, from time
to time: (a) takes from any Person and holds collateral (other than the Collateral) for the
payment of all or any part of the Obligations and exchanges, enforces or releases such collateral
or any part thereof; and (b) accepts and holds any endorsement or guaranty of payment of all or any
part of the Obligations and releases or substitutes any such endorser or guarantor or any Person
who has given any Lien in any other collateral as security for the payment of all or any part of
the Obligations, or any other Person in any way obligated to pay all or any part of the
Obligations.



     13.7 Fees and Expenses. The Obligated Parties agree to pay to the Agent, for its
benefit, on demand, all costs and expenses that the Agent pays or incurs in connection with the
negotiation, preparation, syndication, consummation, administration, enforcement, and termination
of this Agreement or any of the other Loan Documents, including without limitation: (a) Attorney
Costs; (b) costs and expenses (including attorneys’ and paralegals’ fees and disbursements) for any
amendment, supplement, waiver, consent, or subsequent closing in connection with the Loan Documents
and the transactions contemplated thereby; (c) costs and expenses of lien and title searches and
title insurance; (d) taxes, fees and other charges for recording the Mortgage, filing financing
statements and continuations, and other actions to perfect, protect, and continue the Agent’s Liens
(including costs and expenses paid or incurred by the Agent in connection with the consummation of
this Agreement); (e) sums paid or incurred to pay any amount or take any action required of the
Obligated Parties under the Loan Documents that the Obligated Parties fail to pay or take; (f)
costs of appraisals, inspections, and verifications of the Collateral, including travel, lodging,
and meals for inspections of the Collateral and the Obligated Parties’ operations by the Agent plus
the Agent’s then customary charge for field examinations and audits and the preparation of reports
thereof (such charge not to exceed $850 per day (or portion thereof) for each Person retained or
employed by the Agent with respect to each field examination or audit and not to exceed $25,000 in
the aggregate per field examination conducted at any time other than during the continuance of an
Event of Default; it being understood and agreed that, subject only to the $850 per day limitation
set forth above, there shall be no limitation on the aggregate charges in connection with any field
examination conducted, in whole or in part, during the continuance of any Event of Default); and
(g) costs and expenses of forwarding loan proceeds, collecting checks and other items of payment,
and establishing and maintaining Payment Accounts and lock boxes, and costs and expenses of
preserving and protecting the Collateral. In addition, the Obligated Parties agree to



74









 







pay costs and expenses incurred by the Agent (including Attorneys’ Costs) to the Agent, for
its benefit, on demand, and to the other Lenders for their benefit, on demand, and all reasonable
fees, expenses and disbursements incurred by such other Lenders for one law firm retained by such
other Lenders, in each case, paid or incurred to obtain payment of the Obligations, enforce the
Agent’s Liens, sell or otherwise realize upon the Collateral, and otherwise enforce the provisions
of the Loan Documents, or to defend any claims made or threatened against the Agent or any Lender
arising out of the transactions contemplated hereby (including preparations for and consultations
concerning any such matters), together with all other Extraordinary Expenses. The foregoing shall
not be construed to limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Obligated Parties. All of the foregoing costs and expenses shall be charged to
the Loan Account as Revolving Loans as described in Section 3.6.



     13.8 Notices. Except as otherwise provided herein, all notices, demands, and requests
that any party is required or elects to give to any other party shall be in writing or by a
telecommunications device capable of creating a written record, and any such notice shall become
effective: (a) upon personal delivery thereof, including, but not limited to, delivery by
overnight mail and courier service; (b) four (4) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid; provided that, unless
otherwise required by applicable law, such four-day period shall not extend any time period for
notices contained in this Agreement; or (c) in the case of notice by such a telecommunications
device, when properly transmitted, in each case addressed to the party to be notified as follows:



     If to the Agent or to the Bank:


Bank of America, N.A.

55 S. Lake Avenue, Suite 900

Pasadena, California 91101

Attention: Todd Eggertsen, Vice President

Telecopy No.: (626) 584-4602



with copies to:



Gary Samson, Esq.

McGuireWoods LLP

1800 Century Park East, 8th Floor

Los Angeles, California 90067

Telecopy No.: (310) 956-3148




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     If to any Obligated Party:


c/o Paramount Petroleum Corporation

14700 Downey Avenue

Paramount, California 90723

Attention: Shai Even, Chief Financial Officer

Telecopy No.: (972) 367-3726



and:



Paramount Petroleum Corporation

7616 LBJ Freeway, Suite 300

Dallas, Texas 75251-1100

Attention: Shai Even, Chief Financial Officer

Telecopy No.: (972) 367-3726



with copies to:



Jones Day

2727 North Harwood Street

Dallas, Texas 75201-1515

Attention: Mark T. Goglia

Telecopy No.: (214) 969-5100



or to such other address as each party may designate for itself by like notice. Failure or delay
in delivering copies of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall not adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration, or other
communication.




     13.9 Waiver of Notices. Unless otherwise expressly provided herein, the Obligated
Parties waive presentment, notice of demand or dishonor and protest as to any instrument, notice of
intent to accelerate the Obligations and notice of acceleration of the Obligations, as well as any
and all other notices to which it might otherwise be entitled. No notice to or demand on the
Obligated Parties that the Agent or any Lender may elect to give shall entitle the Obligated
Parties to any or further notice or demand in the same, similar, or other circumstances.



     13.10 Binding Effect. The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective representatives, successors, and permitted assigns of the
parties hereto; provided, however, that no interest herein may be assigned by the Obligated Parties
without the prior written consent of the Agent and each Lender. The rights and benefits of the
Agent and the Lenders hereunder shall, if such Persons so agree, inure to any party acquiring any
interest in the Obligations or any part thereof.



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     13.11 Indemnity of the Agent and the Lenders by the Obligated Parties.



          (a) The Obligated Parties agree to defend, indemnify, and hold each Indemnified Person
harmless from and against any and all Claims (including Attorney Costs and Extraordinary Expenses)
of any kind or nature whatsoever that may at any time (including at any time following repayment of
the Loans and the termination, resignation, or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by, or asserted against any such Indemnified Person in any way
relating to or arising out of this Agreement, any document contemplated by or referred to herein or
the transactions contemplated hereby, or any action taken or omitted by any such Indemnified Person
under or in connection with any of the foregoing, including with respect to any investigation,
litigation, or proceeding (including any Insolvency Proceeding or appellate proceeding) related to
or arising out of this Agreement, any other Loan Document, or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively,
the “Indemnified Liabilities”); provided, that the Obligated Parties shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting solely from
the gross negligence or willful misconduct of such Indemnified Person as determined in a final,
non-appealable order of or court of competent jurisdiction. The agreements in this Section shall
survive termination of this Agreement and Payment in Full of all other Obligations.




          (b) Without limiting the rights of the Agent and the Lenders under any separate environmental
indemnity agreement delivered by the Obligated Parties, the Obligated Parties agree to indemnify,
defend and hold harmless the Agent and the Lenders from any loss or liability directly or
indirectly arising out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal, or presence of a Hazardous Substance relating to the
Obligated Parties’ operations, business, or property. This indemnity will apply whether the
hazardous substance is on, under, or about the Obligated Parties’ property or operations or
property leased to any Obligated Party. The indemnity includes but is not limited to Attorneys
Costs. The indemnity extends to the Agent and the Lenders, their parents, affiliates,
subsidiaries, and all of their directors, officers, employees, agents, successors, attorneys and
assigns. “Hazardous Substance” means any substance, material or waste that is or becomes
designated or regulated as “toxic,” “hazardous,” “pollutant,” or “contaminant” or a similar
designation or regulation under any federal, state or local law (whether under common law, statute,
regulation or otherwise) or judicial or administrative interpretation of such, including petroleum
or natural gas. This indemnity will survive repayment of all other Obligations.




     13.12 Limitation of Liability. No claim may be made by the Obligated
Parties, any Lender, or other Person against the Agent, any Lender, or the affiliates, directors,
officers, employees, counsel, representatives, agents or attorneys-in-fact of any of them for any
special, indirect, consequential, or punitive damages in respect of any claim for breach of
contract, tort or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any other Loan Document, or any act, omission or event occurring
in connection therewith, and the Obligated Parties and each Lender hereby waive, release and 



77









 




agree not to sue upon any claim for such damages, whether or not accrued and whether or
not known or suspected to exist in its favor.




     13.13 Final Agreement. This Agreement and the other Loan Documents are intended by
the Obligated Parties, the Agent and the Lenders to be the final, complete, and exclusive
expression of the agreement between them. Subject to Section 13.20, this Agreement and the
other Loan Documents supersede any and all prior oral or written agreements relating to the subject
matter hereof. No modification, rescission, waiver, release, or amendment of any provision of this
Agreement or any other Loan Document shall be made, except by a written agreement signed by the
Borrower and a duly authorized officer of each of the Agent and the requisite Lenders.



     13.14 Counterparts. This Agreement may be executed in any number of counterparts, and
by the Agent, each Lender, and the Obligated Parties in separate counterparts, each of which shall
be an original, but all of which shall together constitute one and the same agreement; signature
pages may be detached from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.



     13.15 Captions. The captions contained in this Agreement are for convenience of
reference only, are without substantive meaning and should not be construed to modify, enlarge, or
restrict any provision.



     13.16 Right of Setoff. In addition to any rights and remedies of the Lenders provided
by law, if an Event of Default exists or the Loans have been accelerated, the Agent, the Bank, and
each Lender is hereby authorized at any time and from time to time, without prior notice to the
Obligated Parties, any such notice being waived by the Obligated Parties 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, the Agent,
the Bank, or such Lender or any Affiliate of such Person to or for the credit or the account of the
Obligated Parties against any and all Obligations owing to such Person, now or hereafter existing,
irrespective of whether or not such Person shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each of the Agent, the Bank
and each Lender agrees promptly to notify the Borrower and the Agent after any such setoff and
application made by such Person; provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. Notwithstanding the foregoing, no Lender
shall exercise any right of setoff, banker’s lien, or the like against any deposit account or
Property of the Obligated Parties held or maintained by such Lender without the prior written
consent of the Agent.



     13.17 Confidentiality.



          (a) The Obligated Parties hereby consent that the Agent, the Bank, and each Lender may issue
and disseminate to the public general information describing the credit accommodation entered into
pursuant to this Agreement, including the name and address of the

78









 








Obligated Parties and a general description of the Obligated Parties’ business, and may use
the Obligated Parties’ names in advertising and other promotional material. The Agent, the Bank,
and each Lender shall provide the Borrower with a reasonable opportunity to review a sample of any
such proposed advertising or other promotional material prior to the dissemination thereof;
provided that the Obligated Parties’ consent or approval shall not be required in connection with
any such dissemination.




     (b) Each Lender severally agrees to take normal and reasonable precautions and exercise due
care to maintain the confidentiality of information provided to the Agent or such Lender by or on
behalf of the Obligated Parties pursuant to this Agreement or any other Loan Document, except to
the extent that such information: (i) was or becomes generally available to the public other than
as a result of disclosure by the Agent or such Lender; or (ii) was or becomes available on a
non-confidential basis from a source other than the Obligated Parties; provided that such source is
not bound by a confidentiality agreement with the Obligated Parties known to the Agent or such
Lender; provided, further, that the Agent and any Lender may disclose such information: (1) at the
request or pursuant to any requirement of any Governmental Authority to which the Agent or such
Lender is subject or in connection with an examination of the Agent or such Lender by any such
Governmental Authority; (2) pursuant to subpoena or other court process; (3) when required to do so
in accordance with the provisions of any applicable Requirement of Law; (4) to the extent
reasonably required in connection with any litigation or proceeding (including, but not limited to,
any bankruptcy proceeding) to which the Agent, any Lender, or their respective Affiliates may be
party; (5) to the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (6) to the Agent’s or such Lender’s independent
auditors, accountants, attorneys, and other professional advisors; (7) to any prospective
Participant or Assignee under any Assignment and Acceptance, actual or potential, or to any actual
or prospective counterparty (or its advisors) to any securitization, swap or derivative transaction
relating to any Obligated Party or any of its Subsidiaries and the obligations hereunder; provided
that such prospective Participant, Assignee or counterparty agrees to keep such information
confidential to the same extent required of the Agent and the Lenders hereunder; (8) as expressly
permitted under the terms of any other document or agreement regarding confidentiality to which any
Obligated Party or any of its Subsidiaries is party or is deemed party with the Agent or such
Lender; and (9) to its Affiliates.



     13.18 Conflicts with Other Loan Documents. Unless otherwise expressly provided in
this Agreement (or in another Loan Document by specific reference to the applicable provision
contained in this Agreement), if any provision contained in this Agreement conflicts with any
provision of any other Loan Document, the provision contained in this Agreement shall govern and
control.



     13.19 USA Patriot Act Notice. The Agent (for itself and not on behalf of any Lender),
the Bank, and each Lender hereby notifies the Obligated Parties that pursuant to the requirements
of the Patriot Act, the Agent, the Bank, and each such Lender is required to obtain, verify, and
record information that identifies the Obligated Parties, which information includes the name and
address of the Borrower and other information that will allow the Agent, the Bank, and each such
Lender to identify the Obligated Parties in accordance with the Patriot Act.



79









 





     13.20 Amendment and Restatement; Waiver of Claims.



          (a) This Agreement is an amendment and restatement of the Amended and Restated Credit
Agreement. All “Obligations” under the Amended and Restated Credit Agreement, and all security
interests, liens, and collateral assignments granted to the Agent for the benefit of the Lenders
under the Amended and Restated Credit Agreement or any of the other “Loan Documents” defined
therein, hereby are renewed and continued in full force and effect, and hereafter shall be governed
by this Agreement. All existing “Loan Documents” previously executed in connection with the
Original Loan Agreement shall continue in full force and effect, except to the extent any such
agreement is amended, restated, or replaced in connection with this Agreement, and any and all
references therein to the Amended and Restated Credit Agreement (regardless of terminology) shall
refer to and mean this Agreement.




          (b) The Obligated Parties hereby represent and warrant that as of the date of this Agreement
there are no claims, offsets against, or defenses or counterclaims to the Obligations under the
Amended and Restated Credit Agreement or any other Loan Document. The Obligated Parties hereby
waive and release any and all such claims, offsets, defenses, or counterclaims, whether known or
unknown, arising prior to the date of this Agreement.




          (c) The Obligated Parties intend the above release to cover, encompass, release, and
extinguish, inter alia, all claims, demands, and causes of action that might otherwise be reserved
by the California Civil Code Section 1542, which provides as follows:





“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with the
debtor.” 



          (d) The Obligated Parties acknowledge that they may hereafter discover facts different from or
in addition to those now known or believed to be true with respect to such claims, demands, or
causes of action, and agrees that this Agreement and the above release are and will remain
effective in all respects notwithstanding any such differences or additional facts.




[Remainder of Page Intentionally Left Blank]



80









 








     IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above
written.



	 	 	 	 	 	 	 
	 	 	“BORROWER”	 	 
	 
	 	 	 	 	 	 
	 	 	PARAMOUNT PETROLEUM CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Harlin R. Dean 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Harlin R. Dean	 	 
	 

	 	Title:
	 	Vice President and Secretary	 	 






Signature Pages




 









 






	 	 	 	 	 	 	 
	 	 	“OBLIGATED PARTIES”	 	 
	 
	 	 	 	 	 	 
	 	 	PARAMOUNT PETROLEUM CORPORATION OF ARIZONA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Harlin R. Dean 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Harlin R. Dean	 	 
	 

	 	Title:
	 	Vice President and Secretary	 	 






	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PARAMOUNT OF OREGON, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Harlin R. Dean 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Harlin R. Dean	 	 
	 

	 	Title:
	 	Vice President and Secretary	 	 






	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PARAMOUNT OF WASHINGTON, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Harlin R. Dean 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Harlin R. Dean	 	 
	 

	 	Title:
	 	Vice President and Secretary	 	 






	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	EDGINGTON OIL COMPANY, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Harlin R. Dean 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Harlin R. Dean	 	 
	 

	 	Title:
	 	Vice President and Secretary	 	 






	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ALON ASPHALT BAKERSFIELD, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Harlin R. Dean 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Harlin R. Dean	 	 
	 

	 	Title:
	 	Vice President and Secretary	 	 






Signature Pages




 









 








	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,
as the Agent, Bank, and Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Todd R. Eggertsen 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Todd R. Eggertsen	 	 
	 

	 	Title:
	 	Vice President	 	 






Signature Pages




 









 






	 	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Rebecca A. Ford 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Rebecca A. Ford 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Duly Authorized Signatory 	 	 
	 

	 	 	 	 	 	 





Signature Pages





 









 





ANNEX A




to




Second Amended and Restated Credit Agreement




Definitions




     Initially capitalized terms used in the Loan Documents have the following respective meanings
(unless otherwise defined therein), and all section, annex, exhibit, or schedule references in the
following definitions refer to sections of annexes, exhibits, or schedules attached to the
Agreement:



     “Accounts” means all of the Obligated Parties’ now owned or hereafter acquired or arising
“accounts”, as defined in the UCC, including any rights to payment for the sale or lease of goods
or rendition of services, whether or not they have been earned by performance.



     “Account Debtor” means each Person obligated in any way on or in connection with an Account,
Chattel Paper, or General Intangibles (including a payment intangible).



     “ACH Transactions” means any cash management or related services including the automatic
clearing house transfer of funds by the Bank for the account of any Obligated Party pursuant to
agreement or overdrafts.



     “Adjusted Net Earnings from Operations” means, with respect to any fiscal period of any Person
(the “subject Person”), the subject Person’s net income after provision for income taxes for such
fiscal period, as determined in accordance with GAAP and reported on the Financial Statements for
such period, excluding any and all of the following included in such net income: (a) gain or loss
arising from the sale of any capital assets; (b) gain arising from any write-up in the book value
of any asset to the extent exceeding any prior write down in the value of such asset; (c) earnings
of any other Person, substantially all the assets of which have been acquired by the Subject Person
in any manner, to the extent realized by such other Person prior to the date of acquisition; (d)
earnings of any Person in which the subject Person has an ownership interest (other than a
Subsidiary consolidated with the subject Person in accordance with GAAP) unless (only to the
extent) such earnings shall actually been received by the subject Person in the form of cash
distributions; (e) earnings of any other Person to which assets of the subject Person shall have
been sold, transferred or disposed of, or into which the subject Person shall have been merged, or
that has been a party with the subject Person to any consolidation or other form of reorganization,
prior to the date of such transaction; (f) gain arising from the acquisition of debt or equity
securities of the subject Person or from cancellation or forgiveness of Debt; and (g) gain arising
from extraordinary items, as determined in accordance with GAAP, or from any other non-recurring
transaction.



     “Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person or that owns, directly



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or indirectly, five percent (5%) or more of the outstanding equity interest of such Person. A
Person shall be deemed to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, by contract, or otherwise.



     “Agent” means Bank of America, N.A., solely in its capacity as administrative agent for the
Lenders, and any successor agent for the Lenders.



     “Agent Advances” has the meaning specified in Section 1.2(i).



     “Agent’s Liens” means the Liens in the Collateral granted to the Agent, for the benefit of the
Secured Parties pursuant to this Agreement and the other Loan Documents.



     “Agent-Related Persons” means, collectively, the Agent, together with its Affiliates, and the
officers, directors, employees, counsel, representatives, agents and attorneys-in-fact of the Agent
and such Affiliates.



     “Aggregate Revolver Outstandings” means, at any date of determination: the sum of: (a) the
unpaid balance of Revolving Loans; (b) one hundred percent (100%) of the aggregate stated amount of
all outstanding Letters of Credit; and (c) the aggregate amount of any unpaid reimbursement
obligations in respect of Letters of Credit.



     “Agreement” means the Second Amended and Restated Credit Agreement to which this Annex
A is attached, as from time to time amended, modified or restated.



     “Alon” means Alon USA Energy, Inc.



     “Alon Loan Agreement” means that certain Credit Agreement dated as of June 22, 2006, and
executed by and among certain financial institutions party thereto from time to time, Credit
Suisse, acting through its Cayman Islands Branch, as Collateral Agent and Alon, as amended,
restated, or otherwise modified from time to time; provided that such amendment, restatement, or
modification is not in violation of the CS Intercreditor Agreement.



     “Alon Loan Documents” means, collectively, the Alon Loan Agreement and all other agreements,
instruments, and documents evidencing, securing, guaranteeing, or otherwise relating to the
transactions contemplated by the Alon Loan Agreement, as each may be amended, restated, or
otherwise modified from time to time; provided that such amendment, restatement, or modification is
not in violation of the CS Intercreditor Agreement.



     “Amended and Restated Credit Agreement” has the meaning given in the recitals to this
Agreement.



     “Anniversary Date” means the date of each anniversary of the Closing Date.



     “Applicable Margin” means



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Annex A









 





          (a) with respect to Revolving Loans and all other Obligations (other than LIBOR Revolving
Loans), 0.25%;




          (b) with respect to LIBOR Revolving Loans, 1.50%;




          (c) with respect to the Letter of Credit Fee for standby Letters of Credit, 1.50%;




          (d) with respect to the Letter of Credit Fee for documentary Letters of Credit, 1.125%; and




          (e) with respect to the Unused Line Fee, 0.375%.



The Applicable Margin shall be adjusted (up or down) as shall be determined by reference to the
following grids:




	 	 	 	 	 
	 	 	Level of	 
	If the Average Monthly Availability is:	 	Applicable Margin:	 
	Greater than or equal to $175,000,000
	 	Level I
	Less than $175,000,000, but greater than or equal to $100,000,000
	 	Level II
	Less than $100,000,000, but greater than or equal to $50,000,000
	 	Level III
	Less than $50,000,000
	 	Level IV






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margin	 
	 	 	Level I	 	 	Level II	 	 	Level III	 	 	Level IV	 
	Base Rate Revolving
Loans
	 	 	0.00	%	 	 	0.25	%	 	 	0.50	%	 	 	0.75	%
	LIBOR Revolving Loans
	 	 	1.25	%	 	 	1.50	%	 	 	1.75	%	 	 	2.00	%
	Standby L/C Margin
	 	 	1.25	%	 	 	1.50	%	 	 	1.75	%	 	 	2.00	%
	Documentary L/C Margin
	 	 	0.875	%	 	 	1.125	%	 	 	1.375	%	 	 	1.625	%
	Unused Line Fee
	 	 	0.375	%	 	 	0.375	%	 	 	0.250	%	 	 	0.250	%






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Annex A









 




All adjustments in the Applicable Margins shall be implemented monthly on a prospective basis,
starting on the first day of each calendar month, commencing on April 1, 2007. If, as a result of
any restatement of or other adjustment to any calculation of Average Monthly Availability, or for
any other reason, the Agent determines that (a) the Average Monthly Availability as of any
applicable date was inaccurate and (b) a proper calculation of the Average Monthly Availability
would have resulted in different pricing for any period, then (i) if the proper calculation of the
Average Monthly Availability would have resulted in higher pricing for such period, the Obligated
Parties shall automatically and retroactively be obligated to pay to the Agent, promptly on demand
by the Agent, an amount equal to the excess of the amount of interest and fees that should have
been paid for such period over the amount of interest and fees actually paid for such period; and
(ii) if the proper calculation of the Average Monthly Availability would have resulted in lower
pricing for such period, the Agent and the Lenders shall have no obligation to repay any interest
or fees to the Obligated Parties; provided that if, as a result of any restatement or other event a
proper calculation of the Average Monthly Availability would have resulted in higher pricing for
one or more periods and lower pricing for one or more other periods (due to the shifting of amounts
from one period to another period or any similar reason), then the amount payable by the Obligated
Parties pursuant to clause (i) above shall be based upon the excess, if any, of the amount
of interest and fees that should have been paid for all applicable periods over the amount of
interest and fees paid for all such periods.




     “Assignee” has the meaning specified in Section 11.2(a).



     “Assignment and Acceptance” has the meaning specified in Section 11.2(a).



     “Attorney Costs” means and includes all reasonable fees, expenses and disbursements of any law
firm or other counsel engaged by the Agent, and the reasonably allocated costs and expenses of
internal legal services of the Agent.



     “Availability” means, at any time: (a) the lesser of: (i) the Maximum Revolver Amount; or
(ii) the Borrowing Base; minus (b) Reserves other than Reserves deducted in the calculation
of the Borrowing Base; minus (c) in each case, the Aggregate Revolver Outstandings.



     “Bank” means Bank of America, N.A., a national banking association, or any successor entity
thereto.



     “Bank Products” means any one or more of the following types of services or facilities
extended to any Obligated Party by the Bank or any affiliate of the Bank in reliance on the Bank’s
agreement to indemnify such affiliate: (a) credit cards; (b) ACH Transactions; (c) cash
management, including controlled disbursement services; and (d) Hedge Agreements.



     “Bank Product Reserves” means all reserves that the Agent from time to time establishes in its
reasonable discretion for the Bank Products then provided or outstanding.



     “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et seq.).



     “BAS” means Banc of America Securities LLC, or any successor entity thereto.



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Annex A









 





     “Base Rate” means the rate of interest announced by the Bank from time to time as its prime
rate. Such rate is a rate set by the Bank based upon various factors including its 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 Bank shall take effect at the opening of business on the day specified in the
public announcement of such change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.



     “Base Rate Revolving Loan” means a Revolving Loan during any period in which it bears interest
based on the Base Rate.



     “Blocked Account Agreement” means an agreement among any Obligated Party, the Agent, and the
Bank, in form and substance reasonably satisfactory to the Agent, concerning the collection of
payments that represent the proceeds of Accounts or of any other Collateral.



     “Borrowing” means a borrowing hereunder consisting of Revolving Loans made on the same day by
the Lenders to the Borrower, or by the Bank in the case of a Borrowing funded by Non-Ratable Loans,
or by the Agent in the case of a Borrowing consisting of an Agent Advance, or the issuance of
Letters of Credit or Credit Support hereunder.



     “Borrowing Base” means, at any time, an amount determined by the Agent with reference to the
most recent Borrowing Base Certificate delivered to the Agent, that is equal to:



          (a) the sum of the following:



          (i) up to ninety percent (90%) of the Net Amount of Eligible Accounts; plus



          (ii) up to eighty-five percent (85%) of Eligible Petroleum Inventory, including
Eligible Petroleum Inventory in Transit; plus



          (iii) up to one hundred percent (100%) of Eligible Cash and Cash Equivalents;
plus




          (iv) up to ninety-five percent (95%) of Eligible Investments; plus




          (v) up to eighty-five percent (85%) of Eligible Margin Deposits; plus




          (vi) up to one hundred percent (100%) of Paid but Unexpired Letters of Credit;
minus



          (b) Reserves from time to time established by the Agent in its credit judgment, reasonably
exercised.



     “Borrowing Base Certificate” means a certificate by a Responsible Officer of the Borrower,
substantially in the form of Exhibit B (or another form acceptable to the Agent),



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Annex A









 






setting forth the calculation of the Borrowing Base, including a calculation of each component
thereof, all in such detail as shall be reasonably satisfactory to the Agent. All calculations of
the Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall
originally be made by the Borrower and certified to the Agent; provided, that the Agent shall have
the right to review and adjust, with written or verbal notice to the Borrower substantially
concurrent with such adjustment, in the exercise of its reasonable credit judgment, any such
calculation: (1) to reflect its reasonable estimate of declines in value of any of the Collateral
described therein; and (2) to the extent that such calculation is not in accordance with this
Agreement.



     “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, or are in fact closed in, North Carolina or
Pasadena, California, and if such day relates to a LIBOR Revolving Loan, any such day on which
dealings in Dollar deposits are conducted between banks in the London interbank Eurodollar market.



     “Capital Adequacy Regulation” means any guideline, request, or directive of any central bank
or other Governmental Authority, or any other law, rule, or regulation, whether or not having the
force of law, in each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.



     “Capital Expenditures” means all payments that become due (whether or not paid during any
fiscal period) in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto (excluding expenditures financed by the Term Loan and out of the
proceeds of any Equipment described in Section 7.9(i)), that has a useful life of more than
one year, including without limitation, those costs arising in connection with the direct or
indirect acquisition of such asset by way of increased product or service charges or in connection
with a Capital Lease (including capitalized interest).



     “Capital Lease” means any lease of property by any Obligated Party that, in accordance with
GAAP, should be reflected as a capital lease on the balance sheet of such Obligated Party.



     “Cash” means U.S. dollar denominated currency, U.S. dollar denominated wire transfers of
money, and any other form of immediately available funds approved by the Agent.



     “Cash Collateralize” means the delivery of cash or a Supporting Letter of Credit to the
Lender, as security for the payment of Obligations, in an amount equal to (a) with respect to
outstanding Letters of Credit and Credit Support, an amount equal to the greater of 105% of the
face amount of such Letters of Credit and Credit Support, or the greatest amount for which such
Letter of Credit or such Credit Support may be drawn, plus any fees and expenses associated
with such Letter of Credit or such Credit Support, and (b) with respect to any inchoate or
contingent Obligations (including Obligations arising under Bank Products), the Agent’s reasonable
estimate of the amount due or to become due, including all fees and other amounts relating to such
Obligations. “Cash Collateralization” has a correlative meaning.



A-6
Annex A









 





     “Cash Equivalents” means: (a) Repurchase agreements and short-term obligations issued or
guaranteed as to principal and interest by the United States of America and having a maturity of
not more than twelve (12) months from the date of acquisition; (b) short-term certificates of
deposit issued by any bank organized under the laws of the United States of America or any state
thereof if such bank has a short-term debt rating of not less than P-1 or A-1 or their equivalents
by Moody’s or S&P, respectively; (c) short-term certificates of deposit issued by, and so-called
Eurodollar “call deposits” at, any bank or any foreign subsidiary or Affiliate of such bank, if any
obligations of such bank or foreign subsidiary or affiliate, as applicable, have a rating of not
less than Baa or BBB or their equivalents, or P-3 or A-3 or their equivalents, as applicable, by
Moody’s or S&P, respectively; or (d) commercial paper or finance company paper that is rated not
less than P-1 or A-1 or their equivalents by Moody’s or S&P, respectively.



     “Change of Control” means if (a) Alon ceases to own directly or indirectly 100% of the issued
and outstanding voting capital stock of Holdings, (b) Holdings ceases to own directly or indirectly
100% of the issued and outstanding voting capital stock of any of the Obligated Parties, or (c) the
Borrower ceases to own directly or indirectly 100% of the issued and outstanding voting capital
stock of PPA.



     “Chattel Paper” means all of the Obligated Parties’ now owned or hereafter acquired “chattel
paper”, as defined in the UCC, including electronic chattel paper.



     “Claims” means all liabilities, obligations, losses, damages, penalties, judgments,
proceedings, costs and expenses of any kind (including remedial response costs, reasonable Attorney
Costs and other Extraordinary Expenses) at any time (including after Payment in Full of the
Obligations) incurred by or asserted against any Indemnified Person in any way relating to: (a)
any Loan Documents or transactions relating thereto; (b) any action taken or omitted to be taken by
any Indemnified Person in connection with any Loan Documents; (c) the existence or perfection of
any Liens, or realization upon any Collateral; (d) exercise of any rights or remedies under any
Loan Documents or applicable law; or (e) failure by any Loan Party to perform or observe any terms
of any Loan Document, in each case including all costs and expenses relating to any investigation,
litigation, arbitration or other proceeding (including any insolvency proceeding or appellate
proceedings), whether or not the applicable Indemnified Person is a party thereto.



     “Closing Date” means the date of this Agreement.



     “Code” means the Internal Revenue Code of 1986.



     “Collateral” means all of the real and personal property and all other assets of any Person
from time to time subject to the Agent’s Liens securing payment or performance of the Obligations,
as more fully described in the Security Agreement and the other Loan Documents.



     “Commitment” means, at any time with respect to a Lender, the principal amount set forth
beside such Lender’s name under the heading “Commitment” on Schedule A-1 attached to the
Agreement or on the signature page of the Assignment and Acceptance pursuant to which



A-7
Annex A









 






such Lender became a Lender hereunder in accordance with the provisions of Section
11.2, as such Commitment may be adjusted from time to time in accordance with the provisions of
Section 11.2, and “Commitments” means, collectively, the aggregate amount thereof.



     “Contaminant” means any waste, pollutant, Hazardous Substance, toxic substance, hazardous
waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any form or
condition, polychlorinated biphenyls (“PCBs”), or any constituent of any such substance or waste.



     “Continuation/Conversion Date” means the date on which a Loan is converted into or continued
as a LIBOR Revolving Loan.



     “Consent Agreements” means, as required by the Agent in its sole discretion, agreements
between the Agent and: (a) customers of the Obligated Parties under material offtake agreements;
and (b) the licensors of intellectual property rights material to the operation of the Obligated
Parties’ business, in each case consenting to, among other things, the following: (i) the Obligated
Parties’ grant of a Lien in such agreements and the rights of the Obligated Parties thereunder to
the Agent as security for the Obligations; (ii) the Agent’s right to obtain the benefit of such
agreements during any enforcement action by the Agent with respect to the Collateral; and (iii) the
transfer of such rights to a purchaser in foreclosure.



     “Credit Support” has the meaning specified in Section 1.3(a).



     “CS” means Credit Suisse, acting through its Cayman Islands Branch, as Collateral Agent, under
the Alon Loan Agreement.



     “CS Guarantee and Collateral Agreement” means that certain Guaranty and Collateral Agreement
dated as of August 4, 2006 by the Borrower and certain of its Subsidiaries in favor of CS, as
amended, restated, or otherwise modified from time to time; provided that such amendment,
restatement, or modification is not in violation of the CS Intercreditor Agreement.



     “CS Intercreditor Agreement” means that certain Intercreditor Agreement dated as of even date
herewith by and between the Agent and CS, as amended, restated, or otherwise modified from time to
time; provided that such amendment, restatement, or modification is not in violation of its terms.
The CS Intercreditor Agreement is a Loan Document.



     “CS Security Documents” means the Term Security Documents (as such term is defined in the CS
Intercreditor Agreement).



     “Debt” means, for any Person (the “subject Person”) and without duplication, all liabilities,
obligations and indebtedness of the subject Person to any other Person, of any kind or nature, now
or hereafter owing, arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise, consisting of
indebtedness for borrowed money or the deferred purchase price of property, excluding trade
payables, but including: (a) all Obligations; (b) all obligations and liabilities of any other
Person secured by any Lien on the subject Person’s property, even though the subject Person has not



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assumed or become liable for the payment thereof; provided, however, that all such obligations
and liabilities that are limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet of the subject
Person prepared in accordance with GAAP; (c) all obligations or liabilities created or arising
under any Capital Lease or conditional sale or other title retention agreement with respect to
property used or acquired by the subject Person, even if the rights and remedies of the lessor,
seller, or lender thereunder are limited to repossession of such property; provided, however, that
all such obligations and liabilities that are limited in recourse to such property shall be
included in Debt only to the extent of the book value of such property as would be shown on a
balance sheet of the subject Person prepared in accordance with GAAP; (d) the present value
(discounted at the Base Rate) of lease payments due under synthetic leases; and (e) all obligations
and liabilities under Guaranties for any of the foregoing.



     “Default” means any event or circumstance that, with the giving of notice, the lapse of time,
or both, would (if not cured, waived, or otherwise remedied during such time) constitute an Event
of Default.



     “Default Rate” means a fluctuating per annum interest rate at all times equal to the sum of:
(a) the otherwise applicable Interest Rate; plus (b) two percent (2%) per annum. Each
Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate. In
addition, the Default Rate shall result in an increase in the Letter of Credit Fee by 2 percentage
points per annum.



     “Defaulting Lender” has the meaning specified in Section 12.15(c).



     “Designated Account” has the meaning specified in Section 1.2(c).



     “Distribution” means, with respect to any Person (other than a natural person): (a) the
payment or making or declaration of any dividend or other distribution of property in respect of
such Person’s capital stock (or any options or warrants for, or other rights with respect to, such
capital stock of such Person), other than distributions solely in such Person’s capital stock (or
any options or warrants for, or other rights with respect to, such capital stock) of the same
class; (b) the redemption or other acquisition by such Person of any capital stock (or any options
or warrants for, or other rights with respect to, such capital stock) of such Person; (c) with
respect to any Obligated Party, any payment or accrual of bonus management fees to any direct or
indirect owner of equity interests in such Obligated Party or any of its Affiliates or to any
family member or Affiliate of any such Person; and (d) with respect to any Obligated Party, any
payment or accrual of salary, consulting fees or other form of compensation paid to any direct or
indirect owner of equity interests in such Obligated Party or any of its Affiliates or to any
family member or Affiliate of any such Person in an aggregate amount in excess of one hundred seven
percent (107%) of such payments or accruals during the previous Fiscal Year to such Person.



     “Documents” means all documents as such term is defined in the UCC, including bills of lading,
warehouse receipts, or other documents of title, now owned or hereafter acquired by the Obligated
Parties.



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     “DOL” means the United States Department of Labor or any successor department or agency.



     “Dollar” and “$” means dollars in the lawful currency of the United States. Unless otherwise
specified, all payments under the Agreements shall be made in Dollars.



     “EBITDA” means, with respect to any Person and for any fiscal quarter of such Person, Adjusted
Net Earnings from Operations (excluding the LIFO effect), plus, to the extent deducted in
the determination of Adjusted Net Earnings from Operations for that fiscal period, interest
expenses, federal, state, local, and foreign income taxes, depreciation, and amortization.



     “Edgington” means Edgington Oil Company, LLC, a Delaware corporation.



     “Eligible Accounts” means the Accounts that the Agent in the exercise of its reasonable
commercial discretion determines to be Eligible Accounts. Without limiting the discretion of the
Agent to establish other criteria of ineligibility, Eligible Accounts shall not, unless the Agent
in its sole discretion elects, include any Account:



          (a) (i) with respect to which more than seventy (70) days have elapsed since the date of the
original invoice therefor; or (ii) that relates to Inventory shipped or services rendered by the
Borrower more than seventy-two (72) days prior to the date of determination of eligibility, such
seventy-two (72) day period to commence on the first day that Inventory is shipped or services
rendered in connection with such Account;




          (b) with respect to which any of the representations, warranties, covenants, and agreements
contained in the Security Agreement are incorrect or have been breached;




          (c) with respect to which Account (or any other Account due from such Account Debtor), in
whole or in part, a check, promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment, and returned uncollected for any reason,
unless such Account has subsequently been paid; provided that the foregoing shall not apply to any
such return to the extent due to a dispute or the like as described in clause (j) below,
which clause (j) shall govern in such instance;




          (d) that represents a progress billing (as hereinafter defined) or as to which the Borrower
has extended the time for payment without the consent of the Agent; for the purposes hereof,
“progress billing” means any invoice for goods sold or leased or services rendered under a contract
or agreement pursuant to which the Account Debtor’s obligation to pay such invoice is conditioned
upon the Borrower’s completion of any further performance under the contract or agreement;




          (e) with respect to which any one or more of the following events has occurred to the Account
Debtor on such Account: (i) death or judicial declaration of incompetency of an Account Debtor who
is an individual; (ii) the filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the bankruptcy,





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insolvency, or similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; (iii) the making of any general assignment by the
Account Debtor for the benefit of creditors; (iv) the appointment of a receiver or trustee for the
Account Debtor or for any of the assets of the Account Debtor, including without limitation, the
appointment of or taking possession by a “custodian,” as defined in the Federal Bankruptcy Code;
(v) the institution by or against the Account Debtor of any other type of insolvency proceeding
(under the bankruptcy laws of the United States or otherwise) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims against, or winding up of
affairs of, the Account Debtor; (vi) the sale, assignment, or transfer of all or any material part
of the assets of the Account Debtor; (vii) the nonpayment generally by the Account Debtor of its
debts as they become due; (viii) or the cessation of the business of the Account Debtor as a going
concern;




          (f) owed by an Account Debtor if fifty percent (50%) or more of the aggregate Dollar amount of
outstanding Accounts owed at such time by such Account Debtor thereon is classified as ineligible
under clause (a) above;




          (g) owed by an Account Debtor that: (i) does not maintain its chief executive office in the
United States of America or Canada (other than the Province of Newfoundland); or (ii) is not
organized under the laws of the United States of America or Canada or any state or province
thereof; or (iii) is the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any department, agency,
public corporation, or other instrumentality thereof; except to the extent that such Account is
secured or payable by a letter of credit satisfactory to the Agent in its discretion;




          (h) owed by an Account Debtor that is an Affiliate or employee of any Obligated Party;




          (i) except as provided in clause (j) below, with respect to which either the
perfection, enforceability, or validity of the Agent’s Liens in such Account, or the Agent’s right
or ability to obtain direct payment to the Agent of the proceeds of such Account, is governed by
any federal, state, or local statutory requirements other than those of the UCC;




          (j) owed by an Account Debtor to which any Obligated Party or its Subsidiaries, is indebted in
any way, or that is subject to any right of setoff or recoupment by the Account Debtor unless the
Account Debtor has entered into an agreement acceptable to the Agent to waive setoff rights; or if
the Account Debtor thereon has disputed liability or made any claim with respect to any other
Account due from such Account Debtor; but in each such case only to the extent of such
indebtedness, setoff, recoupment, dispute, or claim;




          (k) owed by the government of the United States of America, or any department, agency, public
corporation, or other instrumentality thereof, unless the Federal Assignment of Claims Act of 1940,
as amended (31 U.S.C. § 3727 et seq.), and any other steps necessary to perfect the Agent’s Liens
therein, have been complied with to the Agent’s satisfaction with respect to such Account;




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          (l) owed by any state, municipality, or other political subdivision of the United States of
America, or any department, agency, public corporation, or other instrumentality thereof and as to
which the Agent determines that its Lien therein is not or cannot be perfected;




          (m) that represents a sale on a bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis;




          (n) that is evidenced by a promissory note or other instrument or by chattel paper;




          (o) if the Agent believes, in the exercise of its reasonable judgment, that the prospect of
collection of such Account is impaired or that the Account may not be paid by reason of the Account
Debtor’s financial inability to pay;




          (p) with respect to which the Account Debtor is located in any state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit the Borrower to seek
judicial enforcement in such State of payment of such Account, unless the Borrower has qualified to
do business in such state or has filed a Notice of Business Activities Report or equivalent report
for the then current year;




          (q) that arises out of a sale not made in the ordinary course of the Borrower’s business;




          (r) with respect to which the goods giving rise to such Account have not been shipped and
delivered to and accepted by the Account Debtor or the services giving rise to such Account have
not been performed by the Borrower, and if applicable, accepted by the Account Debtor, or the
Account Debtor revokes its acceptance of such goods or services;




          (s) owed by an Account Debtor that, together with its Affiliates, is obligated to the Borrower
respecting otherwise Eligible Accounts, the aggregate unpaid balance of which exceeds the following
percentage of the aggregate unpaid balance of all Eligible Accounts owed to the Borrower at such
time by all of the Borrower’s Account Debtors, but only to the extent of such excess: (i) for each
of Valero Marketing and Supply Company, the Defense Fuel Supply Center, Chevron/Texaco, Shell Oil,
Exxon/Mobil, Conoco/Phillips, and British Petroleum, no percentage limitation applies so long as
the debt issued by such Account Debtor remains investment grade as determined by Moody’s Investors
Service, Inc. and Standard & Poor’s Corporation; and (ii) in the case of any other Account Debtor,
twenty percent (20%), except that Accounts that are supported by a letter of credit assigned to,
and otherwise in form and substance satisfactory to, the Agent are excluded for all purposes in
determining whether the twenty percent (20%) limitation has been exceeded; or




          (t) that is not subject to a first priority and perfected security interest in favor of the
Agent for the benefit of the Lenders.




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     If any Account at any time ceases to be an Eligible Account, then such Account shall promptly
be excluded from the calculation of Eligible Accounts.



     "Eligible Assignee” means: (a) a commercial bank, commercial finance company or other asset
based lender, having total assets in excess of $1,000,000,000; (b) any Lender listed on the
signature page of this Agreement; (c) any Affiliate of any Lender; and (d) if an Event of Default
has occurred and is continuing, any other Person reasonably acceptable to the Agent.



     "Eligible Cash and Cash Equivalents” means Cash and Cash Equivalents of the Borrower that are
subject to a springing deposit account control agreement with the Bank or other Lender evidencing
the valid, first priority, perfected lien and security interest in favor of the Agent, for the
benefit of the Lenders.



     "Eligible Exchange Balances” means to the extent not otherwise included in the definition of
Eligible Accounts or Eligible Petroleum Inventory, an amount equal to:



          (a) the sum of the values of any and all rights of the Borrower to receive Petroleum Product
that would constitute Eligible Petroleum Inventory if owned by the Borrower and located on its
premises or to receive payments of money in connection with Exchange Transactions; provided, that
the Agent has a perfected, first priority security interest in the rights of the Borrower arising
in connection therewith and in the Petroleum Product receivables in connection therewith and the
Agent shall otherwise designate such rights as eligible in its reasonable credit judgment; and
provided, further, that the Agent shall, unless otherwise determined by the Agent in its sole
discretion, exclude from this clause (a) any values created in any Exchange Transaction
with respect to which:





          (i) any representation or warranty contained in this Agreement or any other Loan
Document is breached;




          (ii) the customer or trading partner has disputed liability or made any claim with
respect to such transaction or with respect to any other amount or product due from such
customer or trading partner to the Borrower other than for a minimal adjustment in the
ordinary course of business and in accordance with regular commercial practice;




          (iii) more than one hundred eighty (180) days have elapsed since the Borrower first
earned the right to delivery or payment of such value, or the Borrower’s customer or trading
partner does not deliver such value to the Borrower within ten (10) Business Days after the
originally scheduled delivery or payment due date therefor;




          (iv) the customer or trading partner is not located in the United States of America, is
not creditworthy or is otherwise unsatisfactory to the Agent in the exercise of its
reasonable commercial judgment; or




          (v) the customer or trading partner has filed a petition for relief under any existing
or future law relating to bankruptcy, insolvency, reorganization, or relief of



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debtors, made a general assignment for the benefit of creditors, had filed against it any petition or
other application for relief under any existing or future law relating to bankruptcy,
insolvency, reorganization, or relief of debtors, failed, suspended business operations,
become insolvent, called a meeting of its creditors for the purpose of
obtaining any financial concession or accommodation, or had or suffered a receiver or a
trustee to be appointed for all or a significant portion of its assets or affairs;
less



          (b) the sum of the values of any and all obligations of the Borrower to deliver
Petroleum Product, to make payments of money not secured by outstanding Letters of Credit or to
deliver other value in connection with Exchange Transactions; provided that the value of such
rights or obligations shall be determined in accordance with the price or prices set forth in the
exchange agreements entered into by the Borrower with each petroleum supplier or purchaser, or, if
no such price is set forth, in accordance with the then current market value for such Petroleum
Product determined on a Marked-to-Market Basis after deducting: (i) the amount on all such
exchanges for which performance has not been made on the date that such performance is due; and
(ii) the amount of all discounts, allowances, rebates, credits, and adjustments to such exchanges,
to the extent not already deducted in the above calculation of Eligible Exchange Balances. If the
amount set forth in clause (b) above exceeds the amount in clause (a) above,
Eligible Exchange Balances shall be expressed as a negative number and referred to herein as a
"Negative Exchange Balance”.




     "Eligible Investments” means any and all Qualifying Investments owned by the Borrower and held
in a blocked custody account subject to the Agent’s dominion and control and that are subject to a
valid, first priority, perfected lien and security interest in favor of the Agent, for the benefit
of the Lenders.



     "Eligible Margin Deposits” means at any time with respect to the Borrower, the Borrower’s net
equity in the aggregate amount of all sums deposited by the Borrower into accounts with commodities
brokers on nationally recognized exchanges, after deducting therefrom the aggregate amount of all
claims, disputes, contras, and offsets (contingent or otherwise) in favor of such brokers or any
other Persons against such sums; provided, however, that no sums deposited into any account with
any commodities broker shall be included in Eligible Margin Deposits unless such broker has
executed and delivered to the Agent an agency and control agreement, with respect to such account,
in form and substance satisfactory to the Lenders and the Agent.



     "Eligible Petroleum Inventory” means, at any given time the sum of:



          (a) the amount, valued on a Marked-to-Market Basis, of Petroleum Product owned by the Borrower
and is held for sale or that consists of raw materials and, in each case, that is subject to a
valid, first priority perfected lien and security interest in favor of the Agent; provided that,
unless the Agent shall otherwise elect in its sole discretion, Eligible Petroleum Inventory shall
not include any Petroleum Product:




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          (i) that is held on consignment or not otherwise owned by the Borrower, or is of a type
no longer sold by the Borrower;




          (ii) that is obsolete or returned or repossessed or used goods taken in trade;




          (iii) that is not in good condition, is unmerchantable, or does not meet in all
material respects all standards imposed by any Governmental Authority having regulatory
authority over such goods, their use, or sale;




          (iv) that is subject to any other Lien whatsoever (other than the Liens described in
clause (d) of the definition of Permitted Liens, provided that such Permitted Liens:
(x) are junior in priority to the Agent’s Liens or subject to Reserves; and (y) do not
impair directly or indirectly the ability of the Agent to realize on or obtain the full
benefit of the Collateral);




          (v) that is located in a public warehouse or in possession of a bailee or in a facility
leased by the Borrower, if the warehouseman, bailee, or lessor has not delivered to the
Agent a subordination agreement in form and substance satisfactory to the Agent or if a
Reserve for rents or storage charges has not been established for Inventory at that
location;




          (vi) that is held by the Borrower on property leased by the Borrower, unless the Agent
has received a waiver from the lessor of such leased property and, if any, the sublessor
thereof, in form and substance satisfactory to the Agent;




          (vii) that consists solely of chemicals (other than commodity chemicals maintained in
bulk), samples, prototypes, supplies, or packing and shipping materials;




          (viii) that has been shipped to a customer of the Borrower regardless of whether such
shipment is on a consignment basis;




          (ix) that is not either: (x) located at a location owned or leased by the Borrower and
set forth on Schedule 6.11 hereto; or (y) in transit between any such locations:




          (x) that is not currently either usable or salable, at prices approximating market, in
the normal course of the Borrower’s business;




          (xi) that contains or bears any Proprietary Rights licensed to the Borrower by any
Person, if the Agent is not satisfied that it may sell or otherwise dispose of such
Inventory in accordance with the terms of the Security Agreement and Section 9.2
without infringing the rights of the licensor of such Proprietary Rights or violating any
contract with such licensor (and without payment of any royalties other than any royalties
due with respect to the sale or disposition of such Inventory pursuant to the existing
license agreement) and as to which the Borrower has not delivered to the



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Agent a consent or sublicense agreement from such licensor in form and substance acceptable to the Agent if
requested; and




          (xii) that the Agent shall otherwise designate as ineligible in its reasonable credit
judgment; plus




     (b) Eligible Exchange Balances other than Negative Exchange Balances.



     "Eligible Petroleum Inventory in Transit” means at any given time, the aggregate value on a
Marked-to-Market Basis of Petroleum Product contracted for purchase by the Borrower if: (a) such
Petroleum Product has not, as of such time, been delivered to the Borrower; (b) such Petroleum
Product has not been included as Eligible Petroleum Inventory in the then effective Borrowing Base
Certificate but will be eligible for inclusion in the Borrowing Base upon the delivery thereof; (c)
the Borrower’s obligation to pay the purchase price of such Petroleum Product is supported by a
Letter of Credit; provided, that for purposes of including such Petroleum Product in the Borrowing
Base, such Petroleum Product shall be valued at an amount not to exceed the Maximum Drawing Amount
of all Letters of Credit supporting the purchase price thereof; and provided, further, that no
portion of such Letter of Credit supporting such purchase price is included in the Borrowing Base
as a Paid but Unexpired Letter of Credit.



     "Environmental Compliance Reserve” means any reserve that the Agent establishes, in its
reasonable discretion after prior written notice to the Borrower, from time to time for amounts
that are reasonably likely to be expended by the Obligated Parties in order for the Obligated
Parties and their operations and property: (a) to comply with any notice from a Governmental
Authority asserting material non-compliance with Environmental Laws; or (b) to correct any such
material non-compliance identified in a report delivered to the Agent and the Lenders pursuant to
Section 7.7.



     "Environmental Laws” means all federal, state, or local laws, statutes, common law duties,
rules, regulations, ordinances, and codes, together with all administrative orders, directed
duties, licenses, authorizations, and permits of and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety, and land use matters.



     "Environmental Lien” means a Lien in favor of any Governmental Authority for: (a) any
liability under Environmental Laws; or (b) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a Contaminant into the
environment.



     "Equipment” means all of the Obligated Parties’ now owned and hereafter acquired machinery,
equipment, furniture, furnishings, fixtures, and other tangible personal property (except
Inventory), including embedded software, certificated and uncertificated motor vehicles, aircraft,
dies, tools, jigs, molds; and office equipment, as well as all of such types of property leased by
the Obligated Parties and all of the Obligated Parties’ rights and interests with respect thereto
under such leases (including without limitation, options to purchase), together with all present
and future additions and accessions thereto, replacements therefor, component and auxiliary parts
and supplies used or to be used in connection therewith, and all substitutes for any



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of the foregoing, and all manuals, drawings, instructions, warranties, and rights with respect thereto,
wherever any of the foregoing is located.




     "ERISA” means the Employee Retirement Income Security Act of 1974, and regulations promulgated
thereunder.



     "ERISA Affiliate” means any trade or business (whether or not incorporated) under common
control with any Obligated Party 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 relating to Section
412 of the Code).



     "ERISA Event” means: (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal
by any Obligated Party 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 any Obligated Party or any ERISA Affiliate from a
Multi-employer Plan or notification that a Multi-employer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multi-employer Plan; (e) the failure by any Obligated Party or any ERISA Affiliate
to meet any funding obligations with respect to any Pension Plan or Multi-employer Plan; (f) the
occurrence of an event or condition that 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 Multi-employer Plan; or (g) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Obligated Party or any ERISA Affiliate.



     "Event of Default” has the meaning specified in Section 9.1.



     "Exchange Act” means the Securities Exchange Act of 1934 and any regulations promulgated
thereunder.



     "Exchange Transaction” means any transaction in which the Borrower trades, lends, borrows, or
exchanges Petroleum Product in the ordinary course of business with any Person other than any
Affiliate of the Borrower.



     "Extraordinary Expenses” means all reasonable costs, expenses or advances that the Agent may
incur during a Default or Event of Default, or during the pendency of any insolvency proceeding
related to any Obligated Party or the Collateral, including those relating to: (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or
advertising for sale, sale, collection, or other preservation of or realization upon any
Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against the
Agent or any Lender, any Obligated Party, any representative of creditors of any Obligated Party,
or any other Person) in any way relating to any Collateral (including the validity, perfection,
priority or avoidability of the Agent’s Liens with respect to any Collateral), any Loan Documents
or the



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validity, allowance, or amount of any Obligations, including any lender liability or other
Claims; (c) the exercise, protection or enforcement of any rights or remedies of the Agent or any
Lender in, or the monitoring of, any insolvency proceeding; (d) settlement or satisfaction of any
taxes, charges or Liens with respect to any Collateral; (e) any action to enforce any Obligations
or Loan Documents or to realize upon any Collateral (whether by judicial action, self-help,
notification of Account Debtors, exercise of setoff or recoupment, or otherwise), whether or not
taken in connection with, or for the purposes of instituting, any insolvency proceeding; or (f)
negotiation and documentation of any modification, waiver, workout, restructuring or forbearance
with respect to any Loan Documents or Obligations. Such costs, expenses and advances include
transfer fees, taxes, storage fees, insurance costs, permit fees, utility reservation and standby
fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions,
accountants’ fees, environmental study fees, wages and salaries paid to employees of any Obligated
Party or independent contractors in liquidating any Collateral, and travel expenses.




     "Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, 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 of New York on the Business Day next succeeding
such day; provided that: (a) if such day is not a Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day; and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Bank on
such day on such transactions as determined by the Agent.



     "Federal Reserve Board” means the Board of Governors of the Federal Reserve System or any
successor thereto.



     "Fee Letter” means that certain Letter Agreement dated as of the Closing Date, from the Agent
to Obligated Parties setting forth certain fees payable by the Obligated Parties to the Agent in
connection with the Loan Documents.



     "Financial Statements” means, according to the context in which it is used, the financial
statements referred to in Sections 5.2 and 6.6 or any other financial statements
required to be given to the Agent pursuant to this Agreement.



     "First Purchaser Lien” means a statutory Lien created in connection with the sale and purchase
of Petroleum Product, including the statutory Liens, if any, created under the laws of Texas, New
Mexico, Wyoming, Kansas, Oklahoma, or any other state.



     "First Purchaser Reserve” means the unpaid amount of any payable obligation related to the
purchase of Petroleum Product by the Obligated Parties that the Agent determines may be secured by
a First Purchaser Lien to the extent such payable obligation is not at the time in question covered
by a Letter of Credit.



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     "Fiscal Year” means the Obligated Parties’ fiscal year for financial accounting purposes. As
of the Closing Date, the current Fiscal Year of the Obligated Parties will end on December 31,
2007.



     "Fixed Assets” means the Equipment and Real Estate of the Obligated Parties.



     "Fixed Charge Coverage Ratio” means the ratio, determined on a consolidated basis for Holdings
and its Subsidiaries for the most recent twelve consecutive calendar months, and calculated as of
the last day of the most recently ended calendar month, of (a) EBITDA, to (b) Fixed Charges.



     "Fixed Charges” means, for any Person, the sum of cash Interest Expense, cash Taxes,
Distributions, principal payments on Debt and Capital Leases (scheduled and/or actual), and
unfinanced Capital Expenditures.



     "Funding Date” means the date on which a Borrowing occurs.



     "GAAP” means generally accepted accounting principles and practices set forth from time to
time 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 agencies with similar functions of comparable stature and authority
within the U.S. accounting profession) that are applicable to the circumstances as of the Closing
Date.



     "General Intangibles” means all of the Obligated Parties’ now owned or hereafter acquired
general intangibles, choses in action, and causes of action and all other intangible personal
property of the Obligated Parties of every kind and nature (other than Accounts), including without
limitation, all contract rights, payment intangibles, Proprietary Rights, corporate or other
business records, inventions, designs, blueprints, plans, specifications, trade secrets, goodwill,
computer software, customer lists, registrations, licenses, franchises, tax refund claims, any
funds that may become due to the Obligated Parties in connection with the termination of any Plan
or other employee benefit plan or any rights thereto and any other amounts payable to the Obligated
Parties from any Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which any Obligated Party is beneficiary, rights to receive
dividends, distributions, cash, Instruments and other property in respect of or in exchange for
pledged equity interests or Investment Property and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Obligated Party.



     "Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative functions of or



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pertaining to government, and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.




     "Guaranty” means, with respect to any Person, all obligations of such Person that in any
manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the payment or
performance of any indebtedness (other than trade payables of another Obligated Party arising in
the ordinary course of business), dividend or other obligations of any other Person (the
“guaranteed obligations”), or assure or in effect assure the holder of the guaranteed obligations
against loss in respect thereof, including any such obligations incurred through an agreement,
contingent or otherwise: (a) to purchase the guaranteed obligations or any property constituting
security therefor; (b) to advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition; or (c) to lease
property or to purchase any debt or equity securities or other property or services.



     "Hazardous Substance” has the meaning specified in Section 13.11(b).



     "Hedge Agreement” means any and all transactions, agreements or documents now existing or
hereafter entered into, that provide for an interest rate, credit, commodity or equity swap, cap,
floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging the Obligated Parties’ exposure to fluctuations in interest or exchange
rates, loan, credit exchange, security or currency valuations or commodity prices.



     "Holdings” means Alon Paramount Holdings, Inc., a Delaware corporation.



     "Immaterial Company” means each Obligated Party or Subsidiary of any Obligated Party, other
than the Borrower and Edgington, that (a) accounts for less than (i) 5.0% of consolidated EBITDA of
Holdings and its Subsidiaries for the immediately preceding four fiscal quarters, or (ii) has
assets that represent less than 5.0% of the consolidated assets of Holdings and its Subsidiaries,
in each case calculated as of the last day of the most recent fiscal quarter in respect of which
the Financial Statements have been delivered pursuant to Section 5.2, and (b) is identified
as being an “Immaterial Company” on the Compliance Certificate delivered in connection with such
Financial Statements; provided that the total consolidated EBITDA for all “Immaterial Companies”
included as such on any Compliance Certificate may not exceed 7.5% of the consolidated EBITDA of
Holdings and its Subsidiaries and the total assets for all “Immaterial Companies” included as such
on any Compliance Certificate may not exceed 7.5% of the consolidated assets of Holdings and its
Subsidiaries.



     "Indemnified Person” means, collectively, each Secured Party and its officers, directors,
employees, affiliates, agents and attorneys, and includes the Agent and each Agent-Related Parson,
and each Lender and the Lender-Related Persons.



     "Instruments” means all instruments as such term is defined in the UCC, now owned or hereafter
acquired by the Obligated Parties.



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     "Intercompany Subordination Agreement” means the Intercompany Subordination Agreement dated as
of even date herewith by and between the Agent, Holdings, and the Obligated Parties, as amended,
restated, or otherwise modified from time to time. The Intercompany Subordination Agreement is a
Loan Document.



     "Interest Expense” means, with respect to any Person for any fiscal period, the aggregate
amount of interest required to be paid or accrued during such period on all Debt of such Person
during such period, whether such interest was or is required to be reflected as an item of expense
or capitalized, including payments consisting of interest in respect of Capital Leases or synthetic
leases, and including unused commitment fees, facility fees, and similar fees and expenses in
connection with the borrowing of money (including all fees and expenses incurred in connection with
Hedge Agreements entered into with respect to any Debt).



     "Interest Period” means, as to any LIBOR Revolving Loan, the period commencing on the Funding
Date of such Loan or on the Continuation/Conversion Date on which the Loan is converted into or
continued as a LIBOR Revolving Loan, and ending on the date one, two, or
three months thereafter as selected by the Borrower in its Notice of Borrowing, in the form
attached hereto as Exhibit D, or Notice of Continuation/Conversion, in the form attached
hereto as Exhibit E; provided that:



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




          (b) any Interest Period pertaining to a LIBOR Revolving 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




          (c) no Interest Period shall extend beyond the Stated Termination Date.




     "Interest Rate” means each or any of the interest rates, including the Default Rate, set forth
in Section 2.1.



     "Inventory” means all of the Obligated Parties’ now owned and hereafter acquired inventory
(including Petroleum Product), goods and merchandise, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned goods, raw materials, work-in-process,
finished goods (including embedded software), crude oil, natural gas, natural gas liquids,
gasoline, diesel, aviation fuel, fuel oil, propane, ethanol, and other hydrocarbons and other
refined products other materials and supplies of any kind, nature or description that are used or
consumed in the Obligated Parties’ business or used in connection with the packing, shipping,
advertising, selling or finishing of such goods, merchandise, and all documents of title or other
Documents representing them.



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     "Investment Property” means all of the Obligated Parties’ right, title, and interest in and to
any and all: (a) securities whether certificated or uncertificated; (b) securities entitlements;
(c) securities accounts; (d) commodity contracts; or (e) commodity accounts.



     "IRS” means the Internal Revenue Service and any Governmental Authority succeeding to any of
its principal functions under the Code.



     "Latest Projections” means the projections most recently received by the Agent pursuant to
Section 5.2(e).



     "Lender” and “Lenders” have the meanings specified in the introductory paragraph hereof and
shall include the Agent to the extent of any Agent Advance outstanding and the Bank to the extent
of any Non-Ratable Loan outstanding; provided that no such Agent Advance or Non-Ratable Loan shall
be taken into account in determining any Lender’s Pro Rata Share.



     "Lender-Related Persons” means, collectively, each Lender, together with its Affiliates, and
the officers, directors, employees, counsel, representatives, agents and attorneys-in-fact of such
Lender and such Affiliates.



     "Letter of Credit” has the meaning specified in Section 1.3(a).



     "Letter of Credit Fee” has the meaning specified in Section 2.6.



     "Letter of Credit Issuer” means the Bank, any Affiliate of the Bank or any other financial
institution that issues any Letter of Credit pursuant to this Agreement.



     "Letter of Credit Reserves” means any reserves established by the Agent in the full amount of
all issued and outstanding Letters of Credit plus applicable Bank fees.



     "LIBOR Interest Payment Date” means, with respect to a LIBOR Revolving Loan, the Termination
Date and the last day of each Interest Period applicable to such Loan or, with respect to each
Interest Period of greater than three months in duration, if any, the last day of the third month
of such Interest Period and the last day of such Interest Period.



     "LIBOR Rate” means, for any Interest Period with respect to a LIBOR Revolving Loan, the per
annum rate of interest (rounded upward, if necessary, to the nearest 1/8th of 1%), determined by
the Agent at approximately 11:00 a.m. (London time) two Business Days prior to commencement of such
Interest Period, for a term comparable to such Interest Period, equal to (a) the British Bankers
Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available
source designated by the Agent); or (b) if BBA LIBOR is not available for any reason, the interest
rate at which Dollar deposits in the approximate amount of the LIBOR Revolving Loan would be
offered by the Bank’s London branch to major banks in the London interbank Eurodollar market. If
the Board of Governors imposes a Reserve Percentage with respect to LIBOR deposits, then LIBOR
shall be the foregoing rate, divided by 1 minus the Reserve Percentage.



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     "LIBOR Revolving Loan” means a Revolving Loan during any period in which it bears interest
based on the LIBOR Rate.



     "Lien” means: (a) any interest in property securing an obligation owed to, or a claim by, a
Person other than the owner of the property, whether such interest is based on the common law,
statute, or contract, and including a security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease, consignment, or
bailment for security purposes; (b) to the extent not included under clause (a), any
reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction,
lease, or other title exception or encumbrance affecting property; and (c) any contingent or other
agreement to provide any of the foregoing.



     "Loan Account” means the loan account of the Obligated Parties, which account shall be
maintained by the Agent.



     "Loan Documents” means this Agreement, the Security Agreement, the Mortgages, the Lockbox
Agreement, the Stock Pledge Agreement, the Intercompany Subordination Agreement, the CS
Intercreditor Agreement, the Consent Agreements, the Fee Letter, each hazardous materials
undertaking and unsecured indemnity and any other agreements, instruments, and
documents heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral, or any other aspect of the transactions contemplated
by this Agreement.



     "Loans” means, collectively, all loans and advances provided for in Article 1.



     "Lockbox Agreement” means the lockbox agreement required to be entered into by the Borrower
pursuant to Section 11 of the Security Agreement.



     "Low Availability Period” means each period beginning on each Low Availability Trigger Date
and ending on the first day of the second calendar month following the month in which such Low
Availability Trigger Date occurs. For the avoidance of doubt, any two or more Low Availability
Periods may run concurrently and/or consecutively and a Low Availability Period shall be deemed to
remain in effect until all Low Availability Periods have ended.



     "Low Availability Trigger Date” means each date, if any, upon which (a) Availability is less
than $30,000,000, (b) a Default or Event of Default occurs, or (c) any Event of Default has
previously occurred and is continuing.



     "Majority Lenders” means at any date of determination Lenders whose Pro Rata Shares aggregate
more than fifty percent (50%).



     "Margin Stock” means “margin stock” as such term is defined in Regulation T, U, or X of the
Federal Reserve Board.




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     “Marked-to-Market Basis” means, at the relevant time of reference thereto: (a) as to the
Obligated Parties’ inventory of Petroleum Product with respect to which the Obligated Parties have
existing firm contracts to sell such inventory, the specified price to be paid for such inventory
under such contracts; and (b) as to other Petroleum Product inventory, for each type of such
Petroleum Product specified on Schedule A-2 hereto, as determined by reference to the
pricing method specified for such type of inventory on Schedule A-2 hereto; provided that
if a price or quotation is not available for a particular type of Petroleum Product for any reason
on a particular Business Day, the most recently available price or quotation from a prior Business
Day shall be used for that type of Petroleum Product inventory. Notwithstanding the foregoing, if
prices or quotations are not publicly available in accordance with the foregoing methodology for
more than a five-Business Day period for a particular type of inventory and there is a reasonable
likelihood that such prices or quotations will not be available for any extended period of time for
that product: (I) the Agent and the Borrower shall meet and confer in good faith as soon as is
practicable in order to attempt to establish a new mechanism for determining the fair market value
of the product in question; and (ii) until such time as a new mechanism is agreed to by the Agent
and the Borrower, the fair market value of the particular type of inventory for which prices or
quotes are no longer available shall be reasonably determined by the Agent.



     “Material Adverse Effect” means the effect of any event or circumstance that, taken alone or
in conjunction with other events or circumstances, has or could be reasonably expected to (a) have
a material adverse effect on the Collateral or the business, operations, properties, prospects or
condition (financial or otherwise) of (i) the Borrower, (ii) Edgington, or (iii) the Obligated
Parties taken as a whole; (b) result in a material impairment of the ability of any Obligated Party
or any of its Affiliates (in each case, other than an Immaterial Company) to perform under any Loan
Document to which it is a party; or (c) result in a material adverse effect upon the legality,
validity, binding effect or enforceability against any Obligated Party (other than an Immaterial
Company) of any Loan Document to which it is a party.



     “Maximum Drawing Amount” The maximum aggregate amount from time to time that the
beneficiaries may draw under outstanding Letters of Credit, as such aggregate amount may be reduced
from time to time pursuant to the terms of the Letters of Credit.



     “Maximum Rate” has the mean in specified in Section 2.3.



     “Maximum Revolver Amount” means Three Hundred Million Dollars ($300,000,000).



     “Mortgage” means and includes any and all of the mortgages, deeds of trust, deeds to secure
debt, assignments, and other instruments executed and delivered by any Obligated Party or of any of
its Subsidiaries to or for the benefit of the Agent by which the Agent, on behalf of the Lenders,
acquires a Lien on any Real Estate owned by any Obligated Party or of any of its Subsidiaries or a
collateral assignment of any Obligated Party’s or of any of its Subsidiary’s interest under leases
of any Real Estate, and all amendments, modifications, and supplements thereto. The term
“Mortgage” shall also mean and include any of the foregoing instruments executed and delivered by
any Obligated Party or of any of its Subsidiaries after the Closing Date with respect to any Real
Estate.



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     “Multi-employer Plan” means a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA
that is or was at any time during the current year or the immediately preceding six (6) years
contributed to by any Obligated Party or any ERISA Affiliate.



     “Negative Exchange Balance” has the meaning specified in the definition of Eligible Exchange
Balances.



     “Net Amount of Eligible Accounts” means, at any time, the gross amount of Eligible Accounts
less unpaid sales, excise, or similar taxes, and less returns, discounts, claims, credits,
allowances, accrued rebates, offsets, deductions, counterclaims, disputes, Negative Exchange
Balances and other defenses of any nature at any time issued, owing, granted, outstanding,
available or claimed.



     “Non-Ratable Loan” and “Non-Ratable Loans” have the respective meanings specified in
Section 1.2(h).



     “Notice of Borrowing” has the meaning specified in Section 1.2(b).



     “Notice of Continuation/Conversion” has the meaning specified in Section 2.2(b).



     “Obligated Party” means each of the Borrower and each of its Affiliates party to this
Agreement from time to time, individually, and “Obligated Parties” means all of such Persons,
collectively.



     “Obligations” means all present and future loans, advances, liabilities, obligations,
covenants, duties, and debts owing by the Obligated Parties to the Agent and/or any Lender, arising
under or pursuant to this Agreement or any of the other Loan Documents, whether or not evidenced by
any note, or other instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification obligations under any indemnity for
Claims or otherwise, including Attorney Costs and Extraordinary Expenses, whether direct or
indirect, absolute or contingent, due or to become due, primary or secondary, as principal or
guarantor, and including without limitation all principal, interest, charges, expenses, fees,
attorneys’ fees, filing fees and any other sums chargeable to the Obligated Parties hereunder or
under any of the other Loan Documents or under any other agreement or instrument with the Agent
and/or the Lenders. “Obligations” includes, without limitation: (a) all debts, liabilities, and
obligations now or hereafter arising from or in connection with the Letters of Credit; and (b) all
debts, liabilities, and obligations now or hereafter arising from or in connection with Bank
Products.



     “Original Credit Agreement” has the meaning given in the recitals to this Agreement.



     “Other Taxes” means any present or future stamp or documentary taxes or any other excise or
property taxes, charges, or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this Agreement or any other
Loan Documents.



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Annex A









 




     “Paid but Unexpired Letters of Credit” means at any given time, the difference between: (a)
the Maximum Drawing Amount of all Letters of Credit issued in connection with purchases of
Petroleum Product by the Obligated Parties; and (b) the aggregate outstanding amounts payable by
the Obligated Parties to the suppliers of Petroleum Product delivered to the Obligated Parties in
connection with such purchases.



     “Paid in Full” or “Payment in Full” means, with respect to any Obligations, (a) the full and
indefeasible payment thereof in cash or other immediately available funds, including any interest,
fees and other charges accruing during any insolvency proceeding or that would have accrued but for
the commencement of such insolvency proceeding (whether or not allowed in the proceeding); (b) if
such Obligations relate to Letters of Credit or Credit Support, the termination or Cash
Collateralization thereof; (c) if such Obligations are contingent or inchoate in nature (including
those related to Claims that have been asserted or threatened against any Indemnified Person),
adequate provision (as determined by the Agent in its discretion, reasonably exercised and set
forth in writing to the Borrower) is made for the repayment of such Obligations; and (d) a release
of any then-existing Claims of the Obligated Parties and their Affiliates against all Indemnified
Persons arising in connection with this Agreement and the other Loan Documents, whether known or
unknown. No Loans will be deemed to have been “Paid in Full” until the Commitments have expired or
been terminated.



     “Paramount-Nevada Asphalt Company” means Paramount-Nevada Asphalt Company, LLC, a Nevada
limited liability company, in which the Borrower and Granite Construction Incorporated, a Delaware
corporation, each own fifty percent (50%) of the ownership interests.



     “Paramount-Nevada Asphalt Operating Agreement” means that certain Operating Agreement of
Paramount-Nevada Asphalt Company, LLC dated as of August 25, 2000 by and between the Borrower and
Granite Construction Incorporated.



     “Paramount OR” means Paramount of Oregon, LLC, a Delaware limited liability company.



     “Paramount Refinery” has the meaning given in the recitals to this Agreement.



     “Paramount WA” means Paramount of Washington, LLC, a Delaware limited liability company.



     “Participant” means any Person who shall have been granted the right by any Lender to
participate in the financing provided by such Lender under this Agreement and who shall have
entered into a participation agreement in form and substance satisfactory to such Lender.



     “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Pub. L. No. 107-56, 115 Stat. 272 (Oct.
26, 2001)), as amended.



     “Payment Account” means each bank account established pursuant to the Security Agreement, to
which the proceeds of Accounts and other Collateral are deposited or credited,



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Annex A









 





and that is maintained in the name of the Agent or the Obligated Parties, as the Agent may
determine, on terms acceptable to the Agent.



     “PBGC” means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding
to the functions thereof.



     “Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV
of ERISA that any Obligated Party sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a Multi-employer Plan, has made contributions at
any time during the immediately preceding five (5) plan years.



     “Permitted Affiliate Property Transfers” means (i) the lease by any Obligated Party to any
other Obligated Party of the property of such Obligated Party; provided that the Borrower may only
be party to any such lease as a lessee and may not be a lessor of any of its property thereunder,
and (ii) the transfer by any Obligated Party to a wholly-owned Subsidiary of such Obligated Party
of such Obligated Party’s pipeline rights; provided that the Agent has been given not less than 15
days prior written notice of each such transaction and the Obligated Parties have delivered to the
Agent such agreements in connection therewith as the Agent may reasonably request.



     “Permitted Distributions” means: (a) Distributions made by any Obligated Party to any Person
owning any stock issued by such Obligated Party made at any time other than during a Low
Availability Period and that would not result in the imposition of a Low Availability Period; (b)
Distributions by Paramount-Nevada Asphalt Company to the Borrower and to Granite Construction
Incorporated made pro rata in accordance with their respective ownership interests in
Paramount-Nevada Asphalt Company; (c) Distributions made to any Obligated Party by any of its
Subsidiaries; and (d) Unrestricted Distributions.



     “Permitted Liens” means:



          (a) the Agent’s Liens;




          (b) Liens for taxes not delinquent or statutory Liens for taxes in an amount not to exceed
$500,000 provided that the payment of such taxes that are due and payable is being contested in
good faith and by appropriate proceedings diligently pursued and as to which adequate financial
reserves have been established on the Obligated Parties’ books and records and a stay of
enforcement of any such Lien is in effect;




          (c) Liens consisting of deposits made in the ordinary course of business in connection with,
or to secure payment of, obligations under worker’s compensation, unemployment insurance, social
security, and other similar laws, or to secure the performance of bids, tenders, or contracts
(other than for the repayment of Debt) or to secure indemnity, performance, or other similar bonds
for the performance of bids, tenders, or contracts (other than for the repayment of Debt) or to
secure statutory obligations (other than liens arising under ERISA or Environmental Liens) or
surety or appeal bonds, or to secure indemnity, performance or other similar bonds;




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Annex A









 




          (d) Liens securing the claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords, and other like Persons, provided that if any such Lien arises from the nonpayment of
such claims or demand when due, such claims or demands do not exceed $1,000,000 in the aggregate;




          (e) Liens constituting encumbrances in the nature of reservations, exceptions, encroachments,
easements, rights of way, covenants running with the land, and other similar title exceptions or
encumbrances affecting any of the Real Estate; provided that they do not in the aggregate
materially detract from the value of the Real Estate or materially interfere with its use in the
ordinary conduct of the Obligated Parties’ business;




          (f) Liens arising from judgments and attachments in connection with court proceedings provided
that the attachment or enforcement of such Liens would not result in an Event of Default hereunder
and such Liens are being contested in good faith by appropriate proceedings, adequate reserves have
been set aside, and no material Property is subject to a material risk of loss or forfeiture and
the claims in respect of such Liens are fully covered by insurance (subject to ordinary and
customary deductibles) and a stay of execution pending appeal or proceeding for review is in
effect;




          (g) Liens granted pursuant to the CS Security Documents and subject to the CS Intercreditor
Agreement, and those securing any refunding, refinancing, replacement, renewal, or extension
thereof permitted hereunder;




          (h) Liens that the Agent has agreed will be prior to the lien of the Mortgages pursuant to the
pro forma title policies attached to the Agent’s final recording instructions for the Mortgages
delivered on or prior to the Closing Date; and




          (i) Unrestricted Liens.




     “Permitted Subordinated Debt Payments” means payments in respect of Subordinated Debt made at
any time other than during a Low Availability Period and that would not result in the imposition of
a Low Availability Period to the extent that such payments are not otherwise prohibited under the
terms of the applicable Subordination Agreement, including the Intercompany Subordination
Agreement.



     “Person” means any individual, sole proprietorship, partnership, limited liability company,
joint venture, trust, unincorporated organization, association, corporation, Governmental
Authority, or any other entity.



     “Petroleum Product” means crude oil, intermediate feedstocks, blendstocks, and finished and
unfinished petroleum products, including without limitation, asphalt, gasoline, diesel fuels, fuel
oil, jet fuels, and atmospheric gas oil; provided that such term shall not include solvents.



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Annex A









 




     “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) that any Obligated
Party sponsors or maintains or to which any Obligated Party makes, is making, or is obligated to
make contributions and includes any Pension Plan.



     “Pledge Agreement” means that certain Amended and Restated Pledge Agreement, dated as of the
Closing Date, by and between the Obligated Parties and the Agent.



     “PPA” means Paramount Petroleum Corporation of Arizona, Inc., a Delaware corporation and
wholly-owned Subsidiary of the Borrower.



     “Proprietary Rights” means all of the Obligated Parties’ now owned and hereafter arising or
acquired: licenses, franchises, permits, patents, patent rights, copyrights, works that are the
subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service mark applications, and all licenses and rights related to any of the
foregoing, including those patents, trademarks, service marks, trade names, and copyrights set
forth on Schedule 6.12 hereto, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the
foregoing, and all rights to sue for past, present, and future infringement of any of the
foregoing.



     “Pro Rata Share” means, with respect to a Lender, a fraction (expressed as a percentage), the
numerator of which is the amount of such Lender’s Commitment and the denominator of which is the
sum of the amounts of all of the Lenders’ Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of Obligations owed to
such Lender and the denominator of which is the aggregate amount of the Obligations owed to the
Lenders, in each case giving effect to a Lender’s participation in Non-Ratable Loans and Agent
Advances.



     “Qualifying Investment” means readily marketable obligations that are not Cash Equivalents,
but that: (a) (i) are rated A or A-1 or better by S&P or A or P-1 or better by Moody’s; or (ii)
are issued or guaranteed by the United State of America or any agency thereof; or (iii) constitute
investments in money market funds rated A by S&P; and (b) mature prior to the Stated Termination
Date.



     “Real Estate” means all of the Obligated Parties’ and their Subsidiaries’ now or hereafter
owned or leased estates in real property, including, without limitation, all fees, leaseholds and
future interests, together with all of the Obligated Parties’ now or hereafter owned or leased
interests in the improvements thereon, the fixtures attached thereto, and the easements appurtenant
thereto.



     “Release” means a release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration of a Contaminant into the indoor or outdoor
environment or into or out of any Real Estate or other property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater, Real Estate, or other
property.



     “Report” has the meaning given in Section 12.18(a).



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Annex A









 




     “Reportable Event” means, any of the events set forth in Section 4043(b) or (c) of ERISA or
the regulations thereunder, other than any such event for which the 30-day notice requirement under
ERISA has been waived in regulations issued by the PBGC.



     “Required Lenders” means at any time Lenders whose Pro Rata Shares aggregate more than
sixty-six and two-thirds percent.



     “Requirement of Law” means, as to any Person, any law (statutory or common), treaty, rule or
regulation, or determination of an arbitrator or of a Governmental Authority, in each case
applicable to or binding upon the Person or any of its property or to which the Person or any of
its property is subject.



     “Reserve Percentage” means the reserve percentage (expressed as a decimal, rounded upward to
the nearest 1/8th of 1%) applicable to member banks under regulations issued from time to time by
the Board of Governors the Federal Reserve System for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).



     “Reserves” means reserves that limit the availability of credit hereunder, consisting of
reserves against Availability, Eligible Accounts, or Eligible Petroleum Inventory, established by
the Agent from time to time in the Agent’s reasonable credit judgment. Without limiting the
generality of the foregoing, the following reserves shall be deemed to be a reasonable exercise of
the Agent’s credit judgment: (a) Bank Product Reserves; (b) a reserve for accrued, unpaid interest
on the Obligations; (c) reserves for rent at leased locations subject to statutory or contractual
landlord liens; (d) reserves for Inventory shrinkage; (e) Environmental Compliance Reserves; (f)
reserves for customs charges and estimated excise fuel Taxes; (g) reserves for dilution; (h)
reserves for warehousemen’s or bailees’ charges; (i) Letter of Credit Reserves; (j) any First
Purchaser Reserve; and (k) any other reserves that the Agent deems appropriate in its credit
judgment, reasonably exercised.



     “Responsible Officer” of any Person means the chief executive officer, president, the chief
financial officer, or the chief operating officer of such Person, or any other officer identified
in writing by such Person having substantially the same authority and responsibility as any of the
foregoing. Unless the context otherwise clearly requires, references herein to a “Responsible
Officer” refer to a Responsible Officer of the Borrower.



     “Restricted Investment” means, as to the Obligated Parties, any acquisition of property by the
Obligated Parties in exchange for cash or other property, whether in the form of an acquisition of
stock, debt, or other indebtedness or obligation, or the purchase or acquisition of any other
property, or a loan, advance, capital contribution, or subscription, except the following: (a)
acquisitions of Equipment to be used in the business of the Obligated Parties so long as the
acquisition costs thereof constitute Capital Expenditures permitted hereunder; (b) acquisitions of
Inventory in the ordinary course of business of the Obligated Parties; (c) acquisitions of current
assets acquired in the ordinary course of business of the Obligated Parties; (d) direct obligations



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of the United States of America or any agency thereof, or obligations guaranteed by the United
States of America; provided that such obligations mature within one year from the date of
acquisition thereof; (e) acquisitions of certificates of deposit maturing within one year from the
date of acquisition, bankers’ acceptances, Eurodollar bank deposits, or overnight bank deposits, in
each case issued by, created by, or with a bank or trust company organized under the laws of the
United States of America or any state thereof having capital and surplus aggregating at least
$100,000,000; (f) acquisitions of commercial paper given a rating of “A2” or better by Standard &
Poor’s Corporation or “P2” or better by Moody’s Investors Service, Inc. and maturing not more than
ninety (90) days from the date of creation thereof; (g) Hedge Agreements; and (h) Unrestricted
Investments.



     “Revolving Loans” has the meaning specified in Section 1.2 and includes each Agent
Advance and Non-Ratable Loan.



     “Revolving Loan Note” and “Revolving Loan Notes” have the respective meanings specified in
Section 1.2(a)(ii).



     “Richmond Pier” means the Richmond Beach, Washington, asphalt terminal owned by Paramount WA.



     “Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002 (Pub. L. No. 107-204, 116 Stat.
745).



     “Secured Parties” means the Agent, each Lender, the Letter of Credit Issuer, and the providers
of Bank Products and their respective successors and permitted assigns.



     “Security Agreement” means that certain Amended and Restated Security Agreement (as amended,
restated, or otherwise modified from time to time) dated as of the Closing Date by and between the
Obligated Parties and the Agent.



     “Settlement” and “Settlement Date” have the respective meanings specified in Section
12.15(a)(ii).



     “SFHA” has the meaning specified in Section 7.5(a).



     “Solvent” means, when used with respect to any Person, that at the time of determination, the
assets of such Person, at a fair valuation, are in excess of the total amount of its debts
(including contingent liabilities), and: (a) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts become absolute and
matured; and (b) it is then able and expects to be able to pay its debts (including contingent
debts and other commitments) as they mature; and (c) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted. For purposes of determining whether a
Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in
light of all the facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.



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     “Stated Termination Date” means February 28, 2012.



     “Stock Pledge Agreement” means a stock pledge agreement pursuant to which the pledgors
thereunder pledge all of the common stock of the Obligated Parties to the Agent to secure the
Obligations and the non-recourse guaranty agreement in connection therewith.



     “Stock Purchase Agreement” means that certain Stock Purchase Agreement among the former
stockholders of the Borrower and Alon dated as of April 28, 2006.



     “Subordinated Debt” means Debt issued by any Obligated Party and subordinated in all respects
to the payment and performance of the Obligations pursuant to a Subordination Agreement.



     “Subordinated Term Loans” means the term loans in the aggregate amount not to exceed Two
Hundred Seventy Two Million Three Hundred Sixty Nine Thousand Four Hundred Thirty Eight and 16/100
Dollars ($272,369,438.16), made by Holdings to the Borrower, Edgington, and Alon Bakersfield, Inc.
pursuant to: (a) that certain Subordinated Intercompany Note dated as of September 28, 2006, and
entered into by and between Edgington (formerly know as EOC Acquisition, LLC, a Delaware limited
liability company) and Holdings (as successor in interest to Alon USA Pipeline, Inc.) in the
original principal amount of Seventy Seven Million, Five Hundred Fifty Eight Thousand, Eight
Hundred Five and 16/100 Dollars ($77,558,805.16); (b) that certain Subordinated Intercompany Note
dated as of June 1, 2006, and entered into by and between Alon Asphalt Bakersfield, Inc., a
Delaware corporation and Holdings (as successor in interest to Alon USA Asphalt, Inc., a Delaware
corporation) in the original principal amount of Twelve Million and 00/100 Dollars
($12,000,000.00); (c) that certain Subordinated Intercompany Note dated as of August 4, 2006, and
entered into by and between the Borrower and Holdings in the principal amount of Sixty Nine Million
Eight Hundred Ten Thousand Six Hundred Thirty Three and No/100 Dollars ($69,810,633.00); and (d)
that certain Subordinated Intercompany Note dated as of August 4, 2006, and entered into by and
between the Borrower and Holdings in the principal amount of One Hundred Thirteen Million and
No/100 Dollars ($113,000,000.00); subject, in each case, to the Intercompany Subordination
Agreement.



     “Subordinated Term Loan Debt” means the indebtedness and liabilities of the Borrower under the
Subordinated Term Loan Documents.



     “Subordinated Term Loan Documents” means, collectively, the documents in form and substance
satisfactory to the Agent, from time to time evidencing, securing and otherwise relating to the
Subordinated Term Loans.



     “Subordination Agreement” means a subordination agreement entered into between Agent, on
behalf of the Lenders, and one or more third parties in form and substance satisfactory to the
Agent and the Lenders including, without limitation, the Intercompany Subordination Agreement.




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     “Subsidiary” of a Person means any corporation, association, partnership, limited liability
company, joint venture or other business entity of which more than fifty percent (50%) of the
voting stock or other equity interests (in the case of Persons other than corporations), is owned
or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context otherwise clearly requires, references herein
to a “Subsidiary” refer to a Subsidiary of the Obligated Parties.



     “Supporting Letter of Credit” means a standby letter of credit in form and substance
satisfactory to the Agent, issued by an issuer satisfactory to the Agent, under which standby
letter of credit the Agent is entitled to draw amounts necessary to reimburse the Agent for
payments to be made by the Agent or the Lenders under outstanding Letters of Credit or Credit
Support and any fees and expenses associated with such Letters of Credit or Credit Support.



     “Supporting Obligations” means all “supporting obligations” as such term is defined in the
UCC.



     “Taxes” means any and all present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and
the Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by
the Agent’s or each Lender’s net income in any the jurisdiction (whether federal, state or local
and including any political subdivision thereof) under the laws of which such Lender or the Agent,
as the case may be, is organized or maintains a lending office.



     “Termination Date” means the earliest to occur of: (i) the Stated Termination Date; (ii) the
date the Total Facility is terminated either by the Obligated Parties pursuant to Section
3.2 or by the Required Lenders pursuant to Section 9.2; and (iii) the date this
Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this
Agreement.



     “Total Facility” has the meaning specified in Section 1.1.



     “Turnaround Costs” means those costs incurred on a bi-annual or tri-annual basis for the
purpose of performing major scheduled maintenance on the Paramount Refinery.



     “UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of
California or of any other state, the laws of which are required as a result thereof to be applied
in connection with the issue of perfection of security interests.



     “Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities under Section
4001(a)(16) of ERISA, over the current value of that 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.



     “Unrestricted Debt” means Debt of any Obligated Party or its Subsidiaries that is: (a)
incurred after the Closing Date and at any time other than during any Low Availability Period that
would not result in the imposition of a Low Availability Period; (b) not secured by any Lien other
than Permitted Liens; and (c) disclosed in writing to the Agent and Lenders by the



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Obligated Parties by delivery to the Agent of (i) an updated Schedule 6.9 describing
such debt in reasonable detail, and (ii) copies of all documents and instruments evidencing such
Debt and any collateral therefor.



     “Unrestricted Distributions” means Distributions made at any time other than during any Low
Availability Period that would not result in the imposition of a Low Availability Period.



     “Unrestricted Investments” means any Restricted Investment occurring at any time other than
during the existence of a Low Availability Period and that would not result in the imposition of a
Low Availability Period.



     “Unrestricted Liens” means Liens securing Unrestricted Debt (and those securing any refunding,
refinancing, replacement, renewal, or extension permitted hereunder) to the extent subject to an
intercreditor and subordination agreement between each Person holding any such Lien and the Agent
in form and substance satisfactory to the Agent in its discretion.



     “Unrestricted Mergers and Acquisitions” means transactions of (a) merger, reorganization, or
consolidation, and (ii) acquisition (by construction, purchase, or otherwise) of assets, lines of
business, or equity interests occurring at any time other than during any Low Availability Period
and that would not result in the imposition of a Low Availability Period, so long as:



          (i) such transaction was not consummated pursuant to a hostile offer (including a proxy
consent), other than a hostile offer to which opposition by such Person’s board of directors has
been withdrawn and each Person being acquired shall be a “going-concern”;




          (ii) such transactions are in all material respects consummated in accordance with applicable
laws and all consents required to be obtained from any Governmental Authority prior to or
concurrently with such acquisition have been so obtained;




          (iii) all actions required to be taken with respect to such acquired or newly formed
Subsidiary or such acquired assets under Section 7.20 have been taken (or will be taken
within the time periods prescribed in Section 7.20);




          (iv) the business of any Person acquired by an Obligated Party or its Subsidiaries constitutes
a business permitted by Section 7.17;




          (v) the Obligated Parties and their Subsidiaries do not incur or assume any Debt in connection
with any such transaction, except as otherwise permitted by Section 7.13;




          (vi) no Obligated Party shall, as a result of or in connection with any such transaction,
assume or incur any direct or contingent liabilities (whether relating to environmental, tax,
litigation, or other matters) that could reasonably be expected to result in the existence or
occurrence of a Material Adverse Effect; and




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          (vii) the Borrower has delivered to the Agent a certificate of a Responsible Officer to the
effect set forth in clauses (a) through (vi) above.




     “Unrestricted Sale and Leasebacks” means transactions occurring at any time other than during
the existence of a Low Availability Period, and that would not result in the imposition of a Low
Availability Period, in which an Obligated Party or its Subsidiary, directly or indirectly, enters
into an arrangement with any Person (the “subject Person”) providing for such Obligated Party or
such Subsidiary to lease property that such Obligated Party or such Subsidiary has sold or will
sell or otherwise transfer to such Person; provided that the Agent has been given not less than 15
days prior written notice of such transaction and the Obligated Parties have delivered to the Agent
such agreements from such subject Person as the Agent may reasonably request.



     “Unrestricted Sales” means transfers, sales, assignments, leases, or otherwise dispositions of
all or any part of the property of any Obligated Party or any of its Subsidiaries occurring at any
time other than during the existence of a Low Availability Period and that would not result in the
imposition of a Low Availability Period.



     “Unused Line Fee” has the meaning specified in Section 2.5.



     “Unused Line Fee Percentage” means the percentage corresponding to the Unused Line Fee given
in the definition of Applicable Margin.



     Accounting Terms. Under the Loan Documents (except as otherwise specified herein),
all accounting terms shall be interpreted, all accounting determinations shall be made, and all
financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with
the most recent audited Financial Statements delivered to the Agent before the Closing Date and
using the same inventory valuation method as used in such financial statements. If at any time any
change in GAAP would affect the computation of any financial covenant or requirement set forth in
any Loan Document, and the Borrower, the Agent, or any Lender so requests, the Borrower, the Agent,
and the Lenders shall negotiate in good faith to amend such covenant or requirement to preserve the
original intent thereof in light of such change in GAAP; provided that, until so amended, (a) such
covenant or requirement shall continue to be determined in accordance with GAAP prior to such
change, and (b) the Obligated Parties shall provide to the Agent all 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.



     Interpretive Provisions.



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





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          (b) The words “hereof,” “herein,” “hereunder,” and similar words refer to the Agreement as a
whole and not to any particular provision of the Agreement; and Subsection, Section, Schedule, and
Exhibit references are to the Agreement unless otherwise specified.




          (c) The term “documents” includes any and all instruments, documents, agreements,
certificates, indentures, notices, and other writings, however evidenced.




          (d) The term “including” is not limiting and means “including without limitation.”




          (e) 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.”




          (f) The word “or” is not exclusive.




          (g) Unless otherwise expressly provided herein: (i) references to agreements (including the
Agreement) and other contractual instruments shall be deemed to include all subsequent amendments
and other modifications thereto, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document; and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing, or interpreting the statute or regulation.




          (h) The captions and headings of the Agreement and other Loan Documents are for convenience of
reference only and shall not affect the interpretation of the Agreement.




          (i) The Agreement and other Loan Documents may use several different limitations, tests, or
measurements to regulate the same or similar matters. All such limitations, tests, and
measurements are cumulative and shall each be performed in accordance with their terms.




          (j) For purposes of Section 9.1, a breach of the financial covenant contained in
Section 7.22 or 7.23 shall be deemed to have occurred as of any date of
determination thereof by the Agent or as of the last day of any specified measuring period,
regardless of when the Financial Statements reflecting such breach are delivered to the Agent. It
is expressly acknowledged by the Obligated Parties that any failure to satisfy a financial covenant
on a measurement date shall not be cured or remedied by satisfaction of such covenant on a
subsequent date.




          (k) The Agreement and the other Loan Documents are the result of negotiations among and have
been reviewed by counsel to the Agent, the Obligated Parties and the other parties, and are the
products of all parties. Accordingly, they shall not be construed against the Lenders or the Agent
merely because of the Agent’s or Lenders’ involvement in their preparation.




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          (l) Any Event of Default that shall have occurred under the Agreement at any time shall be
deemed continuing unless (i) such Event of Default is cured, provided that an Event of Default may
only be cured within the time-frame and only if so expressly permitted under the terms of the
Agreement or (ii) such Event of Default is waived in writing by the Agent in accordance with the
terms of the Agreement.




          (m) All fees are fully-earned when due and are not subject to rebate or refund, nor subject to
proration except as may otherwise be specifically provided herein. All fees payable hereunder are
compensation for services and are not, and may not be deemed to be, interest or any other charge
for the use, forbearance or detention of money.





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