exv10w1



 





Exhibit 10.1




AMENDED AND RESTATED

CREDIT AGREEMENT




DATED AS OF DECEMBER 29, 2006




AMONG




NEWPARK RESOURCES, INC., A DELAWARE CORPORATION,

BATSON MILL, L.P., A TEXAS LIMITED PARTNERSHIP,

DURA-BASE NEVADA, INC., A NEVADA CORPORATION,

EXCALIBAR MINERALS INC., A TEXAS CORPORATION,

EXCALIBAR MINERALS OF LA., L.L.C.,

A LOUISIANA LIMITED LIABILITY COMPANY,

NES PERMIAN BASIN, L.P., A TEXAS LIMITED PARTNERSHIP,

NEWPARK ENVIRONMENTAL SERVICES, L.L.C.,

A LOUISIANA LIMITED LIABILITY COMPANY,

NEWPARK ENVIRONMENTAL MANAGEMENT COMPANY,

L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

NEWPARK ENVIRONMENTAL SERVICES OF TEXAS, L.P.,

A TEXAS LIMITED PARTNERSHIP,

NEWPARK HOLDINGS, INC., A LOUISIANA CORPORATION,

NEWPARK TEXAS, L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

NID, L.P., A TEXAS LIMITED PARTNERSHIP,

NEWPARK DRILLING FLUIDS LABORATORY, INC., A TEXAS CORPORATION,

SOLOCO, L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

SOLOCO TEXAS, L.P., A TEXAS LIMITED PARTNERSHIP,

SUPREME CONTRACTORS, L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

COMPOSITE MAT SOLUTIONS L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

NEWPARK ENVIRONMENTAL WATER SOLUTIONS LLC, A DELAWARE LIMITED LIABILITY

COMPANY, THE LOMA COMPANY L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY, AND

NEWPARK DRILLING FLUIDS, LP, A TEXAS LIMITED PARTNERSHIP




AS BORROWERS,




THE LOAN PARTIES PARTY HERETO,




THE LENDERS PARTY HERETO FROM TIME TO TIME,




JPMORGAN CHASE BANK, N.A.

(Successor by Merger to Bank One, NA (Main Office Chicago))




AS AGENT AND LC ISSUER,




BANK OF AMERICA, N.A.,




AS SYNDICATION AGENT




AND




THE OTHER FINANCING INSTITUTIONS PARTY THERETO FROM TIME TO TIME




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II THE FACILITY	 	 	25	 
	 
	 	 	 	 	 	 
	2.1.
	 	The Facility	 	 	25	 
	 
	 	2.1.1.     Revolving Loans	 	 	25	 
	 
	 	2.1.2.     Facility LCs	 	 	27	 
	 
	 	2.1.3.     Non-Ratable Loans	 	 	31	 
	 
	 	2.1.4.     Protective Advances and Overadvances	 	 	31	 
	 
	 	2.1.5.     [Intentionally Omitted.]	 	 	32	 
	 
	 	2.1.6.     [Intentionally Omitted.]	 	 	32	 
	 
	 	2.1.7.     Reallocation of Loans and Commitments	 	 	32	 
	2.2.
	 	Ratable Loans; Risk Participation	 	 	33	 
	2.3.
	 	Payment of the Obligations	 	 	33	 
	2.4.
	 	Minimum Amount of Each Advance	 	 	33	 
	2.5.
	 	Funding Account	 	 	33	 
	2.6.
	 	Reliance Upon Authority; No Liability	 	 	34	 
	2.7.
	 	Conversion and Continuation of Outstanding Advances	 	 	34	 
	2.8.
	 	Telephonic Notices	 	 	34	 
	2.9.
	 	Notification of Advances, Interest Rates and Repayments	 	 	34	 
	2.10.
	 	Fees	 	 	35	 
	2.11.
	 	Interest Rates	 	 	35	 
	2.12.
	 	Eurodollar Advances Post Default; Default Rates	 	 	35	 
	2.13.
	 	Interest Payment Dates; Interest and Fee Basis	 	 	36	 
	2.14.
	 	Voluntary Prepayments	 	 	36	 
	2.15.
	 	Mandatory Prepayments	 	 	36	 
	2.16.
	 	Termination of the Facility	 	 	38	 
	2.17.
	 	Method of Payment	 	 	38	 
	2.18.
	 	Apportionment, Application, and Reversal of Payments	 	 	39	 
	2.19.
	 	Settlement	 	 	40	 
	2.20.
	 	Indemnity for Returned Payments	 	 	40	 
	2.21.
	 	Noteless Agreement; Evidence of Indebtedness	 	 	40	 
	2.22.
	 	Lending Installations	 	 	41	 
	2.23.
	 	Non-Receipt of Funds by the Agent; Defaulting Lenders	 	 	41	 
	2.24.
	 	Limitation of Interest	 	 	42	 
	 
	 	 	 	 	 	 
	ARTICLE III YIELD PROTECTION; TAXES	 	 	43	 
	 
	 	 	 	 	 	 
	3.1.
	 	Yield Protection	 	 	43	 
	3.2.
	 	Changes in Capital Adequacy Regulations	 	 	44	 
	3.3.
	 	Availability of Types of Advances	 	 	44	 
	3.4.
	 	Funding Indemnification	 	 	45	 
	3.5.
	 	Taxes	 	 	45	 
	3.6.
	 	Lender Statements; Survival of Indemnity	 	 	46	 
	 
	 	 	 	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT	 	 	47	 






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	4.1.
	 	Effectiveness	 	 	47	 
	4.2.
	 	Each Credit Extension	 	 	50	 
	 
	 	 	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES	 	 	51	 
	 
	 	 	 	 	 	 
	5.1.
	 	Existence and Standing	 	 	51	 
	5.2.
	 	Authorization and Validity	 	 	51	 
	5.3.
	 	No Conflict; Government Consent	 	 	51	 
	5.4.
	 	Security Interest in Collateral	 	 	51	 
	5.5.
	 	Financial Statements	 	 	52	 
	5.6.
	 	Material Adverse Change	 	 	52	 
	5.7.
	 	Taxes	 	 	52	 
	5.8.
	 	Litigation and Contingent Obligations	 	 	52	 
	5.9.
	 	Capitalization and Subsidiaries	 	 	53	 
	5.10.
	 	ERISA	 	 	53	 
	5.11.
	 	Accuracy of Information	 	 	53	 
	5.12.
	 	Names; Prior Transactions	 	 	53	 
	5.13.
	 	Regulation U	 	 	53	 
	5.14.
	 	Material Agreements	 	 	53	 
	5.15.
	 	Compliance With Laws	 	 	54	 
	5.16.
	 	Ownership of Properties	 	 	54	 
	5.17.
	 	Plan Assets; Prohibited Transactions	 	 	54	 
	5.18.
	 	Environmental Matters	 	 	54	 
	5.19.
	 	Investment Company Act	 	 	54	 
	5.20.
	 	Public Utility Holding Company Act	 	 	54	 
	5.21.
	 	Bank Accounts	 	 	54	 
	5.22.
	 	Indebtedness	 	 	54	 
	5.23.
	 	Affiliate Transactions	 	 	54	 
	5.24.
	 	Real Property; Leases	 	 	55	 
	5.25.
	 	Intellectual Property Rights	 	 	55	 
	5.26.
	 	Insurance	 	 	55	 
	5.27.
	 	Solvency	 	 	55	 
	5.28.
	 	Intercreditor Agreement; Term Agreement	 	 	56	 
	5.29.
	 	Post-Retirement Benefits	 	 	56	 
	5.30.
	 	Common Enterprise	 	 	56	 
	5.31.
	 	Reportable Transaction	 	 	56	 
	5.32.
	 	Labor Disputes	 	 	56	 
	 
	 	 	 	 	 	 
	ARTICLE VI COVENANTS	 	 	56	 
	 
	 	 	 	 	 	 
	6.1.
	 	Financial and Collateral Reporting	 	 	56	 
	6.2.
	 	Use of Proceeds	 	 	60	 
	6.3.
	 	Notices	 	 	60	 
	6.4.
	 	Conduct of Business	 	 	61	 
	6.5.
	 	Taxes	 	 	62	 
	6.6.
	 	Payment of Indebtedness and Other Liabilities	 	 	62	 
	6.7.
	 	Insurance	 	 	62	 
	6.8.
	 	Compliance with Laws	 	 	64	 
	6.9.
	 	Maintenance of Properties and Intellectual Property Rights	 	 	64	 
	6.10.
	 	Inspection	 	 	64	 
	6.11.
	 	Appraisals; Additional Real Property Requirements	 	 	65	 





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	6.12.
	 	Communications with Accountants	 	 	65	 
	6.13.
	 	Collateral Access Agreements and Real Estate Purchases	 	 	65	 
	6.14.
	 	Deposit Account Control Agreements	 	 	66	 
	6.15.
	 	Additional Collateral; Further Assurances	 	 	66	 
	6.16.
	 	Dividends	 	 	67	 
	6.17.
	 	Indebtedness	 	 	67	 
	6.18.
	 	Capital Structure	 	 	69	 
	6.19.
	 	Preservation of Existence; Merger; Survival of Liability	 	 	69	 
	6.20.
	 	Sale of Assets	 	 	70	 
	6.21.
	 	Investments and Acquisitions	 	 	70	 
	6.22.
	 	Liens	 	 	72	 
	6.23.
	 	Change of Name or Location; Change of Fiscal Year	 	 	73	 
	6.24.
	 	Affiliate Transactions	 	 	73	 
	6.25.
	 	Amendments to Agreements	 	 	73	 
	6.26.
	 	Prepayment of Indebtedness; Subordinated Indebtedness	 	 	74	 
	6.27.
	 	Financial Contracts	 	 	75	 
	6.28.
	 	Intentionally Omitted	 	 	75	 
	6.29.
	 	Financial Covenants	 	 	75	 
	 
	 	6.29.1.     Fixed Charge Coverage Ratio	 	 	75	 
	 
	 	6.29.2.     Consolidated Leverage Ratio	 	 	75	 
	 
	 	6.29.3.     [Intentionally Omitted.]	 	 	75	 
	6.30.
	 	Depository Banks	 	 	75	 
	6.31.
	 	Real Property Purchases	 	 	75	 
	6.32.
	 	Sale of Accounts	 	 	76	 
	6.33.
	 	Canadian Subsidiaries Negative Pledge	 	 	76	 
	 
	 	 	 	 	 	 
	ARTICLE VII DEFAULTS	 	 	76	 
	 
	 	 	 	 	 	 
	ARTICLE VIII REMEDIES; WAIVERS AND AMENDMENTS	 	 	79	 
	 
	 	 	 	 	 	 
	8.1.
	 	Remedies	 	 	79	 
	8.2.
	 	Waivers by Loan Parties	 	 	80	 
	8.3.
	 	Amendments	 	 	80	 
	8.4.
	 	Preservation of Rights	 	 	81	 
	 
	 	 	 	 	 	 
	ARTICLE IX GENERAL PROVISIONS	 	 	82	 
	 
	 	 	 	 	 	 
	9.1.
	 	Survival of Representations	 	 	82	 
	9.2.
	 	Governmental Regulation	 	 	82	 
	9.3.
	 	Headings	 	 	82	 
	9.4.
	 	Entire Agreement	 	 	82	 
	9.5.
	 	Several Obligations; Benefits of this Agreement	 	 	82	 
	9.6.
	 	Expenses; Indemnification	 	 	82	 
	9.7.
	 	Numbers of Documents	 	 	84	 
	9.8.
	 	Accounting	 	 	84	 
	9.9.
	 	Severability of Provisions	 	 	84	 
	9.10.
	 	Nonliability of Lenders	 	 	84	 
	9.11.
	 	Confidentiality	 	 	85	 
	9.12.
	 	Nonreliance	 	 	85	 
	9.13.
	 	Disclosure	 	 	85	 
	9.14.
	 	Patriot Act Notice	 	 	85	 
	9.15.
	 	Amendment and Restatement	 	 	86	 





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	9.16.
	 	Prior Dissolutions	 	 	86	 
	 
	 	 	 	 	 	 
	ARTICLE X THE AGENT	 	 	86	 
	 
	 	 	 	 	 	 
	10.1.
	 	Appointment; Nature of Relationship	 	 	86	 
	10.2.
	 	Powers	 	 	87	 
	10.3.
	 	General Immunity	 	 	87	 
	10.4.
	 	No Responsibility for Credit
Extensions, Recitals, etc.	 	 	87	 
	10.5.
	 	Action on Instructions of the Lenders	 	 	87	 
	10.6.
	 	Employment of Agents and Counsel	 	 	87	 
	10.7.
	 	Reliance on Documents; Counsel	 	 	87	 
	10.8.
	 	Agent’s Reimbursement and Indemnification	 	 	88	 
	10.9.
	 	Notice of Default	 	 	88	 
	10.10.
	 	Rights as a Lender	 	 	88	 
	10.11.
	 	Lender Credit Decision	 	 	89	 
	10.12.
	 	Successor Agent	 	 	89	 
	10.13.
	 	Delegation to Affiliates	 	 	89	 
	10.14.
	 	Execution of Loan Documents	 	 	89	 
	10.15.
	 	Collateral Matters	 	 	90	 
	10.16.
	 	Co-Agents, Documentation Agent,
Syndication Agent, etc.	 	 	92	 
	 
	 	 	 	 	 	 
	ARTICLE XI SETOFF; RATABLE PAYMENTS	 	 	92	 
	 
	 	 	 	 	 	 
	11.1.
	 	Setoff	 	 	92	 
	11.2.
	 	Ratable Payments	 	 	92	 
	 
	 	 	 	 	 	 
	ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS	 	 	92	 
	 
	 	 	 	 	 	 
	12.1.
	 	Successors and Assigns	 	 	92	 
	12.2.
	 	Participations	 	 	93	 
	12.3.
	 	Assignments	 	 	94	 
	12.4.
	 	Dissemination of Information	 	 	95	 
	12.5.
	 	Tax Treatment	 	 	95	 
	12.6.
	 	Assignment by LC Issuer	 	 	95	 
	 
	 	 	 	 	 	 
	ARTICLE XIII NOTICES	 	 	96	 
	 
	 	 	 	 	 	 
	13.1.
	 	Notices; Effectiveness; Electronic Communications	 	 	96	 
	13.2.
	 	Change of Address, Etc.	 	 	97	 
	 
	 	 	 	 	 	 
	ARTICLE XIV COUNTERPARTS	 	 	97	 
	 
	 	 	 	 	 	 
	ARTICLE XV GUARANTY	 	 	97	 
	 
	 	 	 	 	 	 
	15.1.
	 	Guaranty	 	 	97	 
	15.2.
	 	Guaranty of Payment	 	 	97	 
	15.3.
	 	No Discharge or Diminishment of Guaranty	 	 	97	 
	15.4.
	 	Defenses Waived	 	 	99	 
	15.5.
	 	Rights of Subrogation	 	 	99	 
	15.6.
	 	Reinstatement; Stay of Acceleration	 	 	99	 
	15.7.
	 	Information	 	 	99	 
	15.8.
	 	Termination	 	 	99	 
	15.9.
	 	Taxes	 	 	100	 
	15.10.
	 	Severability	 	 	100	 
	15.11.
	 	Contribution	 	 	100	 






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	15.12.
	 	Lending Installations	 	 	101	 
	15.13.
	 	Liability Cumulative	 	 	101	 
	 
	 	 	 	 	 	 
	ARTICLE XVI CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL	 	 	101	 
	 
	 	 	 	 	 	 
	16.1.
	 	CHOICE OF LAW	 	 	101	 
	16.2.
	 	CONSENT TO JURISDICTION	 	 	101	 
	16.3.
	 	WAIVER OF JURY TRIAL	 	 	102	 
	 
	 	 	 	 	 	 
	ARTICLE XVII THE BORROWER REPRESENTATIVE	 	 	102	 
	 
	 	 	 	 	 	 
	17.1.
	 	Appointment; Nature of Relationship	 	 	102	 
	17.2.
	 	Powers	 	 	102	 
	17.3.
	 	Employment of Agents	 	 	102	 
	17.4.
	 	Notices	 	 	102	 
	17.5.
	 	Successor Borrower Representative	 	 	102	 
	17.6.
	 	Execution of Loan Documents; Aggregate Borrowing Base Certificate	 	 	102	 
	17.7.
	 	Reporting	 	 	103	 
	 
	 	 	 	 	 	 




COMMITMENT SCHEDULE



PRICING SCHEDULE



EXHIBIT A BORROWING NOTICE



EXHIBIT B CONVERSION/CONTINUATION NOTICE



EXHIBIT C REVOLVING NOTE



EXHIBIT D FORM OF ASSUMPTION OF OBLIGATIONS



EXHIBIT E COMPLIANCE CERTIFICATE



EXHIBIT F JOINDER AGREEMENT



EXHIBIT G ASSIGNMENT AND ASSUMPTION AGREEMENT



EXHIBIT H BORROWING BASE CERTIFICATE



EXHIBIT I AGGREGATE BORROWING BASE CERTIFICATE



EXHIBIT J SUMMARY OF TRANSACTIONS



EXHIBIT K COMMITMENT INCREASE CERTIFICATE



SCHEDULE 5.8 LITIGATION AND CONTINGENT OBLIGATIONS



SCHEDULE 5.9 CAPITALIZATION AND SUBSIDIARIES



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SCHEDULE 5.12 NAMES; PRIOR TRANSACTIONS



SCHEDULE 5.14 MATERIAL AGREEMENTS



SCHEDULE 5.16 OWNERSHIP OF PROPERTIES



SCHEDULE 5.22 INDEBTEDNESS



SCHEDULE 5.23 AFFILIATE TRANSACTIONS



SCHEDULE 5.24 REAL PROPERTY; LEASES



SCHEDULE 5.25 INTELLECTUAL PROPERTY RIGHTS



SCHEDULE 5.26 INSURANCE



SCHEDULE 5.32 LABOR MATTERS



SCHEDULE 6.7 INSURANCE EXCEPTIONS



SCHEDULE 6.21 OTHER INVESTMENTS



SCHEDULE 6.22 LIENS




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AMENDED AND RESTATED

CREDIT AGREEMENT




     This Amended and Restated Credit Agreement, dated as of December 29, 2006, is among Newpark
Resources, Inc., a Delaware corporation, as the Company and as a Borrower, Batson Mill, L.P., a
Texas limited partnership, Dura-Base Nevada, Inc., a Nevada corporation, Excalibar Minerals Inc., a
Texas corporation, Excalibar Minerals of LA., L.L.C., a Louisiana limited liability company, NES
Permian Basin, L.P., a Texas limited partnership, Newpark Environmental Services, L.L.C., a
Louisiana limited liability company, Newpark Environmental Management Company, L.L.C., a Louisiana
limited liability company, Newpark Environmental Services of Texas, L.P., a Texas limited
partnership, Newpark Holdings, Inc., a Louisiana corporation, Newpark Texas, L.L.C., a Louisiana
limited liability company, NID, L.P., a Texas limited partnership, Newpark Drilling Fluids
Laboratory, Inc., a Texas corporation, SOLOCO, L.L.C., a Louisiana limited liability company,
SOLOCO Texas, L.P., a Texas limited partnership, Supreme Contractors, L.L.C., a Louisiana limited
liability company, Composite Mat Solutions L.L.C., a Louisiana limited liability company, Newpark
Environmental Water Solutions LLC, a Delaware limited liability company, The Loma Company, L.L.C.,
a Louisiana limited liability company, and Newpark Drilling Fluids, LP, a Texas limited
partnership, each as a Borrower, the other Loan Parties, the Lenders, and JPMorgan Chase Bank, N.A.
(successor by merger to Bank One, N.A. (Main Office Chicago)), as an LC Issuer and as the Agent.



RECITALS




     WHEREAS, previous hereto, the Company, certain lenders, certain guarantors, and, JPMorgan
Chase Bank, N.A. (successor by merger to Bank One, N.A. (Main Office Chicago)), as agent entered
into the Original Loan Agreement (as defined herein), which Original Loan Agreement has since been
amended, restated, modified, extended, renewed and restructured from time to time, through and
including the Amended Loan Agreement (as defined herein);



     WHEREAS, the Borrowers have now requested that the lenders further amend, restate, modify,
extend, increase, renew and restructure the loans made pursuant to the Amended Loan Agreement, to
permit certain corporate restructuring of the Loan Parties, to admit additional Persons as
borrowers, guarantors, and lenders, as the case may be, and make available to the Borrowers loans
and other extensions of credit, on the terms and conditions set forth herein in an aggregate
original principal amount not to exceed $100,000,000, as may be increased in accordance with the
terms hereof, which extensions of credit will be used by the Borrowers for the purposes set forth
in Section 6.2;



     WHEREAS, the Borrowers and the other Loan Parties have agreed to secure all of their
obligations under the Loan Documents by granting to the Agent, on behalf of the Lenders, a security
interest in and lien upon (and continuing the grant of such security interest in and lien upon) the
Collateral as set forth in the Collateral Documents; and



     WHEREAS, the Guarantors have agreed to guarantee all of the Obligations (and ratify and affirm
such guarantee previously made) of the Borrowers under the Loan Documents to the Agent and the
Lenders as set forth in the Guaranty;



     NOW, THEREFORE, in consideration of these premises and the terms and conditions set forth in
this Agreement, and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto do hereby amend and completely restate the Amended Loan Agreement,
effective as of the Closing Date as defined below, and do hereby agree as follows:



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ARTICLE I




DEFINITIONS




     As used in this Agreement:



     “Account” shall have the meaning given to such term in the Security Agreement.



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



     “Acquisition” means any transaction, or any series of related transactions,
consummated on or after the Closing Date, by which any Loan Party (a) acquires any going business
or all or substantially all of the assets of any Person, whether through purchase of assets, merger
or otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of votes) of the Capital
Stock of a Person which has ordinary voting power for the election of directors or other similar
management personnel of a Person (other than Capital Stock having such power only by reason of the
happening of a contingency) or a majority of the outstanding Capital Stock of a Person.



     “Adjusted Excess Cash Flow” means, for the relevant period of determination, the
amount of Consolidated EBITDA in excess of the amount of Consolidated EBITDA required for the
Company’s Fixed Charge Coverage Ratio to equal 1.5 to 1.0 for such period.



     “Advance” means a borrowing hereunder, (a) made by some or all of the Lenders on the
same Borrowing Date, or (b) converted or continued by the Lenders on the same date of conversion or
continuation, consisting, in either case, of the aggregate amount of the several Loans of the same
Type and, in the case of Eurodollar Loans, for the same Interest Period. The term Advance shall
include Non-Ratable Loans, Overadvances and Protective Advances unless otherwise expressly
provided.



     “Affiliate” of any Person means any other Person directly or indirectly controlling,
controlled by or under common control with such Person. A Person shall be deemed to control
another Person if the controlling Person owns 10% or more of any class of the voting Capital Stock
of the controlled Person or possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person, whether through ownership of
Capital Stock, by contract or otherwise.



     “Agent” means JPMorgan Chase in its capacity as contractual representative of the
Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article X.



     “Aggregate Borrowing Base” means the aggregate of the Borrowing Bases of all of the
Borrowers.



     “Aggregate Borrowing Base Certificate” means a certificate signed by an Authorized
Officer of the Borrower Representative in the form of Exhibit I or another form which is
acceptable to the Agent in its sole discretion.



     “Aggregate Commitment” means the aggregate of the Commitments of all the Lenders, as
reduced or increased from time to time pursuant to the terms hereof, which Aggregate Commitment
shall initially be in the amount of $100,000,000.



2









 





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



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



     “Agreement” means this Amended and Restated Credit Agreement, dated as of December 29,
2006, as it may be amended, restated or modified and in effect from time to time.



     “Alternate Base Rate” means, for any day, a rate of interest per annum equal to the
higher of (a) the Prime Rate for such day and (b) the sum of (i) the Federal Funds Effective Rate
for such day plus (ii) 1/2% per annum.



     “Amended Agreement Lenders” has the meaning specified in Section 2.1.7.



     “Amended Loan Agreement” has the meaning specified in Section 9.15.



     “Applicable LC Fee Rate” means, at any time, the percentage rate per annum at which
fees accrue on the average daily undrawn stated amount under each Facility LC.



     “Applicable Unused Commitment Fee Rate” means, at any time, the percentage rate per
annum at which fees accrue on Available Revolving Commitment at such time as set forth in the
Pricing Schedule.



     “Applicable Margin” means, with respect to Advances of any Type at any time, the
percentage rate per annum which is applicable at such time with respect to Advances of such Type as
set forth in the Pricing Schedule.



     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.



     “Arranger” means Banc One Capital Markets, Inc., a Delaware corporation, and its
successors, in its capacity as “Lead Arranger” and “Sole Book Runner” under the Amended Credit
Agreement.



     “Article” means an article of this Agreement unless another document is specifically
referenced.



     “Assignment Agreement” is defined in Section 12.3(a).



     “Authorized Officer” means any of James E. Braun, John R. Dardenne, Paul L. Howes or
Eric M. Wingerter.



     “Availability” means, with respect to all of the Borrowers, at any time, an amount
equal to the lesser of (a) the Revolving Commitment and (b) the Aggregate Borrowing Base, in each
case, minus the Aggregate Revolving Exposure.



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



     “Banking Services” means each and any of the following bank services provided to any
Loan Party by JPMorgan Chase 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).



3









 





     “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 Agent from time to time
establishes in its Permitted Discretion for Banking Services then provided or outstanding.



     “Bankruptcy Code” means Title 11 of the U.S. Code (11 U.S.C. § 101 et
seq.) as amended, reformed, or otherwise modified from time to time, and any rule or
regulation issued thereunder.



     “Borrower” or “Borrowers” means, individually or collectively, jointly and
severally, the Company, Batson Mill, L.P., a Texas limited partnership, Dura-base Nevada, Inc., a
Nevada corporation, Excalibar Minerals Inc., a Texas corporation, Excalibar Minerals of LA.,
L.L.C., a Louisiana limited liability company, NES Permian Basin, L.P., a Texas limited
partnership, Newpark Environmental Services, L.L.C., a Louisiana limited liability company, Newpark
Environmental Management Company, L.L.C., a Louisiana limited liability company, Newpark
Environmental Services of Texas, L.P., a Texas limited partnership, Newpark Holdings, Inc., a
Louisiana corporation, Newpark Texas, L.L.C., a Louisiana limited liability company, NID, L.P., a
Texas limited partnership, Newpark Drilling Fluids Laboratory, Inc., a Texas corporation, SOLOCO,
L.L.C., a Louisiana limited liability company, SOLOCO Texas, L.P., a Texas limited partnership,
Supreme Contractors, L.L.C., a Louisiana limited liability company, Composite Mat Solutions L.L.C.,
a Louisiana limited liability company, Newpark Environmental Water Solutions LLC, a Delaware
limited liability company, The Loma Company, L.L.C., a Louisiana limited liability company, and
Newpark Drilling Fluids, LP, a Texas limited partnership.



     “Borrower Representative” means the Company, in its capacity as contractual
representative of the Borrowers pursuant to Article XVII.



     “Borrowing Base” means, at any time, with respect to each Borrower, the sum of (a) 85%
of such Borrower’s Eligible Accounts at such time, plus (b) 70% of such Borrower’s Eligible
Unbilled Accounts, plus (c) the lesser of (i) 60% of such Borrower’s Eligible Inventory,
valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time
and (ii) 85% of the Net Orderly Liquidation Value of such Borrower’s Eligible Inventory,
minus (d) Reserves related to such Borrower. The Agent may, in its Permitted Discretion,
reduce the advance rates set forth above or reduce one or more of the other elements used in
computing the Borrowing Base.



     “Borrowing Base Certificate” means a certificate, signed by an Authorized Officer of a
Borrower, in the form of Exhibit H or another form which is acceptable to the Agent in its
sole discretion.



     “Borrowing Date” means a date on which an Advance or a Loan is made hereunder.



     “Borrowing Notice” is defined in Section 2.1.1(b).



     “Business Day” means (a) with respect to any borrowing, payment or rate selection of
Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in
Chicago and New York City for the conduct of substantially all of their commercial lending
activities, interbank wire transfers can be made on the Fedwire system and dealings in U.S. dollars
are carried on in the London interbank market and (b) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially
all of their commercial lending activities and interbank wire transfers can be made on the Fedwire
system.



4









 





     “Canadian Subsidiaries” is defined in Section 6.33.



     “Capital Expenditures” means, without duplication, any expenditure or commitment to
expend money for any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Company and its Subsidiaries prepared
in accordance with GAAP.



     “Capital Stock” means any and all corporate stock, units, shares, partnership
interests, membership interests, equity interests, rights, securities, or other equivalent
evidences of ownership (howsoever designated) issued by any Person and any and all warrants, rights
or options to purchase any of the foregoing.



     “Capitalized Lease” of a Person means any lease of Property by such Person as lessee
which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.



     “Capitalized Lease Obligations” of a Person means the aggregate amount of the
obligations of such Person under Capitalized Leases which would be shown as a liability on a
balance sheet of such Person prepared in accordance with GAAP.



     “Cash Equivalent Investments” means (a) short-term obligations of, or fully guaranteed
by, the U.S., (b) commercial paper rated A-1 or better by S&P or P-1 or better by Moody’s, (c)
demand deposit accounts maintained in the ordinary course of business with any domestic office of
any commercial bank organized under the laws of the U.S. or any State thereof that has a combined
capital and surplus and undivided profits of not less than $500,000,000, and (d) certificates of
deposit issued by and time deposits with any domestic office of any commercial bank organized under
the laws of the U.S. or any State thereof that has a combined capital and surplus and undivided
profits of not less than $500,000,000; provided that, in each case, the same provides for payment
of both principal and interest (and not principal alone or interest alone) and is not subject to
any contingency regarding the payment of principal or interest.



     “Change in Control” means the acquisition by any Person, or two or more Persons acting
in concert, of beneficial ownership (within the meaning of Rule 13d3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of
voting Capital Stock of any Borrower; provided however, that the transactions contemplated in
connection with the Permitted Restructuring shall not be deemed to be a Change of Control for
purposes of this Agreement.



     “Closing Date” means the date of this Agreement.



     “Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise
modified from time to time, and any rule or regulation issued thereunder.



     “Collateral” means any and all Property 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 Agent, on behalf of itself and
the Lenders, to secure the Secured Obligations.



     “Collateral Access Agreement” means any landlord waiver or other agreement, in form
and substance reasonably satisfactory to the Agent, between the Agent and any third party
(including any bailee, consignee, customs broker, processor, or other similar Person) in possession
of any Collateral or



5









 




any landlord of any Loan Party for any real Property where any Collateral is located, as such
landlord waiver or other agreement may be amended, restated, or otherwise modified from time to
time.




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



     “Collateral Shortfall Amount” is defined in Section 2.1.2(l).



     “Commitment” means, for each Lender, the obligation of such Lender to make Loans to
the Borrowers, and participate in Facility LCs issued upon the application of any Borrower, in an
aggregate amount not exceeding the amount set forth in the Commitment Schedule or as set
forth in any Assignment Agreement that has become effective pursuant to Section 12.3(c), as
such amount may be modified from time to time pursuant to the terms hereof.



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



     “Company” means Newpark Resources, Inc., a Delaware corporation and its successors and
assigns.



     “Compliance Certificate” is defined in Section 6.1(e).



     “Consolidated Capital Expenditures” means, with reference to any period, the Capital
Expenditures of the Company and its Subsidiaries calculated on a consolidated basis for such
period.



     “Consolidated EBITDA” means Consolidated Net Income plus, to the extent
deducted in determining Consolidated Net Income, (a) Consolidated Interest Expense, (b) expense for
taxes paid or accrued, net of tax refunds, (c) depreciation, (d) amortization, (e) any non-cash
Capital Stock based compensation expenses and (f) non-recurring non-cash charges, minus, to
the extent included in Consolidated Net Income, extraordinary gains (as determined in accordance
with GAAP) realized other than in the ordinary course of business, all calculated for the Company
and its Subsidiaries on a consolidated basis.



     “Consolidated Fixed Charges” means, with reference to any period without duplication,
cash Consolidated Interest Expense, plus prepayments and scheduled principal payments on
Indebtedness (other than with respect to (a) the Revolving Loans, (b) the repayment of the Senior
Subordinated Notes, (c) the repayment of the Indebtedness under the RBS Loan Documents and (d) the
repayment of the Term A Loans and the Supplemental Term Loans) made during such period, plus
expense for taxes paid in cash, plus dividends or distributions paid in cash, plus repurchases or
redemptions of Capital Stock paid in cash as permitted pursuant to Section 6.16(a)(iii), plus
Capitalized Lease payments, plus cash contributions to any Plan, all calculated for the Company and
its Subsidiaries on a consolidated basis.



     “Consolidated Interest Expense” means, with reference to any period, the interest
expense of the Company and its Subsidiaries calculated on a consolidated basis for such period.



     “Consolidated Leverage Ratio” means the ratio, determined as of the end of each Fiscal
Quarter of the Company for the applicable Test Period, of (a) Consolidated Total Debt on such day
to (b) Consolidated EBITDA for such Test Period.



     “Consolidated Net Income” means, with reference to any period, the net income (or
loss) of the Company and its Subsidiaries calculated on a consolidated basis for such period.



6









 





     “Consolidated Net Worth” means at any time the consolidated stockholders’ equity of
the Company and its Subsidiaries calculated on a consolidated basis as of such time.



     “Consolidated Tangible Net Worth” means Consolidated Net Worth, minus
Intangibles.



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



     “Contingent Obligation” of a Person means any agreement, undertaking or arrangement by
which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay
contract or the obligations of any such Person as general partner of a partnership with respect to
the liabilities of the partnership.



     “Controlled Group” means all members of a controlled group of corporations or other
business entities and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any of its Subsidiaries, are treated as a single employer under
Section 414 of the Code.



     “Conversion/Continuation Notice” is defined in Section 2.7.



     “Copyrights” shall have the meaning given to such term in the Security Agreement.



     “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 Pro Rata Share, if any, of
the aggregate principal amount of Non-Ratable Loans, Overadvances and Protective Advances
outstanding at such time.



     “Credit Extension” means the making of an Advance or the issuance of a Facility LC
hereunder.



     “Credit Extension Date” means the Borrowing Date for an Advance or the issuance date
for a Facility LC.



     “Customer List” means a list of a Borrower’s customers, specifying each customer’s
name, mailing address and phone number.



     “Default” means an event described in Article VII.



     “Defaulting Lender” is defined in Section 2.23(b).



     “Deferred Payment Date” is defined in Section 6.26(a).



     “Deferred Prepayment Amount” is defined in Section 6.26(a).



     “Deposit Account Control Agreement” means an agreement, in form and substance
reasonably satisfactory to the Agent, among any Loan Party, a banking institution holding such Loan
Party’s funds, and the Agent with respect to collection and control of all deposits and balances
held in a deposit account maintained by any Loan Party with such banking institution.



7









 





     “Document” shall have the meaning given to such term in the Security Agreement.



     “Domestic Subsidiary” means any Subsidiary which is organized under the laws of the
U.S. or any state of the U.S.



     “Effective Date” means the date that the conditions precedent set forth in Article
IV are satisfied.



     “Eligible Accounts” means, at any time, the Accounts of a Borrower which the Agent
determines in its Permitted Discretion are eligible as the basis for Credit Extensions hereunder.
Without limiting the 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 Agent;




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




     (c) with respect to which more than 90 days have elapsed since the date of the
original invoice therefor or which is more than 60 days past the due date for
payment, whichever is the earlier to occur;




     (d) which is owing by an Account Debtor for which more than 25% of the Accounts
owing from such Account Debtor and its Affiliates are ineligible hereunder;




     (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 (i) such Borrower
exceeds 25% of the aggregate amount of Eligible Accounts of such Borrower or (ii)
all Borrowers exceeds 25% of the aggregate amount of Eligible Accounts of all
Borrowers;




     (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 other
documentation satisfactory to the Agent which has been sent to the Account Debtor,
(iii) represents a progress billing, (iv) is contingent upon such Borrower’s
completion of any further performance, or (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;




     (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 a Borrower;




     (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



8









 






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, (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 any Account Debtor which has sold all or substantially all
of its assets;




     (l) which is owed by an Account Debtor which (i) does not maintain its chief
executive office in the U.S. or Canada (other than the Province of Newfoundland) or
(ii) is not organized under applicable law of the U.S., any state of the U.S.,
Canada, or any province of Canada other than the Province of Newfoundland) unless,
in either case, such Account is backed by a Letter of Credit acceptable to the Agent
which is in the possession of the 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 Agent which is in the
possession of the 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 Agent in such Account have been complied with
to the Agent’s satisfaction;




     (o) which is owed by any Affiliate, employee, or director of any Loan Party;




     (p) which, for any Account Debtor, exceeds a credit limit determined by the
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, but only to the extent of such indebtedness;




     (r) which is subject to any 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 any jurisdiction which
requires filing of a “Notice of Business Activities Report” or other similar report
in order to permit such Borrower to seek judicial enforcement in such jurisdiction
of payment of such Account, unless such Borrower has filed such report or qualified
to do business in such jurisdiction;




     (u) with respect to which such 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; or



9









 






     (v) which the Agent determines may not be paid by reason of the Account
Debtor’s inability to pay or which the 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, such Borrower or the Borrower Representative shall notify the Agent thereof (i)
within three Business Days of the earlier of the date such Borrower or the Borrower Representative
has obtained knowledge thereof if any such Account is in excess of $1,000,000 in the aggregate and
(ii) on and at the time of submission by the Borrower Representative to the Agent of the next
Aggregate Borrowing Base Certificate in all other cases.




     “Eligible Inventory” means, at any time, the Inventory of a Borrower which the Agent
determines in its Permitted Discretion is eligible as the basis for Credit Extensions hereunder.
Without limiting the Agent’s discretion provided herein, Eligible Inventory shall not include any
Inventory:




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




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




     (c) which is, in the Agent’s opinion, slow moving, obsolete, unmerchantable,
defective, unfit for sale, not salable at prices approximating at least the cost of
such Inventory in the ordinary course of business or unacceptable due to age, type,
category and/or quantity;




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




     (e) which does not conform to all standards imposed by any governmental
authority;




     (f) which is not finished goods or raw materials purchased in the ordinary
course by a Borrower, and used in the manufacture of other Inventory of such
Borrower, or which constitutes work-in-process, spare or replacement parts,
subassemblies, packaging and shipping material, manufacturing supplies, display
items, bill-and-hold goods, returned or repossessed goods, defective goods, goods
held on consignment, or goods which are not of a type held for sale in the ordinary
course of business;




     (g) which is not located in the U.S. or is in transit with a common carrier
from vendors and suppliers, provided that, up to $10,000,000 of Inventory in transit
that otherwise constitutes Eligible Inventory may be included as eligible pursuant
to this clause (g) so long as (i) the Agent shall have received (1) a true
and correct copy of the non-negotiable bill of lading and other shipping documents
for such Inventory, (2) casualty insurance naming the Agent as loss payee and
otherwise covering such risks as the Agent may reasonably request, (3) a duly
executed Collateral Access Agreement from the applicable customs broker for such
Inventory, and (4) such other documentation as the Agent may request in its
Permitted Discretion, and (ii) the common carrier is not an Affiliate of the
applicable vendor or supplier;



10









 






     (h) which is located in any location leased by such Borrower unless the lessor
has delivered to the Agent a Collateral Access Agreement;




     (i) which is located in any third party warehouse or is in the possession of a
bailee and is not evidenced by a Document (other than non-negotiable bills of lading
to the extent permitted pursuant to clause (g) above), unless such warehouseman or
bailee has delivered to the Agent a Collateral Access Agreement and such other
documentation as the Agent may require;




     (j) which is the subject of a consignment by such Borrower as consignor;




     (k) which is perishable;




     (l) which contains or bears any Intellectual Property Rights licensed to such
Borrower unless the Agent is satisfied that it may sell or otherwise dispose of such
Inventory without (i) infringing the rights of such licensor, (ii) violating any
contract with such licensor, or (iii) incurring any liability with respect to
payment of royalties other than royalties incurred pursuant to sale of such
Inventory under the current licensing agreement;




     (m) which is not reflected in a current perpetual inventory report of such
Borrower (unless such Inventory is reflected in a report to the Agent as “in
transit” Inventory); or




     (n) which the Agent otherwise determines is unacceptable for any reason
whatsoever.


In the event that Inventory which was previously Eligible Inventory ceases to be Eligible Inventory
hereunder, such Borrower or the Borrower Representative shall notify the Agent thereof (i) within
three Business Days of the earlier of the date the Borrower or the Borrower Representative has
obtained knowledge thereof if any such Inventory has a value (based on the lower of cost,
determined on a first-in, first-out basis, or market) in excess of $1,000,000 in the aggregate and
(ii) on and at the time of submission by the Borrower Representative to the Agent of the next
Aggregate Borrowing Base Certificate in all other cases.




     “Eligible Unbilled Accounts” means, at any time, Accounts of a Borrower that are not
Eligible Accounts for the sole reason that such Accounts are not evidenced by invoices or other
documentation satisfactory to the Agent which have been sent to the Account Debtor; provided,
however, that no such Account shall be an Eligible Unbilled Account if evidence of such Account (by
an invoice or other documentation satisfactory to the Agent) is not sent to the Account Debtor
within thirty (30) days (or 60 days with respect to Accounts owing by Account Debtors approved by
Agent in its Permitted Discretion), provided that the amount of such Eligible Unbilled Accounts
shall not exceed $10,000,000 at any time of the date such Account is created. In the event that an
Account which was previously an Eligible Unbilled Account ceases to be an Eligible Unbilled Account
hereunder, such Borrower or the Borrower Representative shall notify the Agent thereof (i) within
three Business Days of the earlier of the date such Borrower or the Borrower Representative has
obtained knowledge thereof if any such Account is in excess of $500,000 in the aggregate and (ii)
in all other cases, at the time of submission by the Borrower Representative to the Agent of the
next Aggregate Borrowing Base Certificate.



     “Environmental Laws” means any and all federal, state, local and foreign statutes,
laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans,
injunctions, permits,



11









 




concessions, grants, franchises, licenses, agreements and other governmental restrictions
relating to (a) the protection of the environment, (b) the effect of the environment on human
health, (c) emissions, discharges or releases of pollutants, contaminants, hazardous substances or
wastes into surface water, ground water or land, or (d) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.




     “Equipment” has the meaning specified in the Security Agreement.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and any rule or regulation issued thereunder.



     “Eurodollar Advance” means an Advance which, except as otherwise provided in
Section 2.12, bears interest at the applicable Eurodollar Rate.



     “Eurodollar Base Rate” means, with respect to a Eurodollar Advance for the relevant
Interest Period, the applicable British Bankers’ Association LIBOR rate for deposits in U.S.
dollars as reported by any generally recognized financial information service as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period, provided that, if no such British Bankers’ Association
LIBOR rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Interest
Period shall instead be the rate determined by the Agent to be the rate at which JPMorgan Chase or
one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the
interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period, in the approximate amount of JPMorgan Chase’s relevant Eurodollar Loan and
having a maturity equal to such Interest Period.



     “Eurodollar Loan” means a Loan which, except as otherwise provided in Section
2.12, bears interest at the applicable Eurodollar Rate.



     “Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant
Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base Rate applicable to such
Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Interest Period, plus (b) the Applicable Margin.



     “Excalibar” means, collectively, Excalibar Minerals Inc., a Texas corporation and
Excalibar Minerals of LA., L.L.C., a Louisiana limited liability company.



     “Excluded Taxes” means, in the case of each Lender or applicable Lending Installation
and the Agent, taxes imposed on its overall revenue or net income, and franchise taxes imposed on
it, by (a) the jurisdiction under the laws of which such Lender or the Agent is incorporated or
organized or (b) the jurisdiction in which the Agent’s or such Lender’s principal executive office
or such Lender’s applicable Lending Installation is located.



     “Exhibit” refers to an exhibit to this Agreement, unless another document is
specifically referenced.



     “Existing Obligations” means the Obligations (as defined in the Amended Loan
Agreement) outstanding on the Effective Date, immediately prior to the effectiveness of this
Agreement.



     “Facility” means the credit facility described in Section 2.1 hereof to be
provided to the Borrowers on the terms and conditions set forth in this Agreement.



12









 





     “Facility LC” is defined in Section 2.1.2(a).



     “Facility LC Application” is defined in Section 2.1.2(c).



     “Facility LC Collateral Account” is defined in Section 2.1.2(j).



     “Facility Termination Date” means June 25, 2011, or any earlier date on which the
Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.



     “Federal Funds Effective Rate” means, for any day, an interest rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as published for such day
(or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such
transactions received by the Agent from three Federal funds brokers of recognized standing selected
by the Agent in its sole discretion.



     “Fee Letter” is defined in Section 2.10(c).



     “Financial Contract” of a Person means (a) any exchange-traded or over-the-counter
futures, forward, swap or option contract or other financial instrument with similar
characteristics, or (b) any Rate Management Transaction.



     “Fiscal Month” means any of the monthly accounting periods of the Company.



     “Fiscal Quarter” means any of the quarterly accounting periods of the Company, ending
on March 31, June 30, September 30 and December 31 of each year.



     “Fiscal Year” means any of the annual accounting periods of the Company ending on
December 31 of each year.



     “Fixed Charge Coverage Ratio” means, the ratio, determined as of the end of each
Fiscal Quarter of the Company for the applicable Test Period, of (a) Consolidated EBITDA
minus the unfinanced portion of Consolidated Capital Expenditures to (b) Consolidated Fixed
Charges, all calculated for the Company and its Subsidiaries on a consolidated basis.



     “Fixtures” has the meaning specified in the Security Agreement.



     “Floating Rate” means, for any day, a rate per annum equal to (a) the Alternate Base
Rate for such day plus (b) the Applicable Margin, in each case changing when and as the
Alternate Base Rate changes.



     “Floating Rate Advance” means an Advance which, except as otherwise provided in
Section 2.12, bears interest at the Floating Rate.



     “Floating Rate Loan” means a Loan which, except as otherwise provided in Section
2.12, bears interest at the Floating Rate.



     “Foreign Intercompany Notes” is defined in Section 6.21(g).



     “Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.



13









 





     “Form 10-K” means, for any Fiscal Year, the Company’s annual report on Form 10-K (or
any successor form) and the accompanying consolidated financial statements filed with the
Securities and Exchange Commission.



     “Form 10-Q” means, for any Fiscal Quarter, the Company’s quarterly report on Form 10-Q
(or any successor form) and the accompanying consolidated financial statements filed with the
Securities and Exchange Commission.



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



     “Funding Account” is defined in Section 2.5.



     “GAAP” means generally accepted accounting principles as in effect from time to time,
applied in a manner consistent with that used in preparing the financial statements referred to in
Section 5.5.



     “Guaranteed Obligations” is defined in Section 15.1.



     “Guarantor” means each Loan Party, any other Person who becomes a Loan Party pursuant
to a Joinder Agreement, any other Person who executes a Guaranty and their respective successors
and assigns.



     “Guaranty” means Article XV of this Agreement and each separate guaranty, in
form and substance satisfactory to the Agent, delivered by (if required by Agent) a Foreign
Subsidiary (which guaranty shall be governed by the laws of the country in which such Foreign
Subsidiary is located), as it may be amended or modified and in effect from time to time.



     “Highest Lawful Rate” shall mean, on any day, the maximum nonusurious rate of interest
permitted for that day by applicable federal or Texas law stated as a rate per annum. On each day,
if any, that Chapter 303 of the Texas Finance Code, as amended (formerly Tex. Rev. Civ. Stat. Ann.
Art. 5069-1D.003) establishes the Highest Lawful Rate, such rate shall be the “indicated (weekly)
rate ceiling” (as defined in Chapter 303 of the Texas Finance Code, as amended) for that day.



     “Indebtedness” of a Person means such Person’s (a) obligations for borrowed money, (b)
obligations representing the deferred purchase price of Property or services (other than accounts
payable arising in the ordinary course of such Person’s business payable on terms customary in the
trade), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (d) obligations which
are evidenced by notes, acceptances, or other instruments, (e) obligations of such Person to
purchase securities or other Property arising out of or in connection with the sale of the same or
substantially similar securities or Property or any other Off-Balance Sheet Obligations, (f)
Capitalized Lease Obligations, (g) Contingent Obligations for which the underlying transaction
constitutes Indebtedness under this definition, (h) the maximum available stated amount of all
letters of credit or bankers’ acceptances created for the account of such Person and, without
duplication, all reimbursement obligations with respect to letters of credit, (i) Rate Management
Transactions/Net Mark-to-Market Exposure under all Rate Management Transactions, (j) obligations of
such Person under any Sale and Leaseback Transaction, (k) obligations under any liquidated earn-out
and (l) any other obligation for borrowed money or other financial accommodation which in
accordance with GAAP would be shown as a liability on the consolidated balance sheet of such
Person.



14









 





     “Indenture” means that certain Indenture, dated December 17, 1997, among the Company,
certain Subsidiaries of the Company, as guarantors and U.S. Bank, N.A., as trustee, pursuant to
which the Senior Subordinated Notes were issued prior to the date hereof.



     “Intangibles” means, as of any date, all of the intangible assets of a Person
including, without limitation, (a) any surplus resulting from any write-up of assets subsequent to
the Closing Date; (b) deferred assets (including without limitation, deferred taxes), other than
prepaid insurance and prepaid taxes; (c) Intellectual Property Rights, non-compete agreements,
franchises and other similar intangibles; and (d) goodwill, including any amounts, however
designated on a balance sheet, representing the excess of the purchase price paid for assets or
stock over the value assigned thereto on the books of such Person.



     “Intellectual Property Rights” means, with respect to any Person, all of such Person’s
Patents, Copyrights, Trademarks, and Licenses, all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations and continuations-in-part of any of the
foregoing, and all rights to sue for past, present, and future infringement of any of the
foregoing.



     “Intercompany Notes” is defined in Section 6.17(e).



     “Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
August 18, 2006 by and among Borrowers, the other Loan Parties, Agent and Term Collateral Agent, as
amended from time to time in accordance with the terms thereof.



     “Interest Period” means, with respect to a Eurodollar Advance, a period of one, two,
three or six months commencing on a Business Day selected by the Borrower Representative pursuant
to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such
date one, two, three or six months thereafter, provided however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding month, such Interest
Period shall end on the last Business Day of such next, second, third or sixth succeeding month.
If an Interest Period would otherwise end on a day which is not a Business Day, such Interest
Period shall end on the next succeeding Business Day, provided however, that if said next
succeeding Business Day falls in a new calendar month, such Interest Period shall end on the
immediately preceding Business Day.



     “Inventory” has the meaning specified in the Security Agreement.



     “Investment” of a Person means any (a) loan, advance, extension of credit (other than
accounts receivable arising in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person, (b) stocks, bonds, mutual funds, partnership interests,
notes, debentures, securities or other Capital Stock owned by such Person, (c) any deposit accounts
and certificate of deposit owned by such Person, and (d) structured notes, derivative financial
instruments and other similar instruments or contracts owned by such Person.



     “Joinder Agreement” is defined in Section 6.15(a).



     “JPMorgan Chase” means JPMorgan Chase Bank, N.A. (successor by merger to Bank One,
N.A. (Main Office Chicago)), in its individual capacity, and its successors.



     “LC Fee” is defined in Section 2.10(b).



     “LC Issuer” means JPMorgan Chase (or any subsidiary or Affiliate of JPMorgan Chase
designated by JPMorgan Chase) in its capacity as an issuer of Facility LCs hereunder.



15









 





     “LC Obligations” means, at any time, the sum, without duplication, of (a) the
aggregate undrawn stated amount under all Facility LCs outstanding at such time plus (b)
the aggregate unpaid amount at such time of all Reimbursement Obligations.



     “LC Payment Date” is defined in Section 2.1.2(d).



     “Lenders” means the lending institutions listed on the signature pages of this
Agreement and their respective successors and assigns in accordance herewith.



     “Lending Installation” means, with respect to a Lender, the LC Issuer or the Agent,
the office, branch, subsidiary or Affiliate of such Lender, LC Issuer or the Agent listed on the
signature pages hereof or on a Schedule or otherwise selected by such Lender, the LC Issuer or the
Agent pursuant to Section 2.22.



     “Letter of Credit” of a Person means a letter of credit, bankers’ acceptances or
similar instrument which is issued upon the application of such Person or upon which such Person is
an account party or for which such Person is in any way liable.



     “Lien” means any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement).



     “Licenses” shall have the meaning given to such term in the Security Agreement.



     “Loan Documents” means this Agreement, any Notes, the Facility LC Applications, the
Collateral Documents and all other agreements, instruments, documents and certificates identified
in Section 4.1 executed and delivered to, or in favor of, Agent or any Lenders and
including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter
of credit agreements and all other written matter whether heretofore, now or hereafter executed by
or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the 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 Parties” means the Borrowers, 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, with respect to a Lender, such Lender’s loans made pursuant to
Article II (or any conversion or continuation thereof), including Non-Ratable Loans,
Overadvances and Protective Advances.



     “Material Adverse Effect” means a material adverse effect on (a) the business,
Property, condition (financial or otherwise), results of operations, or prospects of a Borrower and
its Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform its obligations
under the Loan Documents to which it is a party, (c) the Collateral, or the Agent’s Liens (on
behalf of itself and the Lenders) on the Collateral or the priority of such Liens or (d) the
validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent, the
LC Issuer or the Lenders thereunder.



16









 





     “Material Indebtedness” means Indebtedness in an outstanding principal amount of
$1,000,000 or more in the aggregate (or the equivalent thereof in any currency other than U.S.
dollars).



     “Material Indebtedness Agreement” means any agreement under which any Material
Indebtedness was created or is governed or which provides for the incurrence of Indebtedness in an
amount which would constitute Material Indebtedness (whether or not an amount of Indebtedness
constituting Material Indebtedness is outstanding thereunder).



     “Modify” and “Modification” are defined in Section 2.1.2(a).



     “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 Agent, for the benefit of the Agent and the Lenders, on real
Property of Loan Party, including any amendment, modification or supplement thereto.



     “Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining
agreement or any other arrangement to which the Company or any member of the Controlled Group is a
party to which more than one employer is obligated to make contributions.



     “Net Cash Proceeds” means, if in connection with (a) an asset disposition, cash
proceeds net of (i) commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by such Loan Party in connection
therewith (in each case, paid to non-Affiliates), (ii) transfer taxes, (iii) amounts payable to
holders of senior Liens on such asset (to the extent such Liens constitute Permitted Liens
hereunder), if any, and (iv) an appropriate reserve for income taxes in accordance with GAAP
established in connection therewith, (b) the issuance or incurrence of Indebtedness, cash proceeds
net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in connection therewith or, (c)
an equity issuance, cash proceeds net of underwriting discounts and commissions and other
reasonable costs paid to non-Affiliates in connection therewith.



     “Net Mark-to-Market Exposure” of a Person means, as of any date of determination, the
excess (if any) of all unrealized losses over all unrealized profits of such Person arising from
Rate Management Transactions. As used in this definition, “unrealized losses” means the fair
market value of the cost to such Person of replacing such Rate Management Transaction as of the
date of determination (assuming the Rate Management Transaction were to be terminated as of that
date), and “unrealized profits” means the fair market value of the gain to such Person of replacing
such Rate Management Transaction as of the date of determination (assuming such Rate Management
Transaction were to be terminated as of that date).



     “Net Orderly Liquidation Value” means, with respect to Inventory of any Person, the
orderly liquidation value thereof as determined in a manner acceptable to the Agent by an appraiser
acceptable to the Agent, net of all estimated costs of liquidation thereof.



     “Ninety-Day Average Availability” means, as of any day, the sum of the Availability
for each of the immediately preceding 90 days divided by 90.



     “Non-Ratable Loan” and “Non-Ratable Loans” are defined in Section
2.1.3.



     “Non-U.S. Lender” is defined in Section 3.5(d).



     “Notes” means, collectively, the Revolving Notes.



17









 





     “Obligations” means all unpaid principal of and accrued and unpaid interest on the
Loans, all LC Obligations, 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 Agent,
the LC Issuer or any indemnified party arising under the Loan Documents.



     “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any
indebtedness, liability or obligation under any Sale and Leaseback Transaction which is not a
Capitalized Lease, (c) any indebtedness, liability or obligation under any so-called “synthetic
lease” transaction entered into by such Person, or (d) any indebtedness, liability or obligation
arising with respect to any other transaction which is the functional equivalent of or takes the
place of borrowing but which does not constitute a liability on the balance sheets of such Person,
but excluding from this clause (d) Operating Leases.



     “Operating Lease” of a Person means any lease of Property (other than a Capitalized
Lease) by such Person as lessee which has an original term (including any required renewals and any
renewals effective at the option of the lessor) of one year or more.



     “Operating Lease Obligations” means, as at any date of determination, the amount
obtained by aggregating the present values, determined in the case of each particular Operating
Lease by applying a discount rate (which discount rate shall equal the discount rate which would be
applied under GAAP if such Operating Lease were a Capitalized Lease) from the date on which each
fixed lease payment is due under such Operating Lease to such date of determination, of all fixed
lease payments due under all Operating Leases of the Company and its Subsidiaries.



     “Original Loan Agreement” means that certain Credit Agreement, dated June 25, 1995, by
and among Newpark Resources, Inc., certain of its Subsidiaries, the lending institutions party
thereto as lenders, Bank One, Louisiana, National Association, as administrative and syndication
agent and the other parties thereto, as amended.



     “Other Taxes” is defined in Section 3.5(b).



     “Overadvances” has the meaning specified in Section 2.1.4(b).



     “Participants” is defined in Section 12.2(a).



     “Patents” shall have the meaning given to such term in the Security Agreement.



     “Payment Date” means (a) with respect to interest payments due on any Floating Rate
Loan, the first day of each calendar month and the Facility Termination Date, (b) with respect to
interest payments due on any Eurodollar Loan, (i) the last day of the applicable Interest Period,
and (ii) in the case of any Interest Period in excess of three months, the day which is three
months after the first day of such Interest Period, and (iii) the Facility Termination Date, and
(c) with respect to any payment of LC Fees or Unused Commitment Fees, the first day of each
calendar month and the Facility Termination Date.



     “PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.



     “Permitted Acquisitions” means Acquisitions, in each case, in the event (a) the
cumulative aggregate cash consideration (defined as total net cash to be paid, plus Indebtedness
and Contingent Obligations to be assumed in connection with such Acquisition, plus the Acquisition
costs associated with such Acquisitions) is less than $30,000,000 through the Facility Termination
Date and (b) (i) the acquisition target is in the same or similar line of business as the Company
and its Subsidiaries; (ii) the




18









 




Company or a Domestic Subsidiary is the surviving entity holding one hundred percent (100%) of
the Capital Stock in the Acquisition target; (iii) no Default or Unmatured Default shall exist
before or after such Acquisition; (iv) such Acquisition shall be completed in accordance with
applicable laws; (v) Agent shall be provided with satisfactory opinions with regard to such
Acquisition as it may request; (vi) the terms of Section 6.15(a) or 6.15(c) as the
case may be, are satisfied; (vii) the board of directors of the Acquisition target approves the
Acquisition; and (viii) both before and (on a pro-forma basis) after giving effect to such
Acquisition, (A) the Company’s Fixed Charge Coverage Ratio shall be equal to or greater than 1.25
to 1.0 and (B) the Borrowers’ Availability shall be in excess of $15,000,000.




     “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 Liens” is defined in Section 6.22.



     “Permitted Restructuring” is defined in Section 6.19.



     “Person” means any natural person, corporation, firm, joint venture, partnership,
limited liability company, association, enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department or instrumentality thereof.



     “Plan” means an employee pension benefit plan which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code as to which a Loan
Party or any member of the Controlled Group may have any liability.



     “Prepayment Certificate” shall mean a certificate signed by the chief financial
officer of the Borrower Representative, certifying (i) with respect to any prepayments of Term
Loans permitted pursuant to Section 6.26(a)(ii), the manner in which the Ninety-Day Average
Availability was calculated and the amount of the proposed prepayment, and (ii) with respect to any
prepayments of Term Loans permitted pursuant to Section 6.26(a)(iii), the manner in which
the Ninety-Day Average Availability, Excess Cash Flow and the resulting prepayment were each
calculated.



     “Prepayment Fee” is defined in Section 2.16(b).



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



     “Prime Rate” means a rate per annum equal to the prime rate of interest announced from
time to time by JPMorgan Chase or its parent (which is not necessarily the lowest rate charged to
any customer), changing when and as said prime rate changes.



     “Prior Loan Agreements” has the meaning specified in Section 9.15.



     “Projections” is defined in Section 6.1(d).



     “Property” of a Person means any and all property, whether real, personal, tangible,
intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.



     “Pro Rata Share” means, with respect to any Lender, (a) with respect to Revolving
Obligations, a portion thereof 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, (b) with respect to Protective Advances or with respect to all Credit Extensions
in the aggregate prior to the Facility Termination Date, a portion equal to a fraction the
numerator of which is such Lender’s



19









 







Commitment and the denominator of which is the Aggregate Commitment of all Lenders, and (c)
with respect to Protective Advances or with respect to all Credit Extensions in the aggregate after
the Facility Termination Date, a portion equal to a fraction the numerator of which is such
Lender’s Credit Exposure and the denominator of which is the Aggregate Credit Exposure of all
Lenders.



     “Protective Advances” is defined in Section 2.1.4(a).



     “Purchasers” is defined in Section 12.3(a).



     “Rate Management 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 Rate Management Transactions, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.



     “Rate Management Transaction” means any transaction (including an agreement with
respect thereto) now existing or hereafter entered by any Loan Party which is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination thereof, whether linked to
one or more interest rates, foreign currencies, commodity prices, equity prices or other financial
measures.



     “RBS Loan Agreement” means that certain Loan Agreement, dated July 26, 2004, by and
among Excalibar as borrowers and RBS Lombard, Inc. as lender, as amended from time to time.



     “RBS Loan Documents” means, collectively, the RBS Loan Agreement, and each other
instrument or document executed or delivered pursuant to or in connection therewith and the
transactions contemplated therein.



     “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve
System as from time to time in effect and any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve requirements applicable to member
banks of the Federal Reserve System.



     “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve
System as from time to time in effect and any successor or other regulation or official
interpretation of said Board of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve
System.



     “Reimbursement Obligations” means, at any time, the aggregate of all obligations of
the Borrowers then outstanding under Section 2.1.2 to reimburse the LC Issuer for amounts
paid by the LC Issuer in respect of any one or more drawings under Facility LCs.



     “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and
the regulations issued under such section, with respect to a Plan, excluding, however, such events
as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within thirty days of the occurrence of such event, provided however, that a failure to
meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event



20









 







regardless of the issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) of ERISA or Section 412(d) of the Code.



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



     “Required Lenders” means Lenders in the aggregate having at least a majority of the
Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate
holding at least a majority of the Aggregate Credit Exposure.



     “Required Revolving Lenders” means Revolving Lenders in the aggregate having at least
a majority of the Revolving Commitment or, if the Revolving Commitment has been terminated,
Revolving Lenders in the aggregate holding at least a majority of the Aggregate Revolving Exposure.



     “Reserve Requirement” means, with respect to an Interest Period, the maximum aggregate
reserve requirement (including all basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on Eurocurrency liabilities.



     “Reserves” means any and all reserves which the Agent deems necessary, in its
Permitted Discretion, to maintain (including, without limitation, reserves for accrued and unpaid
interest on the Secured Obligations, Banking Services Reserves, reserves for rent at locations
leased by any Loan Party and for consignee’s, warehousemen’s and bailee’s charges, reserves for
dilution of Accounts, reserves for Inventory shrinkage, reserves for customs charges and shipping
charges related to any Inventory in transit, reserves for Rate Management Transactions, reserves
for contingent liabilities of any Loan Party, reserves for uninsured losses of any Loan Party and
reserves for taxes, fees, assessments, and other governmental charges) with respect to the
Collateral or any Loan Party.



     “Revolving Commitment” means, (a) as to any Revolving Lender, the aggregate commitment
of such Revolving Lender to make Revolving Loans or incur LC Obligations as set forth in the
Commitment Schedule or in the most recent Assignment Agreement executed by such Revolving Lender
and (ii) as to all Revolving Lenders, the aggregate commitment of all Revolving Lenders to make the
Revolving Loans which aggregate commitment shall be One-hundred Million and No/100 Dollars
($100,000,000) on the Closing Date, as such amount may be adjusted, if at all, from time to time in
accordance with this Agreement.



     “Revolving Exposure” means, as to any Lender at any time, the sum of (a) an amount
equal to its Pro Rata Share of the aggregate principal amount of the Revolving Loans outstanding at
such time, plus (b) an amount equal to its Pro Rata Share of any LC Obligations at such
time, plus (c) an amount equal to its Pro Rata Share of the aggregate principal amount of
Non-Ratable Loans and Overadvances outstanding at such time.



     “Revolving Lenders” means, as of any date of determination, Lenders having a Revolving
Commitment.



     “Revolving Loans” means the revolving loans extended by the Lenders to the Borrowers
pursuant to Section 2.1.1 hereof.



     “Revolving Note” is defined in Section 2.21(d).



21









 





     “Revolving Obligations” means Revolving Loans, LC Obligations, Non-Ratable Loans and
Overadvances.



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



     “Sale and Leaseback Transaction” means any sale or other transfer of Property by any
Person with the intent to lease such Property as lessee.



     “Schedule” refers to a specific schedule to this Agreement, unless another document is
specifically referenced.



     “Section” means a numbered section of this Agreement, unless another document is
specifically referenced.



     “Secured Obligations” means, collectively, (i) the Obligations; (ii) all Banking
Services Obligations; and (iii) all Rate Management Obligations owing to one or more Lenders or any
of their respective Affiliates, provided that at or prior to the time that any Rate Management
Transaction relating to such Rate Management Obligation is executed, the Lender party thereto
(other than JPMorgan Chase) shall have delivered written notice to the Agent that such a Rate
Management 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 Agent, for the benefit of the Agent and the Lenders,
and any other pledge or security agreement entered into, after the Closing Date 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.



     “Senior Subordinated Debt” means the Indebtedness under any unsecured notes or
debentures of the Company, subordinated to the prior payment of the Loans and the other obligations
under the Loan Documents, that may be issued by the Company in order to refinance and/or prepay the
Term Loans, provided that (i) the scheduled amortization and the final maturity shall be at least
one year beyond the corresponding amortization dates and the Facility Termination Date for the
Loans, respectively, and the subordination provisions shall be at least as favorable to the Lenders
as those in the Senior Subordinated Notes, and the other terms and conditions thereof (including,
without limitation, the covenant and event of default provisions thereof but excluding the interest
rate and any call protection provisions) taken as a whole shall be at least as favorable to the
Company and the Lenders as those in the Senior Subordinated Notes, (ii) no covenant contained in
this Agreement or any of the other Loan Documents would be violated on the proposed issuance date
after giving effect to (A) the issuance of such notes or debentures, (B) the payment of all
issuance costs, commissions, discounts, redemption premiums and other fees and charges associated
therewith, (C) the use of proceeds thereof and (D) the redemption, repayment, retirement and
repurchase of all Indebtedness of the Company and its Subsidiaries to be redeemed, repaid or
repurchased in connection therewith and (iii) substantially final drafts of the documentation
governing any such notes or debentures, showing the terms thereof, shall have been furnished to the
Lenders at least 10 days prior to the date of issuance of such notes or debentures.



     “Senior Subordinated Notes” means, collectively, the Company’s 8 5/8% Senior
Subordinated Notes due 2007, Series A, and 8 5/8% Senior Subordinated Notes due 2007, Series B,
each as issued pursuant to the Indenture, and which have been paid in full by the Company on or
around September 22, 2006 with a portion of the proceeds of the Term Loans.



22









 





     “Settlement” is defined in Section 2.19.



     “Settlement Date” is defined in Section 2.19.



     “Single Employer Plan” means a Plan maintained by the Company or any member of the
Controlled Group for employees of the Company or any member of the Controlled Group.



     “Stated Rate” is defined in Section 2.24.



     “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 Agent.



     “Subsidiary” of a Person means, any corporation, partnership, limited liability
company, association, joint venture or similar business organization more than 50% of the
outstanding Capital Stock having ordinary voting power of which shall at the time be owned or
controlled by such Person. Unless otherwise expressly provided, all references herein to a
“Subsidiary” shall mean a Subsidiary of a Borrower.



     “Substantial Portion” means Property which represents more than 10% of the
consolidated assets of the Company and its Subsidiaries or property which is responsible for more
than 10% of the consolidated net sales or of the consolidated net income of the Company and its
Subsidiaries, in each case, as would be shown in the consolidated financial statements of the
Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month
in which such determination is made (or if financial statements have not been delivered hereunder
for that month which begins the twelve-month period, then the financial statements delivered
hereunder for the quarter ending immediately prior to that month).



     “Supplemental Term Loans” means the term loans extended by the Lenders to the
Borrowers pursuant to the Amended Credit Agreement which have been paid in full on or around
September 22, 2006, with a portion of the proceeds of the Term Loans.



     “Supporting Letter of Credit” is defined in Section 2.1.2(l).



     “Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but
excluding Excluded Taxes and Other Taxes.



     “Term A Loans” means the term loans extended by the Lenders to the Borrowers pursuant
to the Amended Credit Agreement which have been paid in full on or around September 22, 2006 with a
portion of the proceeds of the Term Loans.



     “Term Administrative Agent” means JPMorgan Chase Bank, N.A., together with its
affiliates, as the administrative agent for the Term Lenders under the Term Agreement and the other
Term Documents, together with any of its successors and assigns.



     “Term Agreement” means that certain Credit Agreement dated as of August 18, 2006, by
and among Borrowers, the other Loan Parties, Term Administrative Agent, Term Collateral Agent and
the Term Lenders as amended and restated from time to time as permitted by the terms of the
Intercreditor Agreement.



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     “Term Collateral Agent” means Wilmington Trust Company, together with its successors
and assigns, as the collateral agent for benefit of itself, in such capacity, the Administrative
Agent and the Term Lenders under the Term Agreement and the other Term Documents.



     “Term Documents” means the Term Agreement and the other “Loan Documents” as defined in
the Term Agreement.



     “Term Lenders” means, collectively, the “Lenders” as defined in the Term Agreement.



     “Term Loans” means, collectively, the “Loans” as defined in the Term Agreement.



     “Term Notes” means, collectively, the Term A Notes and the Supplemental Term Notes.



     “Test Period” means as of the last day of each Fiscal Quarter, the four (4)
consecutive Fiscal Quarters then ending.



     “Trademarks” shall have the meaning given to such term in the Security Agreement.



     “Transferee” is defined in Section 12.4.



     “Type” means, with respect to any Advance, its nature as a Floating Rate Advance or a
Eurodollar Advance and with respect to any Loan, its nature as a Floating Rate Loan or a Eurodollar
Loan.



     “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.



     “Unfunded Liabilities” means the amount (if any) by which the present value of all
vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value
of all such Plan assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plans using PBGC actuarial assumptions for single employer plan
terminations.



     “Unliquidated Secured Obligations” means, at any time, any Secured Obligations (or
portion thereof) that is 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 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.



     “Unmatured Default” means an event which but for the lapse of time or the giving of
notice, or both, would constitute a Default.



     “Unused Commitment Fee” is defined in Section 2.10(a). 




     “U.S.” means the United States of America.



     “Wholly-Owned Subsidiary” of a Person means, any Subsidiary all of the outstanding
Capital Stock of which shall at the time be owned or controlled, directly or indirectly, by such
Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person.



24









 





     The foregoing definitions shall be equally applicable to both the singular and plural forms of
the defined terms.



ARTICLE II




THE FACILITY




     2.1. The Facility. Each Lender severally agrees, on the terms and conditions set forth
in this Agreement, to (a) make Loans to the Borrowers as set forth below and (b) participate in
Facility LCs issued upon the request of a Borrower, provided that, after giving effect to the
making of each such Loan and the issuance of each such Facility LC, such Lender’s Credit Exposure
shall not exceed its Commitment; provided further, that the Aggregate Credit Exposure shall not
exceed the Aggregate Commitment. The LC Issuer will issue Facility LCs hereunder on the terms and
conditions set forth in Section 2.1.2. The Facility shall be composed of Revolving Loans,
Non-Ratable Loans, Protective Advances, Overadvances and Facility LCs as set forth below:



          2.1.1. Revolving Loans.





          (a) Amount. From and including the Effective Date and prior to the
Facility Termination Date, each Revolving Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make revolving loans (the “Revolving
Loans”) to the Borrower Representative on behalf of the applicable Borrower and
participate in Facility LCs issued to any Borrower as set forth in Section
2.1.2 below, in aggregate amounts not to exceed such Lender’s Pro Rata Share at
such time. If any advance of a Revolving Loan or participation in a Facility LC
would exceed the Borrowers’ Availability, the Revolving Lenders will refuse to make
or may otherwise restrict the making of Revolving Loans or the issuance of Facility
LCs as the Required Revolving Lenders determine until such excess has been
eliminated, subject to the Agent’s authority, in its sole discretion, to make
Protective Advances and Overadvances pursuant to the terms of Section 2.1.4.
The Revolving Loans may consist of Floating Rate Advances or Eurodollar Advances, or
a combination thereof, selected by the Borrower Representative in accordance with
Sections 2.1.1(b) and 2.7. Subject to the terms of this Agreement,
the Borrowers may borrow, repay and reborrow Revolving Loans at any time prior to
the Facility Termination Date. The Commitments to extend credit under this
Section 2.1.1(a) shall expire on the Facility Termination Date.




           (b) Borrowing Procedures. The Borrower Representative shall select the
Type of Advance and, in the case of each Eurodollar Advance, the Interest Period
applicable thereto, from time to time. The Borrower Representative shall give the
Agent irrevocable notice in the form of Exhibit A (a “Borrowing
Notice”) not later than 11:00 a.m. (Chicago time) on the Borrowing Date of each
Floating Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Advance, specifying: (1) the name of the applicable Borrower, (2) the
Borrowing Date, which shall be a Business Day, of such Advance, (3) the aggregate
amount of such Advance, (4) the Type of Advance selected; provided that, if the
Borrower Representative fails to specify the Type of Advance requested, such request
shall be deemed a request for a Floating Rate Advance; and (5) the duration of the
Interest Period if the Type of Advance requested is a Eurodollar Advance; provided
that, if the Borrower Representative fails to select the
duration of the Interest Period for the requested Eurodollar Advance, the
Borrower Representative shall be deemed to have requested on behalf of the
applicable Borrower that such Eurodollar Advance be made with an Interest Period of
one month.



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           (c) The Agent’s Election. Promptly after receipt of a Borrowing Notice
(or telephonic notice in lieu thereof) of a requested Floating Rate Advance, the
Agent shall elect in its sole discretion to have the terms of Section
2.1.1(d) (pro rata advance by all Revolving Lenders) or Section 2.1.3
(advance by the Agent, in the form of a Non-Ratable Loan, on behalf of the Revolving
Lenders) apply to such requested Advance.




           (d) Pro Rata Advance. Unless the Agent elects to have the terms of
Section 2.1.3 apply to a requested Floating Rate Advance, or a requested
Advance is for a Eurodollar Advance, then promptly after receipt of a Borrowing
Notice or telephonic notice in lieu thereof as permitted by Section 2.8, the
Agent shall notify the Lenders by telecopy, telephone, or e-mail of the requested
Advance. Not later than noon (Chicago time) on each Borrowing Date, each Lender
shall make available its Revolving Loan in funds immediately available in Chicago to
the Agent and the Agent will make the funds so received from the Lenders available
to the Borrower Representative at the Funding Account as set forth in Section
2.5.




           (e) Increase in Aggregate Commitment. In the event that the Borrowers
desire to increase the Aggregate Commitment, and so long as no Unmatured Default or
Default shall have occurred and be continuing, with the prior written consent of
Agent, which shall be solely in its discretion, the Borrowers shall have the option
from time to time prior to the Facility Termination Date upon not less than ten (10)
days prior written notice to Agent to request that the Revolving Lenders increase
their respective Revolving Commitments such that the Aggregate Revolving Commitment
shall be increased by a minimum amount of $10,000,000 (in each case, and not to
exceed $30,000,000 in the aggregate), but no Revolving Lender shall have any
obligation whatsoever to agree to any such requested increase (or any portion
thereof), and each Revolving Lender may in its sole and absolute discretion reject
any such requested increase. Such written notice from Borrowers shall specify (i)
the date of such proposed increase in the Aggregate Commitment (which date shall not
be less than 10 Business Days from the date of receipt by Agent of Borrowers’
notice), (ii) the aggregate amount of such proposed Commitment increase, which
shall comply with the requirements set forth above, (iii) that, at the time of
and after giving effect to such proposed Aggregate Commitment increase, the
Borrowers shall be in compliance with the financial covenant set forth in Section
6.29.2, (iv) that no Unmatured Default or Default has occurred and is continuing,
or will result from such increase in the Aggregate Commitment and (v) that all
requisite corporate proceedings or actions, that may be required authorizing the
requested increase shall have been taken by each of the Borrowers. Upon receipt of
such notice from the Borrowers, the Agent shall give notice to each Lender of such
proposed increase in the Aggregate Commitment. Failure of any such Lender to
respond to such requested increase on or before the second Business Day preceding
the date of the proposed increase described in the notice shall be deemed to be a
rejection thereof. If the Revolving Lenders do not agree to increase their
respective Revolving Commitments by amounts sufficient to provide an increase in the
Aggregate Revolving Commitment, the Agent shall have the right to admit additional
Revolving Lenders, if any are agreeable, to increase the Aggregate Revolving
Commitment to the amount requested by the Borrower, up to the maximum amount of
$130,000,000. In the event of such an increase, whether by increase in the
respective Revolving Commitments of existing Revolving Lenders or
by admission of additional Revolving Lenders, the Pro Rata Share of the
Revolving Lenders automatically shall be adjusted. The Loan Parties and each of the
Revolving Lenders and any other offeree that agrees to such requested increase shall
execute and deliver to the Agent a certificate substantially in the form of Exhibit
K attached hereto (a



26









 







 “Commitment Increase Certificate”), and upon its
receipt of a duly completed Commitment Increase Certificate, Agent shall record the
information contained therein in the Register.



          2.1.2. Facility LCs.





           (a) Issuance. The LC Issuer hereby agrees, on the terms and conditions
set forth in this Agreement, to issue to any Borrower standby and commercial Letters
of Credit (each, a “Facility LC”) and to renew, extend, increase, decrease
or otherwise modify each Facility LC (“Modify,” and each such action a
“Modification”), from time to time from and including the Effective Date and
prior to the Facility Termination Date upon the request of the Borrower
Representative for the account of the applicable Borrower; provided that, the
maximum face amount of the Facility LC to be issued or Modified, does not exceed the
least of (i) an amount equal to $28,000,000 minus the sum of (1) the
aggregate undrawn amount of all outstanding Facility LCs at such time plus,
without duplication, (2) the aggregate unpaid Reimbursement Obligations with respect
to all Facility LCs outstanding at such time and (ii) the Borrowers’ Availability.
No Facility LC (or any renewal thereof) shall have an expiry date later than the
earlier of (x) the thirtieth (30th) Business Day prior to the Facility
Termination Date and (y) one year after its issuance; provided that any
Letter of Credit with a one-year tenor may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date referred
to in clause (x) above).




           (b) Participations. Upon the issuance or Modification by the LC Issuer
of a Facility LC in accordance with this Section 2.1.2, the LC Issuer shall
be deemed, without further action by any party hereto, to have unconditionally and
irrevocably sold to each Revolving Lender, and each Revolving Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the LC Issuer, a participation in such Facility LC (and
each Modification thereof) and the related LC Obligations in proportion to its Pro
Rata Share.




           (c) Notice. Subject to Section 2.1.2(a), the Borrower
Representative, on behalf of the applicable Borrower, shall give the LC Issuer
notice prior to 11:00 a.m. (Chicago time) at least three Business Days prior to the
proposed date of issuance or Modification of each Facility LC, specifying the
beneficiary, the proposed date of issuance (or Modification) and the expiry date of
such Facility LC, and describing the proposed terms of such Facility LC and the
nature of the transactions proposed to be supported thereby. Upon receipt of such
notice, the LC Issuer shall promptly notify the Agent, and the Agent shall promptly
notify each Revolving Lender, of the contents thereof and of the amount of such
Revolving Lender’s participation in such proposed Facility LC. The issuance or
Modification by the LC Issuer of any Facility LC shall, in addition to the
conditions precedent set forth in Article IV (the satisfaction of which the
LC Issuer shall have no duty to ascertain), be subject to the conditions precedent
that such Facility LC shall be satisfactory to the LC Issuer and that the applicable
Borrower shall have executed and delivered such application agreement and/or such
other instruments and agreements relating to such Facility LC as the LC Issuer shall
have reasonably requested (each, a “Facility LC Application”). In the event
of any conflict between the terms of this Agreement and the terms of any Facility LC
Application, the terms of this Agreement shall control.



27









 






           (d) Administration; Reimbursement by Revolving Lenders. Upon receipt
from the beneficiary of any Facility LC of any demand for payment under such
Facility LC, the LC Issuer shall notify the Agent and the Agent shall promptly
notify the Borrower Representative and each other Revolving Lender as to the amount
to be paid by the LC Issuer as a result of such demand and the proposed payment date
(the “LC Payment Date”). The responsibility of the LC Issuer to the
Borrower Representative, the Borrowers and each Revolving Lender shall be only to
determine that the documents (including each demand for payment) delivered under
each Facility LC in connection with such presentment shall be in conformity in all
material respects with such Facility LC. The LC Issuer shall endeavor to exercise
the same care in the issuance and administration of the Facility LCs as it does with
respect to letters of credit in which no participations are granted, it being
understood that in the absence of any gross negligence or willful misconduct by the
LC Issuer, each Revolving Lender shall be unconditionally and irrevocably liable
without regard to the occurrence of any Default or any condition precedent
whatsoever, to reimburse the LC Issuer on demand for (i) such Revolving Lender’s Pro
Rata Share of the amount of each payment made by the LC Issuer under each Facility
LC to the extent such amount is not reimbursed by the Borrowers pursuant to
Section 2.1.2(e) below, plus (ii) interest on the foregoing amount
to be reimbursed by such Revolving Lender, for each day from the date of the LC
Issuer’s demand for such reimbursement (or, if such demand is made after 11:00 a.m.
(Chicago time) on such date, from the next succeeding Business Day) to the date on
which such Revolving Lender pays the amount to be reimbursed by it, at a rate of
interest per annum equal to the Federal Funds Effective Rate for the first three
days and, thereafter, at a rate of interest equal to the rate applicable to Floating
Rate Advances.




           (e) Reimbursement by Borrowers. Each Borrower shall be irrevocably and
unconditionally obligated to reimburse the LC Issuer on or before the applicable LC
Payment Date for any amounts to be paid by the LC Issuer upon any drawing under any
Facility LC, without presentment, demand, protest or other formalities of any kind;
provided that, no Borrower nor any Revolving Lender shall hereby be precluded from
asserting any claim for direct (but not consequential) damages suffered by such
Borrower or such Revolving Lender to the extent, but only to the extent, caused by
(i) the willful misconduct or gross negligence of the LC Issuer in determining
whether a request presented under any Facility LC issued by it complied with the
terms of such Facility LC or (ii) the LC Issuer’s failure to pay under any Facility
LC issued by it after the presentation to it of a request strictly complying with
the terms and conditions of such Facility LC. All such amounts paid by the LC
Issuer and remaining unpaid by the Borrowers shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to (x) the rate applicable to
Floating Rate Advances for such day if such day falls on or before the applicable LC
Payment Date and (y) the sum of 2% plus the rate applicable to Floating Rate
Advances for such day if such day falls after such LC Payment Date. The LC Issuer
will pay to each Revolving Lender ratably in accordance with its Pro Rata Share all
amounts received by it from the Borrowers for application in payment, in whole or in
part, of the Reimbursement Obligation in respect of any Facility LC issued by the LC
Issuer, but only to the extent such Revolving Lender has made payment to the LC
Issuer in respect of such Facility LC pursuant to Section 2.1.2(d). Subject
to the terms and conditions of this Agreement (including without limitation the
submission of a Borrowing Notice in compliance with Section 2.1.1(b) and the
satisfaction of the applicable conditions precedent set forth in Article
IV), the Borrower Representative may request an Advance hereunder on behalf of
the applicable Borrower for the purpose of satisfying any Reimbursement Obligation.



28









 






           (f) Obligations Absolute. Each Borrower’s obligations under this
Section 2.1.2 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which any Borrower may have or have had against the LC Issuer, any Revolving Lender
or any beneficiary of a Facility LC. Each Borrower further agrees with the LC
Issuer and the Revolving Lenders that the LC Issuer and the Revolving Lenders shall
not be responsible for, and such Borrower’s Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged, or
any dispute between or among any Borrower, any of its Affiliates, the beneficiary of
any Facility LC or any financing institution or other party to whom any Facility LC
may be transferred or any claims or defenses whatsoever of any Borrower or of any of
its Affiliates against the beneficiary of any Facility LC or any such transferee.
The LC Issuer shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however transmitted, in
connection with any Facility LC. Each Borrower agrees that any action taken or
omitted by the LC Issuer or any Revolving Lender under or in connection with each
Facility LC and the related drafts and documents, if done without gross negligence
or willful misconduct, shall be binding upon such Borrower and shall not put the LC
Issuer or any Revolving Lender under any liability to any Borrower. Nothing in this
Section 2.1.2(f) is intended to limit the right of the Borrowers to make a
claim against the LC Issuer for damages as contemplated by the proviso to the first
sentence of Section 2.1.2(e).




           (g) Actions of LC Issuer. The LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Facility LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other document believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the LC Issuer. The LC Issuer shall be
fully justified in failing or refusing to take any action under this Agreement
unless it shall first have received such advice or concurrence of the Required
Revolving Lenders as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Revolving Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Notwithstanding any other provision of this
Section 2.1.2, the LC Issuer shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement in accordance with a
request of the Required Revolving Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Revolving Lenders and any
future holders of a participation in any Facility LC.




           (h) Indemnification. Each Borrower hereby agrees to, jointly and
severally, indemnify and hold harmless each Revolving Lender, the LC Issuer and the
Agent, and their respective directors, officers, agents and employees from and
against any and all claims and damages, losses, liabilities, costs or expenses which
such Revolving Lender, the LC Issuer or the Agent may incur (or which may be claimed
against such Revolving Lender, the LC Issuer or the Agent by any Person whatsoever)
by reason of or in connection with the issuance, execution and delivery or transfer
of or payment or failure
to pay under any Facility LC or any actual or proposed use of any Facility LC,
including, without limitation, any claims, damages, losses, liabilities, costs or
expenses which the LC Issuer may incur by reason of or in connection with (i) the
failure of any other Revolving Lender to fulfill or comply with its obligations to
the LC Issuer hereunder (but



29









 







 nothing herein contained shall affect any rights any
Borrower may have against any Defaulting Lender) or (ii) by reason of or on account
of the LC Issuer issuing any Facility LC which specifies that the term “Beneficiary”
included therein includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any drawing by any such
successor Beneficiary be accompanied by a copy of a legal document, satisfactory to
the LC Issuer, evidencing the appointment of such successor Beneficiary; provided
that, the Borrowers shall not be required to indemnify any Revolving Lender, the LC
Issuer or the Agent for any claims, damages, losses, liabilities, costs or expenses
to the extent, but only to the extent, caused by (x) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request presented under any
Facility LC complied with the terms of such Facility LC or (y) the LC Issuer’s
failure to pay under any Facility LC after the presentation to it of a request
strictly complying with the terms and conditions of such Facility LC. Nothing in
this Section 2.1.2(h) is intended to limit the obligations of the Borrowers
under any other provision of this Agreement.




           (i) Revolving Lenders’ Indemnification. Each Revolving Lender shall,
ratably in accordance with its Pro Rata Share, indemnify the LC Issuer, its
Affiliates and their respective directors, officers, agents and employees (to the
extent not reimbursed by the Borrowers) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees’ gross negligence or willful misconduct
or the LC Issuer’s failure to pay under any Facility LC after the presentation to it
of a request strictly complying with the terms and conditions of the Facility LC)
that such indemnitees may suffer or incur in connection with this Section
2.1.2 or any action taken or omitted by such indemnitees hereunder.




           (j) Facility LC Collateral Account. The Borrowers agree that they
will, upon the request of the Agent in its Permitted Discretion or the Required
Revolving Lenders and until the final expiration date of any Facility LC and
thereafter as long as any amount is payable to the LC Issuer or the Revolving
Lenders in respect of any Facility LC, maintain a special collateral account
pursuant to arrangements satisfactory to the Agent (the “Facility LC Collateral
Account”) at the Agent’s office at the address specified pursuant to Article
XIII, in the name of the Borrowers but under the sole dominion and control of
the Agent, for the benefit of the Lenders and in which the Borrowers shall have no
interest other than as set forth in Section 8.1. Nothing in this
Section 2.1.2(j) shall either obligate the Agent to require any Borrower to
deposit any funds in the Facility LC Collateral Account or limit the right of the
Agent to release any funds held in the Facility LC Collateral Account in each case
other than as required by Section 8.1. Each Borrower hereby pledges,
assigns and grants to the Agent, on behalf of and for the ratable benefit of the
Lenders and the LC Issuer, a security interest in all of such Borrower’s right,
title and interest in and to all funds which may from time to time be on deposit in
the Facility LC Collateral Account to secure the prompt and complete payment and
performance of the Secured Obligations. The Agent will invest any funds on deposit
from time to time in the Facility LC Collateral Account in certificates of deposit
of JPMorgan Chase having a maturity not exceeding thirty days.




          (k) Rights as a Lender. In its capacity as a Lender, the LC Issuer
shall have the same rights and obligations as any other Lender.



30









 






           (l) Termination of the Facility. If, notwithstanding the provisions of
this Section 2.1.2, any Facility LC is outstanding upon the earlier of (x)
the termination of this Agreement and (y) the Facility Termination Date, then upon
such termination the Borrowers shall deposit with the Agent, for the benefit of the
Agent and the Lenders, with respect to all LC Obligations, as the Agent in its
discretion shall specify, either (i) a standby letter of credit (a “Supporting
Letter of Credit”), in form and substance satisfactory to the Agent, issued by
an issuer satisfactory to the Agent, in a stated amount equal to 105% of the
difference of (x) the amount of LC Obligations at such time, less (y) the amount on
deposit in the Facility LC Collateral Account at such time which is free and clear
of all rights and claims of third parties and has not been applied against the
Obligations (such difference, the “Collateral Shortfall Amount”), under
which Supporting Letter of Credit the Agent is entitled to draw amounts necessary to
reimburse the Agent, the LC Issuer and the Lenders for payments to be made by the
Agent, the LC Issuer and the Lenders under any such Facility LC and any fees and
expenses associated with such Facility LC, or (ii) cash, in immediately available
funds, in an amount equal to 105% of the Collateral Shortfall Amount to be held in
the Facility LC Collateral Account. Such Supporting Letter of Credit or deposit of
cash shall be held by the Agent, for the benefit of the Agent and the Lenders, as
security for, and to provide for the payment of, the aggregate undrawn amount of
such Facility LC remaining outstanding.



          2.1.3. Non-Ratable Loans. Subject to the restrictions set forth in Section
2.1.1(a), the Agent may elect to have the terms of this Section 2.1.3 apply to any
requested Floating Rate Advance and JPMorgan Chase shall thereafter make an Advance, on behalf of
the Revolving Lenders and in the amount requested, available to the Borrowers on the applicable
Borrowing Date by transferring same day funds to the Funding Account. Each Advance made solely by
the Agent pursuant to this Section 2.1.3 is referred to in this Agreement as a “Non-Ratable
Loan,” and such Advances are referred to as the “Non-Ratable Loans.” Each Non-Ratable Loan shall
be subject to all the terms and conditions applicable to other Advances funded by the Revolving
Lenders, except that all payments thereon shall be payable to JPMorgan Chase solely for its own
account. The Agent shall not make any Non-Ratable Loan if the requested Non-Ratable Loan exceeds
the Borrowers’ Availability (before giving effect to such Non-Ratable Loan). Non-Ratable Loans may
be made even if a Default or Unmatured Default exists, but may not be made if the conditions
precedent set forth in Section 4.2 have not been satisfied. The Non-Ratable Loans shall be
secured by the Liens granted to the Agent in and to the Collateral and shall constitute Obligations
hereunder. All Non-Ratable Loans shall be Floating Rate Advances and are subject to the settlement
provisions set forth in Section 2.19.




          2.1.4. Protective Advances and Overadvances.





           (a) Protective Advances. Subject to the limitations set forth below,
after the occurrence and during the continuance of a Default or an Unmatured
Default, the Agent is authorized by the Borrowers and the Lenders, from time to time
in the Agent’s sole discretion (but shall have absolutely no obligation to), to make
Advances, on behalf of all Lenders, in an aggregate amount outstanding at any time
not to exceed $7,000,000, which the 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 Borrowers pursuant
to the terms of this Agreement, including costs, fees, and expenses as described in
Section 9.6 (any of such Advances are herein referred to as “Protective
Advances”); provided that, no Protective Advance shall cause the Aggregate
Credit Exposure to exceed the Aggregate Commitment. Protective Advances may be made
even if the conditions precedent set



31









 







forth in Section 4.2 have not been
satisfied. The Protective Advances shall be secured by the Liens in favor of the
Agent in and to the Collateral and shall constitute Obligations hereunder. All
Protective Advances shall be Floating Rate Advances, shall bear interest at the
default rate set forth in Section 2.12 and shall be payable on the earlier
of demand or the Facility Termination Date. The Required Lenders may at any time
revoke the Agent’s authorization to make Protective Advances. Any such revocation
must be in writing and shall become effective prospectively upon the Agent’s receipt
thereof. At any time that there is sufficient Availability and the conditions
precedent set forth in Section 4.2 have been satisfied, the Agent may
request the Revolving Lenders to make a Revolving Loan to repay a Protective
Advance. At any other time the Agent may require the Lenders to fund their risk
participations described in Section 2.2.




          (b) Overadvances. Any provision of this Agreement to the contrary
notwithstanding, at the request of the Borrower Representative on behalf of any
Borrower, the Agent may in its sole discretion (but shall have absolutely no
obligation to), make Advances to the Borrower Representative (for the account of
such Borrower), on behalf of the Revolving Lenders, in amounts that exceed the
Borrowers’ Availability (any such excess Advances are herein referred to
collectively as “Overadvances”); provided that, (i) no such Overadvance
shall be outstanding for more than thirty (30) consecutive days, (ii) no such event
or occurrence shall cause or constitute a waiver of the Agent’s or Revolving
Lenders’ right to refuse to make any further Overadvances, Revolving Loans or
Non-Ratable Loans, or issue Facility LCs, as the case may be, at any time that an
Overadvance exists, and (iii) no Overadvance shall result in a Default or Unmatured
Default due to such Borrower’s failure to comply with Section 2.1.1(a) for
so long as the Agent permits such Overadvance to remain outstanding, but solely with
respect to the amount of such Overadvance. In addition, Overadvances may be made
even if a Default or Unmatured Default exists, but may not be made if the conditions
precedent set forth in Section 4.2 have not been satisfied (other than the
condition regarding Availability). All Overadvances shall constitute Floating Rate
Advances, shall bear interest at the default rate set forth in Section 2.12,
shall be payable on the earlier of demand or the Facility Termination Date and
are subject to the settlement provisions set forth in Section 2.19. The
authority of the Agent to make Overadvances is limited to an aggregate amount not to
exceed $7,000,000 at any time, and no Overadvance shall cause any Revolving Lender’s
Revolving Credit Exposure to exceed its Revolving Commitment or the Aggregate Credit
Exposure to exceed the Aggregate Commitment; provided that, the Required Revolving
Lenders may at any time revoke the Agent’s authorization to make Overadvances. Any
such revocation must be in writing and shall become effective prospectively upon the
Agent’s receipt thereof.



          2.1.5. [Intentionally Omitted.]




          2.1.6. [Intentionally Omitted.]




          2.1.7 Reallocation of Loans and Commitments. On the Effective Date, each Lender, if
any, whose relative proportion of its Commitment hereunder is increasing over the proportion of the
Commitment held by it prior to the Effective Date shall,
by assignments from the Lenders which were parties to the Amended Loan Agreement prior to the
Effective Date (the “Amended Agreement Lenders”) (which assignments shall be deemed to occur
hereunder automatically, and without any requirement for additional documentation, on the Effective
Date) acquire a portion of the Loans and Commitments of the Lenders so designated in such amounts,
and the Lenders shall, through Agent, make such other adjustments among themselves as shall be
necessary so that after giving effect to assignments and



32









 







adjustments, the Lenders shall hold all
Loans outstanding under this Agreement ratably in accordance with their respective Commitments as
reflected on the signature pages under such Lender’s name, as modified from time to time pursuant
to the terms hereof. On the Effective Date, all Interest Periods under the Amended Loan Agreement
in respect of any Existing Obligations under the Amended Loan Agreement shall automatically be
terminated (and the Borrowers shall on the Effective Date make payments to the Amended Agreement
Lenders that held such Existing Obligations to compensate for such termination as if such
termination were a payment or prepayment referred to in said Section 3.4), and subject to the other
restrictions contained herein, the Borrower shall be permitted to continue such Eurodollar Advances
or to convert such Eurodollar Advances into Floating Rate Advances or Floating Rate Loans,
respectively, hereunder.




     2.2. Ratable Loans; Risk Participation. Except as otherwise provided below, each
Advance made in connection with a Revolving Loan shall consist of Loans made by each Lender in an
amount equal to such Lender’s Pro Rata Share. Upon the making of an Advance by the Agent in
connection with a Non-Ratable Loan or an Overadvance (whether before or after the occurrence of a
Default or an Unmatured Default and regardless of whether the Agent has requested a Settlement with
respect to such Non-Ratable Loan or Overadvance), the Agent shall be deemed, without further action
by any party hereto, to have unconditionally and irrevocably sold to each Revolving Lender and each
Revolving Lender shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the Agent, without recourse or warranty, an
undivided interest and participation in such Non-Ratable Loan or Overadvance in proportion to its
Pro Rata Share of the Revolving Commitment. Upon the making of an Advance by the Agent in
connection with a Protective Advance (whether before or after the occurrence of a Default or an
Unmatured Default and regardless of whether the Agent has requested a Settlement with respect to
such Protective Advance), the Agent shall be deemed, without further action by any party hereto, to
have unconditionally and irrevocably sold to each Lender and each Lender shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably purchased from the
Agent, without recourse or warranty, an undivided interest and participation in such Protective
Advance in proportion to its Pro Rata Share of the Aggregate Commitment. From and after the date,
if any, on which any Lender is required to fund its participation in any Non-Ratable Loan,
Overadvance or Protective Advance purchased hereunder, the Agent shall promptly distribute to such
Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such Loan.



     2.3. Payment of the Obligations. The Borrowers shall repay the outstanding principal
balance of the Loans, together with all other Obligations, including all accrued and unpaid
interest thereon, on the Facility Termination Date.



     2.4. Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum
amount of $5,000,000 and in multiples of $1,000,000 if in excess thereof. Floating Rate Advances
may be in any amount.



     2.5.
Funding Account. The Borrower Representative shall deliver to the Agent, on the Effective Date, a notice
setting forth the deposit account of the Borrower Representative (the “Funding Account”) to
which the Agent is authorized by the Borrowers to transfer the proceeds of any Advances requested
pursuant to this Agreement. The Borrower Representative may designate a replacement Funding
Account from time to time by written notice to the Agent. Any designation by the Borrower
Representative of the Funding Account must be reasonably acceptable to the Agent.



     2.6. Reliance Upon Authority; No Liability. The Agent is entitled to rely conclusively
on any individual’s request for Advances hereunder, so long as the proceeds thereof are to be
transferred to the Funding Account. The Agent shall have no duty to verify the identity of any
individual representing



33









 







himself or herself as a person authorized by the Borrowers to make such
requests on their behalf. The Agent shall not incur any liability to the Borrowers as a result of
acting upon any notice referred to in Section 2.1 which the Agent reasonably believes to
have been given by an officer or other person duly authorized by the Borrowers to request Advances
on their behalf or for otherwise acting under this Agreement. The crediting of Advances to the
Funding Account shall conclusively establish the joint and several obligation of the Borrowers to
repay such Advances as provided herein.



     2.7. Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall
continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into
Eurodollar Advances pursuant to this Section 2.7 or are repaid in accordance with this
Agreement. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the
then applicable Interest Period therefor, at which time such Eurodollar Advance shall be
automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was
repaid in accordance with this Agreement or (y) the Borrower Representative shall have given the
Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such
Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another
Interest Period. Subject to the terms of Section 2.4, the Borrower Representative may
elect from time to time to convert all or any part of a Floating Rate Advance into a Eurodollar
Advance on behalf of the applicable Borrower. The Borrower Representative shall give the Agent
irrevocable notice in the form of Exhibit B (a “Conversion/Continuation Notice”) of
each conversion of a Floating Rate Advance into a Eurodollar Advance or continuation of a
Eurodollar Advance not later than 11:00 a.m. (Chicago time) at least three Business Days prior to
the date of the requested conversion or continuation, specifying (i) the requested date, which
shall be a Business Day, of such conversion or continuation, (ii) the aggregate amount and Type of
the Advance which is to be converted or continued, and (iii) the amount of such Advance which is to
be converted into or continued as a Eurodollar Advance and the duration of the Interest Period
applicable thereto.



     2.8. Telephonic Notices. Each Borrower hereby authorizes the Lenders and the Agent to
extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds
based on telephonic notices made by any person or persons the Agent or any Lender in good faith
believes to be acting on behalf of the Borrower Representative, it being understood that the
foregoing authorization is specifically intended to allow Borrowing Notices and
Conversion/Continuation Notices to be given telephonically. The Borrower Representative agrees to
deliver promptly to the Agent a written confirmation, if such confirmation is requested by the
Agent or any Lender, of each telephonic notice signed by an Authorized Officer of the Borrower
Representative. If the written confirmation differs in any material respect from the action taken
by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent
manifest error.



     2.9. Notification of Advances, Interest Rates and Repayments. Promptly after receipt
thereof, the Agent will notify each Lender of the contents of each Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder. Promptly after
notice from the LC Issuer, the Agent will notify each Revolving Lender of the contents of each
request for issuance of a Facility LC hereunder or any Modification. The Agent will notify each
Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of
such interest rate and will give each Lender prompt notice of each change in the Alternate Base
Rate.



     2.10. Fees.




          (a) Unused Commitment Fee. The Borrowers agree to pay to the Agent, for
the account of each Revolving Lender in accordance with such Lender’s Pro Rata
Share, an unused commitment fee at a per annum rate equal to the Applicable Unused
Commitment Fee Rate on the average daily Available Revolving Commitment, payable



34









 







on each Payment Date hereafter and on the Facility Termination Date (the “Unused
Commitment Fee”).




          (b) LC Fees. The Borrowers, and their respective successors and
assigns, shall pay to the Agent, for the account of the Revolving Lenders ratably in
accordance with their respective Pro Rata Shares, a letter of credit fee at a per
annum rate equal to the Applicable LC Fee Rate on the average daily undrawn stated
amount under each Facility LC, such fee to be payable in arrears on each Payment
Date (the “LC Fee”). The Borrowers shall also pay to the LC Issuer for its
own account (x) at the time of issuance of each Facility LC, a fronting fee of
0.125% of the face amount of the Facility LC, and (y) documentary and processing
charges in connection with the issuance or Modification of and draws under Facility
LCs in accordance with the LC Issuer’s standard schedule for such charges as in
effect from time to time.




          (c) Agent and Arranger Fees. The Borrowers agree to pay to the Agent
such additional fees as are specified in the fee letter dated as of the Effective
Date, among the Agent and the Borrowers (the “Fee Letter”).




          (d) Increase and Extension Fee. The Borrowers agree to pay to the
Agent, for the account of each Lender, in consideration of an increase in the
Aggregate Commitment and the extension of the Facility Termination Date, a one-time
aggregate fee equal to $130,000, payable to Agent on, and fully earned and
non-refundable upon, the execution of this Agreement.



     2.11. Interest Rates. Each Floating Rate Advance shall bear interest on the outstanding
principal amount thereof, for each day from and including the date such Advance is made or is
automatically converted from a Eurodollar Advance into a Floating Rate Advance pursuant to
Section 2.7, to but excluding the date it is paid or is converted into a Eurodollar Advance
pursuant to Section 2.7 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate
Advance will take effect simultaneously with each change in the Alternate Base Rate. Each
Eurodollar Advance shall bear interest on the outstanding principal amount thereof from
and including the first day of the Interest Period applicable thereto to (but not including)
the last day of such Interest Period at the interest rate determined by the Agent as applicable to
such Eurodollar Advance based upon the Borrower Representative’s selections under Sections
2.1.1 and 2.7 and otherwise in accordance with the terms hereof. No Interest Period
may end after the Facility Termination Date. If at any time Loans are outstanding with respect to
which the Borrower Representative has not delivered a notice to the Agent specifying the basis for
determining the interest rate applicable thereto, those Loans shall bear interest at the Floating
Rate.



     2.12. Eurodollar Advances Post Default; Default Rates. Notwithstanding anything to the
contrary contained hereunder, during the continuance of a Default or Unmatured Default the Agent or
the Required Lenders may, at their option, by notice to the Borrower Representative (which notice
may be revoked at the option of the Required Lenders notwithstanding any provision of Section
8.3 requiring unanimous consent of the Lenders to reductions in interest rates), declare that
no Advance may be made as, converted into or continued as a Eurodollar Advance. During the
continuance of a Default the Agent or the Required Lenders may, at their option, by notice to the
Borrower Representative (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.3 requiring unanimous consent of the Lenders to
reductions in interest rates), declare that (i) each Eurodollar Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise applicable to such Interest
Period plus 2% per annum, (ii) each Floating Rate Advance shall bear interest at a rate per
annum equal to the Floating Rate in effect from time to time plus 2% per annum and (iii)
the



35









 







LC Fee shall be increased by 2% per annum, provided that, during the continuance of a Default
under subsection (f) or (g) of Article VII, the interest rates set forth in
clauses (i) and (ii) above and the increase in the LC Fee set forth in clause (iii) above shall be
applicable to all Credit Extensions without any election or action on the part of the Agent or any
Lender.



     2.13. Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating
Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur
after the date hereof and at maturity. Interest accrued on each Eurodollar Advance shall be
payable on the last day of its applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on
each Eurodollar Advance having an Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest Period. Interest on all Advances,
Unused Commitment Fees and LC Fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to noon (local time) at the place of
payment. If any payment of principal of or interest on an Advance shall become due on a day which
is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in computing interest in
connection with such payment. After giving effect to any Loan, Advance, continuation, or conversion
of any Eurodollar Loan, there may not be more than eight different Interest Periods in effect
hereunder.



     2.14. Voluntary Prepayments. The Borrowers may from time to time prepay, without penalty
or premium, all or any portion of the outstanding Floating Rate Advances upon written notice to the
Agent. The Borrowers may also from time to time prepay, subject to the payment of any funding
indemnification amounts required by Section 3.4 but without penalty or premium, all
outstanding Eurodollar Advances, or, in a minimum aggregate
amount of $1,000,000 or any integral multiple of $100,000 in excess thereof, any portion of
the outstanding Eurodollar Advances upon three Business Days’ prior notice to the Agent.



     2.15. Mandatory Prepayments.




          (a) Borrowing Base Compliance. Except for Overadvances permitted
pursuant to Section 2.1.4(b), the Borrowers shall immediately repay the
Revolving Loans, Reimbursement Obligations and/or Non-Ratable Loans if at any time
the Aggregate Revolving Exposure exceeds the lesser of (i) the Revolving Commitment
and (ii) the Aggregate Borrowing Base, to the extent required to eliminate such
excess. If any such excess remains after repayment in full of all outstanding
Revolving Loans, Reimbursement Obligations and Non-Ratable Loans, the Borrowers
shall provide cash collateral or a Supporting Letter of Credit for the LC
Obligations in the manner set forth in Section 2.1.2(l) to the extent
required to eliminate such excess.




          (b) Sale of Assets. Immediately upon receipt by any Loan Party of the
Net Cash Proceeds of any asset disposition (other than sales of inventory (including
wooden and composite mats removed from the Company’s rental fleet and sold as used
mats) in the ordinary course of business and sales the Net Cash Proceeds of which do
not exceed $100,000) the applicable Borrower shall prepay the Obligations or shall
cause the applicable Loan Party to deliver funds to the Agent for application to the
Obligations, in an amount equal to all such Net Cash Proceeds. Any such prepayment
shall be applied first, to pay the principal of the Overadvances and
Protective Advances, second, to pay the principal of the Non-Ratable Loans,
third, to pay the principal of the Revolving Loans



36









 







without a concomitant
reduction in the Revolving Commitment, and fourth, to cash collateralize
outstanding Facility LCs.




          (c) Issuance of Debt or Equity. Subject to the terms of the
Intercreditor Agreement, if any Borrower issues Capital Stock (other than Capital
Stock issued to management or employees of Company or any of its Subsidiaries under
any Capital Stock based compensation plan) or any Loan Party issues Indebtedness
(other than Indebtedness permitted by Sections 6.17(a), (c),
(e), (g), and (h)), or if any Loan Party receives any
dividend or distribution from a Person other than a Loan Party, in each case, no
later than the Business Day following the date of receipt by such Borrower or other
Loan Party, as the case may be, of any Net Cash Proceeds of such issuance or receipt
of such dividend, distribution, loan or advance, the Borrowers shall prepay the
Obligations in an amount equal to all such Net Cash Proceeds, dividends,
distributions, loans or advances. Any such prepayment shall be applied
first, to pay the principal of the Overadvances and Protective Advances,
second, to pay the principal of the Non-Ratable Loans, third, to pay
the principal of the Revolving Loans without a concomitant reduction in the
Revolving Commitment, and fourth, to cash collateralize outstanding Facility
LCs.




          (d) [Intentionally Omitted.]




          (e) Insurance/Condemnation Proceeds. Subject to the terms of the
Intercreditor Agreement, any insurance or condemnation proceeds to be applied to the
Obligations in accordance with Section 6.7(d) shall be applied as follows:
(i) insurance proceeds from casualties or losses to cash or Inventory shall be
applied, first, to the Overadvances and Protective Advances, pro rata,
second, to the Non-Ratable Loans, third, to the Revolving Loans of
the Borrower who received such proceeds, fourth, to cash collateralize
outstanding Facility LCs of the Borrower who received such proceeds,
fifth, to the Revolving Loans of the other Borrowers, and
sixth, to cash collateralize outstanding Facility LCs of the other
Borrowers, and (ii) insurance or condemnation proceeds from casualties or losses to
Equipment, Fixtures and real Property shall be applied first, to pay the
principal of the Overadvances and Protective Advances second, to pay the
principal of the Non-Ratable Loans, third, to pay the principal of the
Revolving Loans, and fourth, to cash collateralize outstanding Facility LCs.
The Revolving Commitment shall not be permanently reduced by the amount of any such
prepayments. 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 Agent, in its Permitted Discretion.




          (f) General. Subject to the terms of the Intercreditor Agreement,
without in any way limiting the foregoing, immediately upon receipt by any Loan
Party of proceeds of any sale of any Collateral, the Borrowers shall cause such Loan
Party to deliver such proceeds to the Agent, or deposit such proceeds in a deposit
account subject to a Deposit Account Control Agreement. All of such proceeds shall
be applied as set forth above or otherwise as provided in Section 2.18.
Nothing in this Section 2.15 shall be construed to constitute Agent’s or any
Lender’s consent to any transaction that is not permitted by other provisions of
this Agreement or the other Loan Documents.



37









 







     2.16. Termination of the Facility.




          (a) Without limiting Section 2.3 or Section 8.1, (a) the
Aggregate Commitments shall expire on the Facility Termination Date and


(b) the
Aggregate Credit Exposure and all other unpaid Obligations shall be paid in full by
the Borrowers on the Facility Termination Date.





          (b) The Borrowers may terminate this Agreement with at least ten Business Days’
prior written notice thereof to the Agent and the Lenders, upon (i) the payment in
full of all outstanding Loans, together with accrued and unpaid interest thereon,
(ii) the cancellation and return of all outstanding Facility LCs (or alternatively,
with respect to each such Facility LC, the furnishing to the Agent of a cash deposit
or Supporting Letter of Credit as required by Section 2.1.2(l)), (iii) the
payment in full of the early termination fee set forth in the following sentence
(the “Prepayment Fee”), (iv) the payment in full of all reimbursable expenses and
other Obligations together with accrued and unpaid interest thereon, and (v) the
payment in full of any amount due under Section 3.4. Subject to Section
2.24, if this Agreement is terminated at any time prior to the Facility
Termination Date, whether pursuant to this Section 2.16 or pursuant to
Section 8.1, the Borrower shall pay to the Agent, for the account of the
Lenders, an early termination fee determined in accordance with the following table:



	 	 	 
	Period during which early	 	 
	termination occurs	 	     Prepayment Fee
	On or prior to the first anniversary of the
Closing Date

	 	1.0% of the Aggregate
Commitment
	After the first anniversary of the Closing
Date but on or prior to the second
anniversary

     of the Closing Date

	 	0.50% of the Aggregate
Commitment







No such Prepayment Fee shall be payable in the event this Agreement is terminated in
connection with refinancing of the Obligations in a transaction in which JPMorgan
Chase or one of its Affiliates that is a banking institution provides or arranges a
replacement bank credit facility for the Borrowers.



     2.17. Method of Payment.




          (a) All payments of the Obligations hereunder shall be made, without setoff, deduction, or
counterclaim, in immediately available funds to the Agent at the Agent’s address specified pursuant
to Article XIII, or at any other Lending Installation of the Agent specified in writing by
the Agent to the Borrower Representative, by noon (local time) on the date when due and shall be
applied ratably by the Agent among the Lenders. Any payment received by the Agent after such time
shall be deemed to have been received on the following Business Day and any applicable interest or
fee shall continue to accrue. Solely for purposes of determining the amount of Loans available for
borrowing purposes, checks and cash or other immediately available funds from collections of items
of payment and proceeds of any Collateral shall be applied in whole or in part against the
Obligations, on the day of receipt, subject to actual collection. Each payment delivered to the
Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the
same type of funds that the Agent received at its




38










 






address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender.




     (b) At the election of the Agent, all payments of principal, interest,
reimbursement obligations in connection with Facility LCs, fees, premiums,
reimbursable expenses (including, without limitation, all reimbursement for fees and
expenses pursuant to Section 9.6), and other sums payable under the Loan
Documents, may be paid from the proceeds of Advances made hereunder whether made
following a request by the Borrower Representative pursuant to Section 2.1
or a deemed request as provided in this Section 2.17 or may be deducted from
the Funding Account or any other deposit account of any Borrower maintained with the
Agent. Each Borrower hereby irrevocably authorizes (i) the Agent to make an
Advance 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 Non-Ratable Loans,
Overadvances and Protective Advances) and that all such Advances shall be deemed to
have been requested pursuant to Section 2.1 and (ii) the Agent to charge
the Funding Account or any other deposit account of any Borrower maintained with
JPMorgan Chase for each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents.



     2.18. Apportionment, Application, and Reversal of Payments. Except as otherwise
required pursuant to Section 2.15, principal and interest payments shall be apportioned
ratably among the Lenders as set forth in this Article II and payments of the fees shall,
as applicable, be apportioned ratably among the Lenders, except for fees payable solely to the
Agent or the LC Issuer and except as provided in Section 2.10(c). All payments shall be
remitted to the Agent and all such payments not relating to principal or interest of specific Loans
or not constituting payment of specific fees as specified by the Borrower Representative,
and all proceeds of any Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement, first, to pay any fees, indemnities, or expense
reimbursements including amounts then due to the Agent from the Borrowers (other than in connection
with Banking Services or Rate Management Obligations), second, to pay any fees or expense
reimbursements then due to the Lenders from the Borrowers (other than in connection with Banking
Services or Rate Management 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 due in respect of the Non-Ratable Loans,
sixth, to pay interest due in respect of the Revolving Loans (other than Non-Ratable Loans,
Overadvances and Protective Advances), seventh, to pay or prepay principal on the
Non-Ratable Loans, eighth, to pay or prepay principal of the Revolving Loans (other than
Non-Ratable Loans, Overadvances and Protective Advances) and unpaid reimbursement obligations in
respect of Facility LCs, ninth, to pay an amount to the Agent equal to one hundred five
percent (105%) of the aggregate undrawn face amount of all outstanding Facility LCs and the
aggregate amount of any unpaid reimbursement obligations in respect of Facility LCs, to be held as
cash collateral for such Obligations, tenth, to payment of any amounts owing with respect
to Banking Services and Rate Management Obligations, and eleventh, to the payment of any
other Secured Obligation due to the Agent or any Lender by the Borrowers. Notwithstanding anything
to the contrary contained in this Agreement, unless so directed by the Borrower Representative, or
unless a Default is in existence, neither the Agent nor any Lender shall apply any payment which it
receives to any Eurodollar Loan, except (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 Floating Rate Loans and, in any event, the Borrowers shall pay the Eurodollar
breakage losses in accordance with Section 3.4. The 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. All Loans to Borrowers and all of
the other Obligations of



39









 







Borrowers arising under this Agreement and the other Loan Documents
shall constitute one general obligation of Borrowers secured by all of the Collateral.



     2.19. Settlement. Each Revolving Lender’s funded portion of the Loans is intended by
the Revolving Lenders to be equal at all times to such Revolving Lender’s Pro Rata Share of the
outstanding Loans. Notwithstanding such agreement, the Agent, JPMorgan Chase, and the Lenders
agree (which agreement shall not be for the benefit of or enforceable by the Loan Parties) that in
order to facilitate the administration of this Agreement and the other Loan Documents, settlement
among them as to the Loans, including the Non-Ratable Loans and Overadvances shall take place on a
periodic basis as follows. The Agent shall request settlement (a “Settlement”) with the
Lenders on at least a weekly basis, or on a more frequent basis at the Agent’s election, by
notifying the Lenders of such requested Settlement by telecopy, telephone, or e-mail no later than
12:00 noon (Chicago time) on the date of such requested Settlement (the “Settlement Date”).
Each Revolving Lender (other than the Agent, in the case of the Non-Ratable Loans and
Overadvances) shall transfer the amount of such Revolving Lender’s Pro Rata Share of the
outstanding principal amount of the applicable Loan with respect to which Settlement is requested
to the Agent, to such account of the Agent as the Agent may designate, not later than 2:00 p.m.
(Chicago time), on the Settlement Date applicable thereto. Settlements may occur during the
existence of a Default or an Unmatured Default and whether or not the applicable conditions
precedent set forth in Section 4.2 have then been satisfied. Such amounts transferred to
the Agent shall be applied against the amounts of the applicable Loan and, together with JPMorgan
Chase’s Pro Rata Share of such Non-Ratable Loan or Overadvance, shall constitute Revolving Loans of
such Lenders, respectively. If any such amount is not transferred to the Agent by any Lender on
the Settlement Date applicable thereto, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon as specified in Section 2.23.



     2.20. Indemnity for Returned Payments. If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the 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 Agent or such Lender and the Borrowers shall be liable to pay to the Agent and
the Lenders, and each Borrower hereby indemnifies the Agent and the Lenders and holds the Agent and
the Lenders harmless for the amount of such payment or proceeds surrendered. The provisions of
this Section 2.20 shall be and remain effective notwithstanding any contrary action which
may have been taken by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to the Agent’s and the
Lenders’ rights under this Agreement and shall be deemed to have been conditioned upon such payment
or application of proceeds having become final and irrevocable. The provisions of this Section
2.20 shall survive the termination of this Agreement.



     2.21. Noteless Agreement; Evidence of Indebtedness.




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




     (b) The Agent shall also maintain accounts in which it will record (i) the
amount of each Loan extended hereunder, the Type thereof, the name of the Borrower
who requested such Loan and the Interest Period with respect thereto, (ii) the
amount of



40









 







any principal or interest due and payable or to become due and payable
from the Borrowers to each Lender hereunder, (iii) the original stated amount of
each Facility LC and the amount of LC Obligations outstanding at any time, and (iv)
the amount of any sum received by the Agent hereunder from the Borrowers and each
Lender’s share thereof.




     (c) The entries maintained in the accounts maintained pursuant to paragraphs
(a) and (b) above shall be prima facie evidence of the existence and amounts of the
Obligations therein recorded; provided however, that the failure of the Agent or any
Lender to maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrowers to repay the Obligations in accordance with their
terms.




     (d) Any Lender may request that its Revolving Loans be evidenced by a
promissory note in substantially the form of Exhibit C (a “Revolving
Note”). In such event, each Borrower shall prepare, execute and deliver to such
Lender such Note payable to the order of such Lender. Thereafter, the Revolving
Loans evidenced by such Revolving Note, and interest on the foregoing shall at all
times (prior to any assignment pursuant to Section 12.3) be represented by
one or more Notes payable to the order of the payee named therein, except to the
extent that any such Lender subsequently returns any such Note for cancellation and
requests that such Revolving Loans, once again be evidenced as described in
paragraphs (a) and (b) above.



     2.22. Lending Installations. Each Lender may book its Loans and its participation in
any LC Obligations and the LC Issuer may book the Facility LCs at any Lending Installation selected
by such Lender or the LC Issuer, as the case may be, and may change its Lending Installation from
time to time. All terms of this Agreement shall apply to any such Lending Installation and the
Loans, Facility LCs, Reimbursement Obligations and any Notes issued hereunder shall be deemed held
by each Lender or the LC Issuer, as the case may be, for the benefit of any such Lending
Installation. Each Lender and the LC Issuer may, by written notice to the Agent and the Borrower
Representative in accordance with Article XIII, designate replacement or additional Lending
Installations through which Loans will be made by it or Facility LCs will be issued by it and for
whose account Loan payments or payments with respect to Facility LCs are to be made.



     2.23. Non-Receipt of Funds by the Agent; Defaulting Lenders.




     (a) Unless the Borrower Representative or a Lender, as the case may be,
notifies the Agent prior to the date on which it is scheduled to make payment to the
Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case
of the Borrowers, a payment of principal, interest or fees to the Agent for the
account of the Lenders, that it does not intend to make such payment, the Agent may
assume that such payment has been made. The Agent may, but shall not be obligated
to, make the amount of such payment available to the intended recipient in reliance
upon such assumption. If such Lender or the Borrowers, as the case may be, have not
in fact made such payment to the Agent, the recipient of such payment shall, on
demand by the Agent, repay to the Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the date
such amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to (x) in
the case of payment by a Lender, the Federal Funds Effective Rate for such day
for the first three days and, thereafter, the interest rate applicable to the
relevant Loan or (y) in the case of payment by the Borrowers, the interest rate
applicable to the relevant Loan.



41









 






     (b) If a payment has not been made by a Lender (a “Defaulting Lender”),
the Agent will notify the Borrower Representative of such failure to fund and, upon
demand by the Agent, the Borrowers shall pay such amount (to the extent such amount
had been made available to Borrowers hereunder) to the Agent for the Agent’s
account, together with interest thereon for each day elapsed since the Borrowing
Date at a rate per annum equal to the interest rate applicable to the relevant Loan.
The Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by the Borrowers to the Agent for the Defaulting Lender’s benefit, and, in the
absence of such transfer to the Defaulting Lender, the Agent shall transfer any such
payments to each other non-Defaulting Lender ratably in accordance with their Pro
Rata Share of the Commitments (but only to the extent that such Defaulting Lender’s
Advance was funded by the other Lenders) or, if so directed by the Borrower
Representative and if no Unmatured Default or Default has occurred and is continuing
(and to the extent such Defaulting Lender’s Advance was not funded by the other
Lenders), retain the same to be re-advanced to the Borrowers as if such Defaulting
Lender had made Advances to the Borrowers. Subject to the foregoing, the Agent may
hold and, in its Permitted Discretion, setoff such Defaulting Lender’s funding
shortfall against that Defaulting Lender’s Pro Rata Share of all payments received
from the Borrowers or re-lend to the Borrowers for the account of such Defaulting
Lender the amount of all such payments received and retained by the Agent for the
account of such Defaulting Lender. Until a Defaulting Lender cures its failure to
fund its Pro Rata Share of any Advance (i) solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a “Lender” and such Defaulting Lender’s Commitment shall
be deemed to be zero, (ii) such Defaulting Lender shall not be entitled to any
portion of the Unused Commitment Fee and (iii) the Unused Commitment Fee shall
accrue in favor of the Lenders which have funded their respective Pro Rata Shares of
such requested Advance and shall be allocated among such non-Defaulting Lenders
ratably based on their Pro Rata Share of the Commitments. This Section shall remain
effective with respect to such Defaulting Lender until (x) the Obligations under
this Agreement shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting Lenders, the Agent, and the Borrower Representative
shall have waived such Defaulting Lender’s default in writing, or (z) the
Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to the
Agent all amounts owing by the Defaulting Lender in respect thereof. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by such Defaulting
Lender or any other Lender of its duties and obligations hereunder.



     2.24. Limitation of Interest. The Borrowers, the Agent and the Lenders intend to
strictly comply with all applicable laws, including applicable usury laws. Accordingly, the
provisions of this Section 2.24 shall govern and control over every other provision of this
Agreement or any other Loan Document which conflicts or is inconsistent with this Section
2.24, even if such provision declares that it controls. As used in this Section 2.24,
the term “interest” includes the aggregate of all charges, fees, benefits or other compensation
which constitute interest under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an expense or as
compensation for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or received shall be
amortized, prorated, allocated and spread, in equal parts during the full term of the Obligations.
In no event shall the Borrowers or any other Person be obligated to pay, or any Lender have any
right or privilege to reserve, receive or retain, (a) any interest in excess of the maximum amount
of nonusurious interest permitted under the laws of the State of Texas or the applicable laws (if
any) of the U.S. or of any



42









 







other applicable state, or (b) total interest in excess of the amount
which such Lender could lawfully have contracted for, reserved, received, retained or charged had
the interest been calculated for the full term of the Obligations at the Highest Lawful Rate. On
each day, if any, that the interest rate (the “Stated Rate”) called for under this
Agreement or any other Loan Document exceeds the Highest Lawful Rate, the rate at which interest
shall accrue shall automatically be fixed by operation of this sentence at the Highest Lawful Rate
for that day, and shall remain fixed at the Highest Lawful Rate for each day thereafter until the
total amount of interest accrued equals the total amount of interest which would have accrued if
there were no such ceiling rate as is imposed by this sentence. Thereafter, interest shall accrue
at the Stated Rate unless and until the Stated Rate again exceeds the Highest Lawful Rate when the
provisions of the immediately preceding sentence shall again automatically operate to limit the
interest accrual rate. The daily interest rates to be used in calculating interest at the Highest
Lawful Rate shall be determined by dividing the applicable Highest Lawful Rate per annum by the
number of days in the calendar year for which such calculation is being made. None of the terms
and provisions contained in this Agreement or in any other Loan Document which directly or
indirectly relate to interest shall ever be construed without reference to this Section
2.24, or be construed to create a contract to pay for the use, forbearance or detention of
money at an interest rate in excess of the Highest Lawful Rate. If the term of any Obligation is
shortened by reason of acceleration of maturity as a result of any Default or by any other cause,
or by reason of any required or permitted prepayment, and if for that (or any other) reason any
Lender at any time, including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Highest Lawful Rate, then and in any
such event all of any such excess interest shall be canceled automatically as of the date of such
acceleration, prepayment or other event which produces the excess, and, if such excess interest has
been paid to such Lender, it shall be credited pro tanto against the then-outstanding principal
balance of the Borrowers’ obligations to such Lender, effective as of the date or dates when the
event occurs which causes it to be excess interest, until such excess is exhausted or all of such
principal has been fully paid and satisfied, whichever occurs first, and any remaining balance of
such excess shall be promptly refunded to its payor. Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit accounts (formerly Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch. 15))
shall not apply to this Agreement or to any Loan, nor shall this Agreement or any Loan be governed
by or be subject to the provisions of such Chapter 346 in any manner whatsoever.



ARTICLE III




YIELD PROTECTION; TAXES




     3.1. Yield Protection. If, on or after the Closing Date, the adoption of any law or
any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any change in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or applicable Lending
Installation or the LC Issuer with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency:




     (a) subjects any Lender or any applicable Lending Installation or the LC Issuer
to any Taxes, or changes the basis of taxation of payments (other than with respect
to Excluded Taxes) to any Lender or the LC Issuer in respect of its Eurodollar
Loans, Facility LCs or participations therein, or




     (b) imposes or increases or deems applicable any reserve, assessment, insurance
charge, special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by, any Lender or any applicable Lending



43









 







Installation or the LC Issuer (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar Advances), or




     (c) imposes any other condition the result of which is to increase the cost to
any Lender or any applicable Lending Installation or the LC Issuer of making,
funding or maintaining its Eurodollar Loans, or of issuing or participating in
Facility LCs, or reduces any amount receivable by any Lender or any applicable
Lending Installation or the LC Issuer in connection with its Eurodollar Loans,
Facility LCs or participations therein, or requires any Lender or any applicable
Lending Installation or the LC Issuer to make any payment calculated by reference to
the amount of Eurodollar Loans, Facility LCs or participations therein held or
interest or LC Fees received by it, by an amount deemed material by such Lender or
the LC Issuer as the case may be,


and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending
Installation or the LC Issuer, as the case may be, of making or maintaining its Eurodollar Loans or
Commitment or of issuing or participating in Facility LCs or to reduce the return received by such
Lender or applicable Lending Installation or the LC Issuer, as the case may be, in connection with
such Eurodollar Loans, Commitment, Facility LCs or participations therein, then, within fifteen
days of demand by such Lender or the LC Issuer, as the case may be, the Borrowers shall pay such
Lender or the LC Issuer, as the case may be, such additional amount or amounts as will compensate
such Lender or the LC Issuer, as the case may be, for such increased cost or reduction in amount
received.




     3.2. Changes in Capital Adequacy Regulations. If a Lender or the LC Issuer determines
the amount of capital required or expected to be maintained by such Lender or the LC Issuer, any
Lending Installation of such Lender or the LC Issuer, or any corporation controlling such Lender or
the LC Issuer is increased as a result of a Change, then, within fifteen days of demand by such
Lender or the LC Issuer, the Borrowers shall pay such Lender or the LC Issuer the amount necessary
to compensate for any shortfall in the rate of return on the portion of such increased capital
which such Lender or the LC Issuer determines is attributable to this Agreement, its Credit
Exposure or its Commitment to make Loans and issue or participate in Facility LCs, as the case may
be, hereunder (after taking into account such Lender’s or the LC Issuer’s policies as to capital
adequacy). “Change” means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines (as defined below) or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this Agreement which affects
the amount of capital required or expected to be maintained by any Lender or the LC Issuer or any
Lending Installation or any corporation controlling any Lender or the LC Issuer. “Risk-Based
Capital Guidelines” means (i) the risk-based capital guidelines in effect in the U.S. on the
date of this Agreement, including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the U.S. implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices Entitled “International Convergence
of Capital Measurements and Capital Standards,” including transition rules, and any amendments to
such regulations adopted prior to the date of this Agreement.



     3.3. Availability of Types of Advances. If any Lender determines that maintenance of
its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule,
regulation, or directive, whether or not having the force of law, or if the Required Lenders
determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances
are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately
reflect the cost of making or maintaining Eurodollar Advances, then the Agent shall suspend the
availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or
converted to Floating Rate Advances, subject to the payment of any funding indemnification amounts
required by Section 3.4.



44









 





     3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date
which is not the last day of the applicable Interest Period, whether because of acceleration,
prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by the Borrower
Representative for any reason other than default by the Lenders, the Borrowers will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar
Advance.



     3.5. Taxes.




     (a) All payments by the Borrowers to or for the account of any Lender, the LC
Issuer or the Agent hereunder or under any Note or Facility LC Application shall be
made free and clear of and without deduction for any and all Taxes. If any Borrower
shall be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender, the LC Issuer or the Agent, (a) 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 3.5)
such Lender, the LC Issuer or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (b) such
Borrower shall make such deductions, (c) such Borrower shall pay the full amount
deducted to the relevant authority in accordance with applicable law and (d) such
Borrower shall furnish to the Agent the original copy of a receipt evidencing
payment thereof within thirty days after such payment is made.




     (b) In addition, each Borrower hereby agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under any Note or Facility LC
Application or from the execution or delivery of, or otherwise with respect to, this
Agreement or any Note or Facility LC Application (“Other Taxes”).




     (c) The Borrowers hereby agree to, jointly and severally, indemnify the Agent,
the LC Issuer and each Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed on amounts payable
under this Section 3.5) paid by the Agent, the LC Issuer or such Lender as a
result of its Commitment, any Loans made by it hereunder, any Facility LC issued
hereunder or otherwise in connection with its participation in this Agreement and
any liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. Payments due under this indemnification shall be made within
thirty days of the date the Agent, the LC Issuer or such Lender makes demand
therefor pursuant to Section 3.6.




     (d) Each Lender that is not incorporated under the laws of the U.S. or a state
thereof (each a “Non-U.S. Lender”) agrees that it will, not more than ten
Business Days after the date of this Agreement, (i) deliver to the Agent two duly
completed copies of U.S. Internal Revenue Service Form W-8BEN or W-8ECI, certifying
in either case that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any U.S. federal income taxes, and (ii) deliver
to the Agent a U.S. Internal Revenue Form W-8 or W-9, as the case may be, and
certify that it is entitled to an exemption from U.S. backup withholding tax. Each
Non-U.S. Lender further undertakes to deliver to each of the Borrower Representative
and the Agent (x) renewals or additional copies of such form (or any successor
form) on or before the date that such form expires or becomes obsolete, and (y)
after the occurrence of any event requiring a change in the most recent forms so
delivered by it, such additional forms or amendments



45









 







thereto as may be reasonably
requested by the Borrower Representative or the Agent. All forms or amendments
described in the preceding sentence shall certify that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of any U.S.
federal income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form or amendment
with respect to it and such Lender advises the Borrower Representative and the Agent
that it is not capable of receiving payments without any deduction or withholding of
U.S. federal income tax.




     (e) For any period during which a Non-U.S. Lender has failed to provide the
Borrower Representative with an appropriate form pursuant to clause (d), above
(unless such failure is due to a change in treaty, law or regulation, or any change
in the interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under this
Section 3.5 with respect to Taxes imposed by the U.S.; provided that, should
a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of
withholding tax become subject to Taxes because of its failure to deliver a form
required under clause (d), above, the Borrowers shall take such steps as such
Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover
such Taxes.




     (f) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note pursuant
to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower
Representative (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at a
reduced rate.




     (g) If the U.S. Internal Revenue Service or any other governmental authority of
the U.S. or any other country or any political subdivision thereof asserts a claim
that the Agent did not properly withhold tax from amounts paid to or for the account
of any Lender (because the appropriate form was not delivered or properly completed,
because such Lender failed to notify the Agent of a change in circumstances which
rendered its exemption from withholding ineffective, or for any other reason), such
Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly,
by the Agent as tax, withholding therefor, or otherwise, including penalties and
interest, and including taxes imposed by any jurisdiction on amounts payable to the
Agent under this subsection,
together with all costs and expenses related thereto (including attorneys fees
and time charges of attorneys for the Agent, which attorneys may be employees of the
Agent). The obligations of the Lenders under this Section 3.5(g) shall
survive the payment of the Obligations and termination of this Agreement.



     3.6. Lender Statements; Survival of Indemnity. To the extent reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans
to reduce any liability of the Borrowers to such Lender under Sections 3.1, 3.2 and
3.5 or to avoid the unavailability of Eurodollar Advances under Section 3.3, so
long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender.
Each Lender shall deliver a written statement of such Lender to the Borrower Representative (with a
copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2,
3.4 or 3.5. Such written statement shall set forth in reasonable detail the
calculations upon which



46









 







such Lender determined such amount and shall be final, conclusive and
binding on the Borrowers in the absence of manifest error. Determination of amounts payable under
such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded
its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in
fact that is the case or not. Unless otherwise provided herein, the amount specified in the
written statement of any Lender shall be payable on demand after receipt by the Borrower
Representative of such written statement. The obligations of the Borrowers under Sections
3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and
termination of this Agreement.



ARTICLE IV




CONDITIONS PRECEDENT




     4.1. Effectiveness. This Agreement will not become effective unless the Loan Parties
have satisfied each of the following conditions, in addition to the documents delivered under or in
connection with the Prior Loan Agreements, unless the Agent, in its sole discretion, deems such
prior delivery of any document as satisfaction of any condition set forth herein, in a manner
satisfactory to the Agent and the Lenders, and with respect to any condition requiring delivery of
any agreement, certificate, document, or instrument, the Loan Parties shall have furnished to the
Agent sufficient copies of any such agreement, certificate, document, or instrument for
distribution to the Lenders:




     (a) This Agreement or counterparts hereof shall have been duly executed by each
Loan Party, the Agent and the Lenders; and the Agent shall have received duly
executed copies of the Loan Documents and such other documents, instruments,
agreements and legal opinions as the Agent shall reasonably request in connection
with the transactions contemplated by this Agreement and the other Loan Documents,
each in form and substance reasonably satisfactory to the Agent.




     (b) Each Loan Party shall have delivered copies of its articles or certificate
of incorporation, organization or limited partnership, together with all amendments,
and a certificate of good standing, each certified by the appropriate governmental
officer in its jurisdiction of incorporation or organization.




     (c) Each Loan Party shall have delivered copies, certified by its Secretary or
Assistant Secretary, of its by-laws or operating, management or partnership
agreement
and of its Board of Directors’ resolutions or the resolutions of its members
and of resolutions or actions of any other body authorizing the execution, delivery
and performance of the Loan Documents to which such Loan Party is a party.




     (d) Each Loan Party shall have delivered an incumbency certificate, executed by
its Secretary or Assistant Secretary (or Secretary or Assistant Secretary of the
general partner of such Borrower, if applicable), which shall identify by name and
title and bear the signatures of the Authorized Officers and any other officers such
Loan Party authorized to sign the Loan Documents to which such Loan Party is a
party, upon which certificate the Agent and the Lenders shall be entitled to rely
until informed of any change in writing by such Loan Party.




     (e) Each Borrower and each other Loan Party shall have delivered a certificate,
signed by the chief financial officer of such Borrower and such other Loan Party, on
the initial Credit Extension Date (i) stating that no Default or Unmatured



47









 







Default
has occurred and is continuing, (ii) stating that the representations and
warranties contained in Article V are true and correct as of such Credit
Extension Date, (iii) specifying the deposit account at JPMorgan Chase which shall
be used as the Funding Account and (iv) certifying any other factual matters as may
be reasonably requested by the Agent or any Lender.




     (f) The Loan Parties shall have delivered a written opinion of the Loan
Parties’ counsel, addressed to the Agent, the LC Issuer and the Lenders, in form and
substance satisfactory to the Agent.




     (g) The Borrowers shall have delivered any Notes requested by a Lender pursuant
to Section 2.21 payable to the order of each such requesting Lender.




     (h) The Borrowers shall have delivered money transfer authorizations as the
Agent may have reasonably requested.




     (i) Unless otherwise agreed by the Agent, the Loan Parties shall have
delivered, with respect to each parcel of real Property which is required to be
subject to a Lien in favor of the Agent, each of the following, in form and
substance reasonably satisfactory to the Agent:




     (i) a Mortgage on such property;




     (ii) evidence that a counterpart of the Mortgage has been recorded in
the place necessary, in the Agent’s judgment, to create a valid and
enforceable second priority Lien (subject only to the first priority Lien of
the Term Collateral Agent pursuant to the Term Documents subject to the
Intercreditor Agreement) in favor of the Agent for the benefit of itself and
the Lenders;




     (iii) ALTA or other mortgagee’s title policy;




     (iv) copies of Phase I Environmental Reports or other similar reports,
(in form and substance satisfactory to the Agent) as the Agent may require;




     (v) an opinion of counsel in the state in which such parcel of real
Property is located in form and substance and from counsel reasonably
satisfactory to the Agent; and




such other information, documentation, and certifications as may be reasonably
required by the Agent.




     (j) The Agent shall have received all Lien and other searches that the Agent
deems necessary, the Loan Parties shall have delivered UCC termination statements or
amendments to existing UCC financing statements with respect to any filings against
the Collateral as may be requested by the Agent and shall have authorized the filing
of such termination statements or amendments, the Agent shall have been authorized
to file any UCC financing statements that the Agent deems necessary to perfect its
Liens in the Collateral and Liens creating a first priority security interest in the
Collateral in favor of the Agent shall have been perfected.



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     (k) The Borrower Representative shall have delivered an Aggregate Borrowing
Base Certificate which calculates the Aggregate Borrowing Base as of the end of the
Business Day immediately preceding the Effective Date and each Borrower shall have
delivered a duly executed Borrowing Base Certificate for such Borrower which
calculates such Borrower’s Borrowing Base as of the end of the Business Day
immediately preceding the Effective Date.




     (l) The Agent shall have completed its business due diligence and the Loan
Parties’ corporate structure, capital structure, material accounts and governing
documents shall be acceptable to the Agent. In addition, the terms and conditions
of all Indebtedness of each Loan Party shall be acceptable to the Agent.




     (m) All legal (including tax implications) and regulatory matters, including,
but not limited to compliance with applicable requirements of Regulations U, T and X
of the Board of Governors of the Federal Reserve System, shall be satisfactory to
the Agent and the Lenders.




     (n) The Loan Parties shall have delivered (i) Collateral audits, satisfactory
to the Agent, prepared by an independent firm engaged directly by the Agent and (ii)
unless otherwise agreed by the Agent, appraisals, prepared by an independent
appraiser engaged directly by the Agent, of each parcel of real property or interest
in real property described in the Mortgages, which appraisals satisfy the
requirements of the Financial Institutions Reform, Recovery and Enforcement Act, as
amended, and the regulations promulgated thereunder, if applicable, and which shall
evidence compliance with the supervisory loan-to-value limits set forth in the
Federal Deposit Insurance Corporation Improvement Act of 1991, as amended, and the
regulations promulgated thereunder, if applicable, which audits and appraisals shall
be satisfactory to the Agent, together with evidence of compliance with applicable
federal regulations governing loans in areas having special flood hazards




     (o) The Loan Parties shall have delivered any requested environmental review
reports from firm(s) satisfactory to the Agent, which review reports shall be
acceptable to the Agent. Any environmental hazards or liabilities identified in any
such environmental review reports shall indicate the Loan Parties’ plans with
respect thereto.




     (p) The Borrowers shall have delivered evidence of insurance coverage in form,
scope, and substance reasonably satisfactory to the Agent and otherwise in
compliance with the terms of Section 6.7.




     (q) The Borrowers shall have delivered each Collateral Access Agreement
required to be provided pursuant to Section 6.13.




     (r) The Borrowers shall have delivered each Deposit Account Control Agreement
required to be provided pursuant to Section 6.14.




     (s) The Agent shall have determined that (i) since December 31, 2005, there is
an absence of any material adverse change or disruption in primary or secondary loan
syndication markets, financial markets or in capital markets generally that would
likely impair syndication of the Credit Extensions hereunder and (ii) the Loan
Parties shall have fully cooperated with the Agent’s syndication efforts including,
without limitation, by providing the Agent with information regarding the Loan
Parties’ operations and prospects and such other information as the Agent deems
necessary to successfully syndicate the Credit Extensions hereunder.



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     (t) The Borrowers shall have delivered a properly completed Facility LC
Application if the initial Credit Extension will include the issuance of a Facility
LC. The Borrowers shall have executed the LC Issuer’s master agreement for the
issuance of Letters of Credit.




     (u) Reserved.




     (v) The Borrowers shall have paid all of the fees and expenses owing to the
Agent, the LC Issuer and the Lenders pursuant to Section 2.10, and
Section 9.6(a).




     (w) The Borrowers shall have delivered to the Agent true and complete Customer
Lists for each Borrower.




     (x) The Loan Parties shall have delivered to the Agent their most recent
statement of the Unfunded Liabilities of each Single Employer Plan, certified as
correct by an actuary enrolled under ERISA.




     (y) The Loan Parties shall have delivered such other documents as the Agent,
the LC Issuer, any Lender or their respective counsel may have reasonably requested.



     4.2. Each Credit Extension. Except as otherwise expressly provided herein, the
Lenders shall not be required to make any Credit Extension if on the applicable Credit Extension
Date:




     (a) There exists any Default or Unmatured Default or any Default or Unmatured
Default shall result from any such Credit Extension and the Agent or the Required
Lenders shall have determined not to make any Credit Extension as a result of such
Default or Unmatured Default.




     (b) Any representation or warranty contained in Article V is untrue or
incorrect as of such Credit Extension Date except to the extent any such
representation or warranty is stated to relate solely to an earlier date, and the
Agent or the Required Lenders shall have determined not to make any Credit Extension
as a result of the fact that such representation or warranty is untrue or incorrect.




     (c) After giving effect to any Credit Extension, the Borrowers’ Availability
would be less than zero.




     (d) Any legal matter incident to the making of such Credit Extension shall not
be satisfactory to the Agent and its counsel.



     Each Borrowing Notice or request for issuance of Facility LC with respect to each such Credit
Extension shall constitute a representation and warranty by each Borrower that the conditions
contained in Section 4.1 have been satisfied and that none of the conditions set forth in
Section 4.2 exist as of the applicable Credit Extension Date. Any Lender may require a
duly completed Compliance Certificate as a condition to making a Credit Extension.



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ARTICLE V




REPRESENTATIONS AND WARRANTIES




     Each Loan Party represents and warrants to the Lenders as follows:



     5.1. Existence and Standing. Both before and after giving effect to the Permitted
Restructuring, each Loan Party (as the case may be) is a corporation, partnership (in the case of
Subsidiaries only) or limited liability company duly and properly incorporated or organized, as the
case may be, validly existing and (to the extent such concept applies to such entity) in good
standing under the laws of its jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in which its business is conducted.



     5.2. Authorization and Validity. Each Loan Party has the power and authority and
legal right to execute and deliver the Loan Documents to which it is a party and to perform its
obligations thereunder. The execution and delivery by each Loan Party of the Loan Documents to
which it is a party and the performance of its obligations thereunder have been duly authorized by
proper proceedings, and the Loan Documents to which such Loan Party is a party constitute legal,
valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance
with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally.



     5.3. No Conflict; Government Consent. Neither the execution and delivery by any Loan
Party of the Loan Documents to which it is a party, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate (a) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on such Loan Party or (b)
any Loan Party’s articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, or operating or other management
agreement, as the case may be, or (c) the provisions of any indenture, instrument or
agreement to which any Loan Party is a party or is subject, or by which it, or its Property,
is bound, or conflict with or constitute a default thereunder, or result in, or require, the
creation or imposition of any Lien in, of or on the Property of such Loan Party pursuant to the
terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration with, or exemption
by, or other action in respect of any governmental or public body or authority, or any subdivision
thereof, which has not been obtained by a Loan Party, is required to be obtained by any Loan Party
in connection with the execution and delivery of the Loan Documents, the borrowings under this
Agreement, the payment and performance by the Loan Parties of the Obligations or the legality,
validity, binding effect or enforceability of any of the Loan Documents.



     5.4. 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 Agent, for the
benefit of the Agent and the Lenders, and such Liens constitute perfected and continuing Liens on
the Collateral, securing the Obligations, enforceable against the applicable Loan Party and all
third parties, and having priority over all other Liens on the Collateral, but in the case of Liens
securing the obligations outstanding under the Term Agreement, subject to the Intercreditor
Agreement, except in the case of (a) Permitted Liens, to the extent any such Permitted Liens would
have priority over the Liens in favor of the Agent pursuant to any applicable law or agreement and
(b) Liens perfected only by possession (including possession of any certificate of title) to the
extent the Agent has not obtained or does not maintain possession of such Collateral.



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     5.5. Financial Statements.




     (a) The audited consolidated financial statements of the Company and its
Subsidiaries for the Fiscal Year ended on December 31, 2005 heretofore delivered to
the Lenders were prepared in accordance with GAAP (as in effect on the date such
statements were prepared) and fairly present the consolidated financial condition
and operations of the Company and its Subsidiaries at such date and the consolidated
results of their operations for the period then ended. The unaudited consolidated
financial statements of the Company and its Subsidiaries through September 30, 2006,
heretofore delivered by the Borrowers to the Lenders were prepared in accordance
with GAAP (as in effect on the date such statements were prepared except for the
presentation of footnotes and for applicable normal year-end audit adjustments) and
fairly present the consolidated financial condition and operations of the Company
and its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.




     (b) The Projections for the Fiscal Year ending December 31, 2007, and the most
recent Projections delivered to the Agent and the Lenders pursuant to Section
6.1(d), represent the Borrowers’ good faith estimate of the future financial
performance of the Borrowers for the period set forth therein.



     5.6. Material Adverse Change. Except as set forth in Schedule 5.6, since
December 31, 2005, there has been no change in the business, Property, prospects, condition
(financial or otherwise) or results of operations of the Loan Parties which could reasonably be
expected to have a Material Adverse Effect.



     5.7. Taxes. The Loan Parties have filed all U.S. federal tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by any Loan Party, except such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided in accordance with GAAP and as to which
no Lien exists. The U.S. income tax returns of the Loan Parties have been audited by the Internal
Revenue Service through the Fiscal Year ended December 31, 2002. No tax liens have been filed and
no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on
the books of the Loan Parties in respect of any taxes or other governmental charges are adequate.
If any Loan Party is a limited liability company, each such limited liability company that has
elected to be taxed as a partnership qualifies for partnership tax treatment under U.S. federal tax
law.



     5.8. Litigation and Contingent Obligations. Except as set forth on Schedule
5.8, there is no litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any of their corporate or executive officers, threatened against or
affecting any Loan Party which could reasonably be expected to have a Material Adverse Effect or
which seeks to prevent, enjoin or delay the making of any Credit Extensions. Other than any
liability incident to any litigation, arbitration or proceeding which (i) could not reasonably be
expected to have a Material Adverse Effect or (ii) is set forth on Schedule 5.8, no Loan
Party has any material contingent obligations not provided for or disclosed in the financial
statements referred to in Section 5.5.



     5.9. Capitalization and Subsidiaries. Schedule 5.9 sets forth (a) a correct
and complete list of the name and relationship to the Company of each and all of the Company’s
Subsidiaries, (b) the location of the chief executive office of each Loan Party and each of its
Subsidiaries and each other location where any of them have maintained their chief executive office
in the past five years, (c) a true and complete listing of each class of each Loan Party’s
authorized Capital Stock, of which all of such issued shares or interests are validly issued and
outstanding and, to the extent applicable, fully paid, non-assessable and owned beneficially and of
record by the Persons identified on Schedule 5.9, and (d) the type of entity of



52









 







each Loan
Party. With respect to each Loan Party, Schedule 5.9 also sets forth the employer or
taxpayer identification number of each Loan Party and the organizational identification number
issued by each Loan Party’s jurisdiction of organization or a statement that no such number has
been issued. All of the issued and outstanding Capital Stock 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, to the extent applicable, is fully paid and non-assessable.



     5.10. ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the
aggregate exceed $1,000,000. Neither the Company nor any other member of the Controlled Group has
incurred, or is reasonably expected to incur, any withdrawal liability to Multiemployer Plans in
excess of $1,000,000 in the aggregate. Each Plan complies in all material respects with all
applicable requirements of law and regulations, no Reportable Event has occurred with respect to
any Plan, neither the Company nor any other member of the Controlled Group has withdrawn from any
Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan.



     5.11. Accuracy of Information. No information, exhibit or report furnished by any Loan Party to the Agent or to any Lender
in connection with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not misleading.



     5.12. Names; Prior Transactions. Except for the merger of Newpark Drilling Fluids,
LLC into Newpark Drilling Fluids, LP, the Permitted Restructuring or as otherwise set forth on
Schedule 5.12, the Loan Parties have not, during the past five years, been known by or used
any other corporate or fictitious name, or been a party to any merger or consolidation, or been a
party to any Acquisition.



     5.13. Regulation U. No Loan Party is engaged, nor will it engage, principally or as
one of its important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” as such terms are defined in Regulation U of the
Federal Reserve Board as now and from time to time hereafter in effect (such securities being
referred to herein as “Margin Stock”). No Loan Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness that was originally incurred to purchase or carry any Margin
Stock or for any other purpose that might cause any of the Loans or other extensions of credit
under this Agreement to be considered a “purpose credit” within the meaning of Regulations T, U or
X of the Federal Reserve Board. No Loan Party will take or permit to be taken any action that
might cause any Loan Document to violate any regulation of the Federal Reserve Board.



     5.14. Material Agreements. Schedule 5.14 hereto sets forth as of the Closing
Date all material agreements and contracts to which any Loan Party is a party or is bound as of the
date hereof. No Loan Party is subject to any charter or other corporate restriction which could
reasonably be expected to have a Material Adverse Effect. No Loan Party is in default in the
performance, observance or fulfillment of any of the 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.



     5.15. Compliance With Laws. The Loan Parties have complied with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any
instrumentality or agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property.



     5.16. Ownership of Properties. Except as set forth on Schedule 5.16, on the
date of this Agreement, the Loan Parties will have good title, free of all Liens other than those
permitted by Section 6.22,
to all of the Property and assets reflected in the Loan Parties’
most recent consolidated financial statements provided to the Agent as owned by the Loan Parties.



53









 





     5.17. Plan Assets; Prohibited Transactions. No Loan Party is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §
2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to
Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the
execution of this Agreement nor the making of Credit Extensions hereunder gives rise to a
prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. No
“benefit plan investors” (as defined in 29 C.F.R. § 2510.3 (101(f)) own 25% or more of the value of
any class of equity interests in any Borrower.



     5.18. Environmental Matters. In the ordinary course of its business, the officers of
each Loan Party consider the effect of Environmental Laws on the business of such Loan Party, in
the course of which they identify and evaluate potential risks and liabilities accruing to such
Loan Party due to Environmental Laws. On the basis of this consideration, the Loan Parties have
concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 5.18, no Loan Party has received any notice to the effect
that its operations are not in material compliance with any of the requirements of applicable
Environmental Laws or are the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous waste or substance into
the environment.



     5.19. Investment Company Act. No Loan Party is an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940,
as amended.



     5.20. Public Utility Holding Company Act. No Loan Party is a “holding company” or a
“subsidiary company” of a “holding company”, or an “Affiliate” of a “holding company” or of a
“subsidiary company” of a “holding company”, within the meaning of the Public Utility Holding
Company Act of 1935, as amended.



     5.21. Bank Accounts. As of the Closing Date, Exhibit B to the Security
Agreement contains a complete and accurate list of all bank accounts maintained by each Loan Party
with any bank or other financial institution.



     5.22. Indebtedness. As of the Closing Date and after giving effect to the Credit
Extensions to be made on the Closing Date (if any), the Loan Parties have no Indebtedness, except
for (a) the Obligations, and (b) any Indebtedness described on Schedule 5.22.



     5.23. Affiliate Transactions. Except as set forth on Schedule 5.23, as of the
Closing Date, 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 none of the foregoing
Persons are directly or indirectly indebted to or 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.



     5.24. Real Property; Leases. As of the Closing Date, Schedule 5.24 sets forth
a correct and complete list of all real Property owned by each Loan Party, all leases and subleases
of real Property by each Loan Party as lessee or sublessee, and all leases and subleases of real
Property by each Loan Party as lessor or sublessor. Each
of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and no default by any
party to any such lease or sublease exists. Each



54









 







Loan Party has good and indefeasible title in fee
simple to the real Property identified on Schedule 5.24 as owned by such Loan Party, or
valid leasehold interests in all real Property designated therein as “leased” by such Loan Party.



     5.25. Intellectual Property Rights. As of the Closing Date: (a) Schedule 5.25
sets forth a correct and complete list of all material Intellectual Property Rights of each Loan
Party; (b) none of the Intellectual Property Rights listed in Schedule 5.25 is subject to
any licensing agreement or similar arrangement except as set forth in Schedule 5.25; (c)
the Intellectual Property Rights described in Schedule 5.25 constitute all of the material
property of such type necessary to the current and anticipated future conduct of the Loan Parties’
business; (d) to the best of each Loan Party’s knowledge, no slogan or other advertising device,
product, process, method, substance, part, or other material now employed, or now contemplated to
be employed, by any Loan Party infringes in any material respect upon any rights held by any other
Person; and (e) no claim or litigation regarding any of the foregoing is pending or threatened, and
no patent, invention, device, application, principle or any statute, law, rule, regulation,
standard, or code is pending or, to the knowledge of any Loan Party, proposed.



     5.26. Insurance. Schedule 5.26 lists all insurance policies of any nature
maintained, as of the Closing Date, by each Loan Party, as well as a summary of the terms of each
such policy.



     5.27. Solvency.




     (a) Immediately after the consummation of the transactions to occur on the date
hereof and immediately following the making of each Credit Extension, and after
giving effect to the application of the proceeds of such Credit Extensions, (a) the
fair value of the assets of each Loan Party, at a fair valuation, will exceed the
debts and liabilities, subordinated, contingent or otherwise, of each Loan Party;
(b) 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 each
Loan Party on its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c) 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 (d)
each Loan Party will not have unreasonably small capital with which to conduct the
businesses in which it is engaged as such businesses are now conducted and are
proposed to be conducted after the date hereof.




     (b) No Borrower intends to, nor will any Borrower permit any of its
Subsidiaries to, and no Borrower 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.



     5.28. Intercreditor Agreement; Term Agreement. The Secured Obligations constitute ABL
Obligations (as defined in the Intercreditor Agreement). In addition, no Event of Default or
Default (each as defined in the Term Agreement) exists, nor will any such Event of Default or
Default exist under the Term Agreement immediately after the granting or continuation of any Loan
hereunder.



     5.29. Post-Retirement Benefits. The present value of the expected cost of
post-retirement medical and insurance benefits payable by each Loan Party to its employees and
former employees, as estimated by such Loan Party in accordance with procedures and assumptions
deemed reasonable by the Required Lenders in their Permitted Discretion, does not exceed $500,000.



55









 





     5.30. 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 Borrowers
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 corporate, limited partnership or limited
liability company, as applicable, purpose, will be of direct and indirect benefit to such Loan
Party, and is in its best interest.



     5.31. Reportable Transaction. The Borrowers do not intend to treat the Advances and
related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4). In the event a Borrower determines to take any action inconsistent with such
intention, it will promptly notify the Agent thereof.



     5.32. Labor Disputes. Except as set forth on Schedule 5.32, as of the Closing
Date (a) there is no collective bargaining agreement or other labor contract covering employees of
the Borrower or any of its Subsidiaries, (b) no such collective bargaining agreement or other labor
contract, if any, is scheduled to expire during the term of this Agreement, (c) no union or other
labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of
employees of the Borrower or any of its Subsidiaries or for any similar purpose, and (d) there is
no pending or (to the best of the Borrower’s knowledge) threatened, strike, work stoppage, material
unfair labor practice claim, or other material labor dispute against or affecting the Borrower or
its Subsidiaries or their employees.



ARTICLE VI




COVENANTS




     Each Loan Party executing this Agreement jointly and severally agrees as to all Loan Parties
that from and after the date hereof and until the Facility Termination Date:



     6.1. Financial and Collateral Reporting. Each Loan Party will maintain, for itself
and each Subsidiary, a system of accounting established and administered in accordance with GAAP,
and will furnish to the Lenders:




     (a) on the date of the filing of Form 10-K with the Securities and Exchange
Commission, but in no event later than ninety days after the close of each Fiscal
Year of the Company and its Subsidiaries, an audit report certified without a “going
concern” or like qualification or exception, or qualification arising out of the
scope of the audit, by independent certified public accountants acceptable to the
Required Lenders, prepared in accordance with GAAP on a consolidated and
consolidating basis (consolidating statements need not be certified by such
accountants), including balance sheets as of the end of such Fiscal Year, related
profit and loss and reconciliation of surplus statements, and a statement of cash
flows, accompanied by (i) any management letter prepared by said accountants and
(ii) a certificate of said accountants that, in the course of their examination
necessary for their certification of the foregoing, they have obtained no knowledge
of any Default or Unmatured Default, or if, in the opinion of such accountants, any
Default or Unmatured Default shall exist, stating the nature and status thereof;



56









 






     (b) on the date of the filing of Form 10-Q with the Securities and Exchange
Commission, but in no event later than forty-five days after the close of each of
the first three quarterly periods of each Fiscal Year of the Company and its
Subsidiaries, consolidated and consolidating unaudited balance sheets as at the
close of each such Fiscal Quarter and consolidated and consolidating profit and loss
and reconciliation of surplus statements and a statement of cash flows for the
period from the beginning of the applicable Fiscal Year to the end of such Fiscal
Quarter, all certified by its chief financial officer and prepared in accordance
with GAAP (except for exclusion of footnotes and subject to normal year-end audit
adjustments);




     (c) within thirty days after the close of each Fiscal Month of the Company and
its Subsidiaries, consolidated and consolidating unaudited balance sheets as at the
close of each such Fiscal Month and consolidated and consolidating profit and loss
and reconciliation of surplus statements, and certain cash flow items deemed
necessary by Agent in its discretion, from the beginning of the applicable Fiscal
Year to the end of such Fiscal Month, all prepared in accordance with GAAP (except
for exclusion of footnotes and subject to normal year-end audit adjustments) and
certified by its chief financial officer;




     (d) as soon as available, but not later than thirty days prior to the end of
such Fiscal Year, a copy of the plan and forecast (including a projected
consolidated and consolidating balance sheet, income statement and funds flow
statement) of the Company for each Fiscal Quarter of the following Fiscal Year (the
“Projections”) in form reasonably satisfactory to the Agent;




     (e) together with each of the financial statements required under Sections
6.1(a), (b) and (c), a compliance certificate in substantially
the form of Exhibit E (a “Compliance Certificate”) signed by the
chief financial officer of the Borrower Representative showing the calculations
necessary to determine compliance with this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or Unmatured Default exists, stating the
nature and status thereof.




     (f) as soon as available but in any event within three days of the end of each
calendar week (or Fiscal Month if Borrowers’ average Availability for the prior
thirty-day period exceeds $20,000,000), and at such other times as may be requested
by the Agent, as of the period then ended, an Aggregate Borrowing Base Certificate,
together with a duly executed Borrowing Base Certificate for each Borrower which
calculates such Borrower’s Borrowing Base, and supporting information in connection
therewith;




     (g) as soon as available but in any event within fifteen days of the end of
each Fiscal Month and at such other times as may be requested by the Agent, as of
the period then ended:




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



57









 






     (ii) a schedule detailing each Borrower’s Inventory, in form
satisfactory to the Agent, (1) by location (showing Inventory in transit,
any Inventory located with a third party under any consignment, bailee
arrangement, or warehouse agreement), by class (raw material,
work-in-process and finished goods), by product type, and by volume on hand,
which Inventory shall be valued at the lower of cost (determined on a
first-in, first-out basis) or market and adjusted for Reserves as the Agent
has previously indicated to the Borrower are deemed by the Agent to be
appropriate, (2) including a report of any variances or other results of
Inventory counts performed by such Borrower since the last Inventory
schedule (including information regarding sales or other reductions,
additions, returns, credits issued by such Borrower and complaints and
claims made against such Borrower), and (3) reconciled to such Borrower’s
Borrowing Base Certificate delivered as of such date;




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




     (iv) a reconciliation of each Borrower’s Accounts and Inventory between
the amounts shown in such Borrower’s general ledger and financial statements
and the reports delivered pursuant to clauses (i) and (ii) above; and




     (v) a reconciliation of the loan balance per each Borrower’s general
ledger to the loan balance under this Agreement.




     (h) as soon as available but in any event within fifteen days of the end of
each Fiscal Month, and at such other times as may be requested by the Agent, as of
the month then ended, a schedule and aging of the Borrowers’ accounts payable;




     (i) promptly upon the Agent’s request:




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




     (ii) copies of purchase orders, invoices, and shipping and delivery
documents in connection with any Inventory or Equipment 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 days of the end of each
calendar week and at such other times as may be requested by the 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 days of filing thereof,
copies of all tax returns filed by any Loan Party with the U.S. Internal Revenue
Service;



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     (l) as soon as possible and in any event within two-hundred and seventy days
after the close of the Fiscal Year of the Company, a statement of the Unfunded
Liabilities of each Single Employer Plan, certified as correct by an actuary
enrolled under ERISA;




     (m) as soon as possible and in any event within ten days after any Borrower
knows that any Reportable Event has occurred with respect to any Plan, a statement,
signed by the chief financial officer of such Borrower, describing said Reportable
Event and the action which such Borrower proposes to take with respect thereto;




     (n) as soon as possible and in any event within thirty days of filing therewith
with the PBGC, the U.S. Internal Revenue Service or any other governmental entity, a
copy of each annual report or other filing with respect to any Plan;




     (o) as soon as possible and in any event within ten days after receipt by any
Loan Party, a copy of (i) any material notice or claim to the effect that any Loan
Party is or may be liable to any Person as a result of the release by any Loan
Party, or any other Person of any toxic or hazardous waste or substance into the
environment, and (ii) any material notice alleging any violation of any federal,
state or local environmental, health or safety law or regulation by the any Loan
Party;




     (p) within ten days of each March 31 and September 30, an updated Customer List
for each Borrower, certified as true and correct by an Authorized Officer of each
such Borrower;




     (q) concurrently with the furnishing thereof to the shareholders of the
Borrowers, copies of all financial statements, reports and proxy statements so
furnished;




     (r) promptly upon the filing thereof, copies of all registration statements and
annual, quarterly, monthly or other regular reports which any Loan Party files with
the Securities and Exchange Commission;




     (s) as soon as possible and in any event within ten days after the end of each
Fiscal Quarter (or more frequently as requested by Agent in its discretion), a
detailed listing of all advances of proceeds of Loans made by the Borrower
Representative to each Borrower during the immediately preceding Fiscal Month and a
detailed listing of all intercompany loans made by the Borrowers during such Fiscal
Month;




     (t) on the first Business Day of the month of each March and September, a
certificate of good standing for each Loan Party from the appropriate governmental
officer in its jurisdiction of incorporation, formation, or organization; and




     (u) such other information (including non-financial information) as the Agent
or any Lender may from time to time reasonably request.



     6.2. Use of Proceeds.




     (a) The Borrowers will use the proceeds of the Credit Extensions for (i)
general corporate purposes (not otherwise prohibited by this Agreement) and (ii)
Permitted Acquisitions.



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     (b) No Loan Party will use any of the proceeds of the Credit Extensions to (i)
purchase or carry any Margin Stock in violation of Regulation U, (ii) repay or
refinance any Indebtedness of any Person incurred to buy or carry any Margin Stock,
(iii) acquire any security in any transaction that is subject to Section 13 or
Section 14 of the Securities Exchange Act of 1934 (and the regulations promulgated
thereunder), or (iv) make any Acquisition other than Permitted Acquisitions.



     6.3. Notices. Each Loan Party will give prompt notice in writing to the Agent and the
Lenders of:




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




     (b) any other development, financial or otherwise, which could reasonably be
expected to have a Material Adverse Effect;




     (c) the assertion by the holder of any Capital Stock of any Loan Party or the
holder of any Indebtedness of any Loan Party in excess of $1,000,000 that any
default exists with respect thereto or that any Loan Party is not in compliance
therewith;




     (d) receipt of any material written notice that any Loan Party is subject to
any investigation by any governmental entity with respect to any potential or
alleged violation of any applicable Environmental Law or of imposition of any Lien
against any Property of any Loan Party for any liability with respect to damages
arising from, or costs resulting from, any violation of any Environmental Laws;




     (e) receipt of any notice of litigation commenced or threatened against any
Loan Party that (i) seeks damages in excess of $2,000,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its
assets, (iv) alleges criminal misconduct by any Loan Party, (v) alleges the
violation of any law regarding, or seeks remedies in connection with, any
Environmental Laws; or (vi) involves any product recall;




     (f) any Lien (other than Permitted Liens) or claim made or asserted against any
of the Collateral;




     (g) its decision to change, (i) such Loan Party’s name or type of entity, (ii)
such Loan Party’s articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws, or
operating or other management agreement (with respect to clauses (i) and (ii) other
than with respect to the Permitted Restructuring), and (iii) the location where any
Collateral is held or maintained; provided that, in no event shall the Agent receive
notice of such change less than thirty days prior thereto;




     (h) commencement of any proceedings contesting any tax, fee, assessment, or
other governmental charge in excess of $500,000;




     (i) the opening of any new deposit account by any Loan Party with any bank or
other financial institution;




     (j) any loss, damage, or destruction to the Collateral in the amount of
$500,000 or more, whether or not covered by insurance;



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     (k) any and all default notices received under or with respect to any leased
location or public warehouse where Collateral is located (which shall be delivered
within two Business Days after receipt thereof);




     (l) all material amendments to real estate leases, together with a copy of each
such amendment;




     (m) immediately after becoming aware of any pending or threatened strike, work
stoppage, unfair labor practice claim, or other labor dispute affecting the Borrower
or any of its Subsidiaries in a manner;




     (n) evidence of payment of monthly lease or rental payments as to each leased
or rented location for which a landlord or bailee waiver has not been obtained
(which shall be delivered within three Business Days after payment thereof);




     (o) the fact that such Loan Party has entered into a Rate Management
Transaction or an amendment to a Rate Management Transaction, together with copies
of all agreements evidencing such Rate Management Transactions or amendments thereto
(which shall be delivered within two Business Days);




     (p) any notice provided to or by Term Administrative Agent and/or Term
Collateral Agent relating to any “Default” or “Event of Default” or event relating
to a “Material Adverse Effect” (each as defined in the Term Agreement), such notice
to be
contemporaneously delivered by the Borrower Representative to the Agent and the
Lenders; and




     (q) any other matter as the Agent may reasonably request.



     6.4. Conduct of Business. Both before and after giving effect to the Permitted
Restructuring, each Loan Party will:




     (a) carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted;




     (b) do all things necessary to remain duly incorporated or organized, validly
existing and (to the extent such concept applies to such entity) in good standing as
a domestic corporation, partnership or limited liability company in its jurisdiction
of incorporation or organization, as the case may be, and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted;




     (c) keep adequate books and records with respect to its business activities in
which proper entries, reflecting all financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements delivered to the
Agent pursuant to
Section 4.1(n) (unless otherwise consented to by Agent in
its discretion);




     (d) at all times maintain, preserve and protect all of its assets and
properties used or useful in the conduct of its business, and keep the same in good
repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make, or cause to be
made, all necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices; and



61









 






     (e) transact business only in such corporate and trade names as are set forth
in Schedule 5.12 (as may be updated by Borrowers upon consummation of the
Permitted Restructuring), unless such Loan Party has provided Agent with thirty
days’ prior written notice of a change (other than with respect to the Permitted
Restructuring) to such corporate or trade names and otherwise complied with the
terms of Section 6.23.



     6.5. Taxes. Each Loan Party will timely file complete and correct U.S. federal and
applicable foreign, state and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits, Property or
Collateral, except those which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been set aside in accordance with GAAP. At any time
that any Loan Party is organized as a limited liability company, each such limited liability
company that has elected to be taxed as a partnership will qualify for partnership tax treatment
under U.S. federal tax law.



     6.6. Payment of Indebtedness and Other Liabilities. Each Loan Party will pay or
discharge when due all Material Indebtedness permitted by Section 6.17 owed by such Loan
Party (or its successor pursuant to the Permitted Restructuring), and all other liabilities and
obligations due to materialmen, mechanics, carriers, warehousemen, and landlords, except that the
Loan Parties may in good faith contest, by appropriate proceedings diligently pursued, any
such obligations; provided that, (a) adequate reserves have been set aside for such
liabilities in accordance with GAAP, (b) such liabilities would not result in aggregate liabilities
in excess of $1,000,000, (c) no Lien shall be imposed to secure payment of such liabilities that is
superior to the Agent’s Liens securing the Secured Obligations, (d) none of the Collateral becomes
subject to forfeiture or loss as a result of the contest and (e) such Loan Party shall promptly pay
or discharge such contested liabilities, if any, and shall deliver to the Agent evidence reasonably
acceptable to the Agent of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Loan Party or the conditions set forth in this proviso are no longer
met.



     6.7. Insurance.




     (a) Except as set forth on Schedule 6.7, each Loan Party shall at all
times maintain, with financially sound and reputable carriers having a Financial
Strength rating of at least A by A.M. Best Company, insurance against: (i) loss or
damage by fire and loss in transit; (ii) theft, burglary, pilferage, larceny,
embezzlement, and other criminal activities; (iii) business interruption; (iv)
general liability and (v) and such other hazards, as is customary in the business of
such Loan Party. All such insurance shall be in amounts, cover such assets and be
under policies acceptable to the Agent in its Permitted Discretion. In the event
any Collateral is located in any area that has been designated by the Federal
Emergency Management Agency as a “Special Flood Hazard Area”, the applicable Loan
Party shall purchase and maintain flood insurance on such Collateral (including any
personal Property which is located on any real Property leased by such Loan Party
within a “Special Flood Hazard Area”). The amount of all insurance required by this
Section shall at a minimum comply with applicable law, including the Flood Disaster
Protection Act of 1973, as amended. All premiums on such insurance shall be paid
when due by the applicable Loan Party, and copies of the policies delivered to the
Agent. If any Loan Party fails to obtain any insurance as required by this Section,
the Agent at the direction of the Required Lenders may obtain such insurance at the
Borrowers’ expense. By purchasing such insurance, the Agent shall not be deemed to
have waived any Default or Unmatured Default arising from any Loan Party’s failure
to maintain such insurance or pay any premiums therefor. No Loan Party will use or
permit any Property to be used in violation of applicable law or in any manner which
might render inapplicable any insurance coverage.



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     (b) All insurance policies required under Section 6.7(a) shall name the
Agent (for the benefit of the Agent and the Lenders) as an additional insured or as
loss payee, as applicable, and shall provide that, or contain loss payable clauses
or mortgagee clauses, in form and substance satisfactory to the Agent, which provide
that:




     (i) all proceeds thereunder with respect to any Collateral shall be
payable to the Agent;




     (ii) no such insurance shall be affected by any act or neglect of the
insured or owner of the Property described in such policy; and




     (iii) such policy and loss payable clauses may be canceled, amended, or
terminated only upon at least thirty days prior written notice given to the
Agent.




     (c) The Borrowers must give the Agent prior written notice of any change in
insurance carriers and any new insurance policy shall comply with the provisions of
this Section 6.7 and otherwise be acceptable to the Agent. Without in any
way limiting the foregoing, in no event shall the Borrowers change their insurance
carrier without first obtaining a loss payable endorsement in form and substance
satisfactory to the Agent.




     (d) Notwithstanding the foregoing, any insurance or condemnation proceeds
received by the Loan Parties shall, subject to the terms of the Intercreditor
Agreement, be immediately forwarded to the Agent and the Agent may, at its option,
apply any such proceeds to the reduction of the Obligations in accordance with
Section 2.15(e), provided that in the case of insurance proceeds pertaining
to any Loan Party other than the Borrowers, such insurance proceeds shall be applied
to the Loans owing by the Borrowers. The Agent may permit or require any Loan Party
to use such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds could not reasonably be expected to have a Material Adverse Effect and such
insurance proceeds do not exceed $1,000,000 in the aggregate, upon the applicable
Loan Party’s request, the Agent shall permit such Loan Party to replace, restore,
repair or rebuild the property; provided that, if such Loan Party has not completed
or entered into binding agreements to complete such replacement, restoration, repair
or rebuilding within ninety days of such casualty, the Agent may apply such
insurance proceeds to the Obligations in accordance with Section 2.15. All
insurance proceeds that are to be made available to the Borrowers to replace,
repair, restore or rebuild the Collateral shall be applied by the Agent to reduce
the outstanding principal balance of the Revolving Loans (which application shall
not result in a permanent reduction of the Revolving Commitment) and upon such
application, the Agent shall establish a Reserve against the Aggregate Borrowing
Base in an amount equal to the amount of such proceeds so applied. All insurance
proceeds made available to any Loan Party that is not a Borrower to replace, repair,
restore or rebuild Collateral shall be deposited in a cash collateral account. In
either case, thereafter, such funds shall be made available to the applicable Loan
Party to provide funds to replace, repair, restore or rebuild the Collateral as
follows:




     (i) the Borrower Representative, on behalf of the applicable Borrower,
shall request a Revolving Loan or the Borrower Representative, on behalf of
the applicable Loan Party, shall request a release from the cash collateral
account be made in the amount needed;



63









 






     (ii) so long as the conditions set forth in Section 4.2 have
been met, the Revolving Lenders shall make such Revolving Loan or the Agent
shall release funds from the cash collateral account; and




     (iii) in the case of insurance proceeds applied against the Revolving
Loan, the Reserve established with respect to such insurance proceeds shall
be reduced by the amount of such Revolving Loan.



     6.8. Compliance with Laws. Each Loan Party will comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws.



     6.9. Maintenance of Properties and Intellectual Property Rights. Each Loan Party will
do all things necessary to (a) maintain, preserve, protect and keep its Property in good repair,
working order and condition, and make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly conducted at all times and
(b) obtain and maintain in effect at all times all material franchises, governmental
authorizations, Intellectual Property Rights, licenses and permits, which are necessary for it to
own its Property or conduct its business as conducted on the Closing Date.



     6.10. Inspection. Each Loan Party will permit the Agent and the Lenders, by their
respective employees, representatives and agents, from time to time upon two Business Days’ prior
notice as frequently as the Agent reasonably determines to be appropriate, to (a) inspect any of
the Property, the Collateral, and the books and financial records of such Loan Party, (b) examine,
audit and make extracts or copies of the books of accounts and other financial records of such Loan
Party, (c) have access to its properties, facilities, the Collateral and its advisors, officers,
directors and employees to discuss the affairs, finances and accounts of such Loan Party and (d)
review, evaluate and make test verifications and counts of the Accounts, Inventory and other
Collateral of such Loan Party. If a Default or an Unmatured Default has occurred and is
continuing, each Loan Party shall provide such access to the Agent and to each Lender at all times
and without advance notice. Furthermore, so long as any Default has occurred and is continuing,
each Loan Party shall provide the Agent and each Lender with access to its suppliers. Each Loan
Party shall promptly make available to the Agent and its counsel originals or copies of all books
and records that the Agent may reasonably request. The Loan Parties acknowledge that from time to
time the Agent may prepare and may distribute to the Lenders certain audit reports pertaining to
the Loan Parties’ assets for internal use by the Agent and the Lenders from information furnished
to it by or on behalf of the Loan Parties, after the Agent has exercised its rights of inspection
pursuant to this Agreement.



     6.11. Appraisals; Additional Real Property Requirements. Whenever a Default or
Unmatured Default exists, and at such other times (which shall occur not less than once per
calendar year) as the Agent requests, the Loan Parties shall, at their sole expense, provide the
Agent with appraisals or updates thereof of their Inventory, Equipment and real Property from an
appraiser selected and engaged by the Agent, and prepared on a basis, satisfactory to the Agent,
such appraisals and updates to include, without limitation, information required by applicable law
and regulations and by the internal policies of the Lenders. At the request of the Agent, the Loan
Parties shall, at their sole expense, deliver, with respect to each parcel of real Property, which
is required from time to time to be subject to a Lien in favor of the Agent, a Mortgage on such
real Property duly executed by the appropriate Loan Party in recordable form, an ALTA or other
mortgagee’s title policy and a copy of a Phase I Environmental Report or other similar report, each
in form and substance satisfactory to the Agent.



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     6.12. Communications with Accountants. Each Loan Party executing this Agreement
authorizes (a) the Agent and (b) so long as a Default has occurred and is continuing, each Lender,
to communicate directly with its independent certified public accountants and authorizes and shall
instruct those accountants and advisors to communicate to the Agent and each Lender information
relating to any Loan Party with respect to the business, results of operations and financial
condition of any Loan Party.



     6.13. Collateral Access Agreements and Real Estate Purchases. Each Loan Party shall use commercially reasonable efforts to obtain a Collateral Access
Agreement, from the lessor of each leased property, mortgagee of owned property or bailee or
consignee with respect to any warehouse, processor or converter facility or other location where
Collateral is stored or located, which agreement or letter shall provide access rights, contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or bailee or consignee
may assert against the Collateral at that location, and shall otherwise be reasonably satisfactory
in form and substance to the Agent. With respect to such locations or warehouse space leased or
owned as of the Closing Date and thereafter, if the Agent has not received a Collateral Access
Agreement as of the Effective Date (or, if later, as of the date such location is acquired or
leased), the Borrowers’ Eligible Inventory at that location shall be excluded from the Aggregate
Borrowing Base and the applicable Borrower’s Borrowing Base. After the Closing Date, no real
property or warehouse space shall be leased by any Loan Party and no Inventory shall be shipped to
a processor or converter under arrangements established after the Closing Date, unless and until a
satisfactory Collateral Access Agreement shall first have been obtained with respect to such
location and if it has not been obtained, Borrowers’ Eligible Inventory at that location shall be
excluded from the Aggregate Borrowing Base and the applicable Borrower’s Borrowing Base. Each Loan
Party shall timely and fully pay and perform its obligations under all leases and other agreements
with respect to each leased location or third party warehouse where any Collateral is or may be
located. To the extent permitted hereunder, if any Loan Party proposes to acquire a fee ownership
interest in real Property after the Closing Date, it shall first provide the Agent with notice of
such proposed acquisition and, if required by the Agent, provide to the Agent a mortgage or deed of
trust granting the Agent a second priority Lien on such real Property (subject only to the first
priority Lien of the Term Collateral Agent pursuant to the Term Documents, subject to the
Intercreditor Agreement), together with environmental audits, mortgage title insurance commitment,
real property survey, local counsel opinion(s), and, if required by the Agent, supplemental
casualty insurance and flood insurance, and such other documents, instruments or agreements
reasonably requested by the Agent, in each case, in form and substance reasonably satisfactory to
the Agent.



     6.14. Deposit Account Control Agreements. The Loan Parties will provide to the Agent
upon the Agent’s request, a Deposit Account Control Agreement duly executed on behalf of each
financial institution holding a deposit account of a Loan Party as set forth in the Security
Agreement.



     6.15. Additional Collateral; Further Assurances.




     (a) Subject to applicable law, each Loan Party shall, unless the Required
Lenders otherwise consent, (i) cause each of its Subsidiaries (excluding any Foreign
Subsidiary) to become or remain a Borrower (unless otherwise permitted by Agent in
its sole discretion) and (ii) cause each of its Subsidiaries (excluding any Foreign
Subsidiary) formed or acquired after the Closing Date in accordance with the terms
of this Agreement to become a party to this Agreement by executing the Joinder
Agreement set forth as Exhibit F hereto (the “Joinder Agreement”).



65









 






     (b) Upon the request of the Agent, each Loan Party shall (i) grant Liens to the
Agent, for the benefit of the Agent and the Lenders, pursuant to such documents as
the Agent may reasonably deem necessary and deliver such property, documents, and
instruments as the Agent may request to perfect the Liens of the Agent in any
Property of such Loan Party which constitutes Collateral, including any parcel of
real Property located in the U.S. owned by any Loan Party, and (ii) in connection
with the foregoing requirements, or either of them, deliver to the Agent all items
of the type required by Section 4.1 (as applicable). Upon execution and
delivery of such Loan Documents and
other instruments, certificates, and agreements, each such Person shall
automatically become a Guarantor hereunder and thereupon shall have all of the
rights, benefits, duties, and obligations in such capacity under the Loan Documents.




     (c) Each Loan Party will cause (i) 100% of the issued and outstanding Capital
Stock of each of its Domestic Subsidiaries and (ii) 65% (or such greater percentage
that, due to a change in an applicable law after the date hereof, (1) could not
reasonably be expected to cause the undistributed earnings of such Foreign
Subsidiary as determined for U.S. federal income tax purposes to be treated as a
deemed dividend to such Foreign Subsidiary’s U.S. parent and (2) could not
reasonably be expected to cause any material adverse tax consequences) of the issued
and outstanding Capital Stock entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) and 100% of the issued and outstanding Capital Stock not
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each
Foreign Subsidiary directly owned by such Loan Party or any Domestic Subsidiary to
be subject at all times to a second priority, perfected Lien (subject only to the
first priority Lien of the Term Collateral Agent pursuant to the Term Documents,
subject to the Intercreditor Agreement) in favor of the Agent pursuant to the terms
and conditions of the Loan Documents or other security documents as the Agent shall
reasonably request.




     (d) Without limiting the foregoing, each Loan Party shall, and shall cause each
of the Loan Parties’ Subsidiaries which is required to become a Loan Party pursuant
to the terms of this Agreement to, execute and deliver, or cause to be executed and
delivered, to the Agent such documents and agreements, and shall take or cause to be
taken such actions as the Agent may, from time to time, reasonably request to carry
out the terms and conditions of this Agreement and the other Loan Documents.




     (e) Notwithstanding the foregoing, at any time after a Default has occurred,
each Loan Party shall, upon the request of the Agent, cause each Foreign Subsidiary
to become a Loan Party and a Guarantor and to grant Liens to the Agent on its assets
and have the balance of its stock pledged to the Agent.



     6.16. Dividends.




     (a) No Loan Party will declare or pay any dividends or make any distributions
on its Capital Stock (other than dividends or distributions payable in its own
common stock or pursuant to the Permitted Restructuring) or redeem, repurchase or
otherwise acquire or retire any of its Capital Stock at any time outstanding, other
than with respect to the following:




     (i) any Subsidiary may declare and pay dividends or make distributions
to the Borrowers or to a Wholly-Owned Subsidiary of the Borrowers;



66









 






     (ii) Reserved.




     (iii) the Company may repurchase or redeem its Capital Stock from time
to time, not in excess of an aggregate of $10,000,000 from the Closing Date
to the Facility Termination Date; provided, however, that no repurchase or
redemption may be made unless (A) both before and (on a pro-forma basis)
after giving effect thereto (1) the Borrowers’ Fixed Charge Coverage Ratio
has been
and will be equal to or greater than 1.5 to 1.0 for two consecutive
Fiscal Quarters, (2) the Borrowers’ Availability is equal to or greater than
$15,000,000, (3) there is no Default or Unmatured Default in existence and
none would result from such repurchase of redemption, and (4) the repurchase
or redemption is permitted by the Term Agreement;




     (iv) any Loan Party may retire Capital Stock if the retirement (A)
consists of a conversion of any class of Capital Stock into another class of
common stock or (B) the sole consideration paid in connection with such
retirement is common stock; and




     (v) each Borrower may pay dividends or make distributions to its
partners or members in an aggregate amount not greater than the amount
necessary for such partners or members to pay their actual state and United
States federal income tax liabilities in respect of income earned by such
Borrower.




     (b) No Loan Party shall directly or indirectly enter into or become bound by
any agreement, instrument, indenture or other obligation (other than this Agreement,
the other Loan Documents, the Term Documents and any indenture pursuant to which
Senior Subordinated Debt permitted by Section 6.17 is issued) that could
directly or indirectly restrict, prohibit or require the consent of any Person with
respect to the payment of dividends or distributions or the making or repayment of
intercompany loans by a Subsidiary of the Borrowers to the Borrowers.



     6.17. Indebtedness. No Loan Party will create, incur or suffer to exist any
Indebtedness, except:




     (a) the Obligations;




     (b) Indebtedness existing on the date hereof and described in Schedule
5.22;




     (c) purchase money Indebtedness incurred in connection with the purchase of any
Equipment; provided that, the amount of such purchase money Indebtedness shall be
limited to an amount not in excess of the purchase price of such Equipment and the
aggregate of all such purchase money Indebtedness shall not exceed $5,000,000;




     (d) Indebtedness which represents an extension, refinancing, or renewal of any
of the Indebtedness described in clauses (b), (c), (g) and
(i) hereof; provided that, (i) the principal amount or interest rate of such
Indebtedness is not increased, (ii) any Liens securing such Indebtedness are not
extended to any additional Property of any Loan Party, (iii) no Loan Party that is
not obligated with respect to repayment of such Indebtedness as of the Closing Date
or as of the date such Indebtedness was incurred, whichever is later, is required to
become obligated with respect thereto, (iv) such extension, refinancing or renewal
does not result in a shortening of the average weighted



67









 







maturity of the Indebtedness
so extended, refinanced, renewed, (v) the terms of any such extension, refinancing,
or renewal are not less favorable to the obligor thereunder than the original terms
of such Indebtedness and (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to the Agent and
the
Lenders as those that were applicable to the refinanced, renewed, or extended
Indebtedness;




     (e) Indebtedness owing by any Borrower to any other Loan Party with respect to
intercompany loans, provided further, that:




     (i) upon the request of the Agent, the applicable Loan Parties shall
have executed and delivered to the other Borrower, on the Effective Date, a
demand note (collectively, the “Intercompany Notes”) to evidence any
such intercompany Indebtedness owing at any time by any Borrower to another
Loan Party, which Intercompany Notes shall be in form and substance
reasonably satisfactory to the Agent and shall be pledged and delivered to
the Agent pursuant to the Security Agreement as additional collateral
security for the Secured Obligations;




     (ii) the Loan Parties shall record all intercompany transactions on
their books and records in a manner reasonably satisfactory to the Agent;




     (iii) the obligations of the Borrowers under any such Intercompany
Notes shall be subordinated to the Obligations of the Loan Parties hereunder
in a manner reasonably satisfactory to the Agent; and




     (iv) at the time any such intercompany loan or advance is made and
after giving effect thereto, each Loan Party thereto shall be Solvent.




     (f) Contingent Obligations (i) by endorsement of instruments for deposit or
collection in the ordinary course of business (ii) consisting of the Reimbursement
Obligations and (iii) consisting of guarantees of Indebtedness incurred for the
benefit of any other Loan Party if the primary obligation is expressly permitted
elsewhere in this Section 6.17, provided that guarantees of Indebtedness
permitted by Section 6.17(h) shall be subordinated to the same extent as the
Senior Subordinated Debt is subordinated to the Loans;




     (g) Indebtedness arising under Rate Management Transactions related to the
Loans having a Net Mark-to-Market Exposure not exceeding $1,000,000;




     (h) Indebtedness of the Company in respect of any Senior Subordinated Debt the
net proceeds of which are used to prepay, redeem, retire or repurchase the
outstanding principal amount of the then outstanding Term Loans (including any
accrued and unpaid interest and any premiums, fees and expenses, in each case, in
connection therewith);




     (i) other unsecured Indebtedness in an amount not in excess of $5,000,000; and




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     (j) Subject to Subsection (h) hereof, Indebtedness under the Term
Agreement not to exceed the aggregate principal amount of $150,000,000 and as long
as such Indebtedness is subject to the terms of the Intercreditor Agreement.



     6.18. Capital Structure . If all or any part of a Loan Party’s Capital Stock has
been pledged to the Agent, that Loan Party shall not issue additional Capital Stock other than in
connection with the Permitted Restructuring. No Loan Party shall engage in any business other than
the businesses currently engaged in by it.



     6.19. Preservation of Existence; Merger; Survival of Liability.




     (a) Each Loan Party will preserve and maintain its existence except for
certain dissolutions, mergers, conversions, name changes (and dividend and capital
contributions) to be consummated on or before January 1, 2007 pursuant to the
corporate restructuring of the Loan Parties and their respective Affiliates, in each
instance, as described in Exhibit J; provided however, that the Company and
each such other Loan Party affected or other new Subsidiary and/or Affiliate of
Borrowers and/or the other Loan Parties created in connection the actions
described on Exhibit J shall comply with the following conditions, in each
case, to the reasonable satisfaction of Agent: (i) upon consummation of all of the
transactions contemplated by the Permitted Restructuring, the Company will own,
directly or indirectly all of the then existing Loan Parties and all other entities
otherwise described on Exhibit J pursuant to the Permitted Restructuring,
(ii) all transactions contemplated by the Permitted Restructuring shall be
consummated on or before January 1, 2007, (iii) all requisite corporate proceedings,
including any shareholder consents that may be required, authorizing the
transactions contemplated by the Permitted Restructuring shall have been taken, (iv)
all documents necessary or prepared in connection with the Permitted Restructuring
shall be in form and substance reasonably satisfactory to Agent and its counsel, (v)
with respect to the transactions contemplated by the Permitted Restructuring,
including the mergers, name changes, conversions, entity creations and dissolutions,
within ten (10) Business Days after filing the requisite documents with the
applicable Secretary of State (or equivalent Governmental Authority), Agent shall
have received evidence of such filings (including a copy of the certificate of
limited partnership, certificate of limited liability company, or certificate of
incorporation) certified by such Secretary of State (or equivalent Governmental
Authority), (vi) Agent shall have received all information and copies of all other
documents, including records of requisite corporate action and proceedings which
Agent may have requested in connection therewith, such documents where requested by
Agent or its counsel to be certified by appropriate corporate officers, (vii) such
entities shall have expressly assumed the Secured Obligations by executing an
Assumption of Obligations in the form attached hereto as Exhibit D and otherwise by
complying with the provisions of Section 6.15 hereof, as requested by
Agent, and (viii) Agent shall have filed a UCC-1 financing statement or UCC-3
Amendment naming each such entity as debtor, and the Loan Parties shall have taken
all such other actions as Agent shall deem appropriate to evidence, reaffirm,
preserve and perfect its Liens and other rights hereunder and under the other Loan
Documents (the foregoing events described in this Section 6.19(a) being
collectively, a “Permitted Restructuring”)




     (b) Other than with respect to the Permitted Restructuring, no Loan Party will
merge or consolidate with or into any other Person, except that (a) any Subsidiary
of a Borrower may merge into such Borrower or a Wholly-Owned Subsidiary of such
Borrower that is a Loan Party, (b) any Loan Party (other than the Borrowers) may
merge



69









 







with any other Loan Party and (c) in connection with a Permitted Acquisition,
provided that the Loan Party is the surviving entity.



     6.20. Sale of Assets. No Loan Party will lease, sell or otherwise dispose of its
Property (including any Capital Stock owned by it other than with respect to the Permitted
Restructuring) to any other Person except:




     (a) sales of Inventory (including wooden and composite mats removed from the
Company’s rental fleet and sold as used mats) in the ordinary course of business;




     (b) the sale or other disposition of Equipment that is obsolete or no longer
useful in such Loan Party’s business and having a book value not exceeding $100,000
in the aggregate in any Fiscal Year; and




     (c) the sale or disposition of other assets having a book value not exceeding
$100,000 in the aggregate in any Fiscal Year.


Subject to the terms of the Intercreditor Agreement, the Net Cash Proceeds of any sale or
disposition (to the extent such Net Cash Proceeds exceed $100,000) permitted pursuant to this
Section (other than pursuant to Section 6.20(a)) shall be delivered to the Agent as
required by Section 2.15 and applied to the Obligations as set forth therein; provided,
however, that the Company may retain up to $150,000 of un-reinvested Net Cash Proceeds from any
sale or disposition pursuant to this Section in any calendar year.




     6.21. Investments and Acquisitions. No Loan Party will (i) make or suffer to exist
any Investments (including without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, (ii) create any Subsidiary, (iii) become or remain a
partner in any partnership or joint venture, or (iv) make any Acquisition, except:




     (a) Cash Equivalent Investments, subject to control agreements in favor of the
Agent for the benefit of the Lenders or otherwise subject to a perfected security
interest in favor of the Agent for the benefit of the Lenders;




     (b) Investments in existence on the Closing Date and described in Schedule
6.21;




     (c) Investments consisting of loans or advances made to (i) the executive
officers of such Loan Party on an arms-length basis in the ordinary course of
business consistent with past practices for travel and entertainment expenses and
similar purposes up to a maximum of $25,000 to any employee and up to a maximum of
$75,000 in the aggregate (for all Loan Parties) at any one time outstanding and (ii)
the executive officers of such Loan Party on an arms-length basis in the ordinary
course of business consistent with past practices for relocation expenses and
similar purposes up to a maximum of $300,000 to any employee and up to a maximum of
$1,000,000 in the aggregate (for all Loan Parties) at any one time outstanding;




     (d) subject to Sections 4.2(a) and 4.4 of the Security Agreement,
Investments comprised of notes payable, or stock or other securities issued by
Account Debtors to such 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;



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     (e) additional Investments in Wholly-Owned Subsidiaries which are Loan Parties;
and




     (f) Permitted Acquisitions and the formation of Wholly Owned Subsidiaries of
the Borrowers in connection with a Permitted Acquisition; and




     (g) Investments in the form of loans and advances to Wholly-Owned Foreign
Subsidiaries, provided that:




     (i) the applicable Foreign Subsidiary shall have executed and delivered
to the Loan Party a demand note (collectively, the “Foreign Intercompany
Notes”) to evidence any such intercompany Indebtedness owing at any time
by any Foreign Subsidiary to a Loan Party, which Foreign Intercompany Notes
shall be in form and substance reasonably satisfactory to the Agent (a copy
of such executed note shall be delivered to Agent);




     (ii) all Foreign Subsidiaries and Loan Parties shall record all
intercompany transactions on their books and records in a manner reasonably
satisfactory to the Agent;




     (iii) at the time any such intercompany loan or advance is made by a
Loan Party and after giving effect thereto, such Loan Party shall be
Solvent;




     (iv) no Default or Unmatured Default would occur and be continuing
after giving effect to any such proposed intercompany loan;




     (v) in the case of any such intercompany loans made by any Borrower,
the Borrowers’ Availability shall not be less than $15,000,000 after giving
effect to such intercompany loan; and




     (vi) the aggregate balance of all such intercompany loans owing to the
Borrowers by the Foreign Subsidiaries shall not exceed $40,000,000 at any
time.



     6.22. Liens.




     (a) No Loan Party will create, incur, or suffer to exist any Lien in, of, or on
the Property of such Loan Party, (including, without limitation, the real Property
or marine vessels of such Loan Party) except the following (collectively,
“Permitted Liens”):




     (i) Liens for taxes, fees, assessments, or other governmental charges
or levies on the Property of such Loan Party if such Liens (1) shall not at
the time be delinquent or (2) subject to the provisions of Section
6.6, do not secure obligations in excess of $250,000, are being
contested in good faith and by appropriate proceedings diligently pursued,
adequate reserves in accordance with GAAP have been set aside on the books
of such Loan Party, and a stay of enforcement of such Lien is in effect;



71









 






     (ii) Liens imposed by law, such as carrier’s, warehousemen’s, and
mechanic’s Liens and other similar Liens arising in the ordinary course of
business which secure payment of obligations not more than ten days past
due;




     (iii) statutory Liens in favor of landlords of real Property leased by
such Loan Party; provided that, such Loan Party is current with respect to
payment of all rent and other amounts due to such landlord under any lease
of such real Property;




     (iv) Liens arising out of pledges or deposits under worker’s
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation or to secure the
performance of bids, tenders, or contracts (other than for the repayment of
Indebtedness) or to secure indemnity, performance, or other similar bonds
for the performance of bids, tenders, or contracts (other than for the
repayment of Indebtedness) or to secure statutory obligations (other than
liens arising under ERISA or Environmental Laws) or surety or appeal bonds,
or to secure indemnity, performance, or other similar bonds;




     (v) utility easements, building restrictions, and such other
encumbrances or charges against real Property as are of a nature generally
existing with respect to properties of a similar character and which do not
in any material way affect the marketability of such real Property or
interfere with the use thereof in the business of such Loan Party;




     (vi) Liens existing on the Closing Date and described in Schedule
6.22;




     (vii) Liens resulting from any extension, refinancing, or renewal of
the related Indebtedness as permitted pursuant to Section 6.17(d);
provided that, the Liens evidenced thereby are not increased to cover any
additional Property not covered thereby immediately prior to such extension,
refinancing or renewal;




     (viii) Liens securing purchase money Indebtedness of such Loan Party
permitted pursuant to Section 6.17(c); provided that, such Liens
attach only to the Property which was purchased with the proceeds of such
purchase money Indebtedness;




     (ix) Liens in favor of the Agent granted pursuant to any Loan Document;




     (x) Liens in favor of the Term Administrative Agent and/or the Term
Collateral Agent, as applicable, securing the Indebtedness owing under the
Term Agreement so long as the Intercreditor Agreement is in full force and
effect with respect thereto.




     (b) Notwithstanding the foregoing, none of the Liens permitted pursuant to this
Section 6.22, other than (1) clauses (i) and (ix) above, may at any time
attach to any Accounts of any Loan Party and (2) clauses (i) through (iii) and (ix)
above, may at any time attach to any Inventory of any Loan Party.



72









 






     (c) Other than as provided in the Loan Documents or in connection with the
creation or incurrence of any Indebtedness under Section 6.17(c), no Loan
Party will enter into or become subject to any negative pledge or other restriction
on the right of such Loan Party to grant Liens to the Agent and the Lenders on any
of its Property; provided that, any such negative pledge or other restriction
entered into in connection with the creation of Indebtedness under Section
6.17(c) shall be limited to the Property securing such purchase money
Indebtedness.



     6.23. Change of Name or Location; Change of Fiscal Year. Other than with respect to
the Permitted Restructuring, no Loan Party shall (a) change its name as it appears in official
filings in the state of its incorporation or organization, (b) change its chief executive office,
principal place of business, mailing address, corporate offices or warehouses or locations at which
Collateral is held or stored, or the location of its records concerning the Collateral as set forth
in the Security Agreement, (c) change the type of entity that it is, (d) change its organization
identification number, if any, issued by its state of incorporation or other organization, or (e)
change its state of incorporation or organization, in each case, unless (1) the Agent shall have
received at least thirty days’ prior written notice of such change and (2) the Agent shall have
acknowledged in writing that, either (i) such change will not adversely affect the validity,
perfection or priority of the Agent’s security interest in the Collateral, or (ii) any reasonable
action requested by the Agent in connection therewith has been completed or taken (including any
action to continue the perfection of any Liens in favor of the Agent, on behalf of Lenders, in any
Collateral), provided that, any new location shall be in the continental U.S. No Loan Party shall
change its Fiscal Year.



     6.24. Affiliate Transactions. No Loan Party will enter into any transaction
(including, without limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer (including, without limitation, any payment or transfer with respect to any
fees or expenses for management services) to, any of its Affiliates except in the ordinary course
of business and pursuant to the reasonable requirements of such Loan Party’s business and, with
respect to each such transaction involving an Affiliate that is not a party to this Agreement, upon
fair and reasonable terms no less favorable to such Loan Party than such Loan Party would obtain in
a comparable arms-length transaction.



     6.25. Amendments to Agreements. Other than pursuant to the Permitted Restructuring,
no Loan Party will, nor will any Loan Party permit its Subsidiary to, amend or terminate its
articles of incorporation, charter, certificate of formation, by-laws, operating, management or
partnership agreement or other organizational document.



     6.26. Prepayment of Indebtedness; Subordinated Indebtedness.





     (a) No Loan Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness prior to its scheduled maturity, other than
(i) the Obligations; (ii) the voluntary prepayment of the Term Loans pursuant to
Section 2.14(a) of the Term Agreement (including any applicable prepayment
premium); provided that (A) both before and after giving pro forma effect to such
prepayment, the Ninety-Day Average Availability calculated in the related Prepayment
Certificate and on the prepayment date is equal to or greater than $30,000,000, (B)
no Default has occurred and is continuing or would result from such prepayment, and
(C) a Prepayment Certificate shall have been
delivered to Agent; (iii) the mandatory prepayment of the Term Loans pursuant
to Section 2.15(a), Section 2.15(b) and Section 2.15(d) of
the Term Agreement (including any applicable prepayment premium), in each case,
subject to the terms of the Intercreditor Agreement; (iv) the mandatory prepayment
of the Term Loans with respect



73









 







to the Company’s Excess Cash Flow (as defined in the
Term Agreement) pursuant to Section 2.15(c) thereof; provided that (A) both
before and after giving pro forma effect to such prepayment, the Ninety-Day Average
Availability calculated in the related Prepayment Certificate and on the prepayment
date is equal to or greater than $20,000,000 (provided that for any prepayment with
regard to the Company’s Excess Cash Flow (as defined in the Term Agreement) for
Fiscal Year 2006, such Ninety-Day Average Availability shall be equal to or greater
than $15,000,000), (B) no Default has occurred and is continuing or would result
from such prepayment, and (C) a Prepayment Certificate shall have been delivered to
Agent; (v) Indebtedness secured by a Permitted Lien if the asset securing such
Indebtedness has been sold or otherwise disposed of in accordance with Section
6.20; (vi) Indebtedness permitted by Section 6.17(d) upon any
refinancing thereof in accordance therewith; and (vii) Indebtedness permitted by
Section 6.17(e); (viii) Indebtedness under the Term Loans repaid in
connection with a refinancing thereof, provided that such refinancing constitutes
Senior Subordinated Debt permitted under Section 6.17(h). Notwithstanding
the foregoing, if all or a portion of a prepayment under Section 2.15(c) of
the Term Agreement is not permitted to be paid in full pursuant to clause
(iv)(A) or (B) above (the “Deferred Prepayment Amount”), the
Ninety-Day Average Availability may be recalculated on the date (the “Deferred
Payment Date”) that is thirty (30) days after the Scheduled Prepayment Date (as
defined in the Term Agreement), and if on the Deferred Payment Date the prepayment
of the Deferred Prepayment Amount is permitted under clauses (iv)(A) and (B) above
(with regard to clause (iv)(A), determined based on the Ninety-Day Average
Availability as of the Deferred Payment Date) and a Prepayment Certificate has been
delivered in accordance with clause (iv)(C) above, the prepayment of the
Deferred Prepayment Amount pursuant to clause (iv) above shall be permitted
on the date that is five (5) days after the Deferred Payment Date.




     (b) With respect to the foregoing, no Loan Party shall make any amendment or
modification to any note or other agreement evidencing or governing any Subordinated
Indebtedness, including any Senior Subordinated Debt, in a manner adverse to the
Lenders (other than (i) amendments, supplements or modifications to such
Subordinated Indebtedness, including any Senior Subordinated Debt, which reduce the
interest rate or extend the maturity thereof, or (ii) waivers of compliance by the
Company or any of its Subsidiaries with any of the terms or conditions of such
Subordinated Indebtedness, including any Senior Subordinated Debt (except those
terms or conditions which by their terms are for the benefit of the Lenders).



     6.27. Financial Contracts. No Loan Party shall enter into or remain liable upon any
Financial Contract, except for (a) Rate Management Transactions permitted by Section 6.17(g), and
(b) Financial Contracts that constitute currency swap transactions of Canadian Dollars provided
that (i) they do not exceed an aggregate notional amount of 100% of all Canadian Dollar loans
reasonably projected to be outstanding from the Company to Newpark Canada and any other Canadian
Subsidiaries, together with all Investments by the Company in such entities during the term of such
Financial Contract minus the aggregate principal amount (stated in Canadian Dollars) of all
Revolving Loans, reasonably projected to be outstanding during the term of such Financial Contract,
and (ii) they are for a term of three years or less.



     6.28. Intentionally Omitted.



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     6.29. Financial Covenants.




     6.29.1. Fixed Charge Coverage Ratio. The Company will not permit the Fixed Charge
Coverage Ratio, determined as of the end of each of the Company’s Fiscal Quarter for the
applicable Test Period, to be less than the corresponding ratio set forth below:



	 	 	 
	 	 	Minimum Fixed Charge
	Date of Determination	 	Coverage Ratio
	Through and including December 31,
2006 and thereafter

	 	1.1 to 1.0







     6.29.2. Consolidated Leverage Ratio. The Company will not permit the Consolidated
Leverage Ratio, determined as of the end of each of the Company’s Fiscal Quarters for the
applicable Test Period, to be greater than the corresponding ratio set forth below:



	 	 	 
	 	 	Maximum Consolidated
	Date of Determination	 	Leverage Ratio
	September 30, 2006

	 	3.25 to 1.00
	December 31, 2006

	 	3.00 to 1.00
	March 31, 2007

	 	3.00 to 1.00
	June 30, 2007

	 	3.00 to 1.00
	September 30, 2007

	 	3.00 to 1.00
	December 31, 2007 and each Fiscal
Quarter thereafter

	 	2.75 to 1.00







     6.29.3. [Intentionally Omitted.]



     6.30. Depository Banks. Each Loan Party shall maintain the Agent as such Loan Party’s
principal depository bank, including for the maintenance of operating, administrative, cash
management, collection activity, and other deposit accounts for the conduct of its business.



     6.31. Real Property Purchases. No Loan Party shall purchase a fee simple ownership
interest in real Property with an aggregate purchase price in excess of $5,000,000



     6.32. Sale of Accounts . No Loan Party will, nor will any Loan Party permit its Subsidiary to, sell or otherwise
dispose of any notes receivable or accounts receivable, with or without recourse.



     6.33. Canadian Subsidiaries Negative Pledge. No Loan Party will, nor will any Loan
Party permit any of its Subsidiaries that are organized under the laws of a province of Canada
(“Canadian Subsidiaries”) to, create, incur or suffer to exist, any Lien in, of, or on any
Property of such Canadian Subsidiary (including, without limitation, the real Property or marine
vessels of such Canadian Subsidiary).



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ARTICLE VII




DEFAULTS



The occurrence of any one or more of the following events shall constitute a “Default”
hereunder:





     (a) any representation or warranty made or deemed made by or on behalf of any
Loan Party to any Lender or the Agent under or in connection with this Agreement,
any other Loan Document, any Credit Extension, or any certificate or information
delivered in connection with any of the foregoing shall be materially false on the
date as of which made;




     (b) nonpayment, when due (whether upon demand or otherwise), of any principal,
interest, fee, Reimbursement Obligation or any other obligation owing under any of
the Loan Document;




     (c) the breach by any Loan Party of any of the terms or provisions of
Section 6.2, 6.3(a), 6.16 through 6.23 or 6.25 through
6.33;




     (d) the breach by any Loan Party (other than a breach which constitutes a
Default under another Section of this Article VII) of any of the terms or
provisions of (i) Section 6.1, 6.3 (other than Section 6.3(a)), 6.4
through 6.15, or 6.24 of this Agreement which is not remedied within
five days from the earlier of (x) the date on which any Loan Party had actual or
constructive knowledge of such breach or (y) the date on which such Loan Party
receives written notice from the Agent or any Lender or (ii) any other Section of
this Agreement which is not remedied within fifteen days after the earlier of (x)
the date on which any Loan Party had actual or constructive knowledge of such breach
or (y) the date on which such Loan Party receives written notice from the Agent or
any Lender;




     (e) failure of any Loan Party to pay when due any Material Indebtedness or a
default, breach or other event occurs under any term, provision or condition
contained in any Material Indebtedness Agreement of any Loan Party, the effect of
which default, event or condition is to cause, or to permit the holder(s) of such
Material Indebtedness or the lender(s) under any Material Indebtedness Agreement to
cause, such Material Indebtedness to become due prior to its stated maturity or any
commitment to lend under any Material Indebtedness Agreement to be terminated prior
to its stated expiration date; any Material Indebtedness of any Loan Party shall be
declared to be due and payable or required to be prepaid or repurchased (other than
by a regularly scheduled payment) prior to the stated maturity thereof; or any Loan
Party shall not pay, or admit in writing its inability to pay, its debts generally
as they become due;




     (f) any Loan Party shall (i) have an order for relief entered with respect to
it under the Bankruptcy Code as now or hereafter in effect, (ii) make an assignment
for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any portion of its Property which constitutes a Substantial
Portion, (iv) institute any proceeding seeking an order for relief under the
Bankruptcy Code as now or hereafter in effect or seeking to adjudicate it a bankrupt
or insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an



76









 







answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate or partnership action to authorize or
effect any of the foregoing actions set forth in this subsection (f) or (vi)
fail to contest in good faith any appointment or proceeding described in
subsection (g) below;




     (g) a receiver, trustee, examiner, liquidator or similar official shall be
appointed for any Loan Party or any portion of its Property which constitutes a
Substantial Portion, or a proceeding described in subsection (f)(iv) of
Article VII shall be instituted against any Loan Party and such appointment
continues undischarged or such proceeding continues undismissed or unstayed for a
period of sixty consecutive days;




     (h) any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of any Loan Party which, when taken together with all other Property of any
Loan Party so condemned, seized, appropriated, or taken custody or control of,
during the twelve-month period ending with the month in which any such action
occurs, constitutes a Substantial Portion;




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




     (j) any Loan Party shall fail within thirty days to pay, bond or otherwise
discharge one or more (i) judgments or orders for the payment of money in excess of
$1,000,000 (or the equivalent thereof in currencies other than U.S. Dollars) in the
aggregate, or (ii) nonmonetary 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;




     (k) any Change in Control shall occur;




     (l) the Unfunded Liabilities of all Single Employer Plans shall exceed in the
aggregate $1,000,000 or any Reportable Event shall occur in connection with any
Plan;




     (m) any Borrower or any other member of the Controlled Group shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal
liability to such Multiemployer Plan in an amount which, when aggregated with all
other amounts required to be paid to Multiemployer Plans by such Borrower or any
other member of the Controlled Group as withdrawal liability (determined as of the
date of such notification), exceeds $1,000,000 or requires payments exceeding
$1,000,000 per annum;




     (n) a Borrower or any other member of the Controlled Group shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA, if
as a result of such reorganization or termination the aggregate annual contributions
of such Borrower and the other members of the Controlled Group (taken as a whole) to
all Multiemployer Plans which are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer Plans
for the respective plan years of each such Multiemployer Plan immediately preceding
the plan



77









 







year in which the reorganization or termination occurs by an amount
exceeding $1,000,000;




     (o) any Loan Party shall (i) be the subject of any proceeding or investigation
pertaining to the release by the any Loan Party or any other Person of any toxic or
hazardous waste or substance into the environment, or (ii) violate any Environmental
Law, which, in the case of an event described in clause (i) or clause (ii), could
reasonably be expected to have a Material Adverse Effect (as determined by Agent in
its Permitted Discretion);




     (p) 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;




     (q) any 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 any
Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions
of the Guaranty to which it is a party, or any Guarantor shall deny that it has any
further liability under any Guaranty to which it is a party, or shall give notice to
such effect;




     (r) any Collateral Document shall for any reason fail to create a valid and
perfected first priority security interest (or, to the extent provided in the
Intercreditor Agreement, a second 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 terms or provisions of any Collateral Document;




     (s) 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);




     (t) the representations and warranties set forth in Section 5.17 (Plan
Assets; Prohibited Transactions) shall at any time not be true and correct;




     (u) nonpayment by any Borrower or any of its Subsidiaries of any Rate
Management Obligation when due or the breach by any Borrower or any of its
Subsidiaries of any term, provision or condition contained in any Rate Management
Transaction or any transaction of the type described in the definition of “Rate
Management Transactions,” whether or not any Lender or Affiliate of a Lender is a
party thereto; or




     (v) any Loan Party is criminally indicted or convicted under any law that may
reasonably be expected to lead to a forfeiture of any Property of such Loan Party
having a fair market value in excess of $500,000.



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ARTICLE VIII




REMEDIES; WAIVERS AND AMENDMENTS




     8.1. Remedies.




     (a) If any Default occurs, the Agent may in its discretion (and at the written
request of the Required Lenders, shall) (i) reduce the Aggregate Commitment or the
Revolving Commitment, (ii) terminate or suspend the obligations of the Lenders to
make Loans hereunder and the obligation and power of the LC Issuer to issue Facility
LCs, (iii) declare all or any portion of the Obligations to be due and payable,
whereupon such Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives, (iv) upon notice to the Borrower Representative and in addition to
the continuing right to demand payment of all amounts payable under this Agreement,
the Agent may either (1) make demand on the Borrowers to pay, and the Borrowers
will, forthwith upon such demand and without any further notice or act, pay to the
Agent an amount, in immediately available funds (which funds shall be held in the
Facility LC Collateral Account), equal to 105% of the Collateral Shortfall Amount or
(2) deliver a Supporting Letter of Credit as required by Section 2.1.2(l),
whichever the Agent may specify in its sole discretion, (v) increase the rate of
interest applicable to the Loans and the LC Fees as set forth in this Agreement and
(vi) exercise any rights and remedies provided to the Agent under the Loan Documents
or at law or equity, including all remedies provided under the UCC.




     (b) If any Default described in subsections (f) or (g) of
Article VII occurs with respect to any Loan Party, the obligations of the
Lenders to make Loans hereunder and the obligation and power of the LC Issuer to
issue Facility LCs shall automatically terminate and all Obligations shall
immediately become due and payable without any election or action on the part of the
Agent, the LC Issuer or any Lender and the Loan Parties will be and become thereby
unconditionally obligated, without any further notice, act or demand, to pay to the
Agent an amount equal to 105% of the Collateral Shortfall Amount, which funds shall
be deposited in the Facility LC Collateral Account.




     (c) If, within thirty days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans and the
obligation and power of the LC Issuer to issue Facility LCs hereunder as a result of
any Default (other than any Default as described in subsections (f) or
(g) of Article VII with respect to any Borrower) and before any
judgment or decree for the payment of the Obligations due shall have been obtained
or entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower Representative, rescind and annul such
acceleration and/or termination.




     (d) If at any time while any Default is continuing, the Agent determines that
the Collateral Shortfall Amount at such time is greater than zero, the Agent may
make demand on the Borrowers (upon notice to the Borrower Representative) to pay,
and the Borrowers will, forthwith upon such demand and without any further notice or
act, pay to the Agent an amount equal to 105% of the Collateral Shortfall Amount,
which funds shall be deposited in the Facility LC Collateral Account. The Borrowers
hereby pledge, assign, and grant to the Agent, on behalf of and for the benefit of
the Agent, the Lenders, and the LC Issuer, a security interest in all of the
Borrowers’ right, title, and interest in and to all



79









 







funds which may from time to
time be on deposit in the Facility LC Collateral Account to secure the prompt and
complete payment and performance of the Obligations.




     (e) The Agent may at any time or from time to time after funds are deposited in
the Facility LC Collateral Account, apply such funds to the payment of the
Obligations and any other amounts as shall from time to time have become due and
payable by the Borrowers to the Lenders or the LC Issuer under the Loan Documents.




     (f) At any time while any Default is continuing, neither the Borrowers nor any
Person claiming on behalf of or through the Borrowers shall have any right to
withdraw any of the funds held in the Facility LC Collateral Account. After all of
the Secured Obligations have been indefeasibly paid in full and the Aggregate
Commitment has been terminated, any funds remaining in the Facility LC Collateral
Account shall be returned by the Agent to the Borrowers or paid to whomever may be
legally entitled thereto at such time.



     8.2. Waivers by Loan Parties. Except as otherwise provided for in this Agreement or
by applicable law, each Loan Party waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by the Agent on which any Loan Party may in any way be liable, and hereby ratifies
and confirms whatever the Agent may do in this regard, (b) all rights to notice and a hearing prior
to the Agent’s taking possession or control of, or to the Agent’s replevy, attachment or levy upon,
the Collateral or any bond or security that might be required by any court prior to allowing the
Agent to exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling
and exemption laws.



     8.3. Amendments.




     (a) Subject to the provisions of this Section 8.3, no amendment, waiver
or modification of any provision of this Agreement or any other Loan Document, and
no consent with respect to any departure by any Loan Party therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders (or
the Agent with the consent in writing of the Required Lenders) and the Loan Parties
and then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.




     (b) Notwithstanding subsection (a) above, no such amendment, waiver or
other modification with respect to this Agreement shall, without the consent of all
of the Lenders:




     (i) extend the final maturity of any Loan to a date after the Facility
Termination Date;




     (ii) postpone any regularly scheduled payment of principal of any Loan
or reduce or forgive all or any portion of the principal amount of any Loan
or any Reimbursement Obligation;




     (iii) reduce the rate or extend the time of payment of interest or fees
payable to the Lenders pursuant to any Loan Document;



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     (iv) reduce the percentage or number of Lenders specified in the
definition of Required Lenders;




     (v) extend the Facility Termination Date;




     (vi) increase the amount of the Aggregate Commitment or the Commitment
of any Lender hereunder (other than pursuant to Section 12.3);




     (vii) increase the advance rates set forth in the definition of
Borrowing Base;




     (viii) permit any Loan Party to assign its rights under this Agreement;




     (ix) amend this Section 8.3;




     (x) release any guarantor of any Credit Extension, except as otherwise
permitted herein or in the other Loan Documents; or




     (xi) except as provided in Section 10.16 or any Collateral
Document, release all or substantially all of the Collateral.




     (c) No amendment of any provision of this Agreement relating to the Agent or to
the Non-Ratable Loans, the Overadvances or the Protective Advances shall be
effective without the written consent of the Agent. No amendment of any provision
relating to the LC Issuer shall be effective without the written consent of the LC
Issuer. The Agent may (i) amend the Commitment Schedule to reflect assignments
entered into pursuant to Section 12.3, and (ii) waive payment of the fee
required under Section 12.3(c) without obtaining the consent of any other
party to this Agreement.



     8.4. Preservation of Rights. No delay or omission of the Lenders, the LC Issuer or
the Agent to exercise any right under the Loan Documents shall impair such right or be construed to
be a waiver of any Default or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or the inability of the Borrowers to satisfy the
conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed
by the Lenders required pursuant to Section 8.3, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents or by law afforded
shall be
cumulative and all shall be available to the Agent, the LC Issuer and the Lenders until the
Obligations have been paid in full.



ARTICLE IX




GENERAL PROVISIONS




     9.1. Survival of Representations. All representations and warranties of the Loan
Parties contained in this Agreement and the other Loan Documents shall survive the execution and
delivery of the Loan Documents and the making of the Credit Extensions herein contemplated.



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     9.2. Governmental Regulation. Anything contained in this Agreement to the contrary
notwithstanding, neither the LC Issuer nor any Lender shall be obligated to extend credit to the
Borrowers in violation of any limitation or prohibition provided by any applicable statute or
regulation.



     9.3. Headings. Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of the provisions of the Loan
Documents.



     9.4. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Loan Parties, the Agent, the LC Issuer and the Lenders and supersede all
prior agreements and understandings among the Loan Parties, the Agent and the Lenders relating to
the subject matter thereof other than those contained in the Fee Letter which shall survive and
remain in full force and effect during the term 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.



     9.5. Several Obligations; Benefits of this Agreement. The respective obligations of
the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any
other lender (except to the extent to which the Agent is authorized to act as administrative agent
for the Lenders hereunder). The failure of any Lender to perform any of its obligations hereunder
shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not
be construed so as to confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns, provided however, that the parties hereto
expressly agree that the Arranger shall enjoy the benefits of the provisions of Sections 9.6,
9.10 and 10.11 to the extent specifically set forth therein and shall have the right to
enforce such provisions on its own behalf and in its own name to the same extent as if it were a
party to this Agreement.



     9.6. Expenses; Indemnification.




     (a) Expenses. The Borrowers shall reimburse the Agent and the Arranger
for any costs, internal charges and out-of-pocket expenses (including attorneys’
fees and time charges of attorneys for the Agent, which attorneys may be employees
of the Agent) paid or incurred by the Agent or the Arranger in connection with the
preparation, negotiation, execution, delivery, syndication, distribution (including,
without limitation, via the internet or through a service such as Intralinks),
review, amendment, modification, and administration of the Loan Documents. The
Borrowers also agree to reimburse the Agent, the Arranger, the LC Issuer and the
Lenders for any costs, internal charges and out-of-pocket expenses (including
attorneys’ fees and time charges of attorneys for the Agent, the Arranger, the LC
Issuer and the Lenders, which attorneys may be employees of the Agent, the Arranger,
the LC Issuer or the Lenders) paid or incurred by the Agent, the Arranger, the LC
Issuer or any Lender in connection with the collection and enforcement of the Loan
Documents. Expenses being reimbursed by the Borrowers under this Section include,
without limitation, costs and expenses incurred in connection with:




     (i) appraisals of all or any portion of the Collateral, including each
parcel of real Property or interest in real Property described in any
Collateral Document, if required, which appraisals shall be in conformity
with the applicable requirements of any law or any governmental rule,
regulation, policy, guideline or directive (whether or not having the force
of law), or any



82









 







interpretation thereof, including, without limitation, the
provisions of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, reformed or otherwise modified from
time to time, and any rules promulgated to implement such provisions
(including travel, lodging, meals and other out of pocket expenses);




     (ii) field examinations and audits and the preparation of Reports at
the Agent’s then customary charge (such charge is currently $800 per day (or
portion thereof) for each Person retained or employed by the Agent with
respect to each field examination or audit) plus travel, lodging, meals and
other out of pocket expenses;




     (iii) any amendment, modification, supplement, consent, waiver or other
documents prepared with respect to any Loan Document and the transactions
contemplated thereby;




     (iv) lien and title searches and title insurance;




     (v) taxes, fees and other charges for recording the Mortgages, filing
financing statements and continuations, and other actions to perfect,
protect, and continue the Agent’s Liens (including costs and expenses paid
or incurred by the Agent in connection with the consummation of the
Agreement);




     (vi) 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;




     (vii) any litigation, contest, dispute, proceeding or action (whether
instituted by Agent, the LC Issuer, any Lender, any Loan Party or any other
Person and whether as to party, witness or otherwise) in any way
relating to the Collateral, the Loan Documents or the transactions
contemplated thereby; and




     (viii) costs and expenses of forwarding loan proceeds, collecting
checks and other items of payment, and establishing and maintaining the
Funding Account and lock boxes, and costs and expenses of preserving and
protecting the Collateral




     The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrowers. All of the foregoing
costs and expenses may be charged to the Borrower’s Loan Account as Revolving Loans, or to
another deposit account, all as described in Section 2.17(b).




     (b) Indemnification. The Borrowers hereby further agree, jointly and
severally, to indemnify the Agent, the Arranger, the LC Issuer each Lender, their
respective Affiliates, and each of their directors, officers and employees against
all losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation therefor
whether or not the Agent, the Arranger, the LC Issuer any Lender or any Affiliate is
a party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated hereby or
the direct or indirect application or proposed application of the proceeds of any
Credit Extension hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent



83









 







jurisdiction to have resulted from
the gross negligence or willful misconduct of the party seeking indemnification.
The obligations of the Borrowers under this Section 9.6 shall survive the
termination of this Agreement. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE
INTENTION OF THE BORROWERS AND THE BORROWERS AGREE THAT THE FOREGOING INDEMNITIES
SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO LOSSES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL
EXPENSES OF LITIGATION OR PREPARATION THEREFOR), WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED
PARTY.



     9.7. Numbers of Documents. All statements, notices, closing documents, and requests
hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may
furnish one to each of the Lenders.



     9.8. Accounting. Except as provided to the contrary herein, all accounting terms used
herein shall be interpreted and all accounting determinations hereunder shall be made in accordance
with GAAP in a manner consistent with that used in preparing the financial statements referred to
in Section 5.5, except that any calculation or determination which is to be made on a
consolidated basis shall be made for the Company and all of its Subsidiaries, including those
Subsidiaries, if any, which are unconsolidated on the Company’s audited financial statements. If
at any time any change in GAAP would affect the computation of any financial ratio or requirement
set forth in any Loan Document, and the Borrowers (through the Borrower Representative), the Agent
or the Required Lenders shall so request the Agent, the Lenders and the Loan Parties shall
negotiate in good faith to amend such ratio or requirement to preserve
the original intent thereof in light of such change in GAAP (subject to the approval of the
Required Lenders), provided that, until so amended, such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and the Borrowers shall provide to
the Agent and the Lenders reconciliation statements showing the difference in such calculation,
together with the delivery of monthly, quarterly and annual financial statements required
hereunder.



     9.9. Severability of Provisions. Any provision in any Loan Document that is held to
be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable.



     9.10. Nonliability of Lenders. The relationship between any Loan Party on the one
hand and the Lenders, the LC Issuer and the Agent on the other hand shall be solely that of debtor
and creditor. Neither the Agent, the Arranger, the LC Issuer nor any Lender shall have any
fiduciary responsibilities to any Loan Party. Neither the Agent, the Arranger, the LC Issuer nor
any Lender undertakes any responsibility to any Loan Party to review or inform such Loan Party of
any matter in connection with any phase of any Loan Party’s business or operations. The Loan
Parties agree that neither the Agent, the Arranger, the LC Issuer nor any Lender shall have
liability to any Loan Party (whether sounding in tort, contract or otherwise) for losses suffered
by any Loan Party in connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final non-appealable judgment by a
court of competent jurisdiction that such losses resulted from the gross negligence or willful
misconduct of the party from which recovery is sought. Neither the Agent, the Arranger, the LC
Issuer nor any Lender shall have any liability with respect to, and each Loan Party hereby waives,
releases and agrees not to sue for, any special, indirect, consequential or punitive damages



84









 







suffered by any Loan Party in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby.



     9.11. Confidentiality. The Agent and each Lender agrees to hold any confidential
information which it may receive from the Borrower in connection with this Agreement in confidence,
except for disclosure (a) to its Affiliates and to the Agent and any other Lender and their
respective Affiliates, (b) to legal counsel, accountants, and other professional advisors to such
Lender or to a Transferee, (c) to regulatory officials, (d) to any Person as requested pursuant to
or as required by law, regulation, or legal process, (e) to any Person in connection with any legal
proceeding to which it is a party, (f) to its direct or indirect contractual counterparties in swap
agreements or to legal counsel, accountants and other professional advisors to such counterparties,
(g) permitted by Section 12.4, and (h) to rating agencies if requested or required by such
agencies in connection with a rating relating to the Credit Extensions hereunder. Without limiting
Section 9.4, the Borrowers agree that the terms of this Section 9.11 shall set
forth the entire agreement between the Borrowers and each Lender (including the Agent) with respect
to any confidential information previously or hereafter received by such Lender in connection with
this Agreement, and this Section 9.11 shall supersede any and all prior confidentiality
agreements entered into by such Lender with respect to such confidential information.
Notwithstanding anything herein to the contrary, confidential information shall not include, and
each party to any of the Loan Documents and their respective Affiliates (and the respective
partners, directors, officers, employees, advisors,
representatives and other agents of each of the foregoing and their Affiliates) may disclose
to any and all Persons, without limitation of any kind, (i) any information with respect to the
U.S. federal and state income tax treatment of the transactions contemplated hereby and any facts
that may be relevant to understanding such tax treatment, which facts shall not include for this
purpose the names of the parties or any other Person named herein, or information that would permit
identification of the parties or such other Persons, or any pricing terms or other nonpublic
business or financial information that is unrelated to such tax treatment or facts, and (ii) all
materials of any kind (including opinions or other tax analyses) relating to such tax treatment or
facts that are provided to any of the Persons referred to above, and it is hereby confirmed that
each of the Persons referred to above has been authorized to make such disclosures since the
commencement of discussions regarding the transactions contemplated hereby.



     9.12. Nonreliance. Each Lender hereby represents that it is not relying on or looking
to any Margin Stock for the repayment of the Credit Extensions provided for herein.



     9.13. Disclosure. Each Loan Party and each Lender hereby acknowledges and agrees that
JPMorgan Chase 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.



     9.14. Patriot Act Notice. IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW
ACCOUNT. To help the government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record information that
identifies each person or entity that opens an account, including any deposit account, treasury
management account, loan, other extension of credit, or other financial services product. What
this means for the Borrowers: When a Borrower opens an account, if such Borrower is an individual,
the Agent and the Lenders will ask for such Borrower’s name, residential address, date of birth,
and other information that will allow Agent and the Lenders to identify such Borrower, and, if the
Borrower is not an individual, the Agent and the Lenders will ask for such Borrower’s name,
employer identification number, business address, and other information that will allow the Agent
and the Lenders to identify such Borrower. The Agent and the Lenders may also ask, if a Borrower
is an individual, to see such Borrower’s driver’s license or other identifying documents, and, if a
Borrower is not an individual, to see such Borrower’s legal organizational documents or other
identifying documents.



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     9.15. Amendment and Restatement. This Agreement is an amendment and restatement of
that certain Amended and Restated Credit Agreement, dated as of February 25, 2004, among Newpark
Resources, Inc., the lending institutions party thereto as “Lenders”, Bank One, N.A. (Main Office
Chicago), as agent and LC Issuer, and the other parties thereto, as amended, which agreement
amended and restated that certain Amended and Restated Credit Agreement, dated as of January 31,
2002 among the above-referenced parties (collectively, the “Amended Loan Agreement” and
together with the Original Loan Agreement and all interim amendments, restatements and other
modifications thereto, collectively, the “Prior Loan Agreements”). All “Obligations” under
the Prior Loan Agreements and all Liens securing payment of “Obligations” under the Prior Loan
Agreements shall in all respects be continuing and this Agreement shall not be deemed to evidence
or result in a novation or repayment and re-borrowing of such “Obligations”. This
Agreement shall supersede the Prior Loan Agreements. From and after the Effective Date, this
Agreement shall govern the terms of the “Obligations” under the Prior Loan Agreements. To the
extent not replaced by Loan Documents dated as of the Closing Date, any “Loan Documents” (as
defined in the Prior Loan Agreements) executed in connection with the Prior Loan Agreements (other
than any such Loan Document that is specifically terminated by the parties thereto) shall continue
to be effective, and all references in those prior Loan Documents to the “Amended and Restated
Credit Agreement,” the “Credit Agreement”, the “Agreement” or similar references, shall be deemed
to refer to this Agreement without further amendment thereof.



     9.16. Prior Dissolutions. Immediately prior to the consummation of the transactions
contemplated hereby, the Agent and Lenders under the Amended Loan Agreement hereby consent to the
prior dissolution of Newpark Water Technology Partners LLC, OLS Consulting Services, Inc., Shamrock
Drilling Fluids, Inc., and Newport Water Technology Partners, LLC in each case, effective as of the
date of such dissolution.



ARTICLE X




THE AGENT




     10.1. Appointment; Nature of Relationship. JPMorgan Chase is hereby appointed by each
of the Lenders as its contractual representative (herein referred to as the “Agent”)
hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the
Agent to act as the contractual representative of such Lender with the rights and duties expressly
set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual
representative upon the express conditions contained in this Article X. Notwithstanding
the use of the defined term “Agent,” it is expressly understood and agreed that the Agent shall not
have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative of the Lenders with
only those duties as are expressly set forth in this Agreement and the other Loan Documents. In
its capacity as the Lenders’ contractual representative, the Agent (a) does not hereby assume any
fiduciary duties to any of the Lenders, (b) is a “representative” of the Lenders within the meaning
of the term “secured party” as defined in the Texas Uniform Commercial Code and (c) is acting as an
independent contractor, the rights and duties of which are limited to those expressly set forth in
this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim
against the Agent on any agency theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Lender hereby waives.



     10.2. Powers. The Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to the Agent by the terms of each thereof, together with
such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.



86









 





     10.3. General Immunity. Neither the Agent nor any of its directors, officers, agents
or employees shall be liable to the Borrowers, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except to the extent
such action or inaction is determined in a final non-appealable judgment by a court of competent
jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.



     10.4. No Responsibility for Credit Extensions, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection
with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including, without limitation, any
agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any
condition specified in Article IV, except receipt of items required to be delivered solely
to the Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the
validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any
other instrument or writing furnished in connection therewith; (f) the value, sufficiency,
creation, perfection or priority of any Lien in any Collateral; or (g) the financial condition of
any Loan Party, any Guarantor or any Affiliate of any Loan Party.



     10.5. Action on Instructions of the Lenders. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other Loan Document in
accordance with written instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The
Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document
unless it shall be requested in writing to do so by the Required Lenders. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost and expense that it may incur by reason of taking or continuing to take any
such action.



     10.6. Employment of Agents and Counsel. The Agent may execute any of its duties as
the Agent hereunder and under any other Loan Document by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities
received by the Agent or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders and all matters
pertaining to the Agent’s duties hereunder and under any other Loan Document.



     10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any
Note, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex, electronic mail
message, statement, paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion
of counsel selected by the Agent, which counsel may be employees of the Agent. For purposes of
determining compliance with the conditions specified in Sections 4.1 and 4.2, each
Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless the Agent shall have received notice
from such Lender prior to the applicable date specifying its objection thereto.



     10.8. Agent’s Reimbursement and Indemnification. The Lenders agree to reimburse and
indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments
have been terminated, in proportion to their Commitments immediately prior to such termination) (a)
for any



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amounts not reimbursed by the Borrowers for which the Agent is entitled to reimbursement by
the Borrowers under the Loan Documents, (b) for any
other expenses incurred by the Agent on behalf
of the Lenders, in connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the
Agent in connection with any dispute between the Agent and any Lender or between two or more of the
Lenders) and (c) for any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the transactions contemplated
thereby (including, without limitation, for any such amounts incurred by or asserted against the
Agent in connection with any dispute between the Agent and any Lender or between two or more of the
Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that, (i) no Lender shall be liable for any of the foregoing to the extent any
of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any
indemnification required pursuant to Section 3.5(g) shall, notwithstanding the provisions
of this Section 10.8, be paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of
the Obligations and termination of this Agreement.



     10.9. Notice of Default. The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written
notice from a Lender, any Borrower or the Borrower Representative referring to this Agreement
describing such Default or Unmatured Default and stating that such notice is a “notice of default.”
In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to
the Lenders; provided, that, the Agent shall not be liable to any Lender for any failure to do so,
except to the extent that such failure is attributable to the Agent’s gross negligence or willful
misconduct.



     10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent shall have
the same rights and powers hereunder and under any other Loan Document with respect to its
Commitment and its Credit Extensions as any Lender and may exercise the same as though it were not
the Agent, and the term “Lender” or “Lenders” shall, at any time when the Agent is a Lender, unless
the context otherwise indicates, include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with any Loan Party in which such Loan Party is not restricted hereby from engaging
with any other Person, all as if JPMorgan Chase were not the Agent and without any duty to account
therefor to Lenders. JPMorgan Chase and its Affiliates may accept fees and other consideration from
any Loan Party for services in connection with this Agreement or otherwise without having to
account for the same to Lenders. The Agent in its individual capacity, is not obligated to remain a
Lender.



     10.11. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent,
the Arranger or any other Lender and based on the financial statements prepared by the Loan Parties
and such other documents and information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent, the Arranger 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 this Agreement and
the other Loan Documents. Except for any notice, report, document, credit information or other
information expressly required to be furnished to the Lenders by the Agent or Arranger hereunder,
neither the Agent nor the Arranger shall have any duty or responsibility (either initially or on a
continuing basis) to provide any Lender with any notice, report, document, credit information or
other information



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concerning the affairs, financial condition or business of the Borrowers or any
of their Affiliates that may come into the possession of the Agent or Arranger (whether or not in
their respective capacity as Agent or Arranger) or any of their Affiliates.



     10.12. Successor Agent. The Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower Representative, such resignation to be effective upon the
appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days
after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any
time with or without cause by written notice received by the Agent from the Required Lenders, such
removal to be effective on the date specified by the Required Lenders. Upon any such resignation
or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrowers and
the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent’s giving notice of its intention to resign,
then the resigning Agent may appoint, on behalf of the Borrowers and the Lenders, a successor
Agent. Notwithstanding the previous sentence, the Agent may at any time without the consent of the
Borrowers or any Lender, appoint any of its Affiliates which is a commercial bank as a successor
Agent hereunder. If the Agent has resigned or been removed and no successor Agent has been
appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrowers shall
make all payments in respect of the Obligations to the applicable Lender and for all other purposes
shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder
until such successor Agent has accepted the appointment. Any such successor Agent shall be a
commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance
of any appointment as the Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges and duties of the
resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the
resigning or removed Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the
provisions of this Article X shall continue in effect for the benefit of such Agent in
respect of any actions taken or omitted to be taken by it while it was acting as the Agent
hereunder and under the other Loan Documents. In the event that there is a successor to the Agent
by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this
Section 10.12, then the term “Prime Rate” as used in this Agreement shall mean the
prime rate, base rate or other analogous rate of the new Agent.



     10.13. Delegation to Affiliates. The Borrowers and the Lenders agree that the Agent
may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate
(and such Affiliate’s directors, officers, agents and employees) which performs duties in
connection with this Agreement shall be entitled to the same benefits of the indemnification,
waiver and other protective provisions to which the Agent is entitled under Articles IX and
X.



     10.14. Execution of Loan Documents. The Lenders hereby empower and authorize the
Agent, on behalf of the Agent and the Lenders, to execute and deliver to the Loan Parties the Loan
Documents and all related agreements, certificates, documents, or instruments as shall be necessary
or appropriate to effect the purposes of the Loan Documents. Each Lender agrees that any action
taken by the Agent or the Required Lenders in accordance with the terms of this Agreement or the
other Loan Documents, and the exercise by the Agent or the Required Lenders of their respective
powers set forth therein or herein, together with such other powers that are reasonably incidental
thereto, shall be binding upon all of the Lenders. The Lenders acknowledge that all of the
Obligations hereunder constitute one debt, secured pari passu by all of the Collateral.



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     10.15. Collateral Matters.




     (a) The Lenders hereby irrevocably authorize the Agent, at its option and in
its sole discretion, to release or subordinate (as applicable) any Liens granted to
the Agent by the Loan Parties on any Collateral (i) upon the termination of the
Aggregate Commitment, payment and satisfaction in full in cash of all Obligations
(other than Unliquidated Secured Obligations), and the cash collateralization of all
Unliquidated Secured 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 Agent that the sale or disposition is made in
compliance with the terms of this Agreement (and the Agent may rely conclusively on
any such certificate, without further inquiry), (iii) constituting Property in which
no Loan Party has at any time during the term of this Agreement owned any interest,
(iv) constituting property leased to a Loan Party under a lease which has expired or
been terminated in a transaction permitted under this Agreement, (v) owned by or
leased to an Loan Party which is subject to a purchase money security interest or
which is the subject of a Capitalized Lease, in either case, entered into by such
Loan Party pursuant to Section 6.17(c), (vi) as required to effect any sale
or other disposition of such Collateral in connection with any exercise of remedies
of the Agent and the Lenders pursuant to Section 8.1 or (vii) as provided in
Section 4.2 of the Intercreditor Agreement, upon any release, sale or disposition of
Term Priority Collateral (as defined in the Intercreditor Agreement). Upon request
by the Agent at any time, the Lenders will confirm in writing the Agent’s authority
to release any Liens upon particular types or items of Collateral pursuant to this
Section 10.15. Except as provided in the preceding sentence, the Agent will
not release any Liens on Collateral without the prior written authorization of the
Required Lenders; provided that, the Agent may in its discretion, release its Liens
on Collateral valued in the aggregate not in excess of $2,500,000 during any
calendar year without the prior written authorization of the Lenders.




     (b) Upon receipt by the Agent of any authorization required pursuant to
Section 10.15(a) from the Required Lenders of the Agent’s authority to
release any Liens upon particular types or items of Collateral, and upon at least
five Business Days prior written request by the Loan Parties, the Agent shall (and
is hereby irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of its Liens upon such Collateral; provided that,
(i) the Agent shall not be required to execute any such document on terms which, in
the Agent’s opinion, would expose the Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty and (ii) such release shall not in any manner discharge, affect, or impair
the Obligations or any Liens (other than those expressly being
released) upon (or obligations of the 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.




     (c) The Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by the Loan Parties or is cared for,
protected, or insured or has been encumbered, or that the Liens granted to the Agent
therein have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to exercise at
all or in any particular manner or under any duty of care, disclosure, or fidelity,
or to continue exercising, any of the rights, authorities, and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act,



90









 







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




     (d) Each Lender hereby appoints each other Lender as its agent for the purpose
of perfecting Liens, for the benefit of the 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 Agent) obtain possession of
any such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent’s request therefor shall deliver such Collateral to the Agent or otherwise
deal with such Collateral in accordance with the Agent’s instructions.




     (e) Each Lender hereby agrees as follows: (a) such Lender is deemed to have
requested that the Agent furnish such Lender, promptly after it becomes available, a
copy of each Report prepared by or on behalf of the Agent; (b) such Lender expressly
agrees and acknowledges that neither JPMorgan Chase nor the Agent (i) makes any
representation or warranty, express or implied, as to the completeness or accuracy
of any Report or any of the information contained therein, or (ii) shall be liable
for any information contained in any Report; (c) such Lender expressly agrees and
acknowledges that the Reports are not comprehensive audits or examinations, that the
Agent, JPMorgan Chase, or any other party performing any audit or 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 JPMorgan Chase undertakes no
obligation to update, correct or supplement the Reports; (d) such Lender agrees to
keep all Reports confidential and strictly for its internal use, not share the
Report with any Loan Party and not to distribute any Report to 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,
such Lender agrees (i) that neither JPMorgan Chase nor the Agent shall be liable to
such Lender or any other Person receiving a copy of the Report for any inaccuracy or
omission contained in or relating to a Report, (ii) to conduct its own due diligence
investigation and make credit decisions with respect to the Loan Parties based on
such documents as such Lender deems appropriate without any reliance on the Reports
or on the Agent or JPMorgan Chase, (iii) to hold the Agent and any such other Person
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in connection
with any Credit Extensions that the indemnifying Lender has made or may make to the
Loan Parties, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of,
any Obligations and (iv) to pay and protect, and indemnify, defend, and hold
the 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 the Agent and any such other Person
preparing a Report as the direct or indirect result of any third parties who might
obtain all or part of any Report through the indemnifying Lender.



     10.16. Co-Agents, Documentation Agent, Syndication Agent, etc. Neither any of the
Lenders identified in this Agreement as a “co-agent” nor the Documentation Agent or the Syndication
Agent shall have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none
of such Lenders shall have or be



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deemed to have a fiduciary relationship with any Lender. Each
Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect
to the Agent in Section 10.11.



ARTICLE XI

SETOFF; RATABLE PAYMENTS




     11.1. Setoff. In addition to, and without limitation of, any rights of the Lenders
under applicable law, if any Loan Party becomes insolvent, however evidenced, or any Default
occurs, any and all deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time held or owing by any
Lender or any Affiliate of any Lender to or for the credit or account of any Borrower may be offset
and applied toward the payment of the Secured Obligations owing to such Lender, whether or not the
Secured Obligations, or any part thereof, shall then be due.



     11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has payment
made to it upon its Credit Exposure (other than payments received pursuant to Section 3.1,
3.2, 3.4 or 3.5) in a greater proportion than that received by any other
Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Aggregate Credit
Exposure held by the other Lenders so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Credit Exposure. If any Lender, whether in connection with setoff or
amounts which might be subject to setoff or otherwise, receives collateral or other protection for
its Secured Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share in the benefits of
such collateral ratably in proportion to respective Pro Rata Share of the Aggregate Credit
Exposure. In case any such payment is disturbed by legal process, or otherwise, appropriate
further adjustments shall be made.



ARTICLE XII




BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS




     12.1. Successors and Assigns. The terms and provisions of the Loan Documents shall be
binding upon and inure to the benefit of the Loan Parties and the Lenders and their respective
successors and assigns permitted hereby, except that (a) the Loan Parties shall not have the right
to assign their rights or obligations under the Loan Documents without the prior written consent of
each Lender, (b) any assignment by any Lender must be
made in compliance with Section 12.3, and (c) any transfer by Participation must be
made in compliance with Section 12.2. Any attempted assignment or transfer by any party
not made in compliance with this Section 12.1 shall be null and void, unless such attempted
assignment or transfer is treated as a participation in accordance with Section 12.2. The
parties to this Agreement acknowledge that clause (b) of this Section 12.1 relates only to
absolute assignments and this Section 12.1 does not prohibit assignments creating security
interests, including, without limitation, (x) any pledge or assignment by any Lender of all or any
portion of its rights under this Agreement and any Note to a Federal Reserve Bank or (y) in the
case of a Lender which is a Fund, any pledge or assignment of all or any portion of its rights
under this Agreement and any Note to its trustee in support of its obligations to its trustee;
provided however, that no such pledge or assignment creating a security interest shall release the
transferor Lender from its obligations hereunder unless and until the parties thereto have complied
with the provisions of Section 12.3. The Agent may treat the Person which made any Credit
Extension or which holds any Note as the owner thereof for all purposes hereof unless and until
such Person complies with Section 12.3; provided however, that the Agent may in its
discretion (but shall not be required to) follow instructions from the Person which made any Credit
Extension or which holds any Note to direct payments relating to such Credit Extension or Note to
another Person. Any assignee of the rights to any Credit Extension or any Note agrees by
acceptance of such assignment to be



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bound by all the terms and provisions of the Loan Documents.
Any request, authority or consent of any Person, who at the time of making such request or giving
such authority or consent is the owner of the rights to any Credit Extension (whether or not a Note
has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or
assignee of the rights to such Credit Extension.



     12.2. Participations.




     (a) Permitted Participants; Effect. Any Lender may at any time sell to
one or more banks or other entities (“Participants”) participating interests
in any Credit Exposure of such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a Participant,
such Lender’s obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the owner of its Credit
Exposure and the holder of any Note issued to it in evidence thereof for all
purposes under the Loan Documents, all amounts payable by the Borrowers under this
Agreement shall be determined as if such Lender had not sold such participating
interests, and the Borrowers and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations
under the Loan Documents.




     (b) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or waiver
with respect to any Credit Extension or Commitment in which such Participant has an
interest which would require consent of all of the Lenders pursuant to the terms of
Section 8.3 or of any other Loan Document.




     (c) Benefit of Certain Provisions. Each Loan Party agrees that each
Participant shall be deemed to have the right of setoff provided in Section
11.1 in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents, provided that, each
Lender shall retain the right of setoff provided in Section 11.1 with
respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1,
agrees to share with each Lender, any amount received pursuant to the exercise of
its right of setoff, such amounts to be shared in accordance with Section
11.2 as if each Participant were a Lender. The Borrowers further agree that
each Participant shall be entitled to the benefits of Sections 3.1,
3.2, 3.4 and 3.5 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to Section 12.3,
provided that, (i) a Participant shall not be entitled to receive any greater
payment under Section 3.1, 3.2 or 3.5 than the Lender who
sold the participating interest to such Participant would have received had it
retained such interest for its own account, unless the sale of such interest to such
Participant is made with the prior written consent of the Borrower Representative,
and (ii) any Participant not incorporated under the laws of the U.S. or any state
thereof agrees to comply with the provisions of Section 3.5 to the same
extent as if it were a Lender.



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     12.3. Assignments.




     (a) Permitted Assignments. Any Lender may at any time assign to one or
more banks or other entities (“Purchasers”) all or any part of its rights
and obligations under the Loan Documents. Such assignment shall be substantially in
the form of Exhibit G (an “Assignment Agreement”). Each such
assignment with respect to a Purchaser which is not a Lender or an Affiliate of a
Lender or an Approved Fund shall either be in an amount equal to the entire
applicable Commitment and Credit Extensions of the assigning Lender or (unless each
of the Borrower Representative and the Agent otherwise consents) be in an aggregate
amount not less than $5,000,000 in the case of any assignment of a Revolving
Commitment. The amount of the assignment shall be based on the Commitment or
outstanding Credit Extensions (if the Commitment has been terminated) subject to the
assignment, determined as of the date of such assignment or as of the “Trade Date,”
if the “Trade Date” is specified in the assignment.




     (b) Consents. The consent of the Borrower Representative shall be
required prior to an assignment becoming effective unless the Purchaser is a Lender,
an Affiliate of a Lender or an Approved Fund, provided that, the consent of the
Borrower Representative shall not be required if a Default has occurred and is
continuing. The consent of the Agent shall be required prior to an assignment
becoming effective unless the Purchaser is a Lender with a Revolving Commitment (in
the case of an assignment of a Revolving Commitment) or is a Lender, an Affiliate of
a Lender or an Approved Fund (in the case of an assignment of any other Commitment
or Loans). The consent of the LC Issuer shall be required prior to an assignment of
a Revolving Commitment becoming effective unless the Purchaser is a Lender with a
Revolving Commitment. Any consent required under this Section 12.3(b) shall
not be unreasonably withheld or delayed.




     (c) Effect; Effective Date. Upon (i) delivery to the Agent of a duly
executed Assignment Agreement, together with any consents required by Sections
12.3(a) and 12.3(b), and (ii) payment of a $3,500 fee to the Agent for
processing such assignment effective on the effective date specified by the Agent in
such Assignment Agreement. The Assignment Agreement shall contain a representation
by the Purchaser to the effect that none of the consideration used to make the
purchase of the Commitment and Credit Exposure under the applicable Assignment
Agreement constitutes “plan assets” as defined under ERISA and that the rights and
interests of the Purchaser in and under the Loan Documents will not be “plan assets”
under ERISA. On and after the effective date of such Assignment Agreement, such
Purchaser shall for all purposes be a Lender party
to this Agreement and any other Loan Document executed by or on behalf of the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party thereto, and the
transferor Lender shall be released with respect to the Commitment and Credit
Exposure assigned to such Purchaser without any further consent or action by the
Borrowers, the Lenders or the Agent. In the case of an Assignment Agreement
covering all of the assigning Lender’s rights and obligations under this Agreement,
such Lender shall cease to be a Lender hereunder but shall continue to be entitled
to the benefits of, and subject to, those provisions of this Agreement and the other
Loan Documents which survive payment of the Obligations and termination of the
applicable agreement. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 12.3
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 Section
12.2. Upon the consummation of any assignment to a Purchaser pursuant to this
Section 12.3(c), the transferor Lender,



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the Agent and the Borrowers shall,
if the transferor Lender or the Purchaser desires that its Loans be evidenced by
Notes, make appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their respective Commitments, as adjusted pursuant to
such assignment.




     (d) Register. The Agent, acting solely for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in the U.S. a copy of each
Assignment Agreement delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of the
Credit Extensions owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). The entries in the Register shall be conclusive, and
the Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrowers and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.



     12.4. Dissemination of Information. Each Loan Party authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan
Documents by operation of law (each a “Transferee”) and any prospective Transferee any and
all information in such Lender’s possession concerning the creditworthiness of the Loan Parties,
including without limitation any information contained in any Reports; provided that, each
Transferee and prospective Transferee agrees to be bound by Section 9.11 of this Agreement.



     12.5. Tax Treatment. If any interest in any Loan Document is transferred to any
Transferee which is not incorporated under the laws of the U.S. or any state thereof, the
transferor Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 3.5(d).



     12.6. Assignment by LC Issuer. Notwithstanding anything contained herein, if at any time JPMorgan Chase assigns all of its
Revolving Commitment and Revolving Loans pursuant to Section 12.3, JPMorgan Chase may, upon
thirty days’ notice to the Borrower Representative and the Lenders, resign as LC Issuer. In the
event of any such resignation as LC Issuer, the Borrower Representative shall be entitled to
appoint from among the Lenders a successor LC Issuer hereunder; provided however, that no failure
by the Borrower Representative to appoint any such successor shall affect the resignation of
JPMorgan Chase as LC Issuer. If JPMorgan Chase resigns as LC Issuer, it shall retain all the
rights and obligations of the LC Issuer hereunder with respect to the Facility LCs outstanding as
of the effective date of its resignation as LC Issuer and all LC Obligations with respect thereto
(including the right to require the Lenders to make Revolving Loans or fund risk participations in
outstanding Reimbursement Obligations pursuant to Section 2.1.2(d)).



ARTICLE XIII




NOTICES




     13.1. Notices; Effectiveness; Electronic Communications.




     (a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as provided
in



95









 







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 telecopier as follows:




     (i) if to any Loan Party, at its address or telecopier number set forth
on the signature page hereof;




     (ii) if to the Agent, at its address or telecopier number set forth on
the signature page hereof;




     (iii) if to the LC Issuer, at its address or telecopier number set
forth on the signature page hereof;




     (iv) if to a Lender, to it at its address or telecopier number set
forth in its Administrative Questionnaire.




     Notices sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by telecopier shall be
deemed to have been given when sent (except that, if not given during normal business hours
for the recipient, shall be deemed to have been given at the opening of business on the next
Business Day for the recipient). Notices delivered through electronic communications to the
extent provided in paragraph (b) below, shall be effective as provided in said paragraph
(b).




     (b) Electronic Communications. Notices and other communications to the
Lenders and the LC Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Agent or as otherwise determined by the Agent, provided
that, the foregoing shall not apply to notices to any Lender or the LC Issuer
pursuant to Article II if such Lender or the LC Issuer, as applicable, has
notified the Agent that it is incapable of receiving notices under such Article by
electronic communication. The Agent or any Loan Party may, in its respective
discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it or as it otherwise determines, provided that such
determination or approval may be limited to particular notices or communications.
Notwithstanding the foregoing, in every instance, the Borrower Representative shall
be required to provide paper copies of the Compliance Certificates required by
Section 6.1(e) to the Agent.




     Unless the Agent otherwise prescribes, (i) notices and other communications 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 such notice or other
communication is 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) notices or communications 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 (i) of notification that such
notice or communication is available and identifying the website address therefor.



     13.2. Change of Address, Etc. Any party hereto may change its address or telecopier
number for notices and other communications hereunder by notice to the other parties hereto.



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ARTICLE XIV




COUNTERPARTS




     This Agreement may be executed in any number of counterparts, all of which taken together
shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement shall be effective when it has been executed by the Loan
Parties, the Agent, the LC Issuer and the Lenders and each party has notified the Agent by
facsimile transmission or telephone that it has taken such action.



ARTICLE XV




GUARANTY




     15.1. Guaranty. Each Guarantor (other than those that have delivered a separate
Guaranty; each to be referred to in this Article XV as a Guarantor and collectively as the
Guarantors) 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 Agent, the LC Issuer and the Lenders in
endeavoring to collect all or any part of the Secured Obligations from, or in prosecuting any
action against, any Borrower, any 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 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 extension or renewal.



     15.2. Guaranty of Payment. This Guaranty is a guaranty of payment and not of
collection. Each Guarantor waives any right to require the Agent, the LC Issuer or any Lender to
sue any Borrower, any Guarantor, any other guarantor, or any other person obligated for all or any
part of the Guaranteed Obligations, or otherwise to enforce its payment against any collateral
securing all or any part of the Guaranteed Obligations.



     15.3. No Discharge or Diminishment of Guaranty.




     (a) Except as otherwise provided for herein and to the extent provided for
herein, the obligations of each 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
any 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 Borrower, any Guarantor, or any other guarantor of
or



97









 







other person liable for any of the Guaranteed Obligations, or their
assets or any resulting release or discharge of any obligation of any
Borrower, any Guarantor, or any other guarantor of or other person liable
for any of the Guaranteed Obligations; or




     (iv) the existence of any claim, setoff or other rights which any
Guarantor may have at any time against any Borrower, any Guarantor, any
other guarantor of the Guaranteed Obligations, the Agent, the LC Issuer, any
Lender, or any other person, whether in connection herewith or in any
unrelated transactions.




     (b) The obligations of each 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 Borrower, any Guarantor or any other guarantor of or other person
liable for any of the Guaranteed Obligations, of the Guaranteed Obligations or any
part thereof.




     (c) Further, the obligations of any Guarantor hereunder are not discharged or
impaired or otherwise affected by:




     (i) the failure of the Agent, the LC Issuer 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 any 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;




     (d) any action or failure to act by the Agent, the LC Issuer or any Lender with
respect to any collateral securing any part of the Guaranteed Obligations; and




     (e) 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
Guarantor or that would otherwise operate as a discharge of any Guarantor as a
matter of law or equity (other than the indefeasible payment in full in cash of the
Guaranteed Obligations).



     15.4. Defenses Waived. To the fullest extent permitted by applicable law, each
Guarantor hereby waives any defense based on or arising out of any defense of any Borrower or any
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 any Borrower or any Guarantor, other than the
indefeasible payment in full in cash of the Guaranteed Obligations. Without limiting the generality
of the foregoing, each 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 Borrower, any Guarantor,
any other guarantor of any of the Guaranteed Obligations,



98









 







or any other person. The 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 Borrower, any
Guarantor, any other guarantor or any other person liable on any part of the Guaranteed Obligations
or exercise any other right or remedy available to it against any Borrower, any Guarantor, any
other guarantor or any other person liable on any of the Guaranteed Obligations, without affecting
or impairing in any way the liability of such Guarantor under this 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 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 Guarantor against any
Borrower, any other guarantor or any other person liable on any of the Guaranteed Obligations, as
the case may be, or any security.



     15.5. Rights of Subrogation. No 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 Borrower, any Guarantor, any person liable on the Guaranteed Obligations, or any
collateral, until the Loan Parties and the Guarantors have fully performed all their obligations to
the Agent, the LC Issuer and the Lender.



     15.6. 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 any Borrower or otherwise, each Guarantor’s
obligations under this 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 Agent,
the LC Issuer and the Lenders are in possession of this Guaranty. If acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of any 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
Guarantors forthwith on demand by the Lender.



     15.7. Information. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrowers’ 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 Guarantor assumes and incurs under this Guaranty, and agrees that neither
the Agent, the LC Issuer nor any Lender shall have any duty to advise any Guarantor of information
known to it regarding those circumstances or risks.



     15.8. Termination. The Lenders may continue to make loans or extend credit to any
Borrower based on this Guaranty until five days after the Agent receives written notice of
termination from any Guarantor. Notwithstanding receipt of any such notice, each Guarantor will
continue to be liable to the Lender 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.



     15.9. Taxes. All payments of the Guaranteed Obligations will be made by each
Guarantor free and clear of and without deduction for or on account of any and all present or
future taxes, levies, imposts, duties, charges, deductions or withholdings of whatever nature
imposed by any governmental authority with respect to such payments, and any and all liabilities
with respect to the foregoing, but excluding franchise taxes and taxes imposed on overall net
income of the Lender by the U.S. or the jurisdiction in which the Lender’s applicable Lending
Installation is located (collectively, “Taxes”). If



99









 







any Guarantor is required by law to
deduct any Taxes from or in respect of any sum payable to the Lenders under this Guaranty, (a) the
sum payable must be increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this provision) the Lenders receive an
amount equal to the sum it would have received had no such deductions been made, (b) the Guarantors
must then make such deductions, and must pay the full amount deducted to the relevant authority in
accordance with applicable law, and (c) the Guarantors must furnish to the Lender within forty-five
days after their due date certified copies of all official receipts evidencing payment thereof.



     15.10. Severability. The provisions of this 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 Guarantor under this Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Guarantor’s liability under
this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the
amount of such liability shall, without any further action by the 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
Guarantor’s “Maximum Liability”. This Section with respect to the Maximum Liability of
each
Guarantor is intended solely to preserve the rights of the Lenders to the maximum extent not
subject to avoidance under applicable law, and no 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 Guarantor hereunder shall not be rendered voidable
under applicable law. Each Guarantor agrees that the Guaranteed Obligations may at any time and
from time to time exceed the Maximum Liability of each Guarantor without impairing this Guaranty or
affecting the rights and remedies of the Lenders hereunder, provided that, nothing in this sentence
shall be construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.



     15.11. Contribution. In the event any Guarantor (a “Paying Guarantor”) shall
make any payment or payments under this Guaranty or shall suffer any loss as a result of any
realization upon any collateral granted by it to secure its obligations under this Guaranty, each
other Guarantor (each a “Non-Paying Guarantor”) shall contribute to such Paying Guarantor
an amount equal to such Non-Paying Guarantor’s “Pro Rata Share” of such payment or payments made,
or losses suffered, by such Paying Guarantor. For purposes of this Article XV, each
Non-Paying Guarantor’s “Pro Rata Share” 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 Borrowers after the date hereof
(whether by loan, capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all 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 Guarantor, the aggregate amount of all monies
received by such Guarantors from the Borrowers after the date hereof (whether by loan, capital
infusion or by other means). Nothing in this provision shall affect any Guarantor’s several
liability for the entire amount of the Guaranteed Obligations (up to such Guarantor’s Maximum
Liability). Each of the Guarantors covenants and agrees that its right to receive any contribution
under this 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 Agent, the LC Issuer, the Lenders and the Guarantors and may be enforced by any one, or
more, or all of them in accordance with the terms hereof.



100









 





     15.12. Lending Installations. The Guaranteed Obligations may be booked at any Lending
Installation. All terms of this Guaranty apply to and may be enforced by or on behalf of any
Lending Installation.



     15.13. Liability Cumulative. The liability of each Loan Party as a Guarantor under
this Article XV is in addition to and shall be cumulative with all liabilities of each Loan
Party to the Agent, the LC Issuer 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 of 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.



ARTICLE XVI




CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL




     16.1. CHOICE OF LAW. 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.



     16.2. CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE 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 AND EACH LOAN PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS
TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, THE LC ISSUER OR ANY
LENDER TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY ANY LOAN PARTY AGAINST THE AGENT, THE LC ISSUER OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTION WITH ANY
LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN DALLAS, TEXAS.



     16.3. WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE AGENT, THE LC ISSUER AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.



ARTICLE XVII




THE BORROWER REPRESENTATIVE




     17.1. Appointment; Nature of Relationship. The Company is hereby appointed by each of
the Borrowers as its contractual representative (herein referred to as the “Borrower
Representative”)



101









 







hereunder and under each other Loan Document, and each of the Borrowers
irrevocably authorizes the Borrower Representative to act as the contractual representative of such
Borrower with the rights and duties expressly set forth herein and in the other Loan Documents.
The Borrower Representative agrees to act as such contractual representative upon the express
conditions contained in this Article XVI. Additionally, the Borrowers hereby appoint the
Borrower Representative as their agent to receive all of the proceeds of the Loans in the
Funding Account, at which time the Borrower Representative shall promptly disburse such Loans to
the appropriate Borrower. The Agent and the Lenders, and their respective officers, directors,
agents or employees, shall not be liable to the Borrower Representative or any Borrower for any
action taken or omitted to be taken by the Borrower Representative or the Borrowers pursuant to
this Section 17.1.



     17.2. Powers. The Borrower Representative shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Borrower Representative by the terms
of each thereof, together with such powers as are reasonably incidental thereto. The Borrower
Representative shall have no implied duties to the Borrowers, or any obligation to the Lenders to
take any action thereunder except any action specifically provided by the Loan Documents to be
taken by the Borrower Representative.



     17.3. Employment of Agents. The Borrower Representative may execute any of its duties
as the Borrower Representative hereunder and under any other Loan Document by or through Authorized
Officers.



     17.4. Notices. Each Borrower shall immediately notify the Borrower Representative of
the occurrence of any Default or Unmatured Default hereunder referring to this Agreement describing
such Default or Unmatured Default and stating that such notice is a “notice of default.” In the
event that the Borrower Representative receives such a notice, the Borrower Representative shall
give prompt notice thereof to the Agent and the Lenders. Any notice provided to the Borrower
Representative hereunder shall constitute notice to each Borrower on the date received by the
Borrower Representative.



     17.5. Successor Borrower Representative. Upon the prior written consent of the Agent,
the Borrower Representative may resign at any time, such resignation to be effective upon the
appointment of a successor Borrower Representative. The Agent shall give prompt written notice of
such resignation to the Lenders.



     17.6. Execution of Loan Documents; Aggregate Borrowing Base Certificate. The
Borrowers hereby empower and authorize the Borrower Representative, on behalf of the Borrowers, to
execute and deliver to the Agent and the Lenders the Loan Documents and all related agreements,
certificates, documents, or instruments as shall be necessary or appropriate to effect the purposes
of the Loan Documents, including without limitation, the Aggregate Borrowing Base Certificates and
the Compliance Certificates. Each Borrower agrees that any action taken by the Borrower
Representative or the Borrowers in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Borrower Representative of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Borrowers.



     17.7. Reporting. Each Borrower hereby agrees that such Borrower shall furnish
promptly after each Fiscal Month to the Borrower Representative a copy of its Borrowing Base
Certificate and any other certificate or report required hereunder or requested by the Borrower
Representative on which the Borrower
Representative shall rely to prepare the Aggregate Borrowing Base Certificates and Compliance
Certificates required pursuant to the provisions of this Agreement.



[Signature Pages Follow]





102










 





     IN WITNESS WHEREOF, the Loan Parties, the Lenders, the LC Issuer and the Agent have
executed this Agreement as of the date first above written.



	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 	 	NEWPARK RESOURCES, INC.,	 	 
	 	 	DURA-BASE NEVADA, INC.,	 	 
	 	 	EXCALIBAR MINERALS INC.,	 	 
	 	 	EXCALIBUR MINERALS OF LA., L.L.C.,	 	 
	 	 	NEWPARK ENVIRONMENTAL SERVICES, L.L.C.,	 	 
	 	 	NEWPARK ENVIRONMENTAL MANAGEMENT COMPANY, L.L.C.,	 	 
	 	 	NEWPARK HOLDINGS, INC.,	 	 
	 	 	NEWPARK TEXAS, L.L.C.,	 	 
	 	 	NEWPARK DRILLING FLUIDS LABORATORY, INC.,	 	 
	 	 	SOLOCO, L.L.C.,	 	 
	 	 	SUPREME CONTRACTORS, L.L.C.,	 	 
	 	 	COMPOSITE MAT SOLUTIONS L.L.C.,	 	 
	 	 	NEWPARK ENVIRONMENTAL WATER

 SOLUTIONS LLC, and THE
LOMA COMPANY, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John R. Dardenne
 

	 	 
	 

	 	 	 	John R. Dardenne	 	 
	 

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	BATSON MILL, L.P.,	 	 
	 	 	NES PERMIAN BASIN, L.P.,	 	 
	 	 	NEWPARK DRILLING FLUIDS, LP,	 	 
	 	 	NEWPARK ENVIRONMENTAL SERVICES OF TEXAS, L.P.,	 	 
	 	 	NID, L.P., and	 	 
	 	 	SOLOCO TEXAS, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 
	 	Newpark Holdings, Inc., the general partner of
such entity	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 
	 	/s/ John R. Dardenne	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John R. Dardenne	 	 
	 

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	LOAN PARTIES:	 	 
	 
	 	 	 	 	 	 
	 	 	MALLARD & MALLARD OF LA., INC.	 	 






 









 






	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John R. Dardenne	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John R. Dardenne	 	 
	 

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	NEWPARK ENVIRONMENTAL SERVICES	 	 
	 	 	MISSISSIPPI, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Newpark Holdings, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John R. Dardenne	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John R. Dardenne	 	 
	 

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	NOTICE ADDRESS FOR ALL LOAN PARTIES:	 	 
	 	 	c/o Newpark Resources, Inc.	 	 
	 	 	3850 North Causeway Blvd., Suite 1770	 	 
	 	 	Metairie, Louisiana 70002-1752	 	 
	 	 	Attention: Mr. John R. Dardenne, Sr., Treasurer	 	 
	 	 	Telephone: (504) 838-8222	 	 
	 	 	Facsimile: (504) 833-9506	 	 






 









 






	 	 	 	 	 	 	 
	 	 	LENDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., (successor by merger to
Bank One, N.A. (Main Office Chicago)),
Individually, as Agent and LC Issuer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Devin Mock	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	J. Devin Mock	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Address:	 	 
	 	 	JPMorgan Chase Bank,
N.A.	 	 
	 	 	2200 Ross Avenue, 6th Floor	 	 
	 	 	Dallas, Texas 75201	 	 
	 	 	Attention: J. Devin Mock	 	 
	 	 	Telephone: (214) 965-2382	 	 
	 	 	Facsimile: (214) 965-2594	 	 






 









 






	 	 	 	 	 	 	 
	 	 	CAPITAL ONE, NATIONAL ASSOCIATION,

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Cheryl Denenea	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Cheryl Denenea	 	 
	 

	 	Title:
	 	Vice President	 	 






 









 






	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., 


as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John Olsen	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	John Olsen	 	 
	 

	 	Title:
	 	Vice President	 	 






 









 






	 	 	 	 	 	 	 
	 	 	WHITNEY NATIONAL BANK,

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Josh Jones	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Josh Jones	 	 
	 

	 	Title:
	 	Vice President