exv10w12



 





Exhibit 10.12



 











CREDIT AGREEMENT




dated as of




February 27, 2007




among




SUPERIOR OFFSHORE INTERNATIONAL, L.L.C.,




The Lenders Party Hereto




and




JPMORGAN CHASE BANK, N.A.,

as Administrative Agent




 






J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner and Sole Lead Arranger







 




 









 









TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE 1 Definitions
	 	 	1	 
	SECTION 1.01. Defined Terms
	 	 	1	 
	SECTION 1.02. Classification of Loans and Borrowings
	 	 	21	 
	SECTION 1.03. Terms Generally
	 	 	21	 
	SECTION 1.04. Accounting Terms; GAAP
	 	 	21	 
	 
	 	 	 	 
	ARTICLE II The Credits
	 	 	21	 
	SECTION 2.01. Commitments
	 	 	21	 
	SECTION 2.02. Loans and Borrowings
	 	 	23	 
	SECTION 2.03. Requests for Revolving Borrowings
	 	 	23	 
	SECTION 2.04. Protective Advances
	 	 	24	 
	SECTION 2.05. Swingline Loans and Overadvances
	 	 	25	 
	SECTION 2.06. Letters of Credit
	 	 	26	 
	SECTION 2.07. Funding of Borrowings
	 	 	29	 
	SECTION 2.08. Interest Elections
	 	 	30	 
	SECTION 2.09. Termination of Commitments
	 	 	31	 
	SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt
	 	 	31	 
	SECTION 2.11. Prepayment of Loans
	 	 	32	 
	SECTION 2.12. Fees
	 	 	34	 
	SECTION 2.13. Interest
	 	 	34	 
	SECTION 2.14. Alternate Rate of Interest
	 	 	35	 
	SECTION 2.15. Increased Costs
	 	 	35	 
	SECTION 2.16. Break Funding Payments
	 	 	36	 
	SECTION 2.17. Taxes
	 	 	37	 
	SECTION 2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs
	 	 	38	 
	SECTION 2.19. Mitigation Obligations; Replacement of Lenders
	 	 	40	 
	SECTION 2.20. Returned Payments
	 	 	40	 
	 
	 	 	 	 
	ARTICLE III Representations and Warranties
	 	 	41	 
	SECTION 3.01. Organization; Powers
	 	 	41	 
	SECTION 3.02. Authorization; Enforceability
	 	 	41	 
	SECTION 3.03. Governmental Approvals; No Conflicts
	 	 	41	 
	SECTION 3.04. Financial Condition; No Material Adverse Change
	 	 	41	 
	SECTION 3.05. Properties
	 	 	41	 
	SECTION 3.06. Litigation and Environmental Matters
	 	 	42	 
	SECTION 3.07. Compliance with Laws and Agreements
	 	 	42	 
	SECTION 3.08. Investment Company Status
	 	 	42	 
	SECTION 3.09. Taxes
	 	 	42	 
	SECTION 3.10. ERISA
	 	 	42	 
	SECTION 3.11. Disclosure
	 	 	43	 
	SECTION 3.12. Material Agreements
	 	 	43	 
	SECTION 3.13. Solvency
	 	 	43	 
	SECTION 3.14. Insurance
	 	 	43	 
	SECTION 3.15. Capitalization and Subsidiaries
	 	 	43	 
	SECTION 3.16. Security Interest in Collateral
	 	 	44	 
	SECTION 3.17. Employment Matters
	 	 	44	 
	SECTION 3.18. Affiliate Transactions
	 	 	44	 
	SECTION 3.19. Common Enterprise
	 	 	44	 






					
	 	 	 	 	 






i









 







	 	 	 	 	 
	ARTICLE IV Conditions
	 	 	45	 
	SECTION 4.01. Effective Date
	 	 	45	 
	SECTION 4.02. Each Credit Event
	 	 	47	 
	 
	 	 	 	 
	ARTICLE V Affirmative Covenants
	 	 	48	 
	SECTION 5.01. Financial Statements; Borrowing Base and Other Information
	 	 	48	 
	SECTION 5.02. Notices of Material Events
	 	 	50	 
	SECTION 5.03. Existence; Conduct of Business
	 	 	51	 
	SECTION 5.04. Payment of Obligations
	 	 	51	 
	SECTION 5.05. Maintenance of Properties
	 	 	51	 
	SECTION 5.06. Books and Records; Inspection Rights
	 	 	51	 
	SECTION 5.07. Compliance with Laws
	 	 	52	 
	SECTION 5.08. Use of Proceeds
	 	 	52	 
	SECTION 5.09. Insurance
	 	 	52	 
	SECTION 5.10. Casualty and Condemnation
	 	 	52	 
	SECTION 5.11. Appraisals
	 	 	52	 
	SECTION 5.12. Depository Banks
	 	 	52	 
	SECTION 5.13. Additional Collateral; Further Assurances
	 	 	52	 
	 
	 	 	 	 
	ARTICLE VI Negative Covenants
	 	 	53	 
	SECTION 6.01. Indebtedness
	 	 	54	 
	SECTION 6.02. Liens
	 	 	54	 
	SECTION 6.03. Fundamental Changes
	 	 	56	 
	SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions
	 	 	56	 
	SECTION 6.05. Asset Sales
	 	 	57	 
	SECTION 6.06. Sale and Leaseback Transactions
	 	 	57	 
	SECTION 6.07. Swap Agreements
	 	 	58	 
	SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness
	 	 	58	 
	SECTION 6.09. Transactions with Affiliates
	 	 	58	 
	SECTION 6.10. Restrictive Agreements
	 	 	58	 
	SECTION 6.11. Amendment of Material Documents
	 	 	59	 
	SECTION 6.12. Clauses Restricting Subsidiary Distributions
	 	 	59	 
	SECTION 6.13. Lines of Business
	 	 	59	 
	SECTION 6.14. Coastwise Citizenship
	 	 	59	 
	SECTION 6.15. Changes in Fiscal Periods
	 	 	59	 
	SECTION 6.16. Capital Expenditures
	 	 	59	 
	SECTION 6.17. Financial Covenants
	 	 	59	 
	 
	 	 	 	 
	ARTICLE VII Events of Default
	 	 	60	 
	 
	 	 	 	 
	ARTICLE VIII The Administrative Agent
	 	 	62	 
	 
	 	 	 	 
	ARTICLE IX Miscellaneous
	 	 	64	 
	SECTION 9.01. Notices
	 	 	64	 
	SECTION 9.02. Waivers; Amendments
	 	 	66	 
	SECTION 9.03. Expenses; Indemnity; Damage Waiver
	 	 	67	 
	SECTION 9.04. Successors and Assigns
	 	 	69	 
	SECTION 9.05. Survival
	 	 	72	 
	SECTION 9.06. Counterparts; Integration; Effectiveness
	 	 	72	 
	SECTION 9.07. Severability
	 	 	72	 
	SECTION 9.08. Right of Setoff
	 	 	72	 






					
	 	 	 	 	 






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	SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process
	 	 	73	 
	SECTION 9.10. WAIVER OF JURY TRIAL
	 	 	73	 
	SECTION 9.11. Headings
	 	 	73	 
	SECTION 9.12. Confidentiality
	 	 	73	 
	SECTION 9.13. Several Obligations; Nonreliance; Violation of Law
	 	 	74	 
	SECTION 9.14. USA PATRIOT Act
	 	 	75	 
	SECTION 9.15. Disclosure
	 	 	75	 
	SECTION 9.16. Appointment for Perfection
	 	 	75	 
	SECTION 9.17. Interest Rate Limitation
	 	 	75	 
	 
	 	 	 	 
	ARTICLE X Loan Guaranty
	 	 	75	 
	SECTION 10.01. Guaranty
	 	 	75	 
	SECTION 10.02. Guaranty of Payment
	 	 	76	 
	SECTION 10.03. No Discharge or Diminishment of Loan Guaranty
	 	 	76	 
	SECTION 10.04. Defenses Waived
	 	 	76	 
	SECTION 10.05. Rights of Subrogation
	 	 	77	 
	SECTION 10.06. Reinstatement; Stay of Acceleration
	 	 	77	 
	SECTION 10.07. Information
	 	 	77	 
	SECTION 10.08. Termination
	 	 	77	 
	SECTION 10.09. Taxes
	 	 	77	 
	SECTION 10.10. Maximum Liability
	 	 	78	 
	SECTION 10.11. Contribution
	 	 	78	 
	SECTION 10.12. Liability Cumulative
	 	 	78	 






SCHEDULES:




Commitment Schedule

Schedule 3.05 — Properties

Schedule 3.06 — Disclosed Matters

Schedule 3.12 — Material Agreements

Schedule 3.14 — Insurance

Schedule 3.15 — Capitalization and Subsidiaries

Schedule 3.18 — Affiliate Transactions

Schedule 6.01 — Existing Indebtedness

Schedule 6.02 — Existing Liens

Tax Lien Schedule




EXHIBITS:




Exhibit A — Form of Assignment and Assumption

Exhibit B — Form of Opinion of Borrower’s Counsel

Exhibit C — Form of Borrowing Base Certificate

Exhibit D — Form of Compliance Certificate

Exhibit E — Joinder Agreement

Exhibit F — Commitment Increase Certificate

Exhibit G — Additional Lender Certificate

Exhibit H — Form of Vessel Mortgage




					
	 	 	 	 	 
	
	 	 
	 	 






iii









 






Exhibit 10.12




     CREDIT AGREEMENT dated as of February 27, 2007 (as it may be amended or modified from time to
time, this “Agreement”), among SUPERIOR OFFSHORE INTERNATIONAL, L.L.C., the Lenders party
hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.



     The parties hereto agree as follows:



ARTICLE 1




Definitions




     SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:



     “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the Alternate Base Rate.



     “Account” has the meaning assigned to such term in the Security Agreement.



     “Account Debtor” means any Person obligated on an Account.



     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.



     “Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder.



     “Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.



     “Affiliate” means, with respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.



     “Aggregate Credit Exposure” means, at any time, the aggregate Credit Exposure of all
the Lenders.



     “Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a)
the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.



     “Applicable Percentage” means, with respect to any Lender, (a) with respect to
Revolving Loans, LC Exposure, Swingline Loans or Overadvances, a percentage equal to a fraction the
numerator of which is such Lender’s Revolving Commitment and the denominator of which is the
aggregate Revolving Commitment of all Revolving Lenders (if the Revolving Commitments have
terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s
share of the aggregate Revolving Exposures at that time) and (b) with respect to Protective
Advances or with respect to the Aggregate



					
	 	 	 	 	 
	
	 	 
	 	 






1









 





Credit Exposure, a percentage based upon its share of the Aggregate Credit Exposure and the
unused Commitments.




     “Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar
Revolving Loan, or with respect to the commitment fees payable hereunder, as the case may be, the
applicable rate per annum set forth below under the caption “Eurodollar Spread” or “Commitment Fee
Rate”, as the case may be, based upon the Borrower’s Fixed Charge Coverage Ratio or Average 30-Day
Availability, as applicable, as of the most recent determination date, provided that until the
delivery to the Administrative Agent, pursuant to Section 5.01, of the Borrower’s consolidated
financial information for the Borrower’s first fiscal quarter ending after the Effective Date, the
“Applicable Rate” shall be the applicable rate per annum set forth below in Category 2:



	 	 	 	 	 
	Average 30-Day	 	 	 	 
	Availability or Fixed	 	Revolver	 	Commitment
	Charge Coverage Ratio	 	Eurodollar Spread	 	Fee Rate
	Category 1

Fixed Charge Coverage Ratio

≥ 2.0 to 1.0 or Average 30-Day Availability

≥ $15,000,000
	 	1.75%
	 	0.25%
	 	 	 	 	 
	Category 2

Fixed Charge Coverage Ratio

< 2.0 to 1.0 but

≥ 1.5 to 1.0 or Average 30-Day Availability

< $15,000,000 but

≥ $10,000,000
	 	2.00%
	 	0.25%
	 	 	 	 	 
	Category 3

Fixed Charge Coverage Ratio

< 1.5 to 1.0 or Average 30-Day Availability

< $10,000,000
	 	2.25%
	 	0.25%






     For purposes of the foregoing, (a) the Applicable Rate shall be determined as of the end of
each fiscal quarter of the Borrower based upon the Borrower’s annual or quarterly consolidated
financial statements delivered pursuant to Section 5.01 and (b) each change in the Applicable Rate
resulting from a change in the Average 30-Day Availability or Fixed Charge Coverage Ratio shall be
effective during the period commencing on and including the date of delivery to the Administrative
Agent of such consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change, provided that if such
consolidated financial statements have not been delivered to Administrative Agent, the Average
30-Day Availability and Fixed Charge Coverage Ratio shall be deemed to be in Category 3. If, as a
result of any restatement of or other adjustment to the financial statements of the Borrower or for
any other reason, the Administrative Agent determines that (a) the Fixed Charge Coverage Ratio or
Average 30-Day Availability as calculated by the Borrower as of any applicable date was inaccurate
and (b) a proper calculation of the Fixed Charge Coverage Ratio or Average 30-Day Availability
would have resulted in different pricing for any period, then (i) if the proper calculation of the
Fixed Charge Coverage Ratio or Average 30-Day Availability would have resulted in higher pricing
for such period, the Borrower shall automatically and retroactively be obligated to pay to the
Administrative Agent, for its benefit and the benefit of the Lenders, promptly on demand by the
Administrative Agent, an amount equal to the excess of the amount of interest and fees that should
have



					
	 	 	 	 	 
	
	 	 
	 	 






2









 





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 Fixed Charge Coverage Ratio or Average 30-Day
Availability would have resulted in lower pricing for such period, an amount equal to the interest
and fees that were paid for such period over the amount of interest and fees that should have been
paid for such period shall be applied as a credit to the next payment(s) of interest and/or fees
payable hereunder; provided that if, as a result of any restatement or other event a proper
calculation of the Fixed Charge Coverage Ratio or Average 30-Day 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 income or expenses form one period to another period or any similar reason), then
the amount payable by, or credited to, the Borrower pursuant to clause (i) or (ii) above, as
applicable, shall be based upon the positive difference, if any, between the amount of interest and
fees that should have been paid for all applicable periods and the amount of interest and fees paid
for all such periods.




     “Approved Fund” has the meaning assigned to such term in Section 9.04.



     “Asset Sale” means any Disposition of property or series of related Dispositions of
property (excluding any such Disposition permitted by clause (a), (b), (c) (d), (e) or (f) of
Section 6.05) that yields Net Cash Proceeds to any Loan Party in excess of $500,000.



     “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A or any other form
approved by the Administrative Agent.



     “Availability” means, at any time, an amount equal to (a) the lesser of the Revolving
Commitment and the Borrowing Base plus (b) cash held in an account with Administrative
Agent which account is subject to an account control agreement in favor of Administrative Agent
minus (c) the Revolving Exposure of all Revolving Lenders.



     “Available Revolving Commitment” means, at any time, the Revolving Commitment then in
effect minus the Revolving Exposure of all Revolving Lenders at such time.



     “Availability Period” means the period from and including the Effective Date to but
excluding the earlier of the Maturity Date and the date of termination of the Commitments.



     “Average 30-Day Availability” means the amount obtained by adding Availability at the
end of each day for each of the prior thirty (30) days and dividing the sum by thirty (30).



     “Banking Services” means each and any of the following bank services provided to any
Loan Party by any Lender or any of its Affiliates: (a) commercial credit cards, (b) stored value
cards and (c) treasury management services (including, without limitation, controlled disbursement,
automated clearinghouse transactions, return items, overdrafts and interstate depository network
services).



     “Banking Services Obligations” of the Loan Parties means any and all obligations of
the Loan Parties, whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.



     “Banking Services Reserves” means all Reserves which the Administrative Agent from
time to time establishes in its Permitted Discretion for Banking Services then provided or
outstanding.



					
	 	 	 	 	 
	
	 	
	 	 






3









 






     “Board” means the Board of Governors of the Federal Reserve System of the United
States of America.



     “Borrower” means Superior Offshore International, L.L.C., a Louisiana limited
liability company.



     “Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in
effect, (b) a Swingline Loan, (c) a Protective Advance and (d) an Overadvance.



     “Borrowing Base” means, at any time, the sum of (a) 85% of the Borrower’s Eligible
Accounts at such time minus (b) Reserves. The Administrative Agent may, in its Permitted
Discretion, reduce the advance rates set forth above, adjust Reserves or reduce one or more of the
other elements used in computing the Borrowing Base. The parties understand that the exclusionary
criteria in the definition of Eligible Accounts, any Reserves that may be imposed as provided
herein, any reduction of the advance rates set forth above, and any deductions or other adjustments
provided for herein to the face amount Eligible Accounts have the effect of reducing the Borrowing
Base, and, accordingly, whether or not any provisions hereof so state, all of the foregoing shall
be determined without duplication so as not to result in multiple reductions in the Borrowing Base
for the same facts or circumstances.



     “Borrowing Base Certificate” means a certificate, signed and certified as accurate and
complete by a Financial Officer of the Borrower, in substantially the form of Exhibit C or
another form which is acceptable to the Administrative Agent in its sole discretion.



     “Borrowing Request” means a request by the Borrower for a Revolving Borrowing in
accordance with Section 2.02.



     “Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain closed;
provided that, when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.



     “Capital Expenditures” means, for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing
(pursuant to a capital lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period) that should be capitalized
under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.



     “Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in accordance with GAAP.



     “Cash Equivalents” means:



          (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of acquisition;



          (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of six months or less from the date of acquisition issued by any Lender
or by



					
	 	 	 	 	 
	
	 	 
	 	 






4









 





any commercial bank organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000;




          (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Ratings Services
(“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of commercial paper issuers generally, and maturing within six
months from the date of acquisition;



          (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements
of clause (b) of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States government;



          (e) securities with maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s;



          (f) securities with maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank satisfying the requirements
of clause (b) of this definition;



          (g) money market mutual or similar funds that invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition;



          (h) money market funds that (i) comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated
AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.



     “Change in Control” (i) at any time prior to the IPO, Louis E. Schaefer, Jr. and his
Affiliates shall cease to own of record and beneficially at least 60% of the outstanding Equity
Interests of the Borrower; (ii) at any time following the IPO, (x) any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), other than Louis E. Schaefer, Jr. and his Affiliates, shall become, or obtain
rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner” (as
defined in Rules 13(d)-3 and 13(d) 5 under the Exchange Act), directly or indirectly, of more than
30% of the outstanding Equity Interests of the Borrower or (y) Louis E. Schaefer, Jr. and his
Affiliates shall cease to own of record and beneficially at least 35% of the outstanding common
stock of the Borrower; or (iii) the board of directors of the Borrower shall cease to consist of a
majority of Continuing Directors.



     “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.



     “Charter Obligations” means all obligations (other than obligations backed by a
cash-secured letter of credit) of the Borrower and its domestic Subsidiaries with respect to
potential liquidated



					
	 	 	 	 	 
	
	 	 
	 	 






5









 





damages, fees or other liabilities incurred in connection with the termination or breach of
charters or similar contractual arrangements entered into with respect to the charter or lease of
vessels, in each case calculated on a probable loss basis in accordance with GAAP.




     “Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its
individual capacity, and its successors.



     “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans, Swingline Loans or Protective Advances
or Overadvances.



     “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     “Collateral” means any and all property owned, leased or operated by a Person covered
by the Collateral Documents and any and all other property of any Loan Party, now existing or
hereafter acquired, that may at any time be or become subject to a security interest or Lien in
favor of the Administrative Agent, on behalf of itself and the Lenders, to secure the Secured
Obligations.



     “Collateral Access Agreement” has the meaning assigned to such term in the Security
Agreement.



     “Collateral Documents” means, collectively, the Security Agreement, the Mortgages, if
any, and any other documents granting a Lien upon the Collateral as security for payment of the
Secured Obligations.



     “Collection Account” has the meaning assigned to such term in the Security Agreement.



     “Commitment” means, with respect to each Lender, the sum of such Lender’s Revolving
Commitment, together with the commitment of such Lender to acquire participations in Protective
Advances hereunder. The initial amount of each Lender’s Commitment is set forth on the Commitment
Schedule, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its
Commitment, as applicable.



     “Commitment Schedule” means the Schedule attached hereto identified as such.



     “Continuing Directors” means the directors of the Borrower, if prior to the IPO, on
the Closing Date and, if after the IPO, on the date the IPO is consummated, and each other
director, if, in each case, such other director’s nomination for election to the board of directors
of the Borrower is recommended by at least a majority of the then Continuing Directors.



     “Contractor Reserve” means a reserve equal to the amount of sums payable to
contractors or other payees of any Loan Party that have a statutory Lien under Chapter 56 of the
Texas Property Code or Louisiana Revised Statute Section 4861 et. seq. or any successor statutes or
any similar statutes of other states; provided, however, notwithstanding anything
to the contrary in the foregoing, the aggregate amount of the Contractor Reserve will not exceed
$2,000,000 from the Effective Date through, and including, June 30, 2007.



     “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.



     “Controlled Disbursement Account” means the following account: account# 708052410,
and any replacement or additional accounts of the Borrower maintained with the Administrative Agent
as a zero



					
	 	 	 	 	 
	
	 	 
	 	 






6









 





balance, cash management account pursuant to and under any agreement between the Borrower and
the Administrative Agent, as modified and amended from time to time, and through which all
disbursements of the Borrower, any Loan Party and any designated Subsidiary of the Borrower are
made and settled on a daily basis with no uninvested balance remaining overnight.




     “Credit Exposure” means, as to any Lender at any time, the sum of (a) such Lender’s
Revolving Exposure at such time, plus (b) an amount equal to its Applicable Percentage, if
any, of the aggregate principal amount of Protective Advances outstanding at such time.



     “Default” means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.



     “Disclosed Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06.



     “Disposition” means with respect to any property, any sale, lease, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and
“Disposed of” shall have correlative meanings.



     “Document” has the meaning assigned to such term in the Security Agreement.



     “dollars” or “$” refers to lawful money of the United States of America.



     “EBITDA” for any period, Net Income for such period plus, without duplication and to
the extent reflected as a charge in the statement of such Net Income for such period, the sum of
(a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt
issuance costs and commissions, discounts and other fees and charges associated with Indebtedness
(including the Loans), (c) depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs and (e) any extraordinary non-cash
expenses or losses (including, whether or not otherwise includable as a separate item in the
statement of such Net Income for such period, non-cash losses on sales of assets outside of the
ordinary course of business), and minus, (a) to the extent included in the statement of such Net
Income for such period, the sum of (i) interest income, (ii) any extraordinary or non-recurring
non-cash income or gains (including, whether or not otherwise includable as a separate item in the
statement of such Net Income for such period, gains on the sales of assets outside of the ordinary
course of business), (iii) income tax credits (to the extent not netted from income tax expense)
and (iv) any other non-cash income and (b) any cash payments made during such period in respect of
items described in clause (e) above subsequent to the fiscal quarter in which the relevant non-cash
expenses or losses were reflected as a charge in the statement of Net Income, all as determined on
a consolidated basis.



     “Effective Date” means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 9.02).



     “Eligible Accounts” means, at any time, the Accounts of the Borrower which the
Administrative Agent determines in its Permitted Discretion, pursuant to the exclusionary criteria
set forth below, are eligible as the basis for the extension of Revolving Loans and Swingline Loans
hereunder. Without limiting the Administrative Agent’s discretion provided herein, Eligible
Accounts shall not include any Account:



          (a) which is not subject to a first priority perfected security interest in favor of the
Administrative Agent;



					
	 	 	 	 	 
	
	 	 
	 	 






7









 






          (b) which is subject to any Lien other than (i) a Lien in favor of the Administrative Agent
and (ii) a Permitted Encumbrance which does not have priority over the Lien in favor of the
Administrative Agent;



          (c) which is unpaid more than 90 days after the date of the original invoice therefor or more
than 60 days after the original due date, or which has been written off the books of the Borrower
or otherwise designated as uncollectible;



          (d) which is owing by an Account Debtor for which more than 20% of the Accounts owing from
such Account Debtor and its Affiliates are ineligible pursuant to clause (c) above;



          (e) which is owing by an Account Debtor to the extent the aggregate amount of Accounts owing
from such Account Debtor and its Affiliates to the Borrower exceeds 20% of the aggregate Eligible
Accounts; provided, however, that notwithstanding anything to the contrary in the
foregoing, Accounts will be Eligible Accounts to the extent the aggregate amount of Accounts owing
from such Account Debtor and its Affiliates to the Borrower do not exceed 25% of the aggregate
Eligible Accounts only for so long as such applicable Account Debtor’s long term debt has a credit
rating of at least “BBB” by S&P or “Baa” by Moody’s;



          (f) with respect to which any covenant, representation, or warranty contained in this
Agreement or in the Security Agreement has been breached or is not true;



          (g) which (i) does not arise from the sale of goods or performance of services in the ordinary
course of business, (ii) is not evidenced by an invoice or by other documentation satisfactory to
the Administrative Agent which has been sent to the Account Debtor, (iii) represents a progress
billing, (iv) is contingent upon the Borrower’s completion of any further performance, (v)
represents a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval,
consignment, cash-on-delivery or any other repurchase or return basis or (vi) relates to payments
of interest;



          (h) for which the goods giving rise to such Account have not been shipped to the Account
Debtor or for which the services giving rise to such Account have not been performed by the
Borrower or if such Account was invoiced more than once (but only with respect to any duplicate
invoice(s));



          (i) with respect to which any check or other instrument of payment has been returned
uncollected for any reason;



          (j) which is owed by an Account Debtor which has (i) applied for, suffered, or consented to
the appointment of any receiver, custodian, trustee, or liquidator of its assets, (ii) has had
possession of all or a material part of its property taken by any receiver, custodian, trustee or
liquidator, (iii) filed, or had filed against it, any request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or
voluntary or involuntary case under any state or federal bankruptcy laws (other than post-petition
accounts payable of an Account Debtor that is a debtor-in-possession under the Bankruptcy Code and
reasonably acceptable to the Administrative Agent), (iv) has admitted in writing its inability, or
is generally unable to, pay its debts as they become due, (v) become insolvent, or (vi) ceased
operation of its business;



          (k) which is owed by an Account Debtor which has sold all or substantially all of its assets;



					
	 	 	 	 	 
	
	 	 
	 	 






8









 






          (l) which is owed by an Account Debtor which (i) does not maintain its chief executive office
in the U.S. or Canada or (ii) is not organized under applicable law of the U.S., any state of the
U.S., Canada, or any province of Canada unless, in either case, such Account is backed by a Letter
of Credit acceptable to the Administrative Agent which is in the possession of, has been assigned
to and is directly drawable by the Administrative Agent;



          (m) which is owed in any currency other than U.S. dollars;



          (n) which is owed by (i) the government (or any department, agency, public corporation, or
instrumentality thereof) of any country other than the U.S. unless such Account is backed by a
Letter of Credit acceptable to the Administrative Agent which is in the possession of the
Administrative Agent, or (ii) the government of the U.S., or any department, agency, public
corporation, or instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and
any other steps necessary to perfect the Lien of the Administrative Agent in such Account have been
complied with to the Administrative Agent’s satisfaction;



          (o) which is owed by any Affiliate, employee, officer, director, agent or, prior to the IPO,
stockholder of any Loan Party;



          (p) which, for any Account Debtor, exceeds a credit limit determined by the Administrative
Agent, to the extent of such excess;



          (q) which is owed by an Account Debtor or any Affiliate of such Account Debtor to which any
Loan Party is indebted (unless the Account Debtor has entered into an agreement acceptable to
Administrative Agent to waive set-off rights), but only to the extent of such indebtedness or is
subject to any security, deposit, progress payment, retainage or other similar advance made by or
for the benefit of an Account Debtor, in each case to the extent thereof;



          (r) which is subject to any counterclaim, deduction, defense, setoff (unless the Account
Debtor has entered into an agreement acceptable to Administrative Agent to waive set-off rights) or
dispute but only to the extent of any such counterclaim, deduction, defense, setoff or dispute;



          (s) which is evidenced by any promissory note, chattel paper, or instrument;



          (t) which is owed by an Account Debtor located in New Jersey, Minnesota, Indiana, West
Virginia or any other jurisdiction which requires filing of a “Notice of Business Activities
Report” or other similar report in order to permit the Borrower to seek judicial enforcement in
such jurisdiction of payment of such Account, in each case, unless the Borrower has filed such
report or qualified to do business in such jurisdiction;



          (u) with respect to which the Borrower has made any agreement with the Account Debtor for any
reduction thereof, other than discounts and adjustments given in the ordinary course of business to
the extent of such reduction, or any Account which was partially paid and the Borrower created a
new receivable for the unpaid portion of such Account (to the extent of any duplication);



          (v) which does not comply in all material respects with the requirements of all applicable
laws and regulations, whether Federal, state or local, including without limitation the Federal
Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board;



					
	 	 	 	 	 
	
	 	 
	 	 






9









 






          (w) which is for goods that have been sold under a purchase order or pursuant to the terms of
a contract or other agreement or understanding (written or oral) that indicates or purports that
any Person other than the Borrower has or has had an ownership interest in such goods, or which
indicates any party other than the Borrower as payee or remittance party;



          (x) which was created on cash on delivery terms; or



          (y) which the Administrative Agent determines will not be paid by reason of the Account
Debtor’s inability to pay or which the Administrative Agent otherwise determines is unacceptable
for any reason whatsoever.



     In the event that an Account which was previously an Eligible Account ceases to be an Eligible
Account hereunder, the Borrower shall exclude the same in calculating the Borrowing Base and notify
the Administrative Agent thereof on and at the time of submission to the Administrative Agent of
the next Borrowing Base Certificate. In determining the amount of an Eligible Account, the face
amount of an Account may, in the Administrative Agent’s Permitted Discretion, be reduced by,
without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued
and actual discounts, claims, credits or credits pending, promotional program allowances, price
adjustments, finance charges or other allowances (including any amount that the Borrower may be
obligated to rebate to an Account Debtor pursuant to the terms of any agreement or understanding
(written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account
but not yet applied by the Borrower to reduce the amount of such Account.



     “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, release or threatened release of any Hazardous Material or to
health and safety matters.



     “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.



     “Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.



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



     “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.



     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day
notice



					
	 	 	 	 	 
	
	 	 
	 	 






10









 





period is waived); (b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is,
or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.




     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.



     “Event of Default” has the meaning assigned to such term in Article VII.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by
the United States of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the Borrower is located and
(c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.19(b)), any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.16(e),
except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time
of designation of a new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.17(a).



     “Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.



     “Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Borrower.



     “Fixed Charges” means, with reference to any period, without duplication, cash
Interest Expense, plus scheduled principal payments on Indebtedness made during such
period, plus expense for taxes paid in cash, plus dividends or distributions paid
in cash , other than any Restricted Payment made to a Loan Party or made pursuant to Section
6.08(c) or (d), plus Capital Lease Obligation payments, plus cash contributions to
any Plan, all calculated for the Borrower and its Subsidiaries on a consolidated basis.



					
	 	 	 	 	 
	
	 	 
	 	 






11









 






     “Fixed Charge Coverage Ratio” means, the ratio, determined as of the end of each of
fiscal quarter of the Borrower for the most-recently ended four fiscal quarters, of (a) EBITDA
minus the unfinanced portion of Capital Expenditures to (b) Fixed Charges, all calculated
for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.



     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.



     “Funding Account” has the meaning assigned to such term in Section 4.01(h).



     “GAAP” means generally accepted accounting principles in the United States of America.



     “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.



     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or obligation;
provided, that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.



     “Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.



     “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.



     “Indebtedness” of any Person at any date, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price
of property or services (other than current trade payables incurred in the ordinary course of such
Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit (except to the extent secured by
cash collateral), surety bonds or similar arrangements, (g) the liquidation value of all redeemable
preferred Capital Stock of such Person, (h) all Charter Obligations of such Person, (i) all
Guarantees of such Person in respect of obligations of the kind referred to in clauses (a) through
(h) above, (j) all obligations of the kind referred to in clauses (a) through (i) above secured by
(or for which the holder of such obligation has an existing right, contingent or otherwise, to be
secured by) any Lien on



					
	 	 	 	 	 
	
	 	 
	 	 






12









 





property (including accounts and contract rights) owned by such Person, whether or not such
Person has assumed or become liable for the payment of such obligation, and (k) for the purposes of
Section 7(f) only, the net obligations of such Person in respect of Swap Agreements. The
Indebtedness of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness expressly provide that such Person is not liable
therefor.




     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of
February 27, 2007 among Borrower, Administrative Agent and Term Loan Collateral Agent.



     “Interest Election Request” means a request by the Borrower to convert or continue a
Revolving Borrowing in accordance with Section 2.07.



     “Interest Expense” means, with reference to any period, total interest expense
(including that attributable to Capital Lease Obligations) of the Borrower and its Subsidiaries for
such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries
(including all commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing and net costs under Swap Agreements in respect of interest
rates to the extent such net costs are allocable to such period in accordance with GAAP),
calculated on a consolidated basis for the Borrower and its Subsidiaries for such period in
accordance with GAAP.



     “Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline
Loan), the first Business Day of each calendar month and the Maturity Date, (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three
months’ duration, each day prior to the last day of such Interest Period that occurs at intervals
of three months’ duration after the first day of such Interest Period and the Maturity Date, and
(c) with respect to any Swingline Loan, the day that such Loan is required to be repaid and the
Maturity Date.



     “Interest Period” means (a) with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as the Borrower may elect;
provided, that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the
date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be
the effective date of the most recent conversion or continuation of such Borrowing.



     “Inventory” has the meaning assigned to such term in the Security Agreement.



     “IPO” means the initial public offering of securities of Superior Offshore
International, Inc. as more fully described in that certain Form S-1 on file with the Securities
Exchange Commission, as the same may be amended or supplemented from time to time.



					
	 	 	 	 	 
	
	 	 
	 	 






13









 






     “Issuing Bank” means Chase, in its capacity as the issuer of Letters of Credit
hereunder, and its successors in such capacity as provided in Section 2.06(i). The Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect
to Letters of Credit issued by such Affiliate.



     “Joinder Agreement” has the meaning assigned to such term in Section 5.13.



     “LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of
Credit.



     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements
that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of
any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at
such time.



     “LC Collateral Account” has the meaning assigned to such term in Section 2.06(j).



     “LC Sublimit” means, as of any date of determination, the lesser of (a) $17,000,000
and (b) cash which is not subject to any other security interest or lien of equal or superior
priority to the Lien of Administrative Agent, and held in an account of Administrative Agent which
account is subject to an account control agreement in favor of Administrative Agent.



     “Lenders” means the Persons listed on the Commitment Schedule and any other
Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Unless
the context otherwise requires, the term “Lenders” includes the Swingline Lender.



     “Letter of Credit” means any letter of credit issued pursuant to this Agreement.



     “Leverage Ratio” means, on any date, the ratio of (a) Total Indebtedness on such date
to (b) EBITDA for the period of four consecutive fiscal quarters ended on such date (or, if such
date is not the last day of a fiscal quarter, ended on the last day of the fiscal quarter most
recently ended prior to such date).



     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar
Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for
a maturity comparable to such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.



     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, and (b)
the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any



					
	 	 	 	 	 
	
	 	 
	 	 






14









 





financing lease having substantially the same economic effect as any of the foregoing)
relating to such asset.




     “Loan Documents” means this Agreement, any promissory notes issued pursuant to the
Agreement, any Letter of Credit applications, the Collateral Documents, the Loan Guaranty, the
Intercreditor Agreement, the Vessel Mortgages and all other agreements, instruments, documents and
certificates identified in Section 4.01 executed and delivered by any Loan Party to, or in favor
of, the Administrative Agent or any Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, letter of credit agreements and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Loan Party and delivered to the
Administrative Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby. Any reference in the Agreement or any other Loan Document to a Loan Document
shall include all appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to the Agreement or such Loan Document
as the same may be in effect at any and all times such reference becomes operative.



     “Loan Guarantor” each Loan Party (other than the Borrower and the Borrower’s foreign
Subsidiaries).



     “Loan Guaranty” means Article X of this Agreement.



     “Loan Parties” means the Borrower, the Borrower’s domestic Subsidiaries and any other
Person who becomes a party to this Agreement pursuant to a Joinder Agreement and their successors
and assigns.



     “Loans” means the loans and advances made by the Lenders pursuant to this Agreement,
including Swingline Loans, Overadvances and Protective Advances.



     “Long-Term Debt” means any Indebtedness that, in accordance with GAAP, constitutes
(or, when incurred, constituted) a long-term liability.



     “Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries
taken as a whole, (b) the ability of any Loan Party to perform any of its obligations under the
Loan Documents to which it is a party, (c) any material portion of the Collateral, or the
Administrative Agent’s Liens (on behalf of itself and the Lenders) on any material portion of the
Collateral or the priority of such Liens with materiality determined in the Administrative Agent’s
reasonable discretion, or (d) the legality or enforceability against any Loan Party of any Loan
Document to which it is a party.



     “Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Subsidiaries in an aggregate principal amount exceeding $2,500,000. For purposes
of determining Material Indebtedness, the “obligations” of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap
Agreement were terminated at such time.



     “Maturity Date” means February 27, 2010 or any earlier date on which the Commitments
are reduced to zero or otherwise terminated pursuant to the terms hereof. Subject to the consent
of each Lender, the Maturity Date may be extended by one (1) year upon the request of the Borrower,
which request must be received no later than thirty (30) days before February 27, 2010.



     “Maximum Liability” has the meaning assigned to such term in Section 10.10.



					
	 	 	 	 	 
	
	 	 
	 	 






15









 






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



     “Mortgages” means any mortgage, deed of trust or other agreement which conveys or
evidences a Lien in favor of the Administrative Agent, for the benefit of the Administrative Agent
and the Lenders, on real property of a Loan Party, including any amendment, modification or
supplement thereto.



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



     “Net Income” means, for any period, the consolidated net income (or loss) of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or
any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary) in
which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that
any such income is actually received by the Borrower or such Subsidiary in the form of dividends or
similar distributions and (c) the undistributed earnings of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation (other than under any Loan Document) or
Requirement of Law applicable to such Subsidiary.



     “Net Proceeds” means (a) in connection with any Asset Sale, any Recovery Event or any
sale of Subtech, the proceeds thereof in the form of cash and Cash Equivalents (including any such
proceeds received by way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or otherwise, but only as and when received),
net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien on any asset that is the subject of such Asset
Sale, Recovery Event or sale (other than any Lien pursuant to a Loan Document) or otherwise subject
to mandatory prepayment as a result of such event and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or deductions and any tax
sharing arrangements) and (b) in connection with any issuance or sale of Equity Interests or any
incurrence of Indebtedness, the cash proceeds received from such issuance or incurrence, net of
attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions
and other customary fees and expenses actually incurred in connection therewith.



     “Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(d).



     “Non-Paying Guarantor” has the meaning assigned to such term in Section 10.11.



     “Obligated Party” has the meaning assigned to such term in Section 10.02.



     “Obligations” means all unpaid principal of and accrued and unpaid interest on the
Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities
and other obligations of the Loan Parties to the Lenders or to any Lender, the Administrative
Agent, the Issuing Bank or any indemnified party arising under the Loan Documents.



     “Other Taxes” means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.



     “Overadvance” has the meaning assigned to such term in Section 2.05(c).



     “Participant” has the meaning set forth in Section 9.04.



					
	 	 	 	 	 
	
	 	 
	 	 







16










 





     “Paying Guarantor” has the meaning assigned to such term in Section 10.11.



     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.



     “Permitted Discretion” means a determination made in good faith and in the exercise of
reasonable (from the perspective of a secured asset-based lender) business judgment.



     “Permitted Encumbrances” means Liens permitted pursuant to Section 6.02 hereof




     “Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.



     “Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.



     “Prepayment Event” means:



     (a) any Asset Sale; or



     (b) any Recovery Event; or



     (c) the issuance by the Borrower of any Equity Interests other than as contemplated by the
IPO; or



     (d) the incurrence by any Loan Party of any Indebtedness, other than Indebtedness permitted
under Section 6.01 or permitted by the Required Lenders pursuant to Section 9.02;


provided, however, that to the extent that amounts received with respect to clauses (a),
(b), (c) and (d) above are (i) required to be applied to prepayment of term loans outstanding under
the Term Loan Agreement and are so applied or (ii) permitted under the Term Loan Agreement to be
reinvested and are so reinvested, then such events shall not constitute a Prepayment Event
hereunder.




     “Prepayment Fee” means a fee payable to the Administrative Agent, for the benefit of
the Lenders, in an amount equal to the aggregate Revolving Commitment multiplied by (i) 0.5% if
such termination of the Commitments occurs prior to the first anniversary of the date of this
Agreement and (ii) 0.25% if such termination of the Commitments occurs on or after the first but
prior to the second anniversary of the date of this Agreement.



     “Prime Rate” means the rate of interest per annum publicly announced from time to time
by Chase as its prime rate at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced as being
effective.



     “Projections” has the meaning assigned to such term in Section 5.01(f).



     “Protective Advance” has the meaning assigned to such term in Section 2.04.



     “Recovery Event” means any settlement of or payment in respect of any property or
casualty insurance claim or any condemnation proceeding relating to any asset of any Loan Party
that yields Net Proceeds in excess of $500,000.








17









 





     “Register” has the meaning set forth in Section 9.04.



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



     “Report” means reports prepared by the Administrative Agent or another Person showing
the results of appraisals, field examinations or audits pertaining to the Borrower’s assets from
information furnished by or on behalf of the Borrower, after the Administrative Agent has exercised
its rights of inspection pursuant to this Agreement, which Reports may be distributed to the
Lenders by the Administrative Agent.



     “Required Lenders” means, at any time, Lenders having Credit Exposure and unused
Commitments representing more than 50% of the sum of the total Credit Exposure and unused
Commitments at such time; provided that, as long as there are only two Lenders, Required
Lenders shall mean both Lenders.



     “Requirement of Law” means as to any Person, the Certificate of Incorporation and By
Laws or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.



     “Reserves” means any and all reserves which the Administrative Agent deems necessary,
in its Permitted Discretion, to maintain (including, without limitation, an availability reserve,
the Contractor Reserve, reserves for accrued and unpaid interest on the Secured Obligations,
Banking Services Reserves, reserves for dilution of Accounts, reserves for Swap Obligations,
reserves for contingent liabilities of any Loan Party, reserves for uninsured losses of any Loan
Party, reserves for uninsured, underinsured, un-indemnified or under-indemnified liabilities or
potential liabilities with respect to any litigation and reserves for taxes (including for the tax
liens listed on the Tax Lien Schedule), fees, assessments, and other governmental charges) with
respect to the Collateral or any Loan Party.



     “Restricted Payment” has the meaning set forth in Section 6.08.



     “Revolving Commitment” means, with respect to each Lender, the commitment, if any, of
such Lender to make Revolving Loans and to acquire participations in Letters of Credit,
Overadvances and Swingline Loans hereunder, expressed as an amount representing the maximum
possible aggregate amount of such Lender’s Revolving Exposure hereunder, as such commitment may be
reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender’s Revolving Commitment is set forth on the
Commitment Schedule, or in the Assignment and Assumption pursuant to which such Lender
shall have assumed its Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders’ Revolving Commitments is $37,000,000.



     “Revolving Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and an amount
equal to its Applicable Percentage of the aggregate principal amount of Swingline Loans at such
time, plus (c) an amount equal to its Applicable Percentage of the aggregate principal amount of
Overadvances outstanding at such time.



     “Revolving Lender” means, as of any date of determination, a Lender with a Revolving
Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.









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     “Revolving Loan” means a Loan made pursuant to Section 2.01.



     “Revolving Loan Sublimit” means, as of any date of determination, the lesser of (a)
$20,000,000 and (b) the Availability as of such date.



     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc.



     “Secured Obligations” means all Obligations, together with all (i) Banking Services
Obligations and (ii) Swap Obligations owing to one or more Lenders or their respective Affiliates;
provided that at or prior to the time that any transaction relating to such Swap Obligation
is executed, the Lender party thereto (other than Chase) shall have delivered written notice to the
Administrative Agent that such a transaction has been entered into and that it constitutes a
Secured Obligation entitled to the benefits of the Collateral Documents.



     “Security Agreement” means that certain Pledge and Security Agreement, dated as of the
date hereof, between the Loan Parties and the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, and any other pledge or security agreement entered into,
after the date of this Agreement by any other Loan Party (as required by this Agreement or any
other Loan Document), or any other Person, as the same may be amended, restated or otherwise
modified from time to time.



     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding
and to be subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender under such Regulation D
or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.



     “Subordinated Indebtedness” of a Person means any Indebtedness of such Person the
payment of which is subordinated to payment of the Secured Obligations to the written satisfaction
of the Administrative Agent.



     “subsidiary” means, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or the management of which
is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by
such Person.



     “Subsidiary” means any direct or indirect subsidiary of the Borrower or a Loan Party,
as applicable.



     “Subtech” means Subtech Offshore Ltd.



     “Superior Achiever” means that certain vessel being constructed pursuant to the terms
of that certain Shipbuilding Contract YN-714 between Borrower and Merwede Shipyard Nieuwbouw BV, a
company organized under the laws of The Netherlands.






19









 





     “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a
Swap Agreement.



     “Swap Obligations” of a Person means any and all obligations of such Person, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions therefor), under
(a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction.



     “Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of
Swingline Loans hereunder.



     “Swingline Loan” means a Loan made pursuant to Section 2.05.



     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.



     “Term Loan Agreement” means that certain Credit Agreement dated as of February 27,
2007 by and between Borrower, Term Loan Administrative Agent, Term Loan Collateral Agent and the
other lenders party thereto, in an aggregate principal amount not to exceed $110,000,000.



     “Term Loan Administrative Agent” means JPMorgan Chase Bank, N.A.



     “Term Loan Collateral Agent” means Wilmington Trust Company.



     “Term Loan Documentation” means, collectively, collectively, the Term Loan Agreement
and the other “Loan Documents” (as defined in the Term Loan Agreement).



     “Total Indebtedness” means, at any date, the aggregate principal amount of all
Indebtedness of the Borrower and its Subsidiaries at such date, determined on a consolidated basis
in accordance with GAAP.



     “Transactions” means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and
the issuance of Letters of Credit hereunder.



     “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Adjusted LIBO Rate, the Alternate Base Rate.



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



     “Unliquidated Obligations” means, at any time, any Secured Obligations (or portion
thereof) that are contingent in nature or unliquidated at such time, including any Secured
Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under a letter
of credit issued by it; (ii) any






20









 







other obligation (including any guarantee) that is contingent in nature at such time; or (iii)
an obligation to provide collateral to secure any of the foregoing types of obligations.



     “Vessel Mortgage” means each of the preferred ship mortgages made by any Loan Party in
favor of, or for the benefit of, the Administrative Agent for its benefit and the benefit of the
Lenders, substantially in the form of Exhibit H, together with any proceeds thereof (with
such changes thereto as shall be advisable under the law of the jurisdiction in which such mortgage
or deed of trust is recorded).



     “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.



     SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement,
Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by
Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a
“Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class
(e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”)
or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).



     SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.



     SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if the Borrower notifies the Administrative Agent
that the Borrower requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on the operation of
such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of whether any such
notice is given before or after such change in GAAP or in the application thereof, then such
provision shall be interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.



ARTICLE II




The Credits




     SECTION 2.01. Commitments.







21









 








          (a) Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving
Loans to the Borrower from time to time during the Availability Period in an aggregate principal
amount that will not result in (i) such Lender’s Revolving Exposure exceeding such Lender’s
Revolving Commitment, (ii) such Lender’s Revolving Loan Sublimit or (iii) the total Revolving
Exposures exceeding the lesser of (x) the sum of the total Revolving Commitments or (y) the
Borrowing Base, subject to the Administrative Agent’s authority, in its sole discretion, to make
Protective Advances and Overadvances pursuant to the terms of Section 2.04 and 2.05. Within the
foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Revolving Loans.




          (b) Increase in Aggregate Commitment. In the event that a Lender desires to increase
its Revolving Commitment, or a bank or other entity that is not a Lender desires to become a Lender
and provide an additional Revolving Commitment hereunder, and so long as no Default or Event of
Default shall have occurred and be continuing and with the prior written consent of Administrative
Agent (which shall not be unreasonably conditioned, withheld or delayed), the Borrower shall have
the right from time to time prior to the Maturity Date upon not less than thirty (30) days’ prior
written notice to Administrative Agent to increase the Revolving Commitment by an aggregate amount
of up to $20,000,000 (subject to the terms and conditions set forth herein, “Commitment
Adjustment Event”); provided, that in no event shall the aggregate Commitment of all
Lenders be increased to an amount greater than $60,000,000; provided, further,
that:





     (i) if the Borrower elects to increase the Revolving Commitment of a Lender,
the Borrower and such Lender shall execute and deliver to the Administrative Agent a
certificate substantially in the form of Exhibit F attached hereto (a
“Commitment Increase Certificate”);




     (ii) any such Revolving Commitment increase shall be in increments of no less
than $10,000,000;




     (iii) if the Borrower elects to increase the Revolving Commitment by causing a
bank or financial institution that at such time is not a Lender to become a Lender
(an “Additional Lender”), the Borrower and such Additional Lender shall
execute and deliver to the Administrative Agent, a certificate substantially in the
form of Exhibit G hereto) (an “Additional Lender Certificate”),
together with an Administrative Questionnaire; provided that, any such
Additional Lender shall be approved by the Administrative Agent (which approval
shall not be unreasonably conditioned, withheld or delayed) prior to such bank or
financial institution becoming an Additional Lender hereunder;




     (iv) subject to acceptance and recording thereof pursuant to this subsection
(b) hereof, from and after the effective date specified in the Commitment Increase
Certificate or the Additional Lender Certificate, as applicable (or if any
Eurodollar Loan is outstanding, then on the last day of the Interest Period in
respect of such Eurodollar Loan, unless the Borrower has paid compensation required
with respect to such Eurodollar Loan): (a) the amount of the aggregate Revolving
Commitment shall be increased by the amount set forth therein, and (b) in the case
of an Additional Lender
Certificate, any Additional Lender party thereto shall be a party to this
Agreement and the other Loan Documents and have the rights and obligations of a
Lender under this Agreement and the other Loan Documents. In addition, the Lender
party to the Commitment Increase Certificate or Additional Lender, as applicable,
shall purchase a pro rata portion of the outstanding Loans (and participation
interests in Letters of Credit) of each of the other lenders (and such Lenders
hereby agree to sell and to take all such






22









 






further action to effectuate such sale)
such that each Lender (including any Additional Lender, if applicable) shall hold
its respective percentage of the outstanding Loans (and participation interests)
after giving effect to the increase in the Revolving Commitment;




     (v) upon its receipt of a duly completed Commitment Increase Certificate or an
Additional Lender Certificate, as applicable, executed by the Borrower and the
Lender or the Additional Lender party thereto, as applicable, and, with respect to
an Additional Lender, the Administrative Questionnaire, the Administrative Agent
shall accept such Commitment Increase Certificate or Additional Lender Certificate
and shall record the information contained therein in the Register. No increase in
the Revolving Commitment shall be effective for purposes of this Agreement unless it
has been recorded in the Register; and




     (vi) Borrower shall have accepted delivery of the Superior Achiever.



     SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a Swingline Loan) shall
be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable Class. Any Protective
Advance, any Overadvance and any Swingline Loan shall be made in accordance with the procedures set
forth in Section 2.04 and 2.05.



          (b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR Loans
or Eurodollar Loans as the Borrower may request in accordance herewith, provided that all
Borrowings made on the Effective Date must be made as ABR Borrowings but may be converted into
Eurodollar Borrowings in accordance with Section 2.08. Each Swingline Loan shall be an ABR Loan.
Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this
Agreement.




          (c) Each Swingline Loan shall be in an amount that is an integral multiple of $500,000 and not
less than $1,000,000. Borrowings of more than one Type and Class may be outstanding at the same
time; provided that there shall not at any time be more than a total of five (5) Eurodollar
Borrowings outstanding.




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




     SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving Borrowing,
the Borrower shall notify the Administrative Agent of such request either in writing (delivered by
hand or facsimile) in a form approved by the Administrative Agent and signed by the Borrower or by
telephone (a) in the case of a Eurodollar Borrowing, not later than 10:00 a.m., Chicago time, three
Business Days before the date of the proposed Borrowing or (b) in the
case of an ABR Borrowing, not later than noon, Chicago time, on the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.06(e) may be given not later than
9:00 a.m., Chicago time, on the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the
Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent
and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.01:






23









 






     (i) the aggregate amount of the requested Borrowing and a breakdown of the
separate wires comprising such Borrowing;




     (ii) the date of such Borrowing, which shall be a Business Day;




     (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and




     (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of the
term “Interest Period.”


If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any
requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.




     SECTION 2.04. Protective Advances. (a) Subject to the limitations set forth below,
the Administrative Agent is authorized by the Borrower and the Lenders, from time to time in the
Administrative Agent’s sole discretion (but shall have absolutely no obligation to), to make Loans
to the Borrower, on behalf of all Lenders, which the Administrative Agent, in its Permitted
Discretion, deems necessary or desirable (i) to preserve or protect the Collateral, or any portion
thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and
other Obligations, or (iii) to pay any other amount chargeable to or required to be paid by the
Borrower pursuant to the terms of this Agreement, including payments of reimbursable expenses
(including costs, fees, and expenses as described in Section 9.03) and other sums payable under the
Loan Documents (any of such Loans are herein referred to as “Protective Advances”);
provided that, the aggregate amount of Protective Advances outstanding at any time shall
not at any time exceed $2,000,000; provided further that, the aggregate amount of
outstanding Protective Advances plus the aggregate Revolving Exposure shall not exceed the
aggregate unused Commitments. Protective Advances may be made even if the conditions precedent set
forth in Section 4.02 have not been satisfied. The Protective Advances shall be secured by the
Liens in favor of the Administrative Agent in and to the Collateral and shall constitute
Obligations hereunder. All Protective Advances shall be ABR Borrowings. The Administrative
Agent’s authorization to make Protective Advances may be revoked at any time by 100% of the
Lenders. Any such revocation must be in writing and shall become effective prospectively upon the
Administrative Agent’s receipt thereof. At any time that there is sufficient Availability and the
conditions precedent set forth in Section 4.02 have been satisfied, the Administrative Agent may
request the Revolving Lenders to make a Revolving Loan to repay a Protective Advance. At any other
time the Administrative Agent may require the Lenders to fund their risk participations described in
Section 2.04(b).



          (b) Upon the making of a Protective Advance by the Administrative Agent (whether before or
after the occurrence of a Default), each Lender shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably purchased from the Administrative Agent
without recourse or warranty, an undivided interest and participation in such Protective Advance in
proportion to its Applicable Percentage. From and after the date, if any, on which any Lender is
required to fund its participation in any Protective Advance purchased hereunder, the
Administrative Agent shall promptly distribute to such Lender, such Lender’s Applicable Percentage
of all payments of principal and interest and all proceeds of Collateral received by the
Administrative Agent in respect of such Protective Advance.








24









 








     SECTION 2.05. Swingline Loans and Overadvances. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower
from time to time during the Availability Period, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline
Loans exceeding $2,000,000 or (ii) the sum of the total Revolving Exposures exceeding the lesser of
the total Revolving Commitments and Availability; provided that the Swingline Lender shall
not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the
foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Swingline Loans. To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by facsimile), not later than 11:00
a.m., Chicago time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable
and shall specify the requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each Swingline Loan available
to the Borrower by means of a credit to the Funding Account (or, in the case of a Swingline Loan
made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e), by
remittance to the Issuing Bank, and in the case of repayment of another Loan or fees or expenses as
provided by Section 2.18(c), by remittance to the Administrative Agent to be distributed to the
Lenders) by 2:00 p.m., Chicago time, on the requested date of such Swingline Loan. In addition,
the Borrower hereby authorizes the Swingline Lender to, and the Swingline Lender shall, subject to
the terms and conditions set forth herein (but without any further written notice required), not
later than 1:00 p.m., Chicago time, on each Business Day, make available to the Borrower by means
of a credit to the Funding Account, the proceeds of a Swingline Loan to the extent necessary to pay
items to be drawn on any Controlled Disbursement Account that day (as determined based on notice
from the Administrative Agent).



     (b) The Swingline Lender may by written notice given to the Administrative Agent not later
than 11:00 a.m., Chicago time, on any Business Day require the Revolving Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such
notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent will give notice
thereof to each Revolving Lender, specifying in such notice such Lender’s Applicable Percentage of
such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees,
upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of
the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline
Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Each Revolving Lender shall comply with its obligation under this paragraph
by wire transfer of immediately available funds, in the same manner as provided in Section 2.07
with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made
to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline
Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan
after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall
have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests
may appear; provided that any such payment so remitted shall be repaid to the






25









 




Swingline Lender or
to the Administrative Agent, as applicable, if and to the extent such payment is required to be
refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.




          (c) Any provision of this Agreement to the contrary notwithstanding, at the request of the
Borrower, the Administrative Agent may in its sole discretion (but with absolutely no obligation),
make Revolving Loans to the Borrower, on behalf of the Revolving Lenders, in amounts that exceed
Availability (any such excess Revolving Loans are herein referred to collectively as
“Overadvances”); provided that, no Overadvance shall result in a Default due to
Borrower’s failure to comply with Section 2.01 for so long as such Overadvance remains outstanding
in accordance with the terms of this paragraph, but solely with respect to the amount of such
Overadvance. In addition, Overadvances may be made even if the condition precedent set forth in
Section 4.02(c) has not been satisfied. All Overadvances shall constitute ABR Borrowings. The
authority of the Administrative Agent to make Overadvances is limited to an aggregate amount not to
exceed $2,000,000 at any time, no Overadvance may remain outstanding for more than thirty (30) days
and no Overadvance shall cause any Revolving Lender’s Revolving Exposure to exceed its Revolving
Commitment; provided that, the Required Lenders may at any time revoke the Administrative
Agent’s authorization to make Overadvances. Any such revocation must be in writing and shall
become effective prospectively upon the Administrative Agent’s receipt thereof.




          (d) Upon the making of an Overadvance by the Administrative Agent, each Revolving Lender shall
be deemed, without further action by any party hereto, to have unconditionally and irrevocably
purchased from the Administrative Agent without recourse or warranty, an undivided interest and
participation in such Overadvance in proportion to its Applicable Percentage of the Revolving
Commitment. The Administrative Agent may, at any time, require the Revolving Lenders to fund their
participations. From and after the date, if any, on which any Revolving Lender is required to fund
its participation in any Overadvance purchased hereunder, the Administrative Agent shall promptly
distribute to such Lender, such Lender’s Applicable Percentage of all payments of principal and
interest and all proceeds of Collateral received by the Administrative Agent in respect of such
Loan.




     SECTION 2.06. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of Credit up to the
LC Sublimit for its own account, in a form reasonably acceptable to the Administrative Agent and
the Issuing Bank, at any time and from time to time during the Availability Period. In the event
of any inconsistency between the terms and conditions of this Agreement and the terms and
conditions of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.



          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrower shall hand deliver or facsimile (or transmit by electronic communication,
if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (prior to 9:00 am, Chicago time, at least three Business Days prior to the
requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a
Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day),
the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this
Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and
such other information as shall be necessary to prepare, amend, renew or extend such Letter of
Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank’s standard form in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall




26









 








be deemed to
represent and warrant that), after giving effect to such issuance, amendment, renewal or extension
(i) the LC Exposure shall not exceed the LC Sublimit and (ii) the total Revolving Exposures shall
not exceed the lesser of the total Revolving Commitments and the Borrowing Base.




          (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of
business on the earlier of (i) the date one year after the date of the issuance of such Letter of
Credit (or, in the case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) unless otherwise agreed to in writing by the Issuing Bank and the other
Lenders, the date that is five Business Days prior to the Maturity Date.




          (d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action on the part of the
Issuing Bank or the Revolving Lenders, the Issuing Bank hereby grants to each Revolving Lender, and
each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of
Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the
account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by
the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of
this Section, or of any reimbursement payment required to be refunded to the Borrower for any
reason. Each Revolving Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever, including any amendment,
renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or
reduction or termination of the Commitments, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.




          (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative
Agent an amount equal to such LC Disbursement not later than 11:00 a.m., Chicago time, on the date
that such LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 9:00 a.m., Chicago time, on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than 11:00 a.m., Chicago
time, on (i) the Business Day that the Borrower receives such notice, if such notice is received
prior to 9:00 a.m., Chicago time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of
receipt; provided that the Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 or 2.05 that such payment be financed with an ABR
Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the
Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR
Revolving Borrowing or Swingline Loan. If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the
payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the
same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07
shall apply, mutatis mutandis, to the payment obligations of the Revolving
Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent
of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to
this paragraph to




27









 








reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall
not relieve the Borrower of its obligation to reimburse such LC Disbursement.




          (f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as
provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the
Issuing Bank under a Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide a right of setoff against,
the Borrower’s obligations hereunder. Neither the Administrative Agent, the Revolving Lenders nor
the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or
failure to make any payment thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in transmission or
delivery of any draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the Issuing Bank;
provided that the foregoing shall not be construed to excuse the Issuing Bank from
liability to the Borrower to the extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable
law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or
willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent
jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for further
investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such Letter of Credit.




          (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by facsimile) of such demand for payment and whether the Issuing Bank has made
or will make an LC Disbursement thereunder; provided that any failure to give or delay in
giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank
and the Revolving Lenders with respect to any such LC Disbursement.




          (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that,
if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.13(d) shall apply. Interest accrued pursuant to this paragraph shall be
for the account of the Issuing Bank,




28









 








except that interest accrued on and after the date of payment
by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.




          (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by
written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the
successor Issuing Bank. The Administrative Agent shall notify the Revolving Lenders of any such
replacement of the Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i) the successor
Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term
“Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to
such successor and all previous Issuing Banks, as the context shall require. After the replacement
of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall not be required to
issue additional Letters of Credit.




          (j) Cash Collateralization. If any Event of Default shall occur and be continuing,
on the Business Day that the Borrower receives notice from the Administrative Agent or the Required
Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure
representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent,
in the name of the Administrative Agent and for the benefit of the Revolving Lenders (the “LC
Collateral Account”), an amount in cash equal to 105% of the LC Exposure as of such date plus
accrued and unpaid interest thereon; provided that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (h) or (i) of Article VII. Such deposit shall be
held by the Administrative Agent as collateral for the payment and performance of the Secured
Obligations. The Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account and the Borrower hereby grants the Administrative
Agent a security interest in the LC Collateral Account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and sole
discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to
the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other Secured Obligations. If the Borrower is required to provide
an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three
Business Days after all such Defaults have been cured or waived.




     SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately available funds by
1:00 p.m., Chicago time, to the account of the Administrative Agent most recently designated by it
for such purpose by notice to the Lenders in an amount equal to such Lender’s Applicable
Percentage; provided that, Swingline Loans shall be made as provided in Section 2.05. The
Administrative Agent will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to the Funding Account; provided that ABR Revolving Loans made
to finance the reimbursement of (i) an LC






29









 







Disbursement as provided in Section 2.06(e) shall be
remitted by the Administrative Agent to the Issuing Bank and (ii) a Protective Advance or an
Overadvance shall be retained by the Administrative Agent.



          (b) Unless the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest
rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in such Borrowing.




     SECTION 2.08. Interest Elections. (a) Each Revolving Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Revolving
Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different options with respect
to different portions of the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing. This Section shall not apply to
Swingline Borrowings, Overadvances or Protective Advances, which may not be converted or continued.



          (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative
Agent of such election by telephone by the time that a Borrowing Request would be required under
Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the
Administrative Agent of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.




          (c) Each telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:





     (i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);




     (ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;




     (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and






30









 






     (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.


If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration.




          (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall
advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.




          (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative Agent, at the request
of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.




     SECTION 2.09. Termination of Commitments. (a) Unless previously terminated, all
Commitments shall terminate on the Maturity Date.



          (b) The Borrower may at any time terminate the Commitments upon (i) the payment in full of all
outstanding Loans, together with accrued and unpaid interest thereon and on any Letters of Credit,
(ii) the cancellation and return of all outstanding Letters of Credit (or alternatively, with
respect to
each such Letter of Credit, the furnishing to the Administrative Agent of a cash deposit (or
at the discretion of the Administrative Agent a back up standby letter of credit satisfactory to
the Administrative Agent) equal to 105% of the LC Exposure as of such date), (iii) the payment in
full of the accrued and unpaid fees, including applicable Prepayment Fee (if any), and (iv) the
payment in full of all reimbursable expenses and other Obligations together with accrued and unpaid
interest thereon.




     SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each
Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date, (ii) to the
Administrative Agent the then unpaid amount of each Protective Advance on the earlier of the
Maturity Date and demand by the Administrative Agent, (iii) to the Swingline Lender the then unpaid
principal amount of each Swingline Loan on the earlier of the Maturity Date and the first date
after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least
five (5) Business Days after such Swingline Loan is made; provided that on each date that a
Revolving Loan is made, the Borrower shall repay all Swingline Loans then outstanding, and (iv) to
the Administrative Agent the then unpaid principal amount of each Overadvance on the earlier of the
Maturity Date and the 30th day after such Overadvance is made.



          (b) At all times that full cash dominion is in effect pursuant to Section 7.3 of the Security
Agreement, on each Business Day, the Administrative Agent shall apply all immediately available
funds credited to the Collection Account on such Business Day first to prepay any
Protective Advances and Overadvances that may be outstanding, pro rata, and second to
prepay the Revolving Loans (including Swing Line Loans) and to cash collateralize outstanding LC
Exposure; provided that in the case of amounts other than immediately available funds, the
Borrower shall compensate the







31









 







Administrative Agent for the cost of collection and clearance of
remittances so applied, including interest for one (1) day, on all uncollected funds applied as
provided by this Section 2.10(b).




          (c) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such
Lender, including the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.




          (d) The Administrative Agent shall maintain accounts in which it shall record (i) the amount
of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.




          (e) The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this
Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this Agreement.




          (f) Any Lender may request that Loans made by it be evidenced by a promissory note. In such
event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to
the order of such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after assignment pursuant
to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the
payee named therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).




          (g) Notwithstanding anything herein to the contrary, payments of principal and interest in
respect of the Obligations (other than those received by wire transfer or automated clearing house)
shall be subject to a one (1) Business Day clearance period.




     SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in
accordance with paragraph (f) of this Section.



          (b) Except for Overadvances permitted under Section 2.05, in the event and on such occasion
that (i) the total Revolving Exposure exceeds the lesser of (A) the aggregate Revolving Commitments
or (B) the Borrowing Base, (ii) the total amount of Revolving Loans outstanding exceeds the
Revolving Loan Sublimit or (iii) LC Exposure exceeds the LC Sublimit, Borrower shall prepay the
Revolving Loans, LC Exposure and/or Swingline Loans in an aggregate amount equal to such excess.




          (c) In the event and on each occasion that any Net Proceeds are received by or on behalf of
any Loan Party in respect of any Prepayment Event, the Borrower shall, promptly after such Net
Proceeds are received by any Loan Party, prepay the Obligations as set forth in Section 2.11(e)
below in an aggregate amount equal to 100% of such Net Proceeds, provided that, in the case
of any event described in clause (a) or (b) of the definition of the term “Prepayment Event”, if
the Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer to the
effect that the Loan Parties intend to apply the Net Proceeds from such event (or a portion thereof
specified in such certificate), within twelve months after receipt of such Net Proceeds (or, if the
Borrower has entered into a binding contract within twelve months after such Prepayment Event to
acquire assets useful in its business and/or




32









 








to repair the affected asset, as applicable, within
eighteen months after such Prepayment Event), to acquire (or replace or rebuild) real property,
equipment or other tangible assets (excluding inventory) to be used in the business of the Loan
Parties, and certifying that no Default has occurred and is continuing, then either (i) so long as
full cash dominion is not in effect, no prepayment shall be required pursuant to this paragraph in
respect of the Net Proceeds specified in such certificate or (ii) if full cash dominion is in
effect, then such Net Proceeds shall be deposited in a cash collateral account and in either case,
thereafter, such funds shall be made available to the applicable Loan Party as follows:





     (1) the applicable Loan Party shall request a release from the cash collateral
account be made in the amount needed; and




     (2) so long as the conditions set forth in Section 4.02 have been met, the
Revolving Lenders shall make such Revolving Loan or the Administrative Agent shall
release funds from the cash collateral account;


provided that to the extent of any such Net Proceeds therefrom that have not been so
applied by the end of such twelve month period or eighteen month period, as applicable, at which
time a prepayment shall be required in an amount equal to such Net Proceeds that have not been so
applied.




          (d) Reserved.




          (e) All such amounts pursuant to Section 2.11(c) (as to any insurance or condemnation
proceeds, to the extent they arise from casualties or losses to Equipment, Fixtures and real
property) shall be applied, first to prepay any Protective Advances and Overadvances that
may be outstanding, pro rata, and second to prepay the Revolving Loans (including Swing Line
Loans) without a corresponding reduction in the Revolving Commitment and to cash collateralize
outstanding LC Exposure. All such amounts pursuant to Section 2.11(c) (as to any insurance or
condemnation proceeds, to the extent they arise from casualties or losses to cash or Inventory)
shall be applied, first to prepay any Protective Advances and Overadvances that may be
outstanding, pro rata, and second to prepay the Revolving Loans (including Swing Line
Loans) without a corresponding reduction in the Revolving Commitment and to cash collateralize
outstanding LC Exposure. If the precise amount of insurance or condemnation proceeds allocable to
Inventory as compared to Equipment, Fixtures and real property is not otherwise determined, the
allocation and application of those proceeds shall be determined by the Administrative Agent, in
its Permitted Discretion.




          (f) The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a
Swingline Loan, the Swingline Lender) by telephone (confirmed by facsimile) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later than 10:00
a.m., Chicago time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 10:00 a.m., Chicago time, one Business Day
before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later
than 11:00 a.m., Chicago time, on the date of prepayment. Each such notice shall be irrevocable
and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof
to be prepaid; provided that, if a notice of prepayment is given in connection with a
conditional notice of termination of the Commitments as contemplated by Section 2.09, then such
notice of prepayment may be revoked if such notice of termination is revoked in accordance with
Section 2.09. Promptly following receipt of any such notice relating to a Revolving Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of
any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of
a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving
Borrowing shall be applied ratably to the Revolving Loans







33









 







included in the prepaid Borrowing.
Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13.




     SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee, which shall accrue at the Applicable Rate on the
average daily amount of the Available Revolving Commitment of such Lender during the period from
and including the Effective Date to but excluding the date on which the Lenders’ Revolving
Commitments terminate. Accrued commitment fees shall be payable in arrears on the first Business
Day of each calendar month and on the date on which the Revolving Commitments terminate, commencing
on the first such date to occur after the date hereof. All commitment fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of days elapsed.



          (b) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving
Lender a participation fee with respect to its participations in Letters of Credit, which shall
accrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar
Revolving Loans on the average daily amount of such Lender’s LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s Revolving Commitment
terminates and the date on which such Revolving Lender ceases to have any LC Exposure, as well as
the Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including the last day of each calendar month shall be payable on the first
Business Day following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be
payable on the date on which the Revolving Commitments terminate and any such fees accruing
after the date on which the Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed.




          (c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable
in the amounts and at the times separately agreed upon between the Borrower and the Administrative
Agent.




          (d) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for
distribution, in the case of commitment fees and participation fees, to the Lenders. Fees paid
shall not be refundable under any circumstances.




     SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing (including each
Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.



          (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.




          (c) Each Protective Advance and each Overadvance shall bear interest at the Alternate Base
Rate plus the Applicable Rate for Revolving Loans plus 2%.




          (d) Notwithstanding the foregoing, during the occurrence and continuance of an Event of
Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the
Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 9.02 requiring the consent of “each Lender affected thereby” for reductions in







34









 






interest rates), declare that (i) all Loans shall bear interest at 2% plus the rate otherwise
applicable to such Loans as provided in the preceding paragraphs of this Section or (ii) in the
case of any other amount outstanding hereunder, such amount shall accrue at 2% plus the rate
applicable to such fee or other obligation as provided hereunder.




          (e) Accrued interest on each Loan (for ABR Loans, accrued through the last day of the prior
calendar month) shall be payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments; provided that (i) interest accrued pursuant to paragraph
(d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of
such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior
to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.




          (f) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is
based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed. The applicable
Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.




     SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:



          (a) the Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period; or




          (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or
the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in
such Borrowing for such Interest Period;



then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing
to, or continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective, and
(ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be
made as an ABR Borrowing.




     SECTION 2.15. Increased Costs. (a) If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or the Issuing Bank; or




     (ii) impose on any Lender or the Issuing Bank or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made by such Lender
or any Letter of Credit or participation therein;






35









 




and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining
any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or
the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will
pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.




          (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s or the
Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if
any, as a consequence of this Agreement or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below
that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such Lender’s or the
Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company
with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or
the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank or such
Lender’s or the Issuing Bank’s holding company for any such reduction suffered.




          (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall
be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as
the case may be, the amount shown as due on any such certificate within 10 days after receipt
thereof.




          (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right
to demand such compensation; provided that the Borrower shall not be required to compensate
a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender or the Issuing Bank, as the case may
be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to above shall be extended to include
the period of retroactive effect thereof.




     SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.09 and is revoked
in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the principal amount of
such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal






36









 







amount for such period at the interest rate which such Lender would bid
were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.



     SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation of
the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified
Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as
the case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental Authority in accordance with
applicable law.



          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.




          (c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank,
within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent
on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest
error.




          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.




          (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without withholding or at a
reduced rate.




          (f) If the Administrative Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower
or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.17, it
shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such




37









 








refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority. This Section shall not be construed
to require the Administrative Agent or any Lender to make available its tax returns (or any other
information relating to its taxes which it deems confidential) to the Borrower or any other Person.




     SECTION 2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs. (a)
The Borrower shall make each payment required to be made by it hereunder (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16
or 2.17, or otherwise) prior to 2:00 p.m., Chicago time, on the date when due, in immediately
available funds, without set off or counterclaim. Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such payments shall be
made to the Administrative Agent at its offices at 120 South LaSalle Street, Chicago, Illinois,
except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided
herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder shall be due on a day that is not a Business
Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the period of such
extension. All payments hereunder shall be made in dollars. At all times that full cash dominion
is in effect pursuant to Section 7.3 of the Security Agreement, solely for purposes of determining
the amount of Loans available for borrowing purposes, checks (in addition to immediately available
funds applied pursuant to Section 2.10(b)) from collections of items of payment and proceeds of any
Collateral shall be applied in whole or in part against the Obligations, on the Business Day after
receipt, subject to actual collection.



          (b) Any proceeds of Collateral received by the Administrative Agent (i) not constituting
either (A) a specific payment of principal, interest, fees or other sum payable under the Loan
Documents (which shall be applied as specified by the Borrower), (B) a mandatory prepayment (which
shall be applied in accordance with Section 2.11) or (C) amounts to be applied from the Collection
Account when full cash dominion is in effect (which shall be applied in accordance with Section
2.10(b)) or (ii) after an Event of Default has occurred and is continuing and the Administrative
Agent so elects or the Required Lenders so direct, such funds shall be applied ratably
first, to pay any fees, indemnities, or expense reimbursements including amounts then due
to the Administrative Agent and the Issuing Bank from the Borrower (other than in connection with
Banking Services or Swap Obligations), second, to pay any fees or expense reimbursements
then due to the Lenders from the Borrower (other than in connection with Banking Services or Swap
Obligations), third, to pay interest due in respect of the Overadvances and Protective
Advances, fourth, to pay the principal of the Overadvances and Protective Advances,
fifth, to pay interest then due and payable on the Loans (other than the Overadvances and
Protective Advances) ratably, sixth, to prepay principal on the Loans (other than the
Overadvances and Protective Advances) and unreimbursed LC Disbursements ratably and to payment of
any amounts owing with respect to Banking Services and Swap Obligations, seventh, to pay an
amount to the Administrative Agent equal to one hundred five percent (105%) of the aggregate
undrawn face amount of all outstanding Letters of Credit and the aggregate amount of any unpaid LC
Disbursements, to be held as cash collateral for such Obligations, and eighth, to the
payment of any other Secured Obligation due to the Administrative Agent or any Lender by the
Borrower. Notwithstanding anything to the contrary contained in this Agreement, unless so directed
by the Borrower, or unless a Default is in existence, neither the Administrative Agent nor any
Lender shall apply any payment which it receives to any Eurodollar Loan of a Class, except




38









 








(a) on
the expiration date of the Interest Period applicable to any such Eurodollar Loan or (b) in the
event, and only to the extent, that there are no outstanding ABR Loans of the same Class and, in
any such event, the Borrower shall pay the break funding payment required in accordance with
Section 2.16. The Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to any portion of the
Secured Obligations.




          (c) At the election of the Administrative Agent, all payments of principal, interest, LC
Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all
reimbursement for fees and expenses pursuant to Section 9.03), and other sums payable under the
Loan Documents, may be paid from the proceeds of Borrowings made hereunder whether made following a
request by the Borrower pursuant to Section 2.03 or a deemed request as provided in this Section or
may be deducted from any deposit account of the Borrower maintained with the Administrative Agent.
The Borrower hereby irrevocably authorizes (i) the Administrative Agent to make a Borrowing for the
purpose of paying each payment of principal, interest and fees as it becomes due hereunder or
any other amount due under the Loan Documents and agrees that all such amounts charged shall
constitute Loans (including Swingline Loans and Overadvances, but such a Borrowing may only
constitute a Protective Advance if it is to reimburse costs, fees and expenses as described in
Section 9.03) and that all such Borrowings shall be deemed to have been requested pursuant to
Sections 2.03, 2.04 or 2.05, as applicable and (ii) the Administrative Agent to charge any deposit
account of the Borrower maintained with the Administrative Agent for each payment of principal,
interest and fees as it becomes due hereunder or any other amount due under the Loan Documents.




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




          (e) Unless the Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of the Lenders or the
Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be,
the amount due. In such event, if the Borrower has not in fact made such payment, then each of the
Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative
Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day




39









 








from and including the date such amount is distributed to it to but excluding
the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation.




          (f) If any Lender shall fail to make any payment required to be made by it pursuant to Section
2.05, 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received
by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations
under such Sections until all such unsatisfied obligations are fully paid.




     SECTION 2.19. Mitigation Obligations; Replacement of Lenders. If any Lender requests compensation under Section 2.15, or if the Borrower is required
to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.17, then:



          (a) such Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another
of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the
case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender (and the Borrower hereby agrees
to pay all reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment);




          (b) the Borrower may, at its sole expense and effort, require such Lender or any Lender that
defaults in its obligation to fund Loans hereunder (herein, a “Departing Lender”), upon
notice to the Departing Lender and the Administrative Agent, to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its
interests, rights and obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such assignment);
provided that (i) the Borrower shall have received the prior written consent of the
Administrative Agent (and if a Revolving Commitment is being assigned, the Issuing Bank), which
consent shall not unreasonably be withheld, (ii) the Departing Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements
and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.15 or payments required to be
made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or
payments. A Departing Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.




     SECTION 2.20. Returned Payments. If after receipt of any payment which is applied to
the payment of all or any part of the Obligations, the Administrative Agent or any Lender 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 Administrative Agent or such Lender. The provisions of this Section 2.20
shall be and remain effective notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application of proceeds. The
provisions of this Section 2.20 shall survive the termination of this Agreement.






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ARTICLE III




Representations and Warranties




     Each Loan Party represents and warrants to the Lenders that:



     SECTION 3.01. Organization; Powers. Each of the Loan Parties and each of its Subsidiaries (a) is duly organized and validly
existing under the laws of the jurisdiction of its organization, (b) has all requisite power and
authority to carry on its business as now conducted and, is qualified to do business in, and (c) is
in good standing in, every jurisdiction where such qualification is required, except in the case of
clauses (b) and (c) where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.



     SECTION 3.02. Authorization; Enforceability. The Transactions are within each Loan
Party’s corporate powers and have been duly authorized by all necessary organizational action. The
Loan Documents to which each Loan Party is a party have been duly executed and delivered by such
Loan Party and constitute a legal, valid and binding obligation of such Loan Party, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.



     SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in full force and effect
and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will
not violate any Requirement of Law applicable to any Loan Party or any of its Subsidiaries, (c)
will not violate or result in a default under any indenture, agreement or other instrument binding
upon any Loan Party or any of its Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by any Loan Party or any of its Subsidiaries, and (d) will not
result in the creation or imposition of any Lien on any asset of any Loan Party or any of its
Subsidiaries, except Liens created pursuant to the Loan Documents.



     SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower has
heretofore furnished to the Lenders its consolidated balance sheet and statements of income,
stockholders equity and cash flows (i) as of and for the fiscal year ended December 31, 2005,
reported on by KPMG LLP, independent public accountants, and (ii) as of and for the fiscal quarter
and the portion of the fiscal year ended December 31, 2006, certified by its chief financial
officer. Such financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries
as of such dates and for such periods in accordance with GAAP, subject to year end audit
adjustments and the absence of footnotes in the case of the statements referred to in clause (ii)
above.



          (b) No event, change or condition has occurred that has had, or could reasonably be expected
to have, a Material Adverse Effect, since December 31, 2005.




     SECTION 3.05. Properties. (a) As of the date of this Agreement, Schedule 3.05
sets forth the address of each parcel of real property that is owned or leased by each Loan Party.
As of the date of this Agreement, 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 of the Loan Parties and its Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property, free of all Liens other than
those permitted by Section 6.02.






41









 





          (b) Each Loan Party and its Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property necessary to its business as
currently conducted, a correct and complete list of which, as of the date of this Agreement, is set
forth on Schedule 3.05, and the use thereof by the Loan Parties and its Subsidiaries does
not infringe in any material respect upon the rights of any other Person, and the Loan Parties’
rights thereto are not subject to any licensing agreement or similar arrangement.




     SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority pending against or, to the
knowledge of any Loan Party, threatened against or affecting the Loan Parties or any of their
Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this
Agreement or the Transactions.



          (b) Except for the Disclosed Matters (i) no Loan Party nor any of its Subsidiaries has
received notice of any claim with respect to any Environmental Liability or knows of any basis for
any Environmental Liability, other than those that, individually or in the aggregate could not
reasonably be expected to result in a Material Adverse Effect, and (ii) and except with respect to
any other matters that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect, no Loan Party nor any of its Subsidiaries (1) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law or (2) has become subject to any Environmental
Liability.




          (c) Since the date of this Agreement, there has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect.




     SECTION 3.07. Compliance with Laws and Agreements. Each Loan Party and its
Subsidiaries is in compliance with all Requirements of Law applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect. No Default has occurred and is continuing.



     SECTION 3.08. Investment Company Status. No Loan Party nor any of its Subsidiaries is
an “investment company” as defined in, or subject to regulation under, the Investment Company Act
of 1940.



     SECTION 3.09. Taxes. Each Loan Party and its Subsidiaries has timely filed or caused
to be filed all Tax returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good
faith by appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable,
has set aside on its books adequate reserves or (b) to the extent that the failure to do so could
not be expected to result in a Material Adverse Effect. No tax liens have been filed and no claims
are being asserted with respect to any such taxes.



     SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of the assets of such
Plan.






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     SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which it or any Subsidiary is subject, and all
other matters known to it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial statements, certificates or
other information furnished by or on behalf of the any Loan Party to the Administrative Agent or
any Lender in connection with the negotiation of this Agreement or any other Loan Document (as
modified or supplemented by other information so furnished) contains any material misstatement of
fact or omits to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided that, with respect
to projected financial information, the Borrower represents only that such information was prepared
in good faith based upon assumptions believed to be reasonable at the time delivered and, if such
projected financial information was delivered prior to the Effective Date, as of the Effective
Date.



     SECTION 3.12. Material Agreements. All material agreements (which the parties agree
shall mean any agreement that would be required to be filed as a material agreement under
Securities Exchange Commission requirements for public companies) and contracts to which any Loan
Party is a party or is bound as of the date of this Agreement are listed on Schedule 3.12. No Loan
Party is in default in the performance, observance or fulfillment of any of the material
obligations, covenants or conditions contained in (i) any material agreement to which it is a party
or (ii) any agreement or instrument evidencing or governing Indebtedness.



     SECTION 3.13. Solvency. (a) Immediately after the consummation of the Transactions to
occur on the Effective Date, (i) the fair value of the assets of each Loan Party, at a fair
valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (ii) the
present fair saleable value of the property of each Loan Party will be greater than the amount that
will be required to pay the probable liability of its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii)
each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (iv) each Loan Party will
not have unreasonably small capital with which to conduct the business in which it is engaged as
such business is now conducted and is proposed to be conducted after the Effective Date.



          (b) No Loan Party intends to, or will permit any of its Subsidiaries to, and no Loan Party
believes that it or any of its Subsidiaries will, incur debts beyond its ability to pay such debts
as they mature, taking into account the timing of and amounts of cash to be received by it or any
such Subsidiary and the timing of the amounts of cash to be payable on or in respect of its
Indebtedness or the Indebtedness of any such Subsidiary.



     SECTION 3.14. Insurance. Schedule 3.14 sets forth a description of all insurance maintained by or on behalf
of the Loan Parties and the Subsidiaries as of the Effective Date. As of the Effective Date, all
premiums in respect of such insurance have been paid. The Borrower believes that the insurance
maintained by or on behalf of the Borrower and the Subsidiaries is adequate.



     SECTION 3.15. Capitalization and Subsidiaries. Schedule 3.15 sets forth, in
each case, as of the Effective Date, (a) a correct and complete list of the name and relationship
to the Borrower of each and all of the Borrower’s Subsidiaries, (b) a true and complete listing of
each class of each of the Borrower’s authorized Equity Interests, of which all of such issued
shares are validly issued, outstanding, fully paid and non-assessable, and owned beneficially and
of record by the Persons identified on Schedule 3.15, and (c) the type of entity of the
Borrower and each of its Subsidiaries. All of the issued and outstanding Equity Interests owned by
any Loan Party has been (to the extent such concepts are relevant with respect to such ownership
interests) duly authorized and issued and is fully paid and non assessable.






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     SECTION 3.16. Security Interest in Collateral. The provisions of this Agreement and
the other Loan Documents create legal and valid Liens on all the Collateral in favor of the
Administrative Agent, for the benefit of the Administrative Agent and the Lenders, and such Liens
constitute perfected and continuing Liens on the Collateral, securing the Secured Obligations,
enforceable against the applicable Loan Party and all third parties, and having priority over all
other Liens on the Collateral except in the case of (a) Permitted Encumbrances, to the extent any
such Permitted Encumbrances would have priority over the Liens in favor of the Administrative Agent
pursuant to any applicable law or agreement and (b) Liens perfected only by possession, control, or
otherwise (including possession of any certificate of title) to the extent the Administrative Agent
has not obtained or does not maintain possession or control of such Collateral.



     SECTION 3.17. Employment Matters. Except as in the aggregate could not reasonably be
expected to have a Material Adverse Effect, as of the Effective Date, there are no strikes,
lockouts or slowdowns against any Loan Party or any Subsidiary pending or, to the knowledge of the
Borrower, threatened. Except as in the aggregate could not reasonably be expected to have a
Material Adverse Effect, the hours worked by and payments made to employees of the Loan Parties and
the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All payments due from any Loan
Party or any Subsidiary, or for which any claim may be made against any Loan Party or any
Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have
been paid or accrued as a liability on the books of the Loan Party or such Subsidiary.



     SECTION 3.18. Affiliate Transactions. Except as set forth on Schedule 3.18,
as of the date of this Agreement, (i) there are no existing or proposed agreements, arrangements,
understandings, or transactions between any Loan Party and any of the officers, members, managers,
directors, stockholders, parents, other interest holders, employees, or Affiliates (other than
Subsidiaries) of any Loan Party or any members of their respective immediate families, and (ii)
none of the foregoing Persons (A) except as set forth on Schedule 3.18, are directly or
indirectly indebted to or (B) have any direct or indirect ownership, partnership, or voting
interest in any Affiliate of any Loan Party or any Person with which any Loan Party has a business
relationship or which competes with any Loan Party (except that any such Persons may own stock in
(but not exceeding 2.0% of the outstanding Equity Interests of) any publicly traded company that
may compete with a Loan Party.



     SECTION 3.19. Common Enterprise. The successful operation and condition of each of
the Loan Parties is dependent on the continued successful performance of the functions of the group
of the Loan Parties as a whole and the successful operation of each of the Loan Parties is
dependent on the successful performance and operation of each other Loan Party. Each Loan Party
expects to derive benefit (and its board of directors or other governing body has determined that
it may reasonably be expected to derive benefit), directly and indirectly, from (i) successful
operations of each of the other Loan Parties and (ii) the credit extended by the Lenders to the
Borrower hereunder, both in their separate capacities and as members of the group of companies.
Each Loan Party has determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by such Loan Party is within its purpose, will be of direct and
indirect benefit to such Loan Party, and is in its best interest.






44









 





ARTICLE IV




Conditions




     SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance with Section 9.02):



          (a) Credit Agreement and Loan Documents. The Administrative Agent (or its counsel)
shall have received (i) from each party hereto either (A) a counterpart of this Agreement signed on
behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may
include facsimile transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement and (ii) duly executed copies of the Loan Documents and such
other certificates, documents, instruments and agreements as the Administrative Agent shall
reasonably request in connection with the transactions contemplated by this Agreement and the other
Loan Documents, including any promissory notes requested by a Lender pursuant to Section 2.10
payable to the order of each such requesting Lender and a written opinion of the Loan Parties’
counsel, addressed to the Administrative Agent, the Issuing Bank and the Lenders in substantially
the form of Exhibit B.




          (b) Financial Statements and Projections. The Lenders shall have received (i) audited
consolidated financial statements of Borrower for the 2004 and 2005 fiscal years, (ii) unaudited
interim consolidated financial statements of Borrower for each fiscal quarter ended after the date
of the latest applicable financial statements delivered pursuant to clause (i) of this paragraph as
to which such financial statements are available, and such financial statements shall not, in the
reasonable judgment of the Administrative Agent, reflect any material adverse change in the
consolidated financial condition of Borrower and (iii) satisfactory projections through 2007.




          (c) Closing Certificates; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent shall have received (i) a certificate of each Loan
Party, dated the Effective Date and executed by its Secretary or Assistant Secretary, which shall
(A) certify the resolutions of its Board of Directors, members or other body authorizing the
execution, delivery and performance of the Loan Documents to which it is a party, (B) identify by
name and title and bear the signatures of the Financial Officers and any other officers of such
Loan Party authorized to sign the Loan Documents to which it is a party, and (C) contain
appropriate attachments, including the certificate or articles of incorporation or organization of
each Loan Party certified by the relevant authority of the jurisdiction of organization of such
Loan Party and a true and correct copy of its by laws or operating, management or
partnership agreement, and (ii) a long form good standing certificate for each Loan Party from
its jurisdiction of organization.




          (d) No Default Certificate. The Administrative Agent shall have received a
certificate, signed by the chief financial officer of the Borrower, on the initial Borrowing date
(i) stating that no Default has occurred and is continuing, (ii) stating that the representations
and warranties contained in Article III are true and correct as of such date, and (iii) certifying
any other factual matters as may be reasonably requested by the Administrative Agent.




          (e) Fees. The Lenders and the Administrative Agent shall have received all fees
required to be paid, and all expenses for which invoices have been presented (including the
reasonable fees and expenses of legal counsel), on or before the Effective Date. All such amounts
will be paid with proceeds of Loans made on the Effective Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or before the Effective Date.








45









 








          (f) Lien Searches. The Administrative Agent shall have received the results of a
recent lien search in each of the jurisdictions where assets of the Loan Parties are located, and
such search shall reveal no liens on any of the assets of the Loan Parties except for liens
permitted by Section 6.02 or discharged on or prior to the Effective Date pursuant to a pay-off
letter or other documentation satisfactory to the Administrative Agent.




          (g) Pay-Off Letter. The Administrative Agent shall have received satisfactory pay-off
letters for all existing Indebtedness to be repaid from the proceeds the initial Borrowing,
confirming that all Liens upon any of the property of the Loan Parties constituting Collateral will
be terminated concurrently with such payment and all letters of credit issued or guaranteed as part
of such Indebtedness shall have been cash collateralized or supported by a Letter of Credit.




          (h) Funding Account. The Administrative Agent shall have received a notice setting
forth the deposit account of the Borrower (the “Funding Account”) to which the Lender is
authorized by the Borrower to transfer the proceeds of any Borrowings requested or authorized
pursuant to this Agreement.




          (i) Customer List. The Administrative Agent shall have received a true and complete
customer list with addresses and phone and fax numbers.




          (j) Collateral Access and Control Agreements. The Administrative Agent shall have
received each (i) Collateral Access Agreement required to be provided pursuant to Section 4.13 of
the Security Agreement and (ii) Deposit Account Control Agreement required to be provided pursuant
to Section 4.14 of the Security Agreement.




          (k) Solvency. The Administrative Agent shall have received a solvency certificate
from a Financial Officer.




          (l) Borrowing Base Certificate. The Administrative Agent shall have received a
Borrowing Base Certificate which calculates the Borrowing Base as of the end of the Business Day
immediately preceding the Effective Date.




          (m) Closing Availability. After giving effect to all Borrowings to be made on the
Effective Date and the issuance of any Letters of Credit on the Effective Date and payment of all
fees and expenses due hereunder, and with all of the Loan Parties’ indebtedness, liabilities, and
obligations current, the Borrower’s Availability plus the amount of all Contractor Reserves shall
not be less than $15,000,000.




          (n) Pledged Stock; Stock Powers; Pledged Notes. Subject to the provisions of the
Intercreditor Agreement, the Administrative Agent shall have received (i) the certificates
representing the shares of Capital Stock pledged pursuant to the Security Agreement, together with
an undated stock power for each such certificate executed in blank by a duly authorized officer of
the pledgor thereof and (ii) each promissory note (if any) pledged to the Administrative Agent
pursuant to the Security Agreement endorsed (without recourse) in blank (or accompanied by an
executed transfer form in blank) by the pledgor thereof.




          (o) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by the Collateral Documents or under law or
reasonably requested by the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on
the Collateral described therein, prior and superior in right to any other Person (other than with
respect to Liens expressly permitted by Section 6.02), shall be in proper form for filing,
registration or recordation.







46









 








          (p) Insurance. The Administrative Agent shall have received evidence of insurance
coverage in form, scope, and substance reasonably satisfactory to the Administrative Agent and
otherwise in compliance with the terms of Section 5.09 and Section 4.12 of the Security Agreement.




          (q) Letter of Credit Application. The Administrative Agent shall have received a
properly completed letter of credit application if the issuance of a Letter of Credit will be
required on the Effective Date.




          (r) Other Documents. The Administrative Agent shall have received such other
documents as the Administrative Agent, the Issuing Bank, any Lender or their respective counsel may
have reasonably requested.




          (s) All of the conditions precedent to funding of the term loans under the Term Loan Agreement
shall have been satisfied or waived.



The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02)
at or prior to 2:00 p.m., Chicago time, on March 15, 2007 (and, in the event such conditions are
not so satisfied or waived, the Commitments shall terminate at such time).




     SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on the
occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of
Credit, is subject to the satisfaction of the following conditions:



          (a) The representations and warranties of the Borrower set forth in this Agreement shall be
true and correct in all material respects on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as applicable, and if they are
not true and correct in all material respects the Administrative Agent or the Required Lenders
shall have determined not to make any make a Loan or instructed the Issuing Bank not to issue
Letters of Credit as a result of the fact that such representation or warranty is untrue or
incorrect in any material respect.




          (b) At the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have
occurred and be continuing and the Administrative Agent or the Required Lenders shall have
determined not to make such Borrowing or instructed the Issuing Bank not to issue such Letter of
Credit as a result of such Default.




          (c) After giving effect to any Borrowing or the issuance of any Letter of Credit, (i)
Availability is not less than zero, (ii) the amount of Revolving Loans does not exceed the
Revolving Loan Sublimit and (iii) the amount of LC Exposure does not exceed the LC Sublimit.



Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a), (b) and (c) of this Section.







47









 








ARTICLE V




Affirmative Covenants




     Until the Commitments have expired or been terminated and the principal of and interest on
each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit
shall have expired or terminated and all LC Disbursements shall have been reimbursed, each Loan
Party executing this Agreement covenants and agrees, jointly and severally with all of the Loan
Parties, with the Lenders that:



     SECTION 5.01. Financial Statements; Borrowing Base and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:



          (a) within 90 days after the end of each fiscal year of the Borrower, its audited consolidated
balance sheet and related statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, accompanied by any management letter prepared by said accountants;




          (b) within 30 days after the end of each fiscal month of the Borrower, its consolidated and
consolidating balance sheet and related statements of operations, stockholders’ equity and cash
flows as of the end of and for such fiscal month and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding period or periods
of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified
by one of its Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;




          (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a
certificate of a Financial Officer of the Borrower in substantially the form of Exhibit D
(i) certifying, in the case of the financial statements delivered under clause (b), as presenting
fairly in all material respects the financial condition and results of operations of the Borrower
and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes, (ii) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 6.16 and 6.17 and (iv) stating whether any
change in GAAP or in the application thereof has occurred since the date of the audited financial
statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate;




          (d) concurrently with any delivery of financial statements under clause (a) above, a
certificate of the accounting firm that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such financial statements of any
Default or Event of Default under Section 6.17 (which certificate may be limited to the extent
required by accounting rules or guidelines);







48









 








          (e) as soon as available, but in any event not earlier than thirty (30) days prior to the end
of each fiscal year or later than thirty (30) days after the end of each fiscal year of the
Borrower, a copy of the plan and forecast (including a projected consolidated and consolidating
balance sheet, income statement and funds flow statement) of the Borrower for each month of the
upcoming fiscal year (the “Projections”) in form reasonably satisfactory to the
Administrative Agent;




          (f) as soon as available but in any event within three (3) Business Days of the end of each
calendar week, and at such other times as may be requested by the Administrative Agent, as of the
period then ended, a Borrowing Base Certificate and supporting information in connection therewith,
together with any additional reports with respect to the Borrowing Base as the Administrative Agent
may reasonably request; provided, that at such time as Average 30-Day Availability exceeds
$10,000,000 (a reflected in the previous Borrowing Base Certificate delivered by Borrower to
Administrative Agent), the immediately subsequent Borrowing Base Certificate shall not be required
until twenty (20) days of the end of the subsequent calendar month. Such report shall be delivered
electronically in a text formatted file acceptable to the Administrative Agent and contain, at a
minimum, the following:





     (i) a detailed aging of the Borrower’s Accounts (1) including all invoices aged
by invoice date and due date (with an explanation of the terms offered) and (2)
reconciled to the Borrowing Base Certificate delivered as of such date prepared in a
manner reasonably acceptable to the Administrative Agent, together with a summary
specifying the name, address, and balance due for each Account Debtor;




     (ii) a worksheet of calculations prepared by the Borrower to determine Eligible
Accounts, such worksheets detailing the Accounts excluded from Eligible Accounts and
the reason for such exclusion;




     (iii) a reconciliation of the Borrower’s Accounts between the amounts shown in
the Borrower’s general ledger and financial statements and the reports delivered
pursuant to clause (i) above; and




     (iv) a reconciliation of the loan balance per the Borrower’s general ledger to
the loan balance under this Agreement;



          (g) as soon as available but in any event within 30 days of the end of each calendar month
and, during the continuation of an Event of Default, at such other times as may be requested by the
Administrative Agent, as of the month then ended, a schedule and aging of the Borrower’s
accounts payable, delivered electronically in a text formatted file acceptable to the
Administrative Agent;




          (h) as soon as available but in any event within ten (10) Business Days of the last Business
Day of each March and September of each year (commencing with September 28, 2007), as of the period
then ended, and, during the continuation of an Event of Default, at such other times as may be
requested by the Administrative Agent, a list of all customer addresses, delivered electronically
in a text formatted file acceptable to the Administrative Agent;




          (i) promptly upon the Administrative Agent’s request (which request shall be made no more
often than once per calendar quarter unless an Event of Default shall be continuing and during the
continuance of an Event of Default at such other times as may be requested by Administrative
Agent):





     (i) copies of invoices in connection with the invoices issued by the Borrower
in connection with any Accounts, credit memos, shipping and delivery documents, and
other information related thereto;






49









 






     (ii) copies of purchase orders, invoices, and shipping and delivery documents
in connection with any Inventory purchased by any Loan Party; and




     (iii) a schedule detailing the balance of all intercompany accounts of the Loan
Parties;



          (j) as soon as available but in any event within three (3) Business Days of the end of each
calendar week and at such other times as may be requested by the Administrative Agent, as of the
period then ended, the Borrower’s sales journal, cash receipts journal (identifying trade and
non-trade cash receipts) and debit memo/credit memo journal;




          (k) as soon as possible and in any event within thirty (30) days of filing thereof, copies of
all tax returns filed by any Loan Party with the U.S. Internal Revenue Service;




          (l) within ten (10) Business Days of the last Business Day of each March and September of each
year (commencing with September 28, 2007), a certificate of good standing for each Loan Party from
the appropriate governmental officer in its jurisdiction of incorporation, formation, or
organization;




          (m) promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the
Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be; and




          (n) promptly following any request therefor, such other information regarding the operations,
business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the
terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.




     SECTION 5.02. Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:



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




          (b) any (i) default or event of default under any provision of any security issued by any Loan
Party or of any agreement, instrument or other undertaking to which such Loan Party is a party or
by which it or any of its property is bound, including vessel charters, vessel management
agreements and vessel service contracts of any Loan Party or (ii) litigation, investigation or
proceeding that may exist at any time between any Loan Party and any Governmental Authority, that
in either case, if not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;




          (c) any litigation or proceeding affecting any Loan Party (i) in which the amount involved is
$1,000,000 or more and not covered by insurance, (ii) in which injunctive or similar relief is
sought or (iii) which relates to any Loan Document;




          (d) any threatened in writing or actual withholding of payments in an aggregate amount that
exceeds $500,000 owed to any Loan Party by any customer of such Loan Party and such notice shall
detail the name, address and brief summary of the reason for the withheld payment or payments;







50









 








          (e) the following events, as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know thereof: (i) the occurrence of any ERISA Event with respect
to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity (meaning an entity, whether or not incorporated, that is
under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a
group that includes the Borrower and that is treated as a single employer under Section 414 of the
Code) or any Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization (within the meaning of Title IV of ERISA) or Insolvency (within the meaning of Title
IV of ERISA) of, any Plan; and




          (f) any development or event that has had or could reasonably be expected to have a Material
Adverse Effect.



Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer
or other executive officer of the Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect thereto.




     SECTION 5.03. Existence; Conduct of Business. Each Loan Party will, and will cause
each Subsidiary to, (a) do or cause to be done all things necessary to preserve, renew and keep in
full force and effect (i) its legal existence and (ii) the rights, qualifications, licenses,
permits, franchises, governmental authorizations, intellectual property rights, licenses and
permits material to the conduct of its business, and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted except, in the case of clause
(ii) above, to the extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03 and (b) carry on and conduct its business
in substantially the same manner and in substantially the same fields of enterprise as it is
presently conducted.



     SECTION 5.04. Payment of Obligations. Each Loan Party will, and will cause each Subsidiary to, pay or discharge all Material
Indebtedness and all other material liabilities and obligations, including Taxes, before the same
shall become delinquent or in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, and (b) such Loan Party or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with GAAP.



     SECTION 5.05. Maintenance of Properties. Each Loan Party will, and will cause each
Subsidiary to, keep and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted.



     SECTION 5.06. Books and Records; Inspection Rights. Each Loan Party will, and will
cause each Subsidiary to, (i) keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its business and
activities and (ii) permit any representatives designated by the Administrative Agent or any Lender
(including employees of the Administrative Agent, any Lender or any consultants, accountants,
lawyers and appraisers retained by the Administrative Agent), upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books and records,
including environmental assessment reports and Phase I or Phase II studies, and to discuss its
affairs, finances and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested. The Loan Parties acknowledge that the
Administrative Agent, after exercising its rights of inspection, may prepare and






51









 







distribute to the
Lenders certain Reports pertaining to the Loan Parties’ assets for internal use by the
Administrative Agent and the Lenders.



     SECTION 5.07. Compliance with Laws. Each Loan Party will, and will cause each
Subsidiary to, comply with all Requirements of Law applicable to it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect.



     SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used only for
general corporate purposes and for the refinancing of existing indebtedness. No part of the
proceeds of any Loan and no Letter of Credit will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U
and X.



     SECTION 5.09. Insurance. Each Loan Party will, and will cause each Subsidiary to,
maintain with financially sound and reputable carriers having a financial strength rating of at
least A+ by A.M. Best Company (a) insurance in such amounts (with no greater risk retention) and
against such risks (including loss or damage by fire and loss in transit; theft, burglary,
pilferage, larceny, embezzlement, and other criminal activities; business interruption; maritime
employer’s liability; and general liability) and such other hazards, as is customarily maintained
by companies of established repute engaged in the same or similar businesses operating in the same
or similar locations and (b) all insurance required pursuant to the Collateral Documents. The
Borrower will furnish to the Lenders, upon request of the Administrative Agent, information in
reasonable detail as to the insurance so maintained.



     SECTION 5.10. Casualty and Condemnation. The Borrower (a) will furnish to the
Administrative Agent and the Lenders prompt written notice of any casualty or other insured damage
to any material portion of the Collateral or the commencement of any action or proceeding for the
taking of any material portion of the Collateral or interest therein under power of eminent domain
or by condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such
event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected
and applied in accordance with the applicable provisions of this Agreement and the Collateral
Documents



     SECTION 5.11. Appraisals. At any time that the Administrative Agent requests, the
Borrower and the Subsidiaries will provide the Administrative Agent with appraisals or updates
thereof of any real property acquired after the Closing Date from an appraiser selected and engaged
by the Administrative Agent, and prepared on a basis satisfactory to the Administrative Agent, such
appraisals and updates to include, without limitation, information required by applicable law and
regulations; provided, however, that if no Event of Default has occurred and is continuing, two
such appraisals per calendar year shall be at the sole expense of the Loan Parties.



     SECTION 5.12. Depository Banks. The Borrower and each Subsidiary will maintain the
Administrative Agent as its principal depository bank, including for the maintenance of operating,
administrative, cash management, collection activity, and other deposit accounts for the conduct of
its business.



     SECTION 5.13. Additional Collateral; Further Assurances. (a) Subject to applicable
law, the Borrower and each Subsidiary that is a Loan Party shall cause each of its domestic
Subsidiaries formed or acquired after the date of this Agreement in accordance with the terms of
this Agreement to become a Loan Party by executing the Joinder Agreement set forth as Exhibit
E hereto (the “Joinder Agreement”). Upon execution and delivery thereof, each such
Person (i) shall automatically become a Loan Guarantor hereunder and thereupon shall have all of
the rights, benefits, duties, and obligations in such capacity under the Loan Documents and (ii)
will grant Liens to the Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, in any property of such Loan Party which constitutes Collateral,






52









 







including any parcel of
real property having a value (together with improvements thereof) of at least $500,000 located in
the U.S. owned by any Loan Party.



          (b) The Borrower and each Subsidiary that is a Loan Party will cause (i) 100% of the issued
and outstanding Equity Interests of each of its domestic Subsidiaries and (ii) 66% of the issued
and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests not entitled to vote (within
the meaning of Treas. Reg. Section 1.956-2(c)(2) in each foreign Subsidiary directly owned by the
Borrower or any domestic Subsidiary to be subject at all times to a first priority, perfected Lien
in favor of the Administrative Agent pursuant to the terms and conditions of the Loan Documents or
other security documents as the Administrative Agent shall reasonably request.




          (c) Without limiting the foregoing, each Loan Party will, and will cause each Subsidiary to,
execute and deliver, or cause to be executed and delivered, to the Administrative Agent such
documents, agreements and instruments, and will take or cause to be taken such further actions
(including the filing and recording of financing statements, fixture filings, mortgages, deeds of
trust and
other documents and such other actions or deliveries of the type required by Section 4.01, as
applicable), which may be required by law or which the Administrative Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and the other Loan
Documents and to ensure perfection and priority of the Liens created or intended to be created by
the Collateral Documents, all at the expense of the Loan Parties.




          (d) If any material assets (including any real property or improvements thereto or any
interest therein) are acquired by the Borrower or any Subsidiary that is a Loan Party after the
Effective Date (other than assets constituting Collateral under the Security Agreement that become
subject to the Lien in favor of the Security Agreement upon acquisition thereof), the Borrower will
notify the Administrative Agent and the Lenders thereof, and, if requested by the Administrative
Agent or the Required Lenders, the Borrower will cause such assets to be subjected to a Lien
securing the Secured Obligations and will take, and cause the Subsidiary Loan Parties to take, such
actions as shall be necessary or reasonably requested by the Administrative Agent to grant and
perfect such Liens, including actions described in paragraph (c) of this Section, all at the
expense of the Loan Parties.




          (e) With respect to any interest in any vessel having a value of at least $500,000 acquired
after the Closing Date by any the Borrower or any of its Subsidiaries (other than (x) any such
vessel subject to a Lien expressly permitted by Section 6.02(g) and (y) any vessel acquired by any
foreign Subsidiary), promptly (i) execute and deliver a Vessel Mortgage, in favor of the
Administrative Agent, for its benefit and the Lenders, covering such vessel and such other
documentation related thereto as requested by the Administrative Agent and (ii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.




ARTICLE VI




Negative Covenants




     Until the Commitments have expired or terminated and the principal of and interest on each
Loan and all fees, expenses and other amounts payable under any Loan Document have been paid in
full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Loan Parties covenant and agree, jointly and severally, with the Lenders that:






53









 





     SECTION 6.01. Indebtedness. No Loan Party will, nor will it permit any domestic
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:



          (a) Indebtedness of any Loan Party pursuant to any Loan Document;




          (b) Indebtedness of the Borrower to any Subsidiary and of any wholly owned Subsidiary
Guarantor to the Borrower or any other Subsidiary;




          (c) Guarantees incurred in the ordinary course of business by the Borrower or any of its
domestic Subsidiaries of obligations of any wholly owned Subsidiary Guarantor;




          (d) Indebtedness outstanding on the date hereof and listed on Schedule 6.01(d) and any
refinancings, refundings, renewals or extensions thereof (without increasing the amount, or
shortening the maturity of, the principal amount thereof);




          (e) Capital Lease Obligations in connection with a crane in an aggregate principal amount not
to exceed $875,000;




          (f) Indebtedness (including, without limitation, Capital Lease Obligations) secured by Liens
permitted by Section 6.02(g) in an aggregate principal amount not to exceed $500,000 in any fiscal
year prior to the fiscal year in which a vessel mortgage is executed and delivered with respect to
the Superior Achiever in accordance with Section 5.13(d) and $2,000,000 in any fiscal year of the
Borrower thereafter at any one time outstanding;




          (g) Indebtedness in respect of the Term Loan Agreement in an aggregate principal amount not to
exceed $110,000,000 and any refinancings, renewals or extensions thereof (without increasing the
principal amount thereof, or shortening the maturity of such Indebtedness);




          (h) Guarantee Obligations incurred by the Borrower of obligations of Subtech in an aggregate
amount not to exceed $500,000;




          (i) Charter Obligations of the Borrower and its domestic Subsidiaries in an aggregate amount
not to exceed $5,000,000;




          (j) Indebtedness of the Borrower or any of its domestic Subsidiaries in respect of performance
bonds, bid bonds, appeal bonds, surety bonds, and similar obligations, in each case provided in the
ordinary course of business; and




          (k) additional Indebtedness of the Borrower or any of its domestic Subsidiaries in an
aggregate principal amount (for the Borrower and all such Subsidiaries) not to exceed $1,000,000 at
any one time outstanding.




     SECTION 6.02. Liens. No Loan Party will, nor will it permit any domestic Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable)
or rights in respect of any thereof, except:



          (a) Liens for taxes not yet due or that are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are maintained on the
books of the Borrower or its domestic Subsidiaries, as the case may be, in conformity with GAAP;







54









 








          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, vendors’,
landlords’ or
other like Liens arising in the ordinary course of business, including common law maritime Liens or
Liens under the Federal Maritime Lien Act or similar state statutes, in each case that are not
overdue for a period of more than 30 days or that are being contested in good faith by appropriate
proceedings;




          (c) pledges or deposits in connection with workers’ compensation, unemployment insurance and
other social security legislation;




          (d) (i) deposits to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business and (ii) judgment liens in
respect of judgments that do not constitute an Event of Default under clause (k) of Section 7;




          (e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the
ordinary course of business that, in the aggregate, are not substantial in amount and that do not
in any case materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower or any of its domestic
Subsidiaries;




          (f) Liens in existence on the date hereof listed on Schedule 6.02(f), securing Indebtedness
permitted by Section 6.01(d), provided that no such Lien is spread to cover any additional
property after the Closing Date and that the amount of Indebtedness secured thereby is not
increased;




          (g) Liens securing Indebtedness of the Borrower or any other domestic Subsidiary incurred
pursuant to Section 6.01(e) or Section 6.01(f) to finance the acquisition of fixed or capital
assets, provided that (i) such Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (iii) the amount of Indebtedness
secured thereby is not increased;




          (h) Liens created pursuant to the Loan Documents;




          (i) Liens on created pursuant to the Term Loan Documents, provided, that the
Administrative Agent shall have a first priority Lien on all assets subject to such Liens (other
than the First Priority Term Collateral (as defined in the Intercreditor Agreement), over which the
Administrative Agent shall have a second priority Lien) pursuant to the Loan Documents;




          (j) any interest or title of a lessor under any lease entered into by the Borrower or any
domestic Subsidiary in the ordinary course of its business and covering only the assets so leased;




          (k) Liens (i) for salvage or general average, (ii) of a maritime nature incurred in the
ordinary course of business of the Borrower or any domestic Subsidiary arising from vessel
chartering, operations, drydocking, maintenance, the furnishing of supplies or fuel to vessels and
crews wages, and (iii) arising under any vessel charter, in each case for amounts that are not
overdue by more than 30 days or that are being contested in good faith by appropriate proceedings;
and




          (l) Liens not otherwise permitted by this Section so long as neither (i) the aggregate
outstanding principal amount of the obligations secured thereby nor (ii) the aggregate fair market
value (determined as of the date such Lien is incurred) of the assets subject thereto exceeds (as
to the Borrower and all domestic Subsidiaries) $250,000 at any one time.







55









 







Notwithstanding the foregoing, none of the Liens permitted pursuant to this Section 6.02 may at any
time attach to any Loan Party’s Accounts, other than those permitted under clauses (a), (h) and
(i).




     SECTION 6.03. Fundamental Changes. The Borrower shall not, and shall not permit any
of its domestic Subsidiaries to enter into any merger, consolidation or amalgamation, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or dispose of all or
substantially all of its property or business, except that:



          (a) any domestic Subsidiary of the Borrower may be merged or consolidated with or into the
Borrower (provided that the Borrower shall be the continuing or surviving corporation) or
with or into any wholly owned Subsidiary Guarantor (provided that the wholly owned
Subsidiary Guarantor shall be the continuing or surviving corporation);




          (b) the Borrower may be merged with and into Superior Offshore International, Inc. in order to
consummate the IPO, provided that Superior Offshore International, Inc. shall execute and
deliver such joinder agreements or other agreements in respect hereof, and deliver such legal
opinions, as the Administrative Agent shall request;




          (c) any domestic Subsidiary of the Borrower may dispose of any or all of its assets (i) to the
Borrower or any wholly owned Subsidiary Guarantor (upon voluntary liquidation or otherwise) or (ii)
pursuant to a disposition permitted by Section 6.05;




          (d) any Investment expressly permitted by Section 6.04, which may be structured as a merger,
consolidation or amalgamation; and




          (e) any Subsidiary that is not a Loan Party may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders.




     SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. No Loan
Party will, nor will it permit any domestic Subsidiary to, make any advance, loan, extension of
credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock,
bonds, notes, debentures or other debt securities of, or any assets constituting a business unit
of, or make any other investment in, any Person (all of the foregoing, “Investments”),
except:



          (a) extensions of trade credit in the ordinary course of business;




          (b) investments in Cash Equivalents;




          (c) Guarantee Obligations permitted by Section 6.01;




          (d) loans and advances to employees of the Borrower or any domestic Subsidiary in the ordinary
course of business (including for travel, entertainment and relocation expenses) in an aggregate
amount for the Borrower and all domestic Subsidiaries not to exceed $250,000 at any one time
outstanding;




          (e) intercompany Investments by any Loan Party or any domestic Subsidiary in the Borrower or
any Person that, prior to such investment, is a wholly owned Subsidiary Guarantor; and







56









 








          (f) Investments in an aggregate amount (valued at cost) not to exceed $3,000,000 consisting of
payments of cash or Capital Stock to Subtech (or to the Sellers thereof) made on or prior to the
third anniversary of the Closing Date with respect to the acquisition of Subtech;




          (g) Investments of any Person existing at the time such Person becomes a domestic Subsidiary
of the Borrower or consolidates or merges with the Borrower or any of the domestic Subsidiaries
(including in connection with a permitted acquisition) so long as such investments were not made in
contemplation of such Person becoming a domestic Subsidiary or of such merger;




          (h) Investments received in connection with the dispositions of assets permitted by Section
6.05;




          (i) in addition to Investments otherwise expressly permitted by this Section, Investments by
the Borrower or any of its domestic Subsidiaries in an aggregate amount (valued at cost) not to
exceed $1,000,000 during the term of this Agreement;




          (j) subject to Sections 4.2(a) and 4.4 of the Security Agreement, notes payable, or stock or
other securities issued by Account Debtors to a Loan Party pursuant to negotiated agreements with
respect to settlement of such Account Debtor’s Accounts in the ordinary course of business,
consistent with past practices; and




          (k) investments in the form of Swap Agreements permitted by Section 6.07.




     SECTION 6.05. Asset Sales. No Loan Party will, nor will it permit any domestic
Subsidiary to, dispose of any of its property, whether now owned or hereafter acquired, or, in the
case of any domestic Subsidiary, issue or sell any shares of such Subsidiary’s Equity Interests to
any Person, except:



          (a) the disposition of obsolete or worn out property in the ordinary course of business;




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




          (c) Dispositions permitted by clause (i) of Section 6.03(c);




          (d) the sale or issuance of any domestic Subsidiary’s Equity Interests to the Borrower or any
wholly owned Subsidiary Guarantor;




          (e) dispositions resulting from any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any property or asset of the
Borrower or any domestic Subsidiary; and




          (f) the Disposition of other property having a fair market value not to exceed $3,000,000 in
fiscal year 2007 and $1,500,000 in any fiscal year of the Borrower thereafter, provided,
that the consideration for any such Disposition shall be at least 80% cash.




     SECTION 6.06. Sale and Leaseback Transactions. No Loan Party will, nor will it permit
any Subsidiary to enter into any arrangement with any Person providing for the leasing by any Loan
Party of real or personal property that has been or is to be sold or transferred by such Loan Party
to such Person or to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Loan Party.






57









 





     SECTION 6.07. Swap Agreements. No Loan Party will, nor will it permit any Subsidiary
to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate
risks to which the Borrower or any Subsidiary has actual exposure (other than those in respect of
Equity Interests of the Borrower or any of its Subsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary.



     SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness. No Loan Party
will, nor will it permit any domestic Subsidiary to declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Equity Interests of any Loan Party
or any Subsidiary, whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in obligations of any Loan
Party or any Subsidiary (collectively, “Restricted Payments”), except that:



          (a) any domestic Subsidiary may make Restricted Payments to the Borrower or any wholly owned
Subsidiary Guarantor; and




          (b) so long as no Default or Event of Default shall have occurred and be continuing, the
Borrower may purchase its common stock or common stock options from present or former officers or
employees of any Loan Party or any Subsidiary upon the death, disability or termination of
employment of such officer or employee, provided, that the aggregate amount of payments
under this clause (b) after the date hereof (net of any proceeds received by the Borrower after the
date hereof in connection with resales of any common stock or common stock options so purchased)
shall not exceed $250,000 in any fiscal year of the Borrower;




          (c) so long as Administrative Agent has not (i) terminated the Commitments or (ii) declared
all of the obligations hereunder immediately due and payable, in each case, pursuant to Article
VII hereof or otherwise, the Borrower may pay a dividend in connection with the IPO,
provided that such dividend is payable solely with proceeds from the IPO; and




          (d) so long as no Event of Default exists or would result therefrom, and so long as Borrower
remains a limited liability company, the Borrower may pay dividends or make distributions to its
members in an aggregate amount not greater than the amount necessary for such members to pay their
actual state and United States federal income tax liabilities solely in respect of income earned by
the Borrower.




     SECTION 6.09. Transactions with Affiliates. No Loan Party will, nor will it permit
any domestic Subsidiary to, except with respect to Investments permitted pursuant to Section
6.04(c), Section 6.04(d) and Section 6.04(f), enter into any transaction, including any purchase,
sale, lease or exchange of property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than the Borrower or any wholly owned
Subsidiary Guarantor) unless such transaction is (a) otherwise permitted under this Agreement, (b)
in the ordinary course of business of the Borrower or relevant domestic Subsidiary, and (c) upon
fair and reasonable terms no less favorable to the Borrower or relevant domestic Subsidiary than it
would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.



     SECTION 6.10. Restrictive Agreements. No Loan Party will, nor will it permit any
domestic Subsidiary to enter into or suffer to exist or become effective any agreement that
prohibits or limits the






58









 







ability of any Loan Party to create, incur,
assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or
hereafter acquired, other than (a) this Agreement and the other Loan Documents, (b) the Term Loan
Documentation and (c) any agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby).



     SECTION 6.11. Amendment of Material Documents. No Loan Party will, nor will it permit
any domestic Subsidiary to, amend, modify or waive any of its rights under (a) agreement relating
to any Subordinated Indebtedness, or (b) its certificate of incorporation, by-laws, operating,
management or partnership agreement or other organizational documents, to the extent any such
amendment, modification or waiver would be significantly adverse to the Lenders.



     SECTION 6.12. Clauses Restricting Subsidiary Distributions. No Loan Party will, nor
will it permit any domestic Subsidiary to enter into or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any domestic Subsidiary of the Borrower to
(a) make Restricted Payments in respect of any Capital Stock of such domestic Subsidiary held by,
or pay any Indebtedness owed to, the Borrower or any other domestic Subsidiary of the Borrower, (b)
make loans or advances to, or other Investments in, the Borrower or any other domestic Subsidiary
of the Borrower or (c) transfer any of its assets to the Borrower or any other domestic Subsidiary
of the Borrower, except for such encumbrances or restrictions existing under or by reason of (i)
any restrictions existing under the Loan Documents, (ii) any restrictions existing under the Term
Loan Documentation and (iii) any restrictions with respect to a domestic Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the Disposition of all or
substantially all of the Capital Stock or assets of such domestic Subsidiary.



     SECTION 6.13. Lines of Business. No Loan Party will, nor will it permit any domestic
Subsidiary to enter into any business, either directly or through any Subsidiary, except for those
businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or
that are reasonably related thereto.



     SECTION 6.14. Coastwise Citizenship. In no event shall the Borrower or any Loan Party
take any action, or acquiesce in the taking of any action, that might reasonably be expected to
impair the status of Borrower as a citizen of the United States within the meaning of Section 2 of
the Shipping Act of 1916.



     SECTION 6.15. Changes in Fiscal Periods. The Borrower will not permit the fiscal year
of the Borrower to end on a day other than December 31 or change the Borrower’s method of
determining fiscal quarters



     SECTION 6.16. Capital Expenditures. No Loan Party will, nor will it permit any
domestic Subsidiary to, commencing with fiscal year 2007, make or commit to make any Capital
Expenditure, except Capital Expenditures of the Borrower and its domestic Subsidiaries in the
ordinary course of business not exceeding in the aggregate $40,000,000 for fiscal year 2007,
$40,000,000 for fiscal year 2008, $25,000,000 for fiscal year
2009 and $20,000,000 for each fiscal year thereafter, in each case, exclusive of any Net
Proceeds of any Asset Sale or Recovery Event applied in accordance with Section 2.11(c) to acquire,
replace, or repair assets and all Capital Expenditures attributable to the Superior Achiever and
related equipment to the extent purchased with proceeds of loans under the Term Loan Agreement.



     SECTION 6.17. Financial Covenants.






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          (a) Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed Charge
Coverage Ratio, determined for any period of four consecutive fiscal quarters to be less than 1.2
to 1.0 as of the end of each fiscal quarter.




ARTICLE VII




Events of Default




     If any of the following events (“Events of Default”) shall occur:



          (a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation
in respect of any LC Disbursement when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or otherwise;




          (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in clause (a) of this Article) payable under this Agreement, when
and as the same shall become due and payable, and such failure shall continue unremedied for a
period of five days;




          (c) any representation or warranty made or deemed made by or on behalf of any Loan Party or
any Subsidiary in or in connection with this Agreement or any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Agreement or any Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to have been materially
incorrect when made or deemed made;




          (d) any Loan Party shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.02(a), 5.03 (with respect to a Loan Party’s existence) or 5.08 or in Article
VI;




          (e) any Loan Party shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement (other than those which constitute a default under another Section of
this Article), and such failure shall continue unremedied for a period of (i) 5 days after the
earlier of knowledge by the Borrower of such breach or notice thereof from the Administrative Agent
(which notice will be given at the request of any Lender) if such breach relates to terms or
provisions of Section 5.01, 5.02 (other than Section 5.02(a)), 5.03, 5.04, 5.06, 5.07, 5.09, 5.10
or 5.12 of this Agreement or (ii) 30 days after the earlier of knowledge by the Borrower of such
breach or notice thereof from the Administrative Agent (which notice will be given at the request
of any Lender) if such breach relates to terms or provisions of any other Section of this
Agreement;




          (f) any Loan Party or any Subsidiary shall fail to make any payment (of principal regardless
of amount) in respect of any Material Indebtedness (other than a Swap Agreement or any Charter
Obligations), when and as the same shall become due and payable or shall fail to make any
payment of interest in respect thereof beyond the scheduled grace period, if applicable,
provided in the instrument or agreement under which such Indebtedness was created;




          (g) (i) any event or condition occurs that results in any Material Indebtedness (other than a
Swap Agreement or any Charter Obligations) becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or both) the holder or
holders of any Material Indebtedness (other than a Swap Agreement or any Charter Obligations) or
any trustee or agent on its or their behalf to cause any such Material Indebtedness to become due,
or to require the




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prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or assets securing such
Indebtedness or (ii) there occurs under any Swap Agreement constituting Material Indebtedness an
Early Termination Date (as defined in such Swap Agreement) resulting from (A) any event of default
under such Swap Agreement as to which the Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Agreement) or (B) any Termination Event (as so defined) under such Swap
Agreement as to which the Borrower or any Subsidiary is an Affected Party (as so defined);




          (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of a Loan Party or any
Subsidiary of any Loan Party or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Loan Party or any Subsidiary of any Loan Party or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be entered;




          (i) any Loan Party or any Subsidiary of any Loan Party shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official
for such Loan Party or Subsidiary of any Loan Party or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for
the purpose of effecting any of the foregoing;




          (j) any Loan Party or any Subsidiary of any Loan Party shall become unable, admit in writing
its inability or fail generally to pay its debts as they become due;




          (k) one or more judgments for the payment of money in an aggregate amount in excess of
$2,500,000 (not paid or fully covered by insurance as to which the relevant insurance company has
acknowledged coverage) shall be rendered against any Loan Party, any Subsidiary of any Loan Party
or any combination thereof and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of any Loan Party or any Subsidiary of any
Loan Party to enforce any such judgment or any Loan Party or any Subsidiary of any Loan Party shall
fail within 30 days to discharge one or more non-monetary judgments or orders which, individually
or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which
judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriately
contested in good faith by proper proceedings diligently pursued;




          (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;




          (m) a Change in Control shall occur;







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          (n) the occurrence of any “default”, as defined in any Loan Document (other than this
Agreement) or the breach of any of the terms or provisions of any Loan Document (other than this
Agreement), which default or breach continues beyond any period of grace therein provided;




          (o) the Loan Guaranty shall fail to remain in full force or effect or any action shall be
taken to discontinue or to assert the invalidity or unenforceability of the Loan Guaranty, or any
Loan Guarantor shall fail to comply with any of the terms or provisions of the Loan Guaranty to
which it is a party, which default or breach continues beyond any period of grace therein provided,
or any Loan Guarantor shall deny that it has any further liability under the Loan Guaranty to which
it is a party, or shall give notice to such effect;




          (p) any Collateral Document shall for any reason fail to create a valid and perfected first
priority security interest in any Collateral purported to be covered thereby, except as permitted
by the terms of any Collateral Document, or any Collateral Document shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document, or any Loan Party shall fail to comply with any of the
material terms or provisions of any Collateral Document, which default or breach continues beyond
any period of grace therein provided; or




          (q) any material provision of any Loan Document for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or any Loan Party shall challenge the enforceability of
any Loan Document or shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms).



then, and in every such event (other than an event with respect to the Borrower described in clause
(h) or (i) of this Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be due and payable),
and thereupon the principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become
due and payable immediately, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower
described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest thereon and all fees
and other obligations of the Borrower accrued hereunder, shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower. Upon the occurrence and the continuance of an Event of Default, the
Administrative Agent may, and at the request of the Required Lenders shall, exercise any rights and
remedies provided to the Administrative Agent under the Loan Documents or at law or equity,
including all remedies provided under the UCC.




ARTICLE VIII




The Administrative Agent




          Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent
as its agent and authorizes the Administrative Agent to take such actions on its behalf, including
execution of the other Loan Documents, and to exercise such powers as are delegated to the




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Administrative Agent by the terms of the Loan Documents, together with such actions and powers as
are reasonably incidental thereto.




          The bank serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Loan Parties or any Subsidiary of a Loan Party or
other Affiliate thereof as if it were not the Administrative Agent hereunder.




          The Administrative Agent shall not have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing as directed by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall
not have any duty to disclose, and shall not be liable for the failure to disclose, any information
relating to any Loan Party or any of its Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative
Agent shall not be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge
of any Default unless and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in or in connection
with any Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or in connection with any Loan Document, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, (v) the creation, perfection or priority of Liens on the Collateral or the
existence of the Collateral, or (vi) the satisfaction of any condition set forth in Article IV or
elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.




          The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any liability for relying
thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.




          The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any
such sub-agent, and shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as Administrative Agent.







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          Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor. If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent
which shall be a commercial bank or an Affiliate of any such commercial bank. Upon the acceptance
of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall
be the same as those payable to its predecessor unless otherwise agreed between the Borrower and
such successor. After the Administrative Agent’s resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative
Agent, its sub agents and their respective Related Parties in respect of any actions taken or
omitted to be taken by any of them while it was acting as Administrative Agent.




          Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any document furnished
hereunder or thereunder.




          Each Lender hereby agrees that (a) it has requested a copy of each Report prepared by or on
behalf of the Administrative Agent; (b) the Administrative Agent (i) makes no representation or
warranty, express or implied, as to the completeness or accuracy of any Report or any of the
information contained therein or any inaccuracy or omission contained in or relating to a Report
and (ii) shall not be liable for any information contained in any Report; (c) the Reports are not
comprehensive audits or examinations, and that any Person performing any field examination will
inspect only specific information regarding the Loan Parties and will rely significantly upon the
Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel and
that the Administrative Agent undertakes no obligation to update, correct or supplement the
Reports; (d) it will keep all Reports confidential and strictly for its internal use, not share the
Report with any Loan Party or any other Person except as otherwise permitted pursuant to this
Agreement; and (e) without limiting the generality of any other indemnification provision contained
in this Agreement, it will pay and protect, and indemnify, defend, and hold the Administrative
Agent and any such other Person preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including reasonable attorney fees)
incurred by as the direct or indirect result of any third parties who might obtain all or part of
any Report through the indemnifying Lender.




ARTICLE IX




Miscellaneous




     SECTION 9.01. Notices. (a) Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and
other communications provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by facsimile, as follows:






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	 	(i)	 	if to any Loan Party, to the Borrower at:




900 S. College Road, Suite 301

Lafayette, Louisiana 70503

Attention: Jim Mermis

Facsimile No: (337) 233-8870



With copies to Joshua Koch and Roger Burks (at the same address/facsimile)





	 	(ii)	 	if to the Administrative Agent, the Issuing Bank or the
Swingline Lender, to JPMorgan Chase Bank, N.A. at:




2200 Ross Ave., 6th Floor

Dallas, TX 75201

Attention: Christy West

Facsimile No: (214) 965-2594



With a copy to:



Patton Boggs LLP

2001 Ross Avenue, Suite 3000

Dallas, Texas 75201

Attention: Eric White

Facsimile No: (214) 758-1550





	 	(iii)	 	if to any other Lender, to it at its address or facsimile
number set forth in its Administrative Questionnaire.





     All such notices and other communications (i) sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when received or (ii)
sent by facsimile shall be deemed to have been given when sent, provided that if not given
during normal business hours for the recipient, shall be deemed to have been given at the opening
of business on the next Business Day for the recipient.



          (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the
applicable Lender. The Administrative Agent or the Borrower (on behalf of the Loan Parties) may,
in its discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to
procedures approved by it; provided that approval of such procedures may be limited to
particular notices or communications. All such notices and other communications (i) sent to an
e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as available, return e-mail
or other written acknowledgement), provided that if not given during the normal business
hours of the recipient, such notice or communication shall be deemed to have been given at the
opening of business on the next Business Day for the recipient, and (ii) posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the intended recipient at its
e-mail address as described in the foregoing clause (b)(i) of notification that such notice or
communication is available and identifying the website address therefor.







65









 








          (c) Any party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto.




     SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative
Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any other right or power.
The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and
under any other Loan Document are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of any Loan Document or consent to any
departure by any Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing
Bank may have had notice or knowledge of such Default at the time.



          (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except (i) in the case of this Agreement, pursuant to an agreement
or agreements in writing entered into by the Borrower and the Required Lenders or, (ii) in the case
of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties thereto, with the consent
of the Required Lenders; provided that no such agreement shall (i) increase the Commitment
of any Lender without the written consent of such Lender (provided that the Administrative Agent
may make Protective Advances as set forth in Section 2.04), (ii) reduce or forgive the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce or forgive
any interest or fees payable hereunder, without the written consent of each Lender directly
affected thereby, (iii) postpone any scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any date for the payment of any interest, fees or other Obligations payable
hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled
date of expiration of any Commitment, without the written consent of each Lender directly affected
thereby, (iv) change Section 2.18(b) or (d) in a manner that would alter the manner in which
payments are shared, without the written consent of each Lender, (v) increase the advance rates set
forth in the definition of Borrowing Base or add new categories of eligible assets, without the
written consent of each Revolving Lender, (vi) change any of the provisions of this Section or the
definition of “Required Lenders” or any other provision of any Loan Document specifying the number
or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without the written consent
of each Lender, (vii) release any Loan Guarantor from its obligation under its Loan Guaranty
(except as otherwise permitted herein or in the other Loan Documents), without the written
consent of each Lender, or (viii) except as provided in clauses (d) and (e) of this Section or
in any Collateral Document, release all or substantially all of the Collateral, without the written
consent of each Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender
hereunder without the prior written consent of the Administrative Agent, the Issuing Bank or the
Swingline Lender, as the case may be. The Administrative Agent may also amend the Commitment
Schedule to reflect assignments entered into pursuant to Section 9.04




          (c) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in
its sole discretion, to release any Liens granted to the Administrative Agent by the Loan Parties
on any Collateral (i) upon the termination of the all Commitments, payment and satisfaction in full
in cash of




66









 








all Secured Obligations (other than Unliquidated Obligations), and the cash
collateralization of all Unliquidated Obligations in a manner satisfactory to each affected Lender,
(ii) constituting property being sold or disposed of if the Loan Party disposing of such property
certifies to the Administrative Agent that the sale or disposition is made in compliance with the
terms of this Agreement (and the Administrative Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property leased to a Loan Party under a
lease which has expired or been terminated in a transaction permitted under this Agreement, or (iv)
as required to effect any sale or other disposition of such Collateral in connection with any
exercise of remedies of the Administrative Agent and the Lenders pursuant to Article VII. Except
as provided in the preceding sentence, the Administrative Agent will not release any Liens on
Collateral without the prior written authorization of the Required Lenders; provided that,
the Administrative Agent may in its discretion, release its Liens on Collateral valued in the
aggregate not in excess of $2,000,000 during any calendar year without the prior written
authorization of the Required Lenders. Any 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 Loan Parties in respect of) all interests retained by the Loan Parties,
including the proceeds of any sale, all of which shall continue to constitute part of the
Collateral.




          (d) If, in connection with any proposed amendment, waiver or consent requiring the consent of
“each Lender” or “each Lender affected thereby,” the consent of the Required Lenders is obtained,
but the consent of other necessary Lenders is not obtained (any such Lender whose consent is
necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then the
Borrower may elect to replace a Non-Consenting Lender as a Lender party to this Agreement,
provided that, concurrently with such replacement, (i) another bank or other entity which
is reasonably satisfactory to the Borrower and the Administrative Agent shall agree, as of such
date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender
pursuant to an Assignment and Assumption and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such
date and to comply with the requirements of clause (b) of Section 9.04, and (ii) the Borrower shall
pay to such Non-Consenting Lender in same day funds on the day of such replacement (1) all
interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by the
Borrower hereunder to and including the date of termination, including without limitation payments
due to such Non-Consenting Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to
the payment which would have been due to such Lender on the day of such replacement under Section
2.16 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the
replacement Lender.




     SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all
reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the Administrative Agent,
in connection with the syndication and distribution (including,
without limitation, via the internet or through a service such as Intralinks) of the credit
facilities provided for herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions of the Loan Documents (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement, collection or protection of its
rights in connection with the Loan Documents, including its rights under this Section, or in
connection with the Loans made or Letters of Credit issued hereunder, including all such out-of
pocket expenses incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit. Expenses






67









 







being reimbursed by the Borrower under this Section include,
without limiting the generality of the foregoing, costs and expenses incurred in connection with:




     (i) appraisals and insurance reviews;




     (ii) field examinations and the preparation of Reports based on the fees
charged by a third party retained by the Administrative Agent or the internally
allocated fees for each Person employed by the Administrative Agent with respect to
each field examination;




     (iii) background checks regarding senior management and/or key investors, as
deemed necessary or appropriate in the sole discretion of the Administrative Agent;




     (iv) taxes, fees and other charges for (A) lien and title searches and title
insurance and (B) recording the Mortgages, filing financing statements and
continuations, and other actions to perfect, protect, and continue the
Administrative Agent’s Liens;




     (v) sums paid or incurred to take any action required of any Loan Party under
the Loan Documents that such Loan Party fails to pay or take; and




     (vi) forwarding loan proceeds, collecting checks and other items of payment,
and establishing and maintaining the accounts and lock boxes, and costs and expenses
of preserving and protecting the Collateral.


All of the foregoing costs and expenses may be charged to the Borrower as Revolving Loans or to
another deposit account, all as described in Section 2.18(c).




          (b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, penalties, liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of,
in connection with, or as a result of (i) the execution or delivery of the Loan Documents or any
agreement or instrument contemplated thereby, the performance by the parties hereto of their
respective obligations thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit
if the documents presented in connection with such demand do not strictly comply with the terms of
such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on
or from any property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its Subsidiaries,
or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages, penalties, liabilities or
related expenses resulted from the gross negligence or willful misconduct of such Indemnitee.




          (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the
Administrative Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or the
Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount;




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provided that the unreimbursed expense or indemnified loss, claim, damage, penalty,
liability or related expense, as the case may be, was incurred by or asserted against the
Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity as such.




          (d) To the extent permitted by applicable law, no Loan Party shall assert, and each hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.




          (e) All amounts due under this Section shall be payable not later than ten (10) Business Days
after written demand therefor.




     SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of
Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance
with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and assigns permitted
hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this Agreement.



          (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign
to one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:





     (A) the Borrower, provided that no consent of the
Borrower shall be required for an assignment to a Lender, an
Affiliate of a Lender, an Approved Fund or, if an Event of Default
has occurred and is continuing, any other assignee;




     (B) the Administrative Agent; and




     (C) the Issuing Bank.




     (ii) Assignments shall be subject to the following additional conditions:




     (A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount
of the assigning Lender’s Commitment or Loans of any Class, the
amount of the Commitment or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each
of the Borrower and the Administrative Agent otherwise consent,
provided






69









 






that no such consent of the Borrower shall be required if an
Event of Default has occurred and is continuing;




     (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and
obligations under this Agreement, provided that this clause
shall not be construed to prohibit the assignment of a proportionate
part of all the assigning Lender’s rights and obligations in respect
of one Class of Commitments or Loans;




     (C) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500; and




     (D) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire in which the
assignee designates one or more Credit Contacts to whom all
syndicate-level information (which may contain material non-public
information about the Borrower, the Loan Parties and their Related
Parties or their respective securities) will be made available and
who may receive such information in accordance with the assignee’s
compliance procedures and applicable laws, including Federal and
state securities laws.



               For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following
meaning:



               “Approved Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.




          (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and obligations
of a Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 9.04 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in accordance
with paragraph (c) of this Section.




          (iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the Loans
and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to
time (the






70









 






“Register”). The entries in the Register shall be conclusive, and
the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, the
Issuing Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.




     (v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and any
written consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either the
assigning Lender or the assignee shall have failed to make any payment required to
be made by it pursuant to Section 2.05, 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c),
the Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until such
payment shall have been made in full, together with all accrued interest thereon.
No assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.



          (c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent, the
Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any amendment, modification
or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject
to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled
to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were
a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it were a
Lender.




               (ii) A Participant shall not be entitled to receive any greater payment under Section 2.15
or
2.17 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.17(e) as though it were a Lender.



          (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without




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limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.




     SECTION 9.05. Survival. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is extended hereunder,
and shall continue in full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or
any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments
or the termination of this Agreement or any provision hereof.



     SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different counterparts), each of which
shall constitute an original, but all of which when taken together shall constitute a single
contract. This Agreement, the other Loan Documents and any separate letter agreements with respect
to fees payable to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties hereto, and thereafter
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement
by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



     SECTION 9.07. Severability. Any provision of any Loan Document held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions thereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.



     SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of the Borrower or such
Loan Guarantor against any of and all the Secured Obligations held by such Lender, irrespective of
whether or not such Lender shall have made any demand under the Loan Documents and although such
obligations may be unmatured. The applicable Lender shall notify the Borrower and the
Administrative Agent of such set-off or application, provided






72









 




that any failure to give or
any delay in giving such notice shall not affect the validity of any such set-off or application
under this Section. The rights of each Lender under this Section are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.




     SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) The
Loan Documents (other than those containing a contrary express choice of law provision) shall be
governed by and construed in accordance with the internal laws (without regard to the conflict of
laws provisions) of the State of Texas, but giving effect to federal laws applicable to national
banks.



          (b) Each Loan Party hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any U.S. Federal or Texas State court sitting in
Dallas, Texas in any action or proceeding arising out of or relating to any Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and
determined in such Texas State court or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any
right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document against any Loan Party
or its properties in the courts of any jurisdiction.




          (c) Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.




          (d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.




     SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.



     SECTION 9.11. Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.



     SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing Bank and
the Lenders agrees to maintain the confidentiality of the Information (as defined below), except
that






73









 




Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
any regulatory authority, (c) to the extent required by Requirement of Law or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights
or obligations under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Loan Parties and their obligations,
(g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis from a source
other than the Borrower. For the purposes of this Section, “Information” means all
information received from the Borrower relating to the Borrower or its business, other than any
such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a
non-confidential basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.




          EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12 FURNISHED TO IT PURSUANT
TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS
AFFILIATES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS
DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT
WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE
LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.




          ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR
THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE
SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER,
THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH
LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS
ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL
NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING
FEDERAL AND STATE SECURITIES LAWS.




     SECTION 9.13. Several Obligations; Nonreliance; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure of any Lender to
make any Loan or perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. Each Lender hereby represents that it is not relying on or
looking to any margin stock for the repayment of the Borrowings provided for herein. Anything
contained in this Agreement to the contrary






74









 




notwithstanding, neither the Issuing Bank nor any
Lender shall be obligated to extend credit to the Borrower in violation of any Requirement of Law.




     SECTION 9.14. USA PATRIOT Act. Each Lender that is subject to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
“Act”) hereby notifies the Borrower that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will allow such Lender to
identify the Borrower in accordance with the Act.



     SECTION 9.15. Disclosure. Each Loan Party and each Lender hereby acknowledges and
agrees that the Administrative Agent and/or its Affiliates from time to time may hold investments
in, make other loans to or have other relationships with any of the Loan Parties and their
respective Affiliates.



     SECTION 9.16. Appointment for Perfection. Each Lender hereby appoints each other
Lender as its agent for the purpose of perfecting Liens, for the benefit of the Administrative
Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC or any other
applicable law can be perfected only by possession. Should any Lender (other than the
Administrative Agent) obtain possession of any such Collateral, such Lender shall notify the
Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor
shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in
accordance with the Administrative Agent’s instructions.



     SECTION 9.17. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges
and other amounts which are treated as interest on such Loan under applicable law (collectively the
“Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance
with applicable law, the rate of interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful, the interest and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.



ARTICLE X




Loan Guaranty




     SECTION 10.01. Guaranty. Each Loan Guarantor (other than those that have delivered a
separate Guaranty) hereby agrees that it is jointly and severally liable for, and, as primary
obligor and not merely as surety, absolutely and unconditionally guarantees to the Lenders the
prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of the Secured Obligations and all costs and expenses including, without
limitation, all court costs and attorneys’ and paralegals’ fees (including allocated costs of
in-house counsel and paralegals) and expenses paid or incurred by the Administrative Agent, the
Issuing Bank and the Lenders in endeavoring to collect all or any part of the Secured Obligations
from, or in prosecuting any action against, the Borrower, any Loan Guarantor or any other guarantor
of all or any part of the Secured Obligations (such costs and expenses, together with the Secured
Obligations, collectively the “Guaranteed Obligations”). Each Loan Guarantor further agrees
that the Guaranteed Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee notwithstanding any such






75









 







extension or renewal. All terms of this Loan Guaranty apply to and may be enforced by or on behalf
of any domestic or foreign branch or Affiliate of any Lender that extended any portion of the
Guaranteed Obligations.



     SECTION 10.02. Guaranty of Payment. This Loan Guaranty is a guaranty of payment and
not of collection. Each Loan Guarantor waives any right to require the Administrative Agent, the
Issuing Bank or any Lender to sue the Borrower, any Loan Guarantor, any other guarantor, or any
other person obligated for all or any part of the Guaranteed Obligations (each, an “Obligated
Party”), or otherwise to enforce its payment against any collateral securing all or any part of
the Guaranteed Obligations.



     SECTION 10.03. No Discharge or Diminishment of Loan Guaranty. (a) Except as otherwise
provided for herein, the obligations of each Loan Guarantor hereunder are unconditional and
absolute and not subject to any reduction, limitation, impairment or termination for
any reason (other than the indefeasible payment in full in cash of the Guaranteed
Obligations), including: (i) any claim of waiver, release, extension, renewal, settlement,
surrender, alteration, or compromise of any of the Guaranteed Obligations, by operation of law or
otherwise; (ii) any change in the corporate existence, structure or ownership of the Borrower or
any other guarantor of or other person liable for any of the Guaranteed Obligations; (iii) any
insolvency, bankruptcy, reorganization or other similar proceeding affecting any Obligated Party,
or their assets or any resulting release or discharge of any obligation of any Obligated Party; or
(iv) the existence of any claim, setoff or other rights which any Loan Guarantor may have at any
time against any Obligated Party, the Administrative Agent, the Issuing Bank, any Lender, or any
other person, whether in connection herewith or in any unrelated transactions.



          (b) The obligations of each Loan Guarantor hereunder are not subject to any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or
unenforceability of any of the Guaranteed Obligations or otherwise, or any provision of applicable
law or regulation purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.




          (c) Further, the obligations of any Loan Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of the Administrative Agent, the Issuing Bank or any Lender
to assert any claim or demand or to enforce any remedy with respect to all or any part of the
Guaranteed Obligations; (ii) any waiver or modification of or supplement to any provision of any
agreement relating to the Guaranteed Obligations; (iii) any release, non-perfection, or invalidity
of any indirect or direct security for the obligations of the Borrower for all or any part of the
Guaranteed Obligations or any obligations of any other guarantor of or other person liable for any
of the Guaranteed Obligations; (iv) any action or failure to act by the Administrative Agent, the
Issuing Bank or any Lender with respect to any collateral securing any part of the Guaranteed
Obligations; or (v) any default, failure or delay, willful or otherwise, in the payment or
performance of any of the Guaranteed Obligations, or any other circumstance, act, omission or delay
that might in any manner or to any extent vary the risk of such Loan Guarantor or that would
otherwise operate as a discharge of any Loan Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of the Guaranteed Obligations).




     SECTION 10.04. Defenses Waived. To the fullest extent permitted by applicable law,
each Loan Guarantor hereby waives any defense based on or arising out of any defense of the
Borrower or any Loan Guarantor or the unenforceability of all or any part of the Guaranteed
Obligations from any cause, or the cessation from any cause of the liability of the Borrower or any
Loan Guarantor, other than the indefeasible payment in full in cash of the Guaranteed Obligations.
Without limiting the generality of the foregoing, each Loan Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not
provided for herein, as well as any requirement that at any time any action be taken by any person
against any Obligated Party, or any other person. The






76









 







Administrative Agent may, at its election,
foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an
assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with
respect to any collateral securing all or a part of the Guaranteed Obligations, compromise or
adjust any part of the Guaranteed Obligations, make any other accommodation with any Obligated
Party or exercise any other right or remedy available to it against any Obligated Party, without
affecting or impairing in any way the liability of such Loan Guarantor under this Loan Guaranty
except to the extent the Guaranteed Obligations have been fully and indefeasibly paid in cash. To
the fullest extent permitted by applicable law, each Loan Guarantor waives any defense arising out
of any such election even though that election may operate, pursuant to applicable law, to impair
or extinguish any right of reimbursement or subrogation or other right or remedy of any Loan
Guarantor against any Obligated Party or any security.



     SECTION 10.05. Rights of Subrogation. No Loan Guarantor will assert any right, claim
or cause of action, including, without limitation, a claim of subrogation, contribution or
indemnification that it has against any Obligated Party, or any collateral, until the Loan Parties
and the Loan Guarantors have fully performed all their obligations to the Administrative Agent, the
Issuing Bank and the Lenders.



     SECTION 10.06. Reinstatement; Stay of Acceleration. If at any time any payment of any
portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon
the insolvency, bankruptcy, or reorganization of the Borrower or otherwise, each Loan Guarantor’s
obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time
as though the payment had not been made and whether or not the Administrative Agent, the Issuing
Bank and the Lenders are in possession of this Loan Guaranty. If acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms
of any agreement relating to the Guaranteed Obligations shall nonetheless be payable by the Loan
Guarantors forthwith on demand by the Lender.



     SECTION 10.07. Information. Each Loan Guarantor assumes all responsibility for being
and keeping itself informed of the Borrower’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks that each Loan Guarantor assumes and incurs under this Loan Guaranty,
and agrees that neither the Administrative Agent, the Issuing Bank nor any Lender shall have any
duty to advise any Loan Guarantor of information known to it regarding those circumstances or
risks.



     SECTION 10.08. Termination. The Lenders may continue to make loans or extend credit
to the Borrower based on this Loan Guaranty until five days after it receives written notice of
termination from any Loan Guarantor. Notwithstanding receipt of any such notice, each Loan
Guarantor will continue to be liable to the Lenders for any Guaranteed Obligations created, assumed
or committed to prior to the fifth day after receipt of the notice, and all subsequent renewals,
extensions, modifications and amendments with respect to, or substitutions for, all or any part of
that Guaranteed Obligations.



     SECTION 10.09. Taxes. All payments of the Guaranteed Obligations will be made by each
Loan Guarantor free and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if any Loan Guarantor shall be required to deduct any Indemnified Taxes or
Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan
Guarantor shall make such deductions and (iii) such Loan Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable law.






77









 





     SECTION 10.10. Maximum Liability. The provisions of this Loan Guaranty are severable, and in any action or proceeding
involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the obligations of any
Loan Guarantor under this Loan Guaranty would otherwise be held or determined to be avoidable,
invalid or unenforceable on account of the amount of such Loan Guarantor’s liability under this
Loan Guaranty, then, notwithstanding any other provision of this Loan Guaranty to the contrary, the
amount of such liability shall, without any further action by the Loan Guarantors or the Lenders,
be automatically limited and reduced to the highest amount that is valid and enforceable as
determined in such action or proceeding (such highest amount determined hereunder being the
relevant Loan Guarantor’s “Maximum Liability.” This Section with respect to the Maximum
Liability of each Loan Guarantor is intended solely to preserve the rights of the Lenders to the
maximum extent not subject to avoidance under applicable law, and no Loan Guarantor nor any other
person or entity shall have any right or claim under this Section with respect to such Maximum
Liability, except to the extent necessary so that the obligations of any Loan Guarantor hereunder
shall not be rendered voidable under applicable law. Each Loan Guarantor agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum Liability of each
Loan Guarantor without impairing this Loan Guaranty or affecting the rights and remedies of the
Lenders hereunder, provided that, nothing in this sentence shall be construed to increase
any Loan Guarantor’s obligations hereunder beyond its Maximum Liability.



     SECTION 10.11. Contribution. In the event any Loan Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or shall suffer any
loss as a result of any realization upon any collateral granted by it to secure its obligations
under this Loan Guaranty, each other Loan Guarantor (each a “Non-Paying Guarantor”) shall
contribute to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable
Percentage” of such payment or payments made, or losses suffered, by such Paying Guarantor.
For purposes of this Article X, each Non-Paying Guarantor’s “Applicable Percentage” with respect to
any such payment or loss by a Paying Guarantor shall be determined as of the date on which such
payment or loss was made by reference to the ratio of (i) such Non-Paying Guarantor’s Maximum
Liability as of such date (without giving effect to any right to receive, or obligation to make,
any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been
determined, the aggregate amount of all monies received by such Non-Paying Guarantor from the
Borrower after the date hereof (whether by loan, capital infusion or by other means) to (ii) the
aggregate Maximum Liability of all Loan Guarantors hereunder (including such Paying Guarantor) as
of such date (without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been determined for any
Loan Guarantor, the aggregate amount of all monies received by such Loan Guarantors from the
Borrower after the date hereof (whether by loan, capital infusion or by other means). Nothing in
this provision shall affect any Loan Guarantor’s several liability for the entire amount of the
Guaranteed Obligations (up to such Loan Guarantor’s Maximum Liability). Each of the Loan
Guarantors covenants and agrees that its right to receive any contribution under this Loan Guaranty
from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in
full in cash of the Guaranteed Obligations. This provision is for the benefit of both the
Administrative Agent, the Issuing Bank, the Lenders and the Loan Guarantors and may be enforced by
any one, or more, or all of them in accordance with the terms hereof.



     SECTION 10.12. Liability Cumulative. The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative with all liabilities of
each Loan Party to the Administrative Agent, the Issuing Bank and the Lenders under this Agreement
and the other Loan Documents to which such Loan Party is a party or in respect of any obligations
or liabilities of the other Loan Parties, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.






78









 





[Signature Page Follows]







79









 





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



	 	 	 	 	 
	 	SUPERIOR OFFSHORE INTERNATIONAL, L.L.C.

 	 
	 	By  	      /s/ Roger D. Burks
 	 
	 	 	Name:  	Roger D. Burks 	 
	 	 	Title:  	Chief Financial Officer 	 
	 




















 





	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., individually, as

Administrative Agent, Issuing Bank and Swingline

Lender

 	 
	 	By  	      /s/ Christy West
 	 
	 	 	Name:  	Christy West 	 
	 	 	Title:  	Vice President 	 
	 



















 





COMMITMENT SCHEDULE




	 	 	 	 	 	 	 	 	 
	Lender	 	Revolving Commitment	 	 	Commitment	 
	JPMorgan Chase Bank, N.A.
	 	$	37,000,000	 	 	$	37,000,000	 
	 
	Total
	 	$	37,000,000	 	 	$	37,000,000	 
	 
	 	 	 	 	 	 





Commitment Schedule



















 





TAX LIEN SCHEDULE




	 	 	 	 	 	 	 	 	 
	Date Filed	 	Type (State/Federal)	 	 	Dollar Amount	 	 	Jurisdiction of Filing







Commitment Schedule





















 







EXHIBIT A




ASSIGNMENT AND ASSUMPTION




     This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment
and Assumption as if set forth herein in full.



     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit,
guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under
or in connection with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or related to any of the
foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all
other claims at law or in equity related to the rights and obligations sold and assigned pursuant
to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii)
above being referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.



	 	 	 	 	 
	1.

	 	Assignor:
	 	                                      
;  
	 
	 	 	 	 
	2.

	 	Assignee:
	 	                                      
;  
	 

	 	 	 	[and is an Affiliate of [identify Lender]/Approved Fund1]
	 
	 	 	 	 
	3.

	 	Borrower(s):
	 	                                      
;  
	 
	 	 	 	 
	4.

	 	Administrative Agent:
	 	                    , as the administrative agent under the Credit Agreement

	 
	 	 	 	 
	5.

	 	Credit Agreement:
	 	[The [amount] Credit Agreement dated as of                      among [name of

Borrower(s)], the Lenders parties thereto, [name of Administrative
Agent], as Administrative Agent, and the other agents parties
thereto]
	 
	 	 	 	 
	6.

	 	Assigned Interest:	 	 








 




			
	1	 	Select as applicable.


Exhibit A












 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	Facility Assigned	 	Aggregate Amount of	 	Amount of	 	Percentage Assigned of
	 	 	Commitment/Loans	 	Commitment/Loans	 	Commitment/Loans
	 	 	for all Lenders	 	Assigned	 	 	 	 
	 

	 	$	 	$	 	%
	 

	 	$	 	$	 	%
	 

	 	$	 	$	 	%





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



The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire
in which the Assignee designates one or more Credit Contacts to whom all syndicate-level
information (which may contain material non-public information about the Borrower, the Loan Parties
and their Related Parties or their respective securities) will be made available and who may
receive such information in accordance with the Assignee’s compliance procedures and applicable
laws, including Federal and state securities laws.



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




	 	 	 	 	 
	 	 	ASSIGNOR
	 
	 	 	 	 
	 	 	[NAME OF ASSIGNOR]
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	ASSIGNEE
	 
	 	 	 	 
	 	 	[NAME OF ASSIGNEE]
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Title:









Exhibit A









 









 







[Consented to and] Accepted:




[NAME OF ADMINISTRATIVE AGENT],

as Administrative Agent




	 	 	 	 	 
	By

	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 






[Consented to:]




[NAME OF RELEVANT PARTY]




	 	 	 	 	 
	By

	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 




Exhibit A












 









 






ANNEX
1



[                    ]2




STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION




     1. Representations and Warranties.



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



     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered
pursuant to Section ___ thereof, as
applicable, and such other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision independently and
without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender3, attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the
Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be performed by it as a
Lender.



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



     3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument.





 




			
	2	 	Describe Credit Agreement at option of
Administrative Agent.
	 
	3	 	The concept of  “Foreign Lender”
should be conformed to the section in the Credit Agreement governing
withholding taxes and gross-up.



Exhibit A











 









 





Delivery of an executed counterpart of a signature page of this Assignment and Assumption by
facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and
Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with,
the law of the State of Texas.



Exhibit A











 









 









EXHIBIT B




OPINION OF COUNSEL FOR THE BORROWER




[See attached Pages]



Exhibit B










 









 







EXHIBIT
C





BORROWING BASE CERTIFICATE


BORROWING BASE REPORT 


	 	 	 	 			 
	 
		
	 

	 	 	 			Rpt #
	Obligor Number:

	 	 	 			Date:
	Loan Number:

	 	 	 			Period Covered:                    
to                    






	 	 	 	 	 	 	 
	                COLLATERAL CATEGORY	 	A/R	 	   TOTAL
	Description
	 	 	 	 	 	 
	1 Beginning Balance (Previous 

report-Line 8)
	 	 	 	 	 	 
	2 Additions to Accounts
Receivables (Gross Sales or
Purchases)
	 	 	 	 	 	 
	3 Other Additions (Add back any 

non A/R cash in line 3
	 	 	 	 	 	 
	4 Deductions to Accounts
Receivables (Cash Received)
	 	 	 	 	 	 
	5 Deductions to Accounts
Receivables (Discounts, other)
	 	 	 	 	 	 
	6 Deductions to Accounts
Receivables (Credit Memos, all)
	 	 	 	 	 	 
	7 Other non cash credits to A/R
	 	 	 	 	 	 
	8 Total Ending Accounts 

Receivables Balance
	 	 	 	 	 	 
	9 Less Ineligible-Past Due
	 	 	 	 	 	 
	10 Less Ineligible-Cross age

(20%)
	 	 	 	 	 	 
	11 Less Ineligible-Foreign
	 	 	 	 	 	 
	12 Less Ineligible-Contra
	 	 	 	 	 	 
	13 Less Ineligible-Other

(attached schedule)
	 	 	 	 	 	 
	14 Total Ineligibles-Accounts 

Receivable
	 	 	 	 	 	 
	15 Reserved.
	 	 	 	 	 	 
	16 Reserved.
	 	 	 	 	 	 
	17 Reserved.
	 	 	 	 	 	 
	18 Reserved.
	 	 	 	 	 	 
	19 Reserved.
	 	 	 	 	 	 
	20 Reserved
	 	 	 	 	 	 
	21 Total Eligible Collateral
	 	 	 	 	 	 
	22 Advance Rate Percentage

	 	 	85	%	 	 
	23 Net Available-Borrowing Base 

Value
	 	 	 	 	 	 
	24 Reserves (Sum of A and B below)
	 	 	 	 	 	 
	      A) Contractor Reserves
	 	 	 	 	 	 





Exhibit C







 









 








	 	 	 	 	 
	      B) Other Reserves
	 	 	 	 
	25 Total Borrowing Base Value
	 	 	 	 
	26 CAPS/Loan Limits

	 	 	 	Total CAPS/Loan Line
	27 Maximum Borrowing Limit
(Lesser of 25. or 26.)*
LOAN STATUS

	 	 	 	Total Available
	28 Previous Loan Balance

(Previous Report Line 31)
	 	 	 	 
	29 Less: A. Net Collections (Same
as line 4)

               B. Adjustments/Other
	 	 	 	 
	30 Add: A. Request for Funds

               B. Adjustments/Other
	 	 	 	 
	31 New Loan Balance
	 	 	 	 
	32 Letter of Credit/BA’s
outstanding
	 	 	 	 
	33 Availability Not Borrowed

(Lines 27 less 31 & 32)
	 	 	 	 
	34 [Reserved]

	 	 	 	Total New Loan Balance:
	35 OVERALL EXPOSURE (lines 31 & 34)
	 	 	 	 





Pursuant to, and in accordance with, the terms and provisions of that certain Credit
Agreement (“Agreement”), among JPMorgan Chase Bank, N.A., as administrative agent for the
Lenders, the Loan Parties and Superior Offshore International, L.L.C. (“Borrower”),
Borrower is executing and delivering to Administrative Agent this Collateral Report
accompanied by supporting data (collectively referred to as the “Report”). Borrower
represents and warrants to Administrative Agent that this Report is true and correct, and
is based on information contained in Borrower’s own financial accounting records.
Borrower, by the execution of this Report, hereby ratifies, confirms and affirms all of the
terms, conditions and provisions of the Agreement, and further certifies on this                     
day of                     ,
20                    , that the Borrower is in compliance with said Agreement.




	 	 	 
	BORROWER NAME:

	 	AUTHORIZED SIGNATURE:





Exhibit B











 









 








EXHIBIT D




COMPLIANCE CERTIFICATE




To: The Lenders parties to the Credit Agreement Described Below




     This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of
February 27, 2007 (as amended, modified, renewed or extended from time to time, the
“Agreement”) among Superior Offshore International, L.L.C. (the “Borrower”), the
other Loan Parties, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative
Agent for the Lenders and as the Issuing Bank. Unless otherwise defined herein, capitalized terms
used in this Compliance Certificate have the meanings ascribed thereto in the Agreement.



     THE UNDERSIGNED HEREBY CERTIFIES THAT:



     1. I am the duly elected                      of
the Borrower;



     2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under
my supervision, a detailed review of the transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by the attached financial statements [for
quarterly or monthly financial statements add: and such financial statements present fairly in all
material respects the financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes];



     3. The examinations described in paragraph 2 did not disclose, except as set forth below, and
I have no knowledge of (i) the existence of any condition or event which constitutes a Default
during or at the end of the accounting period covered by the attached financial statements or as of
the date of this Certificate or (ii) any change in GAAP or in the application thereof that has
occurred since the date of the audited financial statements referred to in Section 3.04 of the
Agreement;



     4. I hereby certify that no Loan Party has changed (i) its name, (ii) its chief executive
office, (iii) the type of entity it is or (iv) its state of incorporation or organization without
having given the Agent the notice required by Section 4.15 of the Security Agreement;



     5. Schedule I attached hereto sets forth financial data and computations evidencing
the Borrower’s compliance with certain covenants of the Agreement, all of which data and
computations are true, complete and correct; and



     6. Schedule II attached hereto sets forth the various reports and deliveries which are
required at this time under the Credit Agreement and the other Loan Documents and the status of
compliance.



     7. Exhibit A attached hereto sets forth the calculation of Average 30-Day
Availability.



     8. The basis for the determination of the Applicable Margin shall be (check one):



                     Average 30-Day Availability

                     Fixed Charge Coverage Ratio.




     Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the (i)
nature of the condition or event, the period during which it has existed and the action which the
Borrower has taken, is taking, or proposes to take with respect to each such condition or event or
(i) the change in GAAP or the application thereof and the effect of such change on the attached
financial statements:


Exhibit D










 










 





      




      




      




     The foregoing certifications, together with the computations set forth in Schedule I
and Schedule II hereto and the financial statements delivered with this Certificate in
support hereof, are made and delivered this                     day of
                                        
,           
          .



	 	 	 	 	 	 	 
	 	 	SUPERIOR OFFSHORE INTERNATIONAL, L.L.C.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 




Exhibit D











 









 





SCHEDULE I







SCHEDULE I




Compliance as of                     ,
                    with

Provisions of                      and
                     of

the Agreement




6.16 CAPITAL EXPENDITURES




	 	 	 	 	 
	(A)

	 	The actual Capital Expenditures for the Fiscal Year total:
	 	$                     
	(B)

	 	Minus Capital Expenditures made with Net Proceeds of
Asset Sales or Recovery Events:
	 	$                     
	(C)

	 	 Minus Capital Expenditures attributable to the Superior
Achiever or related equipment and made with proceeds of the
term loan
	 	$                     
	(D)

	 	Applicable Capital Expenditures for
the Fiscal Year (A) – (B) – (C):
	 	$                     
	(E)

	 	The amount of Capital Expenditures are not permitted to
exceed the sum of:
	 	$                     






*As set forth in Section 6.16 of the Credit Agreement.




6.17 FIXED CHARGE COVERAGE RATIO




	 	 	 
	The actual Fixed Charge Coverage Ratio for the period of four Fiscal
Quarters most recently ended
(the “Reported Period”) is:

	 	                     to 1.0
	 
	 	 
	the Fixed Charge Coverage Ratio is required to be not less than:

	 	1.2 to 1.0






*As set forth in Section 6.17 of the Credit Agreement.




The Fixed Charge coverage Ratio of the Reported Period has been calculated as follows:




	 	 	 	 	 
	(A)

	 	EBITDA for the Reported Period:	 	 
	 

	 	(See below for calculation of EBITDA)
	 	$                    
	 
	 	 	 	 
	 

	 	       minus	 	 
	 
	 	 	 	 
	(B)

	 	the unfinanced portion of Capital Expenditures:
	 	$                    
	 
	 	 	 	 
	 

	 	       divided by	 	 
	 
	 	 	 	 
	(C)

	 	Fixed Charges for the Reported Period:
	 	$                    






Exhibit D









 









 








CALCULATION OF FIXED CHARGES



For purposes of this Compliance Certificate, consolidated Fixed Charges for the Reported Period
has been calculated as follows and are all calculated for the Borrower and its Subsidiaries on a
consolidated basis::




	 	 	 	 	 
	 

	 	(a) cash Interest Expense during such period:
	 	$                     
	 
	 	 	 	 
	 

	 	plus	 	 
	 
	 	 	 	 
	 

	 	(b) scheduled principal payments	 	 
	 

	 	on Indebtedness made during such period:
	 	$                     
	 
	 	 	 	 
	 

	 	 plus	 	 
	 
	 	 	 	 
	 

	 	(c) expense for taxes paid in cash during such period:
	 	$                     
	 
	 	 	 	 
	 

	 	 plus	 	 
	 
	 	 	 	 
	 

	 	(d) dividends and distributions paid in cash	 	 
	 

	 	during such period, other than any Restricted
payment made to a loan Party or made pursuant
to Section 6.08(c) or (d):

	 	$                     
	 
	 	 	 	 
	 

	 	 plus	 	 
	 
	 	 	 	 
	 

	 	(e) Capital Lease Obligation payments made	 	 
	 

	 	during such period:

	 	$                     
	 
	 	 	 	 
	 

	 	 plus	 	 
	 
	 	 	 	 
	 

	 	(f) cash contributions to any Plan:
	 	$                     
	 
	 	 	 	 
	TOTAL FIXED CHARGES:	 	 $                     








Exhibit D







 









 








CALCULATION OF EBITDA



For purposes of this Compliance Certificate, EBITDA for the Reported period has been calculated as
follows:




	 	 	 	 
	I. Net Income for the Reported Period:
	 	$	                      
	       plus
	 	 	 
	II. for the Reported Period, the sum of:
	 	 	 






	 	 	 	 	 	 	 
	 
	 	a)	 	income tax expense:	 	$                    
	 
	 
	 	b)	 	interest expense, amortization or
write-off of debt discount and debt issuance costs and commissions,
discounts and other fee and charges associated with Indebtedness (including the Loans):	 	$                    _
	 
	 
	 	c)	 	depreciation and amortization expense:	 	$                    _
	 
	 	 	 	 	 	 
	 
	 	d)	 	amortization of intangibles
(including, but not limited to, goodwill) and organization costs:	 	$                    _
	 
	 	 	 	 	 	 
	 
	 	e)	 	any extraordinary non-cash expenses
or losses (including, whether or not otherwise included as a separate
item in the statement of such Net Income for such period, non-cash
losses on sales of assets outside of the ordinary course of business):	 	$                    _
	 
	 	minus	 	 	 	 
	 
	 	a)	 	to the extent included in the
statement of such Net Income for such period the sum of:	 	 
	 
	 
	 	    i.	 	interest income:	 	$                    
	 
	 	 	 	 	 	 
	 
	 	   ii.	 	any extraordinary or non-recurring
non-cash income or gains (including, whether or not otherwise
included as a separate item in the statement of such Net Income for
such period, gains on the sales of assets outside of the ordinary course of business):	 	$                    
	 
	 	 	 	 	 	 
	 
	 	   iii.	 	income tax credits (to the extent
not netted from income tax expense):	 	$                    
	 
	 	 	 	 	 	 
	 
	 	    iv.	 	any other non-cash income, and	 	$                    
	 
	 	 	 	 	 	 
	 
	 	b)	 	any cash payments made during such
period in respect of items described in clause (e) above subsequent
to the fiscal quarter in which the relevant non-cash expenses or
losses were reflected as a charge in the statement of Net Income:	 	$                    






			
	TOTAL EBITDA:
	 	$                      







Exhibit D









 









 








SCHEDULE II




SCHEDULE II




Reports and Deliveries Currently Due


Exhibit D











 









 









Exhibit A to Compliance Certificate

Superior Offshore International, L.L.C.

Average 30-Day Availability Calculation

As of              
             
             
 ,             
       ,        
     
        




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Total Credit Line	 	 
	No. of Days	 	Date	 	Day of Week	 	Borrowing Base	 	Borrowing	 	Borrowing Base Capacity
	1
	 	 	 	 	 	 	 	 	 	 
	2
	 	 	 	 	 	 	 	 	 	 
	3
	 	 	 	 	 	 	 	 	 	 
	4
	 	 	 	 	 	 	 	 	 	 
	5
	 	 	 	 	 	 	 	 	 	 
	6
	 	 	 	 	 	 	 	 	 	 
	7
	 	 	 	 	 	 	 	 	 	 
	8
	 	 	 	 	 	 	 	 	 	 
	9
	 	 	 	 	 	 	 	 	 	 
	10
	 	 	 	 	 	 	 	 	 	 
	11
	 	 	 	 	 	 	 	 	 	 
	12
	 	 	 	 	 	 	 	 	 	 
	13
	 	 	 	 	 	 	 	 	 	 
	14
	 	 	 	 	 	 	 	 	 	 
	15
	 	 	 	 	 	 	 	 	 	 
	16
	 	 	 	 	 	 	 	 	 	 
	17
	 	 	 	 	 	 	 	 	 	 
	18
	 	 	 	 	 	 	 	 	 	 
	19
	 	 	 	 	 	 	 	 	 	 
	20
	 	 	 	 	 	 	 	 	 	 
	21
	 	 	 	 	 	 	 	 	 	 
	22
	 	 	 	 	 	 	 	 	 	 
	23
	 	 	 	 	 	 	 	 	 	 
	24
	 	 	 	 	 	 	 	 	 	 
	25
	 	 	 	 	 	 	 	 	 	 
	26
	 	 	 	 	 	 	 	 	 	 
	27
	 	 	 	 	 	 	 	 	 	 
	28
	 	 	 	 	 	 	 	 	 	 
	29
	 	 	 	 	 	 	 	 	 	 
	30
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Total	$	—
	 
	 	 	 	 	 	 	 	Average Availability	$	—
	 
	 	 	 	 	 	 	 	 	 





Exhibit D











 









 








JOINDER AGREEMENT




     THIS JOINDER AGREEMENT (this “Agreement”), dated as of                                         ,              
       , 200_, is
entered into between                                                             , a               
                          (the “New
Subsidiary”) and JPMORGAN CHASE BANK, N.A., in its capacity as administrative agent (the
“Administrative Agent”) under that certain Credit Agreement, dated as of February, ___, 2007
among Superior Offshore International, L.L.C. (the “Borrower”), the Loan Parties party
thereto, the Lenders party thereto and the Administrative Agent (as the same may be amended,
modified, extended or restated from time to time, the “Credit Agreement”). All capitalized
terms used herein and not otherwise defined shall have the meanings set forth in the Credit
Agreement.



     The New Subsidiary and the Administrative Agent, for the benefit of the Lenders, hereby agree
as follows:



     1. The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this
Agreement, the New Subsidiary will be deemed to be a Loan Party under the Credit Agreement and a
“Loan Guarantor” for all purposes of the Credit Agreement and shall have all of the obligations of
a Loan Party and a Loan Guarantor thereunder as if it had executed the Credit Agreement. The New
Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Credit Agreement, including without limitation (a) all
of the representations and warranties of the Loan Parties set forth in Article III of the Credit
Agreement, *[and]* (b) all of the covenants set forth in Articles V and VI of the Credit Agreement
*[and (c) all of the guaranty obligations set forth in Article X of the Credit Agreement. Without
limiting the generality of the foregoing terms of this paragraph 1, the New Subsidiary, subject to
the limitations set forth in Section 10.10 of the Credit Agreement, hereby guarantees, jointly and
severally with the other Loan Guarantors, to the Administrative Agent and the Lenders, as provided
in Article X of the Credit Agreement, the prompt payment and performance of the Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration or otherwise) strictly in accordance with the terms thereof and agrees that if any of
the Guaranteed Obligations are not paid or performed in full when due (whether at stated maturity,
as a mandatory prepayment, by acceleration or otherwise), the New Subsidiary will, jointly and
severally together with the other Loan Guarantors, promptly pay and perform the same, without any
demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of
any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.]* *[The New Subsidiary has delivered to the Administrative
Agent an executed Loan Guaranty.]*



     2. If required, the New Subsidiary is, simultaneously with the execution of this Agreement,
executing and delivering such Collateral Documents (and such other documents and instruments) as
requested by the Administrative Agent in accordance with the Credit Agreement.



     3. The address of the New Subsidiary for purposes of Section 9.01 of the Credit Agreement is
as follows:


                                        



                                        



                                        




     4. The New Subsidiary hereby waives acceptance by the Administrative Agent and the Lenders of
the guaranty by the New Subsidiary upon the execution of this Agreement by the New Subsidiary.



Exhibit E




 









 





     5. This Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which shall constitute one and the same
instrument.



     6. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.



     IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly executed by its
authorized officer, and the Administrative Agent, for the benefit of the Lenders, has caused the
same to be accepted by its authorized officer, as of the day and year first above written.



	 	 	 	 	 
	 	 	[NEW SUBSIDIARY]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:
	 	 
	 

	 	 	 	 





	 	 	 	 	 
	 	 	Acknowledged and accepted:
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., as Administrative
Agent
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





Exhibit E