exv10w1



 





EXHIBIT
10.1




AMENDED AND RESTATED CREDIT AGREEMENT




Dated as of July 26, 2005




Among




THE FINANCIAL INSTITUTIONS NAMED HEREIN




as the Lenders




and




BANK OF AMERICA, N.A.




as the Administrative Agent and the Lead Arranger and Bookmaker




and




SOCIÉTÉ GÉNÉRALE




as the Documentation Agent




and




PARAMOUNT PETROLEUM CORPORATION




as the Borrower




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	Section	 	Page	 
	ARTICLE 1	 	LOANS AND LETTERS OF CREDIT	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	Total Facility	 	 	2	 
	 
	 	1.2	 	Revolving Loans	 	 	2	 
	 
	 	1.3	 	Letters of Credit	 	 	5	 
	 
	 	1.4	 	Bank Products	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 2	 	INTEREST AND FEES	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Interest	 	 	9	 
	 
	 	2.2	 	Continuation and Conversion Elections	 	 	10	 
	 
	 	2.3	 	Maximum Interest Rate	 	 	11	 
	 
	 	2.4	 	Reserved	 	 	11	 
	 
	 	2.5	 	Unused Line Fee	 	 	11	 
	 
	 	2.6	 	Letter of Credit Fee	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3	 	PAYMENTS AND PREPAYMENTS	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Revolving Loans	 	 	12	 
	 
	 	3.2	 	Termination of Facility	 	 	12	 
	 
	 	3.3	 	Reserved	 	 	12	 
	 
	 	3.4	 	LIBOR Revolving Loan Prepayments	 	 	12	 
	 
	 	3.5	 	Payments by the Borrower	 	 	12	 
	 
	 	3.6	 	Payments as Revolving Loans	 	 	13	 
	 
	 	3.7	 	Apportionment, Application and Reversal of Payments	 	 	13	 
	 
	 	3.8	 	Indemnity for Returned Payments	 	 	14	 
	 
	 	3.9	 	Agent’s and Lenders’ Books and Records; Monthly Statements	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4	 	TAXES, YIELD PROTECTION AND ILLEGALITY	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Taxes	 	 	15	 
	 
	 	4.2	 	Illegality	 	 	15	 
	 
	 	4.3	 	Increased Costs and Reduction of Return	 	 	16	 
	 
	 	4.4	 	Funding Losses	 	 	17	 
	 
	 	4.5	 	Inability to Determine Rates	 	 	17	 
	 
	 	4.6	 	Certificates of Agent	 	 	17	 
	 
	 	4.7	 	Survival	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5	 	BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Books and Records	 	 	17	 
	 
	 	5.2	 	Financial Information	 	 	18	 
	 
	 	5.3	 	Notices to the Lenders	 	 	21	 





 





i









 






	 	 	 	 	 	 	 	 	 
	Section	 	Page	 
	ARTICLE 6	 	GENERAL WARRANTIES AND REPRESENTATIONS	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Authorization, Validity, and Enforceability of this Agreement and the Loan Documents	 	 	23	 
	 
	 	6.2	 	Validity and Priority of Security Interest	 	 	23	 
	 
	 	6.3	 	Organization and Qualification	 	 	24	 
	 
	 	6.4	 	Corporate Name; Prior Transactions	 	 	24	 
	 
	 	6.5	 	Subsidiaries and Affiliates	 	 	24	 
	 
	 	6.6	 	Financial Statements and Projections	 	 	24	 
	 
	 	6.7	 	Capitalization	 	 	25	 
	 
	 	6.8	 	Solvency	 	 	25	 
	 
	 	6.9	 	Debt	 	 	25	 
	 
	 	6.10	 	Distributions	 	 	25	 
	 
	 	6.11	 	Real Estate; Leases	 	 	25	 
	 
	 	6.12	 	Proprietary Rights	 	 	26	 
	 
	 	6.13	 	Trade Names	 	 	26	 
	 
	 	6.14	 	Litigation	 	 	26	 
	 
	 	6.15	 	Labor Disputes	 	 	26	 
	 
	 	6.16	 	Environmental Laws	 	 	26	 
	 
	 	6.17	 	No Violation of Law	 	 	27	 
	 
	 	6.18	 	No Default	 	 	28	 
	 
	 	6.19	 	ERISA Compliance	 	 	28	 
	 
	 	6.20	 	Taxes	 	 	28	 
	 
	 	6.21	 	Regulated Entities	 	 	28	 
	 
	 	6.22	 	Use of Proceeds; Margin Regulations	 	 	29	 
	 
	 	6.23	 	Copyrights, Patents, Trademarks and
Licenses, etc.	 	 	29	 
	 
	 	6.24	 	No Material Adverse Effect	 	 	29	 
	 
	 	6.25	 	Full Disclosure	 	 	29	 
	 
	 	6.26	 	Material Agreements	 	 	29	 
	 
	 	6.27	 	Bank Accounts	 	 	29	 
	 
	 	6.28	 	Governmental Authorization	 	 	29	 
	 
	 	6.29	 	Reserved	 	 	30	 
	 
	 	6.30	 	Tax Shelter Regulations	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7	 	AFFIRMATIVE AND NEGATIVE COVENANTS	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1	 	Taxes and Other Obligations	 	 	30	 
	 
	 	7.2	 	Legal Existence and Good Standing	 	 	30	 
	 
	 	7.3	 	Compliance with Law and Agreements; Maintenance of Licenses	 	 	30	 
	 
	 	7.4	 	Maintenance of Property; Inspection of Property	 	 	31	 
	 
	 	7.5	 	Insurance	 	 	31	 
	 
	 	7.6	 	Insurance and Condemnation Proceeds	 	 	32	 
	 
	 	7.7	 	Environmental Laws	 	 	33	 
	 
	 	7.8	 	Compliance with ERISA	 	 	34	 
	 
	 	7.9	 	Mergers, Consolidations or Sales	 	 	34	 
	 
	 	7.10	 	Distributions; Capital Change; Restricted Investments	 	 	34	 





  




ii









 






	 	 	 	 	 	 	 	 	 
	Section	 	Page	 
	 
	 	7.11	 	Transactions Affecting Collateral or Obligations	 	 	35	 
	 
	 	7.12	 	Guaranties	 	 	35	 
	 
	 	7.13	 	Debt	 	 	35	 
	 
	 	7.14	 	Prepayment	 	 	36	 
	 
	 	7.15	 	Transactions with Affiliates	 	 	36	 
	 
	 	7.16	 	Investment Banking and Finder’s Fees	 	 	37	 
	 
	 	7.17	 	Business Conducted	 	 	37	 
	 
	 	7.18	 	Liens	 	 	37	 
	 
	 	7.19	 	Sale and Leaseback Transactions	 	 	37	 
	 
	 	7.20	 	New Subsidiaries	 	 	37	 
	 
	 	7.21	 	Fiscal Year	 	 	37	 
	 
	 	7.22	 	Capital Expenditures	 	 	37	 
	 
	 	7.23	 	Debt Service Coverage Ratio	 	 	38	 
	 
	 	7.24	 	Tangible Net Worth	 	 	38	 
	 
	 	7.25	 	Current Ratio	 	 	38	 
	 
	 	7.26	 	Use of Proceeds	 	 	38	 
	 
	 	7.27	 	Operating Accounts	 	 	38	 
	 
	 	7.28	 	Reserved	 	 	38	 
	 
	 	7.29	 	Further Assurances	 	 	38	 
	 
	 	7.30	 	Limitations on Subsidiary Guarantors	 	 	39	 
	 
	 	7.31	 	Richmond Pier	 	 	39	 
	 
	 	7.32	 	Upper Bluff Property	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8	 	CONDITIONS OF LENDING	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Conditions Precedent to Making of Loans on the Closing Date	 	 	39	 
	 
	 	8.2	 	Conditions Precedent to Each Loan	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9	 	DEFAULT; REMEDIES	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1	 	Events of Default	 	 	42	 
	 
	 	9.2	 	Remedies	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10	 	TERM AND TERMINATION	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	Term and Termination	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 11	 	AMENDMENTS; WAIVERs; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1	 	Amendments and Waivers	 	 	46	 
	 
	 	11.2	 	Assignments; Participations	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 12	 	THE AGENT	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 
	 	12.1	 	Appointment and Authorization	 	 	49	 
	 
	 	12.2	 	Delegation of Duties	 	 	50	 






 




iii









 






	 	 	 	 	 	 	 	 	 
	Section	 	Page	 
	 
	 	12.3	 	Liability of Agent	 	 	50	 
	 
	 	12.4	 	Reliance by Agent	 	 	50	 
	 
	 	12.5	 	Notice of Default	 	 	51	 
	 
	 	12.6	 	Credit Decision	 	 	51	 
	 
	 	12.7	 	Indemnification	 	 	52	 
	 
	 	12.8	 	Agent in Individual Capacity	 	 	52	 
	 
	 	12.9	 	Successor Agent	 	 	52	 
	 
	 	12.10	 	Withholding Tax	 	 	53	 
	 
	 	12.11	 	Collateral Matters	 	 	54	 
	 
	 	12.12	 	Restrictions on Actions by Lenders; Sharing of Payments	 	 	55	 
	 
	 	12.13	 	Agency for Perfection	 	 	56	 
	 
	 	12.14	 	Payments by Agent to Lenders	 	 	56	 
	 
	 	12.15	 	Settlement	 	 	56	 
	 
	 	12.16	 	Letters of Credit; Intra-Lender Issues	 	 	59	 
	 
	 	12.17	 	Concerning the Collateral and the Related Loan Documents	 	 	62	 
	 
	 	12.18	 	Field Audit and Examination Reports; Disclaimer by Lenders	 	 	62	 
	 
	 	12.19	 	Relation Among Lenders	 	 	62	 
	 
	 	12.20	 	Co-Agents	 	 	63	 
	 
	 	12.21	 	Term Loan Intercreditor Agreement	 	 	63	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 13	 	MISCELLANEOUS	 	 	63	 
	 
	 	 	 	 	 	 	 	 
	 
	 	13.1	 	No Waivers; Cumulative Remedies	 	 	63	 
	 
	 	13.2	 	Severability	 	 	63	 
	 
	 	13.3	 	Governing Law; Choice of Forum; Service of Process	 	 	63	 
	 
	 	13.4	 	WAIVER OF JURY TRIAL	 	 	65	 
	 
	 	13.5	 	Survival of Representations and Warranties	 	 	65	 
	 
	 	13.6	 	Other Security and Guaranties	 	 	65	 
	 
	 	13.7	 	Fees and Expenses	 	 	66	 
	 
	 	13.8	 	Notices	 	 	66	 
	 
	 	13.9	 	Waiver of Notices	 	 	67	 
	 
	 	13.10	 	Binding Effect	 	 	68	 
	 
	 	13.11	 	Indemnity of the Agent and the Lenders by the Borrower	 	 	68	 
	 
	 	13.12	 	Limitation of Liability	 	 	68	 
	 
	 	13.13	 	Final Agreement	 	 	69	 
	 
	 	13.14	 	Counterparts	 	 	69	 
	 
	 	13.15	 	Captions	 	 	69	 
	 
	 	13.16	 	Right of Setoff	 	 	69	 
	 
	 	13.17	 	Confidentiality	 	 	69	 
	 
	 	13.18	 	Conflicts with Other Loan Documents	 	 	71	 
	 
	 	13.19	 	USA Patriot Act Notice	 	 	71	 
	 
	 	13.20	 	Amendment and Restatement; Waiver of Claims	 	 	71	 





 





iv









 






ANNEXES, EXHIBITS AND SCHEDULES




	 	 	 	 	 
	ANNEX A

	 	-
	 	DEFINED TERMS
	 
	 	 
	EXHIBIT A-1

	 	-
	 	FORM OF REVOLVING LOAN NOTE
	 
	 	 
	EXHIBIT B

	 	-
	 	FORM OF BORROWING BASE CERTIFICATE
	 
	 	 
	EXHIBIT C

	 	-
	 	FINANCIAL STATEMENTS
	 
	 	 
	EXHIBIT D

	 	-
	 	FORM OF NOTICE OF BORROWING
	 
	 	 
	EXHIBIT E

	 	-
	 	FORM OF NOTICE OF CONTINUATION/CONVERSION
	 
	 	 
	EXHIBIT F

	 	-
	 	FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT






SCHEDULE A-1 – COMMITMENTS (ANNEX A – DEFINED TERMS)




SCHEDULE A-2 – MAJOR OIL COMPANY ACCOUNTS (ANNEX A – DEFINED TERMS)




SCHEDULE A-3 – MARKED-TO-MARKET BASIS (ANNEX A – DEFINED TERMS)




SCHEDULE A-4 – PERMITTED MECHANIC’S LIENS (ANNEX A – DEFINED TERMS)




SCHEDULE 6.3 – ORGANIZATION AND QUALIFICATIONS




SCHEDULE 6.4 – ORGANIZATIONAL NAME




SCHEDULE 6.5 – SUBSIDIARIES AND AFFILIATES




SCHEDULE 6.7 – OWNERSHIP




SCHEDULE 6.9 – DEBT




SCHEDULE 6.11 – REAL ESTATE; LEASES




SCHEDULE 6.12 – PROPRIETARY RIGHTS




SCHEDULE 6.13 – TRADE NAMES




SCHEDULE 6.14 – LITIGATION




SCHEDULE 6.15 – LABOR DISPUTES




SCHEDULE 6.16 – ENVIRONMENTAL LAW




SCHEDULE 6.19 – ERISA COMPLIANCE




SCHEDULE 6.26 – MATERIAL AGREEMENTS




SCHEDULE 6.27 – BANK ACCOUNTS




SCHEDULE 7.18 – PERMITTED LIENS




 




v









 










AMENDED AND RESTATED CREDIT AGREEMENT




     This Amended and Restated Credit Agreement, dated as of July 26, 2005, (this
“Agreement”) among the financial institutions from time to time parties hereto (such
financial institutions, together with their respective successors and assigns, are referred to
hereinafter each individually as a “Lender” and collectively as the “Lenders”),
Bank of America, N.A., with an office at 55 South Lake Avenue, Suite 900, Pasadena, California
91101, as administrative agent for the Lenders (in its capacity as administrative agent, the
“Agent”) and as the lead arranger and bookmaker, Société Générale, as documentation agent,
and Paramount Petroleum Corporation, a Delaware corporation, with offices at 14700 Downey Avenue,
Paramount, California 90723 (the “Borrower”).



WITNESSETH:




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



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



     WHEREAS, the Borrower has requested that the Original Credit Agreement be amended and restated
to make available to the Borrower a revolving line of credit for loans and letters of credit in the
aggregate principal amount of One Hundred Ninety Million Dollars ($190,000,000), and to amend and
restate certain other provisions of the Original Credit Agreement as set forth herein;



     WHEREAS, the Agent and the Lenders have agreed to amend and restate the Original Credit
Agreement and make available to the Borrower a revolving credit facility and a term loan facility
upon the terms and conditions set forth in this Agreement;



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



     WHEREAS, the Borrower has entered into a term credit facility in the principal amount of
Fifty-two Million Dollars ($52,000,000) with a financial institution not a party hereto, such
credit facility is evidenced by separate loan documents.



     NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this
Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged,
the Lenders, the Agent, the Bank, and the Borrower hereby agree as follows.



 



1









 







ARTICLE 1

LOANS AND LETTERS OF CREDIT




     1.1 Total Facility. Subject to all of the terms and conditions of this Agreement, the
Lenders agree to make available a total credit facility of up to One Hundred Ninety Million Dollars
($190,000,000) (the “Total Facility”) to the Borrower from time to time during the term of
this Agreement. The Total Facility shall be composed of a revolving line of credit consisting of
Revolving Loans and Letters of Credit described herein.



     1.2 Revolving Loans.



          (a) Amounts.





     (i) Subject to the satisfaction of the conditions precedent set forth in
Article 8 below, each Lender severally, but not jointly, agrees, upon the
Borrower’s request from time to time on any Business Day during the period from the
Closing Date to the Termination Date, to make revolving loans (the “Revolving
Loans”) to the Borrower in amounts not to exceed such Lender’s Pro Rata Share of
Availability, except for Non-Ratable Loans and Agent Advances. The Lenders,
however, in their unanimous discretion, may elect to make Revolving Loans or issue
or arrange to have issued Letters of Credit in excess of Availability on one or more
occasions, but if they do so, neither the Agent nor the Lenders shall be deemed
thereby to have changed the limits of the Borrowing Base or to be obligated to
exceed such limits on any other occasion. If any proposed Borrowing exceeds
Availability, the Lenders may refuse to make or may otherwise restrict the making of
Revolving Loans as the Lenders determine until such excess has been eliminated,
subject to the Agent’s authority, in its sole discretion, to make Agent Advances
pursuant to the terms of Section 1.2(i)(i).




     (ii) The Borrower shall, upon demand by the Agent, execute and deliver to each
Lender an amended and restated note to evidence the Revolving Loan of that Lender.
Each note shall be in the principal amount of the Lender’s Pro Rata Share of the
Revolving Loan Commitments, dated the date hereof and substantially in the form of
Exhibit A-1 (each a “Revolving Loan Note” and, collectively, the
“Revolving Loan Notes”). Each Revolving Loan Note shall represent the
obligation of the Borrower to pay the amount of Lender’s Pro Rata Share of the
Revolving Loan Commitments, or, if less, such Lender’s Pro Rata Share of the
aggregate unpaid principal amount of all Revolving Loans to the Borrower together
with interest thereon as prescribed in this Section 1.2. The entire unpaid
balance of the Revolving Loans and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Termination Date.



          (b) Procedure for Borrowing.





     (i) Each Borrowing shall be made upon the Borrower’s irrevocable written notice
delivered to the Agent in the form of a notice of borrowing



 




2










 








(“Notice of Borrowing”), which must be received by the Agent prior to:
(1) 12:00 noon (Pacific time) three (3) Business Days prior to the requested Funding
Date in the case of LIBOR Revolving Loans; and (2) 11:00 a.m. (Pacific time) on the
requested Funding Date in the case of Base Rate Revolving Loans, specifying:




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




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




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




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




     (ii) In lieu of delivering a Notice of Borrowing, the Borrower may give the
Agent telephonic notice of such request for advances to the Designated Account on or
before the deadline set forth above. The Agent at all times shall be entitled to
rely on such telephonic notice in making such Revolving Loans, regardless of whether
any written confirmation is received.




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



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




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




 






3









 








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




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




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




          (h) Making of Non-Ratable Loans.





     (i) If the Agent elects, with the consent of the Bank, to have the terms of
this Section 1.2(h) apply to a requested Borrowing, the Bank shall make a
Revolving Loan in the amount of that Borrowing available to the Borrower on the
applicable Funding Date by transferring same day funds to the Borrower’s Designated
Account. Each Revolving Loan made solely by the Bank pursuant to this Section is
herein referred to as a “Non-Ratable Loan”, and such Revolving Loans are
collectively referred to as the “Non-Ratable Loans”. Each Non-Ratable Loan
shall be subject to all the terms and conditions applicable to other Revolving Loans
except that all payments thereon shall be payable to the Bank solely for its own
account. The aggregate amount of Non-Ratable Loans outstanding at any time shall
not exceed Ten Million Dollars $10,000,000. The Agent shall not request the Bank to
make any Non-Ratable Loan if: (1) the Agent has received written notice from any
Lender that one or more of the applicable conditions precedent set forth in
Article 8 below will not be satisfied on the requested Funding Date for the
applicable Borrowing; or (2) the requested Borrowing would exceed Availability on
that Funding Date.




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



          (i) Agent Advances.




 





4









 









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




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



     1.3 Letters of Credit.



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




          (b) Amounts; Outside Expiration Date. The Agent shall not have any obligation to
issue or cause to be issued any Letter of Credit or to provide Credit Support for any Letter of
Credit at any time if: (i) the Maximum Drawing Amount of the requested Letter of Credit and all
commissions, fees, and charges due from the Borrower in connection with the opening thereof exceeds
Availability at such time; (ii) such Letter of Credit has an expiration date less than thirty (30)
days prior to the Stated Termination Date or more than twelve (12) months from the date of issuance
for standby letters of credit and one hundred eighty (180) days for documentary letters of credit;
or (iii) the relevant Letter of Credit is a standby letter of credit securing performance and
bonding requirements and, upon issuance of such Letter of Credit, the aggregate undrawn face amount
of all Letters of Credit securing performance and bonding requirements as described in this
Section 1.3(b)(iii) would exceed Fifteen Million Dollars ($15,000,000). With respect to
any Letter of Credit which contains any “evergreen” or automatic renewal provision, each Lender
shall be deemed to have consented to any such extension or renewal unless any such Lender shall
have provided to the Agent written notice that it declines to consent to any such extension or
renewal at least thirty (30) days prior to the date




 





5









 







on which the Letter of Credit Issuer is entitled to decline to extend or renew the Letter of
Credit. If all of the requirements of this Section 1.3 are met and no Default or Event of
Default has occurred and is continuing, no Lender shall decline to consent to any such extension or
renewal.




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





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




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



          (d) Issuance of Letters of Credit.





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




     (ii) Responsibilities of the Agent; Issuance. As of the Business Day
immediately preceding the requested issuance date of the Letter of Credit, the Agent
shall determine the amount of Availability. If the amount of such requested Letter
of Credit and all commissions, fees, and charges due from the Borrower in connection
with the issuance thereof does not exceed Availability,



 





6









 









the Agent shall cause the Letter of Credit Issuer to issue the requested Letter
of Credit on the requested issuance date so long as the other conditions hereof are
met.




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



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




          (f) Indemnification; Exoneration; Power of Attorney.





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




     (ii) Assumption of Risk by the Borrower. As among the Borrower, the
Lenders, and the Agent, the Borrower assumes all risks of the acts and omissions of,
or misuse of any of the Letters of Credit by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing, the
Lenders and the Agent shall not be responsible for the following as it relates to
Letters of Credit: (A) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with respect to any of
the Letters of Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged; (B) the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole
or in part, which may prove to be invalid or ineffective for any reason; (C) the



 





7









 









failure of the beneficiary of any Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit; (D) errors,
omissions, interruptions, or delays in transmission or delivery of any messages by
mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E)
errors in interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under
any Letter of Credit or of the proceeds thereof; (G) the misapplication by the
beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter
of Credit; (H) any consequences arising from causes beyond the control of the
Lenders or the Agent, including any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto
Governmental Authority; or (I) the Letter of Credit Issuer’s honor of a draw for
which the draw or any certificate fails to comply in any respect with the terms of
the Letter of Credit. None of the foregoing shall affect, impair or prevent the
vesting of any rights or powers of the Agent or any Lender under this Section
1.3(f).




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




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




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



          (g) Supporting Letter of Credit; Cash Collateral. If, notwithstanding the provisions
of Section 1.3(b) and Section 10.1, any Letter of Credit or Credit Support is
outstanding upon the termination of this Agreement, then upon such termination the Borrower shall
deposit with the Agent, for the ratable benefit of the Agent and the Lenders, with respect to each
Letter of Credit or Credit Support then outstanding, 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 an amount equal to the greatest amount for which such Letter of Credit
or such Credit Support may be drawn plus any fees and expenses associated with such Letter of
Credit or such Credit Support, under which Supporting Letter of Credit the Agent is entitled to
draw amounts necessary to reimburse the Agent and the Lenders for payments to be made by the Agent
and the Lenders under such Letter of Credit or Credit Support and any fees and expenses associated
with such Letter of Credit or Credit Support. Such Supporting Letter of Credit shall




 




8









 







be held by the Agent, for the ratable benefit of the Agent and the Lenders, as security for,
and to provide for the payment of, the aggregate undrawn amount of such Letters of Credit or such
Credit Support remaining outstanding.




     1.4 Bank Products. The Borrower may request and the Agent may, in its sole and
absolute discretion, arrange for the Borrower to obtain from the Bank or the Bank’s Affiliates Bank
Products, although the Borrower is not required to do so. If Bank Products are provided by an
Affiliate of the Bank, the Borrower agrees to indemnify and hold the Agent, the Bank and the
Lenders harmless from any and all costs and obligations now or hereafter incurred by the Agent, the
Bank or any of the Lenders which arise from any indemnity given by the Agent to its Affiliates
related to such Bank Products; provided, however, nothing contained herein is
intended to limit the Borrower’s rights, with respect to the Bank or its Affiliates, if any, which
arise as a result of the execution of documents by and between the Borrower and the Bank which
relate to Bank Products. The agreement contained in this Section shall survive termination of this
Agreement. The Borrower acknowledges and agrees that the obtaining of Bank Products from the Bank
or the Bank’s Affiliates: (a) is in the sole and absolute discretion of the Bank or the Bank’s
Affiliates; and (b) is subject to all rules and regulations of the Bank or the Bank’s Affiliates.



ARTICLE 2

INTEREST AND FEES




     2.1 Interest.



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





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




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


Each change in the Base Rate shall be reflected in the interest rate applicable to Base Rate
Revolving Loans as of the effective date of such change. All interest charges shall be computed on
the basis of a year of 360 days and actual days elapsed (which results in more interest being paid
than if computed on the basis of a 365-day year). The Borrower shall pay to the Agent, for




 





9









 







the ratable benefit of Lenders, interest accrued on all Base Rate Revolving Loans in arrears on the
first day of each month hereafter and on the Termination Date. The Borrower shall pay to the
Agent, for the ratable benefit of Lenders, interest accrued on all LIBOR Revolving Loans in arrears
on each LIBOR Interest Payment Date.




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




     2.2 Continuation and Conversion Elections.



          (a) The Borrower may:





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




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



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





     (i) the proposed Continuation/Conversion Date;




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




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




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



          (c) If upon the expiration of any Interest Period applicable to LIBOR Revolving Loans, the
Borrower has failed to select timely a new Interest Period to be applicable




 





10









 







to LIBOR Revolving Loans or if any Default or Event of Default then exists, the Borrower shall
be deemed to have elected to convert such LIBOR Revolving Loans into Base Rate Revolving Loans
effective as of the expiration date of such Interest Period.




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




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




     2.3 Maximum Interest Rate. In no event shall any interest rate provided for hereunder
exceed the maximum rate legally chargeable by any Lender under applicable law for such Lender with
respect to loans of the type provided for hereunder (the “Maximum Rate”). If, in any
month, any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the
interest rate for that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate shall remain at the
Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest
which would have been paid if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of the Obligations, the total amount of interest paid or accrued under
the terms of this Agreement is less than the total amount of interest which would, but for this
Section 2.3, have been paid or accrued if the interest rate otherwise set forth in this
Agreement had at all times been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay to the Agent, for the account of the Lenders, an amount equal to the excess of:
(a) the lesser of: (i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect; or (ii) the amount of interest which would have accrued had the
interest rate otherwise set forth in this Agreement, at all times, been in effect over; (b) the
amount of interest actually paid or accrued under this Agreement. If a court of competent
jurisdiction determines that the Agent and/or any Lender has received interest and other charges
hereunder in excess of the Maximum Rate, such excess shall be deemed received on account of and
shall automatically be applied to reduce the Obligations other than interest in the inverse order
of maturity; if there are no Obligations outstanding, the Agent and/or such Lender shall refund to
the Borrower such excess.



     2.4 Reserved.



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



 





11









 







credited to the Borrower’s Loan Account immediately upon receipt for purposes of calculating
the Unused Line Fee pursuant to this Section 2.5.




     2.6 Letter of Credit Fee. The Borrower agrees to pay: (i) to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata Shares, for each Letter of
Credit, a fee (the “Letter of Credit Fee”) equal to the Applicable Margin, or during the
existence of any Event of Default, the Default Rate; and (ii) to the Agent for the benefit of the
Letter of Credit Issuer a fronting fee of one eighth of one percent (0.125%) per annum of the
undrawn face amount of each Letter of Credit, and to the Letter of Credit Issuer, all out-of-pocket
costs, fees and expenses incurred by the Letter of Credit Issuer in connection with the application
for, processing of, issuance of, or amendment to any Letter of Credit, which costs, fees and
expenses shall include a “fronting fee” payable to the Letter of Credit Issuer. The Letter of
Credit Fee shall be payable monthly in arrears on the first day of each calendar month following
any month in which a Letter of Credit is outstanding and on the Termination Date. The Letter of
Credit Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed.



ARTICLE 3

PAYMENTS AND PREPAYMENTS




     3.1 Revolving Loans. The Borrower shall repay the outstanding principal balance of
the Revolving Loans, plus all accrued but unpaid interest thereon, on the Termination Date. The
Borrower may prepay Revolving Loans at any time and may reborrow such prepaid amounts, subject to
the terms of this Agreement. In addition, and without limiting the generality of the foregoing,
upon demand the Borrower shall pay to the Agent, for the account of the Lenders, the amount,
without duplication, by which the Aggregate Revolver Outstandings exceeds the lesser of the
Borrowing Base or the Maximum Revolver Amount.



     3.2 Termination of Facility. The Borrower may terminate this Agreement upon at least
thirty (30) Business Days’ notice to the Agent and the Lenders, upon: (a) the payment in full of
all outstanding Revolving Loans, together with all accrued but unpaid interest thereon, and the
cancellation and return of all outstanding Letters of Credit (or the deposit with the Agent of any
Supporting Letter of Credit pursuant to Section 1.3(g) hereof); (b) the payment in full in
cash of all reimbursable expenses and other Obligations; and (c) with respect to any LIBOR
Revolving Loans prepaid, payment of the amounts due under Section 4.4, if any.



     3.3 Reserved.



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



     3.5 Payments by the Borrower.



          (a) All payments to be made by the Borrower shall be made without setoff, recoupment, or
counterclaim. Except as otherwise expressly provided herein, all payments by the Borrower shall be
made to the Agent for the account of the Lenders, at the account designated by the Agent and shall
be made in Dollars and in immediately available funds, no




 




12









 







later than 12:00 noon (Pacific time) on the date specified herein. Any payment received by
the Agent after such time shall be deemed (for purposes of calculating interest only) to have been
received on the following Business Day and any applicable interest shall continue to accrue.




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




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



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



 




13









 








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



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





 





14









 






ARTICLE 4

TAXES, YIELD PROTECTION AND ILLEGALITY




     4.1 Taxes.



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




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




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





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




     (ii) the Borrower shall make such deductions and withholdings;




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




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



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




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




     4.2 Illegality.



 




15









 








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




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




     4.3 Increased Costs and Reduction of Return.



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




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




 




16









 








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



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




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




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




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



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



     4.7 Survival. The agreements and obligations of the Borrower in this Article
4 shall survive the payment of all other Obligations.



ARTICLE 5

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES




     5.1 Books and Records. The Borrower shall maintain at all times, correct and complete
books, records, and accounts in which complete, correct, and timely entries are made of its
transactions in accordance with GAAP (applied consistently with the audited Financial



 





17









 







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




     5.2 Financial Information. The Borrower shall promptly furnish to each Lender all
such financial information as the Agent shall reasonably request. Without limiting the foregoing,
the Borrower will furnish to the Agent, in sufficient copies for distribution by the Agent to each
Lender and in such detail as the Agent or the Lenders shall request, the following:



          (a) As soon as available, but in any event not later than one hundred twenty (120) days after
the close of each Fiscal Year, consolidated audited and consolidating unaudited balance sheets, and
income statements, cash flow statements and changes in stockholders’ equity for the Borrower and
its Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting forth in each
case in comparative form figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of the Borrower and its
consolidated Subsidiaries as at the date thereof and for the Fiscal Year then ended, and prepared
in accordance with GAAP. Such statements shall be examined in accordance with generally accepted
auditing standards by and, in the case of such statements performed on a consolidated basis,
accompanied by a report thereon unqualified in any respect of independent certified public
accountants selected by the Borrower and reasonably satisfactory to the Agent. The Borrower,
simultaneously with retaining such independent public accountants to conduct such annual audit,
shall send a letter to such accountants, with a copy to the Agent and the Lenders, notifying such
accountants that one of the primary purposes for retaining such accountants’ services and having
audited financial statements prepared by them is for use by the Agent and the Lenders. At
reasonable times and upon reasonable advance notice and the provision of an opportunity for a
representative of the Borrower to participate or accompany the Agent, the Borrower hereby
authorizes the Agent to communicate directly with its certified public accountants and, by this
provision, authorizes those accountants to disclose to the Agent any and all financial statements
and other supporting financial documents and schedules relating to the Borrower and to discuss
directly with the Agent the finances and affairs of the Borrower.




          (b) As soon as available, but in any event not later than forty-five (45) days after the end
of each month, consolidated and consolidating unaudited balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such month, and consolidated and consolidating unaudited
income statements and cash flow statements for the Borrower and its consolidated Subsidiaries for
such month and for the period from the beginning of the Fiscal Year to the end of such month, all
in reasonable detail, fairly presenting the financial position and results of operations of the
Borrower and its consolidated Subsidiaries as at the date thereof and for such periods, and
prepared in accordance with GAAP (applied consistently with the audited Financial Statements
required to be delivered pursuant to Section 5.2(a)), provided that,




 





18









 







notwithstanding the foregoing, the Borrower may elect to use the average cost method to value
its Inventory in a manner consistent with its past practice. The Borrower shall certify by a
certificate signed by its chief financial officer that all such statements have been prepared in
accordance with GAAP and present fairly the Borrower’s financial position as at the dates thereof
and its results of operations for the periods then ended, subject to normal year-end adjustments.




          (c) With each of the audited Financial Statements delivered pursuant to Section
5.2(a), a certificate of the independent certified public accountants that examined such
statement to the effect that they have reviewed and are familiar with this Agreement and that, in
examining such Financial Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default with respect to a financial covenant, except for those,
if any, described in reasonable detail in such certificate.




          (d) With each of the annual audited Financial Statements delivered pursuant to Section
5.2(a), and within forty-five (45) days after the end of each quarter, a certificate of the
chief financial officer of the Borrower setting forth in reasonable detail the calculations
required to establish that the Borrower was in compliance with the covenants set forth in
Sections 7.22 through 7.25 during the period covered in such Financial Statements
and as at the end thereof. Within forty-five (45) days after the end of each quarter, a
certificate of the chief financial officer of the Borrower stating that, except as explained in
reasonable detail in such certificate: (i) all of the representations and warranties of the
Borrower contained in this Agreement and the other Loan Documents are correct and complete in all
material respects as at the date of such certificate as if made at such time, except for those that
speak as of a particular date; (ii) the Borrower is, at the date of such certificate, in compliance
in all material respects with all of its respective covenants and agreements in this Agreement and
the other Loan Documents; (iii) no Default or Event of Default then exists or existed during the
period covered by the Financial Statements for such quarter; and (iv) for each such certificate
corresponding to the end of such quarter: (a) a description and analysis in reasonable detail, all
material trends, changes, and developments in each and all Financial Statements; and (b) an
explanation of the variances of the figures in the corresponding budgets and prior Fiscal Year
financial statements. If such certificate discloses that a representation or warranty is not
correct or complete, that a covenant has not been complied with, or that a Default or Event of
Default existed or exists, such certificate shall set forth what action the Borrower has taken or
proposes to take with respect thereto.




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




          (f) Promptly after filing with the PBGC and the IRS, a copy of each annual report or other
filing filed with respect to each Plan of the Borrower.




          (g) Promptly upon the filing thereof, copies of (i) all reports, if any, to or other documents
filed by the Borrower or any of its Subsidiaries with the Securities and




 





19









 







Exchange Commission under the Exchange Act, (ii) all reports, notices, or statements sent or
received by the Borrower or any of its Subsidiaries to or from the holders of any equity interests
of the Borrower (other than routine non-material correspondence sent by shareholders of the
Borrower to the Borrower) or any such Subsidiary or of any Debt of the Borrower or any of its
Subsidiaries registered under the Securities Act of 1933 or to or from the trustee under any
indenture under which the same is issued, and (iii) to the extent applicable to the Borrower or any
of its Subsidiaries, all filings made by the Borrower or any of its Subsidiaries, and any of its
respective principal executive officers and principal financial officers (or individuals performing
similar functions) under the Sarbanes-Oxley Act.




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




          (i) Promptly after their preparation, copies of any and all proxy statements, financial
statements, and reports which the Borrower makes available to its shareholders.




          (j) If requested by the Agent, promptly after filing with the IRS, a copy of each tax return
and any amendments thereto filed by the Borrower or by any of its Subsidiaries.




          (k) (i) On or before the tenth (10th) day of each month, a Borrowing Base Certificate as of
the end of the previous month, with each such Borrowing Base Certificate setting forth supporting
information, including agings of receivables and inventory reports, in accordance with Section
9 of the Security Agreement; and





     (ii) if the Borrower is not in compliance with all of the following conditions:




     (x) the Borrower’s average Availability for such previous month
was equal to or greater than Twenty Million Dollars ($20,000,000);




     (y) the Borrower’s Availability on any Business Day is equal to
or greater than Ten Million Dollars ($10,000,000); and




     (z) no Default or Event of Default has occurred and is
continuing;



          on or before the twenty-fifth (25th) day of each month, an additional Borrowing Base
Certificate as of the fifteenth (15th) day of such month, with each such Borrowing Base Certificate
setting forth supporting information, including agings of receivables and inventory reports, in
accordance with Section 9 of the Security Agreement.




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




 





20









 








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




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



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




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




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




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




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




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




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




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




 





21









 








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




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




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




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




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




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




          (o) Within three (3) Business Days after the occurrence thereof: (i) any changes in the
benefits of any existing Plan which increase the Borrower’s annual costs with respect thereto by an
amount in excess of $500,000, or the establishment of any new Plan or the commencement of
contributions to any Plan to which the Borrower or any ERISA Affiliate was not previously
contributing; or (ii) any failure by the Borrower or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of the Code on or before the due date
for such installment or payment;




          (p) Within three (3) Business Days after the Borrower or any ERISA Affiliate knows or has
reason to know that any of the following events has or will occur: (i) a Multi-employer Plan has
been or will be terminated; (ii) the administrator or plan sponsor of a Multi-




 





22









 







employer Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan; and




          (q) Promptly after the Borrower has notified the Agent of any intention by the Borrower to
treat the Loans and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of
IRS Form 8886 or any successor form.




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



ARTICLE 6

GENERAL WARRANTIES AND REPRESENTATIONS




     The Borrower warrants and represents to the Agent, the Lenders, and the Bank that except as
hereafter disclosed to and accepted by the Agent and the Required Lenders in writing:



     6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents. The Borrower has the power and authority to execute, deliver, and perform this
Agreement and the other Loan Documents to which it is a party, to incur the Obligations, and to
grant to the Agent, for the benefit of the Lenders, Liens upon and security interests in the
Collateral. The Borrower has taken all necessary action (including without limitation, obtaining
approval of its stockholders if necessary) to authorize its execution, delivery, and performance of
this Agreement and the other Loan Documents to which it is a party. This Agreement and the other
Loan Documents to which it is a party have been duly executed and delivered by the Borrower and
constitute the legal, valid, and binding obligations of the Borrower enforceable against it in
accordance with their respective terms. The Borrower’s execution, delivery, and performance of
this Agreement and the other Loan Documents to which it is a party do not and will not conflict
with, constitute a violation or breach of, or result in the imposition of any Lien upon the
property of the Borrower or any of its Subsidiaries by reason of the terms of: (a) any contract,
mortgage, lease, agreement, indenture, or instrument to which the Borrower is a party or which is
binding upon it; (b) any Requirement of Law applicable to the Borrower or any of its Subsidiaries;
or (c) the certificate or articles of incorporation or by-laws or the limited liability company or
limited partnership agreement of the Borrower or any of its Subsidiaries, as applicable. None of
the Petroleum Product owned or purchased by the Borrower is subject to a First Purchaser Lien
except as the Borrower may have previously notified the Agent in accordance with Section
5.3(k).



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



 





23









 








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



     6.4 Corporate Name; Prior Transactions. During the past five (5) years, the Borrower
has not been known by or used any corporate, organizational, or fictitious name, other than as set
forth on Schedule 6.4, or been a party to any merger or consolidation, acquired all or
substantially all of the assets of any Person, or acquired any of its property outside of the
ordinary course of business, other than as set forth on Schedule 6.4. Also set forth on
Schedule 6.4 are all existing assets, rights and obligations of the Borrower that were
obtained or incurred in transactions that would have constituted Restricted Investments if made on
or after the date hereof.



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



     6.6 Financial Statements and Projections.



          (a) The Borrower has delivered the following to the Agent: (i) the audited balance sheet and
related statements of income, retained earnings, cash flows, and changes in stockholders equity for
the Borrower and its consolidated Subsidiaries as of December 31, 2004, and for the Fiscal Year
then ended, accompanied by the report thereon of the Borrower’s independent certified public
accountants; and the unaudited balance sheet and related statements of income and cash flows for
the Borrower and its consolidated Subsidiaries as of September 30, 2004. Such financial statements
are attached hereto as Exhibit C. All such financial statements have been prepared in
accordance with GAAP and present accurately and fairly in all material respects the financial
position of the Borrower and its consolidated Subsidiaries as at the dates thereof and their
results of operations for the periods then ended.




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




 




24









 








          (c) The pro forma balance sheet of the Borrower as at December 31, 2005, attached hereto as
Exhibit C, presents fairly and accurately the Borrower’s financial condition as at such
date after giving effect to the transactions contemplated by this Agreement as if the closing of
such transactions had occurred on such date and the Closing Date had been such date, and has been
prepared in accordance with GAAP.




     6.7 Capitalization. The authorized capital stock of the Borrower consists of 1,000
shares of common stock, par value $.01 per share and 100,000 shares of preferred stock, par value
$1.00 per share. All of the Borrower’s authorized common stock, 30,000 shares of the Borrower’s
preferred stock designated as “Senior Preferred Stock”, and 20,500 shares of the Borrower’s
preferred stock designated as “Junior Preferred Stock” are issued and outstanding and held
beneficially and of record by the stockholders of the Borrower in the amounts set forth in
Schedule 6.7. As set forth in Schedule 6.7, two of the stockholders of the
Borrower hold options to purchase 20,000 shares of Senior Preferred Stock from the other two
stockholders. All such outstanding shares of the Borrower’s common stock and preferred stock have
been duly authorized and validly issued, are fully paid and nonassessable, have been issued in
compliance with all applicable federal and state securities laws, and are not subject to any
preemptive rights or rights of first refusal created by statute, the charter documents of the
Borrower or any agreement to which the Borrower is a party or by which it is bound, except for the
Shareholder Agreement dated January 5, 1996.



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



     6.9 Debt. After giving effect to the making of the Loans to be made on the Closing
Date, the Borrower and its Subsidiaries have no Debt, except: (a) the Obligations; (b) the Term
Loan Debt; (c) Subordinated Debt; (d) the liabilities under the ALON Alliance Agreement; (e) the
liabilities under the Valero Guaranty; and (e) Debt described on Schedule 6.9.



     6.10 Distributions. Since December 31, 2002, no Distribution has been declared, paid,
or made upon or in respect of any capital stock or other securities of the Borrower or any of its
Subsidiaries.



     6.11 Real Estate; Leases. Schedule 6.11 sets forth, as of the Closing Date, a
correct and complete list of all Real Estate owned by the Borrower and all Real Estate owned by any
of its Subsidiaries, all leases and subleases of real or personal property held by the Borrower as
lessee or sublessee (other than leases of personal property as to which the Borrower is lessee or
sublessee for which the value of such personal property in the aggregate is less than $250,000),
and all leases and subleases of real or personal property held by the Borrower 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.
The Borrower has good and marketable title in fee simple to the Real Estate identified on
Schedule 6.11 as owned by the Borrower, or valid leasehold interests in all Real Estate
designated therein as “leased” by the Borrower and the Borrower has good, indefeasible, and
merchantable title to all of its other property reflected on the May 31, 2005 Financial Statements



 





25









 







delivered to the Agent and the Lenders, except as disposed of in the ordinary course of
business since the date thereof, free of all Liens except Permitted Liens.




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



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



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



     6.15 Labor Disputes. Except as set forth on Schedule 6.15, 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 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.



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



          (a) The Borrower and its Subsidiaries have complied in all material respects with all
Environmental Laws and neither the Borrower nor any Subsidiary nor any of its presently owned or
leased real property or presently conducted operations, nor its previously owned real property or
prior operations, is subject to any enforcement order from or liability agreement with any
Governmental Authority or private Person respecting: (i) compliance with any Environmental Law; or
(ii) any potential liabilities and costs or remedial action arising from the Release or threatened
Release of a Contaminant.




          (b) The Borrower and its Subsidiaries have obtained all permits necessary for their current
operations under Environmental Laws, and all such permits are in good standing and the Borrower and
its Subsidiaries are in compliance with all material terms and conditions of such permits.




 




26









 








          (c) Neither the Borrower nor any of its Subsidiaries, nor, to the best of the Borrower’s
knowledge, any of its predecessors in interest, has in violation of applicable law stored, treated
or disposed of any hazardous waste.




          (d) Neither the Borrower nor any of its Subsidiaries has received any summons, complaint,
order or similar written notice indicating that it is not currently in compliance with, or that any
Governmental Authority is investigating its compliance with, any Environmental Laws or that it is
or may be liable to any other Person as a result of a Release or threatened Release of a
Contaminant.




          (e) To the best of the Borrower’s knowledge, none of the present or past operations of the
Borrower and its Subsidiaries is the subject of any investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to a Release or threatened Release of a
Contaminant.




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





     (i) any underground storage tanks or surface impoundments;




     (ii) any asbestos-containing material;




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




     (iv) any Release in concentrations or amounts likely to give rise to liability
under any Environmental Law.



          (g) Neither the Borrower nor any of its Subsidiaries has filed any notice under any
requirement of Environmental Law reporting a spill or accidental and unpermitted Release or
discharge of a Contaminant into the environment.




          (h) Neither the Borrower nor any of its Subsidiaries has entered into any negotiations or
settlement agreements with any Person (including the prior owner of any of its property) imposing
material obligations or liabilities on the Borrower or any of its Subsidiaries with respect to any
remedial action in response to the Release of a Contaminant or environmentally related claim.




          (i) None of the products manufactured, distributed or sold by the Borrower or any of its
Subsidiaries contain asbestos containing material.




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




     6.17 No Violation of Law. Neither the Borrower nor any of its Subsidiaries is in
violation of any law, statute, regulation, ordinance, judgment, order, or decree applicable to it,
which violation could reasonably be expected to have a Material Adverse Effect. To the extent
applicable to the Borrower or any of its Subsidiaries, the Borrower and each of its Subsidiaries



 





27









 







and their respective principal executive officers and principal financial officers (and any
individuals performing similar functions) are in compliance with any certification requirements of
the Sarbanes-Oxley Act.




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



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



          (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from the IRS and to the
best knowledge of the Borrower, nothing has occurred which would cause the loss of such
qualification. The Borrower and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of
any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.




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




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




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



     6.21 Regulated Entities. None of the Borrower, any Person controlling the Borrower,
or any Subsidiary, is an “Investment Company” within the meaning of the Investment Company Act of
1940. The Borrower is not subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public



 





28









 







utilities code or law, or any other federal or state statute or regulation limiting its
ability to incur indebtedness.




     6.22 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be used
solely to repay existing indebtedness of the Borrower and for working capital purposes. Neither
the Borrower nor any Subsidiary is engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.



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



     6.24 No Material Adverse Effect. No Material Adverse Effect has occurred since the
latest date of the Financial Statements delivered to the Lenders.



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



     6.26 Material Agreements. Schedule 6.26 hereto sets forth as of the Closing
Date all agreements and contracts to which the Borrower or any of its Subsidiaries is a party or is
bound and which the Borrower, in its reasonable commercial judgment, deems material.



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



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



 




29









 





     6.29 Reserved.



     6.30 Tax Shelter Regulations. The Borrower does not intend to treat the Loans
and/or Letters of Credit and related transactions as being a “reportable transaction” (within the
meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower determines to take any
action inconsistent with such intention, it will promptly notify the Agent thereof. If the
Borrower so notifies the Agent, the Borrower acknowledges that one or more of the Lenders may treat
its Loans and/or its interest in Non-Ratable Loans and/or Agent Advances and/or Letters of Credit
as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender
or Lenders, as applicable, will maintain the lists and other records required by such Treasury
Regulation.



ARTICLE 7

AFFIRMATIVE AND NEGATIVE COVENANTS




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



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



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



     7.3 Compliance with Law and Agreements; Maintenance of Licenses. The Borrower shall
comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its business (including the
Federal Fair Labor Standards Act, all Environmental Laws, and, to the extent applicable to the
Borrower or any of its Subsidiaries, the Sarbanes-Oxley Act). The Borrower



 




30









 







shall, and shall cause each of its Subsidiaries to, obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and to conduct its
business as conducted on the Closing Date. The Borrower shall not modify, amend, or alter its
certificate or articles of incorporation, as applicable, or its Bylaws, other than in a manner that
does not adversely affect the rights of the Lenders or the Agent and, in such event, only after
giving written notice of the proposed change to the Agent. To the extent applicable to the
Borrower, the Borrower shall cause its principal executive officers and principal financial
officers (or other individuals performing similar functions) to comply with all provisions of the
Sarbanes-Oxley Act.




     7.4 Maintenance of Property; Inspection of Property.



          (a) The Borrower shall, and shall cause each of its Subsidiaries to, maintain all of its
property (including its leased properties) necessary and useful in the conduct of its business in
good operating condition and repair, ordinary wear and tear excepted.




          (b) The Borrower shall permit representatives and independent contractors of the Agent to
visit and inspect any of the Borrower’s properties to examine its corporate, financial, and
operating records and make copies thereof or abstracts therefrom and to discuss its affairs,
finances, and accounts with its directors, officers, and independent public accountants during
normal business hours, and Borrower shall provide at its own cost and expense any assistance
reasonably requested by the Agent’s representatives and independent contractors in connection with
such examinations, subject to the following:





     (i) If no Event of Default has occurred and is continuing: (x) the Agent shall
provide the Borrower with reasonable advance notice of any such examination; and (y)
while the Agent shall not be limited in the frequency, duration or expenses incurred
by it in connection with such examinations, the Borrower shall only be required to
reimburse the Agent for not more than two (2) such examinations per year and
Twenty-two Thousand Dollars ($22,000) per year in associated costs incurred by the
Agent; and




     (ii) If an Event of Default has occurred and is continuing: (x) Agent shall not
be required to provide advance notice of any such examination to Borrower or conduct
any such examination during normal business hours; and (y) any costs incurred by the
Agent in connection with such examinations shall be paid in full by the Borrower
(which cost reimbursement shall apply even if the event of default ceases to be
continuing during the course of an examination).



     7.5 Insurance.



          (a) The Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, with
financially sound and reputable insurers having a rating of at least A or better by Best Rating
Guide (or at least A- or better for, and only for, property insurance relating exclusively to
property that does not consist of any Collateral), insurance against loss or damage by fire with
extended coverage; theft, burglary, pilferage, and loss in transit; public liability and third
party property damage; larceny, embezzlement, or other criminal liability; business




 




31









 







interruption; public liability and third party property damage; and such other hazards or of
such other types as is customary for Persons engaged in the same or similar business, as the Agent,
in its discretion, or acting at the direction of the Required Lenders, shall specify, in amounts
and under policies acceptable to the Agent and the Required Lenders. Without limiting the
foregoing, in the event that any portions of the Real Estate is determined to be located within an
area that has been identified by the Director of the Federal Emergency Management Agency as a
Special Flood Hazard Area (“SFHA”), the Borrower shall purchase and maintain flood
insurance on the Real Estate and any Equipment and Inventory located on the Real Estate. The
amount of said flood insurance will be reasonably determined by the Agent, and shall, at a minimum,
comply with applicable federal regulations as required by the Flood Disaster Protection Act of
1973, as amended. The Borrower shall also maintain flood insurance for its Inventory and Equipment
that is, at any time, located in a SFHA.




          (b) The Borrower shall cause the Agent, for the ratable benefit of the Agent and the Lenders,
to be named as secured party or mortgagee and sole loss payee or additional insured, in a manner
acceptable to the Agent; provided, however, that, so long as any amounts pursuant
to the Term Loan Documents are outstanding, the Term Loan Agent may also be listed as an insured or
loss payee in accordance with the Term Loan Intercreditor Agreement. Each policy of insurance
shall contain a clause or endorsement requiring the insurer to give not less than thirty (30) days’
prior written notice to the Agent in the event of cancellation of the policy for any reason
whatsoever and a clause or endorsement stating that the interest of the Agent shall not be impaired
or invalidated by any act or neglect of the Borrower or any of its Subsidiaries or the owner of any
Real Estate for purposes more hazardous than are permitted by such policy. All premiums for such
insurance shall be paid by the Borrower when due and certificates of insurance and, if requested by
the Agent or any Lender, photocopies of the policies, shall be delivered to the Agent, in each case
in sufficient quantity for distribution by the Agent to each of the Lenders. If the Borrower fails
to procure such insurance or to pay the premiums therefor when due, the Agent may, and at the
direction of the Required Lenders shall, do so from the proceeds of Revolving Loans.




     7.6 Insurance and Condemnation Proceeds. The Borrower shall promptly notify the Agent
and the Lenders of any loss, damage, or destruction to the Collateral in an aggregate amount in
excess of $100,000 in any year, whether or not covered by insurance. The Agent is hereby
authorized to collect all insurance and condemnation proceeds in respect of Collateral directly and
to apply or remit them as follows:



          (a) With respect to insurance and condemnation proceeds not relating to Fixed Assets, after
deducting from such proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds, ratably, to the reduction of
the Obligations in the order provided for in Section 3.7.




          (b) With respect to insurance and condemnation proceeds relating to Collateral consisting of
Fixed Assets, the Agent shall: (i) only so long as any Term Loan Debt is outstanding, permit the
Borrower to use such proceeds in accordance with the Term Loan Documents; and (ii) if the Term Loan
Debt has been paid in full (whether by application of insurance and/or condemnation proceeds
pursuant to the immediately preceding clause (i) or




 




32









 







otherwise), permit or require the Borrower to use such proceeds, or any part thereof, to
replace, repair, restore, or rebuild the relevant Fixed Assets in a diligent and expeditious manner
with materials and workmanship of substantially the same quality as existed before the loss,
damage, or destruction so long as: (x) no Default or Event of Default has occurred and is
continuing; (y) the aggregate proceeds do not exceed $1,000,000, and (iii) the Borrower first: (x)
provides the Agent and the Required Lenders with plans and specifications for any such repair or
restoration which shall be reasonably satisfactory to the Agent and the Required Lenders; and (y)
demonstrates to the reasonable satisfaction of the Agent and the Required Lenders that the funds
available to it will be sufficient to complete such project in the manner provided therein. In all
other circumstances, the Agent shall apply such insurance and condemnation proceeds, ratably, to
the reduction of the Obligations in the order provided for in Section 3.7.




     7.7 Environmental Laws.



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




          (b) Without limiting the generality of the foregoing, the Borrower shall submit to the Agent
and the Lenders annually, commencing on the first Anniversary Date, and on each Anniversary Date
thereafter, an update of the status of each such environmental non-compliance or liability issue.
The Agent or any Lender may request copies of technical reports prepared by the Borrower and its
communications with any Governmental Authority to determine whether the Borrower or any of its
Subsidiaries is proceeding reasonably to correct, cure, or contest in good faith any alleged
non-compliance or environmental liability. The Borrower shall, at the Agent’s or the Required
Lenders’ request and at the Borrower’s expense: (i) retain an independent environmental engineer
acceptable to the Agent to evaluate the site, including tests if appropriate, where the
non-compliance or alleged non-compliance with Environmental Laws has occurred and prepare and
deliver to the Agent, in sufficient quantity for distribution by the Agent to the Lenders, a report
setting forth the results of such evaluation, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof; and (ii) provide to the Agent and
the Lenders a supplemental report of such engineer whenever the scope of the environmental
problems, or the response thereto or the estimated costs thereof, shall increase in any material
respect.




          (c) The Agent and its representatives will have the right at any reasonable time to enter and
visit the Real Estate and any other place where any property of the Borrower is located for the
purposes of observing the Real Estate, taking and removing soil or groundwater samples, and
conducting tests on any part of the Real Estate. The Agent is under no duty, however, to visit or
observe the Real Estate or to conduct tests, and any such acts by the Agent will be solely for the
purposes of protecting the Agent’s Liens and preserving the Agent and the Lenders’ rights under the
Loan Documents. No site visit, observation, or testing by the Agent and the Lenders will result in
a waiver of any default of the Borrower or impose any liability on




 





33









 







the Agent or the Lenders. In no event will any site visit, observation, or testing by the
Agent be a representation that hazardous substances are or are not present in, on, or under the
Real Estate, or that there has been or will be compliance with any Environmental Law. Neither the
Borrower nor any other party is entitled to rely on any site visit, observation, or testing by the
Agent. The Agent and the Lenders owe no duty of care to protect the Borrower or any other party
against, or to inform the Borrower or any other party of, any Hazardous Substances or any other
adverse condition affecting the Real Estate. The Agent may in its discretion disclose to the
Borrower or to any other party if so required by law any report or findings made as a result of, or
in connection with, any site visit, observation, or testing by the Agent. The Borrower understands
and agrees that the Agent makes no warranty or representation to the Borrower or any other party
regarding the truth, accuracy, or completeness of any such report or findings that may be
disclosed. The Borrower also understands that depending on the results of any site visit,
observation, or testing by the Agent and disclosed to the Borrower, the Borrower may have a legal
obligation to notify one or more environmental agencies of the results. The Borrower also
understands that such reporting requirements are site-specific and are to be evaluated by the
Borrower without advice or assistance from the Agent. In each instance, the Agent will give the
Borrower reasonable notice before entering the Real Estate or any other place the Agent is
permitted to enter under this Section 7.7(c). The Agent will make reasonable efforts to
avoid interfering with the Borrower’s use of the Real Estate or any other property in exercising
any rights provided hereunder.




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



     7.9 Mergers, Consolidations or Sales. Neither the Borrower nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization, or consolidation, or, with
respect to the Borrower, change its status as of the Closing Date from that of a corporation to any
other type of entity, or transfer, sell, assign, lease, or otherwise dispose of all or any part of
its property, or wind up, liquidate or dissolve, or agree to do any of the foregoing, except: (a)
for sales of Inventory in the ordinary course of its business; and (b) for sales or other
dispositions of Equipment in the ordinary course of business that are obsolete or no longer useable
by the Borrower in its business with an orderly liquidation value not to exceed $250,000 in any
Fiscal Year. Subject to the rights granted to the Term Loan Agent, within thirty (30) days
following each such Equipment sale or disposition, the Borrower shall either: (i) reinvest the
proceeds of that sale or disposition in other Equipment; or (ii) apply such proceeds to the Loans
in accordance with Section 3.7. All Equipment purchased with such proceeds shall be free
and clear of all Liens, except the Agent’s Liens.



     7.10 Distributions; Capital Change; Restricted Investments. Neither the Borrower nor
any of its Subsidiaries shall: (a) directly or indirectly declare or make, or incur any liability
to make, any Distribution, except Permitted Distributions, it being agreed and understood that if
the



 





34









 







Borrower or a Subsidiary makes a Distribution believed to be a Permitted Distribution when
made, but later determined to have been impermissible as of such date, the Borrower shall cause the
return to it or its Subsidiary, as applicable, of such amount of the Distribution so that the
balance of the Distribution would have been a Permitted Distribution when made. The foregoing
adjustment shall occur no later than fifteen (15) days of the earlier to occur of: (x) written
notice by the Agent to the Borrower that such Distribution was impermissibly made; or (y) the date
upon which the Borrower knows or should have known that such Distribution was impermissibly made;
(b) make any change in its capital structure which could have a Material Adverse Effect; or (c)
make any Restricted Investment.




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



     7.12 Guaranties. Neither the Borrower nor any of its Subsidiaries shall make, issue,
or become liable on any Guaranty, except: (i) Guaranties of the Obligations in favor of the Agent;
(ii) the Borrower’s Guaranty under the ALON Alliance Agreement as provided to the Agent on or about
November 3, 2004; (iii) the Borrower’s Guaranty under the Valero Guaranty as provided to the Agent
on or about July 26, 2005, and (iv) the Paramount Cogeneration Guaranty as written and provided to
the Agent prior to the Original Closing Date.



     7.13 Debt. Neither the Borrower nor any of its Subsidiaries shall incur or maintain
any Debt, other than:



          (a) the Obligations;




          (b) the Term Loan Debt, provided that:





               (i) such Debt is subject at all times to an intercreditor agreement in form and
substance satisfactory to the Agent; and




               (ii) such Debt shall be subject to the following additional limitations: (w)
the principal amount outstanding at any one time under the Term Loan Documents shall
not exceed Fifty-two Million Dollars ($52,000,000); (x) no advances shall be made
under the Term Loan Documents after June 30, 2005; (y) all advances made under the
Term Loan Documents in excess of the initial Fifteen Million Dollars ($15,000,000),
other than the Tranche C Loan (as defined in the Term Loan Documents), shall be used
solely for the Clean Fuels Project; and (z) the Term Loan Documents shall be in form
and substance satisfactory to the Agent;




     (c) Subordinated Debt;




     (d) Debt described on Schedule 6.9;




     (e) Capital Leases of Equipment and purchase money secured Debt incurred to
purchase Equipment, provided that: (i) Liens securing the same attach



 




35









 









only to the Equipment acquired by the incurrence of such Debt; and (ii) the
aggregate amount of such Debt (including Capital Leases) outstanding does not exceed
Five Hundred Thousand Dollars ($500,000) at any time;




     (f) Debt evidencing a refunding, renewal, or extension of the Debt described on
Schedule 6.9; provided that: (i) the principal amount thereof is not
increased; (ii) the Liens, if any, securing such refunded, renewed, or extended Debt
do not attach to any assets in addition to those assets, if any, securing the Debt
to be refunded, renewed or extended; (iii) no Person that is not an obligor or
guarantor of such Debt as of the Closing Date shall become an obligor or guarantor
thereof; and (iv) the terms of such refunding, renewal, or extension are no less
favorable to the Borrower, the Agent, or the Lenders than the original Debt; and




     (g) Debt permitted pursuant to Section 7.12.



     7.14 Prepayment. Neither the Borrower nor any of its Subsidiaries shall make any
payments on any Debt, other than regularly scheduled payments of principal and interest that are
due and payable and made in the ordinary course of business, except that:



          (a) the Obligations shall be paid and prepaid in accordance with the terms of this Agreement;
and




          (b) so long as no Event of Default has occurred and is continuing or would result from the
making of such prepayment (as calculated as of the end of the fiscal quarter in which the
prepayment is to be made), the Borrower may prepay the Term Loan Debt in accordance with the Term
Loan Documents and the Term Loan Intercreditor Agreement as each is in effect on the date hereof,
or as modified with the prior written consent of the Agent, and out of the proceeds (including
insurance proceeds) of any Collateral which serves as first priority collateral for the Term Loan
Debt in accordance with the Term Loan Intercreditor Agreement. Prior to the making of any
prepayment of the Term Loan (other than out of the proceeds of Collateral as described above) the
Borrower shall deliver to the Agent projections, in form and substance reasonably satisfactory to
the Agent, showing that no Default or Event of Default, including without limitation, a violation
of any financial covenant hereunder, would occur as of the last day of the fiscal quarter in which
the prepayment of the Term Loan is to be made.




     7.15 Transactions with Affiliates. Except as set forth below, neither the Borrower
nor any of its Subsidiaries shall, sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including, but not limited to,
any fees or expenses for management services), to any Affiliate, or lend or advance money or
property to any Affiliate, or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any property, of any Affiliate, or become liable on any
Guaranty of the indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding
the foregoing, while no Event of Default has occurred and is continuing, the Borrower and its
Subsidiaries may engage in transactions with Affiliates in the ordinary course of business
consistent with past practices, in amounts and upon terms fully disclosed to the Agent and the
Lenders, and no less



 




36









 







favorable to the Borrower and its Subsidiaries than would be obtained in a comparable
arm’s-length transaction with a third party who is not an Affiliate.




     7.16 Investment Banking and Finder’s Fees. Neither the Borrower nor any of its
Subsidiaries shall pay or agree to pay, or reimburse any other party (other than the Bank, the
Agent, or the Lenders) with respect to, any investment banking or similar or related fee,
underwriter’s fee, finder’s fee, or broker’s fee to any Person in connection with this Agreement,
except for any such fees expressly provided for in this Agreement or the Restated Fee Letter. The
Borrower shall defend and indemnify the Agent and the Lenders against and hold them harmless from
all claims of any Person that the Borrower is obligated to pay for any such fees, and all costs and
expenses (including attorneys’ fees) incurred by the Agent and/or any Lender in connection
therewith.



     7.17 Business Conducted. The Borrower shall not and shall not permit any of its
Subsidiaries to engage, directly or indirectly, in any line of business other than the businesses
in which the Borrower or each respective Subsidiary was engaged on the Original Closing Date, or,
with respect to each of the Subsidiary Guarantors, and without affecting the restriction in
Section 7.30, in any line of business other than the respective business conducted by such
Subsidiary Guarantor as of March 1, 2005.



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



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



     7.20 New Subsidiaries. The Borrower shall not, directly or indirectly, organize,
create, acquire, or permit to exist any Subsidiary other than those listed on Schedule 6.5.



     7.21 Fiscal Year. The Borrower shall not change its Fiscal Year.



     7.22 Capital Expenditures. Neither the Borrower nor any of its Subsidiaries shall
make or incur any Capital Expenditure if, after giving effect thereto, the aggregate amount of all
Capital Expenditures by the Borrower and its Subsidiaries on a consolidated basis would exceed:
(a) $10,000,000 in the aggregate during the Fiscal Year ending December 31, 2004; (b) $16,000,000
in the aggregate during the Fiscal Year ending December 31, 2005; or (c) $8,000,000 in the
aggregate during the Fiscal Year ending December 31, 2006 and during any Fiscal Year thereafter;
provided that if during any Fiscal Year the aggregate amount of all Capital Expenditures is
less than the amount set forth above for such Fiscal Year, the unutilized difference may be carried
forward to, and used in, the immediately succeeding Fiscal Year only and shall be deemed to be the
first Capital Expenditures made during such succeeding Fiscal Year.



 




37









 








     7.23 Debt Service Coverage Ratio. The Borrower will maintain a Debt Service Coverage
Ratio (a) for the period of four (4) consecutive fiscal quarters ended on the last day of the
fiscal quarter ending on June 30, 2005 of not less than 0.6 to 1.0 and (b) for each period of four
(4) consecutive fiscal quarters ended on the last day of each fiscal quarter thereafter of not less
than 1.2 to 1.0.



     7.24 Tangible Net Worth. The Borrower shall not permit its Tangible Net Worth to be
less than the Tangible Net Worth Requirement.



     7.25 Current Ratio. The Borrower will maintain a ratio of Current Assets to Current
Liabilities as of the end of each of the fiscal quarters set forth below of not less than the
corresponding ratio set forth below:



	 	 	 	 	 
	 	 	Minimum Ratio of Current Assets to
	 Fiscal Quarter Ending	 	Current Liabilities
	March 31, 2005
	 	 	1.0:1.0	 
	June 30, 2005
	 	 	1.0:1.0	 
	September 30, 2005
	 	 	1.0:1.0	 
	December 31, 2005 and
each fiscal quarter
thereafter
	 	 	1.1:1.0	 





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



     7.27 Operating Accounts. The Borrower shall maintain all of its operating accounts
and other treasury management functions with the Bank.



     7.28 Reserved.



     7.29 Further Assurances. The Borrower shall execute and deliver, or cause to be
executed and delivered, to the Agent and/or the Lenders such documents and agreements,



 





38









 







including Consent Agreements, Mortgages, amendments, and any title policies and/or
endorsements relating to any such Mortgage or amendment, and shall take or cause to be taken such
actions, as the Agent or any Lender may, from time to time, request to carry out the terms and
conditions of this Agreement and the other Loan Documents.




     7.30 Limitations on Subsidiary Guarantors. The Borrower shall not permit any of the
Subsidiary Guarantors to own any Inventory or Accounts.



     7.31 Richmond Pier. Prior to any use for the receipt or shipment of any petroleum
product by Borrower or any of its Subsidiaries of the pier and dock facilities located offshore of
the Richmond Beach, Washington, asphalt terminal owned by Paramount WA (the “Richmond
Pier”), the Borrower shall provide written notice to the Agent of its intent to use such
portion of the Richmond Pier and shall use its best efforts to obtain any consent to access from
the State of Washington, Department of Natural Resources, reasonably requested by the Agent in its
discretion.



     7.32 Upper Bluff Property. As of the Closing Date, the Borrower is not planning to
use, and will not at any time during the term of this Agreement use, the Real Estate owned by Point
Wells for refinery operations or for the storage of any Inventory.



ARTICLE 8

CONDITIONS OF LENDING




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



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




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




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




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




          (e) Reserved.




 





39









 








          (f) The Agent shall have received:





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




     (ii) duly authorized UCC-3 Termination Statements and such other instruments,
in form and substance satisfactory to the Agent, as shall be necessary to terminate
and satisfy all Liens on the Property of the Borrower, its Subsidiaries and the
Collateral, including, without limitation, the Liens securing the Borrower’s
existing syndicated term loan and revolving loan facilities, except Permitted Liens.



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




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




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




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




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




          (l) The Agent shall have received an executed Revolving Loan Note from the Borrower for each
of Bank of America, N.A., as a Lender, Société Générale, Citibank (West), FSB, BNP Paribas, and
Natexis Banques Populaires to reflect their respective Commitments.




          (m) The Borrower shall have delivered to the Agent an executed original of the Restated Fee
Letter.




          (n) The Agent shall have received an fully-executed copy of the Valero Guaranty in form and
substance satisfactory to the Agent and the Lenders.




          (o) Without limiting the generality of the items described above, any other documents or other
items reasonably requested by the Agent or any Lender.




 




40









 








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



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



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



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




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




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




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



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





 




41









 





ARTICLE 9

DEFAULT; REMEDIES





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



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




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




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




          (d) any default shall occur with respect to any Debt (other than the Obligations) of the
Borrower or any of its Subsidiaries in an outstanding principal amount which exceeds $250,000, or
under any agreement or instrument under or pursuant to which any such Debt may have been issued,
created, assumed, or guaranteed by the Borrower or any of its Subsidiaries, and such default shall
continue for more than the period of grace, if any, therein specified, if the effect thereof (with
or without the giving of notice or further lapse of time or both) is to accelerate, or to permit
the holders of any such Debt to accelerate, the maturity of any such Debt; or any such Debt shall
be declared due and payable or be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof;




          (e) the Borrower or any of its Subsidiaries shall: (i) file a voluntary petition in
bankruptcy or file a voluntary petition or an answer or otherwise commence any action or proceeding
seeking reorganization, arrangement or readjustment of its debts or for any other relief under the
federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state
or federal, now or hereafter existing, or consent to, approve of, or acquiesce in, any such
petition, action or proceeding; (ii) apply for or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, custodian, monitor, trustee or similar officer for it or for
all or any part of its property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;




          (f) an involuntary petition shall be filed or an action or proceeding otherwise commenced
seeking reorganization, arrangement, consolidation or readjustment of the debts of the Borrower or
any of its Subsidiaries or for any other relief under the federal Bankruptcy Code,




 




42









 







as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or
hereafter existing and such petition or proceeding shall not be dismissed within thirty (30) days
after the filing or commencement thereof or an order of relief shall be entered with respect
thereto;




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




          (h) the Borrower or any of its Subsidiaries shall file a certificate of dissolution under
applicable state law or shall be liquidated, dissolved or wound-up or shall commence or have
commenced against it any action or proceeding for dissolution, winding-up or liquidation, or shall
take any corporate action in furtherance thereof;




          (i) all or any material part of the property of the Borrower or any of its Subsidiaries shall
be nationalized, expropriated or condemned, seized or otherwise appropriated, or custody or control
of such property or of the Borrower or such Subsidiary shall be assumed by any Governmental
Authority or any court of competent jurisdiction at the instance of any Governmental Authority,
except where contested in good faith by proper proceedings diligently pursued where a stay of
enforcement is in effect;




          (j) any Loan Document, including the Term Loan Intercreditor Agreement, shall be terminated,
revoked or declared void or invalid or unenforceable or challenged by the Borrower, any other
obligor or any other party to a Loan Document (other than the Agent or any Lender);
provided, however, that the termination of the Term Loan Intercreditor Agreement
resulting from the payment in full of the Term Loan Debt shall not be an Event of Default hereunder
or under any other Loan Document;




          (k) one or more judgments, orders, decrees, or arbitration awards is entered against the
Borrower involving in the aggregate liability (to the extent not covered by independent third-party
insurance and as to which the insurer does not dispute coverage) as to any single or related or
unrelated series of transactions, incidents or conditions, of $3,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of thirty (30) days
after the entry thereof;




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




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



 



43









 








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




          (o) (i) an ERISA Event shall occur with respect to a Pension Plan or Multi-employer Plan which
has resulted or could reasonably be expected to result in liability of the Borrower under Title IV
of ERISA to the Pension Plan, Multi-employer Plan, or the PBGC in an aggregate amount in excess of
$500,000; (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans at any
time exceeds $500,000; or (iii) the Borrower or any ERISA Affiliate shall fail to pay when due,
after the expiration of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multi-employer Plan in an aggregate amount
in excess of $500,000;




          (p) there occurs a Change of Control;




          (q) there occurs an event having a Material Adverse Effect; or




          (r) there occurs an “Event of Default” under and as defined in the Term Loan Documents.




     9.2 Remedies.



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




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




 




44









 







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




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




ARTICLE 10

TERM AND TERMINATION




     10.1 Term and Termination. The term of this Agreement shall end on the Stated
Termination Date unless sooner terminated in accordance with the terms hereof. Upon the occurrence
of an Event of Default, the Agent, upon direction from the Required Lenders, may terminate this
Agreement without notice to the Borrower or any other Person. Upon the effective date of
termination of this Agreement for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest, and any early termination or prepayment fees or penalties)
shall become immediately due and payable and the Borrower shall immediately



 




45









 







arrange for the cancellation and return of Letters of Credit then outstanding or the deposit
with the Agent of any Supporting Letter of Credit pursuant to Section 1.3(g) hereof.
Notwithstanding the termination of this Agreement, until all Obligations are indefeasibly paid in
cash or cash equivalent and performed in full, the Borrower shall remain bound by the terms of this
Agreement and shall not be relieved of any of its Obligations hereunder or under any other Loan
Document, and the Agent and the Lenders shall retain all their rights and remedies hereunder
(including the Agent’s Liens in and all rights and remedies with respect to all then existing and
after-arising Collateral).




ARTICLE 11

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS




     11.1 Amendments and Waivers.



          (a) No amendment or waiver of any provision of this Agreement or any other Loan Document, and
no consent with respect to any departure by the Borrower therefrom, shall be effective unless the
same shall be in writing and signed by the Borrower and the Required Lenders (or by the Agent at
the written request of the Required Lenders). Any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and signed by
all the Lenders and the Borrower and acknowledged by the Agent, do any of the following:





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




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




     (iii) reduce the principal of, or the rate of interest specified herein, on any
Loan, or any fees or other amounts payable hereunder or under any other Loan
Document;




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




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




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




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



 





46









 









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




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



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




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





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




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


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




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




     11.2 Assignments; Participations.



          (a) Any Lender may, with the prior written consent of the Agent (which consent shall not be
unreasonably withheld), assign and delegate to one or more Eligible Assignees (provided that no
consent of the Agent shall be required in connection with any assignment and delegation by a Lender
to an Affiliate of such Lender) (each an “Assignee”) all,




 





47









 







or any ratable part, of the Loans, the Commitments and the other rights and obligations of
such Lender hereunder, in a minimum amount of $10,000,000 (provided that, unless an assignor Lender
has assigned and delegated all of its Loans and Commitments, no such assignment and/or delegation
shall be permitted unless, after giving effect thereto, such assignor Lender retains a Commitment
in a minimum amount of $15,000,000; provided, however, that the Borrower and the
Agent may continue to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until: (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee shall have been given
to the Borrower and the Agent by such Lender and the Assignee; (ii) such Lender and its Assignee
shall have delivered to the Borrower and the Agent an Assignment and Acceptance in the form of
Exhibit F (“Assignment and Acceptance”) together with any note or notes subject to
such assignment; and (iii) the assignor Lender or Assignee has paid to the Agent a processing fee
in the amount of $3,500. The Borrower agrees to promptly execute and deliver new promissory notes
and replacement promissory notes as reasonably requested by the Agent to evidence assignments of
the Loans and Commitments in accordance herewith.




          (b) From and after the date that the Agent notifies the assignor Lender that it has received
an executed Assignment and Acceptance and payment of the above-referenced processing fee: (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and obligations,
including but not limited to the obligation to participate in Letters of Credit and Credit Support,
have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents; and (ii) the assignor Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).




          (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder
and the Assignee thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document furnished pursuant hereto or the attachment, perfection, or priority of any
Lien granted to the Agent or any Lender in the Collateral; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
the Borrower or any other obligor on the Obligations or the performance or observance by the
Borrower or any other obligor on the Obligations of any of their respective obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (iii) such Assignee confirms that
it has received a copy of this Agreement, together with such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter into such Assignment
and Acceptance; (iv) such Assignee will, independently and without reliance upon the Agent, such
assigning Lender, 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




 




48









 







Agreement; (v) such Assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers, including the discretionary rights and incidental power,
as are reasonably incidental thereto; and (vi) such Assignee agrees that it will perform, in
accordance with their terms, all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.




          (d) Immediately upon satisfaction of the requirements of Section 11.2(a), this
Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom.
The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.




          (e) Any Lender may at any time sell to one or more commercial banks, financial institutions,
or other Persons other than the Borrower or its Affiliates (a “Participant”) participating
interests in any Loans, the Commitment of that Lender, and the other interests of that Lender (the
“Originating Lender”) hereunder and under the other Loan Documents; provided,
however, that: (i) the Originating Lender’s obligations under this Agreement shall remain
unchanged; (ii) the Originating Lender shall remain solely responsible for the performance of such
obligations; (iii) the Borrower and the Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender’s rights and obligations under this
Agreement and the other Loan Documents; and (iv) no Lender shall transfer or grant any
participating interest under which the Participant has rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan Document except the matters set
forth in Section 11.1(a) (i), (ii) and (iii), and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such participation; except
that, if amounts outstanding under this Agreement are due and unpaid, or shall have become
due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set off in respect of its participating interest in amounts owing under this
Agreement to the same extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this Agreement.




          (f) Notwithstanding any other provision in this Agreement, any Lender may at any time create a
security interest in, or pledge, all or any portion of its rights under and interest in this
Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law.




ARTICLE 12

THE AGENT




     12.1 Appointment and Authorization. Each Lender hereby designates and appoints the
Bank as its agent under this Agreement and the other Loan Documents and each Lender hereby
irrevocably authorizes the Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan Document,



 




49









 







together with such powers as are reasonably incidental thereto. The Agent agrees to act as
such on the express conditions contained in this Article 12. The provisions of this
Article 12 are solely for the benefit of the Agent and the Lenders and the Borrower shall
have no rights as a third party beneficiary of any of the provisions contained herein.
Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term “agent” in this
Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law. Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. Except as expressly otherwise
provided in this Agreement, the Agent shall have and may use its sole discretion with respect to
exercising or refraining from exercising any discretionary rights or taking or refraining from
taking any actions which the Agent is expressly entitled to take or assert under this Agreement and
the other Loan Documents, including: (a) the determination of the applicability of ineligibility
criteria with respect to the calculation of the Borrowing Base; (b) the making of Agent Advances
pursuant to Section 1.2(i); and (c) the exercise of remedies pursuant to
Section 9.2, and any action so taken or not taken shall be deemed consented to by the
Lenders.




     12.2 Delegation of Duties. The Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees, or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful misconduct.



     12.3 Liability of Agent. None of the Agent-Related Persons shall: (a) be liable for
any action taken or omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct); or (b) be responsible in any manner to any of the Lenders for
any recital, statement, representation, or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement, or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability, or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Borrower or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be
under any obligation to any Lender to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document,
or to inspect the properties, books, or records of the Borrower or any of the Borrower’s
Subsidiaries or Affiliates.



     12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter,



 




50









 







telegram, facsimile, telex or telephone message, statement, or other document or conversation
believed by it to be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the Agent. The Agent shall be
fully justified in failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders (or all Lenders if so required by Section 11.1)
and such request and any action taken or failure to act pursuant thereto shall be binding upon all
of the Lenders.




     12.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default, unless the Agent shall have received written
notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event
of Default and stating that such notice is a “notice of default.” The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action with respect to such
Default or Event of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem advisable.



     12.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons
has made any representation or warranty to it, and that no act by the Agent hereinafter taken,
including any review of the affairs of the Borrower and its Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender
represents to the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Borrower and its Affiliates, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower. Each Lender also represents that
it will, independently and without reliance upon any Agent-Related Person and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals, and decisions in taking or not taking action under this Agreement and the
other Loan Documents, and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition, and creditworthiness
of the Borrower. Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition, or creditworthiness of the Borrower which may
come into the possession of any of the Agent-Related Persons.



 




51









 








     12.7 Indemnification. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to
do so), in accordance with their Pro Rata Shares, from and against any and all Indemnified
Liabilities as such term is defined in Section 13.11; provided, however, that no Lender
shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person’s gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its Pro Rata
Share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein to the extent that the Agent is not reimbursed for
such expenses by or on behalf of the Borrower. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of the Agent.



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



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



 




52









 








     12.10 Withholding Tax.



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





     (i) if such Lender claims an exemption from, or a reduction of, withholding tax
under a United States of America tax treaty, properly completed IRS Forms W-8BEN and
W-8ECI before the payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during which interest
may be paid under this Agreement;




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




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


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




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




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




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




 




53









 








may withhold from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.



          (e) If the IRS or any other Governmental Authority of the United States of America or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the
Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of the Agent.




     12.11 Collateral Matters.



          (a) The Lenders hereby irrevocably authorize the Agent, at its option and in its sole
discretion, to release any Agent’s Liens upon any Collateral: (i) upon the termination of the
Commitments and payment and satisfaction in full by the Borrower of all Loans and reimbursement
obligations in respect of Letters of Credit and Credit Support, and the termination of all
outstanding Letters of Credit (whether or not any of such obligations are due) and all other
Obligations; (ii) constituting property being sold or disposed of if the Borrower certifies to the
Agent that the sale or disposition is made in compliance with Section 7.9 (and the Agent
may rely conclusively on any such certificate, without further inquiry); (iii) constituting
property in which the Borrower owned no interest at the time the Lien was granted or at any time
thereafter; or (iv) constituting property leased to the Borrower under a lease which has expired or
been terminated in a transaction permitted under this Agreement. Except as provided above, the
Agent will not release any of the Agent’s Liens without the prior written authorization of the
Lenders; provided that the Agent may, in its discretion, release the Agent’s Liens on
Collateral valued in the aggregate not in excess of $500,000 during each Fiscal Year without the
prior written authorization of the Lenders and the Agent may release the Agent’s Liens on
Collateral valued in the aggregate not in excess of $1,000,000 during each Fiscal Year with the
prior written authorization of Required Lenders. Upon request by the Agent or the Borrower at any
time, the Lenders will confirm in writing the Agent’s authority to release any Agent’s Liens upon
particular types or items of Collateral pursuant to this Section 12.11.




          (b) Upon receipt by the Agent of any authorization required pursuant to Section
12.11(a) from the Lenders of the Agent’s authority to release Agent’s Liens upon particular
types or items of Collateral, and upon at least five (5) Business Days prior written request by the
Borrower, the Agent may (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent’s Liens upon such Collateral;
provided, however, that: (i) the Agent shall not be required to execute any such
document on terms 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




 




54









 







or any Liens (other than those expressly being released) upon (or obligations of the Borrower
in respect of) all interests retained by the Borrower, 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 Borrower or is cared for, protected or insured or has been
encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or to exercise at all
or in any particular manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to the Agent pursuant
to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent’s own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no other duty or liability whatsoever
to any Lender as to any of the foregoing.




     12.12 Restrictions on Actions by Lenders; Sharing of Payments.



          (a) Each of the Lenders agrees that it shall not, without the express consent of all Lenders,
and that it shall, to the extent it is lawfully entitled to do so, upon the request of all Lenders,
set off against the Obligations, any amounts owing by such Lender to the Borrower or any accounts
of the Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by the Agent, take or cause to be taken
any action to enforce its rights under this Agreement or against the Borrower, including the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.




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




 




55









 








     12.13 Agency for Perfection. Each Lender hereby appoints each other Lender as agent
for the purpose of perfecting the Lenders’ security interest in assets that, in accordance with
Article 9 of the UCC 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 in accordance with
the Agent’s instructions.



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



     12.15 Settlement.



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





     (ii) The Agent shall request settlement (“Settlement”) with the Lenders
on at least a weekly basis, or on a more frequent basis at the Agent’s election:
(1) on behalf of the Bank, with respect to each outstanding Non-Ratable Loan; (2)
for itself, with respect to each Agent Advance; and (3) with respect to collections
received, in each case, by notifying the Lenders of such requested Settlement by
telecopy, telephone, or other similar form of transmission, of such requested
Settlement, no later than 12:00 noon (Pacific time) on the date of such requested
Settlement (the “Settlement Date”). Each Lender (other than the Bank, in
the case of Non-Ratable Loans and the Agent in the case of Agent Advances) shall
transfer the amount of such Lender’s Pro Rata Share of the outstanding principal
amount of the Non-Ratable Loans and Agent Advances with respect to each Settlement
to the Agent, to the Agent’s account, not later than 2:00 p.m. (Pacific time) on the



 





56









 









Settlement Date applicable thereto. Settlements may occur during the
continuation of a Default or an Event of Default and whether or not the applicable
conditions precedent set forth in Article 8 have then been satisfied. Such
amounts made available to the Agent shall be applied against the amounts of the
applicable Non-Ratable Loan or Agent Advance and, together with the portion of such
Non-Ratable Loan or Agent Advance representing the Bank’s Pro Rata Share thereof,
shall constitute Revolving Loans of such Lenders. If any such amount is not
transferred to the Agent by any Lender on the Settlement Date applicable thereto,
the Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the first three (3)
days from and after the Settlement Date and thereafter at the Interest Rate then
applicable to the Revolving Loans: (A) on behalf of the Bank, with respect to each
outstanding Non-Ratable Loan; and (B) for itself, with respect to each Agent
Advance.




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




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




     (v) Between Settlement Dates, the Agent, to the extent no Agent Advances are
outstanding, may pay over to the Bank any payments received by the Agent, which in
accordance with the terms of this Agreement would be applied to the reduction of the
Revolving Loans, for application to the Bank’s Revolving Loans including Non-Ratable
Loans. If, as of any Settlement Date,



 




57









 









collections received since the then immediately preceding Settlement Date have
been applied to the Bank’s Revolving Loans (other than to Non-Ratable Loans or Agent
Advances in which such Lender has not yet funded its purchase of a participation
pursuant to clause (iii) above), as provided for in the previous sentence,
the Bank shall pay to the Agent for the accounts of the Lenders, to be applied to
the outstanding Revolving Loans of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata
Share of the Revolving Loans. During the period between Settlement Dates, the Bank
with respect to Non-Ratable Loans, the Agent with respect to Agent Advances, and
each Lender with respect to the Revolving Loans other than Non-Ratable Loans and
Agent Advances, shall be entitled to interest at the applicable rate or rates
payable under this Agreement on the actual average daily amount of funds employed by
the Bank, the Agent, and the other Lenders.



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



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




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




 




58









 







with interest thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the Interest Rate applicable at the time to the Revolving Loans comprising that
particular Borrowing. The failure of any Lender to make any Revolving Loan on any Funding Date
(any such Lender, prior to the cure of such failure, being hereinafter referred to as a
“Defaulting Lender”) shall not relieve any other Lender of its obligation hereunder to make
a Revolving Loan on that Funding Date. No Lender shall be responsible for any other Lender’s
failure to advance such other Lenders’ Pro Rata Share of any Borrowing.




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




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




     12.16 Letters of Credit; Intra-Lender Issues.



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




          (b) Participations in Letters of Credit.





     (i) Purchase of Participations. Immediately upon issuance of any
Letter of Credit in accordance with Section 1.3(d), each Lender shall be
deemed



 



59









 






to have irrevocably and unconditionally purchased and received without recourse
or warranty, an undivided interest and participation equal to such Lender’s Pro Rata
Share of the face amount of such Letter of Credit or the Credit Support provided
through the Agent to the Letter of Credit Issuer, if not the Bank, in connection
with the issuance of such Letter of Credit (including all obligations of the
Borrower with respect thereto, and any security therefor or guaranty pertaining
thereto).




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




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




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




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




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




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



 




60









 









insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;




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




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




     (6) the failure of the Borrower to satisfy the applicable conditions
precedent set forth in Article 8 above.



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




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




 




61









 








     12.17 Concerning the Collateral and the Related Loan Documents. Each Lender
authorizes and directs the Agent to enter into the other Loan Documents, for the ratable benefit
and obligation of the Agent and the Lenders. Each Lender agrees that any action taken by the
Agent, Majority Lenders or Required Lenders, as applicable, in accordance with the terms of this
Agreement or the other Loan Documents, and the exercise by the Agent, the Majority Lenders, or the
Required Lenders, as applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders. The Lenders acknowledge that the Revolving Loans, Agent Advances, Non-Ratable Loans,
Hedge Agreements, Bank Products and all interest, fees and expenses hereunder constitute one Debt,
secured pari passu by all of the Collateral.



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



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




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




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




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




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




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



 




62









 








     12.20 Co-Agents. None of the Lenders identified on the facing page or signature pages
of this Agreement as a “co-agent” or “documentation agent” shall have any right, power, obligation,
liability, or responsibility or duty under this Agreement other than those applicable to all
Lenders as such. Without limiting the generality of the foregoing, none of the Lenders so
identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in
deciding to enter into this Agreement or in taking or not taking action hereunder.



     12.21 Term Loan Intercreditor Agreement.



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




          (b) Each Lender hereby agrees to be bound by the terms of the Term Loan Intercreditor
Agreement and acknowledges that the Term Loan Agent and the Term Loan Lenders are third party
beneficiaries of this Section 12.21(b).




ARTICLE 13

MISCELLANEOUS




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



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



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



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




 




63









 








          (b) Any legal action or proceeding with respect to this Agreement or any other Loan
Document may be brought in the courts of the State of California or of the United States of America
located in Los Angeles County, California, and by execution and delivery of this Agreement, each of
the Borrower, the Agent and the Lenders consents, for itself and in respect of its property, to the
exclusive jurisdiction of those courts. Each of the Borrower, the Agent and the Lenders
irrevocably waives any objection, including any objection to the laying of venue or based on
the grounds of Forum Non Conveniens, which it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in respect of this Agreement, any other
Loan Document, or any document related thereto. Notwithstanding the foregoing: (i) the Agent and
the Lenders shall have the right to bring any action or proceeding against the Borrower or its
property in the courts of any other jurisdiction the Agent or the Lenders deem necessary or
appropriate in order to realize on the Collateral or other security for the Obligations; and (ii)
each of the parties hereto acknowledges that any appeals from the courts described in the first
sentence of this paragraph may have to be heard by a court located outside those
jurisdictions.




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




          (d) Notwithstanding any other provision of this Agreement to the contrary, any controversy
or claim between or among the parties, arising out of or relating to this Agreement or any other
Loan Document, including any claim based on or arising from an alleged tort, shall at the request
of any party hereto be determined by binding arbitration. The arbitration shall be conducted
in accordance with the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association (“AAA”). The arbitrator(s) shall give effect to statutes of
limitation in determining any claim. Any controversy concerning whether an issue is arbitrable
shall be determined by the arbitrator(s). Judgment upon the arbitration award may be entered in
any court having jurisdiction. The institution and maintenance of an action for judicial relief or
pursuant to a provisional or ancillary remedy shall not constitute a waiver of the right of any
party, including the plaintiff, to submit the controversy or claim to arbitration if any other
party contests such action for judicial relief.




          (e) Notwithstanding the provisions of Section 13.3(d) above, no controversy or claim
shall be submitted to arbitration without the consent of all parties if, at the time of the
proposed submission, such controversy or claim arises from or related to an obligation to the
Lenders which is secured by real estate property collateral (exclusive of real estate space lease




 




64









 







assignments). If all the parties do not consent to submission of such a controversy or claim
to arbitration, the controversy or claim shall be determined as provided in Section
13.3(f).




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




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




     13.4 WAIVER OF JURY TRIAL. Subject to the provisions of Section 13.3(d),
the Borrower, the Lenders and the Agent each irrevocably waive their respective rights to a trial
by jury of any claim or cause of action based upon or arising out of or related to this Agreement,
the other Loan Documents, or the transactions contemplated hereby or thereby, in any action,
proceeding or other litigation of any type brought by any of the parties against any other party or
any Agent-Related Person, Participant or Assignee, whether with respect to contract claims, tort
claims, or otherwise. The Borrower, the Lenders and the Agent each agree that any such claim or
cause of action shall be tried by a court trial without a jury. Without limiting the foregoing,
the parties further agree that their respective right to a trial by jury is waived by operation of
this Section as to any action, counterclaim or other proceeding which seeks, in whole or in
part, to challenge the validity or enforceability of this Agreement or the other Loan Documents or
any provision hereof or thereof. This waiver shall apply to any subsequent amendments, renewals,
supplements or modifications to this Agreement or the other Loan Documents.



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



     13.6 Other Security and Guaranties. The Borrower’s obligations hereunder shall not be
affected if the Agent, without notice to or demand on the Borrower, from time to time: (a) takes
from any Person and holds collateral (other than the Collateral) for the payment of all or any part
of the Obligations and exchanges, enforces or releases such collateral or any part thereof; and (b)
accepts and holds any endorsement or guaranty of payment of all or any part of



 




65









 







the Obligations and releases or substitutes any such endorser or guarantor or any Person who
has given any Lien in any other collateral as security for the payment of all or any part of the
Obligations, or any other Person in any way obligated to pay all or any part of the Obligations.




     13.7 Fees and Expenses. The Borrower agrees to pay to the Agent, for its benefit, on
demand, all costs and expenses that the Agent pays or incurs in connection with the negotiation,
preparation, syndication, consummation, administration, enforcement, and termination of this
Agreement or any of the other Loan Documents, including without limitation: (a) Attorney Costs; (b)
costs and expenses (including attorneys’ and paralegals’ fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title searches and title
insurance; (d) taxes, fees and other charges for recording the Mortgage, filing financing
statements and continuations, and other actions to perfect, protect, and continue the Agent’s Liens
(including costs and expenses paid or incurred by the Agent in connection with the consummation of
this Agreement); (e) sums paid or incurred to pay any amount or take any action required of the
Borrower under the Loan Documents that the Borrower fails to pay or take; (f) costs of appraisals,
inspections, and verifications of the Collateral, including travel, lodging, and meals for
inspections of the Collateral and the Borrower’s operations by the Agent plus the Agent’s then
customary charge for field examinations and audits and the preparation of reports thereof (such
charge is currently $850 per day (or portion thereof) for each Person retained or employed by the
Agent with respect to each field examination or audit); and (g) costs and expenses of forwarding
loan proceeds, collecting checks and other items of payment, and establishing and maintaining
Payment Accounts and lock boxes, and costs and expenses of preserving and protecting the
Collateral. In addition, the Borrower agrees to pay costs and expenses incurred by the Agent
(including Attorneys’ Costs) to the Agent, for its benefit, on demand, and to the other Lenders for
their benefit, on demand, and all reasonable fees, expenses and disbursements incurred by such
other Lenders for one law firm retained by such other Lenders, in each case, paid or incurred to
obtain payment of the Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to defend any claims
made or threatened against the Agent or any Lender arising out of the transactions contemplated
hereby (including preparations for and consultations concerning any such matters). The foregoing
shall not be construed to limit any other provisions of the Loan Documents regarding costs and
expenses to be paid by the Borrower. All of the foregoing costs and expenses shall be charged to
the Borrower’s Loan Account as Revolving Loans as described in Section 3.6.



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



 




66









 








     If to the Agent or to the Bank:


Bank of America, N.A.

55 S. Lake Avenue, Suite 900

Pasadena, California 91101

Attention: Todd Eggertsen, Vice President

Telecopy No.: (626) 397-1273



with copies to:



Gary Samson, Esq.

Jenkens & Gilchrist, LLP

55 S. Lake Avenue, Suite 650

Pasadena, California 91101

Telecopy No.: (626) 304-9711




     If to the Borrower:


Paramount Petroleum Corporation

14700 Downey Avenue

Paramount, California 90723

Attention: Craig H. Studwell, Chief Financial Officer

Telecopy No.: (562) 408-0621



with copies to:



Paramount Petroleum Corporation

14700 Downey Avenue

Paramount, California 90723

Attention: Steven D. Farkas, Vice President and General Counsel

Telecopy No.: (562) 408-0621



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




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



 




67









 








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



     13.11 Indemnity of the Agent and the Lenders by the Borrower.



          (a) Borrower agrees to defend, indemnify, and hold the Agent-Related Persons, and each Lender
(and each of its respective officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact) (each, an “Indemnified Person”) harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges,
expenses, and disbursements (including Attorney Costs) of any kind or nature whatsoever which may
at any time (including at any time following repayment of the Loans and the termination,
resignation, or replacement of the Agent or replacement of any Lender) be imposed on, incurred by,
or asserted against any such Indemnified Person in any way relating to or arising out of this
Agreement, any document contemplated by or referred to herein or the transactions contemplated
hereby, or any action taken or omitted by any such Indemnified Person under or in connection with
any of the foregoing, including with respect to any investigation, litigation, or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement, any other Loan Document, or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided, that the Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.




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




     13.12 Limitation of Liability. No claim may be made by the Borrower, any Lender,
or other Person against the Agent, any Lender, or the affiliates, directors, 



 




68









 







officers, employees, counsel, representatives, agents or attorneys-in-fact of any of them
for any special, indirect, consequential, or punitive damages in respect of any claim for breach of
contract, tort or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any other Loan Document, or any act, omission or event occurring
in connection therewith, and the Borrower and each Lender hereby waive, release and agree not to
sue upon any claim for such damages, whether or not accrued and whether or not known or suspected
to exist in its favor.




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



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



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



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



     13.17 Confidentiality.



          (a) Borrower hereby consents that the Agent and each Lender may issue and disseminate to the
public general information describing the credit accommodation entered into




 




69









 







pursuant to this Agreement, including the name and address of the Borrower and a general
description of the Borrower’s business, and may use the Borrower’s name in advertising and other
promotional material. The Agent and each Lender shall provide the Borrower with a reasonable
opportunity to review a sample of any such proposed advertising or other promotional material prior
to the dissemination thereof, provided that the Borrower’s consent or approval shall not be
required in connection with any such dissemination.




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




          (c) Notwithstanding anything herein to the contrary, the information subject to Section
13.17(b) shall not include, and the Agent and each Lender may disclose without limitation of
any kind, any information with respect to the “tax treatment” and “tax structure” (in each case,
within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that are provided to the
Agent or such Lender relating to such tax treatment and tax structure; provided that with
respect to any document or similar item that in either case contains information concerning the tax
treatment or tax structure of the transactions as well as other information, this sentence shall
only apply to such portions of the document or similar item that relate to the tax treatment or tax
structure of the Loans, Letters of Credit, and transactions contemplated hereby.




 




70









 








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



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



13.20 Amendment and Restatement; Waiver of Claims




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




          (b) Borrower hereby represents and warrants that as of the date of this Agreement there
are no claims, offsets against, or defenses or counterclaims to the Obligations under the Original
Loan Agreement or any other document. Borrower waives and releases any and all such claims,
offsets, defenses, or counterclaims, whether known or unknown, arising prior to the date of this
Agreement.




     Borrower intends the above release to cover, encompass, release, and extinguish, inter
alia, all claims, demands, and causes of action that might otherwise be reserved by the California
Civil Code Section 1542, which provides as follows:




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



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



 




71









 








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



	 	 	 	 	 	 	 	 	 
	 	 	“BORROWER”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PARAMOUNT PETROLEUM CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	   
	 	/s/ Craig H. Studwell	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	     Craig H. Studwell	 	 
	 	 	Title:	 	     Senior Vice President	 	 






 




 









 








	 	 	 	 	 	 	 
	 	 	“AGENT”	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as the Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	     /s/ Todd R. Eggertsen
 

          Todd R. Eggertsen
	 	 
	 

	 	Title:
	 	          Vice President	 	 






 





 









 








	 	 	 	 	 	 	 
	 	 	“BANK”	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as the Bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	     /s/ Todd R. Eggertsen
 

          Todd R. Eggertsen
	 	 
	 

	 	Title:
	 	          Vice President	 	 






 




 









 








	 	 	 	 	 	 	 
	 	 	“LENDERS”	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	     /s/ Todd R. Eggertsen
 

          Todd R. Eggertsen
	 	 
	 

	 	Title:
	 	          Vice President	 	 






 




 









 








	 	 	 	 	 	 	 
	 	 	SOCIÉTÉ GÉNÉRALE,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	     /s/ Craig Tashjian
 

           Craig Tashjian
	 	 
	 

	 	Title:
	 	           Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	     /s/ Andrea Servadio
 

          Andrea Servadio
	 	 
	 

	 	Title:
	 	          Associate	 	 






 





 









 








	 	 	 	 	 	 	 
	 	 	CITIBANK (WEST), FSB,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	     /s/ Hillary Savoie
 

          Hillary Savoie
	 	 
	 

	 	Title:
	 	          Vice President	 	 







	 	 	 




 









 











	 	 	 	 	 	 	 
	 	 	BNP PARIBAS,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	      /s/ Jordan Nenoff
 

           Jordan Nenoff
	 	 
	 

	 	Title:
	 	           Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Keith Cox	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	           Keith Cox	 	 
	 

	 	Title:
	 	           Managing Director	 	 






 





 









 








	 	 	 	 	 	 	 
	 	 	NATEXIS BANQUES POPULAIRES	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	      /s/ Simon Melchior
 

          Simon Melchior
	 	 
	 

	 	Title:
	 	          Assistant Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	     /s/ Stephen A. Jendras
 

          Stephen A. Jendras
	 	 
	 

	 	Title:
	 	          Vice President	 	 






 





 









 








ANNEX A




to




Credit Agreement




Definitions




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



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



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



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



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



     “Affiliate” means, as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by, or is under common control with, such Person or which owns,
directly or indirectly, five percent (5%) or more of the outstanding equity interest of such
Person. A Person shall be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the management and policies
of the other Person, whether through the ownership of voting securities, by contract, or otherwise.



 




A-1 









 








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



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



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



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



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



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



     “ALON Alliance Agreement” means that certain Alliance Agreement dated as of January 1,
2002 by and between Wright Asphalt Products Company and ALON USA, L.P., whereby, among other
things, the Borrower guaranteed the obligations of Wright Asphalt Products Company under the ALON
Alliance Agreement.



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



     “Applicable Margin” means





     (i) with respect to Revolving Loans and all other Obligations (other than LIBOR
Revolving Loans), 1.00%; and




     (ii) with respect to LIBOR Revolving Loans, 2.75%;




     (iii) with respect to the Letter of Credit Fee for standby Letters of Credit,
2.625%;




     (iv) with respect to the Letter of Credit Fee for documentary Letters of
Credit, 1.875%; and




     (v) with respect to the Unused Line Fee, .50%.


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




 





A-2 









 








	 	 	 
	If the Debt Service	 	Level of
	 Coverage Ratio is:	 	Applicable Margin:
	3 2.00

	 	Level I
	3 1.75

	 	Level II
	3 1.50

	 	Level III
	3 1.20

	 	Level IV






	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margin
	 	 	Level I	 	Level II	 	Level III	 	Level IV
	Base Rate Revolving
Loans
	 	     0%	 	  .25%	 	  .50%	 	  .75%
	LIBOR Revolving Loans
	 	1.75%	 	2.00%	 	2.25%	 	2.50%
	Standby L/C Margin
	 	1.625% 	 	1.875% 	 	2.125% 	 	2.375%
	Documentary L/C Margin
	 	 .875%	 	1.125%	 	1.375%	 	1.625%
	Unused Line Fee
	 	  .375%	 	  .500%	 	  .500%	 	  .500%





All adjustments in the Applicable Margins shall be implemented quarterly on a prospective
basis, starting with the calendar month commencing at least five (5) days after the date of
delivery to the Agent of quarterly unaudited Financial Statements evidencing the need for an
adjustment, commencing with delivery of the Borrower’s quarterly Financial Statements to the Agent
for the fiscal quarter ending September 30, 2005. Concurrently with the delivery of the Financial
Statements described above, the Borrower shall deliver to the Agent and the Lenders a certificate,
signed by its chief financial officer, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Applicable Margins.



In addition to any other remedy provided for in this Agreement, if the Applicable Margin, as
calculated upon receipt of the audited Financial Statements delivered to the Agent pursuant to
Section 5.2(a) and with reference to the information provided therein, exceeds the
Applicable Margin calculated based on the most recently delivered unaudited Financial Statements,
then the Applicable Margin then in effect shall be immediately adjusted to reflect such
information. In addition, the Agent shall immediately charge the Borrower’s Loan Account in the
full amount of the underpaid interest, fees, or charges resulting from application of such adjusted
Applicable Margin.



Failure to timely deliver such Financial Statements shall, in the discretion of the Agent and in
addition to any other remedy provided for in this Agreement, result in an increase in the
Applicable Margins to the highest level set forth in the foregoing grid, until the first day of the
first calendar month following the delivery of those Financial Statements demonstrating that such
an increase is not required. If a Default or Event of Default has occurred and is continuing at
the time any reduction in the Applicable Margins is to be implemented, no reduction may occur until
the first day of the first calendar month following the date on which such Default or Event of
Default is waived or cured.




     “Asset Purchase Agreement” means that certain Purchase and Sale Agreement dated as of
December 14, 2004, by and between Chevron U.S.A., Inc. and the Borrower.



 




A-3 









 








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



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



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



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



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



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



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



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



     “Base Rate” means, for any day, the rate of interest in effect for such day as
publicly announced from time to time by the Bank in Charlotte, North Carolina as its “prime rate”
(the “prime rate” being a rate set by the Bank based upon various factors including the Bank’s
costs and desired return, general economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below such announced rate). Any
change in the prime rate announced by the Bank shall take effect at the opening of business on the
day specified in the public announcement of such change. Each Interest Rate based upon the Base
Rate shall be adjusted simultaneously with any change in the Base Rate.



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



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



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



 




A-4 









 








     “Borrowing Base” means, at any time, an amount determined by the Agent with reference
to the most recent Borrowing Base Certificate delivered to the Agent, which is equal to: (a) the
sum of the following:




     (i) one hundred percent (100%) of Eligible Cash and Cash Equivalents;
plus




     (ii) ninety-five percent (95%) of Eligible Investments; plus




     (iii) ninety percent (90%) of the Net Amount of Eligible Accounts that are
Major Oil Company Accounts; plus




     (iv) eighty percent (80%) of the Net Amount of Eligible Accounts other than
Major Oil Company Accounts; plus




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




     (vi) seventy-five percent (75%) of Eligible Petroleum Inventory, including
Eligible Petroleum Inventory in Transit; plus




     (vii) one hundred percent (100%) of Paid but Unexpired Letters of Credit;
minus



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




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



     “Business Day” means: (a) any day that is not a Saturday, Sunday, or a day on which
banks in Pasadena, California or Charlotte, North Carolina are required or permitted to be closed;
and (b) with respect to all notices, determinations, fundings and payments in connection with the
LIBOR Rate or LIBOR Revolving Loans, any day that is a Business Day pursuant to clause (a)
above and that is also a day on which trading in Dollars is carried on by and between banks in the
London interbank market.



     “Capital Adequacy Regulation” means any guideline, request, or directive of any
central bank or other Governmental Authority, or any other law, rule, or regulation, whether or not



 





A-5 









 







having the force of law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.




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



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



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



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



     “Cash Flow” means, for any period, an amount equal to: (a) the sum of: (i) EBITDA
(adding back Permitted Distributions to the extent they are included in determining EBITDA); and
(ii) accrued Turnaround Costs for such period relating to the Paramount Refinery, minus (b)
the sum of: (i) actual Turnaround Costs for such period; (ii) Non-Discretionary Capital
Expenditures made by the Borrower and its Subsidiaries during such period; and (iii) federal,
state, local and foreign income Taxes paid or payable during such period by the Borrower and its
Subsidiaries to the extent included in EBITDA, provided that such Taxes shall in no event
be less than zero.



     “Change of Control” means if: (i) the Craig Barto Trustees, on behalf of the Craig
Barto Trust, or the Jerrel Barto Trustees, on behalf of the Jerrel Barto Trust, shall at any time,
legally or beneficially, own in aggregate less than fifty-two percent (52%) of the common stock of
the Borrower (as adjusted pursuant to any stock split, reverse stock split, stock dividend or
reclassification or recapitalization of the capital stock of the Borrower); (ii) the Craig Barto
Trustees, on behalf of the Craig Barto Trust, the Jerrel Barto Trustees, on behalf of the Jerrel
Barto Trust, W. Scott Lovejoy and/or Mark Milano shall cease to control enough shares in the
aggregate to elect a majority of the Board of Directors of the Borrower or to control the outcome
of any shareholder vote; or (iii) any of the common stock of the Borrower shall, at any time, be



 




A-6 









 







subject to a security interest, lien, or other encumbrance except for liens created by the
Loan Documents or the Term Loan Documents.




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



     “Clean Fuels Project” means the construction, installation, or refurbishment of
certain Equipment for the purpose of enabling the Borrower to manufacture gasoline and diesel fuels
meeting the current California Air Resources Board specifications.



     “Closing Date” means the date of this Agreement.



     “Code” means the Internal Revenue Code of 1986.



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



     “Commitment” means, at any time with respect to a Lender, the principal amount set
forth beside such Lender’s name under the heading “Commitment” on Schedule A-1
attached to the Agreement or on the signature page of the Assignment and Acceptance pursuant to
which such Lender became a Lender hereunder in accordance with the provisions of Section
11.2, as such Commitment may be adjusted from time to time in accordance with the provisions of
Section 11.2, and “Commitments” means, collectively, the aggregate amount of the
commitments of all of the Lenders.



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



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



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



     “Craig Barto Trust” means the Craig C. Barto and Gisele M. Barto Living Trust, a trust
formed under the laws of the State of California pursuant to that certain Joint Revocable and
Living Trust Agreement of Craig C. Barto and Gisele M. Barto dated April 5, 1991.



 




A-7 









 








     “Craig Barto Trustees” means Craig C. Barto and Gisele M. Barto, not individually but
as trustees of the Craig Barto Trust.



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



     “Current Assets” means at any date the amount at which the current assets of the
Borrower and its Subsidiaries would be shown on a consolidated balance sheet of the Borrower and
its Subsidiaries as at such date, prepared in accordance with GAAP (measured on an average cost
basis and excluding liabilities constituting intercompany accounts).



     “Current Liabilities” means at any date the amount at which the current liabilities of
the Borrower and its Subsidiaries would be shown on a consolidated balance sheet of the Borrower
and its Subsidiaries as at such date, prepared in accordance with GAAP (measured on an average cost
basis and excluding liabilities constituting intercompany accounts).



     “Debt” means, without duplication, all liabilities, obligations and indebtedness of
the Borrower to any Person, of any kind or nature, now or hereafter owing, arising, due or payable,
howsoever evidenced, created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, consisting of indebtedness for borrowed money or the deferred
purchase price of property, excluding trade payables, but including: (a) all Obligations; (b) all
obligations and liabilities of any Person secured by any Lien on the Borrower’s property, even
though the Borrower shall not have assumed or become liable for the payment thereof;
provided, however, that all such obligations and liabilities that are limited in
recourse to such property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the Borrower prepared in accordance with GAAP; (c)
all obligations or liabilities created or arising under any Capital Lease or conditional sale or
other title retention agreement with respect to property used or acquired by the Borrower, even if
the rights and remedies of the lessor, seller, or lender thereunder are limited to repossession of
such property; provided, however, that all such obligations and liabilities which
are limited in recourse to such property shall be included in Debt only to the extent of the book
value of such property as would be shown on a balance sheet of the Borrower prepared in accordance
with GAAP; (d) all obligations and liabilities under Guaranties; and (e) the present value
(discounted at the Base Rate) of lease payments due under synthetic leases.



     “Debt Service” means, for any period, the sum of the following amounts that are due
and payable during such period: (i) interest payments on all Debt; (ii) scheduled principal
payments on all Debt; (iii) scheduled payments under any Capital Lease; and (iv) voluntary and
mandatory prepayments on the Term Loan Debt.



     “Debt Service Coverage Ratio” means, for any period, the ratio of Cash Flow to Debt
Service.



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



 




A-8 









 








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



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



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



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



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



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



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



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



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



          (a) (i) with respect to which more than seventy (70) days have elapsed since the date of the
original invoice therefor; or (ii) which relates to Inventory shipped or services




 




A-9 









 







rendered by the Borrower more than seventy-two (72) days prior to the date of determination of
eligibility, such seventy-two (72) day period to commence on the first day that Inventory is
shipped or services rendered in connection with such Account;




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




          (c) with respect to which Account (or any other Account due from such Account Debtor), in
whole or in part, a check, promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment, and returned uncollected for any reason;




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




          (e) with respect to which any one or more of the following events has occurred to the Account
Debtor on such Account: (i) death or judicial declaration of incompetency of an Account Debtor who
is an individual; (ii) the filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the bankruptcy, insolvency, or similar laws of the United States,
any state or territory thereof, or any foreign jurisdiction, now or hereafter in effect; (iii) the
making of any general assignment by the Account Debtor for the benefit of creditors; (iv) the
appointment of a receiver or trustee for the Account Debtor or for any of the assets of the Account
Debtor, including without limitation, the appointment of or taking possession by a “custodian,” as
defined in the Federal Bankruptcy Code; (v) the institution by or against the Account Debtor of any
other type of insolvency proceeding (under the bankruptcy laws of the United States or otherwise)
or of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims
against, or winding up of affairs of, the Account Debtor; (vi) the sale, assignment, or transfer of
all or any material part of the assets of the Account Debtor; (vii) the nonpayment generally by the
Account Debtor of its debts as they become due; (viii) or the cessation of the business of the
Account Debtor as a going concern;




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




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




 





A-10 









 







extent that such Account is secured or payable by a letter of credit satisfactory to the Agent
in its discretion;




          (h) owed by an Account Debtor that is an Affiliate or employee of the Borrower;




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




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




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




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




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




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




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




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




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




 




A-11 









 








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




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




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




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



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



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



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



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




 




A-12 









 









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




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




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




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




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



          (b) the sum of the values of any and all obligations of the Borrower to deliver Petroleum
Product, to make payments of money not secured by outstanding Letters of Credit or to deliver other
value in connection with Exchange Transactions;



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




     “Eligible Investments” means any and all Qualifying Investments owned by the Borrower
and held in a blocked custody account subject to the Agent’s dominion and control and which are



 





A-13 









 






subject to a valid, first priority, perfected lien and security interest in favor of the
Agent, for the benefit of the Lenders.




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



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



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





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




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




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




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




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



 




A-14 









 






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




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




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




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




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




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




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



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




     “Eligible Petroleum Inventory in Transit” means at any given time, the aggregate value
on a Marked-to-Market Basis of Petroleum Product contracted for purchase by the Borrower if: (a)
such Petroleum Product has not, as of such time, been delivered to the Borrower; (b) such Petroleum
Product has not been included as Eligible Petroleum Inventory in the then effective Borrowing Base
Certificate but will be eligible for inclusion in the Borrowing Base upon the delivery thereof; (c)
the Borrower’s obligation to pay the purchase price of such Petroleum Product is supported by a
Letter of Credit; (d) a non-negotiable document of title governed by the law of a state of the
United States of America has been issued to the order of the Agent for



 




A-15 









 




such Petroleum Product; and (e) such document of title has been issued from a shipper located
in, and such Petroleum Product has been shipped from, the United States of America;
provided, that for purposes of including such Petroleum Product in the Borrowing Base, such
Petroleum Product shall be valued at an amount not to exceed the Maximum Drawing Amount of all
Letters of Credit supporting the purchase price thereof; and provided further, that no
portion of such Letter of Credit supporting such purchase price is included in the Borrowing Base
as a Paid but Unexpired Letter of Credit.




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



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



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



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



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



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



     “ERISA Event” means: (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in Section



 




A-16









 




4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multi-employer Plan; (e) the occurrence of an event or
condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension Plan or
Multi-employer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.




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



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



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



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



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



     “Fee Letter” means that certain Letter Agreement dated as of December 18, 2003, from
the Agent to the Borrower setting forth certain fees payable by the Borrower to the Agent in
connection with the Loan Documents.



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



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



 




A-17









 





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



     “Fiscal Year” means the Borrower’s fiscal year for financial accounting purposes. The
current Fiscal Year of the Borrower will end on December 31, 2005.



     “Fixed Assets” means the Equipment and Real Estate of the Borrower.



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



     “GAAP” means generally accepted accounting principles and practices set forth from
time to time in the opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable stature and authority
within the U.S. accounting profession) that are applicable to the circumstances as of the Closing
Date.



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



     “Goodson” means Mr. Doug Goodson or a corporation, partnership, association, trust or
other business entity controlled by Mr. Doug Goodson or a trust of which Mr. Kyle Goodson is the
primary beneficiary.



     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.



     “Guaranty” means, with respect to any Person, all obligations of such Person which in
any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the



 




A-18









 




payment or performance of any indebtedness, dividend or other obligations of any other Person
(the “guaranteed obligations”), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations incurred through an
agreement, contingent or otherwise: (a) to purchase the guaranteed obligations or any property
constituting security therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet condition; or (c) to
lease property or to purchase any debt or equity securities or other property or services.




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



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



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



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



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




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




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




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



     “Inventory” means all of the Borrower’s now owned and hereafter acquired inventory
(including Petroleum Product), goods and merchandise, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned goods, raw materials, work-in-process,
finished goods (including embedded software), crude oil, natural gas, natural gas liquids,
gasoline, diesel, aviation fuel, fuel oil, propane, ethanol, and other hydrocarbons and



 




A-19









 





other refined products other materials and supplies of any kind, nature or description which
are used or consumed in the Borrower’s business or used in connection with the packing, shipping,
advertising, selling or finishing of such goods, merchandise, and all documents of title or other
Documents representing them.




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



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



     “Jerrel Barto Trust” means the Jerrel C. Barto and Janice D. Barto Living Trust, a
trust formed under the laws of the State of California pursuant to that certain Trust Agreement of
Jerrel C. Barto and Janice D. Barto dated March 18, 1991.



     “Jerrel Barto Trustees” means Jerrel C. Barto and Janice D. Barto, not individually
but as trustees of the Jerrel Barto Trust.



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



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



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



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



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



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



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



     “LIBOR Rate” means, for any Interest Period, with respect to LIBOR Revolving Loans,
the rate of interest per annum determined pursuant to the following formula:



	 	 	 	 	 
	LIBOR Rate =

	 	Offshore Base Rate
	 	 
	 

	 	 	 	 
	 

	 	1.00 - Eurodollar Reserve Percentage	 	 






     Where,



 




A-20









 






     “Offshore Base Rate” means the rate per annum appearing on Telerate Page 3750
(or any successor page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for any reason such rate
is not available, the Offshore Base Rate shall be, for any Interest Period, the rate per
annum appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates. If for any reason
none of the foregoing rates is available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum determined by the Agent as the rate of interest at which dollar
deposits in the approximate amount of the LIBOR Revolving Loan comprising part of such
Borrowing would be offered by the Bank’s London Branch to major banks in the offshore dollar
market at their request at or about 11:00 a.m. (London time) two (2) Business Days prior to
the first day of such Interest Period for a term comparable to such Interest Period.




     “Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, rounded upward to the next
1/100th of 1%) in effect on such day applicable to member banks under regulations
issued from time to time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).
The LIBOR Rate for each outstanding LIBOR Revolving Loan shall be adjusted automatically as
of the effective date of any change in the Eurodollar Reserve Percentage.



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



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



     “Loan Account” means the loan account of the Borrower, which account shall be
maintained by the Agent.



     “Loan Documents” means this Agreement, the Original Credit Agreement (as amended
hereby), the Security Agreement, the Mortgage, the Lockbox Agreement, the Stock Pledge Agreement,
the Term Loan Intercreditor Agreement, the Consent Agreements, the Restated Fee Letter and any
other agreements, instruments, and documents heretofore, now or hereafter



 




A-21









 




evidencing, securing, guaranteeing or otherwise relating to the Obligations, the Collateral,
or any other aspect of the transactions contemplated by this Agreement.




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



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



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



     “Major Oil Company Accounts” means at any time, any of the following types of Eligible
Accounts: (a) any Eligible Account as to which the Account Debtor thereon is: (i) a Person
considered by the Required Lenders in their sole discretion, to be a “major oil company” at such
time; or (ii) a Person listed on Schedule A-2 hereto, as such schedule may be amended from
time to time by the Required Lenders, in their sole discretion, upon written notice from the
Required Lenders to the Borrower, provided that with respect to any Account Debtor listed
on Schedule A-2 hereto, as amended, the aggregate amount of all Eligible Accounts hereunder
shall not exceed the maximum amount set forth opposite such Account Debtor’s name on Schedule
A-2 hereto, as amended; and provided, further, that no Accounts owing by such Account
Debtor in excess of such amount shall otherwise be included in the Borrowing Base; or (b) any
Eligible Account as to which a financial institution with a rating of B/C or better by BankWatch, A
or better by S&P, or A or better by Moody’s has issued an irrevocable documentary or stand-by
letter of credit in the amount of such Eligible Account for the benefit of the Borrower and on
which the Borrower may draw in the event of a default by such Account Debtor with respect to such
Eligible Account; provided, that the Agent approves of such letter of credit in its
reasonable credit discretion; and provided, further, that without the prior written consent
of the Agent, no such Eligible Account shall be considered a Major Oil Company Account if at the
relevant time of reference hereto, the issuer of the relevant letter of credit has previously
issued letters of credit in an aggregate undrawn face amount in excess of Ten Million Dollars
($10,000,000) with respect to Major Oil Company Accounts then included in the Borrowing Base.



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



     “Marked-to-Market Basis” means, at the relevant time of reference thereto: (a) as to
the Borrower’s inventory of Petroleum Product with respect to which the Borrower has existing firm
contracts to sell such inventory, the specified price to be paid for such inventory under such
contracts; and (b) as to other Petroleum Product inventory, for each type of such Petroleum Product
specified on Schedule A-3 hereto, as determined by reference to the pricing method
specified for such type of inventory on Schedule A-3 hereto; provided that if a
price or quotation is not available for a particular type of Petroleum Product for any reason on a
particular Business Day, the most recently available price or quotation from a prior Business Day
shall be used for that type of Petroleum Product inventory. Notwithstanding the foregoing, if
prices or quotations are not publicly available in accordance with the foregoing methodology for
more than a five-Business Day period for a particular type of inventory and there is a reasonable
likelihood that such prices or quotations will not be available for any extended period of time for
that product:



 




A-22









 




(i) the Agent and the Borrower shall meet and confer in good faith as soon as is practicable
in order to attempt to establish a new mechanism for determining the fair market value of the
product in question; and (ii) until such time as a new mechanism is agreed to by the Agent and the
Borrower, the fair market value of the particular type of inventory for which prices or quotes are
no longer available shall be reasonably determined by the Agent.




     “Material Adverse Effect” means: (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial or otherwise) or
prospects of the Borrower, the Collateral or any guarantor of the Obligations, including any
identified material adverse change in the Borrower’s compliance, or projected costs of compliance
with, any environmental, health and safety or other regulatory scheme; (b) a material impairment of
the ability of the Borrower or any Affiliate of the Borrower to perform under any Loan Document to
which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect
or enforceability against the Borrower of any Loan Document to which it is a party.



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



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



     “Maximum Revolver Amount” means One Hundred Ninety Million Dollars ($190,000,000).



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



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



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



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



 




A-23









 





     “Non-Discretionary Capital Expenditures” means Capital Expenditures necessarily
incurred by the Borrower or any of its Subsidiaries in order to maintain the Borrower’s plant,
property, and equipment in compliance with all applicable Environmental Laws and other Requirements
of Law and all environmental remediation expenses incurred by the Borrower or any of its
Subsidiaries with respect to the Borrower’s plant, property, and equipment.



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



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



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



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



     “Original Closing Date” means December 18, 2003.



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



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



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



     “Paramount Cogeneration Company” means Paramount Cogeneration Company, LLC, a
California limited liability company and a wholly-owned Subsidiary of the Borrower.



 




A-24









 





     “Paramount Cogeneration Debt” means the indebtedness of Paramount Cogeneration Company
to Bank of America Leasing in the original principal amount of $10,000,000 incurred to finance the
construction of the Paramount Cogeneration Facility.



     “Paramount Cogeneration Facility” means the 7.5 megawatt natural gas fired
cogeneration facility owned by Paramount Cogeneration Company in Paramount, California.



     “Paramount Cogeneration Guaranty” means that certain Guaranty in favor of the
holder(s) of the Paramount Cogeneration Debt, guaranteeing payment and performance of the Paramount
Cogeneration Debt.



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



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



     “Paramount OR” means Paramount of Oregon, Inc., an Oregon corporation.



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



     “Paramount WA” means Paramount of Washington, Inc., a Washington corporation.



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



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



     “Payment Account” means each bank account established pursuant to the Security
Agreement, to which the proceeds of Accounts and other Collateral are deposited or credited, and
that is maintained in the name of the Agent or the Borrower, as the Agent may determine, on terms
acceptable to the Agent.



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



     “Pending Revolving Loans” means, at any time, the aggregate principal amount of all
Revolving Loans requested in any Notice of Borrowing received by the Agent or in lieu of a Notice
of Borrowing, by telephone notice pursuant to Section 1.2(b)(ii) that have not yet been
advanced.



     “Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA which the Borrower sponsors, maintains, or to which it makes, is making, or



 




A-25









 




is obligated to make contributions, or in the case of a Multi-employer Plan, has made
contributions at any time during the immediately preceding five (5) plan years.




     “Permitted Distributions” means: (i) Distributions made by the Borrower to any Person
owning any stock issued by the Borrower, provided that: (x) such Distributions are made
within fifteen (15) days before or after the Borrower’s Fiscal Year end and, after adding the
aggregate amount of all such distributions in any Fiscal Year to the calculation of Debt Service,
the Borrower’s Debt Service Coverage Ratio measured as of the end of such Fiscal Year is not less
than 1.0 to 1.0; and (y) Availability after any such Distribution is greater than Twenty Million
Dollars ($20,000,000); (ii) Distributions by Paramount-Nevada Asphalt Company to the Borrower and
to Granite Construction Incorporated made pro rata in accordance with their respective ownership
interests in Paramount-Nevada Asphalt Company; and (iii) Distributions made to the Borrower by any
of its Subsidiaries.



     “Permitted Liens” means:



          (a) Liens for taxes not delinquent or statutory Liens for taxes in an amount not to exceed
$100,000 provided that the payment of such taxes which are due and payable is being contested in
good faith and by appropriate proceedings diligently pursued and as to which adequate financial
reserves have been established on the Borrower’s books and records and a stay of enforcement of any
such Lien is in effect;




          (b) the Agent’s Liens;




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




          (d) Liens securing the claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords, and other like Persons, provided that if any such Lien arises from the
nonpayment of such claims or demand when due, such claims or demands do not exceed $1,000,000 in
the aggregate in addition to the outstanding amounts listed under the Liens identified on
Schedule A-4 hereto;




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




          (f) Liens arising from judgments and attachments in connection with court proceedings provided
that the attachment or enforcement of such Liens would not result in an




 




A-26









 







Event of Default hereunder and such Liens are being contested in good faith by appropriate
proceedings, adequate reserves have been set aside, and no material Property is subject to a
material risk of loss or forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of execution pending appeal or
proceeding for review is in effect;




          (g) Liens granted pursuant to the Term Loan Documents and subject to the Term Loan
Intercreditor Agreement; and




          (h) Liens that the Agent has agreed will be prior to the lien of the Mortgage pursuant to the
pro forma title policy attached to the Agent’s final recording instructions for the Mortgage
delivered prior to the Closing Date.




     “Permitted Payments” means payments in respect of Subordinated Debt to the extent that
each of the following conditions is first satisfied:



          (a) no such payment may be made prior to January 1, 2006;




          (b) prior to making any such payment, Borrower must be in compliance with each of the
financial covenants set forth in Sections 7.23, 7.24 and 7.25, calculated
as of the close of the fiscal quarter immediately preceding such intended payment;




          (c) compliance with the financial covenants described in clause (b) above must be
demonstrated by an audited Financial Statement delivered pursuant to Section 5.2(d) for the
fiscal quarter ending December 31, 2005 or any fiscal quarter thereafter ending on December 31, or
by an unaudited balance sheet of Borrower for any fiscal quarter ending on March 31, June 30 or
September 30, in each case accompanied by a certificate of the chief financial officer of Borrower
as otherwise required by Section 5.2(d);




          (d) no Default or Event of Default has occurred and is continuing immediately prior to or upon
the making of any such payment (continuation of an Event of Default shall be determined under
Section (i) of the Interpretive Provisions); and




          (e) (i) the Borrower’s average daily Availability for the calendar month immediately preceding
such payment, and (ii) Availability immediately before and after giving effect to any such payment
is, in each case, greater than Twenty Million Dollars ($20,000,000).




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



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



 




A-27









 





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



     “Point Wells” means Point Wells, LLC, a Washington limited liability company.



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



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



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



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



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



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



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



 




A-28









 





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



     “Required Lenders” means at any time Lenders whose Pro Rata Shares aggregate more than
66-2/3%.



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



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



     “Responsible Officer” means the chief executive officer or the president of the
Borrower, the chief financial officer or the chief operating officer of the Borrower, or any other
officer identified in writing by the Borrower having substantially the same authority and
responsibility as any of the foregoing.



     “Restated Fee Letter” means that certain Letter Agreement dated as of the Closing Date
from the Agent to the Borrower setting forth certain fees payable by the Borrower to the Agent and
certain Lenders in connection with this Agreement.



     “Restricted Investment” means, as to the Borrower, any acquisition of property by the
Borrower in exchange for cash or other property, whether in the form of an acquisition of stock,
debt, or other indebtedness or obligation, or the purchase or acquisition of any other property, or
a loan, advance, capital contribution, or subscription, except the following: (a) acquisitions of
Equipment to be used in the business of the Borrower so long as the acquisition costs thereof
constitute Capital Expenditures permitted hereunder; (b) acquisitions of Inventory in the ordinary
course of business of the Borrower; (c) acquisitions of current assets acquired in the ordinary
course of business of the Borrower; (d) direct obligations of the United States of America or any
agency thereof, or obligations guaranteed by the United States of America; provided that
such obligations mature within one year from the date of acquisition thereof; (e) acquisitions of
certificates of deposit maturing within one year from the date of acquisition, bankers’
acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case issued by, created
by, or with a bank or trust company organized under the laws of the United States of America or any
state thereof having capital and surplus aggregating at least $100,000,000; (f)



 




A-29









 




acquisitions of commercial paper given a rating of “A2” or better by Standard & Poor’s
Corporation or “P2” or better by Moody’s Investors Service, Inc. and maturing not more than ninety
(90) days from the date of creation thereof; and (g) Hedge Agreements.




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



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



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



     “Security Agreement” means the Security Agreement of even date herewith among the
Borrower and the Agent for the benefit of the Agent and the Lenders.



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



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



     “Solvent” means, when used with respect to any Person, that at the time of
determination, the assets of such Person, at a fair valuation, are in excess of the total amount of
its debts (including contingent liabilities), and:



          (a) the present fair saleable value of its assets is greater than its probable liability on
its existing debts as such debts become absolute and matured; and




          (b) it is then able and expects to be able to pay its debts (including contingent debts and
other commitments) as they mature; and




          (c) it has capital sufficient to carry on its business as conducted and as proposed to be
conducted.



For purposes of determining whether a Person is Solvent, the amount of any contingent liability
shall be computed as the amount that, in light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual or matured
liability.




     “Stated Termination Date” means January 15, 2007.



     “Stock Pledge Agreement” means a stock pledge agreement pursuant to which the pledgors
thereunder pledge all of the common stock of the Borrower to the Agent to secure the Obligations
and the nonrecourse suretyship agreement in connection therewith.



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



 




A-30









 





     “Subordination Agreement” means a subordination agreement entered into between Agent,
on behalf of the Lenders, and third parties in form and substance satisfactory to the Agent and the
Lenders.



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



     “Subsidiary Guarantors” means, collectively, Paramount OR, Paramount WA, and Point
Wells.



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



     “Tangible Net Worth” shall be determined on a last-in, first-out basis and means the
Borrower’s total assets less total liabilities as determined in accordance with GAAP and reported
on the audited Financial Statements to be delivered pursuant to Section 5.2(a),
plus all Subordinated Debt minus any and all of the following which are included in
making the calculation: (i) gain or loss arising from the sale of any capital assets; (ii) gain
arising from any write-up in the book value of any asset; (iii) earnings of any Person,
substantially all the assets of which have been acquired by the Borrower in any manner, to the
extent realized by such other Person prior to the date of acquisition; (iv) earnings of any Person
in which the Borrower has an ownership interest (other than a Subsidiary consolidated with the
Borrower in accordance with GAAP) unless (and only to the extent) such earnings shall actually have
been received by the Borrower in the form of cash distributions; (v) earnings of any Person to
which assets of the Borrower shall have been sold, transferred or disposed of, or into which the
Borrower shall have been merged, or which has been a party with the Borrower to any consolidation
or other form of reorganization, prior to the date of such transaction; (vi) gain arising from the
acquisition of debt or equity securities of the Borrower or from cancellation or forgiveness of
Debt; (vii) intangibles; and (viii) gain arising from extraordinary items, as determined in
accordance with GAAP, or from any other non-recurring transaction.



     “Tangible Net Worth Requirement” means, as of the end of each Fiscal Year, Seventy
Three Million Five Hundred Thousand Dollars ($73,500,000), plus an amount equal to fifty
percent (50%) of Adjusted Net Earnings From Operations for the immediately preceding Fiscal Year,
beginning with the Fiscal Year ending December 31, 2004.



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



 




A-31









 





     “Term Loan” means all obligations of the Borrower under the Term Loan Documents.



     “Term Loan Agent” means the agent from time to time for the Term Loan Lenders.



     “Term Loan Closing Date” means the date on which the Term Loan is consummated on terms
and conditions satisfactory the Agent.



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



     “Term Loan Documents” means the documents, in form and substance satisfactory to the
Agent, from time to time evidencing, securing, and otherwise relating to the term credit facility,
in an aggregate amount not to exceed Fifty-two Million Dollars ($52,000,000), made to the Borrower.



     “Term Loan Intercreditor Agreement” means the intercreditor agreement between the
Agent and the Term Loan Agent from time to time.



     “Term Loan Lenders” means each of the lenders from time to time having a participation
in the Term Loan Debt.



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



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



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



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



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



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



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



     “Valero Guaranty” means that certain unsecured Guaranty dated as of July 25, 2005,
executed by the Borrower in favor of Valero Energy Corporation and its subsidiaries and affiliates,
whereby the Borrower has guaranteed, on an unsecured basis, the obligations of



 




A-32









 




Wright Asphalt Products Company in connection with one or more agreements for the purchase,
sale and/or exchange of crude oil, refining feedstock, gasoline, refined products, natural gas
liquids, natural gas, electricity, and/or other commodities and/or derivatives thereof.




     “Wright Asphalt Products Company” means that certain Texas general partnership formed
by the Borrower and Goodson in which each of the Borrower and Goodson holds a fifty percent (50%)
partnership interest.



     Accounting Terms. Any accounting term used in the Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and
all financial computations in the Agreement shall be computed, unless otherwise specifically
provided therein, in accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.



     Interpretive Provisions.



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




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




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





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




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




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



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




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




 




A-33









 








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




          (g) For purposes of Section 9.1, a breach of a financial covenant contained in
Sections 7.22 through 7.25 shall be deemed to have occurred as of any date of
determination thereof by the Agent or as of the last day of any specified measuring period,
regardless of when the Financial Statements reflecting such breach are delivered to the Agent.




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




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




 





A-34